SOURCE: NMI Holdings, Inc.

May 04, 2017 16:00 ET

NMI Holdings, Inc. Reports First Quarter 2017 Financial Results

EMERYVILLE, CA--(Marketwired - May 04, 2017) - NMI Holdings, Inc. (NASDAQ: NMIH) today reported net income of $5.5 million, or $0.09 per share, for the first quarter ended Mar. 31, 2017. Results for the quarter include fees and expenses of approximately $1.6 million related to repricing and extension of the company's Term Loan and the previously announced issuance of Insurance-Linked Notes. The company reported a net loss of $3.9 million, or $0.07 per share, in the first quarter of 2016.

Bradley Shuster, chairman and CEO of National MI, said, "We had another great quarter at National MI, achieving new records in the important metrics of insurance in force, premiums earned, master policies and customers generating NIW. Also, subsequent to the end of the quarter, we executed an Insurance-Linked Notes transaction that enhances National MI's financial strength by providing a layer of protection against adverse losses, while at the same time providing expected additional writing capacity under PMIERs of approximately $200 million. Our estimated after-tax cost of this coverage and capital relief is approximately three percent."

  • As of March 31, 2017, the company had primary insurance-in-force of $34.8 billion, up 8% from $32.2 billion at the prior quarter end and up 87% over $18.6 billion as of March 31, 2016.
  • Premiums earned for the quarter were $33.2 million, including $2.5 million attributable to cancellation of single premium policies, which compares with $32.8 million, including $5.1 million related to cancellations, in the prior quarter. Premiums earned in the first quarter of 2017 were up 68% over premium revenue of $19.8 million in the same quarter a year ago, which included $2.3 million related to cancellations.
  • NIW mix was 81% monthly premium product, which compares with 75% in the prior quarter and 59% in the first quarter of 2016.
  • Total underwriting and operating expenses in the first quarter were $26.0 million, including share-based compensation expense of $1.9 million. Expense in the quarter includes fees and expenses of approximately $1.6 million related to repricing and extension of the company's Term Loan and the previously announced issuance of Insurance-Linked Notes. This compares with total underwriting and operating expenses of $23.3 million, including $1.9 million of share-based compensation, in the prior quarter, and $22.7 million, including $1.4 million of share-based compensation, in the same quarter a year ago.
  • Loss expense for the quarter was $0.6 million, resulting in a loss ratio of 2%.
  • At quarter-end, cash and investments were $671 million, including $59 million at the holding company, and book equity was $484 million, equal to $8.09 per share.
  • At quarter-end, the company had total PMIERs available assets of $467 million, which compares with risk- based required assets under PMIERs of $399 million.
   
  Quarter  Quarter  Quarter  Growth  Growth  
  Ended  Ended  Ended  Q/Q  Y/Y  
  3/31/2017  12/31/2016 (1)  3/31/2016        
Primary Insurance-in-Force ($billions) 34.78  32.17  18.56  8 %87 %
New Insurance Written - NIW ($billions)                
 Monthly premium 2.89  3.9  2.49  -26 %16 %
 Single premium 0.67  1.34  1.76  -50 %-62 %
 Total 3.56  5.24  4.25  -32 %-16 %
Premiums Earned ($millions) 33.23  32.83  19.81  1 %68 %
Underwriting & Operating Expense ($millions) 25.99  23.28  22.67  12 %15 %
Loss Expense ($millions) 0.64  0.80  0.46  -20 %39 %
Loss Ratio 2 %2 %2 %      
Cash & Investments ($millions) 671  677  630  -1 %7 %
Book Equity ($millions) 484  476  410  2 %18 %
Book Value per Share 8.09  8.04  6.94  1 %17 %
Approved Master Policies 1,174  1,131  1,023  4 %15 %
Customers Generating NIW 537  532  469  1 %14 %
(1) The 2016 prior period balance sheet has been revised. Please refer to our Form 10-Q for the quarter ended March 31, 2017 for further details.
 

Conference Call and Webcast Details
The company will hold a conference call and live webcast today at 2:00 p.m. Pacific Time / 5:00 p.m. Eastern Time. The webcast will be available on the company's website, www.nationalmi.com, in the "Investor Relations" section. The call also can be accessed by dialing (888) 734-0328 in the U.S., or (914) 495-8578 for international callers using Conference ID: 3499361, or by referencing NMI Holdings, Inc.

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
Certain statements contained in this press release or any other written or oral statements made by or on behalf of the Company in connection therewith may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (Securities Act), Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act), and the U.S. Private Securities Litigation Reform Act of 1995 (PSLRA). The PSLRA provides a "safe harbor" for any forward-looking statements. All statements other than statements of historical fact included in or incorporated by reference in this release are forward-looking statements, including any statements about our expectations, outlook, beliefs, plans, predictions, forecasts, objectives, assumptions or future events or performance. These statements are often, but not always, made through the use of words or phrases such as "anticipate," "believe," "can," "could," "may," "predict," "assume," "potential," "should," "will," "estimate," "plan," "project," "continuing," "ongoing," "expect," "intend" and similar words or phrases. All forward-looking statements are only predictions and involve estimates, known and unknown risks, assumptions and uncertainties that may turn out to be inaccurate and could cause actual results to differ materially from those expressed in them. Many risks and uncertainties are inherent in our industry and markets. Others are more specific to our business and operations. Important factors that could cause actual events or results to differ materially from those indicated in such statements include, but are not limited to: our ability to implement our business strategy, including our ability to attract and retain a diverse customer base and to achieve a diversified mix of business across the spectrum of our product offerings; changes in the business practices of the GSEs that may impact the use of private mortgage insurance; our ongoing ability to comply with the financial requirements of the PMIERs; our ability to maintain sufficient holding company liquidity to meet our short- and long-term liquidity needs; our ability to successfully execute and implement our capital plans, including our ability to access the reinsurance market and to enter into, and receive approval of, reinsurance arrangements on terms and conditions that are acceptable to us, the GSEs and our regulators; heightened competition for our mortgage insurance business from other private mortgage insurers and the FHA; adoption of new or changes to existing laws and regulations that impact the mortgage insurance industry or their enforcement and implementation by regulators; 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; our implementation of complex infrastructure, systems, procedures and internal controls to support our business and regulatory and reporting requirements; potential future lawsuits, investigations or inquiries or resolution of current lawsuits or inquiries; emergence of unexpected claims and coverage issues, including claims exceeding our reserves or amounts we expected to experience; our ability to utilize our net operating loss carry forwards, 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; and general economic downturns and volatility. These risks and uncertainties also include, but are not limited to, those set forth under the heading "Risk Factors" detailed in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2016, as subsequently updated through other reports we file with the SEC. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. We caution you not to place undue reliance on any forward-looking statement, which speaks only as of the date on which it is made, and we undertake no obligation to publicly update or revise any forward-looking statement to reflect new information, future events or circumstances that occur after the date on which the statement is made or to reflect the occurrence of unanticipated events except as required by law.

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

Press Contact
Mary McGarity
Strategic Vantage Mortgage Public Relations
(203) 513-2721
MaryMcGarity@StrategicVantage.com

   
Consolidated statements of operations and comprehensive income  For the three months ended March 31,  
   2017   2016  
Revenues  (In Thousands, except for share data)  
 Net premiums earned  $33,225   $19,807  
 Net investment income   3,807    3,231  
 Net realized investment gains (losses)   (58 )  (885 )
 Other revenues   80    32  
Total revenues   37,054    22,185  
Expenses           
 Insurance claims and claims expenses   635    458  
 Underwriting and operating expenses   25,989    22,672  
Total expenses   26,624    23,130  
Other (expense) income           
          
 (Loss) gain from change in fair value of warrant liability   (196 )  670  
 Interest expense   (3,494 )  (3,632 )
Total other (expense)   (3,690 )  (2,962 )
          
Income (loss) before income taxes   6,740    (3,907 )
 Income tax expense   1,248    -  
Net income (loss)  $5,492   $(3,907 )
          
Earnings (loss) per share           
 Basic  $0.09   $(0.07 )
 Diluted  $0.09   $(0.07 )
          
Weighted average common shares outstanding           
Basic   59,183,973    58,936,694  
Diluted   62,338,856    58,936,694  
Loss Ratio(1)   2 %  2 %
Expense Ratio(2)   78    114  
Combined ratio   80 %  117 %
          
Net income (loss)  $5,492   $(3,907 )
Other comprehensive (loss) income, net of tax:           
 Net unrealized gains in accumulated other comprehensive income, net of tax expense of $664 and $0 for the quarters ended March 31, 2017 and March 31, 2016, respectively   
1,175
   
9,101
 
          
 Reclassification adjustment for losses included in net loss (gain), net of tax expense of $0 for the quarters ended March 31, 2017 and 2016   
58
   
885
 
Other comprehensive (loss) income, net of tax   1,233    9,986  
Comprehensive income  $6,725   $6,079  
(1) Loss ratio is calculated by dividing the provision for insurance claims and claims expenses by net premiums earned.
(2) Expense ratio is calculated by dividing other underwriting and operating expenses by net premiums earned.
 
   
Consolidated balance sheets  March 31, 2017   December 31, 2016 (1)  
Assets  (In Thousands, except for share data)  
 Fixed maturities, available-for-sale, at fair value (amortized cost of $658,463 and           
 $630,688 as of March 31, 2017 and December 31, 2016, respectively)  $658,640   $628,969  
 Cash and cash equivalents   12,543    47,746  
 Premiums receivable   15,566    13,728  
 Accrued investment income   3,900    3,421  
 Prepaid expenses   2,935    1,991  
 Deferred policy acquisition costs, net   32,165    30,109  
 Software and equipment, net   21,168    20,402  
 Intangible assets and goodwill   3,634    3,634  
 Prepaid reinsurance premiums   38,348    37,921  
 Deferred tax asset, net   50,529    51,434  
 Other assets   734    542  
Total assets  $840,162   $839,897  
          
Liabilities           
 Term loan  $144,010   $144,353  
 Unearned premiums   154,711    152,906  
 Accounts payable and accrued expenses   14,175    25,297  
 Reserve for insurance claims and claim expenses   3,761    3,001  
 Reinsurance funds withheld   31,243    30,633  
 Deferred ceding commission   4,790    4,831  
 Warrant liability, at fair value   3,563    3,367  
 Deferred tax liability, net   -    -  
Total liabilities   356,253    364,388  
Commitments and contingencies           
          
Shareholders' equity           
 Common stock - class A shares, $0.01 par value; 59,783,358 and 59,145,161 shares issued and outstanding as of March 31, 2017 and December 31, 2016, respectively (250,000,000 shares authorized)   

598
   

591
 
 Additional paid-in capital   578,081    576,927  
 Accumulated other comprehensive loss, net of tax   (4,054 )  (5,287 )
 Accumulated deficit   (90,716 )  (96,722 )
Total shareholders' equity   483,909    475,509  
Total liabilities and shareholders' equity  $840,162   $839,897  
(1) The 2016 prior period balance sheet has been revised. Please refer to our Form 10-Q for the quarter ended March 31, 2017 for further details.
 
   
Historical Quarterly Data  2017   2016   2015  
   
March 31
  December
31, (4)
  September
30
  
June 30
  
March 31
  December
31
 
Revenues  (In Thousands, except for share data)  
 Net premiums earned  $33,225   $32,825   $31,808   $26,041   $19,807   $16,880  
 Net investment income   3,807    3,634    3,544    3,342    3,231    2,078  
                          
 Net realized investment (losses) gains   (58 )  65    66    61    (885 )  (121 )
 Other revenues   80    105    102    37    32    25  
Total revenues   37,054    36,629    35,520    29,481    22,185    18,862  
Expenses                               
 Insurance claims and claims expenses   635    800    664    470    458    371  
 Underwriting and operating expenses   25,989    23,281    24,037    23,234    22,672    21,686  
Total expenses   26,624    24,081    24,701    23,704    23,130    22,057  
                          
Other (expense) income (1)   (3,690 )  (5,490 )  (4,530 )  (3,766 )  (2,962 )  (1,626 )
                          
Income (loss) before income taxes   6,740    7,058    6,289    2,011    (3,907 )  (4,821 )
 Income tax expense (benefit)   1,248    (52,664 )  114    -    -    -  
Net income (loss)  $5,492   $59,722   $6,175   $2,011   $(3,907 ) $(4,821 )
                          
Earnings (loss) per share                               
 Basic  $0.09   $1.01   $0.10   $0.03   $(0.07 ) $(0.08 )
 Diluted  $0.09   $0.98   $0.10    0.03    (0.07 )  (0.08 )
                          
Weighted average common shares                               
outstanding                               
Basic   59,183,973    59,140,011    59,130,401    59,105,613    58,936,694    58,781,566  
Diluted   62,338,856    61,229,338    60,284,746    59,830,899    58,936,694    58,781,566  
                          
Other data                               
Loss Ratio (2)   2 %  2 %  2 %  2 %  2 %  2 %
Expense Ratio (3)   78 %  71 %  76 %  89 %  114 %  128 %
Combined ratio   80 %  73 %  78 %  91 %  117 %  131 %
(1) Other (expense) income includes the gain from change in fair value of warrant liability, gain from settlement of warrants, and interest expense.
(2) Loss ratio is calculated by dividing the provision for insurance claims and claims expenses by net premiums earned.
(3) Expense ratio is calculated by dividing other underwriting and operating expenses by net premiums earned.
(4) The Q4 2016 quarterly data has been revised. Please refer to our Form 10-Q for the quarter ended March 31, 2017 for further details.
 

New Insurance Written (NIW), Insurance in Force (IIF) and Premiums

The tables below show primary and pool NIW and IIF, by quarter, for the last six quarters.

 
Primary NIW  Three months ended
   March 31,  December 31,  September 30,  June 30,  March 31,  December 31,
   2017  2016  2016  2016  2016  2015
         (In Millions)      
Monthly  $2,892  $3,904  $4,162  $3,700  $2,492  $2,029
Single   667   1,336   1,695   2,138   1,762   2,518
Primary  $3,559  $5,240  $5,857  $5,838  $4,254  $4,547
                   
    
Primary and pool IIF  As of
   March 31,  December 31,  September 30,  June 30,  March 31,  December 31,
   2017  2016  2016  2016  2016  2015
         (In Millions)      
Monthly  $21,511  $19,205  $16,038  $12,529  $9,210  $6,958
Single   13,268   12,963   12,190   11,095   9,354   7,866
Primary   34,779   32,168   28,228   23,624   18,564   14,824
                   
Pool   3,545   3,650   3,826   3,999   4,136   4,238
Total  $38,324  $35,818  $32,054  $27,623  $22,700  $19,062
                   

Portfolio Statistics

The table below shows primary portfolio trends, by quarter, for the last six quarters.

   
Primary portfolio trends  As of and for the quarter ended  
   March 31,   December 31,   September 30,   June 30,   March 31,   December 31,  
   2017   2016   2016   2016   2016   2015  
   ($ Values In Millions)  
New insurance written  $3,559   $5,240   $5,857   $5,838   $4,254   $4,547  
New risk written   868    1,244    1,415    1,411    1,016    1,105  
Insurance in force (1)   34,779    32,168    28,228    23,624    18,564    14,824  
Risk in force (1)   8,444    7,790    6,847    5,721    4,487    3,586  
Policies in force (count) (1)   145,632    134,662    119,002    100,547    79,700    63,948  
Weighted-average coverage (2)   24.3 %  24.2 %  24.3 %  24.2 %  24.2 %  24.2 %
Loans in default (count)   207    179    115    79    55    36  
Percentage of loans in default   0.1 %  0.1 %  0.1 %  0.1 %  0.1 %  0.1 %
                          
Risk in force on defaulted loans  $12   $10   $6   $4   $3   $2  
Average premium yield (3)   0.40 %  0.44 %  0.48 %  0.47 %  0.45 %  0.49 %
Earnings from cancellations  $2.5   $5.1   $5.8   $3.5   $2.3   $1.4  
Annual persistency (4)   81.3 %  80.7 %  81.8 %  83.3 %  82.7 %  79.6 %
Quarterly persistency (5)   88.2 %  81.6 %  78.8 %  83.2 %  86.1 %  87.8 %
(1) Reported as of the end of the period.
(2) End of period risk in force (RIF) divided by IIF.
(3) Average premium yield is calculated by dividing net primary and pool 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.
(5) Defined as the percentage of IIF that remains on our books after any 3-month period, annualized.
 

The tables below reflect our total primary NIW by FICO, loan-to-value (LTV), and purchase/refinance mix.

    
Primary NIW by FICO  Three months ended
   March 31, 2017  December 31, 2016  March 31, 2016
      (In Millions)   
 >= 760  $1,683  $2,566  $2,283
 740-759   551   846   712
 720-739   456   647   473
 700-719   396   560   411
 680-699   264   375   245
 <=679   209   246   130
Total  $3,559  $5,240  $4,254
          
          
Primary NIW by LTV  Three months ended
   March 31, 2017  December 31, 2016  March 31, 2016
        (In Millions)    
 95.01% and above  $274  $355  $209
 90.01% to 95.00%   1,612   2,224   1,816
 85.01% to 90.00%   1,101   1,580   1,420
 85.00% and below   572   1,081   809
Total  $3,559  $5,240  $4,254
          
          
Primary NIW by purchase/refinance mix  Three months ended
   March 31, 2017  December 31, 2016  March 31, 2016
        (In Millions)    
 Purchase  $2,984  $3,776  $2,919
 Refinance   575   1,464   1,335
Total  $3,559  $5,240  $4,254
          

The tables below show the primary weighted average FICO and the weighted average LTV, by policy type, for NIW in the quarters presented.

              
Weighted Average FICO             
   March 31, 2017   December 31, 2016   March 31, 2016  
Monthly  745   746   753  
Single  764   764   759  
           
           
Weighted Average LTV             
   March 31, 2017   December 31, 2016   March 31, 2016  
Monthly  92 % 92 % 92 %
Single  91   90   91  
          

The table below reflects a summary of our primary IIF and RIF by book year.

 
Primary IIF and RIF  As of March 31, 2017
   IIF  RIF
   (In Millions)
March 31, 2017  $3,544  $865
2016   19,774   4,756
2015   9,681   2,384
2014   1,735   428
2013   45   11
Total  $34,779  $8,444
       

The tables below reflect our total primary IIF and RIF by FICO, average loan size, LTV, and loan type.

Primary IIF by FICO     As of   
   March 31, 2017  December 31, 2016  March 31, 2016
     (In Millions)  
 >= 760  $17,408  $16,166  $9,146
 740-759   5,658   5,248   3,045
 720-739   4,460   4,130   2,515
 700-719   3,533   3,245   1,877
 680-699   2,336   2,151   1,305
 <=679   1,384   1,228   676
Total  $34,779  $32,168  $18,564
          
          
Primary RIF by FICO       As of    
    March 31, 2017   December 31, 2016   March 31, 2016
       (In Millions)   
 >= 760  $4,253  $3,934  $2,206
 740-759   1,383   1,281   747
 720-739   1,081   1,000   614
 700-719   851   782   453
 680-699   556   511   312
 <=679   320   282   155
Total  $8,444  $7,790  $4,487
          
          
Primary Average Loan Size by FICO       As of    
    March 31, 2017   December 31, 2016   March 31, 2016
       (In Thousands)   
 >= 760  $250  $250  $247
 740-759   241   241   237
 720-739   235   235   232
 700-719   233   233   229
 680-699   224   224   220
 <=679   210   210   206
 
Primary IIF by LTV     As of   
   March 31, 2017  December 31, 2016  March 31, 2016
   (In Millions)
 95.01% and above  $1,931  $1,686  $699
 90.01% to 95.00%   15,601   14,358   8,220
 85.01% to 90.00%   11,058   10,282   6,326
 85.00% and below   6,189   5,842   3,319
Total  $34,779  $32,168  $18,564
          
          
Primary RIF by LTV     As of   
   March 31, 2017  December 31, 2016  March 31, 2016
   (In Millions)
 95.01% and above  $533  $467  $196
 90.01% to 95.00%   4,585   4,226   2,423
 85.01% to 90.00%   2,626   2,439   1,498
 85.00% and below   700   658   370
Total  $8,444  $7,790  $4,487
          
          
Primary RIF by Loan Type     As of   
   March 31, 2017  December 31, 2016  March 31, 2016
       
Fixed   99%   99%   98%
Adjustable rate mortgages:            
 Less than five years   -   -   -
 Five years and longer   1   1   2
Total   100%   100%   100%
          

As of March 31, 2017 and March 31, 2016, 100% of each of our pool IIF and RIF was comprised of insurance on fixed rate mortgages.

The table below reflects a summary of the change in total primary IIF for the following periods.

              
Primary IIF      Three months ended      
   March 31, 2017   December 31, 2016   March 31, 2016  
   (In Millions)  
IIF, beginning of period  $32,168   $28,228   $14,824  
 NIW   3,559    5,240    4,254  
 Cancellations and other reductions   (948 )  (1,300 )  (514 )
IIF, end of period  $34,779   $32,168   $18,564 
             

Geographic Dispersion

The following table shows the distribution by state of our primary RIF.

   
Top 10 primary RIF by state      As of      
   March 31, 2017   December 31, 2016   March 31, 2016  
California  13.8 % 13.6 % 13.2 %
Texas  7.2   7.0   6.8  
Virginia  6.3   6.5   5.8  
Florida  4.4   4.5   5.3  
Arizona  4.1   3.9   3.8  
Colorado  3.9   3.9   4.1  
Maryland  3.7   3.7   3.1  
Michigan  3.7   3.7   4.3  
Utah  3.6   3.7   3.6  
Pennsylvania  3.6   3.6   3.6  
Total  54.3 % 54.1 % 53.6 %
          

The following table shows portfolio data by origination year.

   
   As of March 31, 2017  



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  $45  28 % 655  224  -  1  0.2 % 0.2 %
2014   3,451   1,735  50 % 14,786  8,527  47  5  2.7 % 0.4 %
2015   12,422   9,681  78 % 52,548  43,414  114  9  2.5 % 0.2 %
2016   21,188   19,774  93 % 83,628  79,595  46  -  0.9 % 0.1 %
2017  $3,559  $3,544  100 % 13,926  13,872  -  -  - % - %
Total  $40,782  $34,779      165,543  145,632  207  15         
(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.
 

The following table provides a reconciliation of the beginning and ending reserve balances for primary insurance claims and claims expenses:

      
   For the three months ended
   March 31, 2017   March 31, 2016  
   (In Thousands)
Beginning balance  $3,001   $679  
Less reinsurance recoverables (1)   (297 )  -  
Beginning balance, net of reinsurance recoverables   2,704    679  
          
Add claims incurred:           
 Claims and claim expenses incurred:           
  Current year (2)   955    553  
  Prior years (3)   (320 )  (95 )
Total claims and claims expenses incurred   635    458  
          
Less claims paid:           
 Claims and claim expenses paid:           
  Current year (2)   -    -  
  Prior years (3)   142    -  
Total claims and claim expenses paid   142    -  
          
Reserve at end of period, net of reinsurance recoverables   3,197    1,137  
Add reinsurance recoverables (1)   564    -  
Balance, March 31  $3,761   $1,137  
(1) Related to ceded losses recoverable on our 2016 quota-share reinsurance transaction. To date, ceded losses have been immaterial.
(2) Related to defaults occurring in the current year.
(3) Related to defaults occurring in prior years.
 

The following table provides a reconciliation of the beginning and ending count of loans in default.

      
   For the three months ended  
   March 31, 2017   March 31, 2016  
Beginning default inventory  179   36  
Plus: new defaults  124   39  
Less: cures  (92 ) (20 )
Less: claims paid  (4 ) -  
Ending default inventory  207   55  
       

The following tables provide details of our claims and reserves.

    
  For the three months ended 
       
  March 31, 2017  March 31, 2016 
  ($ Values In Thousands)    
Number of claims paid  4   - 
Total amount paid for claims $42  $- 
Average amount paid per claim $35  $- 
Severity  88%  -
%
         
 
Average reserve per default:  As of March 31, 2017  As of March 31, 2016
   (In Thousands)
Case  $16  $19
IBNR   2   2
Total  $18  $21
       

The following table provides a comparison of the PMIERs financial requirements as reported by National MI.

              
       As of      
   March 31, 2017   December 31, 2016   March 31, 2016  
   (In thousands)  
Available Assets  $466,982   $453,523   $434,138  
Net Risk-Based Required Assets   398,859    366,584    302,852  
              
Asset charge % (1)   6.14 %  6.15 %  6.12 %
(1) Asset charge represents the risk based required asset amount as defined in the PMIERs, divided by the outstanding RIF on performing primary loans.
 

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