NMI Holdings, Inc. Provides Guidance on Capital Position Under Revised Private Mortgage Insurer Eligibility Requirements

Rhea-AI Summary

NMI Holdings (Nasdaq: NMIH) has provided guidance on its capital position under the revised Private Mortgage Insurer Eligibility Requirements (PMIERs) released by Fannie Mae, Freddie Mac, and the Federal Housing Finance Administration on August 21, 2024. As of June 30, 2024, National MI had PMIERs total available assets of $2,828 million, compared to risk-based required assets of $1,652 million, with $1,176 million of excess funding capacity.

Under the revised PMIERs framework, the company estimates that its total available assets would have been $2,800 million and its risk-based required assets would have been $1,656 million as of June 30, 2024, with pro forma excess funding capacity of $1,144 million. The revised PMIERs framework will be implemented in phases starting March 31, 2025, and fully implemented by September 30, 2026. National MI expects to remain in full compliance throughout this period.

Positive

• National MI had $1,176 million of excess funding capacity as of June 30, 2024
• Under revised PMIERs, National MI would still have $1,144 million of pro forma excess funding capacity
• Company expects to remain in full compliance with existing and revised PMIERs

Negative

• Slight decrease in excess funding capacity under revised PMIERs from $1,176 million to $1,144 million

Insights

Financial Analyst

The revised PMIERs framework brings significant implications for NMI Holdings. Under the new guidelines, the company's excess funding capacity would decrease by $32 million to $1,144 million. This 2.7% reduction, while noteworthy, still leaves NMIH with a substantial buffer. The phased implementation, starting March 31, 2025, provides ample time for adjustment. The company's assertion of maintaining full compliance is reassuring for investors, indicating strong capital management. However, the slight increase in risk-based required assets under the new framework ($1,656 million vs $1,652 million) suggests potential for increased capital requirements in the future, which could impact profitability. Overall, NMIH appears well-positioned to navigate these regulatory changes, but investors should monitor how this affects the company's growth strategy and dividend policies.

Insurance Industry Expert

The revised PMIERs framework represents a significant shift in the private mortgage insurance landscape. NMI Holdings' ability to maintain a substantial excess funding capacity of $1,144 million under the new rules is commendable. This buffer provides a strong cushion against market volatility and potential economic downturns. The phased implementation approach is industry-friendly, allowing insurers time to adapt. However, the slight increase in risk-based required assets under the new framework hints at a more stringent regulatory environment. This could potentially lead to higher capital requirements across the industry, affecting profitability and competitiveness. NMIH's proactive disclosure and confidence in maintaining compliance demonstrate strong risk management practices, which should be viewed positively by stakeholders. The industry will likely see a period of adjustment as companies align with these new standards.

EMERYVILLE, Calif., Aug. 21, 2024 (GLOBE NEWSWIRE) -- NMI Holdings, Inc., (Nasdaq:NMIH), the parent company of National Mortgage Insurance Corporation (National MI), today provided guidance on its capital position under the revised Private Mortgage Insurer Eligibility Requirements (PMIERs) released by Fannie Mae and Freddie Mac (the GSEs), and the Federal Housing Finance Administration (FHFA) on August 21, 2024.

As previously disclosed, at June 30, 2024, National MI had PMIERs total available assets of $2,828 million, compared to risk-based required assets of $1,652 million, with $1,176 million of excess funding capacity.  Under the revised PMIERs framework the company estimates that its total available assets would have been $2,800 million and its risk-based required assets would have been $1,656 million as of June 30, 2024, with pro forma excess funding capacity of $1,144 million.

The GSEs and FHFA have indicated that the revised PMIERs framework will take effect on a phased basis beginning March 31, 2025 and will be fully implemented on September 30, 2026. National MI expects to remain in full compliance with the existing and revised PMIERs, as applicable, prior to and after March 31, 2025.

About National MI
National Mortgage Insurance Corporation (National MI), a subsidiary of NMI Holdings, Inc. (NASDAQ: NMIH), is a U.S.-based, private mortgage insurance company enabling low down payment borrowers to realize home ownership while protecting lenders and investors against losses related to a borrower’s default. To learn more, please visit www.nationalmi.com.

Cautionary Note Regarding Forward-Looking Statements
This press release contains forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act”), the U.S. Private Securities Litigation Reform Act of 1995, or in releases made by the U.S. Securities and Exchange Commission (“SEC”), all as may be amended from time to time. Forward-looking statements are statements about future, not past, events and rely on a number of assumptions concerning future events and involve certain important risks and uncertainties, any of which could cause our actual results to differ materially from those expressed in our forward-looking statements. Forward-looking statements in this press release include, without limitation, statements regarding the potential impact of regulatory changes. More information about the risks, uncertainties and assumptions affecting National MI include, but are not necessarily limited to, the risk factors and forward-looking statements cautionary language contained in our Annual Report on Form 10-K and in other filings made with the SEC. We do not undertake, and specifically disclaim, any obligation to revise any forward-looking statements to reflect the occurrence of future events or circumstances.

Investor Contact
John M. Swenson
Vice President, Investor Relations and Treasury
investor.relations@nationalmi.com
(510) 788-8417

Press Contact
Lesley Alli
Senior Vice President, Industry Relations, Marketing and Communications
media@nationalmi.com
(510) 858-0568

FAQ

What is NMI Holdings' (NMIH) capital position under the revised PMIERs as of June 30, 2024?

Under the revised PMIERs framework, NMI Holdings estimates that its total available assets would have been $2,800 million and its risk-based required assets would have been $1,656 million as of June 30, 2024, with pro forma excess funding capacity of $1,144 million.

When will the revised PMIERs framework for NMI Holdings (NMIH) take effect?

The revised PMIERs framework will be implemented in phases, beginning on March 31, 2025, and will be fully implemented by September 30, 2026.

How does NMI Holdings' (NMIH) excess funding capacity change under the revised PMIERs?

NMI Holdings' excess funding capacity would slightly decrease from $1,176 million under the current PMIERs to $1,144 million under the revised PMIERs, based on June 30, 2024 figures.

Will NMI Holdings (NMIH) remain compliant with the revised PMIERs?

Yes, National MI, a subsidiary of NMI Holdings, expects to remain in full compliance with both the existing and revised PMIERs, as applicable, prior to and after March 31, 2025.