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Item 1. Financial Statements

2025-04-30 compared with 2024-11-07 · 218 added, 272 removed, 484 unchanged (50% of the section changed)

1 unchanged sentence

INDEX TO FINANCIAL STATEMENTS

Condensed Consolidated Balance Sheets as of September 30, 2024 (Unaudited) and December 31, 2023

Condensed Consolidated Statements of Operations and Comprehensive Income for the three and nine months ended September 30, 2024 and 2023 (Unaudited)

Condensed Consolidated Statements of Changes in Shareholders' Equity for the three months ended March 31, June 30, and September 30, 2024 and 2023 (Unaudited)

Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2024 and 2023 (Unaudited)

Condensed Consolidated Balance Sheets as of March 31, 2025 (Unaudited) and December 31, 2024

Condensed Consolidated Statements of Operations and Comprehensive Income for the three months ended March 31, 2025 and 2024 (Unaudited)

Condensed Consolidated Statements of Changes in Shareholders' Equity for the three months ended March 31, 2025 and 2024 (Unaudited)

Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2025 and 2024 (Unaudited)

Notes to Condensed Consolidated Financial Statements (Unaudited) 10

1 unchanged sentence

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Assets (In Thousands, except for share data)

Fixed maturities, available-for-sale, at fair value (amortized cost of $ 2,806,886 and $ 2,542,862 as of September 30, 2024 and December 31, 2023, respectively)

Fixed maturities, available-for-sale, at fair value (amortized cost of $ 2,923,088 and $ 2,876,343 as of March 31, 2025 and December 31, 2024, respectively)

$ 2,809,247 $ 2,723,541

Cash and cash equivalents (including restricted cash of $ 88 and $ 1,338 as of September 30, 2024 and December 31, 2023, respectively)

Cash and cash equivalents (including restricted cash of $ 90 as of December 31, 2024)

74,209 54,308

Premiums receivable 78,454 76,456

Premiums receivable, net 84,153 82,804

Accrued investment income 23,641 22,386

12 unchanged sentences

Other liabilities 10,143 10,751

11,286 12,877

Total liabilities 1,134,625 1,132,541

2 unchanged sentences

Common stock - $ 0.01 par value;

87,901,225 shares issued and 79,320,863 shares outstanding as of September 30, 2024 and 87,334,138 shares issued and 80,881,280 shares outstanding as of December 31, 2023 ( 250,000,000 shares authorized)

88,321,226 shares issued and 78,301,469 shares outstanding as of March 31, 2025 and 87,902,626 shares issued and 78,600,726 shares outstanding as of December 31, 2024 ( 250,000,000 shares authorized)

Additional paid-in capital 1,001,545 1,004,692

Treasury Stock, at cost:

8,580,362 and 6,452,858 common shares as of September 30, 2024 and December 31, 2023, respectively

10,019,757 and 9,301,900 common shares as of March 31, 2025 and December 31, 2024, respectively

( 272,647 ) ( 246,594 )

3 unchanged sentences

Total liabilities and shareholders' equity $ 3,456,196 $ 3,349,973

(1) “Reinsurance funds withheld ” has been reclassified as “Other liabilities ” in the prior period.

See accompanying notes to condensed consolidated financial statements (unaudited).

1 unchanged sentence

C ONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED)

For the three months ended September 30, For the nine months ended September 30,

2024 2023 2024 2023

For the three months ended March 31,

(In Thousands, except for per share data)

1 unchanged sentence

Net investment income 23,686 19,436

Net realized investment losses ( 10 ) — ( 10 ) ( 33 )

Net realized investment gains 24 —

Other revenues 170 160

16 unchanged sentences

Other comprehensive income (loss), net of tax:

Unrealized gains (losses) in accumulated other comprehensive loss, net of tax expense (benefit) of $ 18,441 and $( 6,980 ) for the three months ended September 30, 2024 and 2023, and $ 15,300 and $( 2,467 ) for the nine months ended September 30, 2024 and 2023, respectively

Unrealized gains (losses) in accumulated other comprehensive loss, net of tax expense (benefit) of $ 8,186 and $( 2,729 ) for the quarters ended March 31, 2025 and 2024, respectively

30,795 ( 9,905 )

Reclassification adjustment for realized losses included in net income, net of tax benefit of $ 2 and $ 0 for the three months ended September 30, 2024 and 2023, and $ 2 and $ 7 for the nine months ended September 30, 2024 and 2023, respectively

Reclassification adjustment for realized gains included in net income, net of tax expense of $ 5 for the quarter ended March 31, 2025

Other comprehensive income (loss), net of tax 30,776 ( 9,905 )

12 unchanged sentences

Share-based compensation expense — — 4,507 — — — 4,507

Change in unrealized investment gains/losses, net of tax benefit of $ 2,729

— — — — ( 9,905 ) ( 9,905 )

Net income — — — — — 89,050 89,050

Balances, March 31, 2024 80,546 $ 878 $ 989,349 $ ( 174,227 ) $ ( 149,822 ) $ 1,312,203 $ 1,978,381

Common stock:

shares issued under stock plans, net of shares withheld for employee taxes 62 1 ( 320 ) — — — ( 319 )

Repurchase of common stock ( 844 ) — — ( 27,096 ) — — ( 27,096 )

Share-based compensation expense — — 4,114 — — — 4,114

Change in unrealized investment gains/losses, net of tax benefit of $ 412

— — — — ( 1,549 ) — ( 1,549 )

Net income — — — — — 92,079 92,079

Balances, June 30, 2024 79,764 $ 879 $ 993,143 $ ( 201,323 ) $ ( 151,371 ) $ 1,404,282 $ 2,045,610

Common stock:

shares issued under stock plans, net of shares withheld for employee taxes * * ( 12 ) — — — ( 12 )

Repurchase of common stock ( 443 ) — — ( 17,041 ) — — ( 17,041 )

Share-based compensation expense — — 4,439 — — — 4,439

Change in unrealized investment gains/losses, net of tax expense of $ 8,181

1 unchanged sentence

Net income — — — — — 102,559 102,559

Balances, September 30, 2024 79,321 $ 879 $ 997,570 $ ( 218,364 ) $ ( 81,991 ) $ 1,497,092 $ 2,195,186

* During the three months ended September 30, 2024, we issued 337 common shares with a par value of $ 0.01 in connection with the exercise of options and vesting of restricted stock units granted under our stock plans, which is not identifiable in this schedule due to rounding.

See accompanying notes to condensed consolidated financial statements (unaudited).

NMI HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)

Balances, March 31, 2025 78,301 $ 883 $ 1,001,545 $ ( 272,647 ) $ ( 94,028 ) $ 1,685,818 $ 2,321,571

Common Stock Additional

7 unchanged sentences

Share-based compensation expense — — 4,117 — — — 4,117

Change in unrealized investment gains/losses, net of tax expense of $ 8,640

— — — — 32,502 — 32,502

Net income — — — — — 74,458 74,458

Balances, March 31, 2023 83,280 $ 869 $ 973,599 $ ( 71,437 ) $ ( 171,821 ) $ 975,501 $ 1,706,711

Common stock:

shares issued under stock plans, net of shares withheld for employee taxes 56 1 20 — — — 21

Repurchase of common stock ( 1,046 ) — — ( 26,238 ) — — ( 26,238 )

Share-based compensation expense — — 3,676 — — — 3,676

Change in unrealized investment gains/losses, net of tax benefit of $ 2,729

1 unchanged sentence

Net income — — — — — 89,050 89,050

Balances, June 30, 2023 82,290 $ 870 $ 977,295 $ ( 97,675 ) $ ( 187,320 ) $ 1,055,785 $ 1,748,955

Common stock:

shares issued under stock plans, net of shares withheld for employee taxes 15 * 9 — — — 9

Repurchase of common stock ( 675 ) — — ( 19,441 ) — — ( 19,441 )

Share-based compensation expense — — 3,740 — — — 3,740

Change in unrealized investment gains/losses, net of tax benefit of $ 6,980

— — — — ( 26,257 ) — ( 26,257 )

Net income — — — — — 83,955 83,955

Balances, September 30, 2023 81,630 $ 870 $ 981,044 $ ( 117,116 ) $ ( 213,577 ) $ 1,139,740 $ 1,790,961

* During the three months ended September 30, 2023, we issued 15,430 common shares with a par value of $ 0.01 in connection with the exercise of options and vesting of restricted stock units granted under our stock plans, which is not identifiable in this schedule due to rounding.

Balances, March 31, 2024 80,546 $ 878 $ 989,349 $ ( 174,227 ) $ ( 149,822 ) $ 1,312,203 $ 1,978,381

See accompanying notes to condensed consolidated financial statements (unaudited).

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

For the nine months ended September 30,

For the three months ended March 31,

Cash flows from operating activities (In Thousands)

1 unchanged sentence

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

Net realized investment loss 10 33

Net realized investment gains ( 24 ) —

Depreciation and amortization 2,888 2,996

Net accretion of discount on investment securities ( 229 ) ( 55 )

Loss on extinguishment of debt 6,966 —

Net (accretion)/amortization of (discount)/premium on investment securities ( 770 ) 437

Amortization of debt discount and debt issuance costs 592 510

2 unchanged sentences

Changes in operating assets and liabilities:

Premiums receivable ( 1,998 ) ( 3,701 )

Premiums receivable, net ( 1,349 ) 1,094

Accrued investment income ( 1,255 ) ( 75 )

17 unchanged sentences

Taxes paid related to net share settlement of equity awards ( 10,428 ) ( 9,800 )

Proceeds from senior unsecured notes 419,705 —

Repayments of senior secured notes ( 405,080 ) —

Payments of debt issuance costs ( 7,785 ) —

Repurchases of common stock ( 25,943 ) ( 25,206 )

5 unchanged sentences

Interest paid $ 18,700 $ —

Income taxes paid 9,387 21

See accompanying notes to condensed consolidated financial statements (unaudited).

19 unchanged sentences

All intercompany transactions have been eliminated.

Certain reclassifications to previously reported financial information have been made to conform to our current period presentation.

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.

5 unchanged sentences

There have been no changes to our significant accounting principles as described in Item 8, “ Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements - Note 2 - Summary of Accounting Principles” of our 2024 10-K.

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, and interim periods beginning after December 31, 2024.

We are currently evaluating the impact the adoption of this ASU will have and will include enhanced disclosures in our fiscal year-end 2024 annual consolidated financial statements, as applicable.

Recent Accounting Pronouncements – 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, 2024.

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

Recent Accounting Pronouncements – Not Yet Adopted

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.

9 unchanged sentences

Cost Gross Unrealized Fair

As of September 30, 2024 (In Thousands)

As of March 31, 2025 (In Thousands)

Treasury securities and obligations of U.S.

16 unchanged sentences

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

We did not own any mortgage-backed securities in our asset-backed securities portfolio at September 30, 2024 or December 31, 2023.

We periodically recognize unsettled trade receivables or payables in connection with our investing activity.

Unsettled trade receivables represent funds due but not yet received for the sale or maturity of investments at period end.

Unsettled trade payables represent funds due but not yet paid for investments purchased at period end.

“Accounts Payable and Accrued Expenses” on our condensed consolidated balance sheets included $ 16.2 million of unsettled trade payables related to the purchase of certain investment securities at September 30, 2024.

No unsettled trade receivables were outstanding at September 30, 2024.

No unsettled trade receivables or payables were outstanding at December 31, 2023.

We did not own any mortgage-backed securities in our asset-backed securities portfolio at March 31, 2025 or December 31, 2024.

NMI HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following table presents a breakdown of the fair value of our corporate debt securities by issuer industry group as of September 30, 2024 and December 31, 2023:

September 30, 2024 December 31, 2023

The following table presents a breakdown of the fair value of our corporate debt securities by issuer industry group as of March 31, 2025 and December 31, 2024:

March 31, 2025 December 31, 2024

Financial 38 % 40 %

2 unchanged sentences

Industrial 10 9

Technology 8 8

Communications 7 7

Technology 7 7

Total 100 % 100 %

As of September 30, 2024 and December 31, 2023, approximately $ 5.4 million and $ 5.3 million, respectively, of our cash and investments were held in the form of U.S.

As of both March 31, 2025 and December 31, 2024, 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.

Scheduled Maturities

The amortized cost and fair value of available-for-sale securities as of September 30, 2024 and December 31, 2023, by contractual maturity, are shown below.

The amortized cost and fair value of available-for-sale securities as of March 31, 2025 and December 31, 2024, by contractual maturity, are shown below.

Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

Because most asset-backed securities provide for periodic payments throughout their lives, they are listed below in a separate category.

As of September 30, 2024 Amortized

As of March 31, 2025 Amortized

(In Thousands)

14 unchanged sentences

Aging of Unrealized Losses

As of September 30, 2024, the investment portfolio had gross unrealized losses of $ 128.0 million, of which $ 127.5 million were associated with securities that had been in an unrealized loss position for a period of twelve months or longer.

As of March 31, 2025, the investment portfolio had gross unrealized losses of $ 129.0 million, of which $ 126.3 million were associated with securities that had been in an unrealized loss position for a period of twelve months or longer.

As of December 31, 2024, the investment portfolio had gross unrealized losses of $ 158.6 million, of which $ 150.8 million were associated with securities that had been in an unrealized loss position for a period of twelve months or longer.

4 unchanged sentences

# of Securities Fair Value Unrealized Losses # of Securities Fair Value Unrealized Losses # of Securities Fair Value Unrealized Losses

As of September 30, 2024 ($ In Thousands)

As of March 31, 2025 ($ In Thousands)

Treasury securities and obligations of U.S.

15 unchanged sentences

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

* Amounts not identifiable due to rounding.

Allowance for Credit Losses

As of September 30, 2024 and December 31, 2023, we did not recognize an allowance for credit loss for any security in the investment portfolio and we did not record any provision for credit loss for investment securities during the three or nine months ended September 30, 2024 or 2023.

We evaluated the securities in an unrealized loss position as of September 30, 2024, assessing their credit ratings as well as any adverse conditions specifically related to the security.

Based upon our assessment of the amount and timing of cash flows to be collected over the remaining life of each instrument, we believe the unrealized losses as of September 30, 2024 are not indicative of the ultimate collectability of the current amortized cost of the securities.

Rather, the unrealized losses on securities held as of September 30, 2024 were primarily driven by fluctuations in interest rates, and to a lesser extent, movements in credit spreads following the purchase of those securities.

As of March 31, 2025 and December 31, 2024, we did not recognize an allowance for credit loss for any security in the investment portfolio and we did not record any provision for credit loss for investment securities during the three months ended March 31, 2025 or 2024.

We evaluated the securities in an unrealized loss position as of March 31, 2025, assessing their credit ratings as well as any adverse conditions specifically related to the security.

Based upon our assessment of the amount and timing of cash flows to be collected over the remaining life of each instrument, we believe the unrealized losses as of March 31, 2025 are not indicative of the ultimate collectability of the current amortized cost of the securities.

Rather, the unrealized losses on securities held as of March 31, 2025 were primarily driven by fluctuations in interest rates, and to a lesser extent, movements in credit spreads following the purchase of those securities.

Net Investment Income

The following table presents the components of net investment income:

For the three months ended September 30, For the nine months ended September 30,

2024 2023 2024 2023

For the three months ended March 31,

(In Thousands)

3 unchanged sentences

Net investment income $ 23,686 $ 19,436

(1) Includes interest income recognized on cash and cash equivalents of $ 1.3 million and $ 4.2 million during the three and nine months ended September 30, 2024, respectively, and $ 0.8 million and $ 1.4 million during the three and nine months ended September 30, 2023, respectively.

(1) Includes interest income recognized on cash and cash equivalents of $ 0.9 million and $ 1.1 million during the three months ended March 31, 2025 and 2024, respectively.

NMI HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

For the three months ended September 30, For the nine months ended September 30,

2024 2023 2024 2023

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

For the three months ended March 31,

(In Thousands)

1 unchanged sentence

Gross realized investment losses — —

Net realized investment losses $ ( 10 ) $ — $ ( 10 ) $ ( 33 )

Net realized investment gains

Fair Value of Financial Instruments

36 unchanged sentences

(Level 3) Fair Value

As of September 30, 2024 (In Thousands)

As of March 31, 2025 (In Thousands)

Treasury securities and obligations of U.S.

21 unchanged sentences

Total assets $ 252,984 $ 2,524,865 $ — $ 2,777,849

There were no transfers between Level 2 and Level 3 of the fair value hierarchy during the nine months ended September 30, 2024 or the year ended December 31, 2023.

There were no transfers between Level 2 and Level 3 of the fair value hierarchy during the three months ended March 31, 2025 or the year ended December 31, 2024.

Financial Instruments Not Measured at Fair Value

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 September 30, 2024, the 2024 Notes were carried at a cost of $ 414.7 million, net of unamortized debt issuance costs and an original issue discount totaling $ 10.3 million, and had a fair value of $ 437.9 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.

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

At March 31, 2025, the 2024 Notes were carried at a cost of $ 415.6 million, net of unamortized debt issuance costs and an original issue discount totaling $ 9.4 million, and had a fair value of $ 431.3 million as assessed under our Level 2 hierarchy.

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.

Senior Unsecured Notes

At September 30, 2024, we had $ 425 million aggregate principal amount of senior unsecured notes outstanding.

At March 31, 2025, 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 interest.

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 %

NMI HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

future interest payments due through July 15, 2029, and (2) the aggregate principal balance due plus any accrued and unpaid interest.

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 .

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.

Such amount will be amortized over the contractual life of the 2024 Notes using the effective interest method and included in interest expense.

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

At September 30, 2024, $ 10.3 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 nine months ended September 30, 2024, we recorded a $ 6.8 million loss related to the redemption of the 2020 Notes in “Interest Expense” on our condensed consolidated statements of operations and comprehensive income.

At September 30, 2024 and December 31, 2023, $ 9.2 million and $ 2.5 million, respectively, of accrued and unpaid interest was included in “Accounts Payable and Accrued Expenses” on our condensed consolidated balance sheets.

At March 31, 2025 and December 31, 2024, $ 9.4 million and $ 9.9 million, respectively, of unamortized debt issuance costs and original issue discounts remained.

At March 31, 2025 and December 31, 2024, $ 3.3 million and $ 15.6 million, respectively, of accrued and unpaid interest on the 2024 Notes was included in “Accounts Payable and Accrued Expenses” on our condensed consolidated balance sheets.

Revolving Credit Facility

2 unchanged sentences

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 (SOFR, 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 September 30, 2024 and December 31, 2023, no amounts were drawn under the 2024 or 2021 Revolving Credit Facilities, respectively.

As of March 31, 2025 and December 31, 2024, no amounts were drawn under the 2024 Revolving Credit Facility.

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 September 30, 2024, the applicable commitment fee was 0.225 %.

For the three and nine months ended September 30, 2024, we recorded $ 0.1 million and $ 0.4 million, respectively, of commitment fees in interest expense.

As of March 31, 2025, the applicable commitment fee was 0.225 %.

For the three months ended March 31, 2025, we recorded $ 0.1 million of commitment fees in interest expense.

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 September 30, 2024 and December 31, 2023, unamortized deferred debt issuance costs of $ 2.5 million and $ 0.8 million, respectively, were recorded in “Other Assets” on our condensed 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 PMIERs (subject to any GSE approved waivers).

We were in compliance with all covenants at September 30, 2024.

At March 31, 2025 and December 31, 2024, remaining unamortized deferred debt issuance costs of $ 2.2 million and $ 2.3 million, respectively, were recorded in “Other Assets” on our condensed consolidated balance sheets.

We were in compliance with all covenants at March 31, 2025.

We enter into third-party reinsurance transactions to actively manage our risk, ensure compliance with PMIERs, state regulatory and other applicable capital requirements, (respectively, as defined therein), and support the growth of our business.

3 unchanged sentences

The effect of our reinsurance agreements on premiums written and earned is as follows:

For the three months ended September 30, For the nine months ended September 30,

2024 2023 2024 2023

For the three months ended March 31,

(In Thousands)

8 unchanged sentences

(1) Net of profit commission.

Excess-of-loss Reinsurance

Insurance-Linked Notes

NMIC is a party to reinsurance agreements with 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 October 29, 2020, 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.

Under each agreement, NMIC retains a first layer of aggregate loss exposure on covered policies and the respective Oaktown Re Vehicle then provides second layer loss protection up to a defined reinsurance coverage amount.

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

NMIC makes risk premium payments to the Oaktown Re Vehicles for the applicable outstanding reinsurance coverage amount and pays an additional amount for anticipated operating expenses (capped at $ 250 thousand per year).

NMIC ceded aggregate premiums to the Oaktown Re Vehicles of $ 4.3 million and $ 16.1 million during the three and nine months ended September 30, 2024, respectively, and $ 6.9 million and $ 24.8 million during the three and nine months ended September 30, 2023, respectively.

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

NMIC did not cede any incurred losses on covered policies to the Oaktown Re Vehicles during the three and nine months ended September 30, 2024 and 2023, as the aggregate first layer risk retention for each applicable agreement was not exhausted during such periods.

Under the terms of each excess-of-loss reinsurance agreement, the Oaktown Re Vehicles are required to fully collateralize their outstanding reinsurance coverage amount to NMIC with funds deposited into segregated reinsurance trusts.

Such trust funds are required to be invested in short-term U.S.

Treasury money market funds at all times.

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 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 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 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.

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-

NMI HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

linked note principal is suspended if certain credit enhancement or delinquency thresholds, as defined in each agreement, are triggered (each, a Lock-Out Event).

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 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, 2024, NMIC exercised its optional call to terminate a reinsurance agreement with and the associated insurance-linked notes issued by Oaktown Re III Ltd.

In connection with the termination, NMIC’s excess of loss reinsurance agreement with Oaktown Re III Ltd.

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

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

The following table presents the inception date, covered production period, initial and current reinsurance coverage amount, and initial and current first layer retained aggregate loss under each outstanding ILN Transaction.

Current amounts are presented as of September 30, 2024.

( $ values in thousands)

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

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

$ 242,351 $ 28,149 $ 121,777 $ 120,990

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

367,238 163,033 163,708 163,217

2021-2 ILN Transaction October 26, 2021 4/1/2021 – 9/30/2021 (4)

363,596 256,166 146,229 145,312

(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.

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

(4) Approximately 2 % of the production covered by the 2021-2 ILN Transaction has coverage reporting dates between July 1, 2019 and March 31, 2021.

Under the terms of our ILN Transactions, we are required to maintain a certain level of restricted funds in premium deposit accounts with Bank of New York Mellon until the respective notes have been redeemed in full.

“Cash and Cash Equivalents” on our condensed consolidated balance sheets includes restricted amounts of $ 0.1 million and $ 1.3 million as of September 30, 2024 and December 31, 2023, respectively.

The restricted balances required under these transactions will decline over time as the outstanding principal balance of the respective insurance-linked notes are amortized.

Traditional Reinsurance

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.

Under each agreement, NMIC retains a first layer of aggregate loss exposure on covered policies and the reinsurers then provide second layer loss protection up to a defined reinsurance coverage amount.

The reinsurance coverage amount of each XOL Transaction is set to approximate the PMIERs minimum required assets of its reference pool and decreases from its peak over a ten-year period in the event the PMIERs minimum required assets of the pool declines.

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 $ 9.8 million and $ 28.4 million during the three and nine months ended September 30, 2024, respectively, and $ 8.0 million and $ 22.9 million during the three and nine months ended September 30, 2023, respectively.

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

NMIC did not cede any incurred losses on covered policies under the XOL Transactions during the three and nine months ended September 30, 2024 and 2023, as the aggregate first layer risk retention for each agreement was not exhausted during such periods.

NMI HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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 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.

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.

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.

Best Company Inc.

Best) or both.

Current amounts are presented as of September 30, 2024.

($ values in thousands) Inception Date Covered Production Initial Reinsurance Coverage

Current Reinsurance Coverage Initial First Layer Retained Loss Current First Layer Retained Loss (1)

2022-1 XOL Transaction April 1, 2022 10/1/2021 – 3/31/2022 (2)

$ 289,741 $ 208,904 $ 133,366 $ 132,545

2022-2 XOL Transaction July 1, 2022 4/1/2022 – 6/30/2022 (3)

154,306 129,230 78,906 78,073

2022-3 XOL Transaction October 1, 2022 7/1/2022 – 9/30/2022 96,779 84,988 106,265 105,817

2023-1 XOL Transaction

January 1, 2023 10/1/2022 – 6/30/2023 89,864 87,819 146,513 146,146

2023-2 XOL Transaction

July 1, 2023 7/1/2023 – 12/31/2023

100,777 100,777 136,875 136,875

2024 XOL Transaction (4)

January 1, 2024 1/1/2024 – 12/31/2024

132,685 132,685 235,279 235,279

(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.

(2) Approximately 1 % of the production covered by the 2022-1 XOL Transaction has coverage reporting dates between October 21, 2019 and September 30, 2021.

(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 initial reinsurance coverage, current reinsurance coverage, initial first layer retained loss and current first layer retained loss for the 2024 XOL Transaction will increase as incremental covered production is ceded under the transaction through December 31, 2024.

Quota Share Reinsurance

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.

NMIC is party to nine quota share reinsurance treaties – the 2016 QSR Transaction, effective September 1, 2016 and as modified January 1, 2025, the 2018 QSR Transaction, effective January 1, 2018 and as modified January 1, 2025, the 2020 QSR Transaction, effective April 1, 2020 and as amended January 1, 2024, the 2021 QSR Transaction, effective January 1, 2021 and as modified January 1, 2025, 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, the 2024 QSR Transaction, effective January 1, 2024, and the 2025 QSR Transaction, effective January 1, 2025 – 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.

1 unchanged sentence

Best or both.

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 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.

Under the terms of the 2016 QSR Transaction, NMIC cedes premiums written related to 20 % 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.

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.

2 unchanged sentences

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.

NMI HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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.

7 unchanged sentences

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.

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.

NMI HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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.

9 unchanged sentences

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.

Under the terms of the 2025 QSR Transaction, NMIC cedes premiums earned related to 20 % of the risk on eligible policies written in 2025.

The 2025 QSR Transaction is scheduled to terminate on December 31, 2035.

NMIC also holds a clean-up call that provides for termination of the agreement at its election at any time on or after the date the risk on remaining covered policies falls to 10% or less of the risk on covered policies at December 31, 2025.

Concurrent with the placement of the 2025 QSR Transaction, NMIC entered into two additional sequential quota share reinsurance treaties that will provide coverage for mortgage insurance policies to be written in 2026 and 2027 (the 2026 QSR Transaction and 2027 QSR Transaction).

Under the terms of the 2026 QSR Transaction, NMIC will cede premiums earned related to 20 % of the risk on eligible policies written between January 1, 2026 and December 31, 2026.

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.

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 risk-in-force (RIF) ceded under the respective agreements.

4 unchanged sentences

The following table shows amounts related to the QSR Transactions:

As of and for the three months ended As of and for the nine months ended

September 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023

As of and for the three months ended

March 31, 2025 March 31, 2024

(In Thousands)

2 unchanged sentences

Ceded claims and claim expenses

2,449 2,221 2,970 4,989

Ceding commission earned 9,768 10,292

Profit commission 23,398 23,407

NMI HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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 2020 QSR Transaction under which it receives a 36 % ceding commission.

NMI HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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, 2024 and 2025 QSR Transactions, generally remain below 60 %, 61 %, 50 %, 58 %, 62 %, 55 %, 62 %, 56 % and 62 %, respectively, as measured annually.

3 unchanged sentences

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 $ 1.2 million and $ 1.7 million as of September 30, 2024 and December 31, 2023, respectively.

The reinsurance recoverable on loss reserves related to the 2016 QSR Transaction was $ 1.0 million and $ 1.1 million as of March 31, 2025 and December 31, 2024, respectively.

In accordance with the terms of the 2018, 2020, 2021, 2022, 2022 Seasoned, 2023, 2024 and 2025 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.

1 unchanged sentence

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

The aggregate reinsurance recoverable on loss reserves related to the 2018, 2020, 2021, 2022, 2022 Seasoned, 2023, and 2024 QSR Transactions was $ 28.0 million and $ 25.8 million as of September 30, 2024 and December 31, 2023, respectively.

The aggregate reinsurance recoverable on loss reserves related to the 2018, 2020, 2021, 2022, 2022 Seasoned, 2023, 2024 and 2025 QSR Transactions was $ 30.4 million and $ 31.2 million as of March 31, 2025 and December 31, 2024, respectively.

We remain directly liable for all claim payments if we are unable to collect the recoverables due from our reinsurers and, as such, we actively monitor and manage our counterparty credit exposure to our reinsurance providers.

1 unchanged sentence

We actively monitor the counterparty credit profiles of our reinsurers and each is required to partially collateralize its obligations under the terms of the QSR Transactions.

The allowance for credit loss established against our reinsurance recoverable was deemed immaterial as of September 30, 2024 and December 31, 2023.

The allowance for credit loss established against our reinsurance recoverable was deemed immaterial as of March 31, 2025 and December 31, 2024.

Excess-of-loss Reinsurance

Traditional Reinsurance

NMIC is party to seven 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, the 2024 XOL Transaction, effective January 1, 2024, and the 2025 XOL Transaction, effective January 1, 2025 – 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.

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 $ 10.2 million and $ 9.2 million during the three months ended March 31, 2025 and 2024, respectively.

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

NMIC did not cede any incurred losses on covered policies under the XOL Transactions during the three months ended March 31, 2025 and 2024, as the aggregate first layer risk retention for each agreement was not exhausted during such periods.

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

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

NMI HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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.

Best Company Inc.

Best) or both.

Current amounts are presented as of March 31, 2025.

($ values in thousands) Inception Date Covered Production Initial Reinsurance Coverage

Current Reinsurance Coverage Initial First Layer Retained Loss Current First Layer Retained Loss (1)

2022-1 XOL Transaction April 1, 2022 10/1/2021 – 3/31/2022 (2)

$ 289,741 $ 173,584 $ 133,366 $ 131,513

2022-2 XOL Transaction July 1, 2022 4/1/2022 – 6/30/2022 (3)

154,306 126,085 78,906 76,275

2022-3 XOL Transaction October 1, 2022 7/1/2022 – 9/30/2022 96,779 82,134 106,265 104,496

2023-1 XOL Transaction

January 1, 2023 10/1/2022 – 6/30/2023 89,864 76,752 146,513 145,137

2023-2 XOL Transaction

July 1, 2023 7/1/2023 – 12/31/2023

100,777 92,728 136,875 136,646

2024 XOL Transaction

January 1, 2024 1/1/2024 – 12/31/2024

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

2025 XOL Transaction (4)

January 1, 2025 1/1/2025 – 12/31/2025

56,807 56,807 62,673 62,673

(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.

(2) Approximately 1 % of the production covered by the 2022-1 XOL Transaction has coverage reporting dates between October 21, 2019 and September 30, 2021.

(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 initial reinsurance coverage, current reinsurance coverage, initial first layer retained loss and current first layer retained loss for the 2025 XOL Transaction will increase as incremental covered production is ceded under the transaction through December 31, 2025.

Concurrent with the placement of the 2025 XOL, NMIC entered into an excess-of-loss reinsurance treaty that will provide aggregate coverage for mortgage insurance policies to be written in 2026 (the 2026 XOL Transaction).

Under the terms of the 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 $ 164.2 million.

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

Insurance-Linked Notes

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.

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

NMIC ceded aggregate premiums to the Oaktown Re Vehicles of $ 3.3 million and $ 6.0 million during the three months ended March 31, 2025 and 2024, respectively.

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

NMIC did not cede any incurred losses on covered policies to the Oaktown Re Vehicles during the three months ended March 31, 2025 and 2024, as the aggregate first layer risk retention for each applicable agreement was not exhausted during such periods.

Such trust funds are required to be invested in short-term U.S.

Treasury money market funds at all times.

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 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.

NMI HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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.

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).

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.

Current amounts are presented as of March 31, 2025.

( $ values in thousands)

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

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

$ 367,238 $ 130,299 $ 163,708 $ 162,769

2021-2 ILN Transaction October 26, 2021 4/1/2021 – 9/30/2021 (3)

363,596 224,149 146,229 144,866

(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.

(3) Approximately 2 % of the production covered by the 2021-2 ILN Transaction has coverage reporting dates between July 1, 2019 and March 31, 2021.

“Cash and Cash Equivalents” on our condensed consolidated balance sheets includes a de minimis restricted amount as of March 31, 2025 and $ 0.1 million as of December 31, 2024.

Reserves for Insurance Claims and Claim Expenses

3 unchanged sentences

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.

As of September 30, 2024, we held gross reserves for insurance claims and claim expenses of $ 135.5 million.

During the nine months ended September 30, 2024, we paid 168 claims totaling $ 5.7 million, including 162 claims covered under the QSR Transactions representing $ 1.3 million of ceded claims and claim expenses.

We had 5,712 loans in default in our primary insured portfolio as of September 30, 2024, which represented a 0.87 % default rate against 654,374 total policies in-force and 5,099 loans in default in our primary portfolio as of December 31, 2023, which represented a 0.81 % default rate against 629,690 total policies in-force.

As of March 31, 2025, we held gross reserves for insurance claims and claim expenses of $ 151.8 million.

During the three months ended March 31, 2025, we paid 95 claims totaling $ 5.2 million, including 93 claims covered under the QSR Transactions representing $ 1.1 million of ceded claims and claim expenses.

We had 6,859 loans in default in our primary insured portfolio as of March 31, 2025, which represented a 1.04 % default rate against 661,490 total policies in-force, and 6,642 loans in default in our primary portfolio as of December 31, 2024, which represented a 1.01 % default rate against 659,567 total policies in-force.

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.

3 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

For the nine months ended September 30,

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

For the three months ended March 31,

(In Thousands)

14 unchanged sentences

Prior years (3)

Reinsurance terminations (4)

Total claims and claim expenses paid 3,821 852

7 unchanged sentences

For example, if a loan defaulted in a prior year and subsequently cured and later re-defaulted in the current year, the default would be included in the current year.

Amounts are presented net of reinsurance and included $ 63.2 million attributed to net case reserves and $ 7.0 million attributed to net IBNR reserves for the nine months ended September 30, 2024 and $ 54.4 million attributed to net case reserves and $ 5.8 million attributed to net IBNR reserves for the nine months ended September 30, 2023.

Amounts are presented net of reinsurance and included $ 25.9 million attributed to net case reserves and $ 8.1 million attributed to net IBNR reserves for the three months ended March 31, 2025 and $ 25.9 million attributed to net case reserves and $ 6.6 million attributed to net IBNR reserves for the three months ended March 31, 2024.

(3) Related to insured loans with defaults occurring in prior years, which have been continuously in default before the start of the current year.

Amounts are presented net of reinsurance and included $ 49.8 million attributed to net case reserves and $ 6.3 million attributed to net IBNR reserves for the nine months ended September 30, 2024 and $ 41.1 million attributed to net case reserves and $ 4.5 million attributed to net IBNR reserves for the nine months ended September 30, 2023.

Amounts are presented net of reinsurance and included $ 21.8 million attributed to net case reserves and $ 8.1 million attributed to net IBNR reserves for the three months ended March 31, 2025 and $ 22.4 million attributed to net case reserves and $ 6.3 million attributed to net IBNR reserves for the three months ended March 31, 2024.

(4) Represents the settlement of reinsurance recoverables in conjunction with the termination of one reinsurer under the 2016, 2018 and 2021 QSR Transactions by mutual agreement on a cut-off basis with no termination fee.

See Note 5 , “ Reinsurance” for additional information.

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 nine months ended September 30, 2024, compared to the same period in the prior year, 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, partially offset by a decrease in the average case reserve established against newly defaulted loans.

Our provision for claims and claim expenses during both the nine months ended September 30, 2024 and 2023 benefited from favorable development on prior year defaults.

We recognized $ 57.2 million and $ 46.6 million of favorable prior year development during the nine months ended September 30, 2024 and 2023, respectively, primarily due to cure activity and ongoing analysis of recent loss development trends.

The amount of claims incurred relating to current year defaults increased during the three months ended March 31, 2025, compared to the same period in the prior year, 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, partially offset by a decrease in the average case reserve established against newly defaulted loans.

Our provision for claims and claim expenses during both the three months ended March 31, 2025 and 2024 benefited from favorable development on prior year defaults.

We recognized $ 30.1 million and $ 29.3 million of favorable prior year development during the three months ended March 31, 2025 and 2024, respectively, primarily due to cure activity and ongoing analysis of recent loss development trends.

We may increase or decrease our claim estimates and reserves as we learn additional information about individual defaulted loans, and continue to observe and analyze loss development trends in our portfolio.

Gross reserves of $ 45.1 million related to prior year defaults remained as of September 30, 2024.

Gross reserves of $ 108.4 million related to prior year defaults remained as of March 31, 2025.

NMI HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Earnings per Share (EPS)

1 unchanged sentence

Diluted EPS is based on the weighted average number of shares of common stock outstanding and common stock equivalents that would be issuable upon the vesting of service-based and performance and service-based restricted stock units (RSUs), and the exercise of vested and unvested stock options.

NMI HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following table reconciles the net income and the weighted average shares of common stock outstanding used in the computations of basic and diluted EPS of common stock:

For the three months ended September 30, For the nine months ended September 30,

2024 2023 2024 2023

For the three months ended March 31,

(In Thousands, except for per share data)

8 unchanged sentences

$ 1.28 $ 1.08

Anti-dilutive shares — 1 7 2

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 our 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 condensed consolidated statements of operations and comprehensive income, and segment assets align with total assets as those presented on our condensed consolidated balance sheets.

The accounting policies governing our Mortgage Insurance segment are the same as those described in Item 8, “ Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements - Note 2 - Summary of Accounting Principles” of our 2024 10-K.

Investment income, also referred to as interest revenue, is reported within “ Net Investment Income ” on our condensed consolidated statements of operations and was $ 24.0 million and $ 19.7 million for the three months ended March 31, 2025 and 2024, respectively .

Amortization and depreciation expense for software, equipment, and leasehold improvements was $ 2.9 million and $ 3.0 million for the three months ended March 31, 2025 and 2024, respectively.

We are a U.S.

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federal and various state income tax returns, filed by NMIH on behalf of itself and its subsidiaries.

Our effective tax rate on pre-tax income was 22.2 % and 22.3 % for the three and nine months ended September 30, 2024, respectively, compared to 21.8 % and 22.4 % for the three and nine months ended September 30, 2023, respectively.

Our effective tax rate on pre-tax income was 21.9 % and 22.3 % for the three months ended March 31, 2025 and 2024, respectively.

Our provision for income taxes for interim reporting periods is established based on our estimated annual effective tax rate for a given year.

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Such items are treated on a discrete basis in the reporting period in which they occur.

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), and only 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.

As a result, our interim provision for income taxes for the three and nine months ended September 30, 2024 and 2023 primarily represents a change in our net deferred tax liability.

As of September 30, 2024 and December 31, 2023, we held $ 235.3 million of tax and loss bonds in “Prepaid Federal Income Taxes” on our condensed consolidated balance sheets.

Stockholders' Equity

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 initial $ 125 million share repurchase program through December 31, 2025 to align its remaining tenor with that of the $ 200 million 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 nine months ended September 30, 2024, we repurchased 2.1 million shares at an average price of $ 32.38 per share (excluding associated costs and applicable taxes).

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 September 30, 2024, we had $ 108.1 million of repurchase authority remaining under our program.

NMI HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

bonds in an amount equal to the tax benefit derived from the claimed deduction, which is our intent.

As a result, our interim provision for income taxes for the three months ended March 31, 2025 and 2024 primarily represents a change in our net deferred tax liability.

As of March 31, 2025 and December 31, 2024, we held $ 322.2 million of tax and loss bonds in “Prepaid Federal Income Taxes” on our condensed consolidated balance sheets.

Stockholders' Equity

On July 31, 2023, our Board of Directors authorized the $ 200 million 2023 Repurchase Program (excluding associated costs and applicable taxes) effective through December 31, 2025.

On February 5, 2025, our Board of Directors authorized the new $ 250 million 2025 Repurchase Program (excluding associated costs and applicable taxes) effective through December 31, 2027 and extended the 2023 Repurchase Program through December 31, 2027 to align its remaining tenor with that of the 2025 Repurchase Program.

During the three months ended March 31, 2025, we repurchased 0.7 million shares at an average price of $ 36.12 per share (excluding associated costs and applicable taxes).

As of March 31, 2025, we had $ 304.2 million of repurchase authority remaining.

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.

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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.

Premiums Receivable

Premiums Receivable, Net

Premiums receivable consists of premiums due on our mortgage insurance policies.

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Premiums receivable may be written off prior to 120 days in the ordinary course of business for non-credit events including, but not limited to, the modification or refinancing of an underlying insured loan.

We established a $ 2.0 million and $ 2.7 million reserve for premium write-offs at September 30, 2024 and December 31, 2023, respectively.

We established a $ 1.8 million and $ 2.2 million reserve for premium write-offs at March 31, 2025 and December 31, 2024, respectively.

We separately recognize an allowance for credit losses for premiums receivable based on credit losses expected to arise over the life of the receivable.

Due to the nature of our insurance policies (a necessary precondition for access to mortgage credit for covered borrowers) and the short duration of the related receivables, we do not typically experience credit losses against our premium receivables and the allowance for credit loss established on premium receivable was deemed immaterial at September 30, 2024 and December 31, 2023.

Regulatory Information

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The Wisconsin OCI recognizes only statutory accounting practices prescribed or permitted by the state of Wisconsin for determining and reporting the financial condition and results of operations of an insurance company and for determining its solvency under Wisconsin insurance laws.

NMIC and Re One generated combined statutory net income of $ 20.0 million and $ 90.7 million for the three and nine months ended September 30, 2024, respectively, compared to $ 30.1 million and $ 80.0 million for the three and nine months ended September 30, 2023, respectively.

NMIC and Re One generated combined statutory net income of $ 36.8 million and $ 34.7 million for the three months

NMI HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

ended March 31, 2025 and 2024, respectively.

The Wisconsin OCI has imposed a prescribed accounting practice for the treatment of statutory contingency reserves that differs from the treatment promulgated by the NAIC.

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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 CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following table presents NMIC's statutory surplus, contingency reserve, statutory capital and risk-to-capital (RTC) ratio as of September 30, 2024 and December 31, 2023.

September 30, 2024 December 31, 2023

The following table presents NMIC's statutory surplus, contingency reserve, statutory capital and risk-to-capital (RTC) ratio as of March 31, 2025 and December 31, 2024.

March 31, 2025 December 31, 2024

(In Thousands)

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

Re One had $ 2.1 million and $ 2.0 million of statutory capital at September 30, 2024 and December 31, 2023, respectively.

Re One had $ 2.1 million of statutory capital at March 31, 2025 and December 31, 2024.

NMIH is not subject to any limitations on its ability to pay dividends except those generally applicable to corporations that are incorporated in Delaware.

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NMIC and Re One are subject to certain rules and regulations prescribed by jurisdictions in which they are authorized to operate and the GSEs that may restrict their ability to pay dividends to NMIH.

NMIC has the capacity to pay $ 96.3 million of aggregate ordinary dividends to NMIH during the twelve-month period ending December 31, 2024, and on May 30, 2024, NMIC paid a $ 96.3 million ordinary course dividend to NMIH.

Subsequent Events

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.

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.

NMIC has the capacity to pay $ 98.4 million of aggregate ordinary dividends to NMIH during the twelve-month period ending December 31, 2025.

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-Q

Item 1. Financial Statements