Nmi Holdings Inc · NASDAQ:NMIH
Nmi — Sanford C. Bernstein (May 2014)
20 slides from Nmi's conference presentation, May 14, 2014
Slide 1: Sanford C. Bernstein Investor Presentation
NMI Holdings, Inc. (NMIH) Sanford C. Bernstein Investor Presentation May 14, 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 mortgage insurance market April 2012 J
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 $1.5 - $2.1 billion of additional capital each year. Industry-wide expectation that the GSEs will establish a new, lower, Risk-to-Capital level at 1
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: GSE Reform
GSE Reform Senate Committee Proposals Timing and Results Uncertain Unlikely anything will happen pre-November elections 11
Slide 13: 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 12
Slide 14: 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 $450 million of available capital (excluding deferred tax asset) as of March 31, 2014 No corporate debt No leg
Slide 15: Significant Value Proposition – Differentiation
Significant Value Proposition – Differentiation Based on our feedback to date, NMI’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 covered by 12 month resci
Slide 16: 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 17: Focused Sales Effort
Focused Sales Effort Regional Accounts National Accounts 55 person sales team 5 person sales team 2,000+ lenders Loans originated by Regional Accounts Approximately 40 of the largest lenders Make MI decision on loans they originate prior to Do not make MI decision on loans selling to National Accoun
Slide 18: 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 master policies signed with 478 lenders as of April 30, 2014 Approval by large aggregators significantly increases our ability to source business fr
Slide 19: Portfolio Review as of March 31, 2014
Portfolio Review as of March 31, 2014 Risk-In-Force by FICO Score Primary Pool Total 1% 4% 2% 19% 24% 28% >= 740 >= 740 >= 740 680 - 739 680 - 739 680 - 739 620 - 679 620 - 679 620 - 679 71% 74% 77% Risk-In-Force by LTV Primary Pool Total 1% 0% 11% 26% > 95% > 95% > 95% 90% - 95% 90% - 95% 90% - 95%
Slide 20: 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