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NMI Holdings (NMIH) Q2 Earnings & Revenues Top, Rise Y/Y

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NMI Holdings (NMIH - Free Report) reported second-quarter 2022 operating net income per share of 86 cents, which beat the Zacks Consensus Estimate by 11.7%. The bottom line increased 28.4% year over year.

The quarterly results reflected significant new business production and increasing persistency, which drove growth in the company’s high-quality insured portfolio. Favorable credit performance and expense discipline led to record profitability and strong returns.

NMI Holdings Inc Price, Consensus and EPS Surprise


Operational Update

NMI Holdings’ total operating revenues of $132.2 million increased 9.5% year over year on higher net premiums earned (up 9%) and net investment income (up 16.4%). Revenues beat the Zacks Consensus Estimate by 1.3%.

Primary insurance-in-force increased 23% to $168.6 billion. Annual persistency was 71.5%, up 1760 basis points year over year.

New insurance written was $16.6 billion, down 27% year over year, reflecting a decline in refinancing origination volume year on year.

Underwriting and operating expenses totaled $30.7 million, down 12% year over year. Insurance claims were a benefit of $3 million against an expense of $4.6 million.

The loss ratio was (2.5) against 4.2 in the year-ago quarter.

The adjusted expense ratio of 25.4 improved 450 basis points year over year while the adjusted combined ratio of 22.9 improved 1100 basis points year over year.

Financial Update

Book value per share, a measure of net worth, was up 5.6% year over year to $18.01 as of Jun 30, 2022.

NMI Holdings had $72.4 million in cash and cash equivalents, down 5.5% from 2021 end. The debt balance of $394.6 million increased 0.2% from 2021 end.

Annualized adjusted return on equity was 19.4%, up 300 basis points.

Total PMIERs available assets were $2.2 billion and net risk-based required assets totaled $1.2 billion at second-quarter 2022 end.

Reinsurance Agreement Inked

NMIH entered into a $290 million excess of loss reinsurance agreement with a high-quality panel of third-party reinsurers, covering an existing portfolio of mortgage insurance policies written primarily from Oct 1, 2021 through Mar 31, 2022.

Zacks Rank

NMI Holdings currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Property & Casualty Insurers

Of the insurance industry players that have reported second-quarter results so far, The Travelers Companies (TRV - Free Report) and RLI Corporation (RLI - Free Report) beat the respective Zacks Consensus Estimate for earnings, while The Progressive Corporation (PGR - Free Report) met the mark.

Travelers’ core income of $2.57 per share beat the Zacks Consensus Estimate by 28.5% but decreased 26% year over year. Total revenues increased 7% year over year, primarily due to higher premiums, and beat the consensus estimate by 1.8%. Net written premiums increased 11%, driven by strong retention rates and positive renewal premium changes across all the segments. Underwriting gain of $113 million decreased 65% year over year in the reported quarter.  

Travelers’ combined ratio deteriorated 300 bps year over year to 98.3 due to higher catastrophe losses and a higher underlying combined ratio.

RLI’s operating earnings of $1.49 per share beat the Zacks Consensus Estimate by 6.1% and improved 36.7% from the prior-year quarter. Operating revenues were $301.3 million, up 16.9% year over year, driven by 17.3% higher net premiums earned and 10.5% higher net investment income. The top line beat the Zacks Consensus Estimate of $276 million by 0.9%.

RLI’s underwriting income of $56 million increased 53%, primarily due to the strong performance of the Property and Surety segments. The combined ratio improved 460 bps year over year to 80.2.

Progressive’s earnings per share of 95 cents came in line with the Zacks Consensus Estimate. The bottom line declined 37.1% year over year. Progressive’s net premiums written were $12.4 billion in the quarter, up 8% from $11.7 billion a year ago.

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