NMI Holdings, Inc. (NMIH) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call highlights strong financial performance with record high revenue and EPS growth, alongside a robust shareholder return plan through significant share buybacks. The Q&A section provides confidence in stable premium yields and effective capital management. Despite some uncertainties in guidance, the overall sentiment is positive, supported by high-quality portfolio growth and efficient operations. Given the company's market cap, the stock is likely to experience a positive movement in the 2% to 8% range over the next two weeks.
Key Financial Performance
Total NIW Volume $49 billion for the year, with $14.2 billion in the fourth quarter. This represents growth in insured portfolio and reflects strong new business production.
Primary Insurance-in-Force $221.4 billion at year-end, up 5.4% compared to the fourth quarter of 2024. Growth attributed to high-quality, high-performing policies.
Net Income $388.9 million for the year, up 8% compared to 2024. Quarterly net income was $94.2 million. Growth driven by strong financial performance and portfolio quality.
Diluted EPS $4.92 for the year, up 11% compared to 2024. Quarterly EPS was $1.20. Increase due to record profitability and efficient operations.
Return on Equity (ROE) 16.2% for the year, with 14.8% in the fourth quarter. Reflects strong earnings and efficient capital management.
Total Revenue $706.4 million for the year, up 9% compared to 2024. Quarterly revenue was $180.7 million, a record high. Growth driven by increased premiums and investment income.
Net Premiums Earned $152.5 million in the fourth quarter, up from $143.5 million in Q4 2024. Growth due to portfolio expansion and strong credit performance.
Investment Income $27.5 million in the fourth quarter, up from $22.7 million in Q4 2024. Increase attributed to higher returns on investments.
Book Value Per Share $33.98 at year-end, up 16% compared to Q4 2024. Growth driven by strong earnings and share repurchases.
Expense Ratio 20.4% in the fourth quarter, reflecting efficient cost management.
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Operating Highlights
New Insurance Written (NIW): Generated $49 billion of NIW volume in 2025, including $14.2 billion in Q4, ending the year with $221.4 billion of high-quality, high-performing primary insurance-in-force.
Policies Outstanding: Over 680,000 policies outstanding, helping a record number of borrowers gain access to housing.
Customer Development: Activated 90 new lenders in 2025, ending the year with over 1,700 active accounts.
Private Mortgage Insurance (MI) Market: Total MI industry NIW volume exceeded $300 billion in 2025, with expectations for continued strength in 2026.
Reinsurance Innovation: Secured new quota share and excess of loss treaties in Q4, extending credit risk management framework with favorable terms.
Expense Efficiency: Maintained an expense ratio of 20.4% in Q4, reflecting operational efficiency.
Capital Management: Repurchased $31 million of common stock in Q4, totaling $349 million since 2022, with $226 million remaining under authorization.
Policy Environment: Engaged in active and constructive discussions in Washington to support housing goals and promote the role of private MI industry.
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Risk or Challenges
Default Rate Increase: The default rate increased to 1.12% at year-end, up from the previous quarter, indicating potential credit risk in the insured portfolio.
Claims Expense Growth: Claims expense rose to $21.2 million in Q4 from $18.6 million in Q3, reflecting seasonal activity and portfolio growth, which could impact profitability.
Persistency Decline: 12-month persistency dropped to 83.4% in Q4 from 83.9% in Q3, which may affect long-term revenue stability.
Regulatory Environment: Ongoing discussions in Washington about housing policies could introduce regulatory uncertainties impacting the private mortgage insurance industry.
Economic Environment: Elevated interest rates and macroeconomic conditions could pose challenges to the housing market and new business opportunities.
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Guidance & Outlook
Focus on People and Culture: The company plans to continue investing in its workforce, emphasizing collaboration, performance, and impact to drive future success.
Customer Differentiation: National MI aims to stand out in the evolving mortgage market by focusing on customer service, value-added engagement, and technology leadership.
Portfolio Growth and Risk Management: The company will prioritize disciplined growth of its insured portfolio, focusing on high-quality, high-return business under a comprehensive credit risk management framework.
Shareholder Value: Plans to grow earnings, compound book value, deliver strong mid-teens returns, and prudently distribute excess capital.
Private MI Market Outlook: The private mortgage insurance market is expected to remain strong in 2026, supported by long-term secular trends and continued discipline across the industry.
Reinsurance Strategy: The company has secured new quota share and excess of loss reinsurance treaties, providing forward flow coverage for new business through 2028 at an estimated 4% pretax cost of capital.
Housing Market Resiliency: Encouraged by the broad resiliency in the macro environment and housing market, which supports the private MI industry.
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Shareholder Return Plan
Share Repurchase Program: In the fourth quarter, the company repurchased $31 million of common stock, retiring 811,000 shares at an average price of $37.72. Since the start of the buyback program in 2022, a total of $349 million of common stock has been repurchased, retiring 12.1 million shares at an average price of $28.89. The company has $226 million of repurchase capacity remaining under the existing authorization.
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Key Q&A
Q:Have you seen any changes in the competitive landscape in the industry? Should we expect the core premium yield to remain steady in 2026?
A:Adam Pollitzer noted a balanced and constructive environment with strong volume, pricing rates, and unit economics. Aurora Swithenbank mentioned that while they do not provide guidance, they expect core yields to remain generally stable with some potential fluctuations.
Q:What is your perspective on the potential reduction of premiums at the FHA?
A:Adam Pollitzer stated that the private MI industry already provides a low-cost, high-value solution and does not foresee an additional FHA rate adjustment due to challenges at the FHA and the potential risks to taxpayers.
Q:What are you seeing in terms of the health of the consumer as we look out into 2026? Any insights on credit trends by state or region?
A:Adam Pollitzer highlighted macroeconomic resilience but noted risks such as consumer debt and labor market strain. Aurora Swithenbank added that there are no notable trends in credit or claims experience by geography, and Adam emphasized their use of Rate GPS to manage geographic exposure.
Q:Are you seeing the quarterly runoff trend continue early this year? What is the outlook for persistency?
A:Aurora Swithenbank explained that persistency declined by 50 basis points in Q4 due to rate changes but remains above historical trends. They expect persistency to normalize over time, influenced by refinancing activity.
Q:How should we think about credit implications of one part of the portfolio paying off quickly and the other being sticky?
A:Adam Pollitzer explained that older vintages with low note rates are less likely to refinance, while newer vintages may normalize credit experience over time. Increased refinancing could delay normalization.
Q:Do you think 2026 is the year where you achieve parity share in NIW?
A:Adam Pollitzer expressed satisfaction with their performance and noted that 2026 could see an attractive environment for NIW volume, contingent on stable rates.
Q:Is the forward flow quota share coverage for 2028 different from usual?
A:Aurora Swithenbank stated that the coverage is consistent with prior years but noted better economics and larger size for the 2028 coverage.
Q:Will share buybacks or capital management in 2026 continue at the recent pace or accelerate?
A:Adam Pollitzer indicated that $25 million per quarter is a good assumption, with flexibility to adjust based on value opportunities.
Q:Are there any particular expense initiatives or AI developments for 2026?
A:Aurora Swithenbank mentioned no significant changes in expense discipline. Adam Pollitzer highlighted extensive AI use across departments to enhance efficiency without significant incremental investment.
Q:Review of Unclear Management Responses
A:Management avoided providing specific guidance on core premium yields, persistency trends for the current quarter, and exact expense or AI-related savings for 2026.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Aurora result
Conference event
Investor tab
MI industry
PMIERs capital
Reinsurance pillar
Treasury sir
Washington recognition
asset result
authorization series
capacity authorization
capacity duration
capital Reinsurance
capital experience
cost capacity
country cover
cover GSEs
coverage cost
credit risk
credit volatility
culture
deal term
differentiation credit
discipline industry
downturn National
duration structure
excess loss
focus
industry MI
market opportunity
people
policy
quota share
reinsurance market
risk framework
series quota
share excess
term cost
treaty credit
NMIH Transcript
NMI Holdings, Inc. (NMIH) Q4 2025 Earnings Call Transcript
Positive2-11
The earnings call highlights strong financial performance with record high revenue and EPS growth, alongside a robust shareholder return plan through significant share buybacks. The Q&A section provides confidence in stable premium yields and effective capital management. Despite some uncertainties in guidance, the overall sentiment is positive, supported by high-quality portfolio growth and efficient operations. Given the company's market cap, the stock is likely to experience a positive movement in the 2% to 8% range over the next two weeks.
NMI Holdings, Inc. (NMIH) Q3 2025 Earnings Call Transcript
Positive11-4
The company reported record high revenue and strong financial metrics, including a significant increase in net income and ROE. Despite some macroeconomic risks and a slight rise in defaults, the overall financial health is robust. The share repurchase program and strong reinsurance market add to the positive sentiment. The market cap suggests moderate sensitivity to news, leading to a likely positive stock movement of 2% to 8%.
NMI Holdings, Inc. (NMIH) Q2 2025 Earnings Call Transcript
Positive7-29
The earnings call reveals strong financial performance with record revenue and net income, a low expense ratio, and a declining default rate. The Q&A section supports this with management's confidence in handling market conditions and risk management. The consistent share repurchase program and improved book value per share further bolster shareholder returns. Despite some uncertainties in the housing market, management's proactive strategies and optimistic outlook suggest a positive stock price movement over the next two weeks.
NMI Holdings, Inc. (NMIH) Q1 2025 Earnings Call Transcript
Positive4-29
The earnings call summary reflects strong financial performance with record revenues, net income, and return on equity. The extension of a partnership with Tata Consultancy Services and a robust share repurchase program are positive indicators. Despite some concerns about economic factors and regulatory issues, the company's comprehensive credit risk management and confidence in managing market cycles mitigate these risks. The Q&A section did not reveal significant negative trends or uncertainties. Given the company's market cap, the stock price is likely to react positively, leading to a 2% to 8% increase.
NMIH Report
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