SOURCE: NMI Holdings, Inc.

November 01, 2016 16:00 ET

NMI Holdings, Inc. Reports Record Third Quarter Net Income of $6.2 Million

EMERYVILLE, CA--(Marketwired - November 01, 2016) - NMI Holdings, Inc. (NASDAQ: NMIH) today reported net income of $6.2 million, or $0.10 per share, for the third quarter ended Sep. 30, 2016. This compares with net income of $2.0 million, or $0.03 per share, in the prior quarter and a net loss of ($4.8) million, or ($0.08) per share, in the third quarter of 2015. Total revenue for the quarter was $35.5 million, up 20% from $29.5 million in the prior quarter and up 141% from $14.7 million in the third quarter of 2015.

Bradley Shuster, chairman and CEO of National MI, said, "We continued our positive momentum in the third quarter, delivering record net income and returns, trends that we expect will continue for the foreseeable future. We grew our high-quality insurance-in-force by 19% over the prior quarter and 166% over the third quarter last year. We also continued to shift our mix to high-return monthly product, which grew to 71% of total new insurance written in the quarter. Cessions commenced under our reinsurance agreement and we expect to continue to take advantage of the low cost of capital provided by reinsurance to support our future growth."

  • As of Sep. 30, 2016, the company had primary insurance-in-force of $28.2 billion, up 19% from $23.6 billion at the prior quarter end and up 166% over $10.6 billion as of Sep. 30, 2015.
  • Premiums earned for the quarter were $31.8 million, up 22% from $26.0 million in the prior quarter and up 148% over $12.8 million in the same quarter a year ago
  • Monthly premium NIW was $4.16 billion, an increase of 12% over $3.70 billion in the prior quarter and an increase of 163% over the third quarter of 2015. Single premium NIW of $1.70 billion was down 21% from the prior quarter and down 17% compared with the same quarter a year ago.
  • Total NIW in the third quarter was $5.86 billion, which compares with $5.84 billion in the prior quarter and $3.63 billion in the third quarter of 2015.
  • Total underwriting and operating expenses in the third quarter were $24.0 million, including share-based compensation expense of $1.8 million. This compares with total underwriting and operating expenses of $23.2 million, including $1.8 million of share-based compensation, in the prior quarter, and $19.7 million, including $1.8 million of share-based compensation, in the same quarter a year ago.
  • Loss expense for the quarter was $0.7 million, resulting in a loss ratio of 2.1%.
  • As of the end of the third quarter, the company had approved master policies in place with 1,100 customers, up from 1,061 as of the end of the prior quarter, and up from 906 as of the end of the third quarter of 2015. Customers delivering NIW in the quarter grew to a new high of 525, which compares with 518 in the prior quarter and 391 in the same quarter a year ago.
  • At quarter-end, cash and investments were $686 million, including $77 million at the holding company, and book equity was $430 million, equal to $7.28 per share. This book value excludes any benefit attributable to the company's deferred tax asset of approximately $66 million as of Dec. 31, 2015.
  • In the first nine months of 2016, the company generated $52.2 million of cash from operations, which compares with $16.2 million for the same period in 2015.
  • At quarter-end, the company had total PMIERs available assets of $489 million, which compares with risk- based required assets under PMIERs of $321 million.
 
   Quarter
Ended
9/30/2016
 Quarter
Ended
6/30/2016
 Quarter
Ended
9/30/2015
 Growth
Q/Q
 Growth
Y/Y
Primary Insurance-in-Force ($billions)   28.22   23.62   10.60  19%  166%
New Insurance Written - NIW ($billions)                  
 Monthly premium   4.16   3.70   1.58  12%  163%
 Single premium   1.70   2.14   2.05  -21%  -17%
 Total   5.86   5.84   3.63  -  61%
               
Premiums Earned ($millions)   31.81   26.04   12.83  22%  148%
Underwriting & Operating Expense ($millions)   24.04   23.23   19.65  3%  22%
Loss Expense ($millions)   0.66   0.47   0.18  40%  267%
Loss Ratio   2.1%   1.8%   1.4%      
Cash & Investments ($millions)   686   654   447  5%  53%
Book Equity ($millions)   430   422   408  2%  5%
Book Value per Share  $7.28  $7.14  $6.95  2%  5%
Approved Master Policies   1100   1061   906  4%  21%
Customers Generating NIW   525   518   391  1%  34%
              

Conference Call and Webcast Details
The company will hold a conference call and live webcast today at 1:30 p.m. Pacific Time / 4:30 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: 93562675, 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 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; 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 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; 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, 2015, 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
September 30,
 For the nine months ended September
30,
   2016  2015  2016  2015
Revenues  (In Thousands, except for share data)
 Net premiums earned  $31,808  $12,834  $77,656  $28,626
 Net investment income   3,544   1,884   10,117   5,168
 Net realized investment gains (losses)   66   (15)   (758)   952
 Other revenues   102   -   172   -
Total revenues   35,520   14,703   87,187   34,746
Expenses                
 Insurance claims and claims expenses   664   181   1,592   279
 Underwriting and operating expenses   24,037   19,653   69,943   58,912
Total expenses   24,701   19,834   71,535   59,191
Other (expense) income                
 (Loss) gain from change in fair value of warrant liability   (797)   332   (187)   1,473
 Interest expense   (3,733)   -   (11,072)   -
Total other (expense) income   (4,530)   332   (11,259)   1,473
 
Income (loss) before income taxes   6,289   (4,799)   4,393   (22,972)
 Income tax expense   114   -   114   -
Net income (loss)  $6,175  $(4,799)  $4,279  $(22,972)
 
Earnings (loss) per share                
 Basic  $0.10  $(0.08)  $0.07  $(0.39)
 Diluted  $0.10  $(0.08)  $0.07  $(0.39)
 
Weighted average common shares outstanding                
Basic   59,130,401   58,741,328   59,047,758   58,650,043
Diluted   60,284,746   58,741,328   59,861,916   58,650,043
             
Loss Ratio(1)   2%   1%   2%   1%
Expense Ratio(2)   76   153   90   206
Combined ratio   78%   155%   92%   207%
 
Net income (loss)  $6,175  $(4,799)  $4,279  $(22,972)
Other comprehensive income (loss), net of tax:                
 Net unrealized gains (losses) in accumulated other comprehensive gain (loss), net of tax (benefit) expense of $0 for all periods presented   (82)   (483)   17,690   (15)
 Reclassification adjustment for losses (gains) included in net loss, net of tax expense of $0 for all periods presented   (66)   15   758   (952)
Other comprehensive income (loss), net of tax   (148)   (468)   18,448   (967)
Comprehensive income (loss)  $6,027  $(5,267)  $22,727  $(23,939)
             
  
(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, 2016  December 31, 2015
Assets  (In Thousands, except for share data)
 Fixed maturities, available-for-sale, at fair value (amortized cost of $628,209 and $564,319 as of September 30, 2016 and December 31, 2015, respectively)  $641,572  $559,235
 Cash and cash equivalents   44,522   57,317
 Premiums receivable   11,378   5,143
 Accrued investment income   3,615   2,873
 Prepaid expenses   2,313   1,428
 Deferred policy acquisition costs, net   28,911   17,530
 Software and equipment, net   19,924   15,201
 Intangible assets and goodwill   3,634   3,634
 Prepaid reinsurance premiums   36,091   -
 Other assets   206   90
Total assets  $792,166  $662,451
 
Liabilities        
 Term loan  $144,230  $143,939
 Unearned premiums   145,401   90,773
 Accounts payable and accrued expenses   32,568   22,725
 Reserve for insurance claims and claim expenses   2,133   679
 Reinsurance funds withheld   28,963   -
 Deferred ceding commission
  6,697   -
 Warrant liability, at fair value   1,654   1,467
 Current tax payable   114   -
 Deferred tax   137   137
Total liabilities   361,897   259,720
Commitments and contingencies        
 
Shareholders' equity        
 Common stock - class A shares, $0.01 par value; 59,138,663 and 58,807,825 shares issued and outstanding as of September 30, 2016 and December 31, 2015, respectively (250,000,000 shares authorized)   591   588
 Additional paid-in capital   575,148   570,340
 Accumulated other comprehensive income (loss), net of tax   10,974   (7,474)
 Accumulated deficit   (156,444)   (160,723)
Total shareholders' equity   430,269   402,731
Total liabilities and shareholders' equity  $792,166  $662,451
       
   
Historical Quarterly Data  2016   2015  
   
   September 30   June 30   March 31   December 31   September 30   June 30  
Revenues          (In Thousands, except for share data)         
 Net premiums earned  $31,808   $26,041   $19,807   $16,880   $12,834   $8,856  
 Net investment income   3,544    3,342    3,231    2,078    1,884    1,688  
 Net realized investment gains (losses)   66    61    (885 )  (121 )  (15 )  354  
 Other revenues   102    37    32    25    -    -  
Total revenues   35,520    29,481    22,185    18,862    14,703    10,898  
Expenses                               
 Insurance claims and claims expenses   664    470    458    371    181    (6 )
 Underwriting and operating expenses   24,037    23,234    22,672    21,686    19,653    20,910  
Total expenses   24,701    23,704    23,130    22,057    19,834    20,903  
   
Other (expense) income (1)   (4,530 )  (3,766 )  (2,962 )  (1,626 )  332    (106 )
   
Income (loss) before income taxes   6,289    2,011    (3,907 )  (4,821 )  (4,799 )  (10,112 )
 Income tax expense (benefit)   114    -    -    -    -    241  
Net income (loss)  $6,175   $2,011   $(3,907 ) $(4,821 ) $(4,799 ) $(10,353 )
   
Earnings (loss) per share                               
 Basic  $0.10   $0.03   $(0.07 ) $(0.08 ) $(0.08 ) $(0.18 )
 Diluted  $0.10    0.03    (0.07 )  (0.08 )  (0.08 )  (0.18 )
   
Weighted average common shares outstanding                               
Basic   59,130,401    59,105,613    58,936,694    58,781,566    58,741,328    58,720,095  
Diluted   60,284,746    59,830,899    58,936,694    58,781,566    58,741,328    58,720,095  
   
Other data                               
Loss Ratio (2)   2 %  2 %  2 %  2 %  1 %  - %
Expense Ratio (3)   76 %  89 %  114 %  128 %  153 %  236 %
Combined ratio   78 %  91 %  117 %  131 %  155 %  236 %
                         
  
(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.
  

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
   September
30, 2016
 
June 30, 2016
 March 31,
2016
 December 31,
2015
 September
30, 2015
 
June 30, 2015
           (In Millions)        
Monthly  $4,162  $3,700  $2,492  $2,029  $1,582  $1,460
Single   1,695   2,138   1,762   2,518   2,051   1,089
Primary  $5,857  $5,838  $4,254  $4,547  $3,633  $2,549
 
Primary and pool IIF As of
    September
30, 2016
  
June 30, 2016
  March 31,
2016
  December 31,
2015
  September
30, 2015
  
June 30, 2015
            (In Millions)        
Monthly  $16,038  $12,529  $9,210  $6,958  $5,087  $3,617
Single   12,190   11,095   9,354   7,866   5,514   3,573
Primary   28,228   23,624   18,564   14,824   10,601   7,190
 
Pool   3,826   3,999   4,136   4,238   4,340   4,476
Total  $32,054  $27,623  $22,700  $19,062  $14,941  $11,666
                   

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  
   September
30, 2016
  June 30,
2016
  March 31,
2016
  December 31,
2015
  September
30, 2015
  
June 30, 2015
 
   ($ Values In Millions)  
New insurance written  $5,857   $5,838   $4,254   $4,547   $3,633   $2,549  
New risk written   1,415    1,411    1,016    1,105    887    615  
Insurance in force (1)   28,228    23,624    18,564    14,824    10,601    7,190  
Risk in force (1)   6,847    5,721    4,487    3,586    2,553    1,715  
Policies in force (count) (1)   119,002    100,547    79,700    63,948    46,175    31,682  
Weighted-average coverage (2)   24.3 %  24.2 %  24.2 %  24.2 %  24.1 %  23.9 %
Loans in default (count)   115    79    55    36    20    9  
Percentage of loans in default   0.1 %  0.1 %  0.1 %  0.1 %  - %  - %
   
Risk in force on defaulted loans  $6   $4   $3   $2   $1   $1  
Average premium yield (3)   0.48 %  0.47 %  0.45 %  0.49 %  0.52 %  0.51 %
Annual persistency (4)   81.8 %  83.3 %  82.7 %  79.6 %  71.6 %  65.5 %
                         
  
(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 primary net 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.
  

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   
   September 30, 2016  June 30, 2016  September 30, 2015
        (In Millions)    
 >= 760  $2,975  $3,160  $1,755
 740-759   934   961   583
 720-739   725   672   505
 700-719   588   541   376
 680-699   387   308   271
 <= 679   248   196   143
Total  $5,857  $5,838  $3,633
 
 
Primary NIW by LTV       Three months ended    
    September 30, 2016   June 30, 2016   September 30, 2015
        (In Millions)    
 95.01% and above  $347  $362  $162
 90.01% to 95.00%   2,557   2,633   1,656
 85.01% to 90.00%   1,844   1,732   1,208
 85.00% and below   1,109   1,111   607
Total  $5,857  $5,838  $3,633
 
 
Primary NIW by purchase/refinance mix       Three months ended    
    September 30, 2016   June 30, 2016   September 30, 2015
        (In Millions)    
 Purchase  $4,400  $4,199  $2,604
 Refinance   1,457   1,639   1,029
Total  $5,857  $5,838  $3,633
          

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             
   September 30, 2016   June 30, 2016   September 30, 2015  
Monthly  748   752   742  
Single  763   762   758  
   
   
Weighted Average LTV             
   September 30, 2016   June 30, 2016   September 30, 2015  
Monthly  91 % 92 % 92 %
Single  90   91   91  
          

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

 
Primary IIF and RIF    As of September 30, 2016
     IIF    RIF
     (In Millions)
September 30, 2016  $ 15,433  $ 3,719
2015    10,679    2,610
2014    2,062    505
2013    54    13
Total  $ 28,228  $ 6,847
       

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    
   September 30, 2016   June 30, 2016   September 30, 2015
        (In Millions)    
 >= 760   $14,258   $11,929   $4,969
 740-759    4,612    3,876    1,703
 720-739    3,648    3,082    1,582
 700-719    2,813    2,341    1,063
 680-699    1,863    1,561    848
 <=679    1,034    835    436
Total   $28,228   $23,624   $10,601
 
 
Primary RIF by FICO         As of     
    September 30, 2016    June 30, 2016    September 30, 2015
          (In Millions)     
 >= 760   $3,470   $2,895   $1,174
 740-759    1,130    951    413
 720-739    887    750    391
 700-719    680    566    260
 680-699    443    369    209
 <=679    237    190    106
Total   $6,847   $5,721   $2,553
 
 
Primary Average Loan Size by FICO         As of     
    September 30, 2016    June 30, 2016    September 30, 2015
          (In Thousands)     
 >= 760   $250   $249   $244
 740-759    240    239    234
 720-739    235    234    227
 700-719    233    232    225
 680-699    224    223    218
 <=679    209    209    207
          
   
Primary IIF by LTV      As of      
   September 30, 2016   June 30, 2016   September 30, 2015  
       (In Millions)      
 95.01% and above  $1,363   $1,049   $282  
 90.01% to 95.00%   12,644    10,574    4,710  
 85.01% to 90.00%   9,157    7,754    3,658  
 85.00% and below   5,064    4,247    1,951  
Total  $28,228   $23,624   $10,601  
   
   
Primary RIF by LTV      As of      
   September 30, 2016   June 30, 2016   September 30, 2015  
       (In Millions)      
 95.01% and above  $380   $293   $80  
 90.01% to 95.00%   3,725    3,116    1,392  
 85.01% to 90.00%   2,174    1,838    866  
 85.00% and below   568    474    215  
Total  $6,847   $5,721   $2,553  
   
   
Primary RIF by Loan Type      As of      
   September 30, 2016   June 30, 2016   September 30, 2015  
   
 Fixed   98 %  98 %  97 %
 Adjustable rate mortgages:                
  Less than five years   -    -    -  
  Five years and longer   2    2    3  
Total   100 %  100 %  100 %
             

As of September 30, 2016 and September 30, 2015, 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   
   September 30, 2016  June 30, 2016  September 30, 2015
      (In Millions)   
IIF, beginning of period  $23,624  $18,564  $7,190
 NIW   5,857   5,838   3,633
 Cancellations and other reductions   (1,253)   (778)   (222)
IIF, end of period  $28,228  $23,624  $10,601
          

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

   
Top 10 primary RIF by state      As of      
   September 30, 2016   June 30, 2016   September 30, 2015  
California  13.2 % 13.0 % 13.2 %
Texas  6.8   6.8   7.1  
Virginia  6.6   6.4   3.9  
Florida  4.7   5.0   5.4  
Colorado  4.0   4.1   4.3  
Michigan  3.9   4.1   4.6  
Arizona  3.8   3.8   3.6  
Maryland  3.6   3.4   3.5  
Pennsylvania  3.6   2.3   3.9  
Utah  3.6   3.3   2.6  
Total  53.8 % 52.2 % 52.1 %
          

The following table shows portfolio data by origination year.

   
   
   As of September 30, 2016  



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  $54  33 % 655  264  -  1  - % 0.2 %
2014   3,451   2,062  60 % 14,786  9,824  46  2  2.7 % 0.3 %
2015   12,422   10,678  86 % 52,550  46,902  61  5  1.7 % 0.1 %
   
2016 (through September 30)   15,949   15,434  97 % 63,519  62,012  8  -  0.3 % - %
Total  $31,984  $28,228      131,510  119,002  115  8         
                        
  
(1)The ratio of total losses incurred (paid and reserved) divided by cumulative premiums earned, without the effects 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 September 
30,
 For the nine months ended September 
30,
   2016  2015  2016  2015
   (In Thousands)
Beginning balance  $1,475  $181  $679  $83
Less reinsurance recoverables (1)   -   -   -   -
Beginning balance, net of reinsurance recoverables   1,475   181   679   83
 
Add claims incurred:                
 Claims and claim expenses incurred:                
  Current year (2)   690   219   1,803   358
  Prior years (3)   (29)   (38)   (214)   (79)
Total claims and claims expenses incurred   661   181   1,589   279
 
Less claims paid:                
 Claims and claim expenses paid:                
  Current year (2)   -   -   -   -
  Prior years (3)   93   4   225   4
Total claims and claim expenses paid   93   4   225   4
 
Reserve at end of period, net of reinsurance recoverables   2,043   358   2,043   358
Add reinsurance recoverables (1)   90   -   90   -
Balance, September 30  $2,133  $358  $2,133  $358
             
  
(1)Related to ceded losses recoverable on the 2016 QSR 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.

          
   Three months ended   Nine months ended  
   September 30,   September 30,   September 30,   September 30,  
   2016   2015   2016   2015  
Beginning default inventory  79   9   36   4  
Plus: new defaults  69   21   158   24  
Less: cures  (30 ) (9 ) (73 ) (7 )
Less: claims paid  (3 ) (1 ) (6 ) (1 )
Ending default inventory  115   20   115   20 
             

The following tables provide details of our claims and reserves.

  Three months ended  Nine months ended 
  September 30,  September 30,  September 30,  September 30, 
  2016  2015  2016  2015 
  ($ Values In Thousands) 
Number of claims paid  3   1   6   1 
Total amount paid for claims $93  $4  $225  $4 
Average amount paid per claim $31  $4  $32  $4 
Severity  53%  5%  62%  5%
 
Average reserve per default:  As of September 30, 2016  As of September 30, 2015
   (In Thousands)
Case  $17  $17
IBNR   1   1
Total  $18  $18
       

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

          
      As of   
   September 30, 2016  June 30, 2016  December 31, 2015
     (In thousands)  
Available Assets  $488,635  $432,074  $431,411
Net Risk-Based Required Assets   320,609   377,468   249,805
 
Asset charge % (1)   6.14%   6.10%   6.17%
          
(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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