FORM 10-K
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(Mark One)
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x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended
December 31, 2016
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
to
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Commission file number
001-36
174
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NMI Holdings, Inc.
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(Exact name of registrant as specified in its charter)
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DELAWARE
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45-4914248
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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2100 Powell Street, Emeryville, CA
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94608
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(Address of principal executive offices)
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(Zip Code)
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Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Name of each exchange on which registered
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Class A Common Stock, $.01 par value per share
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NASDAQ Stock Market LLC
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Securities registered pursuant to Section 12(b) of the Act:
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None
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Large accelerated filer
o
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Accelerated filer
x
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Non-accelerated filer
o
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Smaller reporting company
o
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(Do not check if a smaller reporting company)
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Cautionary Note Regarding Forward Looking Statements
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PART I
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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PART II
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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PART III
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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PART IV
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Item 15.
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•
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our future profitability, liquidity and capital resources;
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developments in the world's financial and capital markets and our access to such markets, including reinsurance;
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retention of our existing certificates of authority in each state and the District of Columbia (D.C.) and our ability to remain a mortgage insurer in good standing in each state and D.C.;
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changes in the business practices of Fannie Mae and Freddie Mac (collectively, the GSEs), including implementation of and changes to the Private Mortgage Insurer Eligibility Requirements (PMIERs) or decisions that have the impact of decreasing or discontinuing the use of mortgage insurance as credit enhancement;
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our ability to remain a qualified mortgage insurer under the PMIERs and other requirements imposed by the GSEs, which they may change at any time;
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actions of existing competitors, including governmental agencies like the Federal Housing Administration (FHA) and the Veterans Administration (VA), and potential market entry by new competitors or consolidation of existing competitors;
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adoption of new or changes to existing laws and regulations or their enforcement and implementation by regulators;
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changes to the GSEs' role in the secondary mortgage market or other changes that could affect the residential mortgage industry generally or mortgage insurance in particular;
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potential future lawsuits, investigations or inquiries or resolution of current lawsuits or inquiries;
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changes in general economic, market and political conditions and policies, interest rates, inflation and investment results or other conditions that affect the housing market or the markets for home mortgages or mortgage insurance;
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our ability to implement our business strategy, including our ability to write mortgage insurance on high quality low down payment residential mortgage loans, implement successfully and on a timely basis, complex infrastructure, systems, procedures, and internal controls to support our business and regulatory and reporting requirements of the insurance industry;
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our ability to attract and retain a diverse customer base, including the largest mortgage originators;
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failure of risk management or pricing or investment strategies;
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emergence of unexpected claim and coverage issues, including claims exceeding our reserves or amounts we had expected to experience;
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our ability to utilize our net operating loss carryforwards, which could be limited or eliminated in various ways, including if we experience an ownership change as defined in Section 382 of the Internal Revenue Code;
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failure to maintain, improve and continue to develop necessary information technology systems or the failure of technology providers to perform; and
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ability to recruit, train and retain key personnel.
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single — the insured pays all premium up front at the time coverage is placed;
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annual — the insured pays premium at the time coverage is placed for the first 12 months of coverage. The insured subsequently pays renewal premiums to maintain coverage for successive 12 month periods, with such renewals due prior to the expiration of the then applicable 12 month period;
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monthly — the insured pays premium for the first month of coverage on the loan close date. We subsequently bill the insured each month for the next month's coverage; and
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Monthly Advantage
®
— when we receive notice of the loan close date, we bill the insured for the previous month of coverage (for coverage effective as of the loan close date) and each month thereafter; with this premium plan, the insured pays premium in arrears for the prior month of coverage.
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Top 10, primarily National Accounts, representing approximately 19% of the MI market;
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Next 30, a combination of National and Regional Accounts, representing approximately 17% of the MI market; and
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Approximately 1,500, primarily Regional Accounts, representing the remainder of the MI market.
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the borrower's credit strength, including the borrower's credit history, debt-to-income (DTI) ratios and cash reserves and the willingness of a borrower with sufficient resources to make mortgage payments when the mortgage balance exceeds the value of the home;
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the loan product, which encompasses the LTV ratio, the type of loan instrument, including whether the instrument provides for fixed or variable payments and the amortization schedule, the type of property, the purpose of the loan and the interest rate;
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origination practices of lenders;
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the percentage coverage and size of insured loans; and
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the condition of the economy, including housing values and employment, in the geographic area in which the property is located.
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for loans with higher LTV ratios compared to loans with lower LTV ratios;
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for loans with higher DTI ratios compared to lower DTI ratios;
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for loans to borrowers with lower credit scores compared to loans to borrowers with higher credit scores;
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for investor loans compared to owner-occupied loans;
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during periods of economic contraction and housing price depreciation, including when these conditions may not be nationwide, compared to periods of economic expansion and housing price appreciation;
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for adjustable rate mortgages (ARMs) when the reset interest rate significantly exceeds the interest rate set at loan origination; and
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for cash out refinance loans compared to purchase or rate and term refinance loans.
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Declines in home values. A decline in home values typically makes it more difficult for borrowers to sell or refinance their homes, generally increasing the likelihood of a default followed by a claim if borrowers experience job losses or other life events which reduce their incomes or increase their expenses. In addition, a decline in home values typically increases the severity of any claim we may pay.
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Reductions in income or increases in borrowers' expenses. Borrowers able to make only small down payments often have more difficulty weathering financial hardships caused by unemployment or income reductions, or life events involving illness or divorce, because they may not have large amounts of personal savings or available credit. Rising unemployment will increase the number of borrowers unable to remain current on their home mortgage and increase the number of new claims.
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Higher interest rates. An increase in interest rates typically leads to higher monthly payments for borrowers with existing ARMs as well as for borrowers hoping to purchase a home, the latter of which may have the effect of reducing the pool of potential borrowers available to purchase homes.
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25%
of existing risk written on eligible policies as of August 31, 2016;
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100%
of our existing risk under our pool agreement with Fannie Mae; and
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25%
of risk on eligible policies written from September 1, 2016 through December 31, 2017.
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technology that enables our customers to transact business faster and easier, whether via a secure internet connection or through a secure system-to-system interface;
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integrating our platform with third-party technology providers used by our customers in their loan origination process to order our mortgage insurance and in their servicing processes for servicing and maintaining mortgage insurance policies;
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implementing advanced document and business process management software that focuses on improving our underwriting productivity and that may also be used to improve our quality assurance and loss management functions; and
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launching our award-winning mobile applications, which enable customers to view and access information through mobile devices, including our premium rate calculators, guideline updates and other resources and information notices.
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the PMIERs, including operational, business and remedial requirements and minimum capital levels applicable to GSE-qualified MI providers;
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the underwriting standards that determine what loans are eligible for purchase by the GSEs, which affects the quality of the risk insured by the mortgage insurer and the availability of mortgage loans;
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the terms that the GSEs require to be included in MI policies for loans that they purchase, including terms governing rescission relief;
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the level of MI coverage, subject to the requirements of the GSEs' charters, as to when MI is used as the required credit enhancement on low down payment mortgages;
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the amount of loan level delivery fees (which result in higher costs to borrowers) that the GSEs assess on loans that require MI, which impacts private MI providers' ability to compete with FHA;
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the terms on which the GSEs offer lenders relief on their representations and warranties made to a GSE at the time of sale of a loan to a GSE, which creates pressure on private MIs to alter their rescission rights to conform to the GSE relief;
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loss mitigation programs established by the GSEs that impact insured mortgages and the circumstances under which servicers must implement such programs;
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the maximum loan limits of the GSEs in comparison to those of the FHA and other investors; and
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the availability and scope of different loan purchase programs from the GSEs that allow different levels of MI coverage.
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licenses to transact business;
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policy forms;
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premium rates;
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insurable loans;
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annual and quarterly financial reports prepared in accordance with statutory accounting principles;
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determination of loss, unearned premium and contingency reserves;
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minimum capital levels and adequacy ratios;
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affiliate transactions;
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reinsurance requirements;
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limitations on the types of investment instruments which may be held in an investment portfolio;
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the size of risks and limits on coverage of individual risks which may be insured;
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special deposits of securities;
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shareholder dividends;
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insurance policy sales practices; and
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claims handling.
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a.
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The net income of the insurer for the calendar year preceding the date of the dividend or distribution, minus realized capital gains for that calendar year; or
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b.
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The aggregate of the net income of the insurer for the 3 calendar years preceding the date of the dividend or distribution, minus realized capital gains for those calendar years and minus dividends paid or credited and distributions made within the first 2 of the preceding 3 calendar years.
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we are exempted from compliance with Section 404(b) of Sarbanes-Oxley, which requires our auditors to attest to and report on our internal control over financial reporting;
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we are not required to comply with any new or revised financial accounting standard until such date as a private company (
i.e.
, a company that is not an "issuer" as defined by Section 2(a) of Sarbanes-Oxley) is required to comply with such new or revised accounting standard. As a result, our financial statements may not be comparable with another public company which is neither an EGC nor an EGC which has opted out of using the extended transition period;
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we may elect to not comply with Item 402 of Regulation S-K, which requires extensive quantitative and qualitative disclosure regarding executive compensation, but instead disclose the more limited information required of a "smaller reporting company";
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we are exempted from the following additional compensation-related disclosure provisions that were imposed on U.S. public companies pursuant to the Dodd-Frank Act: (i) the advisory vote on executive compensation required by Section 14A(a) of the Exchange Act, (ii) the requirements of Section 14A(b) of the Exchange Act relating to stockholder advisory votes on "golden parachute" compensation, (iii) the requirements of Section 14(i) of the Exchange Act as to disclosure relating to the relationship between executive compensation and our financial performance, and (iv) the requirement of Section 953(b)(1) of the Dodd-Frank Act, which will require disclosure as to the relationship between the compensation of the Company's chief executive officer and median employee pay.
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the state of the economy, including unemployment, which affects the likelihood that borrowers may default on their loans;
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declines in housing values, as such declines may negatively affect loss mitigation opportunities on loans in default, as well as increase the likelihood that borrowers will default when the value of the home is below or perceived to be below the mortgage balance;
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the product mix of IIF, with loans having higher risk characteristics generally resulting in higher defaults and claims;
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the size of loans insured, with higher average loan amounts tending to increase claims incurred;
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the LTV ratios of our insured loans, with higher average LTV ratios tending to increase claims incurred;
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the percentage of coverage on insured loans, with higher percentages of insurance coverage tending to result in higher incurred claim amounts than lower percentages of insurance coverage;
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higher DTI ratios, which tend to increase incurred claims; and
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the distribution of claims over the life of a book, as described above.
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continue to implement and improve our operational, credit, financial, management and other disclosure and internal risk controls and processes and our reporting systems and procedures in order to manage a growing number of client relationships;
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scale our technology platform; and
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attract and retain management talent.
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the level of current mortgage interest rates compared to the mortgage rates on the IIF, which affects the vulnerability of the IIF to refinancings (
i.e.
, lower current interest rates make it more attractive for borrowers to refinance and receive a lower interest rate);
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changes in rates of home price appreciation or depreciation;
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economic conditions that affect a borrower's decision to pay-off a mortgage earlier than required;
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lenders' credit policies, which may make it more difficult for borrowers to refinance their loans; and
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mortgage insurance cancellation policies of mortgage investors, along with the current value of the homes underlying the mortgages in the IIF.
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lenders using government mortgage insurance programs, including those of the FHA and the VA;
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lenders and other investors holding mortgages in portfolio and self-insuring;
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investors (including the GSEs) using credit enhancements other than MI (including alternative forms of credit risk transfer), using other credit enhancements in conjunction with reduced levels of MI coverage, or accepting credit risk without credit enhancement;
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lenders originating mortgages using "piggy-back" or other structures to avoid MI, such as a first mortgage with an 80% LTV and a second mortgage with a 10%, 15% or 20% LTV (referred to as 80-10-10, 80-15-5 or 80-20 loans, respectively) rather than a first mortgage with an LTV above 80% that has MI;
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state-supported mortgage insurance funds in several states, including California and New York; and
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borrowers paying cash or making large down payments versus securing mortgage financing, which has occurred with greater frequency in the years following the most recent financial crisis.
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federal housing policy, including future premium reductions or loosening of underwriting guidelines;
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increases in premium rates or tightening of underwriting guidelines by private MI companies;
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increases to or imposition of new GSE loan delivery fees on loans that require mortgage insurance, which may result in higher borrower costs for MI loans compared to government insured loans;
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loans insured under Federal government-supported mortgage insurance programs are eligible for securitization in Ginnie Mae securities, which may be viewed by investors as more desirable than GSE securities due to the explicit backing of Ginnie Mae securities by the full faith and credit of the U.S. Federal government.
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difference in the spread between GSE mortgage-backed securities and Ginnie Mae mortgage-backed securities;
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increase in FHA loan limits above GSE loan limits;
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perceived operational ease of using government-sponsored mortgage insurance compared to private MI.
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restrictions on mortgage credit due to more stringent underwriting standards, more restrictive regulatory and capital requirements and liquidity issues affecting lenders;
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the level of loan interest rates. Higher interest rates may increase the potential housing costs of consumers hoping to purchase homes, which may have the effect of reducing the pool of potential borrowers available to purchase homes;
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deductibility of mortgage interest or mortgage insurance premiums for income tax purposes;
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the health of the real estate industry and the national economy as well as conditions in regional and local economies;
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housing affordability;
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population trends, including the rate of household formation;
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the rate of home price appreciation, which in times of heavy refinancing can affect whether refinance loans have LTVs that require MI;
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U.S. government housing policy encouraging loans to first-time homebuyers; and
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the extent to which the GSEs' guaranty and other fees, credit underwriting guidelines and other business terms affect
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incur additional indebtedness;
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incur liens on their property;
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pay dividends or make other distributions;
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sell their assets;
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make certain loans or investments;
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merge or consolidate; and
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enter into transactions with affiliates,
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general market conditions, including price levels and volume and changes in interest rates;
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national, regional and local economic or business conditions;
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the effects of, and changes in, trade, monetary and fiscal policies, including the interest rate policies of the Federal Reserve;
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changes in U.S. housing and housing finance policy, including changes to the GSEs;
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our actual or projected financial condition, liquidity, operating results, cash flows and capital levels;
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changes in, or failure to meet, our publicly disclosed expectations as to our future financial and operating performance;
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publication of research reports about us, our competitors or the financial services industry generally, or changes in, or failure to meet, securities analysts' estimates of our financial and operating performance, or lack of research reports by industry analysts or ceasing of coverage;
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market valuations, as well as the financial and operating performance and prospects, of similar companies;
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future issuances or sales, or anticipated issuances or sales, of our common stock or other securities convertible into or exchangeable or exercisable for our common stock;
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additional indebtedness we may incur in the future;
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expenses incurred in connection with changes in our stock price, such as changes in the value of the liability reflected on our financial statements associated with outstanding warrants;
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the potential failure to establish and maintain effective internal controls over financial reporting;
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additions or departures of key personnel;
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our failure to satisfy the continued listing requirements of the NASDAQ;
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our failure to comply with the Sarbanes-Oxley Act of 2002; and
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our treatment as an EGC under the federal securities laws.
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provide that special meetings of our stockholders generally can only be called by the chairman of the Board or the president or by resolution of the Board;
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provide our Board the ability to issue undesignated preferred stock, the terms of which may be established and the shares of which may be issued without stockholder approval, and which may grant preferred holders voting, special approval, dividend or other rights or preferences superior to the rights of the holder of common stock;
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provide our Board the ability to issue common stock and warrants within the amount of authorized capital;
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provide that, subject to the rights of the holders of any series of preferred stock with respect to such series of preferred stock, any action required or permitted to be taken by our stockholders must be effected at a duly called annual or special meeting of our stockholders and may not be effected by any consent in writing by such stockholders; and
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provide that stockholders seeking to bring business before our annual meeting of stockholders, or to nominate candidates for election as directors at our annual meeting of stockholders, generally must provide timely advance notice of their intent in writing and certain other information not less than 90 days nor more than 120 days prior to the meeting.
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2016
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2015
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||||||||||||
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High
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Low
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High
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Low
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||||||||
1st Quarter
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$
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6.85
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$
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4.41
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$
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9.15
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$
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7.30
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2nd Quarter
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6.51
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4.60
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8.29
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7.39
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3rd Quarter
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8.11
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5.30
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8.89
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7.57
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||||
4th Quarter
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10.80
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7.51
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8.17
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6.77
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11/8/2013
|
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12/31/2013
|
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3/31/2014
|
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6/30/2014
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9/30/2014
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12/30/2014
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||||||||||||
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|
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|
|
|
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||||||||||||
NMI Holdings, Inc.
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$
|
100
|
|
|
$
|
91
|
|
|
$
|
83
|
|
|
$
|
73
|
|
|
$
|
55
|
|
|
$
|
61
|
|
Russell 2000 Index
|
100
|
|
|
106
|
|
|
107
|
|
|
108
|
|
|
101
|
|
|
110
|
|
||||||
Peer Group Index (ESNT, MTG, RDN)
|
100
|
|
|
123
|
|
|
121
|
|
|
116
|
|
|
116
|
|
|
135
|
|
|
3/31/2015
|
|
6/30/2015
|
|
9/30/2015
|
|
12/31/2015
|
|
3/31/2016
|
|
6/30/2016
|
|
9/30/2016
|
|
12/31/2016
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
NMI Holdings, Inc.
|
$
|
43
|
|
|
$
|
50
|
|
|
$
|
44
|
|
|
$
|
33
|
|
|
$
|
8
|
|
|
$
|
17
|
|
|
$
|
56
|
|
$
|
—
|
|
$
|
95
|
|
Russell 2000 Index
|
114
|
|
|
114
|
|
|
102
|
|
|
105
|
|
|
103
|
|
|
107
|
|
|
115
|
|
—
|
|
124
|
|
|||||||||
Peer Group Index (ESNT, MTG, RDN)
|
133
|
|
|
147
|
|
|
134
|
|
|
121
|
|
|
136
|
|
|
136
|
|
|
159
|
|
—
|
|
184
|
|
|
For the years ended December 31,
|
||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
Consolidated statements of operations
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(In Thousands, except for share data and ratios)
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||||||||||||||||||
Net premiums written
|
$
|
134,692
|
|
|
$
|
114,210
|
|
|
$
|
34,029
|
|
|
$
|
3,541
|
|
|
$
|
—
|
|
Net premiums earned
|
110,481
|
|
|
45,506
|
|
|
13,407
|
|
|
2,095
|
|
|
—
|
|
|||||
Net investment income
|
13,751
|
|
|
7,246
|
|
|
5,618
|
|
|
4,808
|
|
|
6
|
|
|||||
Net realized investment (losses) gains
|
(693
|
)
|
|
831
|
|
|
197
|
|
|
186
|
|
|
—
|
|
|||||
Total revenues
|
123,815
|
|
|
53,608
|
|
|
19,222
|
|
|
7,089
|
|
|
284
|
|
|||||
Insurance claims & claims expenses
|
2,392
|
|
|
650
|
|
|
83
|
|
|
—
|
|
|
—
|
|
|||||
Underwriting and operating expenses
|
93,223
|
|
|
80,599
|
|
|
73,417
|
|
|
60,774
|
|
|
27,775
|
|
|||||
Net income (loss)
|
65,841
|
|
|
(27,793
|
)
|
|
(48,906
|
)
|
|
(55,184
|
)
|
|
(27,491
|
)
|
|||||
Basic income (loss) per share
|
$
|
1.11
|
|
|
$
|
(0.47
|
)
|
|
$
|
(0.84
|
)
|
|
$
|
(0.99
|
)
|
|
$
|
(0.73
|
)
|
Weighted average common shares outstanding
|
59,070,948
|
|
|
58,683,194
|
|
|
58,281,425
|
|
|
56,005,326
|
|
|
37,909,936
|
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
Consolidated balance sheets
|
(In Thousands, except for share data and ratios)
|
||||||||||||||||||
Total investments
|
$
|
628,969
|
|
|
$
|
559,235
|
|
|
$
|
336,501
|
|
|
$
|
409,088
|
|
|
$
|
4,864
|
|
Cash and cash equivalents
|
47,746
|
|
|
57,317
|
|
|
103,021
|
|
|
55,929
|
|
|
485,855
|
|
|||||
Total assets
|
841,737
|
|
|
662,451
|
|
|
463,265
|
|
|
481,219
|
|
|
542,768
|
|
|||||
Term loan
|
144,353
|
|
|
143,939
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Unearned premiums
|
152,906
|
|
|
90,773
|
|
|
22,069
|
|
|
1,446
|
|
|
—
|
|
|||||
Reserve for insurance claims and claims expenses
|
3,001
|
|
|
679
|
|
|
83
|
|
|
—
|
|
|
—
|
|
|||||
Shareholders' equity
|
477,349
|
|
|
402,731
|
|
|
426,958
|
|
|
463,217
|
|
|
488,748
|
|
|||||
Book value per share
|
$
|
8.07
|
|
|
$
|
6.85
|
|
|
$
|
7.31
|
|
|
$
|
7.98
|
|
|
$
|
8.81
|
|
Selected ratios
|
|
|
|
|
|
|
|
|
|
||||||||||
Loss ratio
|
2
|
%
|
|
1
|
%
|
|
1
|
%
|
|
—
|
%
|
|
—
|
%
|
|||||
Expense ratio
|
84
|
%
|
|
177
|
%
|
|
545
|
%
|
|
2,900
|
%
|
|
—
|
%
|
|||||
Combined ratio
|
87
|
%
|
|
179
|
%
|
|
545
|
%
|
|
2,900
|
%
|
|
—
|
%
|
|||||
Risk-to-capital ratio
|
11.6:1
|
|
|
8.7:1
|
|
|
3.6:1
|
|
|
0.7:1
|
|
|
—
|
|
|||||
Other data
|
|
|
|
|
|
|
|
|
|
||||||||||
New primary insurance written
|
$
|
21,189,392
|
|
|
$
|
12,424,156
|
|
|
$
|
3,451,354
|
|
|
$
|
162,172
|
|
|
$
|
—
|
|
New primary risk written
|
5,085,562
|
|
|
2,932,035
|
|
|
775,575
|
|
|
36,516
|
|
|
—
|
|
|||||
New pool risk written
|
—
|
|
|
—
|
|
|
—
|
|
|
93,090
|
|
|
—
|
|
|||||
Direct primary insurance in force
|
32,167,539
|
|
|
14,823,926
|
|
|
3,369,664
|
|
|
161,731
|
|
|
—
|
|
|||||
Direct primary risk in force
|
7,790,060
|
|
|
3,586,462
|
|
|
801,561
|
|
|
36,516
|
|
|
—
|
|
|||||
Direct pool risk in force
|
93,090
|
|
|
93,090
|
|
|
93,090
|
|
|
93,090
|
|
|
—
|
|
•
|
Top 10, primarily National Accounts, representing approximately 19% of the MI market;
|
•
|
Next 30, a combination of National and Regional Accounts, representing approximately 17% of the MI market; and
|
•
|
Approximately 1,500, primarily Regional Accounts, representing the remainder of the MI market.
|
•
|
We cede a fixed percentage of premiums on insurance covered by the agreement.
|
•
|
We receive the benefit of a profit commission through a reduction in the premiums we cede. The profit commission varies directly and inversely with the level of losses on a dollar for dollar basis and is eliminated at levels of losses that we do not expect to occur. This means that lower levels of losses result in a higher profit commission and less benefit from ceded losses; higher levels of losses result in more benefit from ceded losses and a lower profit commission (or for levels of losses that are not currently contemplated, its elimination).
|
•
|
We receive the benefit of a ceding commission equal to 20% of premiums ceded. The ceding commission is deferred and recognized as a reduction in underwriting expenses over the expected life of the risk associated with the reinsured policies.
|
•
|
We cede a fixed percentage of losses incurred on insurance covered by the agreement.
|
Primary and pool IIF and NIW
|
As of and for the year ended
|
||||||||||||||||||||||
|
December 31, 2016
|
|
December 31, 2015
|
|
December 31, 2014
|
||||||||||||||||||
|
IIF
|
|
NIW
|
|
IIF
|
|
NIW
|
|
IIF
|
|
NIW
|
||||||||||||
|
(In Millions)
|
||||||||||||||||||||||
Monthly
|
$
|
19,205
|
|
|
$
|
14,261
|
|
|
$
|
6,958
|
|
|
$
|
5,990
|
|
|
$
|
1,401
|
|
|
$
|
1,416
|
|
Single
|
12,963
|
|
|
6,928
|
|
|
7,866
|
|
|
6,434
|
|
|
1,969
|
|
|
2,035
|
|
||||||
Primary
|
32,168
|
|
|
21,189
|
|
|
14,824
|
|
|
12,424
|
|
|
3,370
|
|
|
3,451
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Pool
|
3,650
|
|
|
—
|
|
|
4,238
|
|
|
—
|
|
|
4,721
|
|
|
—
|
|
||||||
Total
|
$
|
35,818
|
|
|
$
|
21,189
|
|
|
$
|
19,062
|
|
|
$
|
12,424
|
|
|
$
|
8,091
|
|
|
$
|
3,451
|
|
Primary and pool premiums written and earned
|
For the year ended
|
||||||||||
|
December 31, 2016
|
|
December 31, 2015
|
|
December 31, 2014
|
||||||
|
(In Thousands)
|
||||||||||
Net premiums written
(1)
|
$
|
134,692
|
|
|
$
|
114,210
|
|
|
$
|
34,029
|
|
Net premiums earned
(1)
|
110,481
|
|
|
45,506
|
|
|
13,407
|
|
•
|
NIW, which is the new IIF (aggregate principal amount of the mortgages) insured during a period. Many factors affect NIW, including the volume of low down payment home mortgage originations (which tend to be generated to a greater extent in purchase financings as compared to refinancings) and the competition to provide credit enhancement on those mortgages, which includes primarily competition from the FHA and other private mortgage insurers;
|
•
|
the product mix of our book of business, which includes recurring monthly premiums earned for monthly policies and the recognition of premiums earned from the amortization of our single premiums over the policies' lives. We expect our product mix and the average premium rate we charge to be generally comparable with the industry as our business matures;
|
•
|
cancellations, which reduce IIF. Upon cancellation of a policy, all premium that is non-refundable is immediately earned, and any refundable premium is returned to the policyholder. Cancellations due to refinancings are affected by the level of current mortgage interest rates compared to the mortgage rates on our IIF. Refinancings are also affected by current home values compared to values when the loans became insured and the terms on which mortgage credit is available. To a lesser extent, cancellations also result from claim payments, as we return any premium received from the servicer after the date the insured mortgage defaults. Finally, cancellations are affected by home price appreciation, which may give homeowners the right to cancel the MI on their loans. Based on current market conditions, we expect our MI policies to have a persistency rate of between 80% and 85%;
|
•
|
premium rates, which are based on the risk characteristics of the loans insured, the percentage of coverage on the loans, competition from other mortgage insurers and general industry conditions; and
|
•
|
premiums ceded under reinsurance agreements. In addition to the reinsurance agreements we currently have in place between NMIC and Re One, we entered into the 2016 QSR Transaction during the third quarter of 2016. Under the terms of the agreement, premiums are ceded to reinsurers who assume a portion of the risk under the insurance policies we write.
|
Primary portfolio trends
|
As of and for the quarter ended
|
||||||||||||||||||
|
December 31, 2016
|
|
September 30, 2016
|
|
June 30, 2016
|
|
March 31, 2016
|
|
December 31, 2015
|
||||||||||
|
($ Values In Millions)
|
||||||||||||||||||
New insurance written
|
$
|
5,240
|
|
|
$
|
5,857
|
|
|
$
|
5,838
|
|
|
$
|
4,254
|
|
|
$
|
4,547
|
|
New risk written
|
1,244
|
|
|
1,415
|
|
|
1,411
|
|
|
1,016
|
|
|
1,105
|
|
|||||
Insurance in force
(1)
|
32,168
|
|
|
28,228
|
|
|
23,624
|
|
|
18,564
|
|
|
14,824
|
|
|||||
Risk in force
(1)
|
7,790
|
|
|
6,847
|
|
|
5,721
|
|
|
4,487
|
|
|
3,586
|
|
|||||
Policies in force (count)
(1)
|
134,662
|
|
|
119,002
|
|
|
100,547
|
|
|
79,700
|
|
|
63,948
|
|
|||||
Weighted-average coverage
(2)
|
24.2
|
%
|
|
24.3
|
%
|
|
24.2
|
%
|
|
24.2
|
%
|
|
24.2
|
%
|
|||||
Loans in default (count)
|
179
|
|
|
115
|
|
|
79
|
|
|
55
|
|
|
36
|
|
|||||
Percentage of loans in default
|
0.1
|
%
|
|
0.1
|
%
|
|
0.1
|
%
|
|
0.1
|
%
|
|
0.1
|
%
|
|||||
Risk in force on defaulted loans
|
$
|
10
|
|
|
$
|
6
|
|
|
$
|
4
|
|
|
$
|
3
|
|
|
$
|
2
|
|
Average premium yield
(3)
|
0.44
|
%
|
|
0.48
|
%
|
|
0.47
|
%
|
|
0.45
|
%
|
|
0.49
|
%
|
|||||
Annual persistency
(4)
|
80.7
|
%
|
|
81.8
|
%
|
|
83.3%
|
|
|
82.7
|
%
|
|
79.6
|
%
|
(1)
|
Reported as of the end of the period.
|
(2)
|
End of period RIF divided by IIF.
|
(3)
|
Average premium yield is calculated by dividing primary net premiums earned, net of reinsurance, by average gross IIF for the period, annualized.
|
(4)
|
Defined as the percentage of IIF that remains on our books after any 12-month period.
|
Primary portfolio trends
|
As of and for the year ended
|
||||||||||
|
December 31, 2016
|
|
December 31, 2015
|
|
December 31, 2014
|
||||||
|
($ Values In Millions)
|
||||||||||
New insurance written
|
$
|
21,189
|
|
|
$
|
12,424
|
|
|
$
|
3,451
|
|
New risk written
|
5,086
|
|
|
2,932
|
|
|
776
|
|
|||
Insurance in force
(1)
|
32,168
|
|
|
14,824
|
|
|
3,370
|
|
|||
Risk in force
(1)
|
7,790
|
|
|
3,586
|
|
|
802
|
|
|||
Policies in force (count)
(1)
|
134,662
|
|
|
63,948
|
|
|
14,603
|
|
|||
Weighted-average coverage
(2)
|
24.2
|
%
|
|
24.2
|
%
|
|
23.8
|
%
|
|||
Loans in default (count)
|
179
|
|
|
79
|
|
|
4
|
|
|||
Percentage of loans in default
|
0.1
|
%
|
|
0.1
|
%
|
|
—
|
%
|
|||
Risk in force on defaulted loans
|
$
|
10
|
|
|
$
|
2
|
|
|
$
|
0.2
|
|
Average premium yield
(3)
|
0.44
|
%
|
|
0.45
|
%
|
|
0.45
|
%
|
|||
Annual persistency
(4)
|
80.7
|
%
|
|
79.6
|
%
|
|
84.1
|
%
|
(1)
|
Reported as of the end of the period.
|
(2)
|
End of period RIF divided by IIF.
|
(3)
|
Average premium yield is calculated by dividing primary net premiums earned, net of reinsurance, by average gross IIF for the period, annualized.
|
(4)
|
Defined as the percentage of IIF that remains on our books after any 12-month period.
|
Primary IIF
|
As of and for the year ended
|
||||||||||
|
December 31, 2016
|
|
December 31, 2015
|
|
December 31, 2014
|
||||||
|
(In Millions)
|
||||||||||
IIF, beginning of period
|
$
|
14,824
|
|
|
$
|
3,370
|
|
|
$
|
162
|
|
NIW
|
21,189
|
|
|
12,424
|
|
|
3,451
|
|
|||
Cancellations and other reductions
|
(3,845
|
)
|
|
(970
|
)
|
|
(243
|
)
|
|||
IIF, end of period
|
$
|
32,168
|
|
|
$
|
14,824
|
|
|
$
|
3,370
|
|
Primary IIF and RIF
|
As of December 31, 2016
|
|
As of December 31, 2015
|
|
As of December 31, 2014
|
||||||||||||||||||
|
IIF
|
|
RIF
|
|
IIF
|
|
RIF
|
|
IIF
|
|
RIF
|
||||||||||||
|
(In Millions)
|
||||||||||||||||||||||
December 31, 2016
|
$
|
20,193
|
|
|
$
|
4,850
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
2015
|
10,071
|
|
|
2,472
|
|
|
12,110
|
|
|
2,932
|
|
|
—
|
|
|
—
|
|
||||||
2014
|
1,856
|
|
|
457
|
|
|
2,644
|
|
|
638
|
|
|
3,257
|
|
|
776
|
|
||||||
2013
|
48
|
|
|
11
|
|
|
70
|
|
|
16
|
|
|
113
|
|
|
26
|
|
||||||
Total
|
$
|
32,168
|
|
|
$
|
7,790
|
|
|
$
|
14,824
|
|
|
$
|
3,586
|
|
|
$
|
3,370
|
|
|
$
|
802
|
|
Primary NIW by FICO
|
For the year ended
|
||||||||||
|
December 31, 2016
|
|
December 31, 2015
|
|
December 31, 2014
|
||||||
|
(In Millions)
|
||||||||||
>= 760
|
$
|
10,985
|
|
|
$
|
6,111
|
|
|
$
|
1,550
|
|
740-759
|
3,452
|
|
|
1,955
|
|
|
628
|
|
|||
720-739
|
2,517
|
|
|
1,726
|
|
|
532
|
|
|||
700-719
|
2,099
|
|
|
1,254
|
|
|
351
|
|
|||
680-699
|
1,315
|
|
|
889
|
|
|
274
|
|
|||
<=679
|
821
|
|
|
489
|
|
|
116
|
|
|||
Total
|
$
|
21,189
|
|
|
$
|
12,424
|
|
|
$
|
3,451
|
|
Primary NIW by LTV
|
For the year ended
|
||||||||||
|
December 31, 2016
|
|
December 31, 2015
|
|
December 31, 2014
|
||||||
|
(In Millions)
|
||||||||||
95.01% and above
|
$
|
1,273
|
|
|
$
|
492
|
|
|
$
|
13
|
|
90.01% to 95.00%
|
9,229
|
|
|
5,452
|
|
|
1,490
|
|
|||
85.01% to 90.00%
|
6,576
|
|
|
4,236
|
|
|
1,283
|
|
|||
85.00% and below
|
4,111
|
|
|
2,244
|
|
|
665
|
|
|||
Total
|
$
|
21,189
|
|
|
$
|
12,424
|
|
|
$
|
3,451
|
|
Primary NIW by purchase/refinance mix
|
For the year ended
|
||||||||||
|
December 31, 2016
|
|
December 31, 2015
|
|
December 31, 2014
|
||||||
|
(In Millions)
|
||||||||||
Purchase
|
$
|
15,293
|
|
|
$
|
8,161
|
|
|
$
|
2,005
|
|
Refinance
|
5,896
|
|
|
4,263
|
|
|
1,446
|
|
|||
Total
|
$
|
21,189
|
|
|
$
|
12,424
|
|
|
$
|
3,451
|
|
Weighted Average FICO
|
For the year ended
|
||||
|
December 31, 2016
|
|
December 31, 2015
|
|
December 31, 2014
|
Monthly
|
750
|
|
745
|
|
743
|
Single
|
762
|
|
759
|
|
755
|
Weighted Average LTV
|
For the year ended
|
|||||||
|
December 31, 2016
|
|
December 31, 2015
|
|
December 31, 2014
|
|||
Monthly
|
91
|
%
|
|
91
|
%
|
|
91
|
%
|
Single
|
90
|
%
|
|
90
|
%
|
|
90
|
%
|
Primary IIF by FICO
|
As of
|
|||||||||||||||||||
|
December 31, 2016
|
|
December 31, 2015
|
|
December 31, 2014
|
|||||||||||||||
|
($ Values In Millions)
|
|||||||||||||||||||
>= 760
|
$
|
16,166
|
|
|
50
|
%
|
|
$
|
7,124
|
|
|
48
|
%
|
|
$
|
1,506
|
|
|
45
|
%
|
740-759
|
5,248
|
|
|
16
|
|
|
2,406
|
|
|
16
|
|
|
610
|
|
|
18
|
|
|||
720-739
|
4,130
|
|
|
13
|
|
|
2,111
|
|
|
14
|
|
|
518
|
|
|
16
|
|
|||
700-719
|
3,245
|
|
|
10
|
|
|
1,515
|
|
|
10
|
|
|
345
|
|
|
10
|
|
|||
680-699
|
2,151
|
|
|
7
|
|
|
1,100
|
|
|
8
|
|
|
276
|
|
|
8
|
|
|||
<=679
|
1,228
|
|
|
4
|
|
|
568
|
|
|
4
|
|
|
115
|
|
|
3
|
|
|||
Total
|
$
|
32,168
|
|
|
100
|
%
|
|
$
|
14,824
|
|
|
100
|
%
|
|
$
|
3,370
|
|
|
100
|
%
|
Primary RIF by FICO
|
As of
|
|||||||||||||||||||
|
December 31, 2016
|
|
December 31, 2015
|
|
December 31, 2014
|
|||||||||||||||
|
($ Values In Millions)
|
|||||||||||||||||||
>= 760
|
$
|
3,934
|
|
|
50
|
%
|
|
$
|
1,707
|
|
|
48
|
%
|
|
$
|
352
|
|
|
44
|
%
|
740-759
|
1,281
|
|
|
16
|
|
|
590
|
|
|
16
|
|
|
145
|
|
|
18
|
|
|||
720-739
|
1,000
|
|
|
13
|
|
|
519
|
|
|
14
|
|
|
126
|
|
|
16
|
|
|||
700-719
|
782
|
|
|
10
|
|
|
369
|
|
|
10
|
|
|
83
|
|
|
10
|
|
|||
680-699
|
511
|
|
|
7
|
|
|
267
|
|
|
8
|
|
|
68
|
|
|
8
|
|
|||
<=679
|
282
|
|
|
4
|
|
|
134
|
|
|
4
|
|
|
28
|
|
|
4
|
|
|||
Total
|
$
|
7,790
|
|
|
100
|
%
|
|
$
|
3,586
|
|
|
100
|
%
|
|
$
|
802
|
|
|
100
|
%
|
Primary Average Loan Size by FICO
|
As of
|
||||||||||
|
December 31, 2016
|
|
December 31, 2015
|
|
December 31, 2014
|
||||||
|
(In Thousands)
|
||||||||||
>= 760
|
$
|
250
|
|
|
$
|
246
|
|
|
$
|
240
|
|
740-759
|
241
|
|
|
235
|
|
|
237
|
|
|||
720-739
|
235
|
|
|
229
|
|
|
232
|
|
|||
700-719
|
233
|
|
|
228
|
|
|
226
|
|
|||
680-699
|
224
|
|
|
219
|
|
|
221
|
|
|||
<=679
|
210
|
|
|
207
|
|
|
206
|
|
Primary IIF by LTV
|
As of
|
|||||||||||||||||||
|
December 31, 2016
|
|
December 31, 2015
|
|
December 31, 2014
|
|||||||||||||||
|
($ Values In Millions)
|
|||||||||||||||||||
95.01% and above
|
$
|
1,686
|
|
|
5
|
%
|
|
$
|
498
|
|
|
3
|
%
|
|
$
|
14
|
|
|
—
|
%
|
90.01% to 95.00%
|
14,358
|
|
|
45
|
|
|
6,583
|
|
|
45
|
|
|
1,472
|
|
|
44
|
|
|||
85.01% to 90.00%
|
10,282
|
|
|
32
|
|
|
5,098
|
|
|
34
|
|
|
1,240
|
|
|
37
|
|
|||
85.00% and below
|
5,842
|
|
|
18
|
|
|
2,645
|
|
|
18
|
|
|
644
|
|
|
19
|
|
|||
Total
|
$
|
32,168
|
|
|
100
|
%
|
|
$
|
14,824
|
|
|
100
|
%
|
|
$
|
3,370
|
|
|
100
|
%
|
Primary RIF by LTV
|
As of
|
|||||||||||||||||||
|
December 31, 2016
|
|
December 31, 2015
|
|
December 31, 2014
|
|||||||||||||||
|
($ Values In Millions)
|
|||||||||||||||||||
95.01% and above
|
$
|
467
|
|
|
6
|
%
|
|
$
|
139
|
|
|
4
|
%
|
|
$
|
4
|
|
|
—
|
%
|
90.01% to 95.00%
|
4,226
|
|
|
55
|
|
|
1,943
|
|
|
54
|
|
|
436
|
|
|
55
|
|
|||
85.01% to 90.00%
|
2,439
|
|
|
31
|
|
|
1,210
|
|
|
34
|
|
|
292
|
|
|
36
|
|
|||
85.00% and below
|
658
|
|
|
8
|
|
|
294
|
|
|
8
|
|
|
70
|
|
|
9
|
|
|||
Total
|
$
|
7,790
|
|
|
100
|
%
|
|
$
|
3,586
|
|
|
100
|
%
|
|
$
|
802
|
|
|
100
|
%
|
Primary RIF by Loan Type
|
As of
|
|||||||
|
December 31, 2016
|
|
December 31, 2015
|
|
December 31, 2014
|
|||
|
|
|
|
|
|
|||
Fixed
|
99
|
%
|
|
98
|
%
|
|
96
|
%
|
Adjustable rate mortgages:
|
|
|
|
|
|
|||
Less than five years
|
—
|
|
|
—
|
|
|
—
|
|
Five years and longer
|
1
|
|
|
2
|
|
|
4
|
|
Total
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
As of December 31, 2016
|
|||||||||||||||||||||||||||
Origination 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)
|
|||||||||||
|
($ Values in Millions)
|
|||||||||||||||||||||||||||
2013
|
$
|
162
|
|
|
$
|
48
|
|
|
30
|
%
|
|
655
|
|
|
239
|
|
|
—
|
|
|
1
|
|
|
—
|
%
|
|
0.2
|
%
|
2014
|
3,451
|
|
|
1,857
|
|
|
54
|
%
|
|
14,786
|
|
|
9,003
|
|
|
48
|
|
|
3
|
|
|
2.6
|
%
|
|
0.3
|
%
|
||
2015
|
12,422
|
|
|
10,071
|
|
|
81
|
%
|
|
52,548
|
|
|
44,716
|
|
|
103
|
|
|
7
|
|
|
2.4
|
%
|
|
0.2
|
%
|
||
2016
|
21,189
|
|
|
20,192
|
|
|
95
|
%
|
|
83,633
|
|
|
80,704
|
|
|
28
|
|
|
—
|
|
|
0.6
|
%
|
|
—
|
%
|
||
Total
|
$
|
37,224
|
|
|
$
|
32,168
|
|
|
|
|
151,622
|
|
|
134,662
|
|
|
179
|
|
|
11
|
|
|
|
|
|
(1)
|
The ratio of losses incurred (paid and reserved) divided by cumulative premiums earned, net of reinsurance.
|
(2)
|
The sum of claims paid ever to date and notices of default as of the end of the period divided by policies ever in force.
|
Top 10 primary RIF by state as of December 31, 2016
|
As of
|
|||||||
|
December 31, 2016
|
|
December 31, 2015
|
|
December 31, 2014
|
|||
California
|
13.6
|
%
|
|
12.9
|
%
|
|
16.3
|
%
|
Texas
|
7.0
|
|
|
6.8
|
|
|
6.6
|
|
Virginia
|
6.5
|
|
|
5.2
|
|
|
3.5
|
|
Florida
|
4.5
|
|
|
5.3
|
|
|
4.6
|
|
Arizona
|
3.9
|
|
|
3.7
|
|
|
3.9
|
|
Colorado
|
3.9
|
|
|
4.2
|
|
|
3.5
|
|
Maryland
|
3.7
|
|
|
2.8
|
|
|
2.2
|
|
Michigan
|
3.7
|
|
|
4.4
|
|
|
4.7
|
|
Utah
|
3.7
|
|
|
3.0
|
|
|
1.7
|
|
Pennsylvania
|
3.6
|
|
|
3.7
|
|
|
3.7
|
|
Total
|
54.1
|
%
|
|
52.0
|
%
|
|
50.7
|
%
|
•
|
the state of the economy, including unemployment, which affects the likelihood that borrowers may default on their loans;
|
•
|
declines in housing values, as such declines may negatively affect loss mitigation opportunities on loans in default, as well as increase the likelihood that borrowers will default when the value of the home is below or perceived to be below the mortgage balance;
|
•
|
the product mix of IIF, with loans having higher risk characteristics generally resulting in higher defaults and claims;
|
•
|
the size of loans insured, with higher average loan amounts tending to increase claims incurred;
|
•
|
the LTV ratio, with higher average LTV ratios tending to increase claims incurred;
|
•
|
the percentage of coverage on insured loans, with higher percentages of insurance coverage tending to result in higher incurred claim amounts than lower percentages of insurance coverage;
|
•
|
higher DTI ratios, which tend to increase incurred claims;
|
•
|
the rate at which we rescind policies. Because of tighter underwriting standards generally in the mortgage lending industry and the terms of our Master Policy, we expect that our level of rescission activity will be lower than recent rescission activity experienced by the MI industry; and
|
•
|
the distribution of claims over the life of a book. Historically, the first two to three years after loans are originated are a period of relatively low claims, with claims increasing substantially for several years subsequent and then declining. Factors, such as persistency of the book, the condition of the economy, including unemployment and housing prices, and others, can affect this pattern.
|
•
|
the typical distribution of claims over the life of a book results in fewer defaults during the first two years after loans are originated, usually peaking in years three through six and declining thereafter;
|
•
|
under the pool insurance agreement between NMIC and Fannie Mae, NMIC is responsible for claims only to the extent they exceed a deductible; and
|
•
|
low NIW in our early years of operations.
|
|
For the year ended December 31,
|
||||||
|
2016
|
|
2015
|
||||
|
(In Thousands)
|
||||||
Beginning balance
|
$
|
679
|
|
|
$
|
83
|
|
Less reinsurance recoverables
(1)
|
—
|
|
|
—
|
|
||
Beginning balance, net of reinsurance recoverables
|
679
|
|
|
83
|
|
||
|
|
|
|
||||
Add claims incurred:
|
|
|
|
||||
Claims and claim expenses incurred:
|
|
|
|
||||
Current year
(2)
|
2,457
|
|
|
699
|
|
||
Prior years
(3)
|
(65
|
)
|
|
(49
|
)
|
||
Total claims and claims expenses incurred
|
2,392
|
|
|
650
|
|
||
|
|
|
|
||||
Less claims paid:
|
|
|
|
||||
Claims and claim expenses paid:
|
|
|
|
||||
Current year
(2)
|
171
|
|
|
50
|
|
||
Prior years
(3)
|
196
|
|
|
4
|
|
||
Total claims and claim expenses paid
|
367
|
|
|
54
|
|
||
|
|
|
|
||||
Reserve at end of period, net of reinsurance recoverables
|
2,704
|
|
|
679
|
|
||
Add reinsurance recoverables
(1)
|
297
|
|
|
—
|
|
||
Balance, December 31
|
$
|
3,001
|
|
|
$
|
679
|
|
|
For the year ended
|
||||
|
December 31, 2016
|
|
December 31, 2015
|
||
Beginning default inventory
|
36
|
|
|
4
|
|
Plus: new defaults
|
284
|
|
|
51
|
|
Less: cures
|
(132
|
)
|
|
(17
|
)
|
Less: claims paid
|
(9
|
)
|
|
(2
|
)
|
Ending default inventory
|
179
|
|
|
36
|
|
|
For the year ended
|
||||||
|
December 31, 2016
|
|
December 31, 2015
|
||||
|
($ Values In Thousands)
|
||||||
Number of claims paid
|
9
|
|
|
2
|
|
||
Total amount paid for claims
|
$
|
367
|
|
|
$
|
54
|
|
Average amount paid per claim
|
$
|
41
|
|
|
$
|
27
|
|
Severity
(1)
|
64
|
%
|
|
44
|
%
|
Average reserve per default:
|
As of December 31, 2016
|
|
As of December 31, 2015
|
||||
|
(In Thousands)
|
||||||
Case
(1)
|
$
|
15
|
|
|
$
|
18
|
|
IBNR
|
2
|
|
|
1
|
|
||
Total
|
$
|
17
|
|
|
$
|
19
|
|
|
As of
|
||||||||||||||||||
|
December 31, 2016
|
|
September 30, 2016
|
|
June 30, 2016
|
|
March 31,2016
|
|
December 31, 2015
|
||||||||||
|
($ values in thousands)
|
||||||||||||||||||
Available Assets
|
$
|
453,523
|
|
|
$
|
488,635
|
|
|
$
|
432,074
|
|
|
$
|
434,138
|
|
|
$
|
431,411
|
|
Net Risk-Based Required Assets
|
366,584
|
|
|
320,609
|
|
|
377,468
|
|
|
302,852
|
|
|
249,805
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Asset charge %
(1)
|
6.15
|
%
|
|
6.14
|
%
|
|
6.10
|
%
|
|
6.12
|
%
|
|
6.17
|
%
|
Consolidated statements of operations
|
For the year ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Revenues
|
(In Thousands, except for share data)
|
||||||||||
Net premiums earned
|
$
|
110,481
|
|
|
$
|
45,506
|
|
|
$
|
13,407
|
|
Net investment income
|
13,751
|
|
|
7,246
|
|
|
5,618
|
|
|||
Net realized investment (losses) gains
|
(693
|
)
|
|
831
|
|
|
197
|
|
|||
Other revenues
|
276
|
|
|
25
|
|
|
—
|
|
|||
Total revenues
|
123,815
|
|
|
53,608
|
|
|
19,222
|
|
|||
Expenses
|
|
|
|
|
|
||||||
Insurance claims and claims expenses
|
2,392
|
|
|
650
|
|
|
83
|
|
|||
Underwriting and operating expenses
|
93,223
|
|
|
80,599
|
|
|
73,417
|
|
|||
Total expenses
|
95,615
|
|
|
81,249
|
|
|
73,500
|
|
|||
Other (expense) income
|
|
|
|
|
|
||||||
(Loss) gain from change in fair value of warrant liability
|
(1,900
|
)
|
|
1,905
|
|
|
2,949
|
|
|||
Gain from settlement of warrants
|
—
|
|
|
—
|
|
|
37
|
|
|||
Interest expense
|
(14,848
|
)
|
|
(2,057
|
)
|
|
—
|
|
|||
Income (loss) before income taxes
|
11,452
|
|
|
(27,793
|
)
|
|
(51,292
|
)
|
|||
Income tax benefit
|
(54,389
|
)
|
|
—
|
|
|
(2,386
|
)
|
|||
Net income (loss)
|
$
|
65,841
|
|
|
$
|
(27,793
|
)
|
|
$
|
(48,906
|
)
|
Consolidated balance sheets
|
December 31, 2016
|
|
December 31, 2015
|
||||
|
(In Thousands)
|
||||||
Total investment portfolio
|
$
|
628,969
|
|
|
$
|
559,235
|
|
Cash and cash equivalents
|
47,746
|
|
|
57,317
|
|
||
Premiums receivable
|
13,728
|
|
|
5,143
|
|
||
Deferred policy acquisition costs, net
|
30,109
|
|
|
17,530
|
|
||
Software and equipment, net
|
20,402
|
|
|
15,201
|
|
||
Prepaid reinsurance premiums
|
37,921
|
|
|
—
|
|
||
Deferred tax asset, net
|
53,274
|
|
|
—
|
|
||
Other assets
|
9,588
|
|
|
8,025
|
|
||
Total assets
|
$
|
841,737
|
|
|
$
|
662,451
|
|
Term loan
|
$
|
144,353
|
|
|
$
|
143,939
|
|
Unearned premiums
|
152,906
|
|
|
90,773
|
|
||
Accounts payable and accrued expenses
|
25,297
|
|
|
22,725
|
|
||
Reserve for insurance claims and claims expenses
|
3,001
|
|
|
679
|
|
||
Reinsurance funds withheld
|
30,633
|
|
|
—
|
|
||
Deferred ceding commission
|
4,831
|
|
|
—
|
|
||
Warrant liability
|
3,367
|
|
|
1,467
|
|
||
Deferred tax liability
|
—
|
|
|
137
|
|
||
Total liabilities
|
364,388
|
|
|
259,720
|
|
||
Total shareholders' equity
|
477,349
|
|
|
402,731
|
|
||
Total liabilities and shareholders' equity
|
$
|
841,737
|
|
|
$
|
662,451
|
|
Consolidated cash flows
|
For the year ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Net cash provided by (used in):
|
(In Thousands)
|
||||||||||
Operating activities
|
$
|
71,944
|
|
|
$
|
41,463
|
|
|
$
|
(20,967
|
)
|
Investing activities
|
(79,792
|
)
|
|
(230,165
|
)
|
|
68,082
|
|
|||
Financing activities
|
(1,723
|
)
|
|
142,998
|
|
|
(23
|
)
|
|||
Net (decrease) increase in cash and cash equivalents
|
$
|
(9,571
|
)
|
|
$
|
(45,704
|
)
|
|
$
|
47,092
|
|
Percentage of portfolio's fair value
|
December 31, 2016
|
|
December 31, 2015
|
|||
1.
|
Corporate debt securities
|
52
|
%
|
|
56
|
%
|
2.
|
U.S. treasury securities and obligations of U.S. government agencies
|
9
|
|
|
14
|
|
3.
|
Asset-backed securities
|
17
|
|
|
17
|
|
4.
|
Cash, cash equivalents and short-term investments
|
16
|
|
|
10
|
|
5.
|
Municipal debt securities
|
6
|
|
|
3
|
|
|
Total
|
100
|
%
|
|
100
|
%
|
Investment portfolio ratings
|
December 31, 2016
|
|
December 31, 2015
|
||
AAA
|
24
|
%
|
|
25
|
%
|
AA
|
19
|
|
|
11
|
|
A
|
44
|
|
|
51
|
|
BBB
|
13
|
|
|
13
|
|
Investment grade
|
100
|
|
|
100
|
|
Below investment grade
|
—
|
|
|
—
|
|
Total
|
100
|
%
|
|
100
|
%
|
•
|
our current net operating loss carryforwards are expected to be fully utilized by 2018;
|
•
|
our other deferred tax assets are based on known recognition schedules and our expectation is that the majority will either reverse in the next three years or are related to deferred tax liabilities;
|
•
|
our significant unearned premium balance which represents future revenue that will be earned over the policies' lives;
|
•
|
the substantial growth in our IIF driving the increase in net premiums;
|
•
|
our positive earnings trends from quarterly and annual increases in revenue;
|
•
|
our taxable income in 2016 and our expected taxable income in future years; and
|
•
|
our expectation that we will be in a cumulative profit in a three-year period in 2017.
|
|
Less than 1 year
|
|
1-3 years
|
|
3-5 years
|
|
More than 5 years
|
||||||||
|
(In Thousands)
|
||||||||||||||
Contractual obligations
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Long-term debt obligations*
|
14,615
|
|
|
159,602
|
|
|
—
|
|
|
—
|
|
||||
Capital lease obligations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Operating lease obligations
|
1,488
|
|
|
6,474
|
|
|
5,710
|
|
|
—
|
|
||||
Purchase obligations
|
2,289
|
|
|
126
|
|
|
—
|
|
|
—
|
|
||||
Other long-term liabilities reflected on the registrant's balance sheet under GAAP
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total
|
$
|
18,392
|
|
|
$
|
166,202
|
|
|
$
|
5,710
|
|
|
$
|
—
|
|
•
|
Level 1 - Unadjusted quoted prices for identical assets or liabilities in active markets that are accessible at the measurement date for identical assets or liabilities.
|
•
|
Level 2 - Prices or valuations based on observable inputs other than quoted prices in active markets for identical assets and liabilities.
|
•
|
Level 3 - Unobservable inputs that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.
|
•
|
our intent to sell the security or whether it is more likely than not that we will be required to sell the security before recovery;
|
•
|
severity and duration of the decline in fair value;
|
•
|
the financial condition of the issuer;
|
•
|
the failure of the issuer to make scheduled interest or principal payments;
|
•
|
recent credit downgrades of the applicable security or the issuer below investment grade; and
|
•
|
adverse conditions specifically related to the security, an industry or a geographic area.
|
|
2012
|
|
Expected life
|
5 years
|
|
Risk free interest rate
|
0.86
|
%
|
Dividend yield
|
0.00
|
%
|
Expected stock price volatility
|
39.00
|
%
|
Projected forfeiture rate
|
1.00
|
%
|
•
|
Changes to the level of interest rates
. Increasing interest rates may reduce the value of certain fixed-rate bonds held in the investment portfolio. Higher rates may cause variable rate assets to generate additional income. Decreasing rates will have the reverse impact. Significant changes in interest rates can also affect persistency and claim rates of our insurance portfolio, and as a result we may determine that our investment portfolio needs to be restructured to better align it with future liabilities and claim payments. Such restructuring may cause investments to be liquidated when market conditions are adverse. Additionally, the changes in Eurodollar based interest rates affect the interest expense related to the Company's debt.
|
•
|
Changes to the term structure of interest rates
. Rising or falling rates typically change by different amounts along the yield curve. These changes may have unforeseen impacts on the value of certain assets.
|
•
|
Market volatility/changes in the real or perceived credit quality of investments
. Deterioration in the quality of investments, identified through changes to our own or third party (
e.g.
, rating agency) assessments, will reduce the value and potentially the liquidity of investments.
|
•
|
Concentration Risk
. If the investment portfolio is highly concentrated in one asset, or in multiple assets whose values are highly correlated, the value of the total portfolio may be greatly affected by the change in value of just one asset or a group of highly correlated assets.
|
•
|
Prepayment Risk
. Bonds may have call provisions that permit debtors to repay prior to maturity when it is to their advantage. This typically occurs when rates fall below the interest rate of the debt.
|
Report of Independent Registered Public Accounting Firm - BDO USA LLP
|
|
Consolidated Balance Sheets as of December 31, 2016 and 2015
|
|
Consolidated Statements of Operations and Comprehensive Income (Loss) for each of the years in the three-year period ended December 31, 2016
|
|
Consolidated Statements of Changes in Shareholders' Equity for each of the years in the three-year period ended December 31, 2016
|
|
Consolidated Statements of Cash Flows for each of the years in the three-year period ended December 31, 2016
|
|
Notes to Consolidated Financial Statements
|
|
December 31, 2016
|
|
December 31, 2015
|
||||
Assets
|
(In Thousands, except for share data)
|
||||||
Fixed maturities, available-for-sale, at fair value (amortized cost of $630,688 and $564,319 as of December 31, 2016 and December 31, 2015, respectively)
|
$
|
628,969
|
|
|
$
|
559,235
|
|
Cash and cash equivalents
|
47,746
|
|
|
57,317
|
|
||
Premiums receivable
|
13,728
|
|
|
5,143
|
|
||
Accrued investment income
|
3,421
|
|
|
2,873
|
|
||
Prepaid expenses
|
1,991
|
|
|
1,428
|
|
||
Deferred policy acquisition costs, net
|
30,109
|
|
|
17,530
|
|
||
Software and equipment, net
|
20,402
|
|
|
15,201
|
|
||
Intangible assets and goodwill
|
3,634
|
|
|
3,634
|
|
||
Prepaid reinsurance premiums
|
37,921
|
|
|
—
|
|
||
Deferred tax asset, net
|
53,274
|
|
|
—
|
|
||
Other assets
|
542
|
|
|
90
|
|
||
Total assets
|
$
|
841,737
|
|
|
$
|
662,451
|
|
|
|
|
|
||||
Liabilities
|
|
|
|
||||
Term loan
|
$
|
144,353
|
|
|
$
|
143,939
|
|
Unearned premiums
|
152,906
|
|
|
90,773
|
|
||
Accounts payable and accrued expenses
|
25,297
|
|
|
22,725
|
|
||
Reserve for insurance claims and claim expenses
|
3,001
|
|
|
679
|
|
||
Reinsurance funds withheld
|
30,633
|
|
|
—
|
|
||
Deferred ceding commission
|
4,831
|
|
|
—
|
|
||
Warrant liability, at fair value
|
3,367
|
|
|
1,467
|
|
||
Deferred tax liability, net
|
—
|
|
|
137
|
|
||
Total liabilities
|
364,388
|
|
|
259,720
|
|
||
Commitments and contingencies
|
|
|
|
|
|
||
|
|
|
|
||||
Shareholders' equity
|
|
|
|
||||
Common stock - class A shares, $0.01 par value;
59,145,161 and 58,807,825 shares issued and outstanding as of December 31, 2016 and December 31, 2015, respectively (250,000,000 shares authorized) |
591
|
|
|
588
|
|
||
Additional paid-in capital
|
576,927
|
|
|
570,340
|
|
||
Accumulated other comprehensive loss, net of tax
|
(5,287
|
)
|
|
(7,474
|
)
|
||
Accumulated deficit
|
(94,882
|
)
|
|
(160,723
|
)
|
||
Total shareholders' equity
|
477,349
|
|
|
402,731
|
|
||
Total liabilities and shareholders' equity
|
$
|
841,737
|
|
|
$
|
662,451
|
|
|
For the years ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
|
(In Thousands, except for share data)
|
||||||||||
Revenues
|
|
|
|
|
|
||||||
Net premiums earned
|
110,481
|
|
|
45,506
|
|
|
$
|
13,407
|
|
||
Net investment income
|
13,751
|
|
|
7,246
|
|
|
5,618
|
|
|||
Net realized investment (losses) gains
|
(693
|
)
|
|
831
|
|
|
197
|
|
|||
Other revenues
|
276
|
|
|
25
|
|
|
—
|
|
|||
Total revenues
|
123,815
|
|
|
53,608
|
|
|
19,222
|
|
|||
Expenses
|
|
|
|
|
|
||||||
Insurance claims and claims expenses
|
2,392
|
|
|
650
|
|
|
83
|
|
|||
Underwriting and operating expenses
|
93,223
|
|
|
80,599
|
|
|
73,417
|
|
|||
Total expenses
|
95,615
|
|
|
81,249
|
|
|
73,500
|
|
|||
Other (expense) income
|
|
|
|
|
|
||||||
(Loss) gain from change in fair value of warrant liability
|
(1,900
|
)
|
|
1,905
|
|
|
2,949
|
|
|||
Gain from settlement of warrants
|
—
|
|
|
—
|
|
|
37
|
|
|||
Interest expense
|
(14,848
|
)
|
|
(2,057
|
)
|
|
—
|
|
|||
Total other (expense) income
|
(16,748
|
)
|
|
(152
|
)
|
|
2,986
|
|
|||
|
|
|
|
|
|
||||||
Income (loss) before income taxes
|
11,452
|
|
|
(27,793
|
)
|
|
(51,292
|
)
|
|||
Income tax benefit
|
(54,389
|
)
|
|
—
|
|
|
(2,386
|
)
|
|||
Net income (loss)
|
$
|
65,841
|
|
|
$
|
(27,793
|
)
|
|
$
|
(48,906
|
)
|
|
|
|
|
|
|
||||||
Earnings (loss) per share
|
|
|
|
|
|
||||||
Basic
|
$
|
1.11
|
|
|
$
|
(0.47
|
)
|
|
$
|
(0.84
|
)
|
Diluted
|
$
|
1.08
|
|
|
$
|
(0.47
|
)
|
|
$
|
(0.84
|
)
|
|
|
|
|
|
|
||||||
Weighted average common shares outstanding
|
|
|
|
|
|
||||||
Basic
|
59,070,948
|
|
|
58,683,194
|
|
|
58,281,425
|
|
|||
Diluted
|
60,829,372
|
|
|
58,683,194
|
|
|
58,281,425
|
|
|||
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
65,841
|
|
|
$
|
(27,793
|
)
|
|
$
|
(48,906
|
)
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
||||||
Net unrealized gains (losses) in accumulated other comprehensive income (loss), net of tax expense of $1,178, $0, and $2,390 for each of the years in the three-year period ended December 31, 2016, respectively
|
1,429
|
|
|
(3,518
|
)
|
|
3,636
|
|
|||
Reclassification adjustment for (gains) losses included in net income (loss), net of tax expense of $0 for the each of the years in the three-year period ended December 31, 2016
|
758
|
|
|
(349
|
)
|
|
(196
|
)
|
|||
Other comprehensive income (loss), net of tax
|
2,187
|
|
|
(3,867
|
)
|
|
3,440
|
|
|||
Comprehensive income (loss)
|
$
|
68,028
|
|
|
$
|
(31,660
|
)
|
|
$
|
(45,466
|
)
|
|
|
|
|
|
|
|
Common Stock - Class A
|
Additional
Paid-in Capital |
Accumulated Other Comprehensive Income (Loss)
|
Accumulated Deficit
|
Total
|
|||||||||||||
|
Amount
|
Class B
|
||||||||||||||||
|
(In Thousands)
|
|||||||||||||||||
Balances, January 1, 2014
|
$
|
581
|
|
$
|
—
|
|
$
|
553,707
|
|
$
|
(7,047
|
)
|
$
|
(84,024
|
)
|
$
|
463,217
|
|
Common stock: class A shares issued under related to warrants
|
*
|
|
—
|
|
13
|
|
—
|
|
—
|
|
13
|
|
||||||
Common stock: class A shares issued under stock plans, net of shares withheld for employee taxes
|
3
|
|
—
|
|
11
|
|
—
|
|
—
|
|
14
|
|
||||||
Share-based compensation expense
|
—
|
|
—
|
|
9,180
|
|
—
|
|
—
|
|
9,180
|
|
||||||
Change in unrealized investment gains/losses, net of tax of $2,390
|
—
|
|
—
|
|
—
|
|
3,440
|
|
—
|
|
3,440
|
|
||||||
Net loss
|
—
|
|
—
|
|
—
|
|
—
|
|
(48,906
|
)
|
(48,906
|
)
|
||||||
Balances, December 31, 2014
|
584
|
|
—
|
|
562,911
|
|
(3,607
|
)
|
(132,930
|
)
|
426,958
|
|
||||||
Common stock: class A shares issued under stock plans, net of shares withheld for employee taxes
|
4
|
|
—
|
|
(694
|
)
|
—
|
|
—
|
|
(690
|
)
|
||||||
Share-based compensation expense
|
—
|
|
—
|
|
8,123
|
|
—
|
|
—
|
|
8,123
|
|
||||||
Change in unrealized investment gains/losses, net of tax of $0
|
—
|
|
—
|
|
—
|
|
(3,867
|
)
|
—
|
|
(3,867
|
)
|
||||||
Net loss
|
—
|
|
—
|
|
—
|
|
—
|
|
(27,793
|
)
|
(27,793
|
)
|
||||||
Balances, December 31, 2015
|
588
|
|
—
|
|
570,340
|
|
(7,474
|
)
|
(160,723
|
)
|
402,731
|
|
||||||
Common stock: class A shares issued under stock plans, net of shares withheld for employee taxes
|
3
|
|
—
|
|
(227
|
)
|
—
|
|
—
|
|
(224
|
)
|
||||||
Share-based compensation expense
|
—
|
|
—
|
|
6,814
|
|
—
|
|
—
|
|
6,814
|
|
||||||
Change in unrealized investment gains/losses, net of tax expense of $1,178
|
—
|
|
—
|
|
—
|
|
2,187
|
|
—
|
|
2,187
|
|
||||||
Net income
|
—
|
|
—
|
|
—
|
|
—
|
|
65,841
|
|
65,841
|
|
||||||
Balances, December 31, 2016
|
$
|
591
|
|
$
|
—
|
|
$
|
576,927
|
|
$
|
(5,287
|
)
|
$
|
(94,882
|
)
|
$
|
477,349
|
|
*
|
During 2014, we issued
1,115
common shares with a par value of
$0.01
related to the exercise of warrants, which is not identifiable in this schedule due to rounding.
|
|
For the years ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Cash flows from operating activities
|
(In Thousands)
|
||||||||||
Net income (loss)
|
$
|
65,841
|
|
|
$
|
(27,793
|
)
|
|
$
|
(48,906
|
)
|
Adjustments to reconcile net income (loss) to net cash used in operating activities:
|
|
|
|
|
|
||||||
Net realized investment losses (gains)
|
693
|
|
|
(831
|
)
|
|
(197
|
)
|
|||
Loss (gain) from change in fair value of warrant liability
|
1,900
|
|
|
(1,905
|
)
|
|
(2,949
|
)
|
|||
Depreciation and amortization
|
5,660
|
|
|
4,861
|
|
|
8,080
|
|
|||
Net amortization of premium on investment securities
|
1,259
|
|
|
—
|
|
|
—
|
|
|||
Amortization of debt discount and debt issuance costs
|
1,914
|
|
|
251
|
|
|
—
|
|
|||
Deferred income taxes
|
(54,749
|
)
|
|
—
|
|
|
—
|
|
|||
Share-based compensation expense
|
6,854
|
|
|
8,174
|
|
|
9,180
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Current tax payable
|
—
|
|
|
—
|
|
|
(2,386
|
)
|
|||
Accrued investment income
|
(548
|
)
|
|
(1,166
|
)
|
|
294
|
|
|||
Premiums receivable
|
(8,585
|
)
|
|
(4,095
|
)
|
|
(1,029
|
)
|
|||
Prepaid expenses
|
(563
|
)
|
|
626
|
|
|
(535
|
)
|
|||
Deferred policy acquisition costs, net
|
(12,579
|
)
|
|
(14,545
|
)
|
|
(2,895
|
)
|
|||
Other assets
|
(452
|
)
|
|
419
|
|
|
(446
|
)
|
|||
Unearned premiums
|
62,133
|
|
|
68,704
|
|
|
20,622
|
|
|||
Reserve for insurance claims and claim expenses
|
2,322
|
|
|
596
|
|
|
83
|
|
|||
Reinsurance balances, net
|
(2,456
|
)
|
|
—
|
|
|
—
|
|
|||
Accounts payable and accrued expenses
|
3,300
|
|
|
8,167
|
|
|
117
|
|
|||
Net cash provided by (used in) operating activities
|
71,944
|
|
|
41,463
|
|
|
(20,967
|
)
|
|||
Cash flows from investing activities
|
|
|
|
|
|
||||||
Purchase of short-term investments
|
(170,067
|
)
|
|
(21,160
|
)
|
|
—
|
|
|||
Purchase of fixed-maturity investments, available-for-sale
|
(143,568
|
)
|
|
(343,771
|
)
|
|
(60,462
|
)
|
|||
Proceeds from maturity of short-term investments
|
129,033
|
|
|
—
|
|
|
—
|
|
|||
Proceeds from redemptions, maturities and sale of fixed-maturity investments, available-for-sale
|
116,281
|
|
|
140,901
|
|
|
136,764
|
|
|||
Purchase of software and equipment
|
(11,471
|
)
|
|
(6,135
|
)
|
|
(8,220
|
)
|
|||
Net cash (used in) provided by investing activities
|
(79,792
|
)
|
|
(230,165
|
)
|
|
68,082
|
|
|||
Cash flows from financing activities
|
|
|
|
|
|
||||||
Taxes paid related to net share settlement of equity awards
|
(755
|
)
|
|
(1,105
|
)
|
|
(1,083
|
)
|
|||
Proceeds from issuance of common stock
|
532
|
|
|
415
|
|
|
1,097
|
|
|||
Gain from settlement of warrants
|
—
|
|
|
—
|
|
|
(37
|
)
|
|||
Proceeds from term loan, net of discount
|
—
|
|
|
148,500
|
|
|
—
|
|
|||
Repayments of term loan
|
(1,500
|
)
|
|
(375
|
)
|
|
—
|
|
|||
Payments of debt issuance costs
|
—
|
|
|
(4,437
|
)
|
|
—
|
|
|||
Net cash (used in) provided by financing activities
|
(1,723
|
)
|
|
142,998
|
|
|
(23
|
)
|
|||
|
|
|
|
|
|
||||||
Net (decrease) increase in cash and cash equivalents
|
(9,571
|
)
|
|
(45,704
|
)
|
|
47,092
|
|
|||
Cash and cash equivalents, beginning of period
|
57,317
|
|
|
103,021
|
|
|
55,929
|
|
|||
Cash and cash equivalents, end of period
|
$
|
47,746
|
|
|
$
|
57,317
|
|
|
$
|
103,021
|
|
|
|
|
|
|
|
||||||
Supplemental disclosures of cash flow information
|
|
|
|
|
|
||||||
Noncash financing activities
|
|
|
|
|
|
||||||
Interest paid
|
$
|
9,669
|
|
|
$
|
5
|
|
|
$
|
—
|
|
Income tax payments
|
200
|
|
|
—
|
|
|
—
|
|
•
|
our intent to sell the security or whether it is more likely than not that we will be required to sell the security before recovery;
|
•
|
severity and duration of the decline in fair value;
|
•
|
the financial condition of the issuer;
|
•
|
the failure of the issuer to make scheduled interest or principal payments;
|
•
|
recent credit downgrades of the applicable security or the issuer below investment grade; and
|
•
|
adverse conditions specifically related to the security, an industry, or a geographic area.
|
|
Amortized
Cost |
|
Gross Unrealized
|
|
Fair
Value |
||||||||||
|
|
Gains
|
|
Losses
|
|
||||||||||
As of December 31, 2016
|
(In Thousands)
|
||||||||||||||
U.S. Treasury securities and obligations of U.S. government agencies
|
$
|
64,135
|
|
|
$
|
6
|
|
|
$
|
(962
|
)
|
|
$
|
63,179
|
|
Municipal debt securities
|
40,801
|
|
|
131
|
|
|
(663
|
)
|
|
40,269
|
|
||||
Corporate debt securities
|
349,712
|
|
|
1,722
|
|
|
(2,356
|
)
|
|
349,078
|
|
||||
Asset-backed securities
|
114,456
|
|
|
765
|
|
|
(560
|
)
|
|
114,661
|
|
||||
Total bonds
|
569,104
|
|
|
2,624
|
|
|
(4,541
|
)
|
|
567,187
|
|
||||
Short-term investments
|
61,584
|
|
|
198
|
|
|
—
|
|
|
61,782
|
|
||||
Total investments
|
$
|
630,688
|
|
|
$
|
2,822
|
|
|
$
|
(4,541
|
)
|
|
$
|
628,969
|
|
|
Amortized
Cost |
|
Gross Unrealized
|
|
Fair
Value |
||||||||||
|
|
Gains
|
|
Losses
|
|
||||||||||
As of December 31, 2015
|
(In Thousands)
|
||||||||||||||
U.S. Treasury securities and obligations of U.S. government agencies
|
$
|
84,968
|
|
|
$
|
4
|
|
|
$
|
(490
|
)
|
|
$
|
84,482
|
|
Municipal debt securities
|
20,209
|
|
|
44
|
|
|
(174
|
)
|
|
20,079
|
|
||||
Corporate debt securities
|
337,273
|
|
|
431
|
|
|
(4,377
|
)
|
|
333,327
|
|
||||
Asset-backed securities
|
101,320
|
|
|
76
|
|
|
(603
|
)
|
|
100,793
|
|
||||
Total bonds
|
543,770
|
|
|
555
|
|
|
(5,644
|
)
|
|
538,681
|
|
||||
Short-term investments
|
20,549
|
|
|
5
|
|
|
—
|
|
|
20,554
|
|
||||
Total investments
|
$
|
564,319
|
|
|
$
|
560
|
|
|
$
|
(5,644
|
)
|
|
$
|
559,235
|
|
As of December 31, 2016
|
Amortized
Cost |
|
Fair
Value |
||||
|
(In Thousands)
|
||||||
Due in one year or less
|
$
|
94,382
|
|
|
$
|
94,584
|
|
Due after one through five years
|
173,296
|
|
|
173,251
|
|
||
Due after five through ten years
|
242,005
|
|
|
240,060
|
|
||
Due after ten years
|
6,549
|
|
|
6,413
|
|
||
Asset-backed securities
|
114,456
|
|
|
114,661
|
|
||
Total investments
|
$
|
630,688
|
|
|
$
|
628,969
|
|
As of December 31, 2015
|
Amortized
Cost |
|
Fair
Value |
||||
|
(In Thousands)
|
||||||
Due in one year or less
|
$
|
62,745
|
|
|
$
|
62,743
|
|
Due after one through five years
|
187,633
|
|
|
186,629
|
|
||
Due after five through ten years
|
193,379
|
|
|
190,055
|
|
||
Due after ten years
|
19,242
|
|
|
19,015
|
|
||
Asset-backed securities
|
101,320
|
|
|
100,793
|
|
||
Total investments
|
$
|
564,319
|
|
|
$
|
559,235
|
|
|
Less Than 12 Months
|
|
12 Months or Greater
|
|
Total
|
|||||||||||||||||||||
|
# of Securities
|
Fair Value
|
Unrealized Losses
|
|
# of Securities
|
Fair Value
|
Unrealized Losses
|
|
# of Securities
|
Fair Value
|
Unrealized Losses
|
|||||||||||||||
As of December 31, 2016
|
|
(Dollars in Thousands)
|
||||||||||||||||||||||||
U.S. Treasury securities and obligations of U.S. government agencies
|
33
|
|
$
|
51,093
|
|
$
|
(962
|
)
|
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
33
|
|
$
|
51,093
|
|
$
|
(962
|
)
|
Municipal debt securities
|
14
|
|
28,659
|
|
(617
|
)
|
|
1
|
|
1,704
|
|
(46
|
)
|
|
15
|
|
30,363
|
|
(663
|
)
|
||||||
Corporate debt securities
|
77
|
|
135,115
|
|
(1,955
|
)
|
|
8
|
|
13,873
|
|
(401
|
)
|
|
85
|
|
148,988
|
|
(2,356
|
)
|
||||||
Asset-backed securities
|
30
|
|
38,702
|
|
(510
|
)
|
|
6
|
|
2,472
|
|
(50
|
)
|
|
36
|
|
41,174
|
|
(560
|
)
|
||||||
Total investments
|
154
|
|
$
|
253,569
|
|
$
|
(4,044
|
)
|
|
15
|
|
$
|
18,049
|
|
$
|
(497
|
)
|
|
169
|
|
$
|
271,618
|
|
$
|
(4,541
|
)
|
|
Less Than 12 Months
|
|
12 Months or Greater
|
|
Total
|
|||||||||||||||||||||
|
# of Securities
|
Fair Value
|
Unrealized Losses
|
|
# of Securities
|
Fair Value
|
Unrealized Losses
|
|
# of Securities
|
Fair Value
|
Unrealized Losses
|
|||||||||||||||
As of December 31, 2015
|
|
(Dollars in Thousands)
|
||||||||||||||||||||||||
U.S. Treasury securities and obligations of U.S. government agencies
|
14
|
|
$
|
50,558
|
|
$
|
(397
|
)
|
|
4
|
|
$
|
10,194
|
|
$
|
(93
|
)
|
|
18
|
|
$
|
60,752
|
|
$
|
(490
|
)
|
Municipal debt securities
|
4
|
|
11,293
|
|
(165
|
)
|
|
1
|
|
3,242
|
|
(9
|
)
|
|
5
|
|
14,535
|
|
(174
|
)
|
||||||
Corporate debt securities
|
83
|
|
244,128
|
|
(4,124
|
)
|
|
4
|
|
9,220
|
|
(253
|
)
|
|
87
|
|
253,348
|
|
(4,377
|
)
|
||||||
Asset-backed securities
|
27
|
|
69,878
|
|
(498
|
)
|
|
4
|
|
9,208
|
|
(105
|
)
|
|
31
|
|
79,086
|
|
(603
|
)
|
||||||
Total investments
|
128
|
|
$
|
375,857
|
|
$
|
(5,184
|
)
|
|
13
|
|
$
|
31,864
|
|
$
|
(460
|
)
|
|
141
|
|
$
|
407,721
|
|
$
|
(5,644
|
)
|
|
For the year ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
|
(In Thousands)
|
||||||||||
Fixed maturities
|
$
|
14,121
|
|
|
$
|
7,726
|
|
|
$
|
6,127
|
|
Short-term investments
|
382
|
|
|
3
|
|
|
8
|
|
|||
Investment income
|
14,503
|
|
|
7,729
|
|
|
6,135
|
|
|||
Investment expenses
|
(752
|
)
|
|
(483
|
)
|
|
(517
|
)
|
|||
Net investment income
|
$
|
13,751
|
|
|
$
|
7,246
|
|
|
$
|
5,618
|
|
|
For the year ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
|
(In Thousands)
|
||||||||||
Gross realized investment gains
|
$
|
748
|
|
|
$
|
1,526
|
|
|
$
|
694
|
|
Gross realized investment losses
|
(1,441
|
)
|
|
(695
|
)
|
|
(497
|
)
|
|||
Net realized investment gains (losses)
|
$
|
(693
|
)
|
|
$
|
831
|
|
|
$
|
197
|
|
|
Fair Value Measurements Using
|
||||||||||||||
|
Quoted Prices in
Active Markets for Identical Assets (Level 1) |
|
Significant Other
Observable Inputs (Level 2) |
|
Significant
Unobservable Inputs (Level 3) |
|
Fair Value
|
||||||||
As of December 31, 2016
|
(In Thousands)
|
||||||||||||||
U.S. Treasury securities and obligations of U.S. government agencies
|
$
|
50,719
|
|
|
$
|
12,460
|
|
|
$
|
—
|
|
|
$
|
63,179
|
|
Municipal debt securities
|
—
|
|
|
40,269
|
|
|
—
|
|
|
40,269
|
|
||||
Corporate debt securities
|
—
|
|
|
349,078
|
|
|
—
|
|
|
349,078
|
|
||||
Asset-backed securities
|
—
|
|
|
114,661
|
|
|
—
|
|
|
114,661
|
|
||||
Cash, cash equivalents and short-term investments
|
109,528
|
|
|
—
|
|
|
—
|
|
|
109,528
|
|
||||
Total assets
|
$
|
160,247
|
|
|
$
|
516,468
|
|
|
$
|
—
|
|
|
$
|
676,715
|
|
Warrant liability
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,367
|
|
|
$
|
3,367
|
|
Total liabilities
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,367
|
|
|
$
|
3,367
|
|
|
Fair Value Measurements Using
|
||||||||||||||
|
Quoted Prices in
Active Markets for Identical Assets (Level 1) |
|
Significant Other
Observable Inputs (Level 2) |
|
Significant
Unobservable Inputs (Level 3) |
|
Fair Value
|
||||||||
As of December 31, 2015
|
(In Thousands)
|
||||||||||||||
U.S. Treasury securities and obligations of U.S. government agencies
|
$
|
65,185
|
|
|
$
|
19,297
|
|
|
$
|
—
|
|
|
$
|
84,482
|
|
Municipal debt securities
|
—
|
|
|
20,079
|
|
|
—
|
|
|
20,079
|
|
||||
Corporate debt securities
|
—
|
|
|
333,327
|
|
|
—
|
|
|
333,327
|
|
||||
Asset-backed securities
|
—
|
|
|
100,793
|
|
|
—
|
|
|
100,793
|
|
||||
Cash, cash equivalents and short-term investments
|
77,872
|
|
|
—
|
|
|
—
|
|
|
77,872
|
|
||||
Total assets
|
$
|
143,057
|
|
|
$
|
473,496
|
|
|
$
|
—
|
|
|
$
|
616,553
|
|
Warrant liability
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,467
|
|
|
$
|
1,467
|
|
Total liabilities
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,467
|
|
|
$
|
1,467
|
|
|
For the year ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
|
(In Thousands)
|
||||||||||
Balance, January 1,
|
$
|
1,467
|
|
|
$
|
3,372
|
|
|
$
|
6,371
|
|
Change in fair value of warrant liability included in earnings
|
1,900
|
|
|
(1,905
|
)
|
|
(2,949
|
)
|
|||
Gain on settlement of warrants
|
—
|
|
|
—
|
|
|
(37
|
)
|
|||
Issuance of common stock on warrant exercise
|
—
|
|
|
—
|
|
|
(13
|
)
|
|||
Balance, December 31
|
$
|
3,367
|
|
|
$
|
1,467
|
|
|
$
|
3,372
|
|
As of December 31, 2016
|
|
Principal
|
||
|
|
(In thousands)
|
||
2017
|
|
1,500
|
|
|
2018
|
|
146,625
|
|
|
Total
|
|
$
|
148,125
|
|
|
|
|
•
|
100%
of our existing risk under our pool agreement with Fannie Mae; and
|
•
|
25%
of risk on eligible policies written from September 1, 2016 through December 31, 2017.
|
|
For the year ended
|
||||||
|
December 31, 2016
|
|
December 31, 2015
|
||||
|
(In Thousands)
|
||||||
Net premiums written
|
|
|
|
||||
Direct
|
$
|
177,962
|
|
|
$
|
114,210
|
|
Ceded
|
(43,270
|
)
|
|
—
|
|
||
Net premiums written
|
$
|
134,692
|
|
|
$
|
114,210
|
|
|
|
|
|
||||
Net premiums earned
|
|
|
|
||||
Direct
|
$
|
115,830
|
|
|
$
|
45,506
|
|
Ceded
|
(5,349
|
)
|
|
—
|
|
||
Net premiums earned
|
$
|
110,481
|
|
|
$
|
45,506
|
|
|
For the year ended
|
||||||
|
December 31, 2016
|
|
December 31, 2015
|
||||
|
(In Thousands)
|
||||||
Ceded risk-in-force
|
$
|
2,008,385
|
|
|
$
|
—
|
|
Ceded premiums written
|
(43,270
|
)
|
|
—
|
|
||
Ceded premiums earned
|
(5,349
|
)
|
|
—
|
|
||
Ceding commission written
|
10,111
|
|
|
—
|
|
||
Ceding commission earned
|
2,303
|
|
|
—
|
|
|
For the year ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
|
(In Thousands)
|
||||||||||
Beginning balance
|
$
|
679
|
|
|
$
|
83
|
|
|
$
|
—
|
|
Less reinsurance recoverables
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|||
Beginning balance, net of reinsurance recoverables
|
679
|
|
|
83
|
|
|
—
|
|
|||
|
|
|
|
|
|
||||||
Add claims incurred:
|
|
|
|
|
|
||||||
Claims and claim expenses incurred:
|
|
|
|
|
|
||||||
Current year
(2)
|
2,457
|
|
|
699
|
|
|
83
|
|
|||
Prior years
(3)
|
(65
|
)
|
|
(49
|
)
|
|
—
|
|
|||
Total claims and claims expenses incurred
|
2,392
|
|
|
650
|
|
|
83
|
|
|||
|
|
|
|
|
|
||||||
Less claims paid:
|
|
|
|
|
|
||||||
Claims and claim expenses paid:
|
|
|
|
|
|
||||||
Current year
(2)
|
171
|
|
|
50
|
|
|
—
|
|
|||
Prior years
(3)
|
196
|
|
|
4
|
|
|
—
|
|
|||
Total claims and claim expenses paid
|
367
|
|
|
54
|
|
|
—
|
|
|||
|
|
|
|
|
|
||||||
Reserve at end of period, net of reinsurance recoverables
|
2,704
|
|
|
679
|
|
|
83
|
|
|||
Add reinsurance recoverables
(1)
|
297
|
|
|
—
|
|
|
—
|
|
|||
Balance, December 31
|
$
|
3,001
|
|
|
$
|
679
|
|
|
$
|
83
|
|
|
Reserves net of Reinsurance
|
|
As of December 31, 2016
|
|||||||||||||||||||
Accident Year
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
Total of IBNR+
|
|
NODs
|
|||||||||||
|
($ Values In Thousands)
|
|||||||||||||||||||||
2013
|
$
|
—
|
|
|
$
|
24
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
—
|
|
2014
|
|
|
56
|
|
|
34
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
2015
|
|
|
|
|
652
|
|
|
614
|
|
|
14
|
|
|
14
|
|
|||||||
2016
|
|
|
|
|
|
|
2,210
|
|
|
170
|
|
|
165
|
|
||||||||
|
|
|
|
|
Total
|
|
|
$
|
2,824
|
|
|
$
|
184
|
|
|
179
|
|
|
Cumulative Paid Claims, net of Reinsurance
|
||||||||||||||
Accident Year
|
2013
|
|
2014
|
|
2015
|
|
2016
|
||||||||
|
(In Thousands)
|
||||||||||||||
2013
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
2014
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|||||
2015
|
|
|
|
|
50
|
|
|
196
|
|
||||||
2016
|
|
|
|
|
|
|
171
|
|
|||||||
|
|
|
|
|
Total
|
|
|
$
|
367
|
|
Reconciliation of Disclosure of Incurred and Paid Claims Development to the Liability for Unpaid Claims and Claim Adjustment Expenses
|
||||
(In Thousands)
|
||||
|
|
As of December 31, 2016
|
||
Liabilities for unpaid claims and claim adjustment expenses, net of reinsurance
|
|
$
|
2,641
|
|
Reinsurance recoverable on unpaid claims
|
|
297
|
|
|
Unallocated claims adjustment expenses
|
|
63
|
|
|
Total gross liability for unpaid claims and claim adjustment expenses
|
|
$
|
3,001
|
|
|
Average annual percentage payout of incurred claims by age, net of reinsurance
|
|||||||||
|
Year 1
|
|
Year 2
|
|
Year 3
|
|
Year 4
|
|||
Claims duration disclosure
|
4%
|
|
14
|
%
|
|
—
|
%
|
|
—
|
%
|
|
For the year ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
|
(In Thousands, except for per share data)
|
||||||||||
Net income (loss)
|
$
|
65,841
|
|
|
$
|
(27,793
|
)
|
|
$
|
(48,906
|
)
|
|
|
|
|
|
|
||||||
Basic earnings (loss) per share
|
$
|
1.11
|
|
|
$
|
(0.47
|
)
|
|
$
|
(0.84
|
)
|
|
|
|
|
|
|
||||||
Basic weighted average shares outstanding
|
59,070,948
|
|
|
58,683,194
|
|
|
58,281,425
|
|
|||
Dilutive effect of un-vested shares
|
1,758,424
|
|
|
—
|
|
|
—
|
|
|||
Dilutive weighted average shares outstanding
|
60,829,372
|
|
|
58,683,194
|
|
|
58,281,425
|
|
|||
|
|
|
|
|
|
||||||
Diluted earnings (loss) per share
|
$
|
1.08
|
|
|
$
|
(0.47
|
)
|
|
$
|
(0.84
|
)
|
For the year ended December 31, 2016
|
Shares
|
|
Weighted Average Grant Date Fair Value per Share
|
|
Weighted Average Exercise Price
|
|||||
|
(Shares in Thousands)
|
|||||||||
Options outstanding at December 31, 2015
|
3,851
|
|
|
$
|
3.94
|
|
|
$
|
10.21
|
|
Options granted
|
—
|
|
|
—
|
|
|
—
|
|
||
Options exercised
|
—
|
|
|
—
|
|
|
—
|
|
||
Options forfeited
|
(41
|
)
|
|
3.33
|
|
|
8.92
|
|
||
Options expired
|
(784
|
)
|
|
3.87
|
|
|
10.06
|
|
||
Options outstanding at December 31, 2016
|
3,026
|
|
|
$
|
3.97
|
|
|
$
|
10.27
|
|
For the year ended December 31, 2015
|
Shares
|
|
Weighted Average Grant Date Fair Value per Share
|
|
Weighted Average Exercise Price
|
|||||
|
(Shares in Thousands)
|
|||||||||
Options outstanding at December 31, 2014
|
3,630
|
|
|
$
|
4.16
|
|
|
$
|
10.66
|
|
Options granted
|
789
|
|
|
3.06
|
|
|
8.49
|
|
||
Options exercised
|
—
|
|
|
—
|
|
|
—
|
|
||
Options forfeited
|
(64
|
)
|
|
4.90
|
|
|
12.20
|
|
||
Options expired
|
(504
|
)
|
|
4.05
|
|
|
10.48
|
|
||
Options outstanding at December 31, 2015
|
3,851
|
|
|
$
|
3.94
|
|
|
$
|
10.21
|
|
For the Year Ended December 31, 2014
|
Shares
|
|
Weighted Average Grant Date Fair Value per Share
|
|
Weighted Average Exercise Price
|
|||||
|
(Shares in Thousands)
|
|||||||||
Options outstanding at December 31, 2013
|
3,062
|
|
|
$
|
3.98
|
|
|
$
|
10.31
|
|
Options granted
|
780
|
|
|
4.85
|
|
|
12.03
|
|
||
Options exercised
|
(109
|
)
|
|
3.85
|
|
|
10.00
|
|
||
Options forfeited
|
(87
|
)
|
|
4.47
|
|
|
11.35
|
|
||
Options expired
|
(16
|
)
|
|
4.25
|
|
|
10.93
|
|
||
Options outstanding at December 31, 2014
|
3,630
|
|
|
$
|
4.16
|
|
|
$
|
10.66
|
|
|
2015
|
2014
|
||
Expected life
|
6 years
|
|
6 years
|
|
Risk free interest rate
|
1.65% - 1.78%
|
|
1.90% - 2.01%
|
|
Dividend yield
|
0.00
|
%
|
0.00
|
%
|
Expected stock price volatility
|
34.40
|
%
|
39.00
|
%
|
Projected forfeiture rate
|
7.50
|
%
|
5.00
|
%
|
For the year ended December 31, 2016
|
Shares
|
|
Weighted Average Grant Date Fair Value per Share
|
|||
|
(Shares in Thousands)
|
|||||
Un-vested restricted stock units at December 31, 2015
|
1,443
|
|
|
$
|
7.81
|
|
Restricted stock units granted
|
1,551
|
|
|
4.98
|
|
|
Restricted stock units vested
|
(381
|
)
|
|
8.71
|
|
|
Restricted stock units forfeited
|
(75
|
)
|
|
5.81
|
|
|
Un-vested restricted stock units at December 31, 2016
|
2,538
|
|
|
$
|
6.01
|
|
For the year ended December 31, 2015
|
Shares
|
|
Weighted Average Grant Date Fair Value per Share
|
|||
|
(Shares in Thousands)
|
|||||
Un-vested restricted stock units at December 31, 2014
|
1,209
|
|
|
$
|
8.90
|
|
Restricted stock units granted
|
784
|
|
|
7.48
|
|
|
Restricted stock units vested
|
(465
|
)
|
|
9.88
|
|
|
Restricted stock units forfeited
|
(85
|
)
|
|
8.95
|
|
|
Un-vested restricted stock units at December 31, 2015
|
1,443
|
|
|
$
|
7.81
|
|
For the Year Ended December 31, 2014
|
Shares
|
|
Weighted Average Grant Date Fair Value per Share
|
|||
|
(Shares in Thousands)
|
|||||
Un-vested restricted stock units at December 31, 2013
|
1,242
|
|
|
$
|
7.75
|
|
Restricted stock units granted
|
373
|
|
|
11.52
|
|
|
Restricted stock units vested
|
(360
|
)
|
|
9.53
|
|
|
Restricted stock units forfeited
|
(46
|
)
|
|
10.14
|
|
|
Un-vested restricted stock units at December 31, 2014
|
1,209
|
|
|
$
|
8.90
|
|
|
2012
|
|
Expected life
|
5 years
|
|
Risk free interest rate
|
0.86
|
%
|
Dividend yield
|
0.00
|
%
|
Expected stock price volatility
|
39.00
|
%
|
Projected forfeiture rate
|
1.00
|
%
|
|
For the year ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
|
(In Thousands)
|
||||||||||
Current
|
$
|
360
|
|
|
$
|
—
|
|
|
$
|
(2,390
|
)
|
Deferred
|
(54,749
|
)
|
|
—
|
|
|
4
|
|
|||
Total income tax benefit
|
$
|
(54,389
|
)
|
|
$
|
—
|
|
|
$
|
(2,386
|
)
|
|
As of December 31,
|
||||||
|
2016
|
|
2015
|
||||
Deferred tax asset
|
(In Thousands)
|
||||||
Net operating loss carry forwards
|
$
|
47,867
|
|
|
$
|
52,819
|
|
Share-based compensation
|
11,231
|
|
|
9,760
|
|
||
Unearned premium reserve
|
9,514
|
|
|
7,504
|
|
||
Deferred ceding commissions
|
1,999
|
|
|
—
|
|
||
Capitalized start-up costs
|
833
|
|
|
913
|
|
||
Unrealized loss on investments
|
711
|
|
|
2,101
|
|
||
Alternative minimum tax credit
|
360
|
|
|
—
|
|
||
Other
|
5,893
|
|
|
5,438
|
|
||
Total gross deferred tax assets
|
78,408
|
|
|
78,535
|
|
||
Less: valuation allowance
|
(7,252
|
)
|
|
(66,399
|
)
|
||
Total deferred tax assets
|
71,156
|
|
|
12,136
|
|
||
Deferred tax liability
|
|
|
|
||||
Deferred acquisition costs
|
(12,456
|
)
|
|
(7,246
|
)
|
||
Capitalized software
|
(5,076
|
)
|
|
(4,753
|
)
|
||
Intangible assets
|
(137
|
)
|
|
(137
|
)
|
||
Other
|
(213
|
)
|
|
(137
|
)
|
||
Total deferred tax liabilities
|
(17,882
|
)
|
|
(12,273
|
)
|
||
Net deferred income tax asset (liability)
|
$
|
53,274
|
|
|
$
|
(137
|
)
|
|
December 31, 2016
|
|
December 31, 2015
|
||||
|
(In Thousands)
|
||||||
Software
|
$
|
23,621
|
|
|
$
|
17,267
|
|
Equipment
|
3,102
|
|
|
1,803
|
|
||
Leasehold improvements
|
3,453
|
|
|
1,028
|
|
||
Subtotal
|
30,176
|
|
|
20,098
|
|
||
Accumulated amortization and depreciation
|
(9,774
|
)
|
|
(4,897
|
)
|
||
Software and equipment, net
|
$
|
20,402
|
|
|
$
|
15,201
|
|
|
(In Thousands)
|
|
Expected Lives
|
||
Goodwill
|
$
|
3,244
|
|
|
Indefinite
|
State licenses
|
260
|
|
|
Indefinite
|
|
GSE applications
|
130
|
|
|
Indefinite
|
|
Total intangible assets and goodwill
|
$
|
3,634
|
|
|
|
Years ending December 31,
|
(In Thousands)
|
||
2017
|
$
|
1,488
|
|
2018
|
1,711
|
|
|
2019
|
2,346
|
|
|
2020
|
2,417
|
|
|
2021
|
2,490
|
|
|
2022
|
2,564
|
|
|
2023
|
657
|
|
|
Totals
|
$
|
13,673
|
|
|
December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
|
(In Thousands)
|
||||||||||
Statutory net loss
|
$
|
(26,653
|
)
|
|
$
|
(52,322
|
)
|
|
$
|
(47,961
|
)
|
Statutory surplus
|
413,809
|
|
|
391,422
|
|
|
236,738
|
|
|||
Contingency reserve
|
90,479
|
|
|
32,564
|
|
|
9,401
|
|
|||
Risk-to-capital
|
11.6:1
|
|
|
8.7:1
|
|
|
3.6:1
|
|
|
2016 Quarters
|
|
2016
|
||||||||||||||||
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
|
Year
|
||||||||||
|
(In Thousands, except share data)
|
||||||||||||||||||
Net premiums earned
|
$
|
19,807
|
|
|
$
|
26,041
|
|
|
$
|
31,808
|
|
|
$
|
32,825
|
|
|
$
|
110,481
|
|
Net investment income
|
3,231
|
|
|
3,342
|
|
|
3,544
|
|
|
3,634
|
|
|
13,751
|
|
|||||
Net realized investment (losses) gains
|
(885
|
)
|
|
61
|
|
|
66
|
|
|
65
|
|
|
(693
|
)
|
|||||
Other revenues
|
32
|
|
|
37
|
|
|
102
|
|
|
105
|
|
|
276
|
|
|||||
Insurance claims and claims expenses
|
458
|
|
|
470
|
|
|
664
|
|
|
800
|
|
|
2,392
|
|
|||||
Underwriting and operating expenses
|
22,671
|
|
|
23,234
|
|
|
24,037
|
|
|
23,281
|
|
|
93,223
|
|
|||||
Gain (loss) from change in fair value of warrant liability
|
670
|
|
|
(59
|
)
|
|
(797
|
)
|
|
(1,714
|
)
|
|
(1,900
|
)
|
|||||
Interest expense
|
3,632
|
|
|
3,707
|
|
|
3,733
|
|
|
3,776
|
|
|
14,848
|
|
|||||
Pre-tax (loss) income
|
(3,907
|
)
|
|
2,011
|
|
|
6,289
|
|
|
7,059
|
|
|
11,452
|
|
|||||
Income tax expense (benefit)
|
—
|
|
|
—
|
|
|
114
|
|
|
(54,503
|
)
|
|
(54,389
|
)
|
|||||
Net (loss) income
|
(3,907
|
)
|
|
2,011
|
|
|
6,175
|
|
|
61,562
|
|
|
65,841
|
|
|||||
(Loss) income per share:
(1)
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic (loss) earnings per share
|
$
|
(0.07
|
)
|
|
$
|
0.03
|
|
|
$
|
0.10
|
|
|
$
|
1.04
|
|
|
$
|
1.11
|
|
Diluted (loss) earnings per share
|
(0.07
|
)
|
|
0.03
|
|
|
0.10
|
|
|
1.01
|
|
|
1.08
|
|
|||||
Weighted average common shares outstanding - basic
|
58,936,694
|
|
|
59,105,613
|
|
|
59,130,401
|
|
|
59,140,011
|
|
|
59,070,948
|
|
|||||
Weighted average common shares outstanding - diluted
|
58,936,694
|
|
|
59,830,899
|
|
|
60,284,746
|
|
|
61,229,338
|
|
|
60,829,372
|
|
|
2015 Quarters
|
|
2015
|
||||||||||||||||
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
|
Year
|
||||||||||
|
(In Thousands, except share data)
|
||||||||||||||||||
Net premiums earned
|
6,936
|
|
|
8,856
|
|
|
12,834
|
|
|
16,880
|
|
|
45,506
|
|
|||||
Net investment income
|
1,596
|
|
|
1,688
|
|
|
1,884
|
|
|
2,078
|
|
|
7,246
|
|
|||||
Net realized investment gains (losses)
|
613
|
|
|
354
|
|
|
(15
|
)
|
|
(121
|
)
|
|
831
|
|
|||||
Other revenues
|
—
|
|
|
—
|
|
|
—
|
|
|
25
|
|
|
25
|
|
|||||
Insurance claims and claims expenses
|
104
|
|
|
(6
|
)
|
|
181
|
|
|
371
|
|
|
650
|
|
|||||
Underwriting and operating expenses
|
18,350
|
|
|
20,910
|
|
|
19,653
|
|
|
21,686
|
|
|
80,599
|
|
|||||
Gain (loss) from change in fair value of warrant liability
|
1,248
|
|
|
(106
|
)
|
|
332
|
|
|
431
|
|
|
1,905
|
|
|||||
Interest expense
|
—
|
|
|
—
|
|
|
—
|
|
|
2,057
|
|
|
2,057
|
|
|||||
Pre-tax loss
|
(8,061
|
)
|
|
(10,112
|
)
|
|
(4,799
|
)
|
|
(4,821
|
)
|
|
(27,793
|
)
|
|||||
Income tax (benefit) expense
|
(241
|
)
|
|
241
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net loss
|
(7,820
|
)
|
|
(10,353
|
)
|
|
(4,799
|
)
|
|
(4,821
|
)
|
|
(27,793
|
)
|
|||||
Loss per share
(1)
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic and diluted loss per share
|
$
|
(0.13
|
)
|
|
$
|
(0.18
|
)
|
|
$
|
(0.08
|
)
|
|
$
|
(0.08
|
)
|
|
$
|
(0.47
|
)
|
Weighted average common shares outstanding
|
58,485,899
|
|
|
58,720,095
|
|
|
58,741,328
|
|
|
58,781,566
|
|
|
58,683,194
|
|
(1)
|
Due to the use of weighted average shares outstanding when calculating earnings per share, the sum of quarterly per share data may not equal the per share data for the year.
|
|
NMI HOLDINGS, INC.
|
February 17, 2017
|
By: /s/ Bradley M. Shuster
|
|
Name: Bradley M. Shuster
Title: Chairman and Chief Executive Officer
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Bradley M. Shuster
|
|
Chairman and Chief Executive Officer
|
|
February 17, 2017
|
Bradley M. Shuster
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ Glenn M. Farrell
|
|
Chief Financial Officer
|
|
February 17, 2017
|
Glenn M. Farrell
|
|
(Principal Financial and Accounting Officer)
|
|
|
|
|
|
|
|
/s/ Steven L. Scheid
|
|
Director
|
|
February 17, 2017
|
Steven L. Scheid
|
|
|
|
|
|
|
|
|
|
/s/ James G. Jones
|
|
Director
|
|
February 17, 2017
|
James G. Jones
|
|
|
|
|
|
|
|
|
|
/s/ Michael Montgomery
|
|
Director
|
|
February 17, 2017
|
Michael Montgomery
|
|
|
|
|
|
|
|
|
|
/s/ Michael Embler
|
|
Director
|
|
February 17, 2017
|
Michael Embler
|
|
|
|
|
|
|
|
|
|
/s/ James H. Ozanne
|
|
Director
|
|
February 17, 2017
|
James H. Ozanne
|
|
|
|
|
December 31, 2016
|
Amortized Cost
|
|
Fair Value
|
|
Amount Reflected on Balance Sheet
|
||||||
|
(In Thousands)
|
||||||||||
Fixed maturities
|
|
|
|
|
|
||||||
U.S. Treasury securities and obligations of U.S. government agencies
|
$
|
64,135
|
|
|
$
|
63,179
|
|
|
$
|
63,179
|
|
Municipal debt securities
|
40,801
|
|
|
40,269
|
|
|
40,269
|
|
|||
Corporate debt securities
|
349,712
|
|
|
349,078
|
|
|
349,078
|
|
|||
Asset-backed securities
|
114,456
|
|
|
114,661
|
|
|
114,661
|
|
|||
Total bonds
|
569,104
|
|
|
567,187
|
|
|
567,187
|
|
|||
Short-term investments
|
61,584
|
|
|
61,782
|
|
|
61,782
|
|
|||
Total investments other than investments in related parties
|
$
|
630,688
|
|
|
$
|
628,969
|
|
|
$
|
628,969
|
|
|
December 31, 2016
|
|
December 31, 2015
|
||||
|
(In Thousands, except for share data)
|
||||||
Assets
|
|
|
|
||||
Fixed maturities, available-for-sale, at fair value
|
$
|
58,209
|
|
|
$
|
87,010
|
|
Cash and cash equivalents
|
15,858
|
|
|
13,183
|
|
||
Investment in subsidiaries, at equity in net assets
|
503,731
|
|
|
442,077
|
|
||
Accrued investment income
|
151
|
|
|
148
|
|
||
Prepaid expenses
|
1,991
|
|
|
1,428
|
|
||
Due from affiliates, net
|
9,211
|
|
|
8,383
|
|
||
Software and equipment, net
|
20,401
|
|
|
15,201
|
|
||
Deferred tax asset, net
|
38,374
|
|
|
—
|
|
||
Other assets
|
182
|
|
|
56
|
|
||
Total assets
|
$
|
648,108
|
|
|
$
|
567,486
|
|
Liabilities
|
|
|
|
||||
Term loan
|
$
|
144,353
|
|
|
$
|
143,939
|
|
Accounts payable and accrued expenses
|
23,039
|
|
|
19,349
|
|
||
Warrant liability, at fair value
|
3,367
|
|
|
1,467
|
|
||
Total liabilities
|
170,759
|
|
|
164,755
|
|
||
|
|
|
|
||||
Shareholders' equity
|
|
|
|
||||
Common stock - class A shares, $0.01 par value;
59,145,161 and 58,807,825 shares issued and outstanding as of December 31, 2016 and December 31, 2015, respectively (250,000,000 shares authorized) |
591
|
|
|
588
|
|
||
Additional paid-in capital
|
576,927
|
|
|
570,340
|
|
||
Accumulated other comprehensive loss, net of tax
|
(5,287
|
)
|
|
(7,474
|
)
|
||
Accumulated deficit
|
(94,882
|
)
|
|
(160,723
|
)
|
||
Total shareholders' equity
|
477,349
|
|
|
402,731
|
|
||
Total liabilities and shareholders' equity
|
$
|
648,108
|
|
|
$
|
567,486
|
|
|
For the year ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
|
(In Thousands)
|
||||||||||
Revenues
|
|
|
|
|
|
||||||
Net investment income
|
$
|
773
|
|
|
$
|
2,535
|
|
|
$
|
2,937
|
|
Net realized investment gains
|
53
|
|
|
379
|
|
|
67
|
|
|||
Total revenues
|
826
|
|
|
2,914
|
|
|
3,004
|
|
|||
|
|
|
|
|
|
||||||
Expenses
|
|
|
|
|
|
||||||
Other operating expenses
|
17,600
|
|
|
17,157
|
|
|
18,817
|
|
|||
Total expenses
|
17,600
|
|
|
17,157
|
|
|
18,817
|
|
|||
|
|
|
|
|
|
||||||
Other income (loss)
|
|
|
|
|
|
||||||
(Loss) gain from change in fair value of warrant liability
|
(1,900
|
)
|
|
1,905
|
|
|
2,949
|
|
|||
Gain from settlement of warrants
|
—
|
|
|
—
|
|
|
37
|
|
|||
Interest expense
|
(14,848
|
)
|
|
(2,057
|
)
|
|
—
|
|
|||
Total other (expenses) income
|
(16,748
|
)
|
|
(152
|
)
|
|
2,986
|
|
|||
|
|
|
|
|
|
||||||
Equity in net income (loss) of subsidiaries
|
58,819
|
|
|
(14,430
|
)
|
|
(38,710
|
)
|
|||
|
|
|
|
|
|
||||||
Income (loss) before income taxes
|
25,297
|
|
|
(28,825
|
)
|
|
(51,537
|
)
|
|||
Income tax benefit
|
(40,544
|
)
|
|
(1,032
|
)
|
|
(2,631
|
)
|
|||
Net income (loss)
|
$
|
65,841
|
|
|
$
|
(27,793
|
)
|
|
$
|
(48,906
|
)
|
|
|
|
|
|
|
||||||
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
||||||
Net unrealized gains in accumulated other comprehensive loss, net of tax (benefit) expense of $82, $0, and $2,390 for each of the years in the three-year period ended December 31, 2016, respectively
|
100
|
|
|
141
|
|
|
1,092
|
|
|||
Reclassification adjustment for losses (gains) included in net loss, net of tax expense of $0 for each of the years in the three-year period ended December 31, 2016
|
53
|
|
|
186
|
|
|
—
|
|
|||
Equity in other comprehensive income (loss) of subsidiaries
|
2,034
|
|
|
(4,194
|
)
|
|
2,348
|
|
|||
Other comprehensive income (loss), net of tax
|
2,187
|
|
|
(3,867
|
)
|
|
3,440
|
|
|||
Comprehensive income (loss)
|
$
|
68,028
|
|
|
$
|
(31,660
|
)
|
|
$
|
(45,466
|
)
|
|
For the year ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Cash flows from operating activities
|
(In Thousands)
|
||||||||||
Net income (loss)
|
$
|
65,841
|
|
|
$
|
(27,793
|
)
|
|
$
|
(48,906
|
)
|
Adjustments to reconcile net income (loss) to net cash used in operating activities:
|
|
|
|
|
|
||||||
Share-based compensation expense
|
6,854
|
|
|
8,174
|
|
|
9,180
|
|
|||
Loss (gain) from change in fair value of warrant liability
|
1,900
|
|
|
(1,905
|
)
|
|
(2,949
|
)
|
|||
Net realized investment losses
|
(53
|
)
|
|
(379
|
)
|
|
(67
|
)
|
|||
Depreciation and amortization
|
5,779
|
|
|
3,885
|
|
|
5,618
|
|
|||
Amortization of debt discount and debt issuance costs
|
1,914
|
|
|
251
|
|
|
—
|
|
|||
Current tax payable
|
—
|
|
|
—
|
|
|
(2,390
|
)
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Equity in net (income) loss of subsidiaries
|
(58,819
|
)
|
|
14,430
|
|
|
38,710
|
|
|||
Accrued investment income
|
(2
|
)
|
|
481
|
|
|
409
|
|
|||
Receivable from affiliates
|
(828
|
)
|
|
1,566
|
|
|
616
|
|
|||
Prepaid expenses
|
(563
|
)
|
|
626
|
|
|
(535
|
)
|
|||
Other assets
|
(126
|
)
|
|
453
|
|
|
(445
|
)
|
|||
Deferred income taxes
|
(38,456
|
)
|
|
—
|
|
|
—
|
|
|||
Accounts payable and accrued expenses
|
2,711
|
|
|
8,025
|
|
|
233
|
|
|||
Net cash (used in) provided by operating activities
|
(13,848
|
)
|
|
7,814
|
|
|
(526
|
)
|
|||
Cash flows from investing activities
|
|
|
|
|
|
||||||
Capitalization of subsidiaries
|
(800
|
)
|
|
(153,500
|
)
|
|
(95,000
|
)
|
|||
Purchase of short-term investments
|
(127,329
|
)
|
|
(21,160
|
)
|
|
—
|
|
|||
Purchase of fixed-maturity investments, available-for-sale
|
(172
|
)
|
|
(66,411
|
)
|
|
(23,552
|
)
|
|||
Proceeds from maturity of short-term investments
|
115,049
|
|
|
—
|
|
|
—
|
|
|||
Proceeds from redemptions, maturities and sale of fixed-maturity investments, available-for-sale
|
41,750
|
|
|
79,652
|
|
|
120,813
|
|
|||
Purchase of software and equipment
|
(10,251
|
)
|
|
(6,135
|
)
|
|
(8,220
|
)
|
|||
Net cash provided by (used in) investing activities
|
18,247
|
|
|
(167,554
|
)
|
|
(5,959
|
)
|
|||
Cash flows from financing activities
|
|
|
|
|
|
||||||
Taxes paid related to net share settlement of equity awards
|
(756
|
)
|
|
(1,105
|
)
|
|
(1,083
|
)
|
|||
Proceeds from issuance of common stock
|
532
|
|
|
415
|
|
|
1,097
|
|
|||
Gain from settlement of warrants
|
—
|
|
|
—
|
|
|
(37
|
)
|
|||
Proceeds from term loan, net of discount
|
—
|
|
|
148,500
|
|
|
—
|
|
|||
Repayments of term loan
|
(1,500
|
)
|
|
(375
|
)
|
|
—
|
|
|||
Payments of debt issuance costs
|
—
|
|
|
(4,437
|
)
|
|
—
|
|
|||
Net cash (used in) provided by financing activities
|
(1,724
|
)
|
|
142,998
|
|
|
(23
|
)
|
|||
|
|
|
|
|
|
||||||
Net increase (decrease) in cash and cash equivalents
|
2,675
|
|
|
(16,742
|
)
|
|
(6,508
|
)
|
|||
Cash and cash equivalents, beginning of period
|
13,183
|
|
|
29,925
|
|
|
36,433
|
|
|||
Cash and cash equivalents, end of period
|
$
|
15,858
|
|
|
$
|
13,183
|
|
|
$
|
29,925
|
|
|
|
Gross Amount
|
|
Ceded to Other Companies
|
|
Assumed from Other Companies
|
|
Net Amount
|
|
Percentage of Amount Assumed to Net
|
|||||||||
For the years ended December 31,
|
|
(In thousands)
|
|||||||||||||||||
2016
|
|
$
|
115,830
|
|
|
$
|
5,349
|
|
|
$
|
—
|
|
|
$
|
110,481
|
|
|
—
|
%
|
2015
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
%
|
||||
2014
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
%
|
Exhibit Number
|
|
Description
|
|
|
|
2.1
|
|
Stock Purchase Agreement, dated November 30, 2011, between NMI Holdings, Inc. and MAC Financial Ltd. (incorporated herein by reference to Exhibit 2.1 to our Form S-1 Registration Statement (Registration No. 333-191635), filed on October 9, 2013)
|
2.2
|
|
Amendment to Stock Purchase Agreement, dated April 6, 2012, between NMI Holdings, Inc. and MAC Financial Ltd. (incorporated herein by reference to Exhibit 2.2 to our Form S-1 Registration Statement (Registration No. 333-191635), filed on October 9, 2013)
|
3.1
|
|
Second Amended and Restated Certificate of Incorporation (incorporated herein by reference to Exhibit 3.1 to our Form S-1 Registration Statement (Registration No. 333-191635), filed on October 9, 2013)
|
3.2
|
|
Third Amended and Restated By-Laws (incorporated herein by reference to Exhibit 3.1 to our Form 8-K, filed on December 9, 2014)
|
4.1
|
|
Specimen Class A common stock certificate (incorporated herein by reference to Exhibit 4.1 to our Form S-1 Registration Statement (Registration No. 333-191635), filed on October 9, 2013)
|
4.2
|
|
Registration Rights Agreement between NMI Holdings, Inc. and FBR Capital Markets & Co., dated April 24, 2012 (incorporated herein by reference to Exhibit 4.2 to our Form S-1 Registration Statement (Registration No. 333-191635), filed on October 9, 2013)
|
4.3
|
|
Registration Rights Agreement by and between MAC Financial Ltd. and NMI Holdings, Inc., dated April 24, 2012 (incorporated herein by reference to Exhibit 4.3 to our Form S-1 Registration Statement (Registration No. 333-191635), filed on October 9, 2013)
|
4.4
|
|
Registration Rights Agreement between FBR & Co., FBR Capital Markets LT, Inc., FBR Capital Markets & Co., FBR Capital Markets PT, Inc. and NMI Holdings, Inc., dated April 24, 2012 (incorporated herein by reference to Exhibit 4.4 to our Form S-1 Registration Statement (Registration No. 333-191635), filed on October 9, 2013)
|
4.5
|
|
Warrant No. 1 to Purchase Common Stock of NMI Holdings, Inc. issued to FBR Capital Markets & Co., dated June 13, 2013 (incorporated herein by reference to Exhibit 4.5 to our Form S-1 Registration Statement (Registration No. 333-191635), filed on October 9, 2013)
|
4.6
|
|
Form of Warrant to Purchase Common Stock of NMI Holdings, Inc. issued to former stockholders of MAC Financial Ltd.(incorporated herein by reference to Exhibit 4.6 to our Form S-1 Registration Statement (Registration No. 333-191635), filed on October 9, 2013)
|
10.1 ~
|
|
NMI Holdings Inc. 2012 Stock Incentive Plan (incorporated herein by reference to Exhibit 10.1 to our Form S-1 Registration Statement (registration No. 333-191635), filed on October 9, 2013)
|
10.2 ~
|
|
Form of NMI Holdings, Inc. 2012 Stock Incentive Plan Restricted Stock Unit Award Agreement for Chief Executive Officer and Chief Financial Officer (incorporated herein by reference to Exhibit 10.2 to our Form S-1 Registration Statement (Registration No. 333-191635), filed on October 9, 2013)
|
10.3 ~
|
|
Form of NMI Holdings, Inc. 2012 Stock Incentive Plan Restricted Stock Unit Award Agreement for Management (incorporated herein by reference to Exhibit 10.3 to our Form S-1 Registration Statement (Registration No. 333-191635), filed on October 9, 2013)
|
10.4 ~
|
|
Form of NMI Holdings, Inc. 2012 Stock Incentive Plan Restricted Stock Unit Award Agreement for Directors (incorporated herein by reference to Exhibit 10.4 to our Form S-1 Registration Statement (Registration No. 333-191635), filed on October 9, 2013)
|
10.5 ~
|
|
Form of NMI Holdings, Inc. 2012 Stock Incentive Plan Nonqualified Stock Option Award Agreement for Chief Executive Officer and Chief Financial Officer (incorporated herein by reference to Exhibit 10.5 to our Form S-1 Registration Statement (Registration No. 333-191635), filed on October 9, 2013)
|
10.6 ~
|
|
Form of NMI Holdings, Inc. 2012 Stock Incentive Plan Nonqualified Stock Option Award Agreement for Management (incorporated herein by reference to Exhibit 10.6 to our Form S-1 Registration Statement (Registration No. 333-191635), filed on October 9, 2013)
|
10.7 ~
|
|
Form of NMI Holdings, Inc. 2012 Stock Incentive Plan Nonqualified Stock Option Award Agreement for Directors (incorporated herein by reference to Exhibit 10.7 to our Form S-1 Registration Statement (Registration No. 333-191635), filed on October 9, 2013)
|
10.8 ~
|
|
Form of NMI Holdings, Inc. 2012 Stock Incentive Plan Nonqualified Stock Option Award Agreement for Chief Executive Officer and Chief Financial Officer
|
10.9 ~
|
|
Form of NMI Holdings, Inc. 2012 Stock Incentive Plan Nonqualified Stock Option Award Agreement for Employees
|
10.10 ~
|
|
Amended and Restated Employment Agreement by and between NMI Holdings, Inc. and Bradley M. Shuster, dated December 23, 2015 (incorporated herein by reference to Exhibit 10.1 to our Form 8-K, filed on December 29, 2015)
|
Exhibit Number
|
|
Description
|
10.11 ~
|
|
Offer Letter by and between NMI Holdings, Inc. and Glenn Farrell, effective December 4, 2014 (incorporated herein by reference to Exhibit 10.1 to our Form 8-K, filed on December 9, 2014)
|
10.12 ~
|
|
Offer Letter by and between NMI Holdings, Inc. and William Leatherberry, dated July 11, 2014 (incorporated herein by reference to Exhibit 10.10 to our Form 10-Q, filed on April 28, 2016)
|
10.13~
|
|
Offer Letter by and between NMI Holdings, Inc. and Adam Pollitzer, dated February 1, 2017 (incorporated herein by reference to Exhibit 10.1 to our Form 8-K, filed on February 3, 2017)
|
10.14 ~
|
|
Form of Indemnification Agreement between NMI Holdings, Inc. and its directors and certain executive officers (incorporated herein by reference to Exhibit 10.1 to our Form 8-K, filed on November 25, 2014)
|
10.15 +
|
|
Commitment Letter dated July 12, 2013 for Bulk Fannie Mae-Paid Loss-on-Sale Mortgage Insurance on the Portfolio of approximately $5.46 billion Purchased by Fannie Mae and Identified by Fannie Mae as Deal No. 2013 MIRT 01 and by the Company as Policy No. P-0001-01 (incorporated herein by reference to Exhibit 10.14 to our Form S-1 Registration Statement (Registration No. 333-191635), filed on October 9, 2013)
|
10.16
|
|
Credit Agreement, dated November 10, 2015, between NMI Holdings, Inc., the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (incorporated herein by reference to Exhibit 4.1 to our Form 8-K, filed on November 10, 2015)
|
10.17
|
|
Amendment No. 1, dated February 10, 2017, to the Credit Agreement dated November 10, 2015, between NMI Holdings, Inc., the lender parties thereto and JPMorgan Chase Bank, N.A., as administrative agent (incorporated herein by reference to Exhibit 10.1 to our Form 8-K, filed on February 10, 2017)
|
10.18 ~
|
|
NMI Holdings, Inc. 2014 Omnibus Incentive Plan (incorporated herein by reference to Appendix A to our 2014 Annual Proxy Statement, filed on March 26, 2014)
|
10.19 ~
|
|
Form of NMI Holdings, Inc. 2014 Omnibus Incentive Plan Restricted Stock Unit Award Agreement for Chief Executive Officer and President (incorporated herein by reference to Exhibit 10.16 to our Form 10-K, filed on February 19, 2016)
|
10.20 ~
|
|
Form of NMI Holdings, Inc. 2014 Omnibus Incentive Plan Restricted Stock Unit Award Agreement for Executive Officers (incorporated herein by reference to Exhibit 10.16 to our Form 10-K, filed on February 19, 2016)
|
10.21 ~
|
|
Form of NMI Holdings, Inc. 2014 Omnibus Incentive Plan Restricted Stock Unit Award Agreement for Employees (incorporated herein by reference to Exhibit 10.19 to our Form 10-K, filed on February 20, 2015)
|
10.22~
|
|
Form of NMI Holdings, Inc. 2014 Omnibus Incentive Plan Restricted Stock Unit Award Agreement for Independent Directors (incorporated herein by reference to Exhibit 10.20 to our Form 10-K, filed on February 20, 2015)
|
10.23 ~
|
|
Form of NMI Holdings, Inc. 2014 Omnibus Incentive Plan Nonqualified Stock Option Award Agreement for Chief Executive Officer and President (incorporated herein by reference to Exhibit 10.21 to our Form 10-K, filed on February 20, 2015)
|
10.24 ~
|
|
Form of NMI Holdings, Inc. 2014 Omnibus Incentive Plan Nonqualified Stock Option Award Agreement for Employees (incorporated herein by reference to Exhibit 10.22 to our Form 10-K, filed on February 20, 2015)
|
10.25 ~
|
|
Form of NMI Holdings, Inc. 2014 Omnibus Incentive Plan Phantom Unit Award Agreement for Independent Directors (incorporated herein by reference to Exhibit 10.21 to our Form 10-Q, filed on August 5, 2015)
|
10.26 ~
|
|
Form of NMI Holdings, Inc. 2014 Omnibus Incentive Plan Performance Based Restricted Stock Unit Award Agreement for Chief Executive Officer
|
10.27 ~
|
|
NMI Holdings, Inc. Severance Benefit Plan (incorporated herein by reference to Exhibit 10.1 to our Form 8-K, filed on February 17, 2016)
|
21.1
|
|
Subsidiaries of NMI Holdings, Inc. (incorporated herein by reference to Exhibit 21.1 to our Form 10-Q filed on October 30, 2015)
|
23.1
|
|
Consent of BDO USA, LLP
|
31.1
|
|
Principal Executive Officer's Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
31.2
|
|
Principal Financial Officer's Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
32.1 #
|
|
Certifications of CEO and CFO Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
Exhibit Number
|
|
Description
|
101 *
|
|
The following financial information from NMI Holdings, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2016 formatted in XBRL (eXtensible Business Reporting Language):
(i) Consolidated Balance Sheets as of December 31, 2016 and 2015 (ii) Consolidated Statements of Comprehensive Income (Loss) for each of the three years in the period ended December 31, 2016,
(iii) Consolidated Statements of Changes in Shareholders' Equity for each of the three years in the period ended December 31, 2016
(iv) Consolidated Statements of Cash Flows for each of the three years in the period ended December 31, 2016, and (v) Notes to Consolidated Financial Statements. |
~
|
Indicates a management contract or compensatory plan or contract.
|
+
|
Confidential treatment granted as to certain portions, which portions have been filed separately with the Securities and Exchange Commission.
|
#
|
In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release No. 34-47986, the certifications furnished in Exhibit 32 hereto are deemed to accompany this Form 10-Q and will not be deemed "filed" for purposes of Section 18 of the Exchange Act or deemed to be incorporated by reference into any filing under the Exchange Act or the Securities Act except to the extent that the registrant specifically incorporates it by reference.
|
*
|
In accordance with Rule 406T of Regulation S-T, the information furnished in these exhibits will not be deemed "filed" for purposes of Section 18 of the Exchange Act. Such exhibits will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act except to the extent that the registrant specifically incorporates it by reference.
|
4.
|
Termination
.
|
By:
|
James H. Ozanne
|
Title:
|
Chairman, Compensation Committee
|
4.
|
Termination
.
|
By:
|
Bradley M. Shuster
|
Title:
|
Chairman and Chief Executive Officer
|
Date: February 17, 2017
|
|
|
/s/ Bradley M. Shuster
|
|
Bradley M. Shuster
|
|
Chairman and Chief Executive Officer
|
|
(Principal Executive Officer)
|
Date: February 17, 2017
|
|
|
/s/ Glenn M. Farrell
|
|
Glenn M. Farrell
|
|
Chief Financial Officer
|
|
(Principal Financial and Accounting Officer)
|
Date: February 17, 2017
|
|
|
|
|
/s/ Bradley M. Shuster
|
|
Bradley M. Shuster
|
|
Chairman and Chief Executive Officer
|
|
(Principal Executive Officer)
|
Date: February 17, 2017
|
|
|
|
|
/s/ Glenn M. Farrell
|
|
Glenn M. Farrell
|
|
Chief Financial Officer
|
|
(Principal Financial and Accounting Officer)
|