NMI Holdings Q2 FY26 earnings call NMIH

NMI Holdings achieved record financial results in Q2 FY26, with total revenue reaching $187.9 million, adjusted net income of $106 million, and adjusted diluted EPS of $1.38. The company generated $16 billion in new insurance written (NIW) volume, growing its primary insurance in force to a record $227.1 billion. This growth reflects strong demand for down payment support and the company's consistent market success.

The company's credit performance remains strong, with a default rate of 1.16% at quarter-end and claims expense at $13.1 million. Management noted continued resilience in the national housing market, with home prices setting records. While some pressure points exist in Sunbelt and West Coast markets, recent data suggests these areas may be bottoming out. The underlying characteristics of new production are considered high quality, supported by individual risk underwriting and reinsurance.

NMI Holdings continues to execute its capital return strategy, repurchasing $31.4 million of common stock in Q2, retiring 827,000 shares at an average price of $37.99. Since the program's inception in 2022, the company has repurchased $408 million of common stock, representing 16% of total outstanding shares. $167 million of repurchase capacity remains, and management evaluates capital allocation based on NIW pace and organic opportunities.

The company emphasizes diversity in its reinsurance sources, currently favoring traditional reinsurance due to excellent execution, flexible terms, and forward flow coverage. This allows for certainty of execution and capital runway. The reinsurance market has seen increased capacity from new entrants and competitive dynamics due to reduced GSE risk transfer, leading to attractive terms for private mortgage insurers. The company remains open to returning to the ILN market for risk transfer.

Management views the private MI market as being at a point of constructive balance, with unit economics on new business remaining attractive. While NMI Holdings saw slightly higher NIW growth compared to some peers who have reported, this is attributed to normal fluctuations and customer engagement rather than aggressive market share management. The focus remains on supporting customers and protecting balance sheet returns.

The 21st Century Road to Housing Act, which went into effect recently, is viewed positively as a bipartisan effort to increase housing supply and improve affordability by streamlining development. While supportive of long-term housing supply, management does not expect an immediate significant impact on the private MI market, as it is primarily a supply-focused initiative.