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NMI Holdings, Inc. Reports Fourth Quarter Net Income of $61.6 Million

EMERYVILLE, CA--(Marketwired - February 15, 2017) - NMI Holdings, Inc. (NASDAQ: NMIH) today reported net income of $61.6 million, or $1.01 per share, for the fourth quarter ended Dec. 31, 2016. Results for the quarter include a tax benefit of $54.5 million resulting from reversal of the valuation allowance on the company's deferred tax asset and a charge of $1.7 million related to the change in fair value of outstanding warrants as a result of the company's higher stock price at Dec. 31, 2016. The company reported net income of $6.2 million, or $0.10 per share, in the prior quarter and a net loss of ($4.8) million, or ($0.08) per share, in the fourth quarter of 2015.

Bradley Shuster, chairman and CEO of National MI, said, "We are proud of our performance in the fourth quarter and for the full year. In 2016 we achieved profitability, more than doubled insurance in force and premiums earned, negotiated a reinsurance treaty to support our growth, and solidified our position as a strong, returns-oriented mortgage insurance provider. We are excited about our growing operating leverage and returns profile, realizing the business model we envisioned at our founding. We want to thank our customers and employees, as well as business partners, lenders and shareholders for making it possible."

Shuster added, "Looking ahead, we believe 2017 will be an even better year as we continue to layer on more high-quality insurance in force and drive strong revenue growth while prudently managing expenses and risk. With our largely fixed expense base, we expect that the operating leverage we already have demonstrated will drive increasing profits and returns throughout the year."

  • As of December 31, 2016, the company had primary insurance-in-force of $32.2 billion, up 14% from $28.2 billion at the prior quarter end and up 117% over $14.8 billion as of December 31, 2015.
  • Premiums earned for the quarter were $32.8 million, up 3% from $31.8 million in the prior quarter and up 94% over $16.9 million in the same quarter a year ago.
  • NIW mix was 75% monthly premium product, which compares with 71% in the prior quarter and 45% in the fourth quarter of 2015.
  • Total underwriting and operating expenses in the fourth quarter were $23.3 million, including share-based compensation expense of $1.9 million. This compares with total underwriting and operating expenses of $24.0 million, including $1.8 million of share-based compensation, in the prior quarter, and $21.7 million, including $2.3 million of share-based compensation, in the same quarter a year ago.
  • Loss expense for the quarter was $0.8 million, resulting in a loss ratio of 2%.
  • As of the end of the fourth quarter, the company had approved master policies in place with 1,131 customers, up from 1,100 as of the end of the prior quarter, and up from 964 as of the end of the fourth quarter of 2015. Customers delivering NIW in the quarter grew to a new high of 638, which compares with 525 in the prior quarter and 500 in the same quarter a year ago.
  • At quarter-end, cash and investments were $677 million, including $74 million at the holding company, and book equity was $477 million, equal to $8.07 per share.
  • In 2016, the company generated $71.9 million of cash from operations, which compares with $41.5 million for 2015.
  • At quarter-end, the company had total PMIERs available assets of $454 million, which compares with risk- based required assets under PMIERs of $367 million.
    Quarter   Quarter   Quarter   Growth   Growth  
    Ended   Ended   Ended   Q/Q   Y/Y  
    12/31/2016   9/30/2016   12/31/2015          
Primary Insurance-in-Force ($billions)   32.17   28.22   14.82   14 % 117 %
New Insurance Written - NIW ($billions)                      
  Monthly premium   3.90   4.16   2.03   -6 % 92 %
  Single premium   1.34   1.70   2.52   -21 % -47 %
  Total   5.24   5.86   4.55   -11 % 15 %
Premiums Earned ($millions)   32.83   31.81   16.88   3 % 94 %
Underwriting & Operating Expense ($millions)   23.28   24.04   21.69   -3 % 7 %
Loss Expense ($millions)   0.80   0.66   0.37   21 % 116 %
Loss Ratio   2 % 2 % 2 %        
Cash & Investments ($millions)   677   686   617   -1 % 10 %
Book Equity ($millions)   477   430   403   11 % 18 %
Book Value per Share   8.07   7.28   6.85   11 % 18 %
Approved Master Policies   1,131   1,100   964   3 % 17 %
Customers Generating NIW   638   525   500   22 % 28 %

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: 41208251, 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 December 31,     For the year ended December 31,  
  2016     2015     2016     2015  
Revenues (In Thousands, except for share data)  
  Net premiums earned $ 32,825     $ 16,880     $ 110,481     $ 45,506  
  Net investment income   3,634       2,078       13,751       7,246  
  Net realized investment gains (losses)   65       (121 )     (693 )     831  
  Other revenues   105       25       276       25  
Total revenues   36,629       18,862       123,815       53,608  
Expenses                              
  Insurance claims and claims expenses   800       371       2,392       650  
  Underwriting and operating expenses   23,281       21,686       93,223       80,599  
Total expenses   24,081       22,057       95,615       81,249  
Other (expense) income                              
  (Loss) gain from change in fair value of warrant liability   (1,713 )     431       (1,900 )     1,905  
  Interest expense   (3,777 )     (2,057 )     (14,848 )     (2,057 )
Total other (expense)   (5,490 )     (1,626 )     (16,748 )     (152 )
                               
Income (loss) before income taxes   7,058       (4,821 )     11,452       (27,793 )
  Income tax benefit   (54,502 )     -       (54,389 )     -  
Net income (loss) $ 61,562     $ (4,821 )   $ 65,841     $ (27,793 )
                               
Earnings (loss) per share                              
  Basic $ 1.04     $ (0.08 )   $ 1.11     $ (0.47 )
  Diluted $ 1.01     $ (0.08 )   $ 1.08     $ (0.47 )
                               
Weighted average common shares outstanding                              
  Basic   59,140,011       58,781,566       59,070,948       58,683,194  
  Diluted   61,229,338       58,781,566       60,829,372       58,683,194  
                               
Loss Ratio(1)   2 %     2 %     2 %     1 %
Expense Ratio(2)   71       128       84       177  
Combined ratio   73 %     131 %     87 %     179 %
                               
Net income (loss) $ 61,562     $ (4,821 )   $ 65,841     $ (27,793 )
Other comprehensive (loss) income, net of tax:                              
  Net unrealized (losses) gains in accumulated other comprehensive income (loss), net of tax expense of $1,178, and $0 for the years ended December 31, 2016 and December 31, 2015, respectively and $1,178, and $0 for the quarters ended December 31, 2016 and December 31, 2015   (16,196 )     (3,503 )     1,429       (3,518 )
  Reclassification adjustment for losses (gains) included in net loss, net of tax expense of $0 for all periods presented   (65)       603       758       (349 )
Other comprehensive (loss) income, net of tax   (16,261 )     (2,900 )     2,187       (3,867 )
Comprehensive income (loss) $ 45,301     $ (7,700 )   $ 68,028     $ (31,660 )

/EINPresswire.com/ -- (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 December 31, 2016     December 31, 2015  
Assets (In Thousands, except for share data)  
  Fixed maturities, available-for-sale, at fair value (amortized cost of $630,688 and $564,319 as of December 31, 2016 and December 31, 2015, respectively) $ 628,969     $ 559,235  
  Cash and cash equivalents   47,746       57,317  
  Premiums receivable   13,728       5,143  
  Accrued investment income   3,421       2,873  
  Prepaid expenses   1,991       1,428  
  Deferred policy acquisition costs, net   30,109       17,530  
  Software and equipment, net   20,402       15,201  
  Intangible assets and goodwill   3,634       3,634  
  Prepaid reinsurance premiums   37,921       -  
  Deferred tax asset, net   53,274       -  
  Other assets   542       90  
Total assets $ 841,737     $ 662,451  
   
Liabilities              
  Term loan $ 144,353     $ 143,939  
  Unearned premiums   152,906       90,773  
  Accounts payable and accrued expenses   25,297       22,725  
  Reserve for insurance claims and claim expenses   3,001       679  
  Reinsurance funds withheld   30,633       -  
  Deferred ceding commission   4,831       -  
  Warrant liability, at fair value   3,367       1,467  
  Deferred tax liability, net   -       137  
Total liabilities   364,388       259,720  
Commitments and contingencies              
   
Shareholders' equity              
  Common stock - class A shares, $0.01 par value; 59,145,161 and 58,807,825 shares issued and outstanding as of December 31, 2016 and December 31, 2015, respectively (250,000,000 shares authorized)   591       588  
  Additional paid-in capital   576,927       570,340  
  Accumulated other comprehensive loss, net of tax   (5,287 )     (7,474 )
  Accumulated deficit   (94,882 )     (160,723 )
Total shareholders' equity   477,349       402,731  
Total liabilities and shareholders' equity $ 841,737     $ 662,451  
Historical Quarterly Data 2016     2015  
  December
31,
    September
30
    June 30     March 31     December 31     September
30
 
Revenues (In Thousands, except for share data)  
  Net premiums earned $ 32,825     $ 31,808     $ 26,041     $ 19,807     $ 16,880     $ 12,834  
  Net investment income   3,634       3,544       3,342       3,231       2,078       1,884  
   
  Net realized investment gains (losses)   65       66       61       (885 )     (121 )     (15 )
  Other revenues   105       102       37       32       25       -  
Total revenues   36,629       35,520       29,481       22,185       18,862       14,703  
Expenses                                              
  Insurance claims and claims expenses   800       664       470       458       371       181  
  Underwriting and operating expenses   23,281       24,037       23,234       22,672       21,686       19,653  
Total expenses   24,081       24,701       23,704       23,130       22,057       19,834  
   
Other (expense) income (1)   (5,490 )     (4,530 )     (3,766 )     (2,962 )     (1,626 )     332  
   
Income (loss) before income taxes   7,058       6,289       2,011       (3,907 )     (4,821 )     (4,799 )
  Income tax (benefit) expense   (54,502 )     114       -       -       -       -  
Net income (loss) $ 61,562     $ 6,175     $ 2,011     $ (3,907 )   $ (4,821 )   $ (4,799 )
   
Earnings (loss) per share                                              
  Basic $ 1.04     $ 0.10     $ 0.03     $ (0.07 )   $ (0.08 )   $ (0.08 )
  Diluted $ 1.01     $ 0.10       0.03       (0.07 )     (0.08 )     (0.08 )
   
Weighted average common shares                                              
outstanding                                              
Basic   59,140,011       59,130,401       59,105,613       58,936,694       58,781,566       58,741,328  
Diluted   61,229,338       60,284,746       59,830,899       58,936,694       58,781,566       58,741,328  
   
Other data                                              
Loss Ratio (2)   2 %     2 %     2 %     2 %     2 %     1 %
Expense Ratio (3)   71 %     76 %     89 %     114 %     128 %     153 %
Combined ratio   73 %     78 %     91 %     117 %     131 %     155 %

(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
 

December
31, 2016
  September
30, 2016
  June 30,
2016
  March 31,
2016
  December
31, 2015
  September
30, 2015
  (In Millions)
Monthly $ 3,904   $ 4,162   $ 3,700   $ 2,492   $ 2,029   $ 1,582
Single   1,336     1,695     2,138     1,762     2,518     2,051
Primary $ 5,240   $ 5,857   $ 5,838   $ 4,254   $ 4,547   $ 3,633
 
Primary and pool IIF As of
  December 31,
2016
  September
30, 2016
  June 30, 2016   March 31,
2016
  December 31,
2015
  September
30, 2015
  (In Millions)
Monthly $ 19,205   $ 16,038   $ 12,529   $ 9,210   $ 6,958   $ 5,087
Single   12,963     12,190     11,095     9,354     7,866     5,514
Primary   32,168     28,228     23,624     18,564     14,824     10,601
 
Pool   3,650     3,826     3,999     4,136     4,238     4,340
Total $ 35,818   $ 32,054   $ 27,623   $ 22,700   $ 19,062   $ 14,941

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  
  December
31, 2016
    September
30, 2016
    June 30,
2016
    March 31,
2016
    December
31, 2015
    September
30, 2015
 
    ($ Values In Millions)  
New insurance written $ 5,240     $ 5,857     $ 5,838     $ 4,254     $ 4,547     $ 3,633  
New risk written   1,244       1,415       1,411       1,016       1,105       887  
Insurance in force (1)   32,168       28,228       23,624       18,564       14,824       10,601  
Risk in force (1)   7,790       6,847       5,721       4,487       3,586       2,553  
Policies in force (count) (1)   134,662       119,002       100,547       79,700       63,948       46,175  
Weighted-average coverage (2)   24.2 %     24.3 %     24.2 %     24.2 %     24.2 %     24.1 %
Loans in default (count)   179       115       79       55       36       20  
Percentage of loans in default   0.1 %     0.1 %     0.1 %     0.1 %     0.1 %     - %
   
Risk in force on defaulted loans $ 10     $ 6     $ 4     $ 3     $ 2     $ 1  
Average premium yield (3)   0.44 %     0.48 %     0.47 %     0.45 %     0.49 %     0.52 %
Annual persistency (4)   80.7 %     81.8 %     83.3 %     82.7 %     79.6 %     71.6 %

(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
  December 31, 2016   September 30, 2016   December 31, 2015
  (In Millions)
  >= 760 $ 2,566   $ 2,975   $ 2,315
  740-759   846     934     754
  720-739   647     725     569
  700-719   560     588     485
  680-699   375     387     277
  <=679   246     248     147
Total $ 5,240   $ 5,857   $ 4,547
 
 
Primary NIW by LTV Three months ended
  December 31, 2016   September 30, 2016   December 31, 2015
  (In Millions)
  95.01% and above $ 355   $ 347   $ 219
  90.01% to 95.00%   2,224     2,557     1,989
  85.01% to 90.00%   1,580     1,844     1,559
  85.00% and below   1,081     1,109     780
Total $ 5,240   $ 5,857   $ 4,547
 
 
Primary NIW by purchase/refinance mix Three months ended
  December 31, 2016   September 30, 2016   December 31, 2015
  (In Millions)
  Purchase $ 3,776   $ 4,400   $ 3,138
  Refinance   1,464     1,457     1,409
Total $ 5,240   $ 5,857   $ 4,547

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                
  December 31, 2016     September 30, 2016     December 31, 2015  
Monthly 746     748     750  
Single 764     763     756  
   
   
Weighted Average LTV                
  December 31, 2016     September 30, 2016     December 31, 2015  
Monthly 92 %   91 %   92 %
Single 90     90     91  

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

Primary IIF and RIF As of December 31, 2016
  IIF   RIF
    (In Millions)
December 31, 2016 $ 20,193   $ 4,850
2015   10,071     2,472
2014   1,856     457
2013   48     11
Total $ 32,168   $ 7,790

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
  December 31, 2016   September 30, 2016   December 31, 2015
  (In Millions)
  >= 760 $ 16,166   $ 14,258   $ 7,124
  740-759   5,248     4,612     2,406
  720-739   4,130     3,648     2,111
  700-719   3,245     2,813     1,515
  680-699   2,151     1,863     1,100
  <=679   1,228     1,034     568
Total $ 32,168   $ 28,228   $ 14,824
 
 
Primary RIF by FICO As of
  December 31, 2016   September 30, 2016   December 31, 2015
  (In Millions)
  >= 760 $ 3,934   $ 3,470   $ 1,707
  740-759   1,281     1,130     590
  720-739   1,000     887     519
  700-719   782     680     369
  680-699   511     443     267
  <=679   282     237     134
Total $ 7,790   $ 6,847   $ 3,586
 
 
Primary Average Loan Size by FICO As of
  December 31, 2016   September 30, 2016   December 31, 2015
  (In Thousands)
  >= 760 $ 250   $ 250   $ 246
  740-759   241     240     235
  720-739   235     235     229
  700-719   233     233     228
  680-699   224     224     219
  <=679   210     209     207
Primary IIF by LTV As of  
  December 31, 2016     September 30, 2016     December 31, 2015  
  (In Millions)  
    95.01% and above $ 1,686     $ 1,363     $ 498  
    90.01% to 95.00%   14,358       12,644       6,583  
    85.01% to 90.00%   10,282       9,157       5,098  
    85.00% and below   5,842       5,064       2,645  
Total $ 32,168     $ 28,228     $ 14,824  
   
   
Primary RIF by LTV As of  
  December 31, 2016     September 30, 2016     December 31, 2015  
  (In Millions)  
    95.01% and above $ 467     $ 380     $ 139  
    90.01% to 95.00%   4,226       3,725       1,943  
    85.01% to 90.00%   2,439       2,174       1,210  
    85.00% and below   658       568       294  
Total $ 7,790     $ 6,847     $ 3,586  
   
   
Primary RIF by Loan Type As of  
  December 31, 2016     September 30, 2016     December 31, 2015  
   
  Fixed   99 %     98 %     98 %
  Adjustable rate mortgages:                      
    Less than five years   -       -       -  
    Five years and longer   1       2       2  
Total   100 %     100 %     100 %

As of December 31, 2016 and December 31, 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  
  December 31, 2016     September 30, 2016     December 31, 2015  
  (In Millions)  
IIF, beginning of period $ 28,228     $ 23,624     $ 10,601  
  NIW   5,240       5,857       4,547  
  Cancellations and other reductions   (1,300 )     (1,253 )     (324 )
IIF, end of period $ 32,168     $ 28,228     $ 14,824  

Geographic Dispersion

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

Top 10 primary RIF by state As of  
  December 31, 2016     September 30, 2016     December 31, 2015  
California 13.6 %   13.2 %   12.9 %
Texas 7.0     6.8     6.8  
Virginia 6.5     6.6     5.2  
Florida 4.5     4.7     5.3  
Arizona 3.9     3.8     3.7  
Colorado 3.9     4.0     4.2  
Maryland 3.7     3.6     2.8  
Michigan 3.7     3.9     4.4  
Utah 3.7     3.6     3.0  
Pennsylvania 3.6     3.6     3.7  
Total 54.1 %   53.8 %   52.0 %

The following table shows portfolio data by origination year.

  As of December 31, 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   $ 48   30 %   655   239   -   1   - %   0.2 %
2014   3,451     1,857   54 %   14,786   9,003   48   3   2.6 %   0.3 %
2015   12,422     10,071   81 %   52,548   44,716   103   7   2.4 %   0.2 %
2016   21,189     20,192   95 %   83,633   80,704   28   -   0.6 %   - %
Total $ 37,224   $ 32,168         151,622   134,662   179   11            

(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 December 31,  
For the year ended December 31,
 
  2016     2015   2016     2015  
  (In Thousands)  
Beginning balance $ 2,133     $ 358   $ 679     $ 83  
Less reinsurance recoverables (1)   (90 )     -     -       -  
Beginning balance, net of reinsurance recoverables   2,043       358     679       83  
   
Add claims incurred:                            
  Claims and claim expenses incurred:                            
    Current year (2)   654       341     2,457       699  
    Prior years (3)   149       30     (65 )     (49 )
Total claims and claims expenses incurred   803       371     2,392       650  
   
Less claims paid:                            
  Claims and claim expenses paid:                            
    Current year (2)   171       50     171       50  
    Prior years (3)   (29 )     -     196       4  
Total claims and claim expenses paid   142       50     367       54  
   
Reserve at end of period, net of reinsurance recoverables   2,704       679     2,704       679  
Add reinsurance recoverables (1)   297       -     297       -  
Balance, December 31 $ 3,001     $ 679   $ 3,001     $ 679  

(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.

  Three months ended     Year ended  
  December 31,     December 31,     December 31,     December 31,  
  2016     2015     2016     2015  
Beginning default inventory 115     20     36     4  
Plus: new defaults 126     27     284     51  
Less: cures (59 )   (10 )   (132 )   (17 )
Less: claims paid (3 )   (1 )   (9 )   (2 )
Ending default inventory 179     36     179     36  

The following tables provide details of our claims and reserves.

  Three months ended     Year ended  
  December 31,     December 31,     December 31,     December 31,  
  2016     2015     2016     2015  
  ($ Values In Thousands)  
Number of claims paid   3       1       9       2  
Total amount paid for claims $ 136     $ 50     $ 367     $ 54  
Average amount paid per claim $ 45     $ 50     $ 41     $ 27  
Severity   65 %     104 %     64 %     44 %
Average reserve per default: As of December 31, 2016   As of December 31, 2015
  (In Thousands)
Case $ 15   $ 18
IBNR   2     1
Total $ 17   $ 19

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

  As of  
  December 31, 2016     September 30, 2016     December 31, 2015  
  (In thousands)  
Available Assets $ 453,523     $ 488,635     $ 431,411  
Net Risk-Based Required Assets   366,584       320,609       249,805  
   
Asset charge % (1)   6.15 %     6.14 %     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.

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