NMI Holdings 2026 Q2 Earnings Call

Please go ahead. Thank you, operator.

Good afternoon. Welcome to the 2026 second quarter conference call for National MI. I'm John Swenson, Vice President of Investor Relations and Treasury. Joining us on the call today are Brad Shuster, Executive Chairman, Adam Pollitzer, President and Chief Executive Officer, and Aurora Swithenbank, Chief Financial Officer. Financial results for the quarter were released after the close today. The press release may be accessed on NMI's website, located at nationalmi.com under the Investors tab. During the course of this call, we may make comments about our expectations for the future. Actual results could differ materially from those contained in these forward-looking statements. Additional information about the factors that could cause actual results or trends to differ materially from those discussed on the call can be found on our website or through our filings with the SEC.

If to the extent the company makes forward-looking statements, we do not undertake any obligation to update those statements in the future in light of subsequent developments. No one should rely on the fact that the guidance of such statements is current at any time other than the time of this call. Note that on this call, we may refer to certain non-GAAP measures. In today's press release and on our website, we've provided a reconciliation of these measures to the most comparable measures under GAAP. I'll turn the call over to Brad.

Thank you, John. Good afternoon, everyone. I'm pleased to report that in the second quarter, National MI again delivered standout operating performance, continued growth in our insured portfolio, and record financial results. Our lenders and their borrowers continued to turn to us for critical down payment support. In the second quarter, we generated $16 billion of NIW volume, ending the period with a record $227.1 billion of high-quality, high-performing primary insurance in force. We also surpassed $500 billion of insurance ever written during the quarter, a notable milestone that serves to highlight the consistent and significant success we've been delivering for so long. National MI was formed with a goal to provide a differentiated commitment and standard of service and a clear vision as to how we should engage in the market to drive value for our borrowers, our lender customers, our employees, and our shareholders.

It's remarkable to reflect on all that we have achieved to date. We've helped nearly 2.2 million borrowers gain access to a mortgage and opened the door to affordable and sustainable homeownership in communities across the country. We've established a broadly diversified national customer franchise, serving over 1,700 lenders from a foundation of partnership, trust, and innovation. We've attracted a talented, dedicated team who drive our success every day and have built a culture of collaboration, integrity, and performance. We have consistently outperformed, delivering exceptionally strong operating and financial results quarter after quarter. The long-term private MI market opportunity is compelling, and I'm as excited as I've ever been about how we're positioned to continue to outperform as we go forward. With that, let me turn it over to Adam.

Thank you, Brad. Good afternoon, everyone. I'm delighted to talk to you today as I share Brad's excitement about our milestone success and his confidence in the opportunity we have as we look ahead. National MI continued to outperform in the second quarter, delivering significant new business production, consistent growth in our insured portfolio, and record financial results. We generated $16 billion of NIW volume and ended the period with a record $227.1 billion of high-quality, high-performing primary insurance in force. Total revenue in the second quarter was a record $187.9 million, and we delivered record adjusted net income of $106 million or $1.38 per diluted share and a 15.9% return on equity. Overall, we had a terrific quarter and are confident as we look ahead. The macro environment and housing market have remained resilient.

Our lender customers and their borrowers continue to rely on us in size for critical down payment support. We see an attractive and sustained new business opportunity fueled by long-term secular trends. We have an exceptionally high-quality insured portfolio covered by a comprehensive set of risk transfer solutions. Our credit performance continues to stand ahead. We're delivering consistent growth and embedded value gains in our insured book. We continue to manage our expenses and capital position with discipline and efficiency, building a robust balance sheet that's supported by the significant earnings power of our platform. Taken together, we see a clear opportunity for continued outperformance. Notwithstanding these strong positives, however, macro risks do remain. We've maintained a proactive stance with respect to our pricing, risk selection, and reinsurance decisioning. It's an approach that has served us well and continues to be the prudent and appropriate course.

More broadly, we've been encouraged by the continued discipline that we see across the private MI market. Overall, we had a terrific quarter, delivering strong operating performance, consistent growth in our insured portfolio, and record financial results. We're in the market every day with a clear mandate and purpose, offering a low-cost, high-value solution that makes homeownership more affordable and achievable for millions of deserving Americans in communities across the country, with coverage that serves to insulate the GSEs and taxpayers from risk and loss in a downturn. Looking ahead, we're well-positioned to continue to serve our customers and their borrowers, invest in our employees and their success, drive growth in our high-quality insured portfolio, and deliver through the cycle growth, returns, and value for our shareholders. With that, I'll turn it over to Aurora.

Thank you, Adam. We delivered record financial results in the second quarter. Total revenue was a record $187.9 million. adjusted net income was a record $106 million, or $1.38 per diluted share, and return on equity was 15.9%. We generated $16 billion of NIW, and our primary insurance in force grew to $227.1 billion. Twelve-month persistency was 81.4% in the second quarter, compared to 82.2% in the first quarter. net premiums earned in the second quarter were a record $157.5 million, compared to $154.8 million in the first quarter and $149.1 million in the second quarter of 2025. net yield for the quarter was 28 basis points, consistent with the first quarter. core yield, which excludes the cost of our reinsurance coverage and the contribution from cancellation earnings, was 34 basis points, also unchanged from the first quarter.

investment income was $30.3 million in the second quarter, compared to $28.6 million in the first quarter and $24.9 million in the second quarter of 2025. Total revenue was a record $187.9 million in the second quarter, up 2.4% compared to the first quarter and 8.1% compared to the second quarter of 2025. underwriting and operating expenses were $30.5 million in the second quarter, compared to $30.6 million in the first quarter. Our expense ratio was 19.4% in the quarter, compared to 19.8% in the first quarter. We had 8,020 defaults at June 30th, compared to 8,044 at March 31st, and our default rate was 1.16% at quarter end. claims expense in the second quarter was $13.1 million, compared to $20.7 million in the first quarter and $13.4 million in the second quarter of 2025.

adjusted net income was a record $106 million, up 7% compared to $99.4 million in the first quarter and 10% compared to $96.5 million in the second quarter of 2025. adjusted diluted earnings per share was a record $1.38, up 8% compared to $1.28 in the first quarter and 14% compared to $1.22 in the second quarter of 2025. shareholders' equity as of June 30th was $2.7 billion, and book value per share was $35.89. book value per share, excluding the impact of our net unrealized gains and losses in the investment portfolio, was $36.88, up 4% compared to the first quarter and 15% compared to the second quarter of last year. In the second quarter, we repurchased $31.4 million of common stock, retiring 827,000 shares at an average price of $37.99.

Since starting our buyback program in 2022, we've repurchased a total of $408 million of common stock, retiring 13.6 million shares at an average price of $29.95. We have $167 million of repurchase capacity remaining under our existing program. At quarter end, we reported $3.7 billion of total available assets under PMIERs and $2.1 billion of risk-based required assets. Excess available assets were $1.6 billion. Overall, we achieved record financial results during the quarter, delivering consistent growth in our high-quality insured portfolio, record top-line performance, standout credit experience, continued expense efficiency, and record bottom-line profitability. With that, let me turn it back to Adam.

Thank you, Aurora. We had a terrific quarter, once again delivering significant new business production, continued growth in our high-quality insured portfolio, and record financial results. We have a strong customer franchise, a talented team driving us forward every day, an exceptionally high-quality book covered by a comprehensive set of risk transfer solutions, and a robust balance sheet supported by the significant earnings power of our platform. Taken together, we're well-positioned to continue to serve our customers and their borrowers, invest in our employees and their success, drive growth in our high-quality insured portfolio, and deliver through the cycle growth, returns, and value for our shareholders. Thank you for joining us today. I'll now ask the operator to come back on so we can take your questions.