Item 2. Management’s Discussion and Analysis
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following analysis should be read in conjunction with our unaudited condensed consolidated financial statements and the notes thereto included in this report and our audited financial statements, notes thereto and “Management's Discussion and Analysis of Financial Condition and Results of Operations” included in our 2025 10-K, as well as the “Glossary of Abbreviations and Acronyms” above, for a more complete understanding of our financial position and results of operations. In addition, investors should review the “Cautionary Note Regarding Forward-Looking Statements” above and the “Risk Factors” detailed in Part II, Item 1A of this report and in Part I, Item 1A of our 2025 10-K, as subsequently updated in other reports we file with the SEC, for a discussion of those risks and uncertainties that have the potential to affect our business, financial condition, results of operations, cash flows or prospects in a material and adverse manner. Our results of operations for interim periods are not necessarily indicative of results to be expected for a full fiscal year or for any other period.
Overview
We provide private MI through our primary insurance subsidiary, NMIC. NMIC is wholly-owned, domiciled in Wisconsin and principally regulated by the Wisconsin OCI. NMIC is approved as an MI provider by the GSEs and is licensed to write coverage in all 50 states and D.C. Our subsidiary, NMIS, provides outsourced loan review services to mortgage loan originators and our subsidiary, Re One, historically provided reinsurance coverage to NMIC in accordance with certain statutory risk retention requirements. Such requirements have been repealed and the reinsurance coverage provided by Re One to NMIC has been commuted. Re One remains a wholly-owned, licensed insurance subsidiary; however, it does not currently have active insurance exposures.
MI protects lenders and investors from default-related losses on a portion of the unpaid principal balance of a covered mortgage. MI plays a critical role in the U.S. housing market by mitigating mortgage credit risk and facilitating the secondary market sale of high-LTV ( i.e., above 80%) residential loans to the GSEs, who are otherwise restricted by their charters from purchasing or guaranteeing high-LTV mortgages that are not covered by certain credit protections. Such credit protection and secondary market sales allow lenders to increase their capacity for mortgage commitments and expand financing access to existing and prospective homeowners.
NMIH, a Delaware corporation, was incorporated in May 2011, and we began start-up operations in 2012 and wrote our first MI policy in 2013. Since formation, we have sought to establish customer relationships with a broad group of mortgage lenders and build a diversified, high-quality insured portfolio. As of March 31, 2026, we had issued master policies with 2,209 customers, including national and regional mortgage banks, money center banks, credit unions, community banks, builder-owned mortgage lenders, internet-sourced lenders and other non-bank lenders. As of March 31, 2026, we had $222.3 billion of primary IIF and $59.5 billion of primary RIF.
We believe that our success in acquiring a large and diverse group of lender customers and growing a portfolio of high-quality IIF traces to our founding principles, whereby we aim to help qualified individuals achieve their homeownership goals, ensure that we remain a strong and credible counter-party, deliver a high-quality customer service experience, establish a differentiated risk management approach that emphasizes the individual underwriting review or validation of the vast majority of the loans we insure, utilizing our proprietary Rate GPS ® pricing platform to dynamically evaluate risk and price our policies, and foster a culture of collaboration and excellence that helps us attract and retain experienced industry leaders.
Our strategy is to continue to build on our position in the private MI market, expand our customer base and grow our insured portfolio of high-quality residential loans by focusing on long-term customer relationships, disciplined and proactive risk selection and pricing, fair and transparent claim payment practices, responsive customer service, and financial strength and profitability.
Our common stock trades on the Nasdaq under the symbol “NMIH.” Our headquarters is located in Emeryville, California. As of March 31, 2026, we had 225 employees. Our corporate website is located at www.nationalmi.com . Our website and the information contained on or accessible through our website are not incorporated by reference into this report.
We discuss below our results of operations for the periods presented, as well as the conditions and trends that have impacted or are expected to impact our business, including new insurance writings, the composition of our insurance portfolio and other factors that we expect to impact our results.
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Conditions and Trends Affecting Our Business
Macroeconomic Developments
Macroeconomic factors, including persistent inflation, elevated interest rates, flagging consumer confidence and increasing jobless claims could have a pronounced impact on the housing market, the mortgage insurance industry and our business in future periods. A marked decline in housing demand, a significant and protracted decrease in house prices or a sustained increase in unemployment could reduce the pace of new business activity in the private mortgage insurance market and negatively impact our future NIW volume, or contribute to an increase in our future default and claim experience.
Key Factors Affecting Our Results
New Insurance Written, Insurance-In-Force and Risk-In-Force
NIW is the aggregate unpaid principal balance of mortgages underpinning new policies written during a given period. Our NIW is affected by the overall size of the mortgage origination market and the volume of high-LTV mortgage originations. Our NIW is also affected by the percentage of such high-LTV originations covered by private versus government MI or other alternative credit enhancement structures and our share of the private MI market. NIW, together with persistency, drives our IIF. IIF is the aggregate unpaid principal balance of the mortgages we insure, as reported to us by servicers at a given date, and represents the sum total of NIW from all prior periods less principal payments on insured mortgages and policy cancellations (including for prepayment, nonpayment of premiums, coverage rescission and claim payments). RIF is related to IIF and represents the aggregate amount of coverage we provide on all outstanding policies at a given date. RIF is calculated as the sum total of the coverage percentage of each individual policy in our portfolio applied to the unpaid principal balance of such insured mortgage. RIF is affected by IIF and the LTV profile of our insured mortgages, with lower LTV loans generally having a lower coverage percentage and higher LTV loans having a higher coverage percentage. Gross RIF represents RIF before consideration of reinsurance. Net RIF is gross RIF net of ceded reinsurance.
Net Premiums Written and Net Premiums Earned
We set our premium rates on individual policies based on the risk characteristics of the underlying mortgage loans and borrowers, and in accordance with our filed rates and applicable rating rules. We primarily price our policies through a proprietary risk-based pricing platform, which we refer to as Rate GPS ® . Rate GPS ® considers a broad range of individual and layered risk variables, including borrower credit, loan-level, product and lender attributes, as well as market and geographic factors, and provides us with the ability to set and charge premium rates commensurate with the underlying risk of each loan that we insure. We also offer a rate card pricing option to a limited number of lender customers when required for business process reasons. We believe that the utilization of Rate GPS ® provides us with a more granular and analytical approach to evaluating and pricing risk, and that this approach enhances our ability to continue building a high-quality mortgage insurance portfolio and delivering attractive risk-adjusted returns.
Premiums are generally fixed for the duration of our coverage of the underlying loans. Net premiums written are equal to gross premiums written minus ceded premiums written under our reinsurance arrangements, less premium refunds and premium write-offs. As a result, net premiums written are generally influenced by:
• NIW;
• premium rates and the mix of premium payment type, which are either single, monthly or annual premiums, as described below;
• cancellation rates of our insurance policies, which are impacted by payments or prepayments on mortgages, refinancings (which are affected by prevailing mortgage interest rates as compared to interest rates on loans underpinning our in force policies), levels of claim payments and home prices; and
• cession of premiums under third-party reinsurance arrangements.
Premiums are paid either by the borrower (BPMI) or the lender (LPMI) in a single payment at origination (single premium), on a monthly installment basis (monthly premium) or on an annual installment basis (annual premium). Our net premiums written will differ from our net premiums earned due to policy payment type. For single premiums, we receive a single premium payment at origination, which is earned over the estimated life of the policy. Substantially all of our single premium policies in force as of March 31, 2026 were non-refundable under most cancellation scenarios. If non-refundable single premium policies are canceled, we immediately recognize the remaining unearned premium balances as earned premium revenue. Monthly
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premiums are recognized in the month billed and when the coverage is effective. Annual premiums are earned on a straight-line basis over the year of coverage. Substantially all of our policies provide for either single or monthly premiums.
The percentage of IIF that remains on our books after any twelve-month period is defined as our persistency rate. Because our insurance premiums are earned over the life of a policy, higher persistency rates can have a significant impact on our net premiums earned and profitability. Generally, faster speeds of mortgage prepayment lead to lower persistency. Prepayment speeds and the relative mix of business between single and monthly premium policies also impact our profitability. Our premium rates include certain assumptions regarding repayment or prepayment speeds of the mortgages underlying our policies. Because premiums are paid at origination on single premium policies and our single premium policies are generally non-refundable on cancellation, assuming all other factors remain constant, if single premium loans are prepaid earlier than expected, our profitability on these loans is likely to increase and, if loans are repaid slower than expected, our profitability on these loans is likely to decrease. By contrast, if monthly premium loans are repaid earlier than anticipated, we do not earn any more premium with respect to those loans and, unless we replace the repaid monthly premium loan with a new loan at the same premium rate or higher, our revenue is likely to decline.
Effect of Reinsurance on Our Results
We utilize third-party reinsurance to actively manage our risk, ensure compliance with PMIERs, state regulatory and other applicable capital requirements, and support the growth of our business. We currently have both quota share and excess-of-loss reinsurance agreements in place, which impact our results of operations and regulatory capital and PMIERs asset positions. Under a quota share reinsurance agreement, the reinsurer receives a premium in exchange for covering an agreed-upon portion of incurred losses. Such a quota share arrangement reduces premiums written and earned and also reduces RIF, providing capital relief to the ceding insurance company and reducing incurred claims in accordance with the terms of the reinsurance agreement. In addition, reinsurers typically pay ceding commissions as part of quota share transactions, which offset the ceding company's acquisition and underwriting expenses. Certain quota share agreements include profit commissions that are earned based on loss performance and serve to reduce ceded premiums. Under an excess-of-loss agreement, the ceding insurer is typically responsible for losses up to an agreed-upon threshold and the reinsurer then provides coverage in excess of such threshold up to a maximum agreed-upon limit. We expect to continue to evaluate reinsurance opportunities in the normal course of business.
See Item 1, “ Financial Statements - Notes to Condensed Consolidated Financial Statements - Note 5, Reinsurance” for further discussion of these third-party reinsurance arrangements.
Portfolio Data
The following table presents NIW and primary IIF as of the dates and for the periods indicated. Unless otherwise noted, the tables below do not include the effects of our third-party reinsurance arrangements described above.
NIW and primary IIF
As of and for the three months ended
March 31, 2026 March 31, 2025
NIW
IIF
NIW
IIF
(In Millions)
Monthly $ 11,935 $ 206,025 $ 9,049 $ 193,856
Single 324 16,293 172 17,452
Total
$ 12,259 $ 222,318 $ 9,221 $ 211,308
NIW increased 33% during the three months ended March 31, 2026 compared to the three months ended March 31, 2025, primarily due to growth in our customer franchise and market presence tied to the increased penetration of existing customer accounts and new customer activations, as well as an increase in the size of the total mortgage insurance market.
Primary IIF increased 5% at March 31, 2026 compared to March 31, 2025, primarily due to the NIW generated between such measurement dates, partially offset by the run-off of in-force policies. Our persistency rate was 82.2% at March 31, 2026 compared to 84.3% at March 31, 2025.
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The following table presents net premiums written and earned for the periods indicated:
Net premiums written and earned
For the three months ended March 31,
2026 2025
(In Thousands)
Net premiums written $ 151,826 $ 143,386
Net premiums earned 154,806 149,366
Net premiums written increased 6% during the three months ended March 31, 2026 compared to the three months ended March 31, 2025. Net premiums earned increased 4% during the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The growth in net premiums written and earned was primarily driven by growth in our monthly IIF and direct monthly pay premium receipts, partially offset by the impact of ceded premiums written and earned under our third-party reinsurance transactions. The growth in net premiums earned was further impacted by a reduction in the contribution of earnings from single premium policies.
Portfolio Statistics
Unless otherwise noted, the portfolio statistics tables presented below do not include the effects of our third-party reinsurance arrangements described above. The table below highlights trends in our primary portfolio as of the dates and for the periods indicated.
Primary portfolio trends As of and for the three months ended
March 31, 2026 December 31, 2025 September 30, 2025 June 30, 2025 March 31, 2025
($ Values In Millions, except as noted below)
New insurance written $ 12,259 $ 14,203 $ 13,012 $ 12,464 $ 9,221
Percentage of monthly premium 97 % 97 % 98 % 98 % 98 %
Percentage of single premium 3 % 3 % 2 % 2 % 2 %
New risk written $ 3,124 $ 3,631 $ 3,399 $ 3,260 $ 2,428
Insurance-in-force (1)
$ 222,318 $ 221,448 $ 218,376 $ 214,653 $ 211,308
Percentage of monthly premium 93 % 93 % 92 % 92 % 92 %
Percentage of single premium 7 % 7 % 8 % 8 % 8 %
Risk-in-force (1)
$ 59,517 $ 59,313 $ 58,538 $ 57,496 $ 56,515
Policies in force (count) (1)
684,977 684,058 677,010 668,638 661,490
Average loan size ($ value in thousands) (1)
$ 325 $ 324 $ 323 $ 321 $ 319
Coverage percentage (2)
26.8 % 26.8 % 26.8 % 26.8 % 26.7 %
Loans in default (count) (1)
8,044 7,661 7,093 6,709 6,859
Default rate (1)
1.17 % 1.12 % 1.05 % 1.00 % 1.04 %
Risk-in-force on defaulted loans (1)
$ 701 $ 656 $ 600 $ 569 $ 567
Average net premium yield (3)
0.28 % 0.28 % 0.28 % 0.28 % 0.28 %
Earnings from cancellations $ 0.6 $ 0.8 $ 0.7 $ 0.7 $ 0.6
Annual persistency (4)
82.2 % 83.4 % 83.9 % 84.1 % 84.3 %
Quarterly run-off (5)
5.1 % 5.1 % 4.3 % 4.3 % 3.9 %
(1) Reported as of the end of the period.
(2) Calculated as end of period RIF divided by end of period IIF.
(3) Calculated as net premiums earned divided by average primary IIF for the period, annualized.
(4) Defined as the percentage of IIF that remains on our books after a given twelve-month period.
(5) Defined as the percentage of IIF that is no longer on our books after a given three-month period.
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The table below presents a summary of the change in total primary IIF for the dates and periods indicated.
Primary IIF As of and for the three months ended March 31,
2026 2025
(In Millions)
IIF, beginning of period $ 221,448 $ 210,183
NIW 12,259 9,221
Cancellations, principal repayments and other reductions (11,389) (8,096)
IIF, end of period $ 222,318 $ 211,308
We consider a “book” to be a collective pool of policies insured during a particular period, normally a calendar year. In general, the majority of underwriting profit, calculated as earned premium revenue minus claims and underwriting and operating expenses, generated by a particular book year emerges in the years immediately following origination. This pattern generally occurs because relatively few of the claims that a book will ultimately experience typically occur in the first few years following origination, when premium revenue is highest, while subsequent years are affected by declining premium revenues, as the number of insured loans decreases (primarily due to loan prepayments), and by increasing losses.
The table below presents a summary of our primary IIF and RIF by book year as of the dates indicated.
Primary IIF and RIF As of March 31,
2026 2025
IIF RIF IIF RIF
Book year
(In Millions)
2026 $ 12,189 $ 3,106 $ — $ —
2025 43,833 11,412 9,152 2,409
2024 35,260 9,394 42,379 11,242
2023 27,059 7,168 33,286 8,789
2022 40,061 10,834 46,203 12,356
2021 and before 63,916 17,603 80,288 21,719
Total $ 222,318 $ 59,517 $ 211,308 $ 56,515
We utilize certain risk principles that form the basis of how we underwrite and originate NIW. We have established prudential underwriting standards and loan-level eligibility matrices which prescribe the maximum LTV, minimum borrower FICO score, maximum borrower DTI ratio, maximum loan size, property type, loan type, loan term and occupancy status of loans that we will insure and memorialized these standards and eligibility matrices in our Underwriting Guideline Manual that is publicly available on our website. Our underwriting standards and eligibility criteria are designed to limit the layering of risk in a single insurance policy. “Layered risk” refers to the accumulation of borrower, loan and property risk. For example, we have higher credit score and lower maximum allowed LTV requirements for investor-owned properties, compared to owner-occupied properties. We monitor the concentrations of various risk attributes in our insurance portfolio, which may change over time, in part, as a result of regional conditions or public policy shifts.
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The tables below present our NIW by FICO, LTV and purchase/refinance mix for the periods indicated. We calculate the LTV of a loan as the percentage of the original loan amount to the original purchase value of the property securing the loan.
NIW by FICO
For the three months ended March 31,
2026 2025
(In Millions)
>= 760 $ 7,237 $ 4,971
740-759 2,161 1,753
720-739 1,452 1,177
700-719 719 665
680-699 379 413
<=679 311 242
Total $ 12,259 $ 9,221
Weighted average FICO 762 758
NIW by LTV
For the three months ended March 31,
2026 2025
(In Millions)
95.01% and above $ 1,506 $ 1,147
90.01% to 95.00% 4,982 4,274
85.01% to 90.00% 3,840 2,751
85.00% and below 1,931 1,049
Total $ 12,259 $ 9,221
Weighted average LTV 91.4 % 92.2 %
NIW by purchase/refinance mix
For the three months ended March 31,
2026 2025
(In Millions)
Purchase $ 9,367 $ 8,822
Refinance
2,892 399
Total $ 12,259 $ 9,221
The tables below present our total primary IIF and RIF by FICO and LTV, and total primary RIF by loan type as of the dates indicated.
Primary IIF by FICO As of March 31,
2026 2025
($ Values In Millions)
>= 760 $ 112,057 50 % $ 106,004 50 %
740-759 40,270 18 37,716 18
720-739 30,551 14 29,430 14
700-719 20,349 9 19,737 9
680-699 13,271 6 13,324 6
<=679 5,820 3 5,097 3
Total $ 222,318 100 % $ 211,308 100 %
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Primary RIF by FICO As of March 31,
2026 2025
($ Values In Millions)
>= 760 $ 29,675 50 % $ 28,117 50 %
740-759 10,854 18 10,132 18
720-739 8,293 14 7,966 14
700-719 5,590 9 5,384 10
680-699 3,628 6 3,610 6
<=679 1,477 3 1,306 2
Total $ 59,517 100 % $ 56,515 100 %
Primary IIF by LTV As of March 31,
2026 2025
($ Values In Millions)
95.01% and above $ 27,419 12 % $ 24,167 12 %
90.01% to 95.00% 109,554 49 104,312 49
85.01% to 90.00% 65,693 30 64,298 30
85.00% and below 19,652 9 18,531 9
Total $ 222,318 100 % $ 211,308 100 %
Primary RIF by LTV As of March 31,
2026 2025
($ Values In Millions)
95.01% and above $ 8,631 15 % $ 7,546 13 %
90.01% to 95.00% 32,314 54 30,804 55
85.01% to 90.00% 16,250 27 15,957 28
85.00% and below 2,322 4 2,208 4
Total $ 59,517 100 % $ 56,515 100 %
Primary RIF by Loan Type As of March 31,
2026 2025
Fixed 98 % 98 %
Adjustable rate mortgages:
Less than five years — —
Five years and longer 2 2
Total 100 % 100 %
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The table below presents selected primary portfolio statistics, by book year, as of March 31, 2026.
As of March 31, 2026
Book Year Original Insurance Written Remaining Insurance in Force % Remaining of Original Insurance Policies Ever in Force Number of Policies in Force Number of Loans in Default # of Claims Paid Incurred Loss Ratio (Inception to Date) (1)
Cumulative Default Rate (2)
Current Default Rate (3)
($ Values In Millions)
2017 and prior $ 58,804 $ 3,112 5 % 237,512 17,167 360 617 2.1 % 0.4 % 2.1 %
2018 27,295 1,823 7 % 104,043 10,044 374 214 2.5 % 0.6 % 3.7 %
2019 45,141 4,717 10 % 148,423 21,671 402 126 2.2 % 0.4 % 1.9 %
2020 62,702 15,320 24 % 186,174 56,248 559 81 1.4 % 0.3 % 1.0 %
2021 85,574 38,944 46 % 257,972 134,406 1,632 191 3.3 % 0.7 % 1.2 %
2022 58,734 40,061 68 % 163,281 120,023 2,292 316 17.0 % 1.6 % 1.9 %
2023 40,473 27,059 67 % 111,994 80,907 1,183 110 16.3 % 1.2 % 1.5 %
2024 46,044 35,260 77 % 120,747 98,403 962 23 15.4 % 0.8 % 1.0 %
2025 48,900 43,833 90 % 125,570 115,779 280 — 8.3 % 0.2 % 0.2 %
2026 12,259 12,189 99 % 30,457 30,329 — — — % — % — %
Total $ 485,926 $ 222,318 1,486,173 684,977 8,044 1,678
(1) Calculated as total claims incurred (paid and reserved) divided by cumulative premiums earned, net of reinsurance.
(2) Calculated as the sum of the number of claims paid ever to date and number of loans in default divided by policies ever in force.
(3) Calculated as the number of loans in default divided by number of policies in force.
Geographic Dispersion
The following table shows the distribution by state of our primary RIF as of the dates indicated. The distribution of our primary RIF as of March 31, 2026 is not necessarily representative of the geographic distribution we expect in the future.
Top 10 primary RIF by state As of March 31,
2026 2025
California 10.1 % 10.1 %
Texas 8.3 8.5
Florida 7.2 7.3
Georgia 4.0 4.1
Illinois 4.0 3.8
Virginia 3.7 3.7
Washington 3.6 3.9
Pennsylvania 3.6 3.4
Ohio 3.5 3.3
New York 3.3 3.2
Total 51.3 % 51.3 %
Insurance Claims and Claim Expenses
Insurance claims and claim expenses incurred represent estimated future payments on newly defaulted insured loans and any change in our claim estimates for previously existing defaults. Claims incurred are generally affected by a variety of factors, including the macroeconomic environment, national and regional unemployment trends, changes in housing values, borrower risk characteristics, LTV ratios and other loan level risk attributes, the size and type of loans insured, the percentage of coverage on insured loans, and the level of reinsurance coverage maintained against insured exposures.
Reserves for claims and claim expenses are established for mortgage loans that are in default. A loan is considered to be in default as of the payment date at which a borrower has missed the preceding two or more consecutive monthly payments. We establish reserves for loans that have been reported to us in default by servicers, referred to as case reserves, and additional loans
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that we estimate (based on actuarial review and other factors) to be in default that have not yet been reported to us by servicers, referred to as IBNR. We also establish reserves for claim expenses, which represent the estimated cost of the claim administration process, including legal and other fees and other general expenses of administering the claim settlement process. Reserves are not established for future claims on insured loans which are not currently reported or which we estimate are not currently in default.
Reserves are established by estimating the number of loans in default that will result in a claim payment, which is referred to as claim frequency, and the amount of the claim payment expected to be paid on each such loan in default, which is referred to as claim severity. Claim frequency and severity estimates are established based on historical observed experience regarding certain loan factors, such as age of the default, cure rates, size of the loan and estimated change in property value. Reserves are released the month in which a loan in default is brought current by the borrower, which is referred to as a cure. Adjustments to reserve estimates are reflected in the period in which the adjustment is made. Reserves are also ceded to reinsurers under the QSR Transactions, XOL Transactions and ILN Transactions as applicable under each treaty. We have not yet ceded reserves under any of the XOL Transactions or ILN Transactions as incurred claims and claim expenses on each respective reference pool remain within our retained coverage layer for each transaction.
Our reserve setting process considers the beneficial impact of forbearance, foreclosure moratorium and other assistance programs that may be made available to certain defaulted borrowers. The effectiveness of forbearance and other such assistance programs can be further enhanced by the availability of various repayment and loan modification options which typically allow borrowers to amortize or, in certain instances, outright defer payments otherwise missed during a period of dislocation over an extended length of time. We generally observe that forbearance, repayment and modification, and other assistance programs are an effective tool to bridge dislocated borrowers from a time of acute stress to a future date when they can resume timely payment of their mortgage obligations, and note higher cure rates on defaults benefitting from broad-based assistance programs than would otherwise be expected on similarly situated loans that did not benefit from such programs.
The actual claims we incur as our portfolio matures are difficult to predict and depend on the specific characteristics of our current in-force book (including the credit score and DTI ratio of the borrower, the LTV ratio of the mortgage and geographic concentrations, among others), as well as the risk profile of new business we write in the future. In addition, claims experience will be affected by macroeconomic factors such as housing prices, interest rates, unemployment rates and other events, such as natural disasters or global pandemics, and any federal, state or local governmental response thereto.
Macroeconomic factors, including persistent inflation, elevated interest rates, flagging consumer confidence and increasing jobless claims could have a pronounced impact on the housing market, the mortgage insurance industry and our business in future periods. A marked decline in housing demand, a significant and protracted decrease in house prices, or a sustained increase in unemployment could contribute to an increase in our future default and claims experience.
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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,
2026 2025
(In Thousands)
Beginning balance $ 196,429 $ 152,071
Less reinsurance recoverables (1)
(38,577) (32,260)
Beginning balance, net of reinsurance recoverables 157,852 119,811
Add claims incurred:
Claims and claim expenses incurred:
Current year (2)
47,150 34,559
Prior years (3)
(26,489) (30,081)
Total claims and claim expenses incurred 20,661 4,478
Less claims paid:
Claims and claim expenses paid:
Current year (2)
— —
Prior years (3)
8,682 4,076
Reinsurance terminations (4)
(1,670) (255)
Total claims and claim expenses paid 7,012 3,821
Reserve at end of period, net of reinsurance recoverables 171,501 120,468
Add reinsurance recoverables (1)
39,703 31,379
Ending balance $ 211,204 $ 151,847
(1) Related to ceded losses recoverable under the QSR Transactions. See Item 1, “ Financial Statements - Notes to Condensed Consolidated Financial Statements - Note 5, Reinsurance” for additional information.
(2) Related to insured loans with their most recent defaults occurring in the current year. 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 $34.8 million attributed to net case reserves and $11.7 million attributed to net IBNR reserves for the three months ended March 31, 2026 and $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.
(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 $15.2 million attributed to net case reserves and $10.8 million attributed to net IBNR reserves for the three months ended March 31, 2026 and $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.
(4) Represents the settlement of reinsurance recoverables in conjunction with the termination or amendment of certain QSR Transactions.
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. 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 $153.0 million related to prior year defaults remained as of March 31, 2026.
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The following table provides a reconciliation of the beginning and ending count of loans in default:
For the three months ended March 31,
2026 2025
Beginning default inventory 7,661 6,642
Plus: new defaults 2,717 2,421
Less: cures (2,160) (2,094)
Less: claims paid (170) (95)
Less: rescission and claims denied (4) (15)
Ending default inventory 8,044 6,859
Ending default inventory increased from March 31, 2025 to March 31, 2026, primarily due to the growth and seasoning of our insured portfolio, partially offset by cure activity within our default population during the intervening period.
The following table provides details of our claims paid, before giving effect to claims ceded under the QSR Transactions for the periods indicated:
For the three months ended March 31,
2026 2025
($ Values In Thousands)
Number of claims paid (1)
170 95
Total amount paid for claims $ 10,776 $ 5,225
Average amount paid per claim
$ 63 $ 55
Severity (2)
88 % 69 %
(1) Count includes 12 and 20 claims settled without payment during the three months ended March 31, 2026 and 2025, respectively.
(2) Severity represents the total amount of claims paid including claim expenses divided by the related RIF on the loan at the time the claim is perfected, and is calculated including claims settled without payment.
We paid 170 and 95 claims during the three months ended March 31, 2026 and 2025, respectively. The number of claims paid in each period was modest relative to the size of our insured portfolio and we generally observe that the borrowers of the loans we insure are well-situated with strong credit profiles, stable 30-year fixed rate mortgages, manageable debt service obligations and significant appreciated equity in their homes. An increase in the value of the homes collateralizing the mortgages we insure provides defaulted borrowers with alternative paths and incentives to cure their loan prior to the development of a claim.
Our claims severity was 88% and 69% for the three months ended March 31, 2026 and 2025, respectively. The increase in claims severity for the three months ended March 31, 2026, was primarily due to an increase in the proportion of claims related to loans originated in more recent years. These loans generally have less accumulated equity than loans from earlier vintages, which typically results in a higher frequency and severity of claims payments. An increase in the value of the homes collateralizing the mortgages we insure provides additional equity support to our risk exposure and raises the prospect of a third-party sale of a foreclosed property, which can mitigate the severity of our settled claims.
The number of claims paid and our severity experience in future periods may be impacted if developing economic cycles impose financial strain on borrowers, and each could increase if house price declines serve to limit the alternative paths and incentives to cure delinquencies that are available to defaulted borrowers or erode the equity value of the homes collateralizing the mortgages we insure.
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The following table provides detail on our average reserve per default, before giving effect to reserves ceded under the QSR Transactions, as of the dates indicated:
Average reserve per default: As of March 31,
2026 2025
(In Thousands)
Case (1)
$ 24.1 $ 20.3
IBNR (1)(2)
2.2 1.8
Total $ 26.3 $ 22.1
(1) Defined as the gross reserve per insured loan in default.
(2) Amount includes claims adjustment expenses.
Average reserve per default increased from March 31, 2025 to March 31, 2026, primarily due to changes in the composition of our default inventory as measured by the size, vintage and current estimated LTV of defaulted loans between the measurement dates. Average reserves per default were further impacted by changes in observed and forecasted housing market conditions and macroeconomic factors between the measurement dates.
GSE Oversight
As an approved insurer , NMIC is subject to ongoing compliance with the PMIERs established by each of the GSEs ( italicized terms have the same meaning that such terms have in the PMIERs, as described below). The PMIERs establish operational, business, remedial and financial requirements applicable to approved insurers . The PMIERs financial requirements prescribe a risk-based methodology whereby the amount of assets required to be held against each insured loan is determined based on certain loan-level risk characteristics, such as FICO, vintage (year of origination), performing vs. non-performing ( i.e., current vs. delinquent), LTV ratio and other risk features. In general, higher quality loans carry lower asset charges.
Under the PMIERs, approved insurers must maintain available assets that equal or exceed minimum required assets , which is an amount equal to the greater of (i) $400 million or (ii) a total risk-based required asset amount.
Available assets reflect the financial resources of a mortgage insurer available to pay claims, and includes the most readily liquid assets held, such as cash, investments and other items as stipulated in the PMIERs. The credit provided for such assets is subject to adjustment based on several factors, including asset class, credit rating and portfolio concentration.
The risk-based required asset amount is a function of the risk profile of an approved insurer's RIF, assessed on a loan-by-loan basis and considered against certain risk-based factors derived from tables set out in the PMIERs, which is then adjusted on an aggregate basis for reinsurance transactions approved by the GSEs, such as with respect to our QSR Transactions, XOL Transactions and ILN Transactions. The aggregate gross risk-based required asset amount for performing, primary insurance is subject to a floor of 5.6% of performing primary adjusted RIF .
By April 15th of each year, NMIC must certify it met all PMIERs requirements as of December 31st of the prior year. We certified to the GSEs by April 15, 2026 that NMIC was in full compliance with the PMIERs as of December 31, 2025. NMIC also has an ongoing obligation to immediately notify the GSEs in writing upon discovery of a failure to meet one or more of the PMIERs requirements. We continuously monitor NMIC's compliance with the PMIERs.
The following table provides a comparison of the PMIERs available assets and net risk-based required asset amount as reported by NMIC as of the dates indicated:
As of March 31,
2026 2025
(In Thousands)
Available assets $ 3,630,735 $ 3,230,653
Net risk-based required assets
2,165,418 1,867,414
Available assets were $3.6 billion at March 31, 2026, compared to $3.2 billion at March 31, 2025. The $400 million increase in available assets between the dates presented was primarily driven by NMIC's positive cash flow from operations during the intervening period, partially offset by the payment of an ordinary course dividend from NMIC to NMIH in June 2025.
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Net risk-based required assets were $2.2 billion at March 31, 2026, compared to $1.9 billion at March 31, 2025. The $298 million increase in the net risk-based required asset amount between the dates presented was primarily due to the growth in our gross RIF and aggregate gross risk-based required asset amount, and was further impacted by the increase in our default inventory and defaulted RIF.
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Consolidated Results of Operations
Consolidated statements of operations For the three months ended March 31, $ Change
% Change
2026 2025 2026 vs. 2025
Revenues ($ In Thousands, except for per share data)
Net premiums earned $ 154,806 $ 149,366 $ 5,440 4 %
Net investment income 28,604 23,686 4,918 21
Net realized investment (losses) gains
(147) 24 (171) (713)
Other revenues 212 170 42 25
Total revenues 183,475 173,246 10,229 6
Expenses
Insurance claims and claim expenses 20,661 4,478 16,183 361
Underwriting and operating expenses 30,623 30,175 448 1
Service expenses 139 116 23 20
Interest expense 7,109 7,106 3 —
Total expenses 58,532 41,875 16,657 40
Income before income taxes 124,943 131,371 (6,428) (5)
Income tax expense 25,613 28,812 (3,199) (11)
Net income $ 99,330 $ 102,559 $ (3,229) (3) %
Earnings per share - Basic $ 1.30 $ 1.31 $ (0.01) (1) %
Earnings per share - Diluted $ 1.28 $ 1.28 $ — — %
Loss ratio (1)
13.3 % 3.0 %
Expense ratio (2)
19.8 % 20.2 %
Combined ratio
33.1 % 23.2 %
For the three months ended March 31, $ Change
% Change
Non-GAAP financial measures (3)
2026 2025 2026 vs. 2025
($ In Thousands, except for per share data)
Adjusted income before tax $ 125,090 $ 131,347 $ (6,257) (5) %
Adjusted net income 99,446 102,540 (3,094) (3)
Adjusted diluted EPS 1.28 1.28 — —
(1) Loss ratio is calculated by dividing insurance claims and claim expenses by net premiums earned.
(2) Expense ratio is calculated by dividing underwriting and operating expenses by net premiums earned.
(3) See “ Explanation and Reconciliation of Our Use of Non-GAAP Financial Measures,” below.
Revenues
Net premiums earned increased during the three months ended March 31, 2026 compared to the three months ended March 31, 2025 primarily due to growth in our monthly IIF and direct monthly pay premium receipts, partially offset by the impact of ceded premiums under our third-party reinsurance transactions and a reduction in the contribution of earnings from single premium policies.
Net investment income increased during the three months ended March 31, 2026 compared to the three months ended March 31, 2025 primarily due to growth in the size of our total invested asset base, as well as an increase in the book yield of our investment portfolio tied to the deployment of new cash flows and reinvestment of rolling maturities at incrementally higher rates.
Other revenues represent underwriting fee revenue generated by our subsidiary, NMIS, which provides outsourced loan
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review services to mortgage loan originators. Changes in other revenues primarily reflect changes in NMIS' outsourced loan review volume. Amounts recognized in other revenues generally correspond with amounts incurred as service expenses for outsourced loan review activities in the same periods.
Expenses
We recognize insurance claims and claim expenses in connection with the loss experience of our insured portfolio and incur other underwriting and operating expenses, including employee compensation and benefits, policy acquisition costs, and technology, professional services and facilities expenses, in connection with the development and operation of our business. We also incur service expenses in connection with NMIS' outsourced loan review activities.
Insurance claims and claim expenses increased during the three months ended March 31, 2026 compared to the three months ended March 31, 2025 primarily due to an increase in the number of newly defaulted loans that emerged during the period and the establishment of initial reserves against such loans, as well as an increase in the average case reserves held against previously defaulted loans that aged in their delinquency status, partially offset by the release of a portion of the reserves we established for anticipated claims payments in prior periods in connection with cure activity and the ongoing analysis of recent loss development trends.
Underwriting and operating expenses increased during the three months ended March 31, 2026 compared to the three months ended March 31, 2025 primarily due to an increase in certain technology expenses and employee compensation costs, partially offset by an increase in ceding commissions received under our QSR Transactions and a decline in depreciation and amortization expenses.
Service expenses represent third-party costs incurred by NMIS in connection with the services it provides. Changes in service expenses primarily reflect changes in NMIS' outsourced loan review volume. Amounts incurred as service expenses generally correspond with amounts recognized in other revenues in the same periods.
Interest expense primarily reflects the carrying costs of our outstanding debt. For further information, see Item 1, “ Financial Statements - Notes to Condensed Consolidated Financial Statements - Note 4, Debt.”
Income tax expense decreased during the three months ended March 31, 2026 compared to the three months ended March 31, 2025 primarily due to a decline in our pre-tax income and a decrease in our effective tax rate. Our effective tax rate on pre-tax income was 20.5% for the three months ended March 31, 2026, compared to 21.9% for the three months ended March 31, 2025. As a U.S. taxpayer, we are subject to a statutory U.S. federal corporate income tax rate of 21%. Our provision for income taxes for interim periods is established based on our estimated annual effective tax rate for a given year and reflects the impact of discrete tax effects in the period in which they occur. Our effective tax rate for the three months ended March 31, 2026 and 2025 reflects the discrete tax effects of the vesting of RSUs, and our effective tax for the three months ended March 31, 2026 further reflects the exercise of options. See Item 1, “ Financial Statements - Notes to Condensed Consolidated Financial Statements - Note 9, Income Taxes.”
Net Income
Net income and adjusted net income decreased during the three months ended March 31, 2026 compared to the three months ended March 31, 2025 primarily due to an increase in our insurance claims and claim expenses, partially offset by growth in our total revenues. Diluted and adjusted diluted EPS were unchanged for the three months ended March 31, 2026 compared to the three months ended March 31, 2025, with the decrease in net income and adjusted net income offset by a decline in the number of weighted average diluted shares outstanding tied to share repurchase activity.
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The non-GAAP financial measures of adjusted income before tax, adjusted net income and adjusted diluted EPS are presented to enhance the comparability of financial results between periods.
Non-GAAP Financial Measure Reconciliations For the three months ended March 31, $ Change
% Change
2026 2025 2026 vs. 2025
As reported ($ In Thousands, except for per share data)
Income before income taxes $ 124,943 $ 131,371 $ (6,428) (5) %
Income tax expense 25,613 28,812 (3,199) (11)
Net income $ 99,330 $ 102,559 $ (3,229) (3) %
Adjustments
Net realized investment losses (gains)
147 (24) 171 (713) %
Adjusted income before tax $ 125,090 $ 131,347 $ (6,257) (5) %
Income tax expense (benefit) on adjustments (1)
31 (5) 36 (720) %
Adjusted net income $ 99,446 $ 102,540 $ (3,094) (3) %
Weighted average diluted shares outstanding 77,435 79,858 (2,423) (3) %
Adjusted diluted EPS $ 1.28 $ 1.28 $ — — %
(1) Marginal tax impact of non-GAAP adjustments is calculated based on our statutory U.S. federal corporate income tax rate of 21%, except for those items that are not eligible for an income tax deduction.
Explanation and Reconciliation of Our Use of Non-GAAP Financial Measures
We believe the use of the non-GAAP measures of adjusted income before tax, adjusted net income and adjusted diluted EPS enhance the comparability of our fundamental financial performance between periods, and provide relevant information to investors. These non-GAAP financial measures align with the way the company's business performance is evaluated by management. These measures are not prepared in accordance with GAAP and should not be viewed as alternatives to GAAP measures of performance. These measures have been presented to increase transparency and enhance the comparability of our fundamental operating trends across periods. Other companies may calculate these measures differently; their measures may not be comparable to those we calculate and present.
Adjusted income before tax is defined as GAAP income before tax, excluding the pre-tax effects of net realized gains or losses from our investment portfolio, periodic costs incurred in connection with capital markets transactions, and other infrequent, unusual or non-operating items in the periods in which such items are incurred.
Adjusted net income is defined as GAAP net income, excluding the after-tax effects of net realized gains or losses from our investment portfolio, periodic costs incurred in connection with capital markets transactions, and other infrequent, unusual or non-operating items in the periods in which such items are incurred. Adjustments to components of pre-tax income are tax effected using the applicable federal statutory tax rate for the respective periods.
Adjusted diluted EPS is defined as adjusted net income divided by adjusted weighted average diluted shares outstanding. Adjusted weighted average diluted shares outstanding is defined as weighted average diluted shares outstanding, adjusted for changes in the dilutive effect of non-vested shares that would otherwise have occurred had GAAP net income been calculated in accordance with adjusted net income. There will be no adjustment to weighted average diluted shares outstanding in the years that non-vested shares are anti-dilutive under GAAP.
Although adjusted income before tax, adjusted net income and adjusted diluted EPS exclude certain items that have occurred in the past and are expected to occur in the future, the excluded items: (1) are not viewed as part of the operating performance of our primary activities; or (2) are impacted by market, economic or regulatory factors and are not necessarily indicative of operating trends, or both. These adjustments, and the reasons for their treatment, are described below.
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• Net realized investment gains and losses . The recognition of net realized investment gains or losses can vary significantly across periods as the timing is highly discretionary and is influenced by factors such as market opportunities, tax and capital profile, and overall market cycles that do not reflect our current period operating results.
• Capital markets transaction costs . Capital markets transaction costs result from activities that are undertaken to improve our debt profile or enhance our capital position through activities such as debt refinancing and capital markets reinsurance transactions that may vary in their size and timing due to factors such as market opportunities, tax and capital profile, and overall market cycles.
• Other infrequent, unusual or non-operating items . Items that are the result of unforeseen or uncommon events, and are not expected to recur with frequency in the future. Identification and exclusion of these items provides clarity about the impact special or rare occurrences may have on our current financial performance. Past adjustments under this category include infrequent, unusual or non-operating adjustments related to severance, restricted stock modification and other expenses incurred in connection with the CEO transition announced in 2021, effects of the release of the valuation allowance recorded against our net federal and certain state net deferred tax assets in 2016 and the re-measurement of our net deferred tax assets in connection with tax reform in 2017. We believe such items are infrequent or non-recurring in nature, and are not indicative of the performance of, or ongoing trends in, our primary operating activities or business.
Consolidated balance sheets March 31, 2026 December 31, 2025 $ Change
% Change
(In Thousands)
Total investment portfolio $ 3,174,107 $ 3,137,023 $ 37,084 1 %
Cash and cash equivalents 70,679 43,937 26,742 61
Premiums receivable, net 86,861 86,259 602 1
Deferred policy acquisition costs, net 64,330 64,372 (42) —
Software and equipment, net 20,887 21,727 (840) (4)
Reinsurance recoverable 39,703 38,577 1,126 3
Prepaid federal income taxes 400,258 400,258 — —
Other assets 52,813 48,945 3,868 8
Total assets $ 3,909,638 $ 3,841,098 $ 68,540 2 %
Debt $ 417,522 $ 417,031 $ 491 — %
Unearned premiums 43,680 46,660 (2,980) (6)
Accounts payable and accrued expenses 104,835 101,595 3,240 3
Reserve for insurance claims and claim expenses 211,204 196,429 14,775 8
Deferred tax liability, net 491,879 478,890 12,989 3
Other liabilities 8,086 8,507 (421) (5)
Total liabilities 1,277,206 1,249,112 28,094 2
Total shareholders' equity 2,632,432 2,591,986 40,446 2
Total liabilities and shareholders' equity $ 3,909,638 $ 3,841,098 $ 68,540 2 %
Total cash and investments increased at March 31, 2026 compared to December 31, 2025 with the addition of incremental cash provided by operating activities, partially offset by share repurchase activity during the three months ended March 31, 2026 and an increase in the unrealized loss position of our fixed income portfolio primarily tied to changes in interest rates during the period. Cash and investments at March 31, 2026 included $73.0 million held by NMIH.
Net premiums receivable represents premiums due on our mortgage insurance policies and may fluctuate based on changes in our monthly premium policies in force, where premiums are generally paid one month in arrears, and the pace of settlement of previously outstanding receivables.
Net deferred policy acquisition costs decreased at March 31, 2026 compared to December 31, 2025 primarily due to the recognition of previously deferred policy acquisition costs during the three months ended March 31, 2026, largely offset by the deferral of certain costs associated with the origination of new policies during the period.
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Net software and equipment decreased at March 31, 2026 compared to December 31, 2025 due to the amortization of previously capitalized amounts during the three months ended March 31, 2026, partially offset by the capitalization of certain software and equipment expenditures during the period.
Reinsurance recoverable increased at March 31, 2026 compared to December 31, 2025 due to an increase in ceded losses recoverable under our QSR Transactions tied to an increase in our gross reserve for insurance claims and claim expenses during the three months ended March 31, 2026.
Prepaid federal income taxes represent tax and loss bonds purchased in connection with our claimed tax deduction for our statutory contingency reserve position. See Item 1, “ Financial Statements - Notes to Condensed Consolidated Financial Statements - Note 9, Income Taxes.”
Other assets increased at March 31, 2026 compared to December 31, 2025 primarily due to an increase in accrued investment income and prepaid expenses during the three months ended March 31, 2026.
Unearned premiums decreased at March 31, 2026 compared to December 31, 2025 due to the amortization of existing unearned premiums through earnings in accordance with the expiration of risk on related single premium policies and the cancellations of other single premium policies during the three months ended March 31, 2026, partially offset by single premium policy originations during the period.
Accounts payable and accrued expenses increased at March 31, 2026 compared to December 31, 2025 primarily due to an increase in unsettled trade payables related to the purchase of certain investment securities, as well as an increase in taxes payable during the three months ended March 31, 2026, partially offset by the settlement of previously accrued compensation expenses and accrued interest on the 2024 Notes, which is payable semi-annually in February and August, during the period.
Reserve for insurance claims and claim expenses increased at March 31, 2026 compared to December 31, 2025 with the establishment of initial reserves on newly defaulted loans and an increase in the average case reserves held against previously defaulted loans that aged in their delinquency status during the three months ended March 31, 2026. The increase was partially offset by the release of a portion of the reserves we established for anticipated claims payments in prior periods (in connection with cure activity and ongoing analysis of recent loss development trends), as well as the payment of previously reserved claims during the period. See “ Insurance Claims and Claim Expenses ,” above for further details.
Net deferred tax liability increased at March 31, 2026 compared to December 31, 2025 due to an increase in the claimed deductibility of our statutory contingency reserve during the three months ended March 31, 2026, partially offset by an increase in the aggregate unrealized loss position of our fixed income portfolio recorded in other comprehensive income during the period. For further information regarding income taxes and their impact on our results of operations and financial position, see Item 1, “ Financial Statements - Notes to Condensed Consolidated Financial Statements - Note 9, Income Taxes .”
The following table summarizes our consolidated cash flows from operating, investing and financing activities:
Consolidated cash flows For the three months ended March 31, $ Change
2026 2025 2026 vs. 2025
Net cash provided by (used in): (In Thousands)
Operating activities $ 116,091 $ 101,151 $ 14,940
Investing activities (47,908) (47,657) (251)
Financing activities (41,441) (33,593) (7,848)
Net increase in cash and cash equivalents
$ 26,742 $ 19,901 $ 6,841
Net cash provided by operating activities increased during the three months ended March 31, 2026 compared to the three months ended March 31, 2025 primarily due to increases in our net premium receipts, growth in our investment income and a decrease in interest payments on the 2024 Notes tied to the timing of the first semi-annual interest payment made in February 2025, partially offset by an increase in claim settlement costs.
Cash used in investing activities for the three months ended March 31, 2026 and 2025 reflects the purchase of fixed and short-term maturities with cash provided by operating activities, and the reinvestment of sales proceeds, maturities, redemptions, and coupon payments within our investment portfolio.
Cash used in financing activities primarily relates to the repurchase of common stock and taxes paid on the net share settlement of equity awards for certain employees.
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Liquidity and Capital Resources
NMIH serves as the holding company for our insurance subsidiaries and does not have any significant operations of its own. NMIH's principal liquidity demands include funds for (i) payment of certain corporate expenses; (ii) payment of certain reimbursable expenses of its insurance subsidiaries; (iii) payment of the interest related to the 2024 Notes and 2024 Revolving Credit Facility; (iv) tax payments to the Internal Revenue Service; (v) capital support for its subsidiaries; (vi) repurchase of its common stock; and (vii) payment of dividends, if any, on its common stock. NMIH is not subject to any limitations on its ability to pay dividends except those generally applicable to corporations that are incorporated in Delaware. Delaware law provides that dividends are only payable out of a corporation's surplus or recent net profits (subject to certain limitations).
As of March 31, 2026, NMIH had $73.0 million of cash, cash equivalents and investments. NMIH ’ s principal sources of net cash are dividends from its subsidiaries and investment income. NMIC has the capacity to pay $101 million of aggregate ordinary dividends to NMIH during the twelve-month period ending December 31, 2026. NMIH also has access to $250 million of undrawn revolving credit capacity under the 2024 Revolving Credit Facility.
On February 5, 2025, our Board of Directors authorized a $250 million repurchase program, effective through December 31, 2027. The authorization provides NMIH with 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.
During the three months ended March 31, 2026, NMIH repurchased 0.7 million shares of common stock at a total cost of $27.7 million, excluding associated costs and applicable taxes. As of March 31, 2026, NMIH had $198.2 million of repurchase authority remaining.
NMIH has entered into tax and expense-sharing agreements with its subsidiaries which have been approved by the Wisconsin OCI, with such approvals subject to change or revocation at any time. Among such agreements, the Wisconsin OCI has approved the allocation of interest expense on the 2024 Notes and 2024 Revolving Credit Facility to NMIC, to the extent proceeds from such offering and facility are contributed to NMIC or used to repay, redeem or otherwise defease amounts raised by NMIC under prior credit arrangements that have previously been distributed to NMIC.
The 2024 Notes mature on August 15, 2029 and bear interest at a rate of 6.00%, payable semi-annually on February 15 and August 15. The 2024 Revolving Credit Facility matures on May 21, 2029, and accrues 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 SOFR 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. Borrowings under the 2024 Revolving Credit Facility may be used for general corporate purposes, including to support the growth of our new business production and operations.
Under the 2024 Revolving Credit Facility, NMIH is 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 March 31, 2026, the applicable commitment fee was 0.175%.
We are subject to certain covenants under the 2024 Revolving Credit Facility, 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 March 31, 2026.
NMIC and Re One are subject to certain capital and dividend rules and regulations prescribed by jurisdictions in which they are authorized to operate and by the GSEs. Under Wisconsin insurance laws, NMIC and Re One may pay dividends up to specified levels ( i.e., “ordinary” dividends) with 30 days' prior notice to the Wisconsin OCI. Dividends in larger amounts, or “extraordinary” dividends, are subject to the Wisconsin OCI's prior approval. Under Wisconsin insurance laws, an ordinary dividend is defined as any payment or distribution that, together with other dividends and distributions made within the preceding twelve months, is less than the lesser of (i) 10% of the insurer's statutory policyholders' surplus as of the preceding December 31 or (ii) adjusted statutory net income for the twelve-month period ending the preceding December 31 . NMIC has the capacity to pay $101 million of aggregate ordinary dividends to NMIH during the twelve-month period ending December 31, 2026.
As an approved insurer under PMIERs, NMIC would generally be subject to additional restrictions on its ability to pay dividends to NMIH if it failed to meet the financial requirements prescribed by PMIERs. Approved insurers that fail to meet the prescribed PMIERs financial requirements are not permitted to pay dividends without prior approval from the GSEs.
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NMIH may require liquidity to fund the capital needs of its insurance subsidiaries. NMIC’s capital needs depend on many factors including its ability to successfully write new business, establish premium rates at levels sufficient to cover claims and operating costs, access the reinsurance markets and meet minimum required asset thresholds under the PMIERs and minimum state capital requirements (respectively, as defined therein).
As an approved mortgage insurer and Wisconsin-domiciled carrier, NMIC is required to satisfy financial and/or capitalization requirements stipulated by each of the GSEs and the Wisconsin OCI. The financial requirements stipulated by the GSEs are outlined in the PMIERs. Under the PMIERs, NMIC must maintain available assets that are equal to or exceed a minimum risk-based required asset amount, subject to a minimum floor of $400 million.
Available assets reflect the financial resources of a mortgage insurer available to pay claims, and includes the most readily liquid assets held, such as cash, investments and other items as stipulated in the PMIERs. The credit provided for such assets is subject to adjustment based on several factors, including asset class, credit rating and portfolio concentration.
The risk-based required asset amount under PMIERs is determined at an individual policy-level based on the risk characteristics of each insured loan. Loans with higher risk factors, such as higher LTVs or lower borrower FICO scores, are assessed a higher charge. Non-performing loans that have missed two or more payments are generally assessed a significantly higher charge than performing loans, regardless of the underlying borrower or loan risk profile; however, special consideration is given under PMIERs to loans that are delinquent on homes located in an area declared by the Federal Emergency Management Agency to be a Major Disaster zone eligible for Individual Assistance.
NMIC’s PMIERs minimum risk-based required asset amount is also adjusted for its reinsurance transactions (as approved by the GSEs). Under NMIC’s quota share reinsurance treaties, it receives credit for the PMIERs risk-based required asset amount on ceded RIF. As its gross PMIERs risk-based required asset amount on ceded RIF increases, the PMIERs credit for ceded RIF automatically increases as well (in an unlimited amount). Under NMIC’s ILN and XOL Transactions, it generally receives credit for the PMIERs risk-based required asset amount on ceded RIF to the extent such requirement is within the subordinated coverage (excess of loss detachment threshold) afforded by the transaction.
NMIC is also subject to state regulatory minimum capital requirements based on its RIF. Formulations of this minimum capital vary by state, however, the most common measure allows for a maximum ratio of RIF to statutory capital (commonly referred to as RTC) of 25:1. The RTC calculation does not assess a different charge or impose a different threshold RTC limit based on the underlying risk characteristics of the insured portfolio. Non-performing loans are treated the same as performing loans under the RTC framework. As such, the PMIERs generally imposes a stricter financial requirement than the state RTC standard.
As of March 31, 2026, NMIC had a RTC ratio of 13.3:1 with $45.0 billion of primary RIF, net of reinsurance, and $3.4 billion of total statutory capital, including contingency reserves. Re One has no RIF remaining and no longer reports a RTC ratio.
NMIC’s principal sources of liquidity include (i) premium receipts on its insured portfolio and new business production, (ii) interest income on its investment portfolio and principal repayments on maturities therein, and (iii) existing cash and cash equivalent holdings. At March 31, 2026, NMIC had $3.2 billion of cash and investments, including $37.1 million of cash and cash equivalents. NMIC's principal liquidity demands include funds for the payment of (i) reimbursable holding company expenses, (ii) premiums ceded under our reinsurance transactions (iii) claims payments, and (iv) taxes as due or otherwise deferred through the purchase of tax and loss bonds. NMIC's cash inflow is generally significantly in excess of its cash outflow in any given period. During the twelve-month period ended March 31, 2026, NMIC generated $423 million of cash flow from operations and received an additional $577 million of cash flow on the sale, maturity and redemption of securities held in its investment portfolio. NMIC is not a party to any contracts (derivative or otherwise) that require it to post an increasing amount of collateral to any counterparty and NMIC’s principal liquidity demands (other than claims payments) generally develop along a scheduled path ( i.e. , are of a contractually predetermined amount and due at a contractually predetermined date). NMIC’s only use of cash with the potential to develop along an unscheduled path is claims payments. Given the relatively small size of our current population of defaulted policies, the generally extended duration of the default-to-foreclosure-to-claim cycle, and the potential availability of forbearance, foreclosure moratorium and other borrower assistance programs (which serve to further extend the default-to-foreclosure-to-claim cycle timeline), we do not expect NMIC to use a meaningful amount of cash to settle claims in the near-term.
We believe that we have sufficient liquidity available at both NMIH and NMIC to meet our operating cash and capital obligations over the next 12 months.
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Debt and Financial Strength Ratings
NMIC’s financial strength is rated “A” by Fitch Ratings (Fitch), “A3” by Moody’s, and “A-” by S&P. NMIH’s 2024 Notes are rated “BBB” by Fitch and “Baa3” by Moody’s. The outlook for all ratings provided by Moody’s is positive and the outlook for all ratings provided by Fitch and S&P is stable.
Consolidated Investment Portfolio
The primary objectives of our investment activity are to generate investment income and preserve capital, while maintaining sufficient liquidity to cover our operating needs. We aim to achieve diversification by type, quality, maturity, and industry. We have adopted an investment policy that defines, among other things, eligible and ineligible investments; concentration limits for asset types, industry sectors, single issuers, and certain credit ratings; and benchmarks for asset duration.
Our investment portfolio is comprised entirely of fixed maturity instruments. As of March 31, 2026, the fair value of our investment portfolio was $3.2 billion and we held an additional $70.7 million of cash and cash equivalents. Pre-tax book yield on the investment portfolio for the three months ended March 31, 2026 was 3.5%. Book yield is calculated as period-to-date net investment income divided by the average amortized cost of the investment portfolio. The yield on our investment portfolio is likely to change over time based on movements in interest rates, credit spreads, the duration or mix of our holdings and other factors.
The following tables present a breakdown of our investment portfolio and cash and cash equivalents by investment type and credit rating:
Percentage of portfolio's fair value March 31, 2026 December 31, 2025
Corporate debt securities 67 % 64 %
Municipal debt securities 18 19
U.S. treasury securities and obligations of U.S. government agencies
8 10
Cash, cash equivalents, and short-term investments 3 4
Other asset-backed securities
3 2
U.S. agency mortgage-backed securities
1 1
Total 100 % 100 %
Investment portfolio ratings at fair value (1)
March 31, 2026 December 31, 2025
AAA (2)
6 % 7 %
AA (3)
35 37
A (3)
52 48
BBB (3)
7 8
Total 100 % 100 %
(1) Excluding certain operating cash accounts.
(2) Includes short-term securities rated A-1+.
(3) Includes +/– ratings.
All of our investments are rated by one or more nationally recognized statistical rating organizations. If three or more ratings are available, we assign the middle rating for classification purposes, otherwise we assign the lowest rating.
Investment Securities - Allowance for credit losses
We did not recognize an allowance for credit loss for any security in the investment portfolio as of March 31, 2026 or December 31, 2025, and we did not record any provision for credit loss for investment securities during the three months ended March 31, 2026 or 2025.
As of March 31, 2026, the investment portfolio had gross unrealized losses of $97.1 million, of which $87.3 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, 2025, the investment portfolio had gross unrealized losses of $86.3 million, of which $84.3 million were associated with securities that had been in an unrealized loss position for a period of twelve months or longer.
We evaluated the securities in an unrealized loss position as of March 31, 2026, assessing their credit ratings as well as
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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, 2026 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, 2026 were primarily driven by fluctuations in interest rates, and to a lesser extent, movements in credit spreads following the purchase of those securities.
Critical Accounting 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. On an ongoing basis, we evaluate our estimates and assumptions. Our actual results may differ from these estimates under different assumptions or conditions.
We believe that the assumptions and estimates associated with revenue recognition and reserves for insurance claims and claim expenses have the greatest potential impact on our consolidated financial statements. Therefore, we consider these to be our critical accounting estimates. There have not been any material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates described in our 2025 10-K.
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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.