SOURCE: NMI Holdings, Inc.

NMI Holdings, Inc.

August 01, 2017 16:12 ET

NMI Holdings, Inc. Reports Second Quarter 2017 Financial Results

EMERYVILLE, CA--(Marketwired - August 01, 2017) - NMI Holdings, Inc. (NASDAQ: NMIH) today reported net income of $6.0 million, or $0.10 per share, for the second quarter ended June 30, 2017. Results for the quarter include previously disclosed fees and expenses of approximately $3.1 million related to the May 2017 issuance of Insurance-Linked Notes (ILN). The company reported net income of $2.0 million, or $0.03 per share, in the second quarter of 2016.

Bradley Shuster, chairman and CEO of National MI, said, "In the second quarter, National MI again delivered solid financial results, including record pre-tax income, and continued to advance the key metrics that will drive realization of our mid-teens return objectives. We made significant strides in customer development, activating 36 new customers in the second quarter and 73 new customers for the year-to-date. We also continued to build a high-quality portfolio of insurance-in-force at a growth rate that leads our industry, while maintaining our focus on prudently and proactively managing risk, expenses, and capital."

  • As of June 30, 2017, the company had primary insurance-in-force of $38.6 billion, up 11% from $34.8 billion at the prior quarter end and up 64% over $23.6 billion as of June 30, 2016.
  • Premiums earned for the quarter were $37.9 million, including $3.8 million attributable to cancellation of single premium policies, which compares with $33.2 million, including $2.5 million related to cancellations, in the prior quarter. Premiums earned in the second quarter of 2017 were up 46% over premium revenue of $26.0 million in the same quarter a year ago, which included $3.5 million related to cancellations.
  • NIW mix was 81% monthly premium product, which compares with 81% in the prior quarter and 63% in the second quarter of 2016.
  • Total underwriting and operating expenses in the second quarter were $28.0 million and include approximately $3.1 million of transaction costs related to the previously disclosed ILN issuance. This compares with total underwriting and operating expenses of $26.0 million, including financing-related transaction costs of $1.6 million in the prior quarter, and $23.2 million in the same quarter a year ago.
  • Claims expense for the quarter was $1.4 million, resulting in a loss ratio of 3.6%.
  • At quarter-end, cash and investments were $694 million, including $57 million at the holding company, and book equity was $495 million, equal to $8.27 per share.
  • At quarter-end, the company had total PMIERs available assets of $485 million, which compares with risk- based required assets under PMIERs of $298 million.
 
   Quarter  Quarter  Quarter      
   Ended  Ended  Ended  Change  Change
   6/30/2017  3/31/2017  6/30/2016  Q/Q  Y/Y
Primary Insurance-in-Force ($billions)  38.63  34.78  23.62  11%  64%
New Insurance Written - NIW ($billions)               
  Monthly premium  4.10  2.89  3.70  42%  11%
  Single premium  0.94  0.67  2.14  40%  -56%
  Total  5.04  3.56  5.84  42%  -14%
 
Premiums Earned ($millions)  37.92  33.23  26.04  14%  46%
Underwriting & Operating Expense ($millions)  28.05  25.99  23.23  8%  21%
Claims Expense ($millions)  1.37  0.64  0.47  114%  191%
Loss Ratio  3.6%  1.9%  1.8%      
Cash & Investments ($millions)  694  671  654  3%  6%
Book Equity ($millions)  495  484  422  2%  17%
Book Value per Share  8.27  8.09  7.14  2%  16%
           

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: 47660998, 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; 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; ability to recruit, train and retain key personnel; 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 June 30,     For the six months ended June 30,  
     2017     2016     2017     2016  
Revenues  (In Thousands, except for share data)  
 Net premiums earned  $ 37,917    $ 26,041    $ 71,142    $ 45,848   
 Net investment income    3,908      3,342      7,715      6,573   
 Net realized investment gains (losses)    188      61      130      (824 ) 
 Other revenues    185      37      265      69   
Total revenues    42,198      29,481      79,252      51,666   
Expenses                             
 Insurance claims and claims expenses    1,373      470      2,008      928   
 Underwriting and operating expenses    28,048      23,234      54,037      45,906   
Total expenses    29,421      23,704      56,045      46,834   
Other (expense) income                             
 Gain (loss) from change in fair value of warrant liability    19      (59 )    (177 )    611   
 Interest expense    (3,300 )    (3,707 )    (6,794 )    (7,339 ) 
Total other expense    (3,281 )    (3,766 )    (6,971 )    (6,728 ) 
 
Income (loss) before income taxes    9,496      2,011      16,236      (1,896 ) 
 Income tax expense    3,484      -      4,732      -   
Net income (loss)  $ 6,012    $ 2,011    $ 11,504    $ (1,896 ) 
 
Earnings (loss) per share                             
 Basic  $ 0.10   $ 0.03   $ 0.19    $ (0.03 ) 
 Diluted  $ 0.10    $ 0.03   $ 0.18    $ (0.03 ) 
 
Weighted average common shares outstanding                             
Basic    59,823,396      59,105,613      59,576,747      59,005,983   
Diluted    63,010,362      59,830,899      62,688,563      59,005,983   
Loss Ratio(1)    3.6 %    1.8 %    2.8 %    2.0 % 
Expense Ratio(2)    74.0      89.2      76.0      100.1   
Combined ratio    77.6 %    91.0 %    78.8 %    102.1 % 
 
Net income (loss)  $ 6,012    $ 2,011   $ 11,504    $ (1,896 ) 
Other comprehensive income, net of tax:                             
 Net unrealized gains in accumulated other comprehensive income, net of tax expense of $1,388 and $0 for the three months ended June 30, 2017 and 2016, respectively, and $2,073 and $0 for the six months ended June 30, 2017 and 2016    2,822      8,670      4,017      17,771   
 Reclassification adjustment for losses (gains) included in net income, net of tax expense of $66 and $0 for the three months ended June 30, 2017 and 2016, respectively, and $45 and $0 for the six months ended June 30, 2017 and 2016    (122 )    (61 )    (84 )    824   
Other comprehensive income, net of tax    2,700      8,609      3,933      18,595   
Comprehensive income  $ 8,712    $ 10,620    $ 15,437    $ 16,699   
                  
(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    June 30, 2017    December 31, 2016 (1)  
Assets    (In Thousands, except for share data)  
 Fixed maturities, available-for-sale, at fair value (amortized cost of $669,363 and $630,688 as of June 30, 2017 and December 31, 2016, respectively)  $ 673,695   $ 628,969  
 Cash and cash equivalents    20,035      47,746  
 Premiums receivable    17,795      13,728  
 Accrued investment income    3,867      3,421  
 Prepaid expenses    2,072      1,991  
 Deferred policy acquisition costs, net    34,206      30,109  
 Software and equipment, net    21,530      20,402  
 Intangible assets and goodwill    3,634      3,634  
 Prepaid reinsurance premiums    38,919      37,921  
 Deferred tax asset, net    45,771      51,434  
 Other assets    1,471      542  
Total assets  $ 862,995    $ 839,897  
   
Liabilities              
 Term loan  $ 143,990   $ 144,353  
 Unearned premiums    157,152      152,906  
 Accounts payable and accrued expenses    21,349      25,297  
 Reserve for insurance claims and claim expenses    5,048      3,001  
 Reinsurance funds withheld    32,042      30,633  
 Deferred ceding commission    4,830      4,831  
 Warrant liability, at fair value    3,544      3,367  
 Deferred tax liability, net    -      -  
Total liabilities    367,955      364,388  
Commitments and contingencies              
   
Shareholders' equity              
 Common stock - class A shares, $0.01 par value; 59,858,418 and 59,145,161 shares issued and outstanding as of June 30, 2017 and December 31, 2016, respectively (250,000,000 shares authorized)    598      591  
 Additional paid-in capital    580,499      576,927  
 Accumulated other comprehensive loss, net of tax    (1,354 )    (5,287 )
 Accumulated deficit    (84,703 )    (96,722 )
Total shareholders' equity    495,040      475,509  
Total liabilities and shareholders' equity  $ 862,995    $ 839,897  
         
         
(1)The 2016 prior period balance sheet has been revised. Please refer to our Form 10-Q for the quarter ended June 30, 2017 for further details.
 
   
Historical Quarterly Data  2017   2016
                 December    September             
     June 30      March 31      31(4)      30      June 30      March 31  
Revenues  (In Thousands, except for share data)
 Net premiums earned  $ 37,917   $ 33,225   $ 32,825   $ 31,808    $ 26,041   $ 19,807  
 Net investment income    3,908      3,807      3,634      3,544      3,342      3,231  
   
 Net realized investment (losses) gains    188      (58 )    65      66      61      (885 )
 Other revenues    185      80      105      102      37      32  
Total revenues    42,198      37,054      36,629      35,520      29,481      22,185  
Expenses                                          
 Insurance claims and claims expenses    1,373      635      800      664      470      458  
 Underwriting and operating expenses    28,048      25,989      23,281      24,037      23,234      22,672  
Total expenses    29,421      26,624      24,081      24,701      23,704      23,130  
   
Other expense    (3,281 )    (3,690 )    (5,490 )    (4,530 )    (3,766 )    (2,962 )
   
Income (loss) before income taxes    9,496      6,740      7,058      6,289      2,011      (3,907 )
 Income tax expense (benefit)    3,484      1,248      (52,664 )    114      -      -  
Net income (loss)  $ 6,012    $ 5,492    $ 59,722    $ 6,175    $ 2,011    $ (3,907 )
   
Earnings (loss) per share                                          
 Basic  $ 0.10   $ 0.09   $ 1.01   $ 0.10    $ 0.03   $ (0.07 )
 Diluted  $ 0.10   $ 0.09   $ 0.98   $ 0.10    $ 0.03   $ (0.07 )
   
Weighted average common shares                                          
outstanding                                          
Basic   59,823,396    59,183,973    59,140,011    59,130,401     59,105,613    58,936,694  
Diluted   63,010,362    62,338,856    61,229,338    60,284,746     59,830,899    58,936,694  
   
Other data                                          
Loss Ratio (2)    3.6 %    1.9 %    2.4 %    2.1 %    1.8 %    2.3 %
Expense Ratio (3)    74.0 %    78.2 %    70.9 %    75.6 %    89.2 %    114.5 %
Combined ratio    77.6 %    80.1 %    73.3 %    77.7 %    91.0 %    116.8 %
                         
(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 June 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
  June 30, 2017 March 31,
2017
 December 31,
2016
 September
30, 2016
 June 30, 2016 March 31,
2016
   (In Millions)
Monthly  $ 4,099  $ 2,892  $ 3,904  $ 4,162  $ 3,700  $ 2,492
Single    938    667    1,336    1,695    2,138    1,762
Primary  $ 5,037  $ 3,559  $ 5,240  $ 5,857  $ 5,838  $ 4,254
                   
 
Primary and pool IIF  As of
   
June 30, 2017
 March 31,
2017
 December 31,
2016
 September
30, 2016
 
June 30, 2016
 March 31,
2016
   
   (In Millions)
Monthly  $ 24,865  $ 21,551  $ 19,205  $ 16,038  $ 12,529  $ 9,210
Single    13,764    13,268    12,963    12,190    11,095    9,354
Primary    38,629    34,779    32,168    28,228    23,624    18,564
 
Pool    3,447    3,545    3,650    3,826    3,999    4,136
Total  $ 42,076  $ 38,324  $ 35,818  $ 32,054  $ 27,623  $ 22,700
                   

The following table presents the amounts related to the 2016 QSR transaction, for the last four quarters.

                 
 For the three months ended 
    June 30, 2017    March 31, 2017    December 31, 2016    September 30, 2016  
  In Thousands  
Ceded risk-in-force   $ 2,403,027    $ 2,167,745    $ 2,008,385    $ 1,778,235  
Ceded premiums written     (12,034 )    (10,292 )    (11,576 )    (38,977 )
Ceded premiums earned     (11,463 )    (9,865 )    (9,746 )    (2,885 )
Ceded claims and claims expenses     342      268      206      90  
Ceding commission written     2,407      2,058      2,316      7,795  
Ceding commission earned     2,275      2,065      1,752      551  
Profit commission     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  
   
June 30, 2017
  March 31,
2017
  December 31,
2016
  September 30,
2016
 
June 30, 2016
  March 31,
2016
 
 
   ($ Values In Millions)
New insurance written  $ 5,037   $ 3,559   $ 5,240   $ 5,857   $ 5,838   $ 4,254  
New risk written    1,242     868     1,244     1,415     1,411     1,016  
Insurance in force (1)    38,629     34,779     32,168     28,228     23,624     18,564  
Risk in force (1)    9,417     8,444     7,790     6,847     5,721     4,487  
Policies in force (count) (1)    161,195     145,632     134,662     119,002     100,547     79,700  
Weighted-average coverage (2)    24.4 %   24.3 %   24.2 %   24.3 %   24.2 %   24.2 %
Loans in default (count)    249     207     179     115     79     55  
Percentage of loans in default    0.2 %   0.1 %   0.1 %   0.1 %   0.1 %   0.1 %
Risk in force on defaulted loans  $ 14   $ 12   $ 10   $ 6   $ 4   $ 3  
Average premium yield (3)    0.41 %   0.40 %   0.44 %   0.48 %   0.47 %   0.45 %
Earnings from cancellations  $ 3.8   $ 2.5   $ 5.1   $ 5.8   $ 3.5     2.3 %
Annual persistency    83.1 %   81.3 %   80.7 %   81.8 %   83.3 %   82.7 %
Quarterly run-off (4)    3.4 %   2.9 %   4.6 %   5.3 %   4.2 %   3.5 %
                         
(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
                         

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

     
Primary NIW by FICO   For the three months ended 
     June 30, 2017     March 31, 2017     June 30, 2016
       ($ In Millions)   
 >= 760  $ 2,376 $ 1,683 $ 3,160
 740-759    793     551     961
 720-739    626     456     672
 700-719    568     396     541
 680-699    368     264     308
 <=679    306     209     196
Total  $ 5,037   $ 3,559   $ 5,838
Weighted average FICO    749     749     756
          
   
Primary NIW by LTV  For the three months ended  
     June 30, 2017     March 31, 2017     June 30, 2016  
   (In Millions)  
 95.01% and above  $ 474   $ 274   $ 362  
 90.01% to 95.00%    2,297     1,612     2,633  
 85.01% to 90.00%    1,506     1,101     1,732  
 85.00% and below    760     572     1,111  
Total  $ 5,037   $ 3,559   $ 5,838  
Weighted average LTV    92.18 %   92.00 %   91.73 %
   
   
Primary NIW by purchase/refinance mix   For the three months ended  
     June 30, 2017     March 31, 2017     June 30, 2016  
    (In Millions)  
 Purchase  $ 4,518   $ 2,984   $ 4,199  
 Refinance    519     575     1,639  
Total  $ 5,037   $ 3,559   $ 5,838  
             

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

Primary IIF and RIFAs of June 30, 2017 
 IIF RIF
  (In Millions)
June 30, 2017$ 8,460 $ 2,078
201619,288 4,650
20159,243 2,284
20141,596 395
201342 10
Total$ 38,629 $ 9,417

The tables below reflect 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
     June 30, 2017     March 31, 2017     June 30, 2016
   (In Millions)
 >= 760  $ 19,224  $ 17,408  $ 11,929
 740-759    6,269     5,658     3,876
 720-739    4,927     4,460     3,082
 700-719    3,973     3,533     2,341
 680-699    2,615     2,336     1,561
 <=679    1,621     1,384     835
Total  $ 38,629   $ 34,779   $ 23,624
          
 
Primary RIF by FICO  As of
     June 30, 2017    March 31, 2017    June 30, 2016
   (In Millions)
 >= 760  $ 4,720  $ 4,253  $ 2,895
 740-759    1,535    1,383    951
 720-739    1,198    1,081    750
 700-719    960    851    566
 680-699    627    556    369
 <=679    377    320    190
Total  $ 9,417  $ 8,444  $ 5,721
 
 
Primary IIF by LTV   As of
     June 30, 2017    March 31, 2017    June 30, 2016
    (In Millions)
 95.01% and above  $ 2,367  $ 1,931  $ 1,049
 90.01% to 95.00%    17,441    15,601    10,574
 85.01% to 90.00%    12,157    11,058    7,754
 85.00% and below    6,664    6,189    4,247
Total  $ 38,629  $ 34,779  $ 23,624
 
 
Primary RIF by LTV   As of
     June 30, 2017    March 31, 2017    June 30, 2016
    (In Millions)
 95.01% and above  $ 648  $ 533  $ 293
 90.01% to 95.00%    5,120    4,585    3,116
 85.01% to 90.00%    2,893    2,626    1,838
 85.00% and below    756    700    474
Total  $ 9,417  $ 8,444  $ 5,721
 
 
Primary RIF by Loan Type   As of
     June 30, 2017    March 31, 2017    June 30, 2016
 
Fixed    98%    99%    98%
Adjustable rate mortgages:               
 Five years and longer    2    1    2
Total    100%    100%    100%
          

The table below reflects a summary of the change in total primary IIF during the periods indicated.

   
Primary IIF  For the three months ended  
    June 30, 2017    March 31, 2017    June 30, 2016  
   (In Millions)  
IIF, beginning of period  $ 34,779   $ 32,168   $ 18,564  
 NIW    5,037     3,559     5,838  
 Cancellations and other reductions    (1,187 )   (948 )   (778 )
IIF, end of period  $ 38,629   $ 34,779   $ 23,624  
             
   
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  
   June 30, 2017   March 31, 2017   June 30, 2016  
California  13.8 %  13.8 % 13.0 %
Texas  7.5    7.2   6.8  
Virginia  6.0    6.3   6.4  
Florida  4.4    4.4   5.0  
Arizona  4.2    4.1   3.8  
Colorado  3.9    3.9   4.1  
Maryland  3.7    3.7   3.4  
Utah  3.7    3.6   3.4  
Pennsylvania  3.6    3.6   3.5  
Michigan  3.6    3.7   4.1  
Total  54.4 %  54.3 % 53.5 %
          

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

   
   As of June 30, 2017  
   
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)
 
   
   
Book year  
   ($ Values in Millions)  
2013  $ 162  $ 42  26 % 655  212  1  1  0.2 % 0.3 %
2014    3,451    1,596  46 % 14,786  7,963  53  7  3.5 % 0.4 %
2015    12,422    9,243  74 % 52,548  41,747  128  13  2.7 % 0.3 %
2016    21,187    19,288  91 % 83,626  78,111  67  2  1.3 % 0.1 %
2017  $ 8,596  $ 8,460  98 % 33,593  33,162  -  -  - % - %
Total  $ 45,818  $ 38,629      185,208  161,195  249  23         
                        
(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 six months ended  
   June 30, 2017    June 30, 2016    June 30, 2017    June 30, 2016  
   
   (In Thousands)  
Beginning balance  $ 3,761   $ 1,137   $ 3,001   $ 679  
Less reinsurance recoverables (1)    (564 )    -      (297 )    -  
Beginning balance, net of reinsurance recoverables    3,197      1,137      2,704      679  
   
Add claims incurred:                            
 Claims and claim expenses incurred:                            
  Current year (2)    1,376      560      2,331      1,113  
  Prior years    (3 )    (90 )    (323 )    (185 )
Total claims and claims expenses incurred    1,373      470      2,008      928  
   
Less claims paid:                            
 Claims and claim expenses paid:                            
  Current year (2)    -      -      -      -  
  Prior years (3)    421      132      563      132  
Total claims and claim expenses paid    421      132      563      132  
   
Reserve at end of period, net of reinsurance                            
recoverables    4,149      1,475      4,149      1,475  
Add reinsurance recoverables (1)    899      -      899      -  
Balance, June 30  $ 5,048    $ 1,475    $ 5,048    $ 1,475  
                 
(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.

       
   Three months ended   Six months ended  
   
   June 30, 2017   June 30, 2016   June 30, 2017   June 30, 2016  
Beginning default inventory  207   55   179   36  
Plus: new defaults  147   50   271   89  
Less: cures  (97 ) (23 ) (189 ) (43 )
Less: claims paid  (8 ) (3 ) (12 ) (3 )
Ending default inventory  249   79   249   79  
             

The following tables provide details of our claims and reserves for the periods indicated.

   
   
   For the three months ended   For the six months ended  
   
     June 30, 2017     June 30, 2016   June 30, 2017     June 30, 2016  
   ($ Values In Thousands)  
Number of claims paid    8     3     12     3  
Total amount paid for claims  $ 429   $ 132   $ 571   $ 132  
Average amount paid per claim  $ 54   $ 44   $ 48   $ 44  
Severity    86 %   71 %   87 %   71 %
   
   
Average reserve per default:              As of June 30, 2017    As of June 30, 2016  
                (In Thousands)  
Case              $ 19   $ 17  
IBNR                1     1  
Total              $ 20   $ 18  
                 

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

          
   As of
   June 30, 2017   March 31, 2017   June 30, 2016
   (In thousands)
Available assets  $ 485,019  $ 466,982  $ 432,074
Risk-based required assets    298,091     398,859     377,468
          

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