Nmi Holdings Inc · NASDAQ:NMIH
Nmi — Investor Presentation (August 2014)
25 slides from Nmi's investor presentation, August 2014
Slide 1: Investor Presentation
NMI Holdings, Inc. (NMIH) Investor Presentation August 2014 © 2014 Copyright. National MI
Slide 2: Cautionary Note Regarding Forward-Looking Statements
Cautionary Note Regarding Forward- Looking Statements This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the
Slide 3: National MI (NMI Holdings, Inc.) Introduction
National MI (NMI Holdings, Inc.) Introduction Private mortgage insurance company capitalized in 2012 with approximately $510 million • One of seven companies approved as an eligible mortgage insurer by Fannie Mae and Freddie Mac • Licensed in all 50 states and D.C. Significant growth opportuniti
Slide 4: Key Accomplishments and Future Milestones
Key Accomplishments and Future Milestones We have made significant progress since forming the Company We are only the 2nd mortgage insurer to be GSE approved in the last 20 years We have several near term targets which will allow us to broadly address the MI market April 2012 January 2013 June
Slide 5: What is Private MI and Why is it Critical?
What is Private MI and Why is it Critical? U.S government has been insuring “conventional” mortgages since 1934 through the FHA The Private MI industry was established in 1957 to provide a private market alternative Approximately 33% of all GSE-securitized purchase mortgages in the first half
Slide 6: Historically Profitable Industry
Historically Profitable Industry Private MI Combined Ratio (1980-2013) The MI industry has been characterized by long periods of Expense Ratio Loss Ratio profitability 280% 300% 237% 235% 222% The industry has demonstrated the 250% 17 years of profitability 194% 190% 165% ability to generate att
Slide 7: The MI Industry's Capital Need Continues
The MI Industry’s Capital Need Continues We estimate, based on the assumptions below, that the private mortgage insurance industry requires between $2.5 – $3.7 billion of additional capital each year should the draft PMIERs be implemented without change 2014E Mortgage Originations $1.0 trillion -
Slide 8: Private MI Share Growth vs. FHA / VA
Private MI Share Growth vs. FHA / VA FHA and VA have filled the gap left by the capital constraints facing the private MI industry during the economic downturn As of year end 2013, FHA had a capital ratio of (0.11%), despite its 2.0% statutory minimum Market share continues to shift back to pr
Slide 9: Highly Favorable Demographic Trends
Highly Favorable Demographic Trends First-time homebuyers represent a significant future opportunity Average age of a first-time homebuyer is 34 years old • More Americans will enter the typical first-time homebuyer age nearly every year over the next decade • Over 40 MM Americans will reach the
Slide 10: Growing Purchase Originations
Growing Purchase Originations Increasing purchase vs. refinance mix is driving a relatively flat MI market, despite a decreasing overall origination market MI penetration is approximately 4x higher in purchase mortgages than refinancing Purchase originations have recovered since the financial
Slide 11: Strong Outlook For Private MI Volume
Strong Outlook For Private MI Volume Private MI volume and penetration is rebounding from historical lows due to • Recovery in housing market • Increased purchase mortgage volume • Market share shift towards private MI as the FHA pulls back by raising prices Private MI Volume and Penetration $450
Slide 12: Significant Value Proposition
Significant Value Proposition We believe our approach represents a differentiated and better way to insure mortgages Differentiated Strong Capital Base Superior Ease of Use Product 11
Slide 13: Significant Value Proposition – Capitalization
Significant Value Proposition – Capitalization Our balance sheet is among the strongest in the industry Strong Capital Base Differentiated Product Superior Ease of Use Approximately $440 million of available assets as of June 30, 2014 No corporate debt No legacy liabilities to influence deci
Slide 14: Significant Value Proposition – Differentiation
Significant Value Proposition – Differentiation Based on our feedback to date, National MI’s product offering is being received favorably by our customers Strong Capital Base Differentiated Product Superior Ease of Use Every policy is underwritten individually and automatically eligible for 12 m
Slide 15: Significant Value Proposition – Ease of Use
Significant Value Proposition – Ease of Use Our technology and focus on customer service will be key to our growth and profitability Strong Capital Base Differentiated Product Superior Ease of Use Modern, custom-developed technology to support the lifecycle of MI policy Competitive pricing C
Slide 16: National Accounts Provide Access to the Market
National Accounts Provide Access to the Market National Accounts 5 person sales team Approx. 40 of the largest lenders Nat’l Acct’s Do Not make MI decision on loans Make MI Decision but purchase correspondent volume On approximately 30% of all and must approve MI companies Private MI loans utilized
Slide 17: Growing Customer Base
Growing Customer Base We have made tremendous progress in our efforts to establish relationships with both regional and national accounts • We have approved master policies with 565 lenders as of June 30, 2014, including 22 of our 40 National Accounts • 102 customers generated NIW for us in the 1H
Slide 18: Growing Correspondent Approvals
Growing Correspondent Approvals We have made tremendous progress in our efforts to increase our correspondent approvals to increase our access to regional accounts. • As of June 30, 2014, we are approved with 18 of the Top Residential Correspondent Lenders, according to National Mortgage News • Th
Slide 19: NIW and IIF Growth as of June 30, 2014
NIW and IIF Growth as of June 30, 2014 Increased access to the market and a growing customer base can be seen in the NIW and IIF growth over the last 4 quarters New Insurance Written and Insurance in New Insurance Written - New Insurance Written - Force Trends National and Regional Accounts Aggreg
Slide 20: Portfolio Review as of June 30, 2014
Portfolio Review as of June 30, 2014 Risk-In-Force by FICO Score Primary Pool Total 2% 3% 2% 16% 27% 31% >= 740 >= 740 >= 740 680 - 739 680 - 739 680 - 739 620 - 679 620 - 679 620 - 679 67% 71% 81% Risk-In-Force by LTV Primary Pool Total 9% 1% 0% > 95% 30% > 95% 37% 90% - 95% 90% - 95% 85% - 90% <=
Slide 21: Draft Private Mortgage Insurer Eligibility Requirements (PMIERs)
Draft Private Mortgage Insurer Eligibility Requirements (PMIERs) We are supportive of consistent capital standards for all Private MI companies • Ensures the industry is well capitalized to take on an increasing role in the housing finance industry as the government seeks to reduce its footprint •
Slide 22: Draft PMIERs – Still Allow for Mid-Teen Returns
Draft PMIERs – Still Allow for Mid-Teen Returns As drafted, we expect a modest impact to allowable Risk to Assets/Capital and Returns Industry 1H 2014 NIW could be leveraged 14:1 based on the current risk-based required assets and would produce a Return on Assets of 16.0% A 2001 FICO mix could
Slide 23: Draft PMIERs – Continued shift from FHA to Private MI
Draft PMIERs – Continued shift from FHA to Private MI Competitors may have to raise premiums in low FICO buckets to earn an acceptable return on assets • Draft PMIERs risk-based required assets required the greatest increase in assets in FICO buckets below 680 • In 2014, only 5% of all Private MI
Slide 24: Draft PMIERS impact on Fannie Mae Pool Capital
Draft PMIERS impact on Fannie Mae Pool Capital Under the Fannie Mae Pool agreement NMI executed in 9/13, capital would be assessed for counterparty strength purposes as the lesser of the pool risk layer or 5.6% of the underlying loan level risk As of 6/30, the pool risk layer was $93.1 million a
Slide 25: Conclusion
Conclusion Private mortgage insurance company capitalized in 2012 with approximately $510 million • One of seven companies approved as an eligible mortgage insurer by Fannie Mae and Freddie Mac • Licensed in all 50 states and D.C. Significant growth opportunities • Long term growth prospects in