SOURCE: NMI Holdings, Inc.

NMI Holdings, Inc.

November 01, 2017 16:00 ET

NMI Holdings, Inc. Reports Record Third Quarter 2017 Financial Results

EMERYVILLE, CA--(Marketwired - November 01, 2017) - NMI Holdings, Inc. (NASDAQ: NMIH) today reported net income of $12.3 million, or $0.21 per share, for the third quarter ended September 30, 2017. This compares with net income of $6.0 million, or $0.10 per share, in the prior quarter, and net income of $6.2 million, or $0.10 per share, in the third quarter of 2016.

Bradley Shuster, Chairman and CEO of National MI, said, "In the third quarter, National MI delivered record financial results, including record new insurance written of $6.1 billion, record net premiums earned of $44.5 million, and record pre-tax income of $19.5 million. We were also pleased to deliver annualized return-on-average equity of 9.8%. National MI continued to build its portfolio of high-quality insurance in force at a rate that leads our industry, and we continued to make significant strides in customer development, activating 25 new customers in the third quarter and 98 new customers for the year-to-date."

  • As of September 30, 2017, the company had primary insurance-in-force of $43.3 billion, up 12% from $38.6 billion at the prior quarter end and up 53% over $28.2 billion as of September 30, 2016.
  • Premiums earned for the quarter were $44.5 million, including $4.3 million attributable to cancellation of single premium policies, which compares with $37.9 million, including $3.8 million related to cancellations, in the prior quarter. Premiums earned in the third quarter of 2017 were up 40% over premium revenue of $31.8 million in the same quarter a year ago, which included $5.8 million related to cancellations.
  • NIW mix was 79% monthly premium product, which compares with 81% in the prior quarter and 71% in the third quarter of 2016.
  • Total underwriting and operating expenses in the third quarter were $24.6 million. This compares with total underwriting and operating expenses of $28.0 million, including approximately $3.1 million of fees and expenses associated with the issuance of Insurance-Linked Notes in the prior quarter and $24.0 million in the same quarter a year ago.
  • Claims expense for the quarter was $1.0 million, resulting in a loss ratio of 2.1%.
  • At quarter-end, cash and investments were $713 million, including $62 million at the holding company, and book equity was $511 million, equal to $8.53 per share.
  • At quarter-end, the company had total PMIERs available assets of $495 million, which compares with risk- based required assets under PMIERs of $356 million.
      
  Quarter Quarter Quarter    
  Ended Ended Ended Change Change
  9/30/2017 6/30/2017 9/30/2016 Q/Q Y/Y
Primary Insurance-in-Force ($billions) 43.26 38.63 28.22 12% 53%
New Insurance Written - NIW ($billions)          
  Monthly premium 4.83 4.10 4.16 18% 16%
  Single premium 1.28 0.94 1.70 36% -25%
  Total 6.11 5.04 5.86 21% 4%
 
Premiums Earned ($millions) 44.52 37.92 31.81 17% 40%
Underwriting & Operating Expense ($millions) 24.65 28.05 24.04 -12% 3%
Loss Expense ($millions) 0.96 1.37 0.66 -30% 45%
Loss Ratio 2.1% 3.6% 2.1%    
Cash & Investments ($millions) 713 694 686 3% 4%
Book Equity ($millions) 511 495 430 3% 19%
Book Value per Share 8.53 8.27 7.28 3% 17%
      

Conference Call and Webcast Details

The company will hold a conference call and live webcast 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: 1906690, 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: changes in the business practices of the GSEs that may impact the use of private mortgage insurance as credit enhancement; our ability to remain an eligible mortgage insurer under the PMIERs, including the financial requirements, and other requirements of the GSEs, which they may change at any time; 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.; our future profitability, liquidity and capital resources; 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; developments in the world's financial and capital markets and our access to such markets, including reinsurance; adoption of new or changes to existing laws and regulations that impact our business or financial condition directly or the mortgage insurance industry generally 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; potential future lawsuits, investigations or inquiries or resolution of current lawsuits or inquiries; 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; 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; 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; our ability to attract and retain a diverse customer base, including the largest mortgage originators; failure of risk management or pricing or investment strategies; emergence of unexpected claims and coverage issues, including claims exceeding our reserves or amounts we expected to experience; potential adverse impacts arising from recent natural disasters, including, with respect to the affected areas, a decline in new business, adverse effects on home prices, and an increase in notices of default on insured mortgages; the inability of our counter-parties, including third party reinsurers, to meet their obligations to us; 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; failure to maintain, improve and continue to develop necessary information technology systems or the failure of technology providers to perform; and, our ability to recruit, train and retain key personnel. 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   For the nine months ended  
 September 30,   September 30,  
   2017   2016   2017  2016  
Revenues  (In Thousands, except for share data)  
 Net premiums earned  $44,519   $31,808   $115,661   $77,656  
 Net investment income   4,170    3,544    11,885    10,117  
 Net realized investment gains (losses)   69    66    198    (758 )
 Other revenues   195    102    461    172  
Total revenues   48,953    35,520    128,205    87,187  
Expenses                     
 Insurance claims and claims expenses   957    664    2,965    1,592  
 Underwriting and operating expenses   24,645    24,037    78,682    69,943  
Total expenses   25,602    24,701    81,647    71,535  
Other expense                     
                  
 Loss from change in fair value of warrant liability   (502 )  (797 )  (679 )  (187 )
 Interest expense   (3,352 )  (3,733 )  (10,146 )  (11,072 )
Total other expense   (3,854 )  (4,530 )  (10,825 )  (11,259 )
                  
Income before income taxes   19,497    6,289    35,733    4,393  
 Income tax expense   7,185    114    11,917    114  
Net income  $12,312   $6,175   $23,816   $4,279  
                  
Earnings per share                     
 Basic  $0.21   $0.10   $0.40   $0.07  
 Diluted  $0.20   $0.10   $0.38   $0.07  
                  
Weighted average common shares outstanding                     
Basic   59,883,629    59,130,401    59,680,166    59,047,758  
Diluted   63,088,958    60,284,746    62,773,333    59,861,916  
                 
Loss Ratio(1)   2.1 %  2.1 %  2.6 %  2.1 %
Expense Ratio(2)   55.4    75.6    68.0    90.1  
Combined ratio   57.5 %  77.7 %  70.6 %  92.2 %
                  
Net income  $12,312   $6,175   $23,816   $4,279  
Other comprehensive income, net of tax:                     
 Net unrealized gain (loss) in accumulated other comprehensive income, net of tax expense of $366 and $0 for the three months ended September 30, 2017 and 2016, respectively, and $2,439 and $0 for the nine months ended September 30, 2017 and 2016  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
768
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(82
 
 
 
 
 
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4,786
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
17,690
 
 
 
 
 
 
 Reclassification adjustment for realized losses (gains) included in net income, net of tax expense of $24 and $0 for the three months ended September 30, 2017 and 2016, respectively, and $69 and $0 for the nine months ended September 30, 2017 and 2016  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(45
 
 
 
 
 
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(66
 
 
 
 
 
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(129
 
 
 
 
 
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
758
 
 
 
 
 
 
Other comprehensive income, net of tax   723    (148 )  4,657    18,448  
Comprehensive income  $13,035   $6,027   $28,473   $22,727  
(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  September 30, 2017   December 31, 2016 (1)  
Assets  (In Thousands, except for share data)  
 Fixed maturities, available-for-sale, at fair value (amortized cost of $687,284 and $630,688 as of September 30, 2017 and December 31, 2016, respectively)  $
692,729
  $
628,969
 
 Cash and cash equivalents   20,698    47,746  
 Premiums receivable   21,056    13,728  
 Accrued investment income   4,598    3,421  
 Prepaid expenses   2,651    1,991  
 Deferred policy acquisition costs, net   36,101    30,109  
 Software and equipment, net   21,767    20,402  
 Intangible assets and goodwill   3,634    3,634  
 Prepaid reinsurance premiums   39,915    37,921  
 Deferred tax asset, net   38,490    51,434  
 Other assets   4,973    542  
Total assets  $886,612   $839,897  
          
Liabilities           
 Term loan  $143,969   $144,353  
 Unearned premiums   161,345    152,906  
 Accounts payable and accrued expenses   22,028    25,297  
 Reserve for insurance claims and claim expenses   6,123    3,001  
 Reinsurance funds withheld   33,105    30,633  
 Deferred ceding commission   4,971    4,831  
 Warrant liability, at fair value   4,046    3,367  
Total liabilities   375,587    364,388  
Commitments and contingencies           
          
Shareholders' equity           
 Common stock - class A shares, $0.01 par value;59,928,092 and 59,145,161 shares issued and outstanding as of September 30,2017 and December 31, 2016, respectively (250,000,000 shares authorized)   

599
   

591
 
 Additional paid-in capital   583,447    576,927  
 Accumulated other comprehensive loss, net of tax   (630 )  (5,287 )
 Accumulated deficit   (72,391 )  (96,722 )
Total shareholders' equity   511,025    475,509  
Total liabilities and shareholders' equity  $886,612   $839,897  
(1)The 2016 prior period balance sheet has been revised. Please refer to our Form 10-Q for the quarter ended September 30, 2017 for further details.
 
   
Historical Quarterly Data  2017   2016  
   September
30
  
June 30
  
March 31
  December
31(4)
  September
30
  
June 30
 
Revenues     (In Thousands, except for share data)    
 Net premiums earned  $44,519   $37,917   $33,225   $32,825   $31,808   $26,041  
 Net investment income   4,170    3,908    3,807    3,634    3,544    3,342  
 Net realized investment gains (losses)   69    188    (58 )  65    66    61  
 Other revenues   195    185    80    105    102    37  
Total revenues   48,953    42,198    37,054    36,629    35,520    29,481  
Expenses                               
 Insurance claims and claims expenses   957    1,373    635    800    664    470  
 Underwriting and operating expenses   24,645    28,048    25,989    23,281    24,037    23,234  
Total expenses   25,602    29,421    26,624    24,081    24,701    23,704  
                          
Other expense (1)   (3,854 )  (3,281 )  (3,690 )  (5,490 )  (4,530 )  (3,766 )
                          
Income before income taxes   19,497    9,496    6,740    7,058    6,289    2,011  
 Income tax expense (benefit)   7,185    3,484    1,248    (52,664 )  114    -  
Net income  $12,312   $6,012   $5,492   $59,722   $6,175   $2,011  
                          
Earnings per share                               
 Basic  $0.21   $0.10   $0.09   $1.01   $0.10   $0.03  
 Diluted  $0.20   $0.10   $0.09   $0.98   $0.10   $0.03  
                          
Weighted average common shares outstanding                               
Basic   59,883,629    59,823,396    59,183,973    59,140,011    59,130,401    59,105,613  
Diluted   63,088,958    63,010,362    62,338,856    61,229,338    60,284,746    59,830,899  
                          
Other data                               
Loss Ratio (2)   2.1 %  3.6 %  1.9 %  2.4 %  2.1 %  1.8 %
Expense Ratio (3)   55.4 %  74.0 %  78.2 %  70.9 %  75.6 %  89.2 %
Combined ratio   57.5 %  77.6 %  80.1 %  73.3 %  77.7 %  91.0 %
(1) Other expense 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 September 30, 2017 for further details.
 
   
New Insurance Written (NIW), Insurance in Force (IIF) and Premiums  
The tables below present primary and pool NIW and IIF, as of the dates and for the periods indicated.  
   
Primary NIW  Three months ended  
   September 30,
2017
 
June 30, 2017
 March 31,
2017
  December 31,
2016
  September 30,
2016
  
June 30, 2016
 
    (In Millions)
Monthly  $4,833  $4,099  $2,892   $3,904   $4,162   $3,700  
Single   1,282   938   667    1,336    1,695    2,138  
Primary  $6,115  $5,037  $3,559   $5,240   $5,857   $5,838  
   
Primary and pool IIF   As of  
    September 30,
2017
  
June 30, 2017
  March 31,
2017
   December 31,
2016
   September 30,
2016
   
June 30, 2016
 
    (In Millions)
Monthly  $28,707  $24,865  $21,511   $19,205   $16,038   $12,529  
Single   14,552   13,764   13,268    12,963    12,190    11,095  
Primary   43,259   38,629   34,779    32,168    28,228    23,624  
                        
Pool   3,330   3,447   3,545    3,650    3,826    3,999  
Total  $46,589  $42,076  $38,324   $35,818   $32,054   $27,623  
   
The following table presents the amounts related to the 2016 QSR transaction, for the last five quarters.  
   
    September 30,
2017
  
June 30, 2017
   
March 31, 2017
   December 31,
2016
   September 30,
2016
 
    (In Thousands)
Ceded risk-in-force  $2,682,982  $2,403,027   $2,167,745   $2,008,385   $1,778,235  
Ceded premiums written   (14,389)   (12,034 )  (10,292 )  (11,576 )  (38,977 )
Ceded premiums earned   (13,393)   (11,463 )  (9,865 )  (9,746 )  (2,885 )
Ceded claims and claims expenses   277   342    268    206    90  
Ceding commission written   2,878   2,407    2,058    2,316    7,795  
Ceding commission earned   2,581   2,275    2,065    1,752    551  
Profit commission   7,758   6,536    5,651    5,642    1,641  
                    
   
Portfolio Statistics  
The table below highlights trends in our primary portfolio as of the date and for the periods indicated.  
   
   
Primary portfolio trends  As of and for the three months ended  
   September 30,
2017
  June 30, 2017   March 31,
2017
  December 31,
2016
  September 30,
2016
  June 30, 2016  
   ($ Values In Millions)  
 New insurance written  $6,115   $5,037   $3,559   $5,240   $5,857   $5,838  
 New risk written   1,496    1,242    868    1,244    1,415    1,411  
 Insurance in force (1)   43,259    38,629    34,779    32,168    28,228    23,624  
 Risk in force (1)   10,572    9,417    8,444    7,790    6,847    5,721  
 Policies in force (count) (1)   180,089    161,195    145,632    134,662    119,002    100,547  
 Average loan size (1)  $0.240    0.240    0.239    0.239    0.237    0.235  
 Weighted-average coverage (2)   24.4 %  24.4 %  24.3 %  24.2 %  24.3 %  24.2 %
 Loans in default (count)   350    249    207    179    115    79  
 Percentage of loans in default   0.2 %  0.2 %  0.1 %  0.1 %  0.1 %  0.1 %
 Risk in force on defaulted loans  $19   $14   $12   $10   $6   $4  
 Average premium yield (3)   0.43 %  0.41 %  0.40 %  0.44 %  0.48 %  0.47 %
 Earnings from cancellations  $4.3   $3.8   $2.5   $5.1   $5.8   $3.5  
 Annual persistency (4)   85.1 %  83.1 %  81.3 %  80.7 %  81.8 %  83.3 %
 Quarterly run-off (5)   3.8 %  3.4 %  2.9 %  4.6 %  5.3 %  4.2 %
(1) Reported as of the end of the period.
(2) Calculated as end of period risk in force (RIF) divided by IIF.
(3) Calculated as net primary and pool premiums earned, net of reinsurance, divided 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 are no longer on our books after any 3-month period
 
   
Primary NIW by FICO  For the three months ended
   September 30, 2017  June 30, 2017  September 30, 2016
   ($ In Millions)
 >= 760  $2,806  $2,376  $2,975
 740-759   934   793   934
 720-739   807   626   725
 700-719   697   568   588
 680-699   456   368   387
 <=679   415   306   248
Total  $6,115  $5,037  $5,857
Weighted average FICO   747   749   753
          
    
Primary NIW by LTV  For the three months ended  
   September 30, 2017   June 20, 2017   September 30, 2016  
   (In Millions)  
 95.01% and above  $722   $474   $347  
 90.01% to 95.00%   2,714    2,297    2,557  
 85.01% to 90.00%   1,765    1,506    1,844  
 85.00% and below   914    760    1,109  
Total  $6,115   $5,037   $5,857  
Weighted average LTV   92.3 %  92.2 %  91.7 %
   
   
Primary NIW by purchase/refinance mix  For the three months ended  
   September 30, 2017   June 30, 2017   September 30, 2016  
   (In Millions)  
 Purchase  $5,387   $4,518   $4,400  
 Refinance   728    519    1,457  
Total  $6,115   $5,037   $5,857  
   
The table below presents a summary of our primary IIF and RIF by book year as of the dates indicated.  
   
Primary IIF and RIF      As of September 30, 2017  
       IIF   RIF  
       (In Millions)  
September 30, 2017       $14,315   $3,508  
2016        18,684    4,520  
2015        8,742    2,167  
2014        1,479    368  
2013        39    9  
Total       $43,259   $10,572  
   
The tables below present our total primary IIF and RIF by FICO and LTV and total primary RIF by loan type as of the dates indicated.  
   
Primary IIF by FICO  As of  
   September 30, 2017   June 30, 2017   September 30, 2016  
   (In Millions)  
 >= 760  $21,329   $19,224   $14,258  
 740-759   6,983    6,269    4,612  
 720-739   5,547    4,927    3,648  
 700-719   4,505    3,973    2,813  
 680-699   2,942    2,615    1,863  
 <=679   1,953    1,621    1,034  
Total  $43,259   $38,629   $28,228  
             
   
Primary RIF by FICO  As of  
   September 30, 2017   June 30, 2017   September 30, 2016  
   (In Millions)  
 >= 760  $5,251   $4,720    3,470  
 740-759   1,713    1,535    1,130  
 720-739   1,349    1,198    887  
 700-719   1,092    960    680  
 680-699   707    627    443  
 <=679   460    377    237  
Total  $10,572   $9,417   $6,847  
   
   
Primary IIF by LTV  As of  
   September 30, 2017   June 30, 2017   September 30, 2016  
   (In Millions)  
 95.01% and above  $3,038   $2,367   $1,363  
 90.01% to 95.00%   19,562    17,441    12,644  
 85.01% to 90.00%   13,437    12,157    9,157  
 85.00% and below   7,222    6,664    5,064  
Total  $43,259   $38,629   $28,228  
   
   
Primary RIF by LTV  As of  
   September 30, 2017   June 30, 2017   September 30, 2016  
   (In Millions)  
 95.01% and above  $822   $648   $380  
 90.01% to 95.00%   5,722    5,120    3,725  
 85.01% to 90.00%   3,205    2,893    2,174  
 85.00% and below   823    756    568  
Total  $10,572   $9,417   $6,847  
   
   
Primary RIF by Loan Type  As of  
   September 30, 2017   June 30, 2017   September 30, 2016  
              
 Fixed   98 %  98 %  98 %
 Adjustable rate mortgages:                
  Five years and longer   2    2    2  
Total   100 %  100 %  100 %
   
The table below presents a summary of the change in total primary IIF during the periods indicated.  
   
   
Primary IIF  For the three months ended  
   September 30, 2017   June 30, 2017   September 30, 2016  
       (In Millions)      
IIF, beginning of period  $38,629   $34,779   $23,624  
 NIW   6,115    5,037    5,857  
 Cancellations and other reductions   (1,485 )  (1,187 )  (1,253 )
IIF, end of period  $43,259   $38,629   $28,228  
             
   
Geographic Dispersion             
     
The following table shows the distribution by state of our primary RIF as of the periods indicated.     
   
Top 10 primary RIF by state  As of  
   September 30, 2017   June 30, 2017   September 30, 2016  
California  13.6 % 13.8 % 13.2 %
Texas  7.6   7.5   6.8  
Virginia  5.6   6.0   6.6  
Arizona  4.4   4.2   3.8  
Florida  4.3   4.4   4.7  
Colorado  3.8   3.9   4.0  
Michigan  3.7   3.6   3.9  
Pennsylvania  3.6   3.6   3.6  
Utah  3.6   3.7   3.6  
Maryland  3.6   3.7   3.6  
Total  53.8 % 54.4 % 53.8 %
          

The following table shows portfolio data by book year, as of September 30, 2017.

 
As of September 30, 2017
Book 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  $39  24%  655  201  -  1  0.2%  0.2%
2014   3,451   1,479  43%  14,786  7,451  54  9  3.8%  0.4%
2015   12,422   8,742  70%  52,548  39,727  164  14  2.9%  0.3%
2016   21,187   18,684  88%  83,626  76,095  119  3  1.6%  0.1%
2017  $14,711  $14,315  97%  57,800  56,615  13  -  0.5%  -
Total  $51,933  $43,259     209,415  180,089  350  27      
(1) The ratio of claims 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   For the nine months ended  
   September 30,
2017
  September 30,
2016
  September 30,
2017
  September 30,
2016
 
              
   (In Thousands)  
Beginning balance  $5,048   $1,475   $3,001   $679  
Less reinsurance recoverables (1)   (899 )  -    (297 )  -  
Beginning balance, net of reinsurance recoverables   4,149    1,475    2,704    679  
                  
Add claims incurred:                     
 Claims and claim expenses incurred:                     
  Current year (2)   1,215    690    3,546    1,803  
  Prior years (3)   (258 )  (29 )  (581 )  (214 )
Total claims and claims expenses incurred   957    661    2,965    1,589  
                  
Less claims paid:                     
 Claims and claim expenses paid:                     
  Current year (2)   -    -    -    -  
  Prior years (3)   157    93    720    225  
Total claims and claim expenses paid   157    93    720    225  
                  
Reserve at end of period, net of reinsurance recoverables   
4,949
   
2,043
   
4,949
   
2,043
 
Add reinsurance recoverables (1)   1,174    90    1,174    90  
Ending balance  $6,123   $2,133   $6,123   $2,133  
(1) Related to ceded losses recoverable on our 2016 quota-share reinsurance transaction, included in "Other Assets" on the Condensed Consolidated Balance Sheet.
(2) Related to insured loans with their most recent defaults occurring in the current year. For example, if a loan had defaulted in a prior year and subsequently cured and later re-defaulted in the current year, that default would be included in the current year.
(3) Related to insured loans with defaults occurring in prior years, which have been continuously in default since that time.
 

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

          
   For the three months ended   For the nine months ended  
   September 30,   September 30,   September 30,   September 30,  
   2017   2016   2017   2016  
Beginning default inventory  249   79   179   36  
Plus: new defaults  208   69   479   158  
Less: cures  (103 ) (30 ) (292 ) (73 )
Less: claims paid  (4 ) (3 ) (16 ) (6 )
Ending default inventory  350   115   350   115  
             

The following tables provide details of our claims and reserves for the periods indicated, before claims paid covered under the 2016 QSR Transaction.

           
    For the three months ended   For the nine months ended  
    September 30,  September 30,   September 30,  September 30,  
    2017  2016   2017  2016  
    ($ Values In Thousands)  
Number of claims paid    4   3    16   6  
Total amount paid for claims   $160  $93   $731  $225  
Average amount paid per claim   $40  $31   $46  $32  
Severity(1)    73%   53 %  83%   62 %
   
(1) Severity represents the total amount of claims paid divided by the related RIF on the loan at the time the claim is perfected.  
  
 
Average reserve per default:  As of September 30, 2017  As of September 30, 2016
   (In Thousands)
Case (1)  $16  $17
IBNR   1   1
Total  $17  $18
(1)Defined as the gross reserve per insured loan in default.
 

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

    
   As of
   September 30, 2017  June 30, 2017  September 30, 2016
   (In thousands)
Available assets  $495,182  $485,019  $488,635
Risk-based required assets   356,207   298,091   320,609
          

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