UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q
FORM 10-Q
(Mark One)
x☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2017March 31, 2023
OR
o☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______
 
Commission file number 001-36174
Commission file number 001-36174
NMI Holdings, Inc.
(Exact name of registrant as specified in its charter)

DELAWAREDelaware45-4914248
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
2100 Powell Street Emeryville, CAEmeryville,CA94608
(Address of principal executive offices)(Zip Code)


(855) 530-6642
(Registrant's telephone number, including area code)


Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common Stock, par value $0.01NMIHNasdaq
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
YES x NO oYes ☒No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
YES x NO oYes ☒No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer"filer," "smaller reporting company"company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer o
☒
Accelerated filer x
☐
Non-accelerated filer o
☐
Smaller reporting company o☐
(Do not check if a smaller reporting company)
Emerging growth company x


☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. x☐


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
YES o NO x

Yes ☐No ☒
The number of shares of common stock, $0.01 par value per share, of the registrant outstanding on October 30, 2017April 28, 2023 was 60,033,14483,279,910 shares.

1



TABLE OF CONTENTS
3
5
Item 1.
5
Item 2.
2426
Item 3.
4151
Item 4.
4252
4353
Item 1.
4353
Item 1A.
4353
Item 6.2.
4354
Item 6.
55
4458
Exhibit Index
i




2

CAUTIONARY NOTE REGARDING FORWARD LOOKINGFORWARD-LOOKING STATEMENTS
This report contains forward lookingforward-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. Any statements about our expectations, outlook, beliefs, plans, predictions, forecasts, objectives, assumptions or future events or performance are not historical facts and may be forward looking.forward-looking. 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," "perceive," "plan," "project," "continuing," "ongoing," "expect," "intend" or words of similar meaning and include, but are not limited to, statements regarding the outlook for our future business and financial performance. All forward lookingforward-looking statements are necessarily only estimates of future results, and actual results may differ materially from expectations. You are, therefore, cautioned not to place undue reliance on such statements which should be read in conjunction with the other cautionary statements that are included elsewhere in this report. Further, any forward lookingforward-looking statement speaks only as of the date on which it is made and we undertake no obligation to update or revise any forward lookingforward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. We have based these forward lookingforward-looking statements on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, operating results, business strategy and financial needs. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward lookingforward-looking statements including, but not limited to:
•changes in general economic, market and political conditions and policies (including rising interest rates and inflation) and investment results or other conditions that affect the U.S. housing market or the U.S. markets for home mortgages, mortgage insurance, reinsurance and credit risk transfer markets, including the risk related to geopolitical instability, inflation, an economic downturn (including any decline in home prices) or recession, and their impacts on our business, operations and personnel;
•changes in the charters, business practices, policy, pricing or priorities of Fannie Mae and Freddie Mac (collectively, the GSEs), includingwhich may include decisions that have the impact of decreasing or discontinuing the use of mortgage insurance as credit enhancement;enhancement generally, or with first time homebuyers or on very high loan-to-value (LTV) mortgages; or changes in the direction of housing policy objectives of the Federal Housing Finance Agency (FHFA), such as the FHFA's priority to increase the accessibility to and affordability of homeownership for low-and-moderate income borrowers and underrepresented communities;
•our ability to remain an eligible mortgage insurer under the private mortgage insurer eligibility requirements (PMIERs) and other requirements imposed by 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 likeother private mortgage insurers and government mortgage insurers such as the Federal Housing Administration (FHA), the U.S. Department of Agriculture's Rural Housing Service (USDA) and the U.S. Department of Veterans AdministrationAffairs (VA) (collectively, government MIs), 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, rules and regulations that impact our business or financial condition directly or the mortgage insurance industry generally or their enforcement and implementation by regulators;regulators, including the implementation of the final rules defining and/or concerning "Qualified Mortgage" and "Qualified Residential Mortgage";
•U.S. federal tax reform and other potential changes in tax law and their impact on us and our operations;
•legislative or regulatory changes to the GSEs' role in the secondary mortgage market or other changes that could affect the residential mortgage industry generally or mortgage insurance industry in particular;
•potential future lawsuits,legal and regulatory claims, investigations, actions, audits or inquiries or resolution of current lawsuits or inquiries;
changesthat could result in general economic, market and political conditions and policies, interest rates, inflation and investment resultsadverse judgements, settlements, fines or other conditionsreliefs that affectcould require significant expenditures or have other negative effects on our business;
3

•uncertainty relating to the housing marketcoronavirus (COVID-19) virus and its variants or the measures taken by governmental authorities and other third-parties to contain the spread of COVID-19, including their impact on the global economy, the U.S. housing, real estate, housing finance and mortgage insurance markets, for home mortgages or mortgage insurance;and our business, operations and personnel;
•our ability to successfully execute and implement our capital plans, including our ability to access the equity, credit and reinsurance marketmarkets and to enter into, and receive approval of, reinsurance arrangements on terms and conditions that are acceptable to us, the GSEs and our regulators;
•lenders, the GSEs, or other market participants seeking alternatives to private mortgage insurance;
•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;
•decrease in the length of time our insurance policies are in force;
•emergence of unexpected claim and coverage issues, including claims exceeding our reserves or amounts we had expected to experience;
•potential adverse impacts arising from recent natural disasters including, with respect to the affected areas, a decline in new business, adverse effects on home prices, and an increase in notices of default on insured mortgages;

•climate risk and efforts to manage or regulate climate risk by government agencies could affect our business and operations;

•potential adverse impacts arising from the occurrence of any man-made disasters or public health emergencies, including pandemics;
•the inability of our counter-parties, including third partythird-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 (IT) systems or the failure of technology providers to perform;
•effectiveness and security of our information technology systems and digital products and services, including the risks these systems, products or services may fail to operate as expected or planned, or expose us to cybersecurity or third-party risks (including exposure of our confidential customer and other confidential information); and
•ability to recruit, train and retain key personnel.
For more information regarding these risks and uncertainties as well as certain additional risks that we face, you should refer to Part I, Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in this report on Form 10-Q, including the exhibits hereto. In addition, for additional discussion of those risks and uncertainties that have the potential to affect our business, financial condition, results of operations, cash flows or prospects in a material and adverse manner, you should review the Risk Factors in Part II, Item 1A of this Report and in Part I, Item 1A, of our Annual Report on Form 10-K for the year ended December 31, 2016 (20162022 (2022 10-K), as subsequently updated in other reports we file from time to time with the U.S. Securities and Exchange Commission (SEC).
Unless expressly indicated or the context requires otherwise, the terms "we," "our," "us""us," "Company" and "Company""NMI" in this document refer to NMI Holdings, Inc., a Delaware corporation, and its wholly ownedwholly-owned subsidiaries on a consolidated basis.




4

PART I

Item 1. Financial Statements






INDEX TO FINANCIAL STATEMENTS

Condensed Consolidated Balance Sheets as of September 30, 2017March 31, 2023 (Unaudited) and December 31, 20162022
6
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and nine months ended September 30, 2017March 31, 2023 and 20162022 (Unaudited)
7
Condensed Consolidated Statements of Changes in Shareholders' Equity for the ninethree months ended September 30, 2017March 31, 2023 and the year ended December 31, 20162022 (Unaudited)
8
Condensed Consolidated Statements of Cash Flows for the ninethree months ended September 30, 2017March 31, 2023 and 20162022 (Unaudited)
9
Notes to Condensed Consolidated Financial Statements (Unaudited)
10


5
NMI HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

March 31, 2023December 31, 2022
Assets(In Thousands, except for share data)
Fixed maturities, available-for-sale, at fair value (amortized cost of $2,383,982 and $2,352,747 as of March 31, 2023 and December 31, 2022, respectively)$2,171,766 $2,099,389 
Cash and cash equivalents (including restricted cash of $2,197 and $2,176 as of March 31, 2023 and December 31, 2022, respectively)83,104 44,426 
Premiums receivable70,198 69,680 
Accrued investment income15,702 14,144 
Deferred policy acquisition costs, net59,921 58,564 
Software and equipment, net31,830 31,930 
Intangible assets and goodwill3,634 3,634 
Reinsurance recoverable23,479 21,587 
Prepaid federal income taxes154,409 154,409 
Other assets19,733 18,267 
Total assets$2,633,776 $2,516,030 
Liabilities
Debt$396,426 $396,051 
Unearned premiums114,064 123,035 
Accounts payable and accrued expenses70,341 74,576 
Reserve for insurance claims and claim expenses108,157 99,836 
Reinsurance funds withheld2,313 2,674 
Deferred tax liability, net223,368 193,859 
Other liabilities12,396 12,272 
Total liabilities927,065 902,303 
Commitments and contingencies
Shareholders' equity
Common stock - class A shares, $0.01 par value; 86,869,169 shares issued and 83,279,886 shares outstanding as of March 31, 2023 and 86,472,742 shares issued and 83,549,879 shares outstanding as of December 31, 2022 (250,000,000 shares authorized)869 865 
Additional paid-in capital973,599 972,717 
Treasury Stock, at cost: 3,589,283 and 2,922,863 common shares as of March 31, 2023 and December 31, 2022, respectively(71,437)(56,575)
Accumulated other comprehensive loss, net of tax(171,821)(204,323)
Retained earnings975,501 901,043 
Total shareholders' equity1,706,711 1,613,727 
Total liabilities and shareholders' equity$2,633,776 $2,516,030 



 September 30, 2017 December 31, 2016
Assets(In Thousands, except for share data)
Fixed maturities, available-for-sale, at fair value (amortized cost of $687,284 and $630,688 as of September 30, 2017 and December 31, 2016, respectively)$692,729
 $628,969
Cash and cash equivalents20,698
 47,746
Premiums receivable21,056
 13,728
Accrued investment income4,598
 3,421
Prepaid expenses2,651
 1,991
Deferred policy acquisition costs, net36,101
 30,109
Software and equipment, net21,767
 20,402
Intangible assets and goodwill3,634
 3,634
Prepaid reinsurance premiums39,915
 37,921
Deferred tax asset, net38,490
 51,434
Other assets4,973
 542
Total assets$886,612
 $839,897
    
Liabilities   
Term loan$143,969
 $144,353
Unearned premiums161,345
 152,906
Accounts payable and accrued expenses22,028
 25,297
Reserve for insurance claims and claim expenses6,123
 3,001
Reinsurance funds withheld33,105
 30,633
Deferred ceding commission4,971
 4,831
Warrant liability, at fair value4,046
 3,367
Total liabilities375,587
 364,388
Commitments and contingencies

 

    
Shareholders' equity   
Common stock - class A shares, $0.01 par value;
59,928,092 and 59,145,161 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively (250,000,000 shares authorized)		599
 591
Additional paid-in capital583,447
 576,927
Accumulated other comprehensive loss, net of tax(630) (5,287)
Accumulated deficit(72,391) (96,722)
Total shareholders' equity511,025
 475,509
Total liabilities and shareholders' equity$886,612
 $839,897

See accompanying notes to condensed consolidated financial statements.statements (unaudited).
6
NMI HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

For the three months ended March 31,
20232022
(In Thousands, except for per share data)
Revenues
Net premiums earned$121,754 $116,495 
Net investment income14,894 10,199 
Net realized investment (losses) gains(33)408 
Other revenues164 339 
Total revenues136,779 127,441 
Expenses
Insurance claims and claim expenses (benefits)6,701 (619)
Underwriting and operating expenses25,786 32,935 
Service expenses80 430 
Interest expense8,039 8,041 
Gain from change in fair value of warrant liability— (93)
Total expenses40,606 40,694 
Income before income taxes96,173 86,747 
Income tax expense21,715 19,067 
Net income$74,458 $67,680 
Earnings per share
Basic$0.89 $0.79 
Diluted$0.88 $0.77 
Weighted average common shares outstanding
Basic83,600 85,953 
Diluted84,840 87,310 
Net income$74,458 $67,680 
Other comprehensive income (loss), net of tax:
Unrealized gains (losses) in accumulated other comprehensive income (loss), net of tax expense (benefit) of $8,633 and $(26,176) for the quarters ended March 31, 2023 and 2022, respectively32,476 (98,471)
Reclassification adjustment for realized losses (gains) included in net income, net of tax (benefit) expense of $(7) and $86 for the quarters ended March 31, 2023 and 2022, respectively26 (323)
Other comprehensive income (loss), net of tax32,502 (98,794)
Comprehensive income (loss)$106,960 $(31,114)


For the three months ended September 30,
For the nine months ended September 30,

2017 2016
2017
2016
Revenues(In Thousands, except for share data)
Net premiums earned$44,519
 $31,808
 $115,661
 $77,656
Net investment income4,170
 3,544
 11,885
 10,117
Net realized investment gains (losses)69
 66
 198
 (758)
Other revenues195
 102
 461
 172
Total revenues48,953
 35,520
 128,205
 87,187
Expenses       
Insurance claims and claims expenses957
 664
 2,965
 1,592
Underwriting and operating expenses24,645
 24,037
 78,682
 69,943
Total expenses25,602
 24,701
 81,647
 71,535
Other expense       
Loss from change in fair value of warrant liability(502) (797) (679) (187)
Interest expense(3,352) (3,733) (10,146) (11,072)
Total other expense(3,854) (4,530) (10,825) (11,259)
        
Income before income taxes19,497
 6,289
 35,733
 4,393
Income tax expense7,185
 114
 11,917
 114
Net income$12,312
 $6,175
 $23,816
 $4,279

       
Earnings per share       
Basic$0.21
 $0.10
 $0.40
 $0.07
Diluted$0.20
 $0.10
 $0.38
 $0.07

       
Weighted average common shares outstanding       
Basic59,883,629
 59,130,401
 59,680,166
 59,047,758
Diluted63,088,958
 60,284,746
 62,773,333
 59,861,916

       
Net income$12,312
 $6,175
 $23,816
 $4,279
Other comprehensive income (loss), net of tax:       
Net unrealized gain (loss) in accumulated other comprehensive income, net of tax expense of $366 and $0 for the three months ended September 30, 2017 and 2016, respectively, and $2,439 and $0 for the nine months ended September 30, 2017 and 2016768
 (82) 4,786
 17,690
Reclassification adjustment for realized losses (gains) included in net income, net of tax expense of $24 and $0 for the three months ended September 30, 2017 and 2016, respectively, and $69 and $0 for the nine months ended September 30, 2017 and 2016(45) (66) (129) 758
Other comprehensive income (loss), net of tax723

(148)
4,657

18,448
Comprehensive income$13,035

$6,027

$28,473

$22,727
See accompanying notes to condensed consolidated financial statements.statements (unaudited).
7
NMI HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)





Common Stock - Class AAdditional
Paid-in Capital		Treasury Stock, At CostAccumulated Other Comprehensive LossRetained EarningsTotal
SharesAmount
(In Thousands)
Balances, December 31, 2022Balances, December 31, 202283,550 $865 $972,717 $(56,575)$(204,323)$901,043 $1,613,727 
Common stock: class A shares issued under stock plans, net of shares withheld for employee taxesCommon stock: class A shares issued under stock plans, net of shares withheld for employee taxes396 4 (2,610)— — — (2,606)
Repurchase of common stockRepurchase of common stock(666)— — (14,862)— — (14,862)
Share-based compensation expenseShare-based compensation expense— — 3,492 — — — 3,492 
Change in unrealized investment gains/losses, net of tax expense of $8,640Change in unrealized investment gains/losses, net of tax expense of $8,640— — — — 32,502 32,502 
Net incomeNet income— — — — — 74,458 74,458 
Balances, March 31, 2023Balances, March 31, 202383,280 $869 $973,599 $(71,437)$(171,821)$975,501 $1,706,711 
Common Stock - Class AAdditional
Paid-in Capital		Accumulated Other Comprehensive Income (Loss)Accumulated DeficitTotal
SharesAmount
(In Thousands)
Balances, January 1, 201658,808
$588
$570,340
$(7,474)$(160,723)$402,731
Common stock: class A shares issued under stock plans, net of shares withheld for employee taxes337
3
(227)—
—
(224)
Share-based compensation expense—
—
6,814
—
—
6,814
Change in unrealized investment gains/losses, net of tax expense of $1,178—
—
—
2,187
—
2,187
Net income—
—
—
—
64,001
64,001
Balances, December 31, 201659,145
$591
$576,927
$(5,287)$(96,722)$475,509
Cumulative effect of change in accounting principle—
—
388
—
515
903
Common stock: class A shares issued under stock plans, net of shares withheld for employee taxes783
8
(801)—
—
(793)
Share-based compensation expense—
—
6,933
—
—
6,933
Change in unrealized investment gains/losses, net of tax expense of $2,508—
—
—
4,657
—
4,657
Net income—
—
—
—
23,816
23,816
Balances, September 30, 201759,928
$599
$583,447
$(630)$(72,391)$511,025





Common Stock - Class AAdditional
Paid-in Capital		Treasury Stock, At CostAccumulated Other Comprehensive Income (Loss)Retained EarningsTotal
SharesAmount
(In Thousands)
Balances, December 31, 202185,793 $858 $955,302 $— $1,485 $608,141 $1,565,786 
Common stock: class A shares issued related to warrant exercises51 1 1,143 — — — 1,144 
Common stock: class A shares issued under stock plans, net of shares withheld for employee taxes430 4 26 — — — 30 
Repurchase of common stock(235)— — (5,000)(5,000)
Share-based compensation expense— — 4,196 — — — 4,196 
Change in unrealized investment gains/losses, net of tax benefit of $26,262— — — — (98,794)— (98,794)
Net income— — — — — 67,680 67,680 
Balances, March 31, 202286,039 $863 $960,667 $(5,000)$(97,309)$675,821 $1,535,042 







See accompanying notes to condensed consolidated financial statements.statements (unaudited).
8
NMI HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

For the three months ended March 31,
20232022
Cash flows from operating activities(In Thousands)
Net income$74,458 $67,680 
Adjustments to reconcile net income to net cash provided by operating activities:
Net realized investment losses (gains)33 (408)
Gain from change in fair value of warrant liability— (93)
Depreciation and amortization2,798 3,093 
Net amortization of premium on investment securities966 1,707 
Amortization of debt discount and debt issuance costs480 451 
Deferred income taxes20,869 19,054 
Share-based compensation expense3,492 4,196 
Changes in operating assets and liabilities:
Premiums receivable(518)(168)
Accrued investment income(1,558)(521)
Deferred policy acquisition costs, net(1,357)(143)
Reinsurance recoverable(1,892)240 
Other assets (1)
(1,612)(1,299)
Unearned premiums(8,971)(844)
Reserve for insurance claims and claim expenses8,321 (1,179)
Reinsurance balances, net(196)79 
Accounts payable and accrued expenses(5,478)(11,535)
Net cash provided by operating activities89,835 80,310 
Cash flows from investing activities
Purchase of short-term investments(106,614)(2)
Purchase of fixed-maturity investments, available-for-sale(133,971)(66,513)
Proceeds from maturity of short-term investments179,297 10,640 
Proceeds from redemptions, maturities and sale of fixed-maturity investments, available-for-sale29,054 36,479 
Software and equipment(1,517)(1,974)
Net cash used in investing activities(33,751)(21,370)
Cash flows from financing activities
Proceeds from issuance of common stock related to employee equity plans2,657 4,491 
Proceeds from issuance of common stock related to warrant exercises— 290 
Taxes paid related to net share settlement of equity awards(5,263)(4,461)
Repurchases of common stock(14,800)(5,000)
Net cash used in financing activities(17,406)(4,680)
Net increase in cash, cash equivalents and restricted cash38,678 54,260 
Cash, cash equivalents and restricted cash, beginning of period44,426 76,646 
Cash, cash equivalents and restricted cash, end of period$83,104 $130,906 

(1)    "Prepaid expenses" have been reclassified as "Other assets" in prior periods.
 For the nine months ended September 30,
 2017 2016
Cash flows from operating activities(In Thousands)
Net income$23,816
 $4,279
Adjustments to reconcile net income to net cash provided by operating activities:   
Net realized investment (gains) losses(198) 758
Loss from change in fair value of warrant liability679
 187
Depreciation and amortization4,871
 4,300
Net amortization of premium on investment securities1,200
 954
Amortization of debt discount and debt issuance costs1,112
 1,416
Share-based compensation expense6,933
 4,987
Deferred income taxes11,340
 —
Changes in operating assets and liabilities:   
Premiums receivable(7,328) (6,235)
Accrued investment income(1,177) (742)
Prepaid expenses(660) (885)
Deferred policy acquisition costs, net(5,992) (11,381)
Other assets(1,150) (2)
Unearned premiums8,439
 54,628
Reserve for insurance claims and claims expenses3,122
 1,454
Reinsurance balances, net618
 (431)
Accounts payable and accrued expenses(3,847) (1,075)
Net cash provided by operating activities41,778
 52,212
Cash flows from investing activities   
Purchase of short-term investments(111,551) (147,639)
Purchase of fixed-maturity investments, available-for-sale(166,640) (103,418)
Proceeds from maturity of short-term investments142,722
 93,916
Proceeds from redemptions, maturities and sale of fixed-maturity investments, available-for-sale75,785
 101,874
Additions to software and equipment(6,869) (8,449)
Net cash used in investing activities(66,553) (63,714)
Cash flows from financing activities   
Proceeds from issuance of common stock related to employee equity plans3,105
 526
Taxes paid related to net share settlement of equity awards(3,883) (694)
Repayments of term loan(1,125) (1,125)
Payments of debt modification costs(370) —
Net cash used in financing activities(2,273) (1,293)
    
Net decrease in cash and cash equivalents(27,048) (12,795)
Cash and cash equivalents, beginning of period47,746
 57,317
Cash and cash equivalents, end of period$20,698
 $44,522
    
Supplemental disclosures of cash flow information   
Interest paid$10,350
 $9,669
Income taxes paid802
 —

See accompanying notes to condensed consolidated financial statements.statements (unaudited).
9
NMI HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)



1. Organization, and Basis of Presentation and Summary of Accounting Principles
NMI Holdings, Inc. (NMIH) is a Delaware corporation, incorporated in May 2011 to provide private mortgage guaranty insurance (which we refer to as mortgage insurance or MI) through its wholly ownedwholly-owned insurance subsidiaries, National Mortgage Insurance Corporation (NMIC) and National Mortgage Reinsurance Inc One (Re One). In April 2012, we completed a private placement of our securities, through which we offered and sold an aggregate of 55,000,000 of our Class AOur common stock resulting in net proceeds of approximately $510 million (the Private Placement), and we completed the acquisition of our insurance subsidiaries for $8.5 million in cash, common stock and warrants, plus the assumption of $1.3 million in liabilities. In November 2013, we completed an initial public offering of 2.4 million shares of our common stock, and our common stock began tradingis listed on the NASDAQNasdaq exchange on November 8, 2013, under the ticker symbol "NMIH."
In April 2013, NMIC, our primary insurance subsidiary, issued its first mortgage insurance policy.policy in April 2013. NMIC is licensed to write mortgage insurance in all 50 states and D.C.the District of Columbia (D.C.). Re One historically provided reinsurance coverage to NMIC in accordance with certain statutory risk retention requirements. Such requirements have been repealed and the reinsurance coverage provided by Re One to NMIC has been commuted. Re One remains a wholly-owned, licensed insurance subsidiary; however, it does not currently have active insurance exposures. In August 2015, NMIH capitalized a wholly ownedwholly-owned subsidiary, NMI Services, Inc. (NMIS), through which we offer outsourced loan review services on a limited basis to mortgage loan originators.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements, which include the results of NMIH and its wholly ownedwholly-owned subsidiaries, have been prepared in accordance with the instructions to Form 10-Q as prescribed by the SEC for interim reporting and include other information and disclosures required by accounting principles generally accepted in the U.S. (GAAP). Our accounts are maintained in U.S. dollars. These statements should be read in conjunction with our consolidated financial statements and notes thereto for the year ended December 31, 2016,2022, included in our 20162022 10-K. All intercompany transactions have been eliminated. Certain reclassifications to previously reported financial information have been made to conform to our current period presentation. The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, as well as disclosure of contingent assets and liabilities as of the balance sheet date. Estimates also affect the reported amounts of income and expenses for the reporting period. Actual results could differ from those estimates. The results of operations for the interim period may not be indicative of the results that may be expected for the full year ending December 31, 2017.2023.
Deferred Policy Acquisition CostsSignificant Accounting Principles
Costs directly associated with the successful acquisition of mortgage insurance policies, consisting of certain selling expenses and other policy issuance and underwriting expenses, are initially deferred and reported as deferred policy acquisition costs (DAC). DAC is reviewed periodically to determine that it does not exceed recoverable amounts and is adjusted as appropriate for policy cancellations to be consistent with our revenue recognition policy. We estimate the rate of amortization to reflect actual experience and anyThere have been no changes to persistency or loss development. For each book yearour significant accounting principles as described in Item 8, "Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements - Note 2 - Summary of business, these costs are amortized to expense in proportion to estimated gross profits over the estimated life of the policies. Total amortization of DAC, net of a portion of ceding commission related to the 2016 QSR Transaction (see Note 5, Accounting Principles"Reinsurance"), was $1.7 million and $1.2 million for the three months ended September 30, 2017 and 2016, respectively, and $4.0 million and $3.4 million for the nine months ended September 30, 2017 and 2016, respectively.
Premium Deficiency Reserves
We consider whether a premium deficiency exists at each fiscal quarter using best estimate assumptions as of the testing date. Per ASC 944, a premium deficiency reserve shall be recognized if the sum of expected claim costs and claim adjustment expenses, expected dividends to policyholders, unamortized acquisition costs and maintenance costs exceeds related unearned premiums and anticipated investment income. We have determined that no premium deficiency reserves were necessary for the three and nine months ended September 30, 2017 or 2016.
Reinsurance
We account for premiums, losses and loss expenses that are ceded to reinsurers on bases consistent with those we use to account for the original policies we issue and pursuant to the terms of our reinsurance contracts. We account for premiums ceded or otherwise paid to reinsurers2022 10-K, except as reductions to premium revenue.
We earn profit and ceding commissionsnoted in connection with our 2016 QSR Transaction (see Note 5, "Reinsurance").Profit commissions represent a percentage of the profits recognized by reinsurers that are returned to us, based on the level of losses we cede. We recognize any profit commissions we earn as increases to premium revenue. Ceding commissions are calculated as a percentage of ceded written premiums, which are intended to cover our costs to acquire and service the direct policies. We earn the
NMI HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

ceding commissions in a manner consistent with our recognition of earnings on the underlying insurance policies, over the terms of the policies reinsured. We account for ceding commissions as reductions to underwriting and operating expenses.
We cede a portion of loss reserves, paid losses and loss expenses to our reinsurers, which are accounted for as reinsurance recoverables on the consolidated balance sheets and as reductions to loss expense on the consolidated statements of operations. We remain directly liable for all loss payments in the event we are unable to collect from any reinsurer.
Variable interest entity
In May 2017, NMIC entered into a reinsurance agreement with Oaktown Re Ltd. (Oaktown Re), a Bermuda-domiciled special purpose reinsurer. At inception of the reinsurance agreement, we determined that Oaktown Re was a variable interest entity (VIE), as defined under GAAP (ASC 810), because it did not have sufficient equity at risk to finance its activities. We evaluated the VIE to determine whether NMIC was its primary beneficiary and, if so, whether we were required to consolidate the assets and liabilities of the VIE. The primary beneficiary of a VIE is an enterprise that (1) has the power to direct the activities of the VIE, which most significantly impact its economic performance and (2) has significant economic exposure to the VIE; i.e., the obligation to absorb losses or receive benefits that could potentially be significant. The determination of whether an entity is the primary beneficiary of a VIE is complex and requires management judgment regarding determinative factors, including the expected results of the VIE and how those results are absorbed by beneficial interest holders, as well as which party has the power to direct activities that most significantly impact the performance of the VIE.
We concluded that we are not the primary beneficiary of Oaktown Re and that consolidation is not required, as we do not have significant economic exposure in the entity.
See Note 5, Recent Accounting Pronouncements - Adopted"Reinsurance" for further discussion of the reinsurance arrangement.
Premiums Receivable
Premiums receivable consist of premiums due on our mortgage insurance policies. If a mortgage insurance premium is unpaid for more than 120 days, the receivable is written off against earned premium and the related insurance policy is canceled. We have determined that the receivable write-off was immaterial as of September 30, 2017. below.
Recent Accounting Pronouncements - Adopted
In May 2014,August 2018, the Financial Accounting Standards Board (the FASB) issued ASU 2018-12, Targeted Improvements to the Accounting Standards Update (ASU) 2014-09, Revenue fromfor Long-Duration Contracts with Customers (Topic 606)(Topic 944). ThisThe update is intendedprovides guidance to provide a consistent approach in recognizing revenue. In accordance with the new standard, recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the new standard requires that reporting companies disclose the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. In August 2015, ASU 2015-14 deferred the provisions of ASU 2014-09 to be effective for interim and annual periods beginning after December 15, 2017. In addition, this guidance amends the existing recognition, measurement, presentation and disclosure requirements for the recognition of a gain or loss on the transfer of non-financial assets that are not in a contract with a customer (ASU 2017-05). In September 2017, ASU 2017-13, added guidance fromlong-duration contracts issued by an SEC Staff Announcement, "Transition Related to Accounting Standards Updates No. 2014-09."insurance entity. The adoption of this update for our loan review services revenue, effective January 1, 2018, will have an immaterial impact on our consolidated financial statements and will not affect the Company’s reporting of insurance premiums and investment income. We are still in the process of evaluating the adoption method and the impact on presentation and disclosure.
In February 2016, the FASB subsequently issued ASU 2016-02, Leases (Topic 842). This update requires that businesses recognize rights2019-09 in November 2019 and obligations associated with certain leases as assetsASU 2020-11 in November 2020, which amended the effective date for this standard and liabilities on the balance sheet.provided transition relief to facilitate early application for long duration contracts. The standard also requires additional disclosures regarding the amount, timing, and uncertainty of cash flows arising from leases. For public business entities, this update is effective for annual periods beginning after December 15, 2018 and interim periods therein. Early adoption is permitted in any period. We expect to adopt this guidance on January 1, 2019. In September 2017, ASU 2017-13, added guidance from an SEC Staff Announcement, "Transition Related to Accounting Standards Update No. 2016-02." We anticipate this standard will have an impact on our financial position, primarily due to our office space operating lease, as we will be required to recognize lease assets and lease liabilities on our consolidated balance sheet. We will continue to assess the potential impacts of this standard, including the impact the adoption of this guidance will have on our results of operations or cash flows.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326). This update requires companies to measure all expected credit losses for financial assets held at the reporting date. The accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration also is amended in the standard. The standard
NMI HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

willnow take effect for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.2022. We are currently evaluating the impact the adoption ofadopted this ASU will have, if any, on the consolidated financial statements.
In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230). This update is intended to reduce diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The standard will take effect for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The adoption of this update, effective January 1, 2018, is2023 and determined it did not expected to have any impact on our statement of cash flows.
In August 2016, the FASB issued ASU 2016-16, Income Taxes- Intra-Entity Transfers of Assets Other Than Inventory (Topic 740). This update is intended to improve the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. The standard will take effect for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The adoption of this update, effective January 1, 2018, is not expected to have anya material impact on our consolidated financial statements.
Recent Accounting Pronouncements - Not Yet Adopted
In January 2017,March 2020, the FASB issued ASU 2017-04, Intangibles - Goodwill2020-04, Reference Rate Reform (Topic 848). The update provides optional guidance to ease the potential burden in accounting for reference rate reform on financial reporting. Reference rate reform refers to the global transition away from referencing the London Interbank Offered Rate (LIBOR) in financial contracts, which is expected to be discontinued during a transition period from 2021 through 2023. The ASU includes optional expedients and Other (Topic 350).exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. This update is intended to simplify the test for goodwill impairment. The standard will take effect for public business entities for fiscal years,may be elected and interim periods within those fiscal years, afterapplied prospectively over time from March 12, 2020 through December 15, 2020. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We have determined that the adoption of this ASU will have no impact on the consolidated financial statements.
31, 2022 as reference rate reform activities occur. In March 2017,December 2022, the FASB issued ASU 2017-08, Receivables - Nonrefundable Fees2022-06, which extended the sunset date of Topic 848 from December 31, 2022 to December 31, 2024. We continue to monitor the impact the discontinuance of LIBOR will have on our contracts and Other Costs (Subtopic 310-20). This update shortensother transactions; however, the amortization period for the premium on certain purchased callable debt securities to the earliest call date. The standard will take effect for public business entities for fiscal years beginning after December 15, 2017. Early adoption is permitted, and if an entity early adopts the guidance in an interim period, any adjustments are reflected as of the beginning of the fiscal year that includes that interim period. The adoption of, this update, effective January 1, 2018, isand future elections under ASU 2020-04 and ASU 2022-06 are not expected to have anya material impact on our consolidated financial statements.
In July 2017,statements as the FASB issued ASU 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), and Derivatives and Hedging (Topic 815). This update is intended to simplifyASUs will ease, if warranted, the requirements for accounting for certain financial instruments with down round features. This standard will take effect for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted in any interim or annual period. The Company is currently evaluating the impact the adoption of this ASU will have, if any, on the consolidated financial statements.
Immaterial Correction of Prior Period Amounts
During the first quarter of 2017, after filing the 2016 10-K, including the audited financial statements included therein, we discovered that $1.8 million of deferred taxes on vested options associated with employees terminated in previous years had not been reversed. Because our deferred tax asset (DTA) was subject to a valuation allowance prior to December 31, 2016, no expense would have been recognized in periods prior to December 31, 2016. However, at December 31, 2016, when we released the valuation allowance against the DTA, the DTA was overstated by $1.8 million and resulted in a $1.8 million overstatement of our 2016 income tax benefit and net income.
In order to provide consistency in the consolidated statements and as permitted by Staff Accounting Bulletin (SAB) 108, revisions for these immaterial amounts to previously reported annual amounts are reflected in the Consolidated Balance Sheet financial information herein and will be reflected in the Consolidated Statement of Operations in future filings containing such financial information as permitted by SAB 108. A comparisoneffects of the affected amounts as previously reported and as adjusted are presented below.rate reform.

10
NMI HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

2. Investments
As of and for the full year ended December 31, 2016As previously reported As adjusted
 (In thousands)
Income Statement   
Net income$65,841
 $64,001
Income tax (benefit)(54,389) (52,550)
Basic EPS1.11
 1.08
Diluted EPS1.08
 1.05
    
Balance Sheet   
Deferred tax asset, net$53,274
 $51,434
Total assets841,737
 839,897
Accumulated deficit(94,882) (96,722)
Total shareholders' equity477,349
 475,509
Change in Accounting Principle
In March 2016,We hold all investments on an available-for-sale basis at fair value on our condensed consolidated balance sheets and evaluate each position quarterly for impairment. We recognize an impairment on a security through the FASB issued ASU 2016-09, Improvementsstatement of operations if (i) we intend to Employee Share-Based Payment Accounting (Topic 718), which intendssell the impaired security; or (ii) it is more likely than not that we will be required to simplify various aspectssell the impaired security prior to recovery of its amortized cost basis. If a sale is intended or likely to be required, we recognize an impairment loss equivalent to the difference of the accounting for and reporting of share-based payments. The new accounting is required to be adopted using a modified retrospective approach, with a cumulative-effect adjustment to opening retained earnings for any outstanding liability awards that qualify for equity classification under the new guidance.
As the guidance is effective for annual and interim reporting periods beginning after December 15, 2016, we adopted the new guidance in the first quarter of 2017. This required us to reflect any adjustments as of January 1, 2017, the beginningamortized cost basis of the annual periodsecurity and its fair value through the condensed consolidated statement of operations and comprehensive income as a "Net Realized Investment Loss." In the event of an impairment of a security that includeswe intend to and have the interim periodability to hold to maturity, we evaluate the drivers of adoption.the impairment to determine the portion that is credit related and the portion that is non-credit related. The primary impactportion of adoption wasimpairment loss that is attributed to credit related factors is recognized through the recognitionstatement of excess tax benefits in ouroperations as a provision for income taxescredit loss and the portion that is attributed to non-credit related factors is recognized in the consolidated statements of operations. Additionally, our consolidated statements of cash flows now present excess tax benefits as an operating activity on a prospective basis. Finally, we have elected to account for forfeitures as they occur, rather than estimate expected forfeitures. The net cumulative effect of this change was recognized as a $0.5 million reduction to the accumulated deficit as of January 1, 2017.
2. Investments
We have designated our investment portfolio as available-for-sale and report it at fair value. The related unrealized gains and losses are, after considering the related tax expense or benefit, recognized throughother comprehensive income, and loss, and on an accumulated basis in shareholders' equity. Net realized investment gains and losses are reported in income based upon specific identificationnet of securities sold.taxes.
Fair Values and Gross Unrealized Gains and Losses on Investments
Amortized
Cost		Gross UnrealizedFair
Value
GainsLosses
As of March 31, 2023(In Thousands)
U.S. Treasury securities and obligations of U.S. government agencies$82,327 $— $(1,826)$80,501 
Municipal debt securities638,842 162 (65,386)573,618 
Corporate debt securities1,486,824 3,000 (143,354)1,346,470 
Asset-backed securities74,168 — (5,112)69,056 
Total bonds2,282,161 3,162 (215,678)2,069,645 
Short-term investments101,821 392 (92)102,121 
Total investments$2,383,982 $3,554 $(215,770)$2,171,766 
Amortized
Cost		Gross UnrealizedFair
Value
GainsLosses
As of December 31, 2022(In Thousands)
U.S. Treasury securities and obligations of U.S. government agencies$82,301 $— $(2,369)$79,932 
Municipal debt securities563,972 — (80,796)483,176 
Corporate debt securities1,457,589 1,149 (165,096)1,293,642 
Asset-backed securities74,762 — (6,204)68,558 
Total bonds2,178,624 1,149 (254,465)1,925,308 
Short-term investments174,123 185 (227)174,081 
Total investments$2,352,747 $1,334 $(254,692)$2,099,389 
We did not own any mortgage-backed securities in our asset-backed securities portfolio at March 31, 2023 or December 31, 2022.
11
 Amortized
Cost		 Gross Unrealized Fair
Value
  Gains Losses 
As of September 30, 2017(In Thousands)
U.S. Treasury securities and obligations of U.S. government agencies$65,669
 $21
 $(636) $65,054
Municipal debt securities90,155
 929
 (348) 90,736
Corporate debt securities404,467
 5,619
 (1,246) 408,840
Asset-backed securities96,279
 1,142
 (101) 97,320
Total bonds656,570
 7,711
 (2,331) 661,950
Short-term investments30,714
 65
 —
 30,779
Total investments$687,284
 $7,776
 $(2,331) $692,729
NMI HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 Amortized
Cost		 Gross Unrealized Fair
Value
  Gains Losses 
As of December 31, 2016(In Thousands)
U.S. Treasury securities and obligations of U.S. government agencies$64,135
 $6
 $(962) $63,179
Municipal debt securities40,801
 131
 (663) 40,269
Corporate debt securities349,712
 1,722
 (2,356) 349,078
Asset-backed securities114,456
 765
 (560) 114,661
Total bonds569,104
 2,624
 (4,541) 567,187
Short-term investments61,584
 198
 —
 61,782
Total investments$630,688
 $2,822
 $(4,541) $628,969
AsThe following table presents a breakdown of September 30, 2017the fair value of our corporate debt securities by issuer industry group as of March 31, 2023 and December 31, 2016,2022:
March 31, 2023December 31, 2022
Financial38 %38 %
Consumer24 24 
Communications11 11 
Utilities11 11 
Technology8 8 
Industrial8 8 
Total100 %100 %
As of March 31, 2023 and December 31, 2022, approximately $7.0$5.5 million and $5.4 million, respectively, of our cash and investments were held in the form of U.S. Treasury securities on deposit with various state insurance departments to satisfy regulatory requirements.
Scheduled Maturities
The amortized cost and fair valuesvalue of available-for-sale securities as of September 30, 2017March 31, 2023 and December 31, 2016,2022, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Because most asset-backed securities provide for periodic payments throughout their lives, they are listed below in a separate category.
As of September 30, 2017Amortized
Cost		 Fair
Value
As of March 31, 2023As of March 31, 2023Amortized
Cost		Fair
Value
(In Thousands)(In Thousands)
Due in one year or less$108,020
 $108,048
Due in one year or less$215,196 $214,150 
Due after one through five years158,353
 159,502
Due after one through five years996,997 928,613 
Due after five through ten years309,708
 312,697
Due after five through ten years1,069,343 932,616 
Due after ten years14,924
 15,162
Due after ten years28,278 27,331 
Asset-backed securities96,279
 97,320
Asset-backed securities74,168 69,056 
Total investments$687,284
 $692,729
Total investments$2,383,982 $2,171,766 
As of December 31, 2016Amortized
Cost		 Fair
Value
As of December 31, 2022As of December 31, 2022Amortized
Cost		Fair
Value
(In Thousands)(In Thousands)
Due in one year or less$94,382
 $94,584
Due in one year or less$271,613 $270,428 
Due after one through five years173,296
 173,251
Due after one through five years935,615 862,747 
Due after five through ten years242,005
 240,060
Due after five through ten years1,047,461 875,947 
Due after ten years6,549
 6,413
Due after ten years23,296 21,709 
Asset-backed securities114,456
 114,661
Asset-backed securities74,762 68,558 
Total investments$630,688
 $628,969
Total investments$2,352,747 $2,099,389 
Aging of Unrealized Losses
As of September 30, 2017,March 31, 2023, the investment portfolio had gross unrealized losses of $2.3 million, $1.5$215.8 million, of which has$209.2 million were associated with securities that had been in an unrealized loss position for a period of 12twelve months or greater. We did not consider these securities to be other-than-temporarily impaired aslonger. As of September 30, 2017. We based our conclusion that these investments were not other-than-temporarily impaired as of September 30, 2017 onDecember 31, 2022, the following facts: (i) theinvestment portfolio had gross unrealized losses of $254.7 million, of which $218.5 million were primarily caused by interest rate movements since the purchase date; (ii) we do not intend to sell these investments; and (iii) we do not believeassociated with securities that it is more likely than not that we will be required to sell these investments before recoveryhad been in an unrealized loss position for a period of our amortized cost basis, which may not occur until maturity.twelve months or longer. For those securities in an unrealized loss position, the length of time the securities were in such a position is as follows:
12
NMI HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Less Than Twelve MonthsTwelve Months or GreaterTotal
# of SecuritiesFair ValueUnrealized Losses# of SecuritiesFair ValueUnrealized Losses# of SecuritiesFair ValueUnrealized Losses
As of March 31, 2023($ In Thousands)
U.S. Treasury securities and obligations of U.S. government agencies10 $57,051 $(900)13 $23,450 $(926)23 $80,501 $(1,826)
Municipal debt securities16 58,938 (483)225 472,635 (64,903)241 531,573 (65,386)
Corporate debt securities76 234,568 (5,139)227 1,002,166 (138,215)303 1,236,734 (143,354)
Asset-backed securities— — — 26 69,056 (5,112)26 69,056 (5,112)
Short-term investments3 24,751 (92)— — — 3 24,751 (92)
Total105 $375,308 $(6,614)491 $1,567,307 $(209,156)596 $1,942,615 $(215,770)
Less Than Twelve MonthsTwelve Months or GreaterTotal
# of SecuritiesFair ValueUnrealized Losses# of SecuritiesFair ValueUnrealized Losses# of SecuritiesFair ValueUnrealized Losses
As of December 31, 2022($ In Thousands)
U.S. Treasury securities and obligations of U.S. government agencies19 $77,164 $(2,260)4 $2,768 $(109)23 $79,932 $(2,369)
Municipal debt securities57 143,097 (12,942)181 340,079 (67,854)238 483,176 (80,796)
Corporate debt securities141 434,174 (19,699)168 790,537 (145,397)309 1,224,711 (165,096)
Asset-backed securities12 13,527 (1,097)14 55,031 (5,107)26 68,558 (6,204)
Short-term investments12 104,236 (227)— — — 12 104,236 (227)
Total241 $772,198 $(36,225)367 $1,188,415 $(218,467)608 $1,960,613 $(254,692)
 Less Than 12 Months 12 Months or Greater Total
 # of SecuritiesFair ValueUnrealized Losses # of SecuritiesFair ValueUnrealized Losses # of SecuritiesFair ValueUnrealized Losses
As of September 30, 2017 (Dollars in Thousands)
U.S. Treasury securities and obligations of U.S. government agencies22
$38,425
$(263) 15
$19,621
$(373) 37
$58,046
$(636)
Municipal debt securities9
21,567
(212) 8
10,319
(136) 17
31,886
(348)
Corporate debt securities44
69,602
(317) 14
34,031
(929) 58
103,633
(1,246)
Asset-backed securities15
21,173
(89) 2
4,988
(12) 17
26,161
(101)
Total90
$150,767
$(881) 39
$68,959
$(1,450) 129
$219,726
$(2,331)
Allowance for credit losses
As of March 31, 2023 and December 31, 2022, we did not recognize an allowance for credit loss for any security in the investment portfolio and we did not record any provision for credit loss for investment securities during the three months ended March 31, 2023 or 2022.
 Less Than 12 Months 12 Months or Greater Total
 # of SecuritiesFair ValueUnrealized Losses # of SecuritiesFair ValueUnrealized Losses # of SecuritiesFair ValueUnrealized Losses
As of December 31, 2016 (Dollars in Thousands)
U.S. Treasury securities and obligations of U.S. government agencies33
$51,093
$(962) —
$—
$—
 33
$51,093
$(962)
Municipal debt securities14
28,659
(617) 1
1,704
(46) 15
30,363
(663)
Corporate debt securities77
135,115
(1,955) 8
13,873
(401) 85
148,988
(2,356)
Asset-backed securities30
38,702
(510) 6
2,472
(50) 36
41,174
(560)
Total154
$253,569
$(4,044) 15
$18,049
$(497) 169
$271,618
$(4,541)
The decrease in the number of securities in and the aggregate size of the unrealized loss position as of March 31, 2023, was driven by fluctuations in interest rates and, to a lesser extent, movements in credit spreads since December 31, 2022. We evaluated the securities in an unrealized loss position as of March 31, 2023, assessing their credit ratings as well as any adverse conditions specifically related to the security. Based upon our estimate of the amount and timing of cash flows to be collected over the remaining life of each instrument, we believe the unrealized losses as of March 31, 2023 are not indicative of the ultimate collectability of the current amortized cost of the securities.
Net Investment Income
The following table presents the components of net investment income:
For the three months ended March 31,
20232022
(In Thousands)
Investment income$15,174 $10,532 
Investment expenses(280)(333)
Net investment income$14,894 $10,199 
13
 For the three months ended September 30, For the nine months ended September 30,
 2017 2016 2017 2016
 (In Thousands)
Investment income$4,363
 $3,727
 $12,455
 $10,672
Investment expenses(193) (183) (570) (555)
Net investment income$4,170
 $3,544
 $11,885
 $10,117
The following table presents the components of net realized investment gains (losses):
 For the three months ended September 30, For the nine months ended September 30,
 2017 2016 2017 2016
 (In Thousands)
Gross realized investment gains$69
 $66
 $536
 $683
Gross realized investment losses—
 —
 (338) (1,441)
Net realized investment gains (losses)$69
 $66
 $198
 $(758)
Investment Securities - Other-than-Temporary Impairment (OTTI)
For the quarter ended September 30, 2017, we held no other-than-temporarily impaired securities. There were no credit losses recognized in earnings for which a portion of an OTTI loss was recognized in accumulated other comprehensive income (loss).
NMI HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


The following table presents the components of net realized investment gains:
For the three months ended March 31,
20232022
(In Thousands)
Gross realized investment gains$— $409 
Gross realized investment losses(33)(1)
Net realized investment (losses) gains$(33)$408 

3. Fair Value of Financial Instruments
The following describes the valuation techniques used by us to determine the fair value of our financial instruments:
We established a fair value hierarchy by prioritizing the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under this standard are described below:
Level 1 - Fair value measurements based on quoted prices in active markets that we have the ability to access for identical assets or liabilities. Market price data generally is obtained from exchange or dealer markets. We do not adjust the quoted price for such instruments.
Level 2 - Fair value measurements based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals.
Level 3 - Fair value measurements based on valuation techniques that use significant inputs that are unobservable. Both observable and unobservable inputs may be used to determine the fair values of positions classified in Level 3. The circumstances for using these measurements include those in which there is little, if any, market activity for the asset or liability. Therefore, we must make certain assumptions, which require significant management judgment or estimation about the inputs a hypothetical market participant would use to value that asset or liability.
In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety.
Assets classified as Level 1 and Level 2
To determine the fair value of securities available-for-sale in Level 1 and Level 2 of the fair value hierarchy, independent pricing sources have been utilized. One price is provided per security based on observable market data. To ensure securities are appropriately classified in the fair value hierarchy, we review the pricing techniques and methodologies of the independent pricing sources and believe that their policies adequately consider market activity, either based on specific transactions for the issue valued or based on modeling of securities with similar credit quality, duration, yield and structure that were recently traded. A variety of inputs are utilized by the independent pricing sources including benchmark yields, reported trades, non-binding broker/dealer quotes, issuer spreads, two sided markets, benchmark securities, bids, offers and reference data including data published in market research publications. Inputs may be weighted differently for any security, and not all inputs are used for each security evaluation. Market indicators, industry and economic events are also considered. This information is evaluated using a multidimensional pricing model. Quality controls are performed by the independent pricing sources throughout this process, which include reviewing tolerance reports, trading information and data changes, and directional moves compared to market moves. This model combines all inputs to arrive at a value assigned to each security. We have not made any adjustments to the prices obtained from the independent pricing sources. There were no transfers between Level 1 and Level 2 of the fair value hierarchy during the quarter ended September 30, 2017.
Liabilities classified as Level 3
14
We calculate the fair value of outstanding warrants utilizing level 3 inputs, including a Black-Scholes option-pricing model, in combination with a binomial model, and we value the pricing protection features within the warrants using a Monte-Carlo simulation model. Variables in the model include the risk-free rate of return, dividend yield, expected life and expected volatility of our stock price.
NMI HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


The following tables present the level within the fair value hierarchy at which the Company’sour financial instruments were measured:
Fair Value Measurements Using
Fair Value Measurements Using  Quoted Prices in
Active Markets for
Identical Assets
(Level 1)		Significant Other
Observable Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)		Fair Value
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)		 Significant Other
Observable Inputs
(Level 2)		 Significant
Unobservable
Inputs
(Level 3)		 Fair Value
As of September 30, 2017(In Thousands)
As of March 31, 2023As of March 31, 2023(In Thousands)
U.S. Treasury securities and obligations of U.S. government agencies$60,214
 $4,840
 $—
 $65,054
U.S. Treasury securities and obligations of U.S. government agencies$80,501 $— $— $80,501 
Municipal debt securities—
 90,736
 —
 90,736
Municipal debt securities— 573,618 — 573,618 
Corporate debt securities—
 408,840
 —
 408,840
Corporate debt securities— 1,346,470 — 1,346,470 
Asset-backed securities—
 97,320
 —
 97,320
Asset-backed securities— 69,056 — 69,056 
Cash, cash equivalents and short-term investments51,477
 —
 —
 51,477
Cash, cash equivalents and short-term investments185,225 — — 185,225 
Total assets$111,691
 $601,736
 $—
 $713,427
Total assets$265,726 $1,989,144 $— $2,254,870 
       
Warrant liability—
 —
 4,046
 4,046
Total liabilities$—
 $—
 $4,046
 $4,046
Fair Value Measurements Using
Fair Value Measurements Using  Quoted Prices in
Active Markets for
Identical Assets
(Level 1)		Significant Other
Observable Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)		Fair Value
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)		 Significant Other
Observable Inputs
(Level 2)		 Significant
Unobservable
Inputs
(Level 3)		 Fair Value
As of December 31, 2016(In Thousands)
As of December 31, 2022As of December 31, 2022(In Thousands)
U.S. Treasury securities and obligations of U.S. government agencies$50,719
 $12,460
 $—
 $63,179
U.S. Treasury securities and obligations of U.S. government agencies$79,932 $— $— $79,932 
Municipal debt securities—
 40,269
 —
 40,269
Municipal debt securities— 483,176 — 483,176 
Corporate debt securities—
 349,078
 —
 349,078
Corporate debt securities— 1,293,642 — 1,293,642 
Asset-backed securities—
 114,661
 —
 114,661
Asset-backed securities— 68,558 — 68,558 
Cash, cash equivalents and short-term investments109,528
 —
 —
 109,528
Cash, cash equivalents and short-term investments218,507 — — 218,507 
Total assets$160,247
 $516,468
 $—
 $676,715
Total assets$298,439 $1,845,376 $— $2,143,815 
       
Warrant liability—
 —
 3,367
 3,367
Total liabilities$—
 $—
 $3,367
 $3,367
There were no transfers between Level 12 and Level 23 of the fair value hierarchy during the ninethree months ended September 30, 2017 andMarch 31, 2023, or the year-endyear ended December 31, 2016.2022.
Financial Instruments not Measured at Fair Value
On June 19, 2020, we issued $400 million aggregate principal amount of senior secured notes that mature on June 1, 2025 (the Notes) and used a portion of the proceeds from the Notes offering to repay the outstanding amount due under our $150 million term loan (2018 Term Loan). At March 31, 2023, the Notes were carried at a cost of $396.4 million, net of unamortized debt issuance costs of $3.6 million, and had a fair value of $401.9 million as assessed under our Level 2 hierarchy. At December 31, 2022, the Notes were carried at a cost of $396.1 million, net of unamortized debt issuance costs of $3.9 million, and had a fair value of $405.9 million.
4. Debt
Senior Secured Notes
At March 31, 2023, we had $400 million aggregate principal amount of senior secured notes outstanding. The followingNotes were issued pursuant to an indenture dated June 19, 2020 (the Indenture) and bear interest at a rate of 7.375%, payable semi-annually on June 1 and December 1.
The Notes mature on June 1, 2025. At any time, or from time to time, prior to March 1, 2025, we may elect to redeem the Notes in whole or in part at a price based on 100% of the aggregate principal amount of any Notes redeemed plus the "Applicable Premium," plus accrued and unpaid interest thereon. Applicable Premium is a roll-forwarddefined as the greater of Level 3 liabilities measured at fair value:(1) 1.0% of the principal amount of the Notes, or (2) the excess of the present value of the principal value of the Notes plus all future interest payments
15
 For the nine months ended September 30,
Warrant Liability2017 2016
 (In Thousands)
Balance, January 1$3,367
 $1,467
Change in fair value of warrant liability included in earnings679
 187
Balance, September 30$4,046
 $1,654
We revalue the warrant liability quarterly using a Black-Scholes option-pricing model, in combination with a binomial model, and we value the pricing protection features within the warrants using a Monte-Carlo simulation model. As of September 30, 2017, the assumptions used in the option-pricing model were as follows: a common stock price as of September 30, 2017 of
NMI HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

$12.40, risk free interest rate of 1.66%, expected life of 3.25 years, expected volatility of 30.6% andover the principal amount. At any time on or after March 1, 2025, we may elect to redeem the Notes in whole or in part at a dividend yield of 0%. The change in fair value is primarily attributableprice equal to an increase in the price of our common stock from December 31, 2016 to September 30, 2017.
4. Term Loan
On November 10, 2015, we entered into a credit agreement (the Credit Agreement) to obtain a three-year senior secured term loan (the Term Loan) for $150 million. On February 10, 2017, we entered into an amendment to the Credit Agreement, to extend the maturity date100% of the Term Loan by one year and reduce the interest rate. Based on our analysis, we concluded the amendment to the Credit Agreement should be treated as a modification. As of September 30, 2017, the Term Loan bears interest at the Eurodollar Rate, as defined in the Credit Agreement and subject to a 1.00% floor, plus an annual margin rate of 6.75% (an all-in rate of 7.99% as of September 30, 2017), payable monthly or quarterly based on our interest rate election. Quarterlyaggregate principal payments of $375 thousand are also required. The outstanding balanceamount of the Term Loan asNotes to be redeemed plus accrued and unpaid interest thereon.
Interest expense for the Notes includes interest and the amortization of September 30, 2017 was $147 million.
Debtcapitalized debt issuance costs. In connection with the Notes offering, we recorded capitalized debt issuance costs totaling $4.8 million, including $370 thousand related to the modification and a 1% original issue discount, are beingof $7.4 million. Such amounts will be amortized to interest expense, using the effective interest method, over the contractual life of the Term Loan. EffectiveNotes using the effective interest method. The effective interest rate on the Notes is 7.825%. At March 31, 2023 and December 31, 2022, approximately $3.6 million and $3.9 million, respectively, of unamortized debt issuance costs remained.
At March 31, 2023 and December 31, 2022, $9.8 million and $2.5 million, respectively, of accrued and unpaid interest on the Notes was included in "Accounts Payable and Accrued Expenses" on the condensed consolidated balance sheets.
2021 Revolving Credit Facility
On November 29, 2021, we amended our $110 million senior secured revolving credit facility (the 2020 Revolving Credit Facility and as amended, the 2021 Revolving Credit Facility), expanding the lender group, increasing the revolving capacity to $250 million, and extending the maturity from February 22, 2023 to the earlier of (x) November 29, 2025, or (y) if any existing senior secured notes remain outstanding on such date, February 28, 2025. Borrowings under the 2021 Revolving Credit Facility may be used for general corporate purposes, including to support the growth of our new business production and operations, and accrue interest at a variable rate equal to, at our discretion, (i) a Base Rate (as defined in the 2021 Revolving Credit Facility) subject to a floor of 1.00% per annum) plus a margin of 0.375% to 1.875% per annum or (ii) the Adjusted Term Loan includes interest, amortizationSecured Overnight Financing Rate (SOFR, as defined in the 2021 Revolving Credit Facility) plus a margin of issuance cost1.375% to 2.875% per annum, with the margin in each of (i) or (ii) based on our applicable corporate credit rating at the time. As of March 31, 2023 and December 31, 2022, no amounts were drawn under the discount.2021 Revolving Credit Facility.
Under the 2021 Revolving Credit Facility, we are required to pay a quarterly commitment fee on the average daily undrawn amount of 0.175% to 0.525%, based on the applicable corporate credit rating at the time. As of March 31, 2023, the applicable commitment fee was 0.30%. For the ninethree months ended September 30, 2017,March 31, 2023, we recorded $10.1$0.2 million of commitment fees in interest expense.
We incurred debt issuance costs of $1.1 million in connection with the 2021 Revolving Credit Facility, and had $0.6 million of unamortized debt issuance costs associated with the 2020 Revolving Credit Facility remaining at the time of its amendment and replacement. The combined unamortized debt issuance will be amortized through interest expense including amortizationon a straight-line basis over the contractual life of the 2021 Revolving Credit Facility. At March 31, 2023 and December 31, 2022, remaining unamortized deferred debt issuance costs were $1.1 million and modification costs and original issue discount.$1.2 million, respectively.
We are subject to certain quarterly covenants under the 2021 Revolving Credit Agreement. These covenants include,Facility, including, but are not limited to, the following: a maximum debt-to-total capitalization ratio (as defined therein) of 35%, maximum risk-to-capital (RTC) ratio of 22.0:1.0, minimum liquidity (as defined therein), compliance with the PMIERsprivate mortgage insurer eligibility requirements (PMIERs) financial requirements (subject to any GSE-approvedGSE approved waivers), and minimum shareholders' equity requirements. This description is not intended to be complete in all respectsconsolidated net worth and is qualified in its entirety by the terms of the Credit Agreement, including its covenants and events of default.statutory capital requirements (respectively, as defined therein). We were in compliance with all covenants at March 31, 2023.

5. Reinsurance
We enter into third-party reinsurance transactions to actively manage our risk, ensure compliance with PMIERs, state regulatory and other applicable capital requirements, (respectively, as defined therein), and support the growth of September 30, 2017.
Future principal payments due underour business. The Wisconsin Office of the Term Loan asCommissioner of September 30, 2017 are as follows:Insurance (Wisconsin OCI) has approved and the GSEs have indicated their non-objection to all such transactions (subject to certain conditions and ongoing review, including levels of approved capital credit).
16
As of September 30, 2017 Principal
  (In thousands)
2017 $375
2018 1,500
2019 145,125
Total $147,000
   

NMI HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

5. Reinsurance
We have entered into two third-party reinsurance transactions to actively manage our risk, ensure PMIERs compliance and support the growth of our business. The GSEs and the Wisconsin Office of the Commissioner of Insurance (Wisconsin OCI) approved both transactions (subject to certain conditions and their periodic review of the transactions, including levels of approved capital credit).

The effect of our reinsurance agreements on premiums written and earned is as follows:
For the three months endedFor the nine months endedFor the three months ended
September 30, 2017 September 30, 2016September 30, 2017 September 30, 2016March 31, 2023March 31, 2022
(In Thousands)(In Thousands)
Net premiums written     Net premiums written
Direct$56,217
 $46,535
$142,134
 $133,526
Direct$148,932 $138,872 
Ceded (1)
(8,501) (37,336)(20,029) (37,336)
Ceded (1)
(35,956)(22,838)
Net premiums written$47,716
 $9,199
$122,105
 $96,190
Net premiums written$112,976 $116,034 
     
Net premiums earned     Net premiums earned
Direct$52,024
 $33,052
$133,696
 $78,900
Direct$157,904 $139,716 
Ceded (1)
(7,505) (1,244)(18,035) (1,244)
Ceded (1)
(36,150)(23,221)
Net premiums earned$44,519
 $31,808
$115,661
 $77,656
Net premiums earned$121,754 $116,495 
(1)    Net of profit commissioncommission.
Excess-of-loss reinsurance
In May 2017, Insurance-linked notes
NMIC entered intois a party to reinsurance agreementagreements with Oaktown Re thatII Ltd., Oaktown Re III Ltd., Oaktown Re V Ltd., Oaktown Re VI Ltd., and Oaktown Re VII Ltd. (special purpose reinsurance entities collectively referred to as the Oaktown Re Vehicles) effective July 25, 2018, July 30, 2019, October 29, 2020, April 27, 2021, and October 26, 2021, respectively. Each agreement provides for up to $211.3 million ofNMIC with aggregate excess-of-loss reinsurance coverage at inception for new delinquencies on an existinga defined portfolio of mortgage insurance policies written from 2013 through December 31, 2016. For the coverage period,policies. Under each agreement, NMIC will retain theretains a first layer of $126.8 million of aggregate lossesloss exposure on covered policies and the respective Oaktown Re willVehicle then provideprovides second layer coverageloss protection up to the outstandinga defined reinsurance coverage amount. NMIC will then retainretains losses in excess of the outstandingrespective reinsurance coverage amount. The outstanding reinsurance coverage amount decreases from $211.3 million at inception over a ten-year period as the underlying covered mortgages amortize and was $185 million as of September 30, 2017. The outstanding reinsurance coverage amount will stop amortizing if certain credit enhancement or delinquency thresholds are triggered.amounts.
Oaktown Re financed the coverage by issuing mortgage insurance-linked notes in an aggregate amount of $211.3 million to unaffiliated investors (the Notes). The Notes mature on April 26, 2027. All of the proceeds paid to Oaktown Re from the sale of the Notes were deposited into a reinsurance trust to collateralize and fund the obligations of Oaktown Re to NMIC under the reinsurance agreement. At all times, funds in the reinsurance trust account are required to be invested in high credit quality money market funds.  We refer collectively to NMIC’s reinsurance agreement with Oaktown Re and the issuance of the Notes by Oaktown Re as the 2017 ILN Transaction. Under the terms of the 2017 ILN Transaction, NMIC makes risk premium payments to the Oaktown Re Vehicles for the applicable outstanding reinsurance coverage amount and pays Oaktown Rean additional amount for anticipated operating expenses (capped at $300$250 thousand per year). ForNMIC ceded aggregate premiums to the Oaktown Re Vehicles of $9.1 million and $10.9 million during the three and nine months ended September 30, 2017, March 31, 2023 and 2022, respectively.
NMIC applies claims paid risk premiums of $1.9 million and $3.3 million, respectively.on covered policies against its first layer aggregate retained loss exposure under each excess-of-loss agreement. NMIC did not cede any incurred losses on covered policies to the Oaktown Re.Re Vehicles during the three months ended March 31, 2023 and 2022, as the aggregate first layer risk retention for each applicable agreement was not exhausted during such periods.
Under the terms of each excess-of-loss reinsurance agreement, the Oaktown Re Vehicles are required to fully collateralize their outstanding reinsurance coverage amount to NMIC with funds deposited into segregated reinsurance trusts. Such trust funds are required to be invested in short-term U.S. Treasury money market funds at all times. Each Oaktown Re Vehicle financed its respective collateral requirement through the issuance of mortgage insurance-linked notes to unaffiliated investors. Such insurance-linked notes mature ten years from the inception date of each reinsurance agreement (except the notes issued by Oaktown Re VI Ltd. and Oaktown Re VII Ltd., which have a 12.5-year maturity). We refer to NMIC's reinsurance agreements with and the insurance-linked note issuances by Oaktown Re Vehicles individually as the 2018 ILN Transaction, 2019 ILN Transaction, 2020-2 ILN Transaction, 2021-1 ILN Transaction, and 2021-2 ILN Transaction, and collectively as the ILN Transactions.
The respective reinsurance coverage amounts provided by the Oaktown Re Vehicles decrease over a ten-year period as the underlying insured mortgages are amortized or repaid, and/or the mortgage insurance coverage is canceled (except the coverage provided by Oaktown Re VI Ltd. and Oaktown Re VII Ltd., which decreases over a 12.5-year period). As the reinsurance coverage decreases, a prescribed amount of collateral held in trust by the Oaktown Re Vehicles is distributed to ILN Transaction noteholders as amortization of the outstanding insurance-linked note principal balances. The outstanding reinsurance coverage amounts stop amortizing, and the distribution of collateral assets to ILN Transaction noteholders and amortization of insurance-linked note principal is suspended if certain credit enhancement or delinquency thresholds, as defined in each agreement, are triggered (each, a Lock-Out Event). As of March 31, 2023, the 2021-2 ILN Transaction was deemed to be in Lock
17
NMI HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Out in connection with the initial build of its target credit enhancement level and will remain in Lock Out until such target credit enhancement level is achieved. Effective February 28, 2023, a previously triggered Lock-Out Event for the 2018 ILN Transaction was deemed to have cleared and amortization of the associated reinsurance coverage, and distribution of collateral assets and amortization of the associated insurance-linked notes resumed.
NMIC holds an optional termination right if certain events occur,rights under each ILN Transaction, including, among others, an optional call feature which provides NMIC the discretion to terminate the transaction on or after a prescribed date, and a clean-up call if the outstanding reinsurance coverage amount amortizes to 10% or less of the reinsurance coverage amount at inception or if NMIC reasonably determines that changes to GSE or rating agency asset requirements would cause a material and adverse effect on the capital treatment adopted by NMIC.afforded to NMIC under a given agreement. In addition, there are certain events that will result intrigger mandatory termination of thean agreement, including NMIC’sNMIC's failure to pay premiums or consent to reductions in thea trust account to make principal payments to noteholders, among others.
AtThe following table presents the time the 2017inception date, covered production period, initial and current reinsurance coverage amount, and initial and current first layer retained aggregate loss under each outstanding ILN Transaction. Current amounts are presented as of March 31, 2023.
($ values in thousands)
Inception DateCovered ProductionInitial Reinsurance CoverageCurrent Reinsurance CoverageInitial First Layer Retained Loss
Current First Layer Retained Loss (1)
2018 ILN TransactionJuly 25, 20181/1/2017 – 5/31/2018$264,545 $147,608 $125,312 $122,166 
2019 ILN TransactionJuly 30, 20196/1/2018 – 6/30/2019326,905 191,044 123,424 122,182 
2020-2 ILN TransactionOctober 29, 2020
4/1/2020 – 9/30/2020 (2)
242,351 85,011 121,777 121,177 
2021-1 ILN TransactionApril 27, 2021
10/1/2020 – 3/31/2021 (3)
367,238 282,630 163,708 163,654 
2021-2 ILN Transaction (5)
October 26, 2021
4/1/2021 – 9/30/2021 (4)
363,596 363,596 146,229 146,167 

(1)    NMIC applies claims paid on covered policies against its first layer aggregate retained loss exposure and cedes reserves for incurred claims and claim expenses to each applicable ILN Transaction was entered into withand recognizes a reinsurance recoverable if such incurred claims and claim expenses exceed its current first layer retained loss.
(2)    Approximately 1% of the production covered by the 2020-2 ILN Transaction has coverage reporting dates between July 1, 2019 and March 31, 2020.
(3)    Approximately 1% of the production covered by the 2021-1 ILN Transaction has coverage reporting dates between July 1, 2019 and September 30, 2020.
(4)    Approximately 2% of the production covered by the 2021-2 ILN Transaction has coverage reporting dates between July 1, 2019 and March 31, 2021.
(5)    As of March 31, 2023, the current reinsurance coverage amount on the 2021-2 ILN Transactions is equal to the initial reinsurance coverage amount, as the reinsurance coverage provided by Oaktown Re VII Ltd. will not begin to amortize until its target credit enhancement level is reached.

Under the terms of our ILN Transactions, we evaluatedare required to maintain a certain level of restricted funds in premium deposit accounts with Bank of New York Mellon until the applicabilityrespective notes have been redeemed in full. "Cash and cash equivalents" on our condensed consolidated balance sheets includes restricted amounts of $2.2 million as of both March 31, 2023 and December 31, 2022. The restricted balances required under these transactions will decline over time as the outstanding principal balance of the accounting guidance that addresses VIEs. Asrespective insurance-linked notes are amortized.
Traditional reinsurance
NMIC is a resultparty to four excess-of-loss reinsurance agreements with broad panels of third-party reinsurers – the 2022-1 XOL Transaction, effective April 1, 2022, the 2022-2 XOL Transaction, effective July 1, 2022, the 2022-3 XOL Transaction, effective October 1, 2022, and the 2023-1 XOL Transaction, effective January 1, 2023 – which we refer to collectively as the XOL Transactions. Each XOL Transaction provides NMIC with aggregate excess-of-loss reinsurance coverage on a defined portfolio of mortgage insurance policies. Under each agreement, NMIC retains a first layer of aggregate loss exposure on covered policies and the reinsurers then provide second layer loss protection up to a defined reinsurance coverage amount. The reinsurance coverage amount of each XOL Transaction is set to approximate the PMIERs minimum required assets of its reference pool and decreases from the inception of each respective agreement over a ten-year period in the event the PMIERs minimum required assets of the evaluationpool declines. NMIC retains losses in excess of the 2017 ILNoutstanding reinsurance coverage amount.
Under the terms of the XOL Transactions, NMIC makes risk premium payments to its third-party reinsurance providers for the outstanding reinsurance coverage amount and ceded aggregate premiums of $7.2 million during the three months ended March 31, 2023. NMIC applies claims paid on covered policies against its first layer aggregate retained loss exposure under each agreement. NMIC did not cede any incurred losses on covered policies under the XOL Transactions during the three months ended March 31, 2023, as the aggregate first layer risk retention for each agreement was not exhausted during the period.
NMIC holds optional termination rights which provide it the discretion to terminate each XOL Transaction we concluded that Oaktown Re ison or after a VIE. However, given that NMIC does not have significant economic exposure in Oaktown Re, we do not consolidate Oaktown Re in our consolidated financial statements.
18
NMI HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

specified date. NMIC may also elect to terminate the XOL Transactions at any point if the outstanding reinsurance coverage amount amortizes to 10% or less of the reinsurance coverage amount provided at inception, or if it determines that it will no longer be able to take full PMIERs asset credit for the coverage. Additionally, under the terms of the treaties, NMIC may selectively terminate its engagement with individual reinsurers under certain circumstances. Such selective termination rights arise when, among other reasons, a reinsurer experiences a deterioration in its capital position below a prescribed threshold, and/or a reinsurer breaches (and fails to cure) its collateral posting obligation.
    Quota share reinsurance
In September 2016, NMIC entered into a quota-share reinsurance transaction with a panel of third-party reinsurers (2016 QSR Transaction). Each of the third-party reinsurersreinsurance providers that is party to the XOL Transactions has an insurer financial strength rating of A- or better by Standard and& Poor’s Rating ServicesService (S&P), A.M. Best Company Inc. (A.M. Best) or both.
UnderThe following table presents the inception date, covered production period, initial and current reinsurance coverage amount, and initial and current first layer retained aggregate loss under each outstanding XOL Transaction. Current amounts are presented as of March 31, 2023.
($ values in thousands)Inception DateCovered Production
Initial Reinsurance Coverage
Current Reinsurance CoverageInitial First Layer Retained Loss
Current First Layer Retained Loss (1)
2022-1 XOL TransactionApril 1, 2022
10/1/2021 – 3/31/2022 (2)
$289,741$283,077$133,366$133,366
2022-2 XOL TransactionJuly 1, 2022
4/1/2022 – 6/30/2022 (3)
154,306152,34778,90678,906
2022-3 XOL TransactionOctober 1, 20227/1/2022 – 9/30/202296,77996,197106,265106,265
2023-1 XOL Transaction (4)
January 1, 202310/1/2022 – 6/30/202359,50959,50994,97794,977
(1)    NMIC applies claims paid on covered policies against its first layer aggregate retained loss exposure and cedes reserves for incurred claims and claim expenses to each applicable XOL Transaction and recognizes a reinsurance recoverable if such incurred claims and claim expenses exceed its current first layer retained loss.
(2)    Approximately 1% of the production covered by the 2022-1 XOL Transaction has coverage reporting dates between October 21, 2019 and September 30, 2021.
(3)    Approximately 1% of the production covered by the 2022-2 XOL Transaction has coverage reporting dates between January 4, 2021 and March 31, 2022.
(4)    The initial reinsurance coverage, current reinsurance coverage, initial first layer retained loss and current first layer retained loss for the 2023-1 XOL Transaction will increase as incremental covered production is ceded under the transaction through June 30, 2023.
Quota share reinsurance
NMIC is a party to seven quota share reinsurance treaties – the 2016 QSR Transaction, effective September 1, 2016, the 2018 QSR Transaction, effective January 1, 2018, the 2020 QSR Transaction, effective April 1, 2020, the 2021 QSR Transaction, effective January 1, 2021, the 2022 QSR Transaction, effective October 1, 2021, the 2022 Seasoned QSR Transaction, effective July 1, 2022 and the 2023 QSR Transaction, effective January 1, 2023 – which we refer to collectively as the QSR Transactions. Under each of the QSR Transactions, NMIC ceded premiums related to:
•25%cedes a proportional share of existingits risk written on eligible policies asto panels of Augustthird-party reinsurance providers. Each of the third-party reinsurance providers that is party to the QSR Transactions has an insurer financial strength rating of A- or better by S&P, A.M. Best or both.
Under the terms of the 2016 QSR Transaction, NMIC cedes premiums written related to 25% of the risk on eligible primary policies written for all periods through December 31, 2016;
2017 and 100% of existingthe risk under our pool agreement with Fannie Mae;Mae. The 2016 QSR Transaction is scheduled to terminate on December 31, 2027, except with respect to the ceded pool risk, which is scheduled to terminate on August 31, 2023. NMIC has the option, based on certain conditions and subject to a termination fee, to terminate the agreement as of December 31, 2020, or at the end of any calendar quarter thereafter, which would result in NMIC recapturing the related risk.
Under the terms of the 2018 QSR Transaction, NMIC cedes premiums earned related to 25% of the risk on eligible policies written in 2018 and 20% of the risk on eligible policies written in 2019. The 2018 QSR Transaction is scheduled to terminate on December 31, 2029. NMIC has the option, based on certain conditions and subject to a termination fee, to terminate the agreement as of December 31, 2022, or at the end of any calendar quarter thereafter, which would result in NMIC recapturing the related risk.
19
NMI HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Under the terms of the 2020 QSR Transaction, NMIC cedes premiums earned related to 21% of the risk on eligible policies written from SeptemberApril 1, 20162020 to December 31, 2020. The 2020 QSR Transaction is scheduled to terminate on December 31, 2030. NMIC has the option, based on certain conditions and subject to a termination fee, to terminate the agreement as of December 31, 2023, or at the end of any calendar quarter thereafter, which would result in NMIC recapturing the related risk.
Under the terms of the 2021 QSR Transaction, NMIC cedes premiums earned related to 22.5% of the risk on eligible policies written from January 1, 2021 to October 30, 2021. The 2021 QSR Transaction is scheduled to terminate on December 31, 2031. NMIC has the option, based on certain conditions and subject to a termination fee, to terminate the agreement as of December 31, 2024, or at the end of any calendar quarter thereafter, which would result in NMIC recapturing the related risk.
Under the terms of the 2022 QSR Transaction, NMIC cedes premiums earned related to 20% of the risk on eligible policies written primarily between October 30, 2021 and December 31, 2022. The 2022 QSR Transaction is scheduled to terminate on December 31, 2032. NMIC has the option, based on certain conditions and subject to a termination fee, to terminate the agreement as of December 31, 2025 or semi-annually thereafter, which would result in NMIC recapturing the related risk.
In connection with the 2022 QSR Transaction, NMIC entered into the 2023 QSR Transaction as a springing back-to-back quota share agreement. Under the terms of the 2023 QSR Transaction, NMIC cedes premiums earned related to 20% of the risk on eligible policies written from January 1, 2023 to December 31, 2023. The 2023 QSR Transaction is scheduled to terminate on December 31, 2033. NMIC has the option, based on certain conditions and subject to a termination fee, to terminate the agreement as of December 31, 2026 or semi-annually thereafter, which would result in NMIC recapturing the related risk.
Under the terms of the 2022 Seasoned QSR Transaction, NMIC cedes premiums earned related to 95% of the net risk on eligible policies primarily for a seasoned pool of mortgage insurance policies that had previously been covered under the retired Oaktown Re Ltd. and Oaktown Re IV Ltd. reinsurance transactions, after the consideration of coverage provided by other QSR Transactions. The 2022 Seasoned QSR Transaction is scheduled to terminate on June 30, 2032. NMIC has the option, based on certain conditions, to terminate the agreement as of June 30, 2025 or quarterly thereafter through December 31, 2017.2027 with the payment of a termination fee, and as of March 31, 2028 or quarterly thereafter without the payment of a termination fee.Such termination would result in NMIC recapturing the related risk.
NMIC may terminate any or all of the QSR Transactions without penalty if, due to a change in PMIERs requirements, it is no longer able to take full PMIERs asset credit for the risk-in-force (RIF) ceded under the respective agreements. Additionally, under the terms of the QSR Transactions, NMIC may elect to selectively terminate its engagement with individual reinsurers on a run-off basis (i.e., reinsurers continue providing coverage on all risk ceded prior to the termination date, with no new cessions going forward) or cut-off basis (i.e., the reinsurance arrangement is completely terminated with NMIC recapturing all previously ceded risk) under certain circumstances. Such selective termination rights arise when, among other reasons, a reinsurer experiences a deterioration in its capital position below a prescribed threshold and/or a reinsurer breaches (and fails to cure) its collateral posting obligations under the relevant agreement.
Effective April 1, 2019, NMIC elected to terminate its engagement with one reinsurer under the 2016 QSR Transaction on a cut-off basis. In connection with the termination, NMIC recaptured approximately $500 million of previously ceded primary RIF and stopped ceding new premiums earned or written with respect to the recaptured risk. With the termination, ceded premiums written under the 2016 QSR Transaction decreased from 25% to 20.5% on eligible policies. The termination has no effect on the cession of pool risk under the 2016 QSR Transaction.
20
NMI HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
The following table shows the amounts related to the 2016 QSR Transaction:Transactions:
For the three months endedFor the nine months endedAs of and for the three months ended
September 30, 2017September 30, 2016September 30, 2017 September 30, 2016March 31, 2023March 31, 2022
(In Thousands)(In Thousands)
Ceded risk-in-force$2,682,982
$1,778,235
$2,682,982
 $1,778,235
Ceded risk-in-force$12,635,442 $8,504,853 
Ceded premiums written(14,389)(38,977)(36,715) (38,977)
Ceded premiums earned(13,393)(2,885)(34,721) (2,885)Ceded premiums earned(42,096)(29,005)
Ceded claims and claims expenses277
90
887
 90
Ceding commission written2,878
7,795
7,343
 7,795
Ceded claims and claim expenses (benefits)Ceded claims and claim expenses (benefits)1,965 (159)
Ceding commission earned2,581
551
6,921
 551
Ceding commission earned9,965 5,886 
Profit commission7,758
1,641
19,945
 1,641
Profit commission22,279 16,723 
Ceded premiums written under the 2016 QSR Transaction are recorded on the balance sheet as prepaid reinsurance premiums and amortized to ceded premiums earned in a manner consistent with the recognition of incomerevenue on direct premiums. Under all other QSR Transactions, premiums are ceded on an earned basis as defined in the agreement. NMIC receives a 20% ceding commission for premiums ceded pursuantunder the QSR Transactions, except with respect to this transaction.the 2022 Seasoned QSR Transaction under which it receives a 35% ceding commission. NMIC also receives a profit commission under each of the QSR Transactions, provided that the loss ratioratios on the loans covered under the agreement2016, 2018, 2020, 2021, 2022, 2023 QSR and 2022 Seasoned QSR Transactions, generally remainsremain below 60%, 61%, 50%, 57.5%, 62%, 62%, and 55% respectively, as measured annually. Ceded claims and claimsclaim expenses under each of the QSR Transactions reduce NMIC'sthe respective profit commission received by NMIC on a dollar-for-dollar basis.
In accordance with the terms of the 2016 QSR Transaction, rather than making a cash payment or transferring investments for ceded premiums written, NMIC established a funds withheld liability, which also includes amounts due to NMIC for ceding and profit commissions. Any loss recoveries and any potential profit commission to NMIC will be realized from this account until exhausted. NMIC's reinsurance recoverable balance is further supported by trust accounts established and maintained by each reinsurer in accordance with the PMIERs funding requirements for risk ceded to non-affiliates. The reinsurance recoverable on loss reserves related to ourthe 2016 QSR Transaction was $1.2$2.4 million and $2.6 million as of September 30, 2017.
The agreement is scheduled to terminate onMarch 31, 2023 and December 31, 2027, except2022, respectively.
In accordance with respectthe terms of the 2018, 2020, 2021, 2022 and 2023 QSR and 2022 Seasoned QSR Transactions, cash payments for ceded premiums earned are settled on a quarterly basis, offset by amounts due to NMIC for ceding and profit commissions. Any loss recoveries and any potential profit commission to NMIC are also recognized quarterly. NMIC's reinsurance recoverable balance is supported by trust accounts established and maintained by each reinsurer in accordance with the PMIERs funding requirements for risk ceded to non-affiliates. The aggregate reinsurance recoverable on loss reserves related to the ceded pool risk, which is scheduled to terminate on August 31, 2023. However, NMIC has the option, based on certain conditions2018, 2020, 2021, 2022, 2023 QSR and subject to a termination fee, to terminate the agreement2022 Seasoned QSR Transactions was $21.1 million and $19.0 million as of March 31, 2023 and December 31, 2020,2022, respectively.
We remain directly liable for all claim payments if we are unable to collect reinsurance recoverable due from our reinsurers and, as such, we actively monitor and manage our counterparty credit exposure to our reinsurance providers. We establish an allowance for expected credit loss against our reinsurance recoverable if we do not expect to recover amounts due from one or more of our reinsurance counterparties, and report our reinsurance recoverable net of such allowance, if any. We actively monitor the counterparty credit profiles of our reinsurers and each is required to partially collateralize its obligations under the terms of our QSR Transactions. The allowance for credit loss established on our reinsurance recoverable was deemed immaterial at the end of any calendar quarter thereafter, which would result in NMIC reassuming the related risk.March 31, 2023 and December 31, 2022.
6. Reserves for Insurance Claims and ClaimsClaim Expenses
We establishhold gross reserves in an amount equal to recognize the estimated liability for insurance claims and claim expenses related to defaults on insured mortgage loans. Our method, consistent with industry practice,A loan is considered to be in "default" as of the payment date at which a borrower has missed the preceding two or more consecutive monthly payments. We establish reserves only for loans that have been reported to us as having been in default for at least 60 days. Ourby servicers, referred to as case reserves, also include amounts for estimated claims incurred onand additional loans that have beenwe estimate (based on actuarial review and other factors) to be in default for at least 60 days that have not yet been reported to us by the servicers, often referred to as IBNR.incurred but not reported (IBNR) reserves.We also establish reserves for claim expenses, which represent the estimated cost of the claim administration process, including legal and other fees, as well as other general expenses of administering the claim settlement process. As of September 30, 2017,March 31, 2023, we had 4,475 primary loans in default and held gross reserves for insurance claims and claimsclaim expenses of $6.1 million for 350 primary loans in default.$108.2 million. During the first ninethree months of 2017,ended March 31, 2023, we paid 1621 claims totaling $731 thousand,$0.4 million, including two20 claims totaling $11 thousand covered under the 2016 QSR Transaction.Transactions representing $0.1 million of ceded claims and claim expenses.
21
NMI HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
In 2013, we entered into a pool insurance transaction with Fannie Mae. The pool transaction includes a deductible, which represents the amount of claims to be absorbed by Fannie Mae before we are obligated to pay any claims. We only establish reserves for pool risk if we expect claims to exceed the deductible under the pool agreement, which represents the amount of claims absorbed by Fannie Mae before we are obligated to pay any claims.this deductible. At September 30, 2017, 46March 31, 2023, 41 loans in the pool were past due by 60 days or more.in default. These 4641 loans
NMI HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

represent represented approximately $3.0$2.9 million of risk-in-force (RIF).RIF. Due to the size of the remaining deductible, our expectation that a limited number of $10.0 million, the low level of notices of default (NODs) reported on loans in the pool through September 30, 2017default will progress to a claim and the expected severity on such claim submissions (all loans in the pool havehad loan-to-value (LTV) ratios (LTVs) under 80%) at origination), we havedid not establishedestablish any poolcase or IBNR reserves for claims or IBNR for the three and nine months endedSeptember 30, 2017 and 2016.pool risk at March 31, 2023. In connection with the settlement of pool claims, we applied $368 thousand$1.0 million to the pool deductible through September 30, 2017.March 31, 2023. At March 31, 2023, the remaining pool deductible was $9.4 million. We have not paid any pool claims to date. 100% of our pool RIF is reinsured under the 2016 QSR Transaction.
We had 4,475 loans in default in our primary insured portfolio as of March 31, 2023, which represented a 0.75% default rate against 600,294 total policies in-force and 4,449 loans in default in our primary portfolio as of December 31, 2022, which represented a 0.75% default rate against 594,142 total policies in-force. The size of the reserve we establish for each defaulted loan (and by extension our aggregate reserve for claims and claim expenses) reflects our best estimate of the future claim payment to be made for each individual loan in default. Our future claims exposure is a function of the number of defaulted loans that progress to claim payment (which we refer to as frequency) and the amount to be paid to settle such claims (which we refer to as severity). Our estimates of claims frequency and severity are not formulaic, rather they are broadly synthesized based on historical observed experience for similarly situated loans and assumptions about future macroeconomic factors.
The following table provides a reconciliation of the beginning and ending gross reserve balances for primary insurance claims and claims expenses:claim expenses (benefits):
For the three months ended March 31,
20232022
(In Thousands)
Beginning balance$99,836 $103,551 
Less reinsurance recoverables (1)
(21,587)(20,320)
Beginning balance, net of reinsurance recoverables78,249 83,231 
Add claims incurred:
Claims and claim expenses (benefits) incurred:
Current year (2)
27,608 10,080 
Prior years (3)
(20,907)(10,699)
Total claims and claim expenses (benefits) incurred6,701 (619)
Less claims paid:
Claims and claim expenses paid:
Current year (2)
— — 
Prior years (3)
272 320 
Total claims and claim expenses paid272 320 
Reserve at end of period, net of reinsurance recoverables84,678 82,292 
Add reinsurance recoverables (1)
23,479 20,080 
Ending balance$108,157 $102,372 
 For the nine months ended September 30,
 2017 2016
 (In Thousands)
Beginning balance$3,001
 $679
Less reinsurance recoverables (1)
(297) —
Beginning balance, net of reinsurance recoverables2,704
 679
    
Add claims incurred:   
Claims and claim expenses incurred:   
Current year (2)
3,546
 1,803
Prior years (3)
(581) (214)
Total claims and claims expenses incurred2,965
 1,589
    
Less claims paid:   
Claims and claim expenses paid:   
Current year (2)
—
 —
Prior years (3)
720
 225
Total claims and claim expenses paid720
 225
    
Reserve at end of period, net of reinsurance recoverables4,949
 2,043
Add reinsurance recoverables (1)
1,174
 90
Ending balance$6,123
 $2,133
(1)    Related to ceded losses recoverable onunder the 2016 QSR Transaction, included in "Other Assets" on the Condensed Consolidated Balance Sheets.Transactions. See Note 5, "Reinsurance"Reinsurance" for additional information.
(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, thatthe default would be included in the current year. Amounts are presented net of reinsurance and included $22.3 million attributed to net case reserves and $4.9 million attributed to net IBNR reserves for the three months ended March 31, 2023 and $5.2 million attributed to net case reserves and $4.7 million attributed to net IBNR reserves for the three months ended March 31, 2022.
(3)    Related to insured loans with defaults occurring in prior years, which have been continuously in default since that time.before the start of the current year. Amounts are presented net of reinsurance and included $16.2 million attributed to net case reserves and $4.5 million attributed to net IBNR reserves for the three months ended March 31, 2023 and $5.8 million attributed to net case reserves and $4.7 million attributed to net IBNR reserves for the three months ended March 31, 2022.

22
NMI HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
The "claims incurred" section of the table above shows claims and claim expenses (benefits) incurred on NODs fordefaults occurring in current and prior years, including IBNR reserves. The amountreserves and is presented net of claims incurred relating to current year NODs represents the estimated amount to be ultimately paid on such loans in default.  We recognized $581 thousand and $214 thousand of favorable prior year development during the nine months ended September 30, 2017 and 2016, respectively, due to NOD cures and ongoing analysis of recent loss development trends.reinsurance. We may increase or decrease our originalclaim estimates and reserves as we learn additional information about individual defaults and claimsdefaulted loans, and continue to observe and analyze loss development trends in our portfolio. ReservesGross reserves of $1.7$72.7 million related to prior year defaults remained as of September 30, 2017.March 31, 2023.
7. Earnings per Share

(EPS)
Basic earnings per shareEPS is based on the weighted average number of shares of common stock outstanding, while diluted earnings per shareoutstanding. Diluted EPS is based on the weighted average number of shares of common stock outstanding and common stock equivalents that would be issuable upon the vesting of service based and performance and service-based restricted stock units (RSUs), and the exercise of vested and unvested stock options other share-based compensation arrangements, and the dilutive effect of
NMI HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

outstanding warrants. The number of shares issuable for RSUs subject to performance and service based vesting requirements are only included in diluted shares if the relevant performance measurement period has commenced and results during such period meet the necessary performance criteria.
The following table reconciles the net income and the weighted average shares of common stock outstanding used in the computations of basic and diluted earnings per shareEPS of common stock:

For the three months ended March 31,
20232022
(In Thousands, except for per share data)
Net income$74,458 $67,680 
Basic weighted average shares outstanding83,600 85,953 
Basic earnings per share$0.89 $0.79 
Net income$74,458 $67,680 
Gain from change in fair value of warrant liability— (93)
Diluted net income$74,458 $67,587 
Basic weighted average shares outstanding83,600 85,953 
Dilutive effect of issuable shares1,240 1,357 
Diluted weighted average shares outstanding84,840 87,310 
Diluted earnings per share$0.88 $0.77 
Anti-dilutive shares— 8 
 For the three months ended September 30, For the nine months ended September 30,
 2017 2016 2017 2016

(In Thousands, except for per share data)
Net income$12,312
 $6,175
 $23,816
 $4,279
        
Basic earnings per share$0.21
 $0.10
 $0.40
 $0.07
        
Basic weighted average shares outstanding59,883,629
 59,130,401
 59,680,166
 59,047,758
Dilutive effect of non-vested shares and warrants3,205,329
 1,154,345
 3,093,167
 814,158
Dilutive weighted average shares outstanding63,088,958
 60,284,746
 62,773,333
 59,861,916
        
Diluted earnings per share$0.20

$0.10
 $0.38
 $0.07

For the three and nine months ended September 30, 2017, 830,043 and 832,460, respectively, and for the three and nine months ended September 30, 2016, 4,012,046 and 4,326,168, respectively, of our common stock equivalents issued under share-based compensation arrangements were not included in the calculation of diluted earnings per share because they were anti-dilutive. The warrants were not dilutive in 2016.
8. Warrants
We issued 992,000 warrants in connection with our Private Placement. Each warrant gives the holder thereof the right to purchase one share of common stock at an exercise price equal to $10.00. The warrants were issued with an aggregate fair value of $5.1 million. Upon exercise of these warrants, the amounts will be treated as additional paid-in capital. No warrants were exercised during the nine months ended September 30, 2017 and 2016. We account for these warrants to purchase our common shares in accordance with ASC 470-20, Debt with Conversion and Other Options and ASC 815-40, Derivatives and Hedging - Contracts in Entity's Own Equity.
9. Income Taxes
We are a U.S. taxpayer and are subject to a statutory U.S. federal corporate income tax rate of 35%21%. NMIH files aTaxable income is reported on our consolidated U.S. federal and various state income tax returns, filed by NMIH on behalf of itself and its subsidiaries. Our provision for income taxes for the interim reporting periods are based on an estimated annual effective tax rate for the year ending December 31, 2017. Our effective tax rate on our pre-tax income was 36.9%22.6% and 33.3%22.0% for the three and nine months ended September 30, 2017, respectively, compared to 1.8%March 31, 2023 and 2.6%2022, respectively. Our provision for the comparable 2016 periods. The increase in theincome taxes for interim reporting periods is established based on our estimated annual effective tax expenserate for the three and nine months ended September 30, 2017, against the comparable 2016 periods is attributable to the elimination ofa given year. Our effective tax benefits during the comparable 2016rate may fluctuate between interim periods due to the recognitionimpact of discrete items not included in our estimated annual effective tax rate, including the tax effects associated with the vesting of RSUs and exercise of options. Such items are treated on a full valuation allowancediscrete basis in the reporting period in which had been recordedthey occur.
As a mortgage guaranty insurance company, we are eligible to reflect the amount of the deferred taxes that may not be realized. We currently pay no regular federal incomeclaim a tax duededuction for our statutory contingency reserve balance, subject to certain limitations outlined under IRC Section 832(e), and only to the forecasted utilization of federal net operatingextent we acquire tax and loss carryforwards,bonds in an amount equal to the tax benefit derived from the claimed deduction, which were $122.9 million as of December 31, 2016. Theis our intent. As a result, our interim provision for income taxes include current year alternative minimumfor the three months ended March 31, 2023 primarily represents a change in our net deferred tax liability. As of March 31, 2023 and December 31, 2022, we held $154.4 million of tax and changes to deferred tax assets. See Note 1, "Organization and Basis of Presentation - Immaterial Correction of Prior Period Amounts" for further details.loss bonds in "Prepaid federal income taxes" on our condensed consolidated balance sheets.


23
NMI HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

9. Stockholders' Equity
On February 10, 2022, our Board of Directors approved a $125 million share repurchase program (excluding associated costs and applicable taxes) effective through December 31, 2023. The authorization provides us the flexibility to repurchase stock from time to time in the open market or in privately negotiated transactions, based on market and business conditions, stock price and other factors, pursuant to a trading plan under Rule 10b-18 and Rule 10b5-1 of the Exchange Act. During the three months ended March 31, 2023, we repurchased 0.7 million shares at an average price of $22.19 (excluding associated costs and applicable taxes). During the year ended December 31, 2022, we repurchased 2.9 million shares at an average price of $19.34 per share (excluding associated costs). As of March 31, 2023, $53.7 million of repurchase authority remained under the program.
10. Litigation
We record a liability when we believe that it is probable that a loss has been incurred, and the amount can be reasonably estimated. If we determine that a loss is reasonably possible, we disclose an estimate of the possible loss or range of loss. If no estimate can be made, we disclose the matter as such. We evaluate litigation and other legal developments that could affect the amount of liability that may need to be accrued, related reasonably possible losses disclosed and make adjustments as appropriate. Significant judgment is required to determine both the likelihood and the estimated amount of losses related to such matters.
We are currently monitoring litigation regarding the refund of certain mortgage insurance premiums as it pertains to provisions of the Homeowners Protection Act and have been named as a defendant in one such case. We are unable to assess the outcome of such litigation at this time or its potential impact on us.
11. Premiums Receivable

Premiums receivable consists of premiums due on our mortgage insurance policies. If a mortgage insurance premium is unpaid for more than 120 days, the associated receivable is written off against earned premium and the related insurance policy is canceled. We recognize an allowance for credit losses for premiums receivable based on credit losses expected to arise over the life of the receivable. Due to the nature of our insurance policies (a necessary precondition for access to mortgage credit for covered borrowers) and the short duration of the related receivables, we do not typically experience credit losses against our premium receivables and the allowance for credit loss established on premium receivable was deemed immaterial at March 31, 2023 and December 31, 2022.

Premiums receivable may be written off prior to 120 days in the ordinary course of business for non-credit events including, but not limited to, the modification or refinancing of an underlying insured loan. We established a $2.6 million and $2.3 million reserve for premium write-offs at March 31, 2023 and December 31, 2022, respectively.

12. Regulatory Information
Statutory InformationRequirements
Our insurance subsidiaries, NMIC and Re One, file financial statements in conformity with statutory accounting principles (SAP) prescribed or permitted by the Wisconsin OCI, NMIC's principal regulator. Prescribed SAP includes state laws, regulations and general administrative rules, as well as a variety of publications of the National Association of Insurance Commissioners.Commissioners (NAIC). The Wisconsin OCI recognizes only statutory accounting practices prescribed or permitted by the state of Wisconsin for determining and reporting the financial condition and results of operations of an insurance company and for determining its solvency under Wisconsin insurance laws.
NMIC and Re One'sOne generated combined statutory net loss,income of $21.8 million and $18.6 million for the three months ended March 31, 2023 and2022, respectively.
The Wisconsin OCI has imposed a prescribed accounting practice for the treatment of statutory contingency reserves that differs from the treatment promulgated by the NAIC. Under Wisconsin OCI's prescribed practice mortgage guaranty insurers are required to reflect changes in their contingency reserves through statutory income. Such approach contrasts with the NAIC's treatment, which records changes to contingency reserves directly to unassigned funds. As a Wisconsin-domiciled insurer, NMIC's statutory net income reflects an expense associated with the change in its contingency reserve. While such treatment impacts NMIC's statutory net income, it does not have an effect on NMIC's statutory capital position.
24
NMI HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
The following table presents NMIC's statutory surplus, contingency reserve, statutory capital and RTC ratios wererisk-to-capital (RTC) ratio as follows:of March 31, 2023 and December 31, 2022.
March 31, 2023December 31, 2022
(In Thousands)
Statutory surplus$998,973 $980,225 
Contingency reserve1,340,443 1,266,038 
Statutory capital (1)
$2,339,416 $2,246,263 
Risk-to-capital10.8:111.1:1
As of and for the nine months and year endedSeptember 30, 2017 December 31, 2016
 (In Thousands)
Statutory net loss$(29,394) $(26,653)
Statutory surplus379,160
 413,809
Contingency reserve157,326
 90,479
Risk-to-Capital11.5:1
 11.6:1
(1)    Represents the total of the statutory surplus and contingency reserve.
Re One had $5.6 million of statutory capital at March 31, 2023 and December 31, 2022.
NMIH is not subject to any limitations on its ability to pay dividends except those generally applicable to corporations that are incorporated in Delaware. Delaware such as NMIH. Delaware corporation law provides that dividends are only payable out of a corporation's capital surplus or, subject to certain limitations, recent net profits (subject to certain limitations). profits.
NMIC and Re One are subject to restrictions oncertain rules and regulations prescribed by jurisdictions in which they are authorized to operate and the GSEs that may restrict their ability to pay dividends without prior approval ofto NMIH.NMIC has the Wisconsin OCI. Certain other states in which NMIC is licensed also have statutes or regulations that restrict its abilitycapacity to pay dividends. Since inception, NMIC has not paid any$98.0 million of aggregate ordinary dividends to NMIH.

NMIH during the twelve-month period ending December 31, 2023.


25

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following analysis should be read in conjunction with our unaudited condensed consolidated financial statements and the notes thereto included in this report and our audited financial statements, notes thereto and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our 20162022 10-K, for a more complete understanding of our financial position and results of operations. In addition, investors should review the "Cautionary Note Regarding Forward-Looking Statements" above and the "Risk Factors" detailed in Part II, Item 1A of this report and in Part I, Item 1A of our 20162022 10-K, as subsequently updated in other reports we file with the SEC, for a discussion of those risks and uncertainties that have the potential to affect our business, financial condition, results of operations, cash flows or prospects in a material and adverse manner. Our results of operations for interim periods are not necessarily indicative of results to be expected for a full fiscal year or for any other period.
Overview
We provide private MI through our insurance subsidiaries. Our primary insurance subsidiary, NMIC. NMIC is wholly-owned, domiciled in Wisconsin and principally regulated by the Wisconsin OCI. NMIC is approved as an MI provider by the GSEs and is licensed to write MI coverage in all 50 states and D.C. Both of our insurance subsidiaries, NMIC and Re One, are domiciled in Wisconsin and directly regulated by our primary regulator, the Wisconsin OCI. Re One solely provides statutorily required reinsurance to NMIC on insured loans with coverage levels in excess of 25%. Our subsidiary, NMIS, provides outsourced loan review services on a limited basis to mortgage loan originators. Our stock trades onoriginators and our subsidiary, Re One, historically provided reinsurance coverage to NMIC in accordance with certain statutory risk retention requirements. Such requirements have been repealed and the NASDAQ under the symbol "NMIH."reinsurance coverage provided by Re One to NMIC has been commuted. Re One remains a wholly-owned, licensed insurance subsidiary; however, it does not currently have active insurance exposures.
MI protects lenders and investors from default-related losses on a portion of the unpaid principal balance of a covered mortgage. MI plays a critical role in the U.S. housing market by mitigating mortgage credit risk and facilitating the secondary market sale of high LTVhigh-LTV (i.e., above 80%) residential loans to the GSEs, who are otherwise restricted by their charters from purchasing or guaranteeing low down paymenthigh-LTV mortgages that are not covered by certain credit protections. Such credit protection and secondary market sales allow lenders to increase their capacity for mortgage commitments and expand financing access to existing and prospective primarily first-time, homeowners.
We were formedNMIH, a Delaware corporation, was incorporated in May 2011, and we began start-up operations in 2012 and wrote our first MI policy in 2013. Since formation, we have sought to establish customer relationships with a broad group of mortgage lenders and build a diversified, high-quality insured portfolio. As of September 30, 2017,March 31, 2023, we had issued master policy relationshipspolicies with 1,2401,900 customers, including national and regional mortgage banks, money center banks, credit unions, community banks, builder-owned mortgage lenders, internet-sourced lenders and internet-sourcedother non-bank lenders. As of September 30, 2017,March 31, 2023, we had $46.6$186.7 billion of totalprimary insurance-in-force (IIF), including primary IIF of $43.3 billion, and $10.7$48.5 billion of gross RIF, including primary RIFrisk-in-force (RIF).
We believe that our success in acquiring a large and diverse group of $10.6 billion.lender customers and growing a portfolio of high-quality IIF traces to our founding principles, whereby we aim to help qualified individuals achieve their homeownership goals, ensure that we remain a strong and credible counter-party, deliver a high-quality customer service experience, establish a differentiated risk management approach that emphasizes the individual underwriting review or validation of the vast majority of the loans we insure, utilizing our proprietary Rate GPS® pricing platform to dynamically evaluate risk and price our policies, and foster a culture of collaboration and excellence that helps us attract and retain experienced industry leaders.
Our strategy is to continue to build on our position in the private MI market, expand our customer base and grow our insured portfolio of high-quality residential loans by focusing on long-term customer relationships, disciplined and proactive risk selection and pricing, fair and transparent claimsclaim payment practices, responsive customer service, and financial strength and profitability.
We discuss below our results of operations forOur common stock trades on the periods presented andNasdaq under the conditions and trends that have impacted or are expected to impact our business.symbol "NMIH." Our headquarters areis located in Emeryville, California and ourCalifornia. As of March 31, 2023, we had 242 employees. Our corporate website is located at www.nationalmi.com. Our website and the information contained on or accessible through our website are not incorporated by reference into this report.
We discuss below our results of operations for the periods presented, as well as the conditions and trends that have impacted or are expected to impact our business, including new insurance writings, the composition of our insurance portfolio and other factors that we expect to impact our results.
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Conditions and Trends Affecting Our Business
Macroeconomic Developments
Macroeconomic factors, including persistent inflation, increasing interest rates, flagging consumer confidence and increasing jobless claims could have a pronounced impact on the housing market, the mortgage insurance industry and our business in future periods. A marked decline in housing demand, a significant and protracted decrease in house prices or a sustained increase in unemployment could reduce the pace of new business activity in the private mortgage insurance market and negatively impact our future new insurance written (NIW) volume, or contribute to an increase in our future default and claim experience.
Key Factors Affecting Our Results
New Insurance Written, Insurance In ForceInsurance-In-Force and Risk In ForceRisk-In-Force
New insurance written (NIW)NIW is the aggregate unpaid principal balance of mortgages underpinning new policies written during a given period. Our NIW is affected by the overall size of the mortgage origination market and the volume of low down paymenthigh-LTV mortgage originations,originations. Our NIW is also affected by the percentage of such low down paymenthigh-LTV originations covered by private versus publicgovernment MI or other alternative credit enhancement structures and our share of the private MI market. NIW, together with persistency, drives our IIF. IIF is the aggregate unpaid principal balance of the mortgages we insure, as reported to us by servicers at a given date, and represents the sum total of NIW from all prior periods less principal payments on insured mortgages and policy cancellations (including for prepayment, nonpayment of premiums, coverage rescission and claims payment)claim payments). RIF is related to IIF and represents the aggregate amount of coverage we provide on all outstanding policies at a given date. RIF is calculated as the sum total of the coverage percentage of each individual policy in our portfolio applied to the unpaid principal balance of such insured mortgage. RIF is affected by IIF and the LTV profile of our insured mortgages, with lower LTV loans generally having a lower coverage percentage and higher LTV loans having a higher coverage percentage. Gross RIF represents RIF without anybefore consideration of the impact of reinsurance. Net RIF representsis gross RIF net of ceded risk and is therefore affected by our reinsurance agreements.reinsurance.



Net Premiums Written and Net Premiums Earned
Our objective is to achieve a mid-teens return on PMIERs required assets and weWe set our premium rates on individual policies based on the risk characteristics of the underlying mortgage loans and borrowers, and in accordance with our filed rates and applicable rating rules. See " - GSE OversightOn June 4, 2018, we introduced a proprietary risk-based pricing platform, which we refer to as Rate GPS®. Rate GPS® considers a broad range of individual variables, including property type, type of loan product, borrower credit characteristics, and lender and market factors, and provides us with the ability to set and charge premium rates commensurate with the underlying risk of each loan that we insure. We introduced Rate GPS® in June 2018 to replace our previous rate card pricing system. While most of our new business is priced through Rate GPS®," below we also continue to offer a rate card pricing option to a limited number of lender customers who require a rate card for operational reasons. We believe the introduction and utilization of Rate GPS® provides us with a discussion of the PMIERs financial requirements.more granular and analytical approach to evaluating and pricing risk, and that this approach enhances our ability to continue building a high-quality mortgage insurance portfolio and delivering attractive risk-adjusted returns.
Premiums are generally fixed overfor the estimated lifeduration of our coverage of the underlying loans. Net premiums written are equal to gross premiums written minus ceded premiums written under our reinsurance arrangements.arrangements, less premium refunds and premium write-offs. As a result, net premiums written are generally influenced by:
•NIW;
•premium rates and the mix of premium payment type, which are either single, monthly or annual premiums, as described below;
•cancellation rates of our insurance policies, which are impacted by payments or prepayments on mortgages, refinancings (which are affected by prevailing mortgage interest rates)rates as compared to interest rates on loans underpinning our in force policies), levels of claimsclaim payments and home prices; and
•cession of premiums under third-party reinsurance arrangements.
Premiums are paid either by the borrower (BPMI) or the lender (LPMI) in a single payment at origination (single premium), on a monthly installment basis (monthly premium) or on an annual installment basis (annual premium). Our net premiums written will differ from our net premiums earned due to policy payment type. For single premiums, we receive a single premium payment at origination, which is initially recorded as unearned premium and earned over the estimated life of the policy. A majoritySubstantially all of our single premium policies in force as of September 30, 2017March 31, 2023 were non-refundable under most cancellation scenarios. If non-refundable single premium
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policies are canceled, we immediately recognize the remaining unearned premium balances as earned premium revenue. Monthly premiums are recognized in the month billed and when the coverage is effective. Annual premiums are earned on a straight-line basis over the year of coverage. Substantially all of our policies provide for either single or monthly premiums.
The percentage of IIF that remains on our books after any 12-monthtwelve-month period is defined as our persistency rate. Because our insurance premiums are earned over the life of a policy, higher persistency rates can have a significant impact on our net premiums earned and profitability. Generally, faster speeds of mortgage prepayment lead to lower persistency. Prepayment speeds and the relative mix of business between single and monthly premium policies also impact our profitability. Our premium rates include certain assumptions regarding repayment or prepayment speeds of the mortgages underlying our policies. Because premiums are paid at origination on single premium policies and substantially all of our single premium policies are generally non-refundable on cancellation, assuming all other factors remain constant, if single premium loans are prepaid earlier than expected, our profitability on these loans is likely to increase and, if loans are repaid slower than expected, our profitability on these loans is likely to decrease. By contrast, if monthly premium loans are repaid earlier than anticipated, we do not earn any more premium with respect to those loans and, unless we replace the repaid monthly premium loan with a new loan at the same premium rate or higher, our profitabilityrevenue is likely to decline.

Effect of reinsurance on our results
We utilize third-party reinsurance to actively manage our risk, ensure compliance with PMIERs, compliancestate regulatory and other applicable capital requirements, and support the growth of our business. We currently have both quota share and excess-of-loss reinsurance agreements in place, which impact our results of operations and regulatory capital and PMIERs asset positions. Under a quota share reinsurance agreement, the reinsurer receives a premium in exchange for covering an agreed-upon portion of incurred losses. Such a quota share arrangement reduces net premiums written and earned and also reduces net RIF, providing capital relief to the ceding insurance company and reducing incurred claims in accordance with the terms of the reinsurance agreement. In addition, reinsurers typically pay ceding commissions as part of quota share transactions, which offset the ceding company’scompany's acquisition and underwriting expenses. Certain quota share agreements include profit commissions that are earned based on loss performance and serve to reduce ceded premiums. Under an excess-of-loss agreement, the ceding insurer is typically responsible for losses up to an agreed-upon threshold and the reinsurer then provides coverage in excess of such threshold up to a maximum agreed-upon limit. In general, there are no ceding commissions under excess-of-loss reinsurance agreements. We expect to continue to evaluate reinsurance opportunities in the normal course of business.
Excess-of-loss reinsurance
Insurance-linked notes
NMIC is party to reinsurance agreements with the Oaktown Re Vehicles that provide it with aggregate excess-of-loss reinsurance coverage on defined portfolios of mortgage insurance policies. Under each agreement, NMIC retains a first layer of aggregate loss exposure on covered policies and the respective Oaktown Re Vehicle then provides second layer loss protection up to a defined reinsurance coverage amount. NMIC then retains losses in excess of the respective reinsurance coverage amounts.
The respective reinsurance coverage amounts provided by the Oaktown Re Vehicles decrease over a ten-year period as the underlying insured mortgages are amortized or repaid, and/or the mortgage insurance coverage is canceled (except the coverage provided by Oaktown Re VI Ltd. and Oaktown Re VII Ltd., which decreases over a 12.5-year period). As the reinsurance coverage decreases, a prescribed amount of collateral held in trust by the Oaktown Re Vehicles is distributed to ILN Transaction noteholders as amortization of the outstanding insurance-linked note principal balances. The outstanding reinsurance coverage amounts stop amortizing, and the collateral distribution to ILN Transaction noteholders and amortization of insurance-linked note principal is suspended if certain credit enhancement or delinquency thresholds, as defined in each agreement, are triggered (each, a Lock-Out Event). As of March 31, 2023, the 2021-2 ILN Transaction was deemed to be in Lock Out in connection with the initial build of its target credit enhancement level and will remain in Lock Out until such target credit enhancement level is achieved. Effective February 28, 2023, a previously triggered Lock-Out Event for the 2018 ILN Transaction was deemed to have cleared and amortization of the associated reinsurance coverage, and distribution of collateral assets and amortization of the associated insurance-linked notes resumed.
NMIC holds optional termination rights under each ILN Transaction, including, among others, an optional call feature which provides NMIC the discretion to terminate the transaction on or after a prescribed date, and a clean-up call if the outstanding reinsurance coverage amount amortizes to 10% or less of the reinsurance coverage amount at inception or if NMIC reasonably determines that changes to GSE or rating agency asset requirements would cause a material and adverse effect on the capital treatment afforded to NMIC under a given agreement. In addition, there are certain events that trigger mandatory termination of an agreement, including NMIC's failure to pay premiums or consent to reductions in a trust account to make principal payments to noteholders, among others.
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The following table presents the inception date, covered production period, current reinsurance coverage amount, current first layer retained aggregate loss and detail on the level of overcollateralization under each outstanding ILN Transaction. Current amounts are presented as of March 31, 2023.
($ values in thousands)2018 ILN Transaction2019 ILN Transaction2020-2 ILN Transaction2021-1 ILN Transaction2021-2 ILN Transaction
Inception dateJuly 25, 2018July 30, 2019October 29, 2020April 27, 2021October 26, 2021
Covered production1/1/2017 – 5/31/20186/1/2018 – 6/30/2019
4/1/2020 – 9/30/2020 (1)
10/1/2020 – 3/31/2021 (2)
4/1/2021 – 9/30/2021 (3)
Current ceded RIF$811,639 $929,536 $3,236,685 $6,591,872 $6,860,558 
Current first layer retained loss122,166 122,182 121,177 163,654 146,167 
Current reinsurance coverage147,608 191,044 85,011 282,630 363,596 
Eligible coverage$269,774 $313,226 $206,188 $446,284 $509,763 
Subordinated coverage (4)
33.24 %33.70 %6.25 %6.75 %7.43 %
PMIERs charge on ceded RIF7.86 %7.74 %5.00 %5.65 %6.77 %
Overcollateralization (5) (6)
$147,608 $191,044 $44,509 $74,062 $45,241 
Delinquency Trigger (7)
4.0%4.0%4.7 %5.1 %5.6 %
(1)     Approximately 1% of the production covered by the 2020-2 ILN Transaction has coverage reporting dates between July 1, 2019 and March 31, 2020.
(2)    Approximately 1% of the production covered by the 2021-1 ILN Transaction has coverage reporting dates between July 1, 2019 and September 2016, 30, 2020.
(3)    Approximately 2% of the production covered by the 2021-2 ILN Transaction has coverage reporting dates between July 1, 2019 and March 31, 2021.
(4)     Absent a delinquency trigger, the subordinated coverage is capped at 7.75%, 7.50%, 6.25%, 6.75% and 7.45% for the 2018, 2019, 2020-2, 2021-1 and 2021-2 ILN Transactions, respectively.
(5)    Overcollateralization for each of the 2018 and 2019 ILN Transactions is equal to their current reinsurance coverage as the PMIERs required asset amount on RIF ceded under each transaction is currently below its remaining first layer retained loss.
(6)    May not be replicated based on the rounded figures presented in the table.
(7)    Delinquency triggers for the 2018 and 2019 ILN Transactions are set at a fixed 4.0% and assessed on a discrete monthly basis; delinquency triggers for the 2020-2, 2021-1 and 2021-2 ILN Transactions are equal to seventy-five percent of the subordinated coverage level and assessed on the basis of a three-month rolling average.
Traditional reinsurance
NMIC entered intois a party to four excess-of-loss reinsurance agreements with broad panels of third-party reinsurers – the 2022-1 XOL Transaction, effective April 1, 2022, the 2022-2 XOL Transaction, effective July 1, 2022, the 2022-3 XOL Transaction, effective October 1, 2022, and the 2023-1 XOL Transaction, effective January 1, 2023 – which we refer to collectively as the XOL Transactions. Each XOL Transaction provides NMIC with aggregate excess-of-loss reinsurance coverage on a defined portfolio of mortgage insurance policies. Under each agreement, NMIC retains a first layer of aggregate loss exposure on covered policies and the reinsurers then provide second layer loss protection up to a defined reinsurance coverage amount. The reinsurance coverage amount of each XOL Transaction is set to approximate the PMIERs minimum required assets of its reference pool and decreases from the inception of each respective agreement over a ten-year period in the event the PMIERs minimum required assets of the pool declines. NMIC retains losses in excess of the outstanding reinsurance coverage amount.
NMIC holds optional termination rights which provide it the discretion to terminate each XOL Transaction on or after a specified date. NMIC may also elect to terminate the XOL Transactions at any point if the outstanding reinsurance coverage amount amortizes to 10% or less of the reinsurance coverage amount provided at inception, or if it determines that it will no longer be able to take full PMIERs asset credit for the coverage. Additionally, under the terms of the treaties, NMIC may selectively terminate its engagement with individual reinsurers under certain circumstances. Such selective termination rights arise when, among other reasons, a reinsurer experiences a deterioration in its capital position below a prescribed threshold, and/or a reinsurer breaches (and fails to cure) its collateral posting obligation.
Each of the third-party reinsurance providers that is party to the XOL Transactions has an insurer financial strength rating of A- or better by S&P, A.M. Best or both.
The following table presents the inception date, covered production period, initial and current reinsurance coverage
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amount, and initial and current first layer retained aggregate loss under each outstanding XOL Transaction. Current amounts are presented as of March 31, 2023.
($ values in thousands)Inception DateCovered ProductionInitial Reinsurance CoverageCurrent Reinsurance CoverageInitial First Layer Retained Loss
Current First Layer Retained Loss (1)
2022-1 XOL TransactionApril 1, 2022
10/1/2021 – 3/31/2022 (2)
$289,741$283,077$133,366$133,366
2022-2 XOL TransactionJuly 1, 2022
4/1/2022 – 6/30/2022 (3)
154,306152,34778,90678,906
2022-3 XOL TransactionOctober 1, 20227/1/2022 – 9/30/202296,77996,197106,265106,265
2023-1 XOL Transaction (4)
January 1, 202310/1/2022 – 6/30/202359,50959,50994,97794,977
(1)    NMIC applies claims paid on covered policies against its first layer aggregate retained loss exposure and cedes reserves for incurred claims and claim expenses to each applicable XOL Transaction and recognizes a reinsurance recoverable if such incurred claims and claim expenses exceed its current first layer retained loss.
(2)    Approximately 1% of the production covered by the 2022-1 XOL Transaction has coverage reporting dates between October 21, 2019 and September 30, 2021.
(3)    Approximately 1% of the production covered by the 2022-2 XOL Transaction has coverage reporting dates between January 4, 2021 and March 31, 2022.
(4)    The initial reinsurance coverage, current reinsurance coverage, initial first layer retained loss and current first layer retained loss for the 2023-1 XOL Transaction will increase as incremental covered production is ceded under the transaction through June 30, 2023.
Quota share reinsurance
NMIC is a party to seven quota share reinsurance treaties – the 2016 QSR Transaction. Transaction, effective September 1, 2016, the 2018 QSR Transaction, effective January 1, 2018, the 2020 QSR Transaction, effective April 1, 2020, the 2021 QSR Transaction, effective January 1, 2021, the 2022 QSR Transaction, effective October 1, 2021, the 2022 Seasoned QSR Transaction, effective July 1, 2022 and the 2023 QSR Transaction, effective January 1, 2023 – which we refer to collectively as the QSR Transactions. Under each of the QSR Transactions, NMIC cedes a proportional share of its risk on eligible policies to panels of third-party reinsurance providers. Each of the third-party reinsurance providers that is party to the QSR Transactions has an insurer financial strength rating of A- or better by S&P, A.M. Best or both.
Under the terms of the 2016 QSR Transaction, NMIC (1) cededcedes premiums written related to 25% of the risk on eligible primary policies written for all periods through December 31, 2017 and 100% of the risk relating tounder our pool agreement with Fannie Mae and (2) ceded or will cede 25% of the risk relating to eligible primary insurance policies written between September 1, 2016 and December 31, 2017,Mae, in exchange for reimbursement of ceded claims and claimsclaim expenses on covered policies, a 20% ceding commission, and a profit commission of up to 60% that varies directly and inversely with ceded claims.
In May 2017,Under the terms of the 2018 QSR Transaction, NMIC secured $211.3 millioncedes premiums earned related to 25% of aggregate excess-of-loss reinsurance coverage at inceptionthe risk on eligible policies written in 2018 and 20% of the risk on eligible policies written in 2019, in exchange for an existing portfolioreimbursement of MIceded claims and claim expenses on covered policies, a 20% ceding commission, and a profit commission of up to 61% that varies directly and inversely with ceded claims.
Under the terms of the 2020 QSR Transaction, NMIC cedes premiums earned related to 21% of the risk on eligible policies written from 2013April 1, 2020 through December 31, 2016, through2020, in exchange for reimbursement of ceded claims and claim expenses on covered policies, a 20% ceding commission, and a profit commission of up to 50% that varies directly and inversely with ceded claims.
Under the terms of the 2021 QSR Transaction, NMIC cedes premiums earned related to 22.5% of the risk on eligible policies written in 2021 (subject to an aggregate risk written limit which was exhausted on October 30, 2021), in exchange for reimbursement of ceded claims and claim expenses on covered policies, a 20% ceding commission, and a profit commission of up to 57.5% that varies directly and inversely with ceded claims.
Under the terms of the 2022 QSR Transaction, NMIC cedes premiums earned related to 20% of the risk on eligible policies written between October 30, 2021 and December 31, 2022, in exchange for reimbursement of ceded claims and claim expenses on covered policies, a 20% ceding commission, and a profit commission of up to 62% that varies directly and inversely with ceded claims.
In connection with the 2022 QSR Transaction, NMIC entered into the 2023 QSR Transaction as a springing back-to-back quota share agreement. Under the terms of the 2023 QSR Transactions, NMIC cedes premiums earned related to 20% of the risk on eligible policies written from January 1, 2023 to December 31, 2023, in exchange for reimbursement of ceded claims and claim expenses on covered policies, a 20% ceding commission, and a profit commission of up to 62% that varies directly and inversely with ceded claims.
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Under the terms of the 2022 Seasoned QSR Transaction, NMIC cedes premiums earned related to 95% of the net risk on eligible policies primarily for a seasoned pool of mortgage insurance-linked notes offeringinsurance policies that had previously been covered under the retired Oaktown Re Ltd. and Oaktown Re IV Ltd. reinsurance transactions, after the consideration of coverage provided by other QSR Transactions, in exchange for reimbursement of ceded claims and claim expenses on covered policies, a 35% ceding commission, and a profit commission of up to 55% that varies directly and inversely with ceded claims.


Oaktown Re. The reinsurance coverage amountNMIC may terminate any or all of the QSR Transactions without penalty if, due to a change in PMIERs requirements, it is no longer able to take full PMIERs asset credit for the RIF ceded under the respective agreements. Additionally, under the terms of the 2017 ILNQSR Transactions, NMIC may elect to selectively to terminate its engagement with individual reinsurers on a run-off basis (i.e., reinsurers continue providing coverage on all risk ceded prior to the termination date, with no new cessions going forward) or cut-off basis (i.e., the reinsurance arrangement is completely terminated with NMIC recapturing all previously ceded risk) under certain circumstances. Such selective termination rights arise when, among other reasons, a reinsurer experiences a deterioration in its capital position below a prescribed threshold and/or a reinsurer breaches (and fails to cure) its collateral posting obligations under the relevant agreement.
Effective April 1, 2019, NMIC elected to terminate its engagement with one reinsurer under the 2016 QSR Transaction decreases from $211.3 million at inception overon a ten-year period ascut-off basis. In connection with the underlying covered mortgages amortize and was $185 million as of September 30, 2017. For the coverage period,termination, NMIC will retain the first layer of $126.8recaptured approximately $500 million of aggregate lossespreviously ceded primary RIF and Oaktown Re will then provide a second layer of coverage upstopped ceding new premiums written with respect to the outstanding reinsurance coverage amount. NMIC retains losses in excessrecaptured risk. With this termination, ceded premiums written under the 2016 QSR Transaction decreased from 25% to 20.5% on eligible policies. The termination had no effect on the cession of pool risk under the outstanding reinsurance coverage amount.2016 QSR Transaction.
See Item 1, "“Financial Statements - Notes to Condensed Consolidated Financial Statements - Note 5, Reinsurance"Reinsurance” for further discussion of these third-party reinsurance arrangements.
Portfolio Data
The following table presents primary and pool NIW and IIF as of the dates and for the periods indicated. Unless otherwise noted, the tables below do not include the effects of our third-party reinsurance arrangements described above.
Primary and pool IIF and NIWAs of and for the three months ended
March 31, 2023March 31, 2022
IIFNIWIIFNIW
(In Millions)
Monthly$166,924 $8,550 $139,156 $13,094 
Single19,800 184 19,721 1,071 
Primary186,724 8,734 158,877 14,165 
Pool1,025 — 1,162 — 
Total$187,749 $8,734 $160,039 $14,165 
Primary and pool IIF and NIWAs of and for the three months ended For the nine months ended
 September 30, 2017 September 30, 2016 September 30, 2017 September 30, 2016
 IIF NIW IIF NIW NIW
   (In Millions)
Monthly$28,707
 $4,833
 $16,038
 $4,162
 $11,824
 $10,354
Single14,552
 1,282
 12,190
 1,695
 2,887
 5,595
Primary43,259
 6,115
 28,228
 5,857
 14,711
 15,949
            
Pool3,330
 —
 3,826
 $—
 —
 —
Total$46,589
 $6,115
 $32,054
 $5,857
 $14,711
 $15,949
ForNIW for the three months ended September 30, 2017, primary NIW increased 4%,March 31, 2023 was $8.7 billion compared to $14.2 billion for the same period in 2016, primarily because of the growth within and an expansion of our customer base. Primarythree months ended March 31, 2022. NIW decreased 8% for the nine months ended September 30, 2017, compared to the nine months ended September 30, 2016,year-on-year primarily due to a reductiondecline in our single policy production, driven primarily by actions we initiated to reduce the concentrationsize of single policies in our product mix, partially offset by growth in our monthly policy volume. For the three and nine months ended September 30, 2017, monthly premium NIWtotal mortgage insurance market.

Total IIF increased 16% and 14%, respectively,17% at March 31, 2023 compared to the same periods a year ago, drivenMarch 31, 2022, primarily bydue to the growth of our customer base.
For the nine months ended September 30, 2017, 80% of our NIW related to monthly premium policies. As of September 30, 2017, monthly premium policies accounted for 66% of our primary IIF, as compared to 60% at December 31, 2016 and 57% at September 30, 2016. We expect the break-down of monthly premium policies and single premium policies (which we refer to as "mix") in our primary IIF to continue to trend toward our current NIW mix over time. Our total IIF increased 45% as of September 30, 2017 compared to September 30, 2016, primarily because of our NIW generated between such measurement dates, partially offset by the run-off of in-force policies. Our persistency rate improved to 85.1% at March 31, 2023 from 71.5% at March 31, 2022, due to a slowdown in the pace of refinancing activity during the intervening twelve-month period driven by an increase in interest and higher persistency of our policies in force.mortgage note rates.
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The following table presents net premiums written and earned for the periods indicated.indicated:
Primary and pool premiums written and earnedFor the three months ended
March 31, 2023March 31, 2022
(In Thousands)
Net premiums written$112,976 $116,034 
Net premiums earned121,754 116,495 
Primary and pool premiums written and earnedFor the three months endedFor the nine months ended
 September 30, 2017 September 30, 2016September 30, 2017September 30, 2016
 (In Thousands)
Net premiums written (1)
$47,716
 $9,199
$122,105
$96,190
Net premiums earned (1)
44,519
 31,808
115,661
77,656
(1) Net premiums written and earned are reported net of reinsurance.
Fordecreased 3% during the three and nine months ended September 30, 2017, net premiums written increased 419% and 27%, respectively, and net premiums earned increased 40% and 49%, respectively,March 31, 2023 compared to the same periodsthree months ended March 31, 2022, reflecting an increase in 2016. The increasestotal premiums ceded under our reinsurance transactions and a decline in netsingle premium policy production, partially offset by growth in our monthly IIF and monthly pay policy premium receipts.
Net premiums written are dueearned during the three months ended March 31, 2023 increased 5% compared to the three months ended March 31, 2022, primarily driven by our NIW production and the growth of our IIF, partially offset by an increase in total premiums ceded under our reinsurance transactions, the run-off of a portion of our prior period monthly policy production and IIFassociated premium receipts, and a decline in the initial cession of premiums written on IIF at the inception of the 2016 QSR Transaction, partially offset by the decrease in single premium NIW. The increases in net premiums earned are primarily due to growth in our monthly policy production and IIF, partially offset by cessions under the 2016 QSR Transaction and 2017 ILN Transaction and, compared to the same periods in 2016, reductions in ourcontribution from single premium policy production and earningscancellations.


from cancellations. Pool premiums written and earned for each of the three and nine months ended September 30, 2017March 31, 2023 and 2022 were $0.9$0.3 million and $2.9 million, respectively, before the effects ofgiving effect to the 2016 QSR Transaction.Transaction, under which all of our written and earned pool premiums are ceded. A portion of our ceded pool premiums written and earned are recouped through profit commission.
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Portfolio Statistics
Unless otherwise noted, the portfolio statistics tables presented below do not include the effects of our third-party reinsurance arrangements described above. The table below highlights trends in our primary portfolio as of the datedates and for the periods indicated.
Primary portfolio trendsAs of and for the three months ended
March 31, 2023December 31, 2022September 30, 2022June 30, 2022March 31, 2022
($ Values In Millions, except as noted below)
New insurance written$8,734 $10,719 $17,239 $16,611 $14,165 
Percentage of monthly premium98 %98 %97 %94 %92 %
Percentage of single premium2 %2 %3 %6 %8 %
New risk written$2,258 $2,797 $4,616 $4,386 $3,721 
Insurance-in-force (1)
$186,724 $183,968 $179,173 $168,639 $158,877 
Percentage of monthly premium89 %89 %89 %88 %88 %
Percentage of single premium11 %11 %11 %12 %12 %
Risk-in-force (1)
$48,494 $47,648 $46,259 $43,260 $40,522 
Policies in force (count) (1)
600,294 594,142 580,525 551,543 526,976 
Average loan size ($ value in thousands) (1)
$311 $310 $309 $306 $301 
Coverage percentage (2)
26.0 %25.9 %25.8 %25.7 %25.5 %
Loans in default (count) (1)
4,475 4,449 4,096 4,271 5,238 
Default rate (1)
0.75 %0.75 %0.71 %0.77 %0.99 %
Risk-in-force on defaulted loans (1)
$337 $323 $284 $295 $362 
Net premium yield (3)
0.26 %0.26 %0.27 %0.30 %0.30 %
Earnings from cancellations$1.4 $1.5 $1.8 $2.2 $2.9 
Annual persistency (4)
85.1 %83.5 %80.1 %76.0 %71.5 %
Quarterly run-off (5)
3.2 %3.3 %4.0 %4.3 %5.0 %
Primary portfolio trendsAs of and for the three months ended
 September 30, 2017 June 30, 2017 March 31, 2017 December 31, 2016 September 30, 2016
 ($ Values In Millions)
New insurance written$6,115
 $5,037
 $3,559
 $5,240
 $5,857
New risk written1,496
 1,242
 868
 1,244
 1,415
Insurance in force (1)
43,259
 38,629
 34,779
 32,168
 28,228
Risk in force (1)
10,572
 9,417
 8,444
 7,790
 6,847
Policies in force (count) (1)
180,089
 161,195
 145,632
 134,662
 119,002
Average loan size (1)
$0.240
 $0.240
 $0.239
 $0.239
 $0.237
Weighted-average coverage (2)
24.4% 24.4% 24.3% 24.2% 24.3%
Loans in default (count)350
 249
 207
 179
 115
Percentage of loans in default0.2% 0.2% 0.1% 0.1% 0.1%
Risk in force on defaulted loans$19
 $14
 $12
 $10
 $6
Average premium yield (3)
0.43% 0.41% 0.40% 0.44% 0.48%
Earnings from cancellations$4.3
 $3.8
 $2.5
 $5.1
 $5.8
Annual persistency85.1% 83.1% 81.3% 80.7% 81.8%
Quarterly run-off (4)
3.8% 3.4% 2.9% 4.6% 5.3%
(1)    Reported as of the end of the period.

(2)    Calculated as end of period RIF divided by end of period IIF.
(1)
(3)    Calculated as net premiums earned divided by average primary IIF for the period, annualized.
(4)    Defined as the percentage of IIF that remains on our books after a given twelve-month period.
(5)    Defined as the percentage of IIF that is no longer on our books after a given three-month period.
Reported as of the end of the period.
(2)
Calculated as end of period RIF divided by IIF.
(3)
Calculated as net primary and pool premiums earned, net of reinsurance, divided by average gross primary IIF for the period, annualized.
(4)
Defined as the percentage of IIF that is no longer on our books after any three-month period.
The table below presents a summary of the change in total primary IIF duringfor the dates and periods indicated.
Primary IIFFor the three months ended For the nine months endedPrimary IIFAs of and for the three months ended
September 30, 2017 September 30, 2016 September 30, 2017 September 30, 2016March 31, 2023March 31, 2022
(In Millions)(In Millions)
IIF, beginning of period$38,629
 $23,624
 $32,168
 $14,824
IIF, beginning of period$183,968 $152,343 
NIW6,115
 5,857
 14,711
 15,949
NIW8,734 14,165 
Cancellations and other reductions(1,485) (1,253) (3,620) (2,545)
Cancellations, principal repayments and other reductionsCancellations, principal repayments and other reductions(5,978)(7,631)
IIF, end of period$43,259
 $28,228
 $43,259
 $28,228
IIF, end of period$186,724 $158,877 
We consider a "book"“book” to be a collective pool of policies insured during a particular period, normally a calendar year. In general, the majority of underwriting profit, calculated as earned premium revenue minus claims and underwriting and operating expenses, generated by a particular book year emerges in the years immediately following origination. This pattern generally occurs because relatively few of the claims that a book will ultimately experience typically occur in the first few years following origination, when premium revenue is highest, while subsequent years are affected by declining premium revenues, as the number of insured loans decreases (primarily due to loan prepayments), and by increasing losses.
33

The table below presents a summary of our primary IIF and RIF by book year as of the dates indicated.
Primary IIF and RIFAs of September 30, 2017 As of September 30, 2016
 IIF RIF IIF RIF
 (In Millions)
September 30, 2017$14,315
 $3,508
 $—
 $—
201618,684
 4,520
 15,433
 3,719
20158,742
 2,167
 10,679
 2,610
20141,479
 368
 2,062
 505
201339
 9
 54
 13
Total$43,259
 $10,572
 $28,228
 $6,847
Primary IIF and RIFAs of March 31, 2023As of March 31, 2022
IIFRIFIIFRIF
(In Millions)
March 31, 2023$8,674 $2,243 $— $— 
202255,664 14,730 14,076 3,699 
202170,771 18,195 78,955 20,058 
202032,679 8,403 41,311 10,431 
20198,798 2,324 11,102 2,910 
2018 and before10,138 2,599 13,433 3,424 
Total$186,724 $48,494 $158,877 $40,522 
We utilize certain risk principles that form the basis of how we underwrite and originate primary NIW. We manage our portfolio credit risk by using several loanhave established prudential underwriting standards and loan-level eligibility matrices which prescribe the maximum LTV, minimum borrower creditFICO score, maximum borrower debt-to-income (DTI) ratio, maximum loan size, property type, loan type, loan term and occupancy status of loans that we will insure. Our loaninsure and memorialized these standards and eligibility matrices as well as all of our detailed underwriting guidelines, are contained in our Underwriting Guideline Manual that is publicly available on our website. Our underwriting standards and eligibility criteria and underwriting guidelines are designed to mitigatelimit the layeredlayering of risk inherent in a single insurance policy. "Layered risk"“Layered risk” refers to the accumulation of borrower, loan and property risk. For example, we have higher credit score and lower maximum allowed LTV requirements for investor-owned properties, compared to owner-occupied properties. We monitor the concentrations of various risk attributes in our insurance portfolio, which may change over time, in part, as a result of regional conditions or public policy shifts.
The tables below present our primary NIW by FICO, LTV and purchase/refinance mix for the periods indicated. We calculate the LTV of a loan as the percentage of the original loan amount to the original purchase value of the property securing the loan.
Primary NIW by FICOFor the three months ended
March 31, 2023March 31, 2022
(In Millions)
>= 760$5,251 $6,372 
740-7591,514 2,388 
720-7391,107 1,937 
700-719456 1,639 
680-699342 1,244 
<=67964 585 
Total$8,734 $14,165 
Weighted average FICO762 748 
Primary NIW by LTVFor the three months ended
March 31, 2023March 31, 2022
(In Millions)
95.01% and above$358 $1,366 
90.01% to 95.00%4,085 7,055 
85.01% to 90.00%3,234 3,868 
85.00% and below1,057 1,876 
Total$8,734 $14,165 
Weighted average LTV91.6 %92.1 %
34

Primary NIW by FICOFor the three months ended For the nine months ended
 September 30, 2017 September 30, 2016 September 30, 2017 September 30, 2016
 ($ In Millions)
>= 760$2,806
 $2,975
 $6,865
 $8,418
740-759934
 934
 2,277
 2,606
720-739807
 725
 1,889
 1,870
700-719697
 588
 1,662
 1,540
680-699456
 387
 1,088
 940
<=679415
 248
 930
 575
Total$6,115
 $5,857
 $14,711
 $15,949
Weighted average FICO747
 753
 748
 754
Primary NIW by purchase/refinance mixFor the three months ended
March 31, 2023March 31, 2022
(In Millions)
Purchase$8,494 $13,398 
Refinance
240 767 
Total$8,734 $14,165 


Primary NIW by LTVFor the three months endedFor the nine months ended
 September 30, 2017 September 30, 2016September 30, 2017 September 30, 2016
 ($ In Millions)
95.01% and above$722
 $347
$1,470
 $918
90.01% to 95.00%2,714
 2,557
6,623
 7,005
85.01% to 90.00%1,765
 1,844
4,372
 4,996
85.00% and below914
 1,109
2,246
 3,030
Total$6,115
 $5,857
$14,711
 $15,949
Weighted average LTV92.3% 91.7%92.2% 91.6%
Primary NIW by purchase/refinance mixFor the three months ended For the nine months ended
 September 30, 2017 September 30, 2016 September 30, 2017 September 30, 2016
 (In Millions)
Purchase$5,387
 $4,400
 $12,889
 $11,518
Refinance728
 1,457
 1,822
 4,431
Total$6,115
 $5,857
 $14,711
 $15,949

The tables below present 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 FICOAs of
March 31, 2023March 31, 2022
($ Values In Millions)
>= 760$91,623 49 %$79,141 50 %
740-75933,156 18 27,406 17 
720-73926,233 14 22,176 14 
700-71918,203 10 15,236 10 
680-69912,502 6 10,347 6 
<=6795,007 3 4,571 3 
Total$186,724 100 %$158,877 100 %
Primary RIF by FICOAs of
March 31, 2023March 31, 2022
($ Values In Millions)
>= 760$23,472 48 %$19,883 49 %
740-7598,692 18 7,054 17 
720-7396,903 14 5,735 14 
700-7194,847 10 4,010 10 
680-6993,311 7 2,706 7 
<=6791,269 3 1,134 3 
Total$48,494 100 %$40,522 100 %
Primary IIF by LTVAs of
March 31, 2023March 31, 2022
($ Values In Millions)
95.01% and above$17,583 9 %$14,918 9 %
90.01% to 95.00%89,125 48 72,381 46 
85.01% to 90.00%56,425 30 48,406 30 
85.00% and below23,591 13 23,172 15 
Total$186,724 100 %$158,877 100 %
35

Primary IIF by FICOAs of
 September 30, 2017 September 30, 2016
 ($ Values In Millions)
>= 760$21,329
 49% $14,258
 50%
740-7596,983
 16
 4,612
 16
720-7395,547
 13
 3,648
 13
700-7194,505
 10
 2,813
 10
680-6992,942
 7
 1,863
 7
<=6791,953
 5
 1,034
 4
Total$43,259
 100% $28,228
 100%
Primary RIF by LTVAs of
March 31, 2023March 31, 2022
($ Values In Millions)
95.01% and above$5,413 11 %$4,527 11 %
90.01% to 95.00%26,326 54 21,358 53 
85.01% to 90.00%13,937 29 11,895 29 
85.00% and below2,818 6 2,742 7 
Total$48,494 100 %$40,522 100 %
Primary RIF by Loan TypeAs of
March 31, 2023March 31, 2022
Fixed98 %99 %
Adjustable rate mortgages:
Less than five years— — 
Five years and longer2 1 
Total100 %100 %
Primary RIF by FICOAs of
 September 30, 2017 September 30, 2016
 ($ Values In Millions)
>= 760$5,251
 50% $3,470
 51%
740-7591,713
 16
 1,130
 17
720-7391,349
 13
 887
 13
700-7191,092
 10
 680
 10
680-699707
 7
 443
 6
<=679460
 4
 237
 3
Total$10,572
 100% $6,847
 100%


Primary IIF by LTVAs of
 September 30, 2017 September 30, 2016
 ($ Values In Millions)
95.01% and above$3,038
 7% $1,363
 5%
90.01% to 95.00%19,562
 45
 12,644
 45
85.01% to 90.00%13,437
 31
 9,157
 32
85.00% and below7,222
 17
 5,064
 18
Total$43,259
 100% $28,228
 100%
Primary RIF by LTVAs of
 September 30, 2017 September 30, 2016
 ($ Values In Millions)
95.01% and above$822
 8% $380
 6%
90.01% to 95.00%5,722
 54
 3,725
 54
85.01% to 90.00%3,205
 30
 2,174
 32
85.00% and below823
 8
 568
 8
Total$10,572
 100% $6,847
 100%
Primary RIF by Loan TypeAs of
 September 30, 2017 September 30, 2016
    
Fixed98% 98%
Adjustable rate mortgages:   
Less than five years—
 —
Five years and longer2
 2
Total100% 100%
The table below showspresents selected primary portfolio statistics, by book year, as of September 30, 2017.March 31, 2023.
As of March 31, 2023
Book YearOriginal Insurance WrittenRemaining Insurance in Force% Remaining of Original InsurancePolicies Ever in ForceNumber of Policies in ForceNumber of Loans in Default# of Claims Paid
Incurred Loss Ratio (Inception to Date) (1)
Cumulative Default Rate (2)
Current Default Rate (3)
($ Values In Millions)
2014 and prior$3,613 $198 5 %15,441 1,248 22 53 3.8 %0.5 %1.8 %
201512,422 1,158 9 %52,548 6,488 119 129 2.6 %0.5 %1.8 %
201621,187 2,447 12 %83,626 12,851 259 148 2.0 %0.5 %2.0 %
201721,582 2,930 14 %85,897 15,691 422 122 2.7 %0.6 %2.7 %
201827,295 3,405 12 %104,043 17,572 558 111 4.1 %0.6 %3.2 %
201945,141 8,798 19 %148,423 37,100 595 35 4.1 %0.4 %1.6 %
202062,702 32,679 52 %186,174 107,371 589 7 2.5 %0.3 %0.5 %
202185,574 70,771 83 %257,972 222,036 1,339 4 6.2 %0.5 %0.6 %
202258,734 55,664 95 %163,281 156,817 572 — 19.3 %0.4 %0.4 %
20238,734 8,674 99 %23,250 23,120 — — — %— %— %
Total$346,984 $186,724 1,120,655 600,294 4,475 609 
(1)    Calculated as total claims incurred (paid and reserved) divided by cumulative premiums earned, net of reinsurance.
(2)    Calculated as the sum of the number of claims paid ever to date and number of loans in default divided by policies ever in force.
(3)    Calculated as the number of loans in default divided by number of policies in force.
36
 As of September 30, 2017
Book yearOriginal 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
 $39
 24% 655
 201
 —
 1
 0.2% 0.2%
20143,451
 1,479
 43% 14,786
 7,451
 54
 9
 3.8% 0.4%
201512,422
 8,742
 70% 52,548
 39,727
 164
 14
 2.9% 0.3%
201621,187
 18,684
 88% 83,626
 76,095
 119
 3
 1.6% 0.1%
201714,711
 14,315
 97% 57,800
 56,615
 13
 —
 0.5% —
Total$51,933
 $43,259
 
 209,415
 180,089
 350
 27
 
 


(1)
The ratio of total claims incurred (paid and reserved) divided by cumulative premiums earned, net of reinsurance.
(2)
The sum of the number of claims paid ever to date and number of loans in default as of the end of the period divided by policies ever in force.
Geographic Dispersion
The following table shows the distribution by state of our primary RIF as of the periodsdates indicated. As of September 30, 2017, our RIF continues to be relatively more concentrated in California, primarily as a result of the location and timing of the acquisition of new customers. The distribution of riskour primary RIF as of September 30, 2017March 31, 2023 is not necessarily representative of the geographic distribution we expect in the future.

Top 10 primary RIF by stateAs of
March 31, 2023March 31, 2022
California10.5 %10.8 %
Texas8.8 9.5 
Florida8.0 8.4 
Georgia4.1 3.9 
Virginia4.1 4.5 
Washington4.0 3.7 
Illinois3.9 3.8 
Colorado3.5 3.7 
Pennsylvania3.4 3.3 
Maryland3.3 3.6 
Total53.6 %55.2 %


Top 10 primary RIF by stateAs of
 September 30, 2017 September 30, 2016
California13.6% 13.2%
Texas7.6
 6.8
Virginia5.6
 6.6
Arizona4.4
 3.8
Florida4.3
 4.7
Colorado3.8
 4.0
Michigan3.7
 3.9
Pennsylvania3.6
 3.6
Utah3.6
 3.6
Maryland3.6
 3.6
Total53.8% 53.8%
Insurance Claims and ClaimsClaim Expenses
Insurance claims and claimsclaim expenses incurred represent estimated future payments on newly defaulted insured loans and any change in our claim estimates for previously existing defaults. Claims incurred isare generally affected by a variety of factors, including the state of the economy,macroeconomic environment, national and regional unemployment trends, changes in housing values, loanborrower risk characteristics, LTV ratios and borrowerother loan level risk characteristics,attributes, the size and type of loans insured, and the percentage of coverage on insured loans.loans, and the level of reinsurance coverage maintained against insured exposures.
Reserves for claims and allocated claimsclaim expenses are established for mortgage loans that are in default. A loan defaults,is considered to be in default as of the payment date at which we refera borrower has missed the preceding two or more consecutive monthly payments. We establish reserves for loans that have been reported to us in default by servicers, referred to as case reserves, whenand additional loans that we are notified that a borrower has missed two or more mortgage payments (i.e., an NOD). We also make estimates of IBNR defaults, which are defaultsestimate (based on actuarial review and other factors) to be in default that have been incurred but have not yet been reported to us by loan servicers, based upon historical reporting trends, and establish IBNR reserves for those estimates.referred to as IBNR. We also establish reserves for unallocated claimsclaim expenses, not associated with a specific claim. The claims expenses consist ofwhich represent the estimated cost of the claim administration process, including legal and other fees as well asand other general expenses of administering the claimsclaim settlement process. Reserves are not established for future claims on insured loans which are not currently reported or which we estimate are not currently in default.
Reserves are established by estimating the number of loans in default that will result in a claim payment, which is referred to as claim frequency, and the amount of the claim payment expected to be paid on each such loan in default, which is referred to as claim severity. Claim frequency and severity estimates are established based on historical observed experience regarding certain loan factors, such as age of the default, cure rates, size of the loan and estimated change in property valuation.value. Reserves are released the month in which a loan in default is brought current by the borrower, which is referred to as a cure. Adjustments to reserve estimates are reflected in the period in which the adjustment is made. Reserves are also ceded to reinsurers under our 2016the QSR Transaction.Transactions, ILN Transactions and XOL Transactions as applicable under each treaty. We willhave not cedeyet ceded reserves tounder any of the reinsurer under the 2017 ILN Transaction unless losses exceedTransactions or XOL Transactions as incurred claims and claim expenses on each respective reference pool remain within our retained coverage layer. Reserves are not established for future claims on insured loans which are not currently in default.
We expect our insurance claims and claims expenses to be relatively low in the near-term. Based on our experience and industry data, we believe that claims incidence for mortgage insurance is generally highest in the third through sixth years after loan origination. Aslayer of September 30, 2017, over 95% of our primary IIF was related to business written since January 1, 2015. Additionally, oureach transaction. Our pool insurance agreement with Fannie Mae contains a claim deductible through which Fannie Mae absorbs specified losses before we are obligated to pay any claims. We have not established any poolclaims or claim expense reserves for claimspool exposure to date.
Our reserve setting process considers the beneficial impact of forbearance, foreclosure moratorium and other assistance programs available to defaulted borrowers. We generally observe that forbearance programs are an effective tool to bridge dislocated borrowers from a time of acute stress to a future date when they can resume timely payment of their mortgage obligations. The effectiveness of forbearance programs is enhanced by the availability of various repayment and loan modification options which allow borrowers to amortize or, IBNRin certain instances, outright defer payments otherwise due during the forbearance period over an extended length of time.
37

In response to date. Although the claims experienceCOVID-19 pandemic, politicians, regulators, lenders, loan servicers and others offered extraordinary assistance to dislocated borrowers through, among other programs, the forbearance, foreclosure moratorium and other assistance programs codified under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The FHFA and GSEs offered further assistance by introducing new repayment and loan modification options to assist borrowers with their transition out of forbearance programs and default status. We generally observe that forbearance, repayment and modification, and other assistance programs aid affected borrowers and drive higher cure rates on new primary insurance written by us to date has been favorable, we expect incurred claims to increase as a greater amount of our existing insured portfolio reaches its anticipated period of highest claim frequency. We estimatedefaults than would otherwise be expected on similarly situated loans that the loss ratio over the life of our existing insured portfolio will be between 20% and 25% of earned premiums, and we price to that expectation.did not benefit from broad-based assistance programs.
The actual claims we incur as our portfolio matures are difficult to predict and depend on the specific characteristics of our current in-force book (including the credit score and DTI of the borrower, the LTV ratio of the mortgage and geographic concentrations, among others), as well as the risk profile of new business we write in the future. In addition, claims experience will be affected by future macroeconomic factors such as housing prices, interest rates, unemployment rates and employment. To date, our claims experience is developing at a slower pace than historical trends indicate,other events, such as a result of high quality underwriting, a strong macroeconomic environment and a favorable housing market. For additional discussion of our reserves, see, Item 1, "Financial Statements - Notes to Condensed Consolidated Financial Statements - Note 6, Reserves for Insurance Claims and Claims Expenses."
We insure mortgages for homes in areas that have been impacted by recent natural disasters or global pandemics, and any federal, state or local governmental response thereto.
Emerging macroeconomic factors, including hurricanes Harveypersistent inflation, elevated interest rates, flagging consumer confidence and Irmaincreasing jobless claims could have a pronounced impact on the housing market, the mortgage insurance industry and the firesour business in Northern California. We do not provide coverage for propertyfuture periods. A marked decline in housing demand, a significant and protracted decrease in house prices, or casualty claims relateda sustained increase in unemployment could contribute to physical damage of a home underpinning an insured mortgage. We anticipate that we will experience an increase in NODs on insured loans in the


impacted areas. Our ultimate claims exposure will depend on the number of NODs received, proximate cause of eachour future default and cure rate of the NOD population. In the event of natural disasters, cure rates are influenced by the adequacy of homeowners and flood insurance carried on a related property, and a borrower's access to aid from government entities and private organizations, in addition to other factors which generally impact cure rates in unaffected areas.claims experience.
The following table provides a reconciliation of the beginning and ending gross reserve balances for primary insurance claims and claims expenses.claim expenses (benefits):
For the three months ended
March 31, 2023March 31, 2022
(In Thousands)
Beginning balance$99,836 $103,551 
Less reinsurance recoverables (1)
(21,587)(20,320)
Beginning balance, net of reinsurance recoverables78,249 83,231 
Add claims incurred:
Claims and claim expenses (benefits) incurred:
Current year (2)
27,608 10,080 
Prior years (3)
(20,907)(10,699)
Total claims and claim expenses (benefits) incurred6,701 (619)
Less claims paid:
Claims and claim expenses paid:
Current year (2)
— — 
Prior years (3)
272 320 
Total claims and claim expenses paid272 320 
Reserve at end of period, net of reinsurance recoverables84,678 82,292 
Add reinsurance recoverables (1)
23,479 20,080 
Ending balance$108,157 $102,372 
 For the three months ended For the nine months ended
 September 30, 2017 September 30, 2016 September 30, 2017 September 30, 2016
 (In Thousands)
Beginning balance$5,048
 $1,475
 $3,001
 $679
Less reinsurance recoverables (1)
(899) —
 (297) —
Beginning balance, net of reinsurance recoverables4,149
 1,475
 2,704
 679
        
Add claims incurred:       
Claims and claim expenses incurred:       
Current year (2)
1,215
 690
 3,546
 1,803
Prior years (3)
(258) (29) (581) (214)
Total claims and claims expenses incurred957
 661
 2,965
 1,589
        
Less claims paid:       
Claims and claim expenses paid:       
Current year (2)
—
 —
 —
 —
Prior years (3)
157
 93
 720
 225
Total claims and claim expenses paid157
 93
 720
 225
        
Reserve at end of period, net of reinsurance recoverables4,949
 2,043
 4,949
 2,043
Add reinsurance recoverables (1)
1,174
 90
 1,174
 90
Ending balance$6,123
 $2,133
 $6,123
 $2,133
(1)    Related to ceded losses recoverable onunder the 2016 QSR Transaction, included in "Other Assets" on the Condensed Consolidated Balance Sheets.Transactions. See Item 1, "Financial Statements - Notes to Condensed Consolidated Financial Statements - Note 5, Reinsurance"Reinsurance" for additional information.
(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, thatthe default would be included in the current year. Amounts are presented net of reinsurance and included $22.3 million attributed to net case reserves and $4.9 million attributed to net IBNR reserves for the three months ended March 31, 2023 and $5.2 million attributed to net case reserves and $4.7 million attributed to net IBNR reserves for the three months ended March 31, 2022.
38

(3)    Related to insured loans with defaults occurring in prior years, which have been continuously in default since that time.before the start of the current year. Amounts are presented net of reinsurance and included $16.2 million attributed to net case reserves and $4.5 million attributed to net IBNR reserves for the three months ended March 31, 2023 and $5.8 million attributed to net case reserves and $4.7 million attributed to net IBNR reserves for the three months ended March 31, 2022.

The "claims incurred" section of the table above shows claims and claim expenses (benefits) incurred on NODs fordefaults occurring in current and prior years, including IBNR reserves. The amountreserves and is presented net of claims incurred relating to current year NODs represents the estimated amount to be ultimately paid on such loans in default. The decreases during the periods presented in reserves held for prior year defaults represent favorable development and are generally the result of ongoing analysis of recent loss development trends.reinsurance. We may increase or decrease our originalclaim estimates and reserves as we learn additional information about individual defaults and claimsdefaulted loans and continue to observe and analyze loss development trends in our portfolio.


Gross reserves of $72.7 million related to prior year defaults remained as of March 31, 2023.
The following table provides a reconciliation of the beginning and ending count of loans in default for the periods indicated.default:
For the three months ended
March 31, 2023March 31, 2022
Beginning default inventory4,449 6,227 
Plus: new defaults1,558 1,163 
Less: cures(1,507)(2,132)
Less: claims paid(21)(19)
Less: rescission and claims denied(4)(1)
Ending default inventory4,475 5,238 
 For the three months ended For the nine months ended
 September 30, 2017 September 30, 2016 September 30, 2017 September 30, 2016
Beginning default inventory249
 79
 179
 36
Plus: new defaults208
 69
 479
 158
Less: cures(103) (30) (292) (73)
Less: claims paid(4) (3) (16) (6)
Ending default inventory350
 115
 350
 115
The increase in the endingEnding default inventory at September 30, 2017declined from March 31, 2022 to March 31, 2023, as borrowers initially impacted by the COVID-19 pandemic continued to cure their delinquencies, and contributed to total cure experience that exceeded the number of new defaults that emerged during the intervening period. New default experience increased during the three months ended March 31, 2023 compared to September 30, 2016 wasthe three months ended March 31, 2022, primarily due to an increase in the number of policies in forcegrowth and expected loss developmentnatural seasoning of our insured portfolio.
The following table provides details of our claims paid, before giving effect to claims paidceded under the 2016 QSR Transaction,Transactions for the threeperiods indicated:
For the three months ended
March 31, 2023March 31, 2022
($ Values In Thousands)
Number of claims paid (1)
21 19 
Total amount paid for claims$344 $402 
Average amount paid per claim
$16 $21 
Severity (2)
39 %39 %
(1)    Count includes seven and ninesix claims settled without payment during the three months ended September 30, 2017March 31, 2023 and September 30, 2016.2022, respectively.
 For the three months ended For the nine months ended
 September 30, 2017 September 30, 2016 September 30, 2017 September 30, 2016
 ($ Values In Thousands)
Number of claims paid4
 3
 16
 6
Total amount paid for claims$160
 $93
 $731
 $225
Average amount paid per claim$40
 $31
 $46
 $32
Severity(1)
73% 53% 83% 62%
(1) (2)    Severity represents the total amount of claims paid including claim expenses divided by the related RIF on the loan at the time the claim is perfected.perfected, and is calculated including claims settled without payment.


We paid 21 and 19 claims during the three months ended March 31, 2023 and 2022, respectively. The increase in the number of claims paid was modest relative to the size of our insured portfolio and number of defaulted loans we reported in each period, primarily due to the forbearance program and foreclosure moratorium implemented by the GSEs in response to the COVID-19 pandemic and codified under the CARES Act. Such forbearance and foreclosure programs remain available and may ultimately interrupt, the timeline over which loans would otherwise progress through the default cycle to a paid claim. Our claims paid experience for the three and nine months ended September 30, 2017 comparedMarch 31, 2023 and 2022, further benefited from broad national house price appreciation observed through June 2022. An increase in the value of the homes collateralizing the mortgages we insure provides defaulted borrowers with alternative paths and incentives to cure their loan prior to the development of a claim. Although national house prices have contracted from their peak, the scale of decline has been modest relative to the quantum of previous gains, and many borrowers still retain significant net price gains and appreciated equity in their homes.

39

Our claims severity for each of the three months ended March 31, 2023 and 2022 was 39%. Claims severity for the three months ended March 31, 2023 and 2022 benefited from the same periods ended September 30, 2016 is due to anbroad national house price appreciation that supported our claims paid experience. An increase in the value of the homes collateralizing the mortgages we insure provides additional equity support to our default inventory. We expectrisk exposure and raises the prospect of a third-party sale of a foreclosed property, which can mitigate the severity of our settled claims.
The number of claims we receivepaid and our severity experience in future periods may be impacted by developing economic cycles and each could increase if house price declines serve to be between 85%limit the alternative paths and 95%incentives to cure delinquencies that are available to defaulted borrowers or erode the equity value of the coverage amount. We believehomes collateralizing the mortgages we insure.
The following table provides detail on our severity is below long-term expectations dueaverage reserve per default, before giving effect to home price appreciation in recent periods.reserves ceded under the QSR Transactions, as of the dates indicated:

Average reserve per default:As of March 31, 2023As of March 31, 2022
(In Thousands)
Case (1)
$22.4 $18.0 
IBNR (1)(2)
1.8 1.5 
Total$24.2 $19.5 
Average reserve per default:As of September 30, 2017 As of September 30, 2016
 (In Thousands)
Case (1)
$16
 $17
IBNR1
 1
Total$17
 $18
(1)Defined as the gross reserve per insured loan in default.

(2)    Amount includes claims adjustment expenses.
Average reserve per default increased from March 31, 2022 to March 31, 2023, primarily due to an incrementally conservative set of assumptions about future macroeconomic and housing market conditions compared to those assumed at March 31, 2022. The increased average reserve per default at March 31, 2023 also reflects the “aging” of COVID-related defaults. While we initially established lower reserves for defaults that we considered to be connected to the COVID-19 pandemic given our expectation that forbearance, repayment and modification, and other assistance programs would aid affected borrowers and drive higher cure rates on such defaults than we would otherwise expect to experience on similarly situated loans that did not benefit from broad-based assistance programs, we have increased such reserves over time as individual defaults remain outstanding or “age.”
GSE Oversight
As anApproved Insurer approved insurer, NMIC is subject to ongoing compliance with the PMIERs.PMIERs established by each of the GSEs (Italicizeditalicized terms have the same meaning that such terms have in the PMIERs, as described below.)below). The PMIERs establish operational, business, remedial and financial requirements applicable toApproved Insurers approved insurers. The PMIERs financial requirements prescribe a risk-based methodology whereby the amount of assets required to be held against each insured loan is determined based on certain loan-level risk characteristics, such as FICO, vintage (year of origination), performing vs. non-performing (i.e., current vs. delinquent), LTV ratio and other risk features. An asset charge is calculated for each insured loan based on its risk profile. In general, higher quality loans carry lower asset charges.
Under the PMIERs, financial requirements, Approved Insurers approved insurers must maintainavailable assets that equal or exceedminimum required assets, which is an amount equal to the greater of (i) $400 million or (ii) a total risk-based required asset amount. Therisk-based required asset amount is a function of the risk profile of anApproved Insurers net approved insurer's RIF, calculated by applyingassessed on a loan-


by-loanloan-by-loan basis and considered against certain risk-based factors derived from tables set out in the PMIERs, to the net RIF, and other transactional adjustmentswhich is then adjusted on an aggregate basis for reinsurance transactions approved by the GSEs, such as with respect to our 2017 ILN TransactionTransactions, XOL Transactions and 2016 QSR Transaction.Transactions. The aggregate gross risk-based required asset amountfor performing, primary insurance is subject to a floor of 5.6% of total, performing primary adjusted RIF, and the risk-based required asset amountfor pool insurance considers both the factors in the PMIERs tables and thenet remaining stop lossfor each pool insurance policy. The PMIERs financial requirements also increase the amount of available assets that must be held by an Approved Insurer for LPMI policies originated on or after January 1, 2016.
By April 15th of each year, NMIC must certify it met all PMIERs requirements as of December 31st of the prior year. We certified to the GSEs by April 15, 20172023 that NMIC fully compliedwas in full compliance with the PMIERs as of December 31, 2016.2022. NMIC also has an ongoing obligation to immediately notify the GSEs in writing upon discovery of itsa failure to meet one or more of the PMIERs requirements. We continuously monitor ourNMIC's compliance with the PMIERs.
40

The following table provides a comparison of the PMIERs financial requirementsavailable assets and risk-based required asset amount as reported by NMIC as of the dates indicated.indicated:
As of
March 31, 2023March 31, 2022
(In Thousands)
Available assets$2,480,882 $2,127,030 
Risk-based required assets1,231,780 1,341,217 
 As of 
 September 30, 2017  September 30, 2016 
 (In Thousands) 
Available assets$495,182
  $488,635
 
Risk-based required assets356,207
  320,609
 

Available assets were $2.5 billion at March 31, 2023, compared to $2.1 billion at March 31, 2022.The$354 million increase in available assets as of September 30, 2017 compared to September 30, 2016 is between the dates presented was primarily driven by theNMIC's positive cash flow from operations and amortizationduring the intervening period, partially offset by the payment of unearned premium reserves. an ordinary course dividend from NMIC to NMIH in April 2022.
The decrease in the risk-based required asset amount between the dates presented was primarily due to an increase in the risk-based required asset amount is due to the growth ofrisk ceded under our RIF,third-party reinsurance agreements, partially offset by the cession of risk relating togrowth in our third-party reinsurance agreements.gross RIF and aggregate gross-risk based required asset amount.
Capital Position of Our Insurance Subsidiaries and Financial Strength Ratings
In addition to GSE-imposed asset requirements, NMIC is also subject to state regulatory minimum capital requirements based on its RIF. While formulations of this minimum capital may vary by jurisdiction, the most common measure allows for a maximum permitted RTC ratio of 25:1.
As of September 30, 2017, NMIC's primary RIF, net of reinsurance, was approximately $6.2 billion. NMIC ceded 100% of its pool RIF pursuant to the 2016 QSR Transaction. Based on NMIC's total statutory surplus of $502.6 million (including contingency reserves) as of September 30, 2017, NMIC's RTC ratio was 12.3:1. Re One had total statutory capital of $33.9 million as of September 30, 2017, with a RTC ratio of 0.7:1. We continuously monitor our compliance with state capital requirements.
In August 2017, Moody's Investors Service (Moody's) re-affirmed its "Ba1" financial strength rating for NMIC and its B2 rating of NMIH's $150 million Term Loan. Moody's outlook for both ratings changed from " stable" to " positive." In July 2017, S&P re-affirmed its "BBB-" financial strength and long-term counter-party credit ratings on NMIC and its"BB-" long-term counter-party credit rating on NMIH. S&P's outlook for both companies is "positive."
Competition
The MI industry is highly competitive and currently consists of six private mortgage insurers, including NMIC, as well as governmental agencies likegovernment MIs such as the FHA, and theUSDA or VA. Private MI companies compete based on service, customer relationships, underwriting and other factors, including price.price, credit risk tolerance and IT capabilities. We expect the private MI market to remain competitive, with pressure for industry participants to growmaintain or maintaingrow their market share.
The private MI industry overall competes more broadly with government entitiesMIs who significantly increased their presenceshare in the MI market following the financial crisis.2008 Financial Crisis. Although there has been broad policy consensus toward the need for increasing private capital to play a larger roleparticipation and decreasing government exposure to credit risk to be reduced in the U.S. housing finance system, it remains difficult to predict whether the combined market share of governmental agencies such as the FHA and VAgovernment MIs will recede to historicalpre-2008 levels. A range of factors influence a lender's and borrower's decision to choose private MI over governmental insurance options,government MI, including among others, premium rates and other charges, loan eligibility requirements, the cancelability of private coverage, loan size limits and the relative ease of use of private MI products compared to governmentalgovernment MI alternatives.


LIBOR Transition
On March 5, 2021, ICE Benchmark Administration Limited (IBA), the administrator for LIBOR, confirmed it would permanently cease the publication of overnight, one-month, three-month, six-month and twelve-month USD LIBOR settings in their current form after June 30, 2023. The U.K. Financial Conduct Authority, the regulator of IBA, announced on the same day that it intends to stop requiring panel banks to continue to submit to LIBOR and all USD LIBOR settings in their current form will either cease to be provided by any administrator or no longer be representative after June 30, 2023. We have exposure to USD LIBOR-based financial instruments, such as LIBOR-based securities held in our investment portfolio and certain ILN Transactions that require LIBOR-based payments. We reviewed our LIBOR-based contracts and each contains provisions that dictate a transition to an alternative reference rate at the time of the discontinuance of LIBOR. We will continue to monitor the impact of the phase out of LIBOR; however, we do not expect the transition will have a material impact on our operations or financial results.

41

Consolidated Results of Operations
Consolidated statements of operationsThree months ended
March 31, 2023March 31, 2022
Revenues($ In Thousands, except for per share data)
Net premiums earned$121,754 $116,495 
Net investment income14,894 10,199 
Net realized investment (losses) gains(33)408 
Other revenues164 339 
Total revenues136,779 127,441 
Expenses
Insurance claims and claim expenses (benefits)6,701 (619)
Underwriting and operating expenses25,786 32,935 
Service expenses80 430 
Interest expense8,039 8,041 
Gain from change in fair value of warrant liability— (93)
Total expenses40,606 40,694 
Income before income taxes96,173 86,747 
Income tax expense21,715 19,067 
Net income$74,458 $67,680 
Earnings per share - Basic$0.89 $0.79 
Earnings per share - Diluted$0.88 $0.77 
Loss ratio(1)
5.5 %(0.5)%
Expense ratio(2)
21.2 %28.3 %
Combined ratio (3)
26.7 %27.7 %
Consolidated statements of operationsThree months ended Nine months ended
 September 30, 2017 September 30, 2016 September 30, 2017 September 30, 2016
Revenues(In Thousands)
Net premiums earned$44,519
 $31,808
 $115,661
 $77,656
Net investment income4,170
 3,544
 11,885
 10,117
Net realized investment gains (losses)69
 66
 198
 (758)
Other revenues195
 102
 461
 172
Total revenues48,953
 35,520
 128,205
 87,187
Expenses       
Insurance claims and claims expenses957
 664
 2,965
 1,592
Underwriting and operating expenses24,645
 24,037
 78,682
 69,943
Total expenses25,602
 24,701
 81,647
 71,535
Other expense       
Loss from change in fair value of warrant liability(502) (797) (679) (187)
Interest expense(3,352) (3,733) (10,146) (11,072)
Income before income taxes19,497
 6,289
 35,733
 4,393
Income tax expense7,185
 114
 11,917
 114
Net income$12,312
 $6,175
 $23,816
 $4,279
        
Loss ratio(1)
2.1% 2.1% 2.6% 2.1%
Expense ratio(2)
55.4% 75.6% 68.0% 90.1%
Combined ratio57.5% 77.7% 70.6% 92.2%
Three months ended
Non-GAAP financial measures (4)
March 31, 2023March 31, 2022
($ In Thousands, except for per share data)
Adjusted income before tax$96,206 $86,506 
Adjusted net income74,484 67,470 
Adjusted diluted EPS0.880.77
(1)    Loss ratio is calculated by dividing the provision for insurance claims and claimsclaim expenses (benefits) by net premiums earned.
(2)    Expense ratio is calculated by dividing other underwriting and operating expenses by net premiums earned.
(3)     Combined ratio may not foot due to rounding.
(4)    See "Explanation and Reconciliation of Our Use of Non-GAAP Financial Measures," below.
Revenues
ForNet premiums earned were $121.8 million for the three and nine months ended September 30, 2017,March 31, 2023, compared to $116.5 million for the three months ended March 31, 2022. The increase in net premiums earned increased $12.7 million or 40%was primarily driven by our NIW production and $38.0 million or 49%, respectively, compared to the corresponding three and nine months ended September 30, 2016. Thegrowth of our IIF, partially offset by an increase in both periods is primarily due tototal premiums ceded under our reinsurance transactions, the continued growth inrun-off of a portion of our prior period monthly policy production and IIF, partially offset byassociated premium receipts. and a decline in the effects of the 2016 QSR Transaction and 2017 ILN Transaction and reductions in ourcontribution from single policy production and earnings from earlypremium policy cancellations.
ForNet investment income was $14.9 million for the three and nine months ended September 30, 2017,March 31, 2023, compared to $10.2 million for the three months ended March 31, 2022. The increase in net investment income increased $0.6 million and $1.8 million, respectively, compared to the three and nine months ended September 30, 2016, due towas primarily driven by an increase in the book yield of the investment portfolio tied to the deployment of new cash flows and reinvestment of rolling maturities at incrementally higher rates, as well as the growth in the size of and improved yields on our total investment portfolio.invested asset base.
42

Other revenues were $0.2 million for the three months ended March 31, 2023, compared to $0.3 million for the three months ended March 31, 2022. Other revenues represent underwriting fee revenue generated by our subsidiary, NMIS, which provides outsourced loan review services to mortgage loan originators. The decrease in other revenues reflects a decline in NMIS' outsourced loan review volume. Amounts recognized in other revenues generally correspond with amounts incurred as service expenses for outsourced loan review activities in the same periods.
Expenses
We recognize insurance claims and claimsclaim expenses in connection with the loss experience of our insured portfolio and incur other underwriting and operating expenses, including employee compensation and benefits, policy acquisition costs, and technology, professional services and facilities expenses, in connection with the development and operation of our business.



We also incur service expenses in connection with NMIS' outsourced loan review activities.
Insurance claims and claimsclaim expenses increased $0.3 million and $1.4were $6.7 million for the three and nine months ended September 30, 2017, respectively,March 31, 2023, compared to insurance claims and claim benefits of $0.6 million for the three and nine months ended September 30, 2016, as a result of anMarch 31, 2022. The increase in our NODs,insurance claims and claim expenses was primarily due todriven by the establishment of initial reserves on newly defaulted loans during the three months ended March 31, 2023, as well as an increase in the number of policiesaverage case reserve held against previously defaulted loans that have aged in force year-over-yeartheir delinquency status, and expected loss development of our portfolio. The increase in claims and claims expenses for the three and nine months ended September 30, 2017 was partially offset by the partial release of a portion of the reserves related towe established for anticipated claims payments in prior year defaults.periods in connection with cure activity and ongoing analysis of recent loss development trends.
Underwriting and operating expenses increased $0.6were $25.8 million or 3%, and $8.7 million or 12% for the three and nine months ended September 30, 2017, respectively,March 31, 2023, compared to $32.9 million for the three and nine months ended September 30, 2016. Employee compensation accounts for the majority of our operating expenses. We increased the size of our workforce from 273 employees as of September 30, 2016 to 298 employees as of September 30, 2017 to support the growth of our business, particularly our salesMarch 31, 2022. The decrease in underwriting and operating functions.expenses reflects an increase in ceding commissions received upon the introduction of the 2022 Seasoned QSR Transaction effective July 1, 2022, a step-down in technology costs related to our agreement with Tata Consultancy Services (TCS) and a decrease in employee compensation costs, partially offset by an increase in travel and entertainment expenses tied to the easing of COVID-19 related restrictions. Underwriting and operating expenses for the nine monthsyear ended September 30, 2017 alsoMarch 31, 2023 further reflect $4.8 million of operating expensesa benefit related to the 2017 ILN Transaction and amendmentrecognition of our deferred policy acquisition costs, which slowed in connection with the Credit Agreement.increased persistency of our IIF.
We incurred interest expense related to the Term Loan of $3.4 million and $10.1Service expenses were $0.1 million for the three and nine months ended September 30, 2017, respectively,March 31, 2023, compared to interest expense of $3.7 million and $11.1$0.4 million for the three and nine months ended September 30, 2016, respectively. Interest expense declinedMarch 31, 2022. Service expenses represent third-party costs incurred by NMIS in connection with the amendmentservices it provides. The decline in service expenses was driven by a decrease in NMIS' outsourced loan review volume and a negotiated decrease in the cost of our Credit Agreement which we completedservices procured from third-party providers. Amounts incurred as service expenses generally correspond with amounts recognized in February 2017, which among other items, reducedrevenues in the interest rate payable onsame periods.
Interest expense was $8.0 million for each of the Term Loan.three months ended March 31, 2023 and 2022. Interest expense primarily reflects the carrying costs of the Notes. See Item 1, "Financial Statements - Notes to Condensed Consolidated Financial Statements - Note 4, Term Loan.Debt."
Income Tax
We aretax expense was $21.7 million for the three months ended March 31, 2023, compared to $19.1 million for the three months ended March 31, 2022. The increase in income tax expense was primarily driven by growth in our pre-tax income. Our effective tax rate on pre-tax income was 22.6% for the three months ended March 31, 2023 compared to 22.0% for the three months ended March 31, 2022. As a U.S. taxpayer, andwe are subject to a statutory U.S. federal corporate income tax rate of 35%21%. Our holding company files a consolidated U.S. federal and various state income tax returns on behalf of itself and its subsidiaries.
Our provision for income taxes for the interim reporting periods areis established based on anour estimated annual effective tax rate for a given year and reflects the year ending December 31, 2017. We currently pay no regular federal incomeimpact of discrete tax due toeffects in the forecasted utilization of federal net operating loss carryforwards,period in which were $122.9 million as of December 31, 2016. The interim provision for income taxes include current year alternative minimum tax and changes to deferred tax assets.they occur. Our effective tax rate on our pre-tax income was 36.9% for the three months ended September 30, 2017, compared to 1.8% for the comparable 2016 period. Our effective tax rate on our pre-tax income was 33.3% for the nine months ended September 30, 2017, compared to our effective tax rate on our pre-tax income of 2.6% for the comparable 2016 period. The difference between our statutory tax rate and our effective tax rates for the three and nine months ended September 30, 2017 is due to aMarch 31, 2023 and 2022 reflect the discrete tax benefit associated with excess tax benefits for restricted stock units that were recognized during the periods as a resulteffects of the adoptionvesting of ASU 2016-09 in the prior quarter.RSUs and exercise of options. See Item 1, "Financial Statements - Notes to Consolidated Financial Statements - Note 1, Organization and Basis of Presentation - Change in Accounting Principle." We expect our effective tax rate to return to approximately the statutory tax rate for the year ending December 31, 2017. From inception through September 30, 2016, we had evaluated the realizability of our net deferred tax assets on a quarterly basis and concluded that it was more-likely-than-not that our net deferred tax assets may not be realized and recognized a full valuation allowance against net deferred tax assets.



Consolidated balance sheetsSeptember 30, 2017 
December 31, 2016 (1)
 (In Thousands)
Total investment portfolio$692,729
 $628,969
Cash and cash equivalents20,698
 47,746
Premiums receivable21,056
 13,728
Deferred policy acquisition costs, net36,101
 30,109
Software and equipment, net21,767
 20,402
Prepaid reinsurance premiums39,915
 37,921
Deferred tax asset, net38,490
 51,434
Other assets15,856
 9,588
Total assets$886,612
 $839,897
Term loan$143,969
 $144,353
Unearned premiums161,345
 152,906
Accounts payable and accrued expenses22,028
 25,297
Reserve for insurance claims and claims expenses6,123
 3,001
Reinsurance funds withheld33,105
 30,633
Deferred ceding commission4,971
 4,831
Warrant liability4,046
 3,367
Total liabilities375,587
 364,388
Total shareholders' equity511,025
 475,509
Total liabilities and shareholders' equity$886,612
 $839,897
(1) The 2016 prior period balance sheet has been revised. See Item 1, "Financial Statements - Notes to Condensed Consolidated Financial Statements - Note 1, Organization8, Income Taxes."
Net Income
Net income was $74.5 million for the three months ended March 31, 2023, compared to $67.7 million for the three months ended March 31, 2022 and Basisadjusted net income was $74.5 million for the three months ended March 31, 2023, compared to $67.5 million for the three months ended March 31, 2022. The increases in net income and adjusted net income were primarily driven by growth in our total revenues, as well as a decline in our underwriting and operating expenses, partially offset by increases in our insurance claims and claim expenses and income tax expense.
Diluted EPS and adjusted diluted EPS were $0.88 for the three months ended March 31, 2023, compared to diluted EPS and adjusted diluted EPS of Presentation. Immaterial Correction$0.77 for the three months ended March 31, 2022. Diluted and adjusted diluted EPS increased primarily due to growth in our net income and adjusted net income, as well as a decline in the number of Prior Period Amounts" weighted average diluted shares outstanding tied to share repurchase activity.
43

The non-GAAP financial measures adjusted income before tax, adjusted net income and adjusted diluted EPS are presented to enhance the comparability of financial results between periods.
Non-GAAP Financial Measure ReconciliationsFor the three months ended March 31,
20232022
As reported($ In Thousands, except for per share data)
Income before income taxes$96,173 $86,747 
Income tax expense21,715 19,067 
Net income$74,458 $67,680 
Adjustments
Net realized investment losses (gains)33 (408)
Gain from change in fair value warrant liability— (93)
Capital market transaction costs— 260 
Adjusted income before tax96,206 86,506 
Income tax expense (benefit) on adjustments (1)
7 (31)
Adjusted net income$74,484 $67,470 
Weighted average diluted shares outstanding84,840 87,310 
Adjusted diluted EPS$0.88 $0.77 
(1)    Marginal tax impact of non-GAAP adjustments is calculated based on our statutory U.S. federal corporate income tax rate of 21%, except for further details.those
Asitems that are not eligible for an income tax deduction.

Explanation and Reconciliation of Our Use of Non-GAAP Financial Measures
We believe the use of the non-GAAP measures of adjusted income before tax, adjusted net income and adjusted diluted EPS enhances the comparability of our fundamental financial performance between periods, and provides relevant information to investors. These non-GAAP financial measures align with the way the company's business performance is evaluated by management. These measures are not prepared in accordance with GAAP and should not be viewed as alternatives to GAAP measures of performance. These measures have been presented to increase transparency and enhance the comparability of our fundamental operating trends across periods. Other companies may calculate these measures differently; their measures may not be comparable to those we calculate and present.
Adjusted income before tax is defined as GAAP income before tax, excluding the pre-tax effects of the gain or loss related to the change in fair value of our warrant liability, periodic costs incurred in connection with capital markets transactions, net realized gains or losses from our investment portfolio, and other infrequent, unusual or non-operating items in the periods in which such items are incurred.
Adjusted net income is defined as GAAP net income, excluding the after-tax effects of the gain or loss related to the change in fair value of our warrant liability, periodic costs incurred in connection with capital markets transactions, net realized gains or losses from our investment portfolio, and other infrequent, unusual or non-operating items in the periods in which such items are incurred. Adjustments to components of pre-tax income are tax effected using the applicable federal statutory tax rate for the respective periods.
Adjusted diluted EPS is defined as adjusted net income divided by adjusted weighted average diluted shares outstanding. Adjusted weighted average diluted shares outstanding is defined as weighted average diluted shares outstanding, adjusted for changes in the dilutive effect of non-vested shares that would otherwise have occurred had GAAP net income been calculated in accordance with adjusted net income. There will be no adjustment to weighted average diluted shares outstanding in the years that non-vested shares are anti-dilutive under GAAP.
Although adjusted income before tax, adjusted net income and adjusted diluted EPS exclude certain items that have occurred in the past and are expected to occur in the future, the excluded items: (1) are not viewed as part of the operating
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performance of our primary activities; or (2) are impacted by market, economic or regulatory factors and are not necessarily indicative of operating trends, or both. These adjustments, and the reasons for their treatment, are described below.
•Change in fair value of warrant liability. Outstanding warrants at the end of each reporting period are revalued, and any change in fair value is reported in the statement of operations in the period in which the change occurred. The change in fair value of our warrant liability can vary significantly across periods and is influenced principally by equity market and general economic factors that do not impact or reflect our current period operating results. Furthermore, all unexercised warrants expired in April 2022 and, as such, no change in fair value will be recognized in future reporting periods thereafter. We believe trends in our operating performance can be more clearly identified by excluding fluctuations related to the change in fair value of our warrant liability.
•Capital markets transaction costs. Capital markets transaction costs result from activities that are undertaken to improve our debt profile or enhance our capital position through activities such as debt refinancing and capital markets reinsurance transactions that may vary in their size and timing due to factors such as market opportunities, tax and capital profile, and overall market cycles.
•Net realized investment gains and losses. The recognition of the net realized investment gains or losses can vary significantly across periods as the timing is highly discretionary and is influenced by factors such as market opportunities, tax and capital profile, and overall market cycles that do not reflect our current period operating results.
•Other infrequent, unusual or non-operating items. Items that are the result of unforeseen or uncommon events, and are not expected to recur with frequency in the future. Identification and exclusion of these items provides clarity about the impact special or rare occurrences may have on our current financial performance. Past adjustments under this category include infrequent, unusual or non-operating adjustments related to severance, restricted stock modification and other expenses incurred in connection with the CEO transition announced in September 30, 2017, we had approximately $713.4 million2021 and the effects of the release of the valuation allowance recorded against our net federal and certain state net deferred tax assets in 2016 and the re-measurement of our net deferred tax assets in connection with tax reform in 2017. We believe such items are infrequent or non-recurring in nature, and are not indicative of the performance of, or ongoing trends in, our primary operating activities or business.

Consolidated balance sheetsMarch 31, 2023December 31, 2022
(In Thousands)
Total investment portfolio$2,171,766 $2,099,389 
Cash and cash equivalents83,104 44,426 
Premiums receivable70,198 69,680 
Deferred policy acquisition costs, net59,921 58,564 
Software and equipment, net31,830 31,930 
Reinsurance recoverable23,479 21,587 
Prepaid federal income tax154,409 154,409 
Other assets39,069 36,045 
Total assets$2,633,776 $2,516,030 
Debt$396,426 $396,051 
Unearned premiums114,064 123,035 
Accounts payable and accrued expenses70,341 74,576 
Reserve for insurance claims and claim expenses108,157 99,836 
Reinsurance funds withheld2,313 2,674 
Deferred tax liability, net223,368 193,859 
Other liabilities12,396 12,272 
Total liabilities927,065 902,303 
Total shareholders' equity1,706,711 1,613,727 
Total liabilities and shareholders' equity$2,633,776 $2,516,030 
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Total cash and investments including $61.7were $2.3 billion as of March 31, 2023, compared to $2.1 billion as of December 31, 2022. Cash and investments at March 31, 2023 included $65.7 million held atby NMIH. The increase in total cash and investments from year-end 2016reflects the addition of incremental cash provided by operating activities, as well as a decrease in the unrealized loss position of our fixed income portfolio partially offset by share repurchase activity during the three months ended March 31, 2023.
Premiums receivable was $70.2 million as of March 31, 2023, compared to $69.7 million as of December 31, 2022. The increase was primarily relates to cash generated from operations.driven by growth in our monthly premium policies in force, where premiums are generally paid one month in arrears.
Net deferred policy acquisition costs were $36.1$59.9 million as of September 30, 2017,March 31, 2023, compared to $30.1$58.6 million atas of December 31, 2016.2022. The increase was primarily driven by the deferral of certain costs associated with the origination of new policies between the respective balance sheet dates, partially offset by the recognition of previously deferred policy acquisition costs.
Reinsurance recoverable was $23.5 million as of March 31, 2023, compared to $21.6 million as of December 31, 2022. The increase was driven by the defermentan increase in ceded losses recoverable under our QSR Transactions.
Prepaid federal income tax was $154.4 million as of certain costs associatedboth March 31, 2023 and December 31, 2022. Prepaid federal income tax represents tax and loss bonds purchased in connection with polices written during the nine months ended September 30, 2017, partially offsetour claimed tax deduction for our statutory contingency reserve position. See Item 1, "Financial Statements - Notes to Condensed Consolidated Financial Statements - Note 8, Income Taxes."
Other assets were $39.1 million as of March 31, 2023, compared to $36.0 million as of December 31, 2022. The increase was primarily driven by increases in our accrued investment income and prepaid expenses.
Unearned premiums were $114.1 million as of March 31, 2023, compared to $123.0 million as of December 31, 2022. The decrease was driven by the amortization of previously deferred acquisition costs and the capitalization of ceding commissions associated with the 2016 QSR Transaction during the period.
Unearned premiums increased $8.4 million to $161.3 million as of September 30, 2017, primarily due to single premium policy origination during the period, offset by the amortization through earnings of existing unearned premiums through earnings in accordance with the expiration of risk on the related single premium policies and the cancellationcancellations of other single premium policies.    
Other assets balance increased $6.3 million to $15.9 million as of September 30, 2017, primarily due to $3.3 million of pending proceeds frompolicies, partially offset by single premium policy originations during the sale of short-term investments in September and a $1.2 million increase in accrued investment income as a result of an increase in the size of our investment portfolio.three months ended March 31, 2023.
Accounts payable and accrued expenses decreased to $22.0were $70.3 million as of September 30, 2017, from $25.3March 31, 2023, compared to $74.6 million atas of December 31, 2016.2022. The balance consistsdecrease was primarily driven by the settlement of expenses to be paid withinpreviously accrued payroll, bonuses and certain contractual payables during the next 12three months ended March 31, 2023, partially offset by an increase in accrued and decreased as a result of lower operating accruals and lower accruedunpaid interest due to a lower interest rate on the Term Loan.Notes which is payable semi-annually in June and December, as well as an increase in reinsurance premiums payable.
Reserve for insurance claims and claim expenses was $108.2 million as of March 31, 2023, compared to $99.8 million as of December 31, 2022. The increase was primarily driven by the establishment of initial reserves on newly defaulted loans during the three months ended March 31, 2023, as well as an increase in the average case reserve held against previously defaulted loans that have aged in their delinquency status. The increase in the reserves for insurance claims and claim expenses was partially offset by the release of a portion of the reserves we established for anticipated claims payments in prior periods in connection with cure activity and ongoing analysis of recent loss development trends. See "Insurance Claims and Claim Expenses," abovefor further details.
Reinsurance funds withheld, was $33.1 million as of September 30, 2017, representing the net ofwhich represents our ceded reinsurance premiums written, less our profit and ceding commission receivables related to the 2016 QSR Transaction. The increase in reinsurance funds withheldTransaction was $2.3 million as of $2.5March 31, 2023, compared to $2.7 million fromas of December 31, 2016, was a result of increased2022. The decrease relates to the continued decline in ceded premiums written.written on single premium policies, due to the end of the reinsurance coverage period for new business under the 2016 QSR Transaction at December 31, 2017. See Item 1, "Financial Statements - Notes to Condensed Consolidated Financial Statements - Note 5, Reinsurance."

Net deferred tax liability was $223.4 million as of March 31, 2023, compared to $193.9 million as of December 31, 2022. The increase was primarily due to an increase in the claimed deductibility of our statutory contingency reserve and the decrease in unrealized losses recorded in other comprehensive income. For further information regarding income taxes and their impact on our results of operations and financial position, see Item 1, "Financial Statements - Notes to Condensed Consolidated Financial Statements - Note 8, Income Taxes."


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The following table summarizes our consolidated cash flows from operating, investing and financing activities:
Consolidated cash flowsFor the nine months ended September 30,Consolidated cash flowsFor the three months ended March 31,
2017 201620232022
Net cash (used in) provided by:(In Thousands)
Net cash provided by (used in):Net cash provided by (used in):(In Thousands)
Operating activities$41,778
 $52,212
Operating activities$89,835 $80,310 
Investing activities(66,553) (63,714)Investing activities(33,751)(21,370)
Financing activities(2,273) (1,293)Financing activities(17,406)(4,680)
Net decrease in cash and cash equivalents$(27,048) $(12,795)
Net increase in cash and cash equivalentsNet increase in cash and cash equivalents$38,678 $54,260 
Net cash provided by operating activities was $41.8$89.8 million for the ninethree months ended September 30, 2017,March 31, 2023, compared to $52.2$80.3 million for the three months ended March 31, 2022. Cash provided by operating activities increased during the three months ended March 31, 2023, primarily due to a decline in the same periodshort-term employee incentive payments and a reduction in 2016. Thetechnology service costs paid under our long-term IT services agreement with TCS, partially offset by a decline in net premiums written tied to a decrease in cash generated from operating activities was primarily caused by increased operating expenses in connection with employee compensationsingle premium policy production and benefits costs and higher claims paid due to an increase in ceded premiums written under our default inventory offset by growth in net premiums written.reinsurance agreements.
Cash used in investing activities for the periods presented was driven bythree months ended March 31, 2023 and 2022 reflects the purchase of fixed and short-term maturities during those periods.with cash provided by operating activities, and the reinvestment of coupon payments, maturities and sale proceeds within our investment portfolio.
The $1 million increase in cashCash used in financing activities was $17.4 million for the ninethree months ended September 30, 2017March 31, 2023, compared to $4.7 million for the same periodthree months ended September 30, 2016, wasMarch 31, 2022. Cash used in financing activities primarily due to an increase in taxes paid relatedrelates to the net share settlementrepurchase of employee equity awards.common stock.

Holding Company
Liquidity and Capital Resources
NMIH serves as the holding company for our insurance subsidiaries and does not have any significant operations of its own. NMIH's principal liquidity demands include funds for:for (i) payment of certain corporate expenses; (ii) payment of certain reimbursable expenses of its insurance subsidiaries; (iii) payment of principal andthe interest related to the Term Loan;Notes and 2021 Revolving Credit Facility; (iv) tax payments to the Internal Revenue Service; (v) capital support for its subsidiaries; (vi) repurchase of its common stock; and (vi)(vii) payment of dividends, if any, on its common stock. NMIH is not subject to any limitations on its ability to pay dividends except those generally applicable to corporations such as NMIH, that are incorporated in Delaware. Delaware corporation law provides that dividends are only payable out of a corporation's surplus or recent net profits (subject to certain limitations).
As of September 30, 2017,March 31, 2023, NMIH had $61.7$65.7 million of cash and investments. NMIH's principal sourcesources of operatingnet cash isare dividends from its subsidiaries and investment incomeincome. NMIC has the capacity to pay aggregate ordinary dividends of $98.0 million to NMIH during the twelve-month period ending December 31, 2023. NMIH also has access to $250 million of undrawn revolving credit capacity under the 2021 Revolving Credit Facility. See Item 1, "Financial Statements - Notes to Condensed Consolidated Financial Statements - Note 4, Debt."
On February 10, 2022, our Board of Directors approved a $125 million share repurchase program (excluding associated costs and applicable taxes) through December 31, 2023, that enables the company to repurchase its common stock. The authorization provides NMIH the flexibility to repurchase stock from time to time in the future could include dividends from NMIC, ifopen market or in privately negotiated transactions, based on market and business conditions, stock price and other factors. During the three months ended March 31, 2023, NMIH repurchased 0.7 million shares of common stock pursuant to a trading plan under Rule 10b-18 of the Exchange Act, at a total cost of $14.9 million, including associated costs and applicable taxes. As of March 31, 2023, $53.7 million of repurchase authority remained available and permitted under law and by the GSEs.program.
NMIH has entered into tax and expense-sharing agreements with its subsidiaries which have been approved by the Wisconsin OCI, butwith such approval may be changedapprovals subject to change or revokedrevocation at any time. WithAmong such agreements, the Wisconsin OCI's approval, NMIH began allocatingOCI has approved the allocation of interest expense on its Term Loanthe Notes and the 2021 Revolving Credit Facility to NMIC into the first quarter of 2017, consistent with the benefitsextent proceeds from such offering and facility are distributed to NMIC received when NMIH down-streamed the loan proceedsor used to repay, redeem or otherwise defease amounts raised by NMIC under prior credit arrangements that have previously been distributed to NMIC.
NMIC's abilityThe Notes mature on June 1, 2025 and bear interest at a rate of 7.375%, payable semi-annually on June 1 and December 1. The 2021 Revolving Credit Facility matures on the earlier of (x) November 29, 2025 or (y) if any existing senior secured notes remain outstanding on such date, February 28, 2025, and accrues interest at a variable rate equal to, at our discretion, (i) a Base Rate (as defined in the 2021 Revolving Credit Facility, subject to a floor of 1.00% per annum) plus a margin of 0.375% to 1.875% per annum or (ii) the Adjusted Term SOFR Rate (as defined in the 2021 Revolving Credit Facility) plus a margin of 1.375% to
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2.875% per annum, with the margin in each of (i) or (ii) based on our applicable corporate credit rating at the time. Borrowings under the 2021 Revolving Credit Facility may be used for general corporate purposes, including to support the growth of our new business production and operations.
Under the 2021 Revolving Credit Facility, NMIH is required to pay dividendsa quarterly commitment fee on the average daily undrawn amount of 0.175% to NMIH is0.525%, based on the applicable corporate credit rating at the time. As of March 31, 2023, the applicable commitment fee was 0.30%.
We are subject to insurance department notice or approval.certain covenants under the 2021 Revolving Credit Facility, including: a maximum debt-to-total capitalization ratio of 35%, a requirement to maintain compliance with the PMIERs financial requirements (subject to any GSE approved waivers), and minimum consolidated net worth and statutory capital requirements (respectively, as defined therein). We were in compliance with all covenants at March 31, 2023.
NMIC and Re One are subject to certain capital and dividend rules and regulations prescribed by jurisdictions in which they are authorized to operate and the GSEs. Under Wisconsin law, NMIC and Re One may pay dividends up to specified levels (i.e.(i.e., "ordinary" dividends) with 30 days' prior notice to the Wisconsin OCI. Dividends in larger amounts, or "extraordinary" dividends, are subject to the Wisconsin OCI's prior approval. Under Wisconsin insurance laws, an extraordinary dividend is defined as any payment or distribution that, together with other dividends and distributions made within the preceding 12twelve months, exceeds the lesser of (i) 10% of the insurer’sinsurer's statutory policyholders' surplus as of the preceding December 31 or (ii) adjusted statutory net income for the 12-monthtwelve-month period ending the preceding December 31.31. NMIC has never paid anythe capacity to pay aggregate ordinary dividends of $98.0 million to NMIH. NMIC reported a statutory net loss forNMIH during the twelve months endedtwelve-month period ending December 31, 2016 and currently cannot pay any dividends2023.
As an approved insurer under PMIERs, NMIC would generally be subject to NMIH without the prior approval of the Wisconsin OCI. Certain other states in which NMIC is licensed also have statutes or regulations that restrictadditional restrictions on its ability to pay dividends.dividends to NMIH if it failed to meet the financial requirements prescribed by PMIERs. Approved insurers that fail to meet the prescribed PMIERs financial requirements are not permitted to pay dividends without prior approval from the GSEs.
NMIH may require liquidity to fund the capital needs of its insurance subsidiaries. NMIC's capital needs depend on many factors including its ability to successfully write new business, establish premium rates at levels sufficient to cover claims and operating costs, access the reinsurance markets and meet minimum required asset thresholds under the PMIERs and minimum state capital requirements. NMIC's capital needs also depend on its decisionrequirements (respectively, as defined therein).
As an approved mortgage insurer and Wisconsin-domiciled carrier, NMIC is required to access the reinsurance markets. NMIH may require liquidity to fund the capital needs of its insurance subsidiaries.


In November 2015, NMIH entered into the Credit Agreement for the Term Loan. On February 10, 2017, NMIH amended the Credit Agreement, (Amendment No. 1) to reduce the interest rate and extend the maturity datesatisfy financial and/or capitalization requirements stipulated by each of the Term Loan from November 10, 2018 to November 10, 2019.GSEs and the Wisconsin OCI. The amended Term Loan bears interest atfinancial requirements stipulated by the Eurodollar Rate, as definedGSEs are outlined in the Credit Agreement andPMIERs. Under the PMIERs, NMIC must maintain available assets that are equal to or exceed a minimum risk-based required asset amount, subject to a 1.00%minimum floor plusof $400 million. At March 31, 2023, NMIC reported $2,481 million available assets against $1,232 million risk-based required assets for a $1,249 million "excess" funding position.
The risk-based required asset amount under PMIERs is determined at an annual margin rate of 6.75%, payable monthly or quarterlyindividual policy-level based on our interest rate election. The Credit Agreement contains various restrictive covenantsthe risk characteristics of each insured loan. Loans with higher risk factors, such as higher LTVs or lower borrower FICO scores, are assessed a higher charge. Non-performing loans that have missed two or more payments are generally assessed a significantly higher charge than performing loans, regardless of the underlying borrower or loan risk profile; however, special consideration is given under PMIERs to loans that are delinquent on homes located in an area declared by FEMA to be a Major Disaster zone eligible for Individual Assistance. In June 2020, the GSEs issued guidance (which was subsequently amended and restated) on the risk-based treatment of loans affected by the COVID-19 pandemic. Under the guidance, non-performing loans that are subject to a forbearance program granted in response to a financial hardship related to COVID-19 will benefit from a permanent 70% risk-based required financial ratiosasset haircut for the duration of the forbearance period and tests (which were not modifiedsubsequent repayment plan or trial modification period.
NMIC's PMIERs minimum risk-based required asset amount is also adjusted for its reinsurance transactions (as approved by Amendment No. 1) that we arethe GSEs). Under NMIC's quota share reinsurance treaties, it receives credit for the PMIERs risk-based required to meet or maintain. These covenants include, but are not limitedasset amount on ceded RIF. As its gross PMIERs risk-based required asset amount on ceded RIF increases, the PMIERS credit for ceded RIF automatically increases as well (in an unlimited amount). Under NMIC's ILN and XOL Transactions, it generally receives credit for the PMIERs risk-based required asset amount on ceded RIF to the following:extent such requirement is within the subordinated coverage (excess of loss detachment threshold) afforded by the transaction.
NMIC is also subject to state regulatory minimum capital requirements based on its RIF. Formulations of this minimum capital vary by state, however, the most common measure allows for a maximum debt-to-total capitalization ratio (as defined therein) of 35%, maximumRIF to statutory capital (commonly referred to as RTC) of 25:1. The RTC calculation does not assess a different charge or impose a different threshold RTC limit based on the underlying risk characteristics of the insured portfolio. Non-performing loans are treated the same as performing loans under the RTC framework. As such, the PMIERs generally imposes a stricter financial requirement than the state RTC standard.
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As of March 31, 2023, NMIC's performing primary RIF, net of reinsurance, was approximately $25.2 billion. NMIC ceded 100% of its pool RIF pursuant to the 2016 QSR Transaction.Based on NMIC's total statutory capital of $2.3 billion (including contingency reserves) as of March 31, 2023, NMIC's RTC ratio was 10.8:1. Re One has no risk in force remaining and no longer reports a RTC ratio.
NMIC's principal sources of 22.0:1.0, minimum liquidity (as defined therein)include (i) premium receipts on its insured portfolio and new business production, (ii) interest income on its investment portfolio and principal repayments on maturities therein, and (iii) existing cash and cash equivalent holdings. At March 31, 2023, NMIC had $2.2 billion of $27.4cash and investments, including $58.3 million of cash and cash equivalents. NMIC's principal liquidity demands include funds for the payment of (i) reimbursable holding company expenses, (ii) premiums ceded under our reinsurance transactions (iii) claims payments, and (iv) taxes as due or otherwise deferred through the purchase of September 30, 2017, compliance withtax and loss bonds. NMIC's cash inflow is generally significantly in excess of its cash outflow in any given period. During the PMIERs financial requirements (subjecttwelve-month period ended March 31, 2023, NMIC generated $295 million of cash flow from operations and received an additional $266 million of cash flow on the maturity, sale and redemption of securities held in its investment portfolio. NMIC is not a party to any GSE-approved waivers)contracts (derivative or otherwise) that require it to post an increasing amount of collateral to any counterparty and NMIC's principal liquidity demands (other than claims payments) generally develop along a scheduled path (i.e., are of a contractually predetermined amount and minimum shareholders' equity requirements. In October 2017, NMIH further amendeddue at a contractually predetermined date). NMIC's only use of cash that develops along an unscheduled path is claims payments. Given the Credit Agreementbreadth and duration of forbearance programs available to remove a covenantborrowers, separate foreclosure moratoriums that required NMIH to maintain liquidity (as defined therein) in an aggregate amount no less than all remaining interest payments due underremain available, and the Term Loan, while retaining the requirement to maintain minimum liquidity (as defined therein) in an amount no less than all remaining principle amortization payments due under the Term Loan, estimated to be $3 million asgeneral duration of the datedefault to foreclosure to claim cycle, we do not expect NMIC to use a meaningful amount of this report (not includingcash to settle claims in the amount due at the maturity date).near-term.
Debt and Financial Strength Ratings
NMIC's financial strength is rated "Baa1" by Moody's and "BBB" by S&P. NMIH’s Notes are rated “Ba1” by Moody’s and its long-term counter-party credit profile is rated “BB” by S&P. The outlook for all ratings provided by Moody's and S&P’s is stable.
Consolidated Investment Portfolio
OurThe primary objectives with respect toof our investment portfolioactivity are to preserve capital and generate investment income and preserve capital, while maintaining sufficient liquidity to cover our operating needs. We aim to achieve diversification as toby type, quality, maturity, industry, and issuer that maximizes the after-tax return on investments.industry. We have adopted an investment policy that defines, among other things, eligible and ineligible investments,investments; concentration limits for asset types, industry sectors, single issuers, and certain credit ratings,ratings; and benchmarks for asset duration.
Substantially all of ourOur investment portfolio is held incomprised entirely of fixed maturity instruments. As of September 30, 2017,March 31, 2023, the fair value of our investment portfolio was $692.7 million. We also had$2.2 billion and we held an additional $20.7$83.1 million of cash and equivalents as of September 30, 2017.cash equivalents. Pre-tax book yield on the investment portfolio for the ninethree months ended September 30, 2017March 31, 2023 was 2.3%2.5%. The bookBook yield is calculated as period-to-date net investment income divided by the average amortized cost of the investment portfolio. YieldThe yield on theour investment portfolio is likely to change over time based on movements in interest rates, credit spreads, the duration or mix of our investment portfolioholdings and other factors.
The following tables present a breakdown of our investment portfolio and cash and cash equivalents by investment type and credit rating:
Percentage of portfolio's fair valueMarch 31, 2023December 31, 2022
Corporate debt securities60 %60 %
Municipal debt securities25 23 
Cash, cash equivalents, and short-term investments8 10 
U.S. Treasury securities and obligations of U.S. government agencies4 4 
Asset-backed securities3 3 
Total100 %100 %
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Percentage of portfolio's fair valueSeptember 30, 2017 December 31, 2016
1.Corporate debt securities57% 52%
2.U.S. treasury securities and obligations of U.S. government agencies9
 9
3.Asset-backed securities14
 17
4.Cash, cash equivalents, and short-term investments7
 16
5.Municipal debt securities13
 6
 Total100% 100%
Investment portfolio ratings at fair value (1)
March 31, 2023December 31, 2022
AAA13 %19 %
AA(2)
27 25 
A(2)
46 41 
BBB(2)
14 15 
BB (3)
— — 
Total100 %100 %
The ratings(1)    Excluding certain operating cash accounts.
(2)    Includes +/– ratings.
(3)    We held one security with a BB+ rating at March 31, 2023 and December 31, 2022, which is not identifiable in the table due to rounding.

All of our investment portfolio were:
Investment portfolio ratings at fair valueSeptember 30, 2017 December 31, 2016
AAA19% 24%
AA(1)
21
 19
A(1)
45
 44
BBB(1)
15
 13
Total100% 100%
(1) Include +/– ratings.
The ratings aboveinvestments are providedrated by one or more of: Moody's, S&P and Fitch Ratings.nationally recognized statistical rating organizations. If three or more ratings are available, we assign the middle rating for classification purposes, otherwise we assign the lowest rating.

Investment Securities - Allowance for credit losses

Other Items
Off-Balance Sheet Arrangements and Contractual Obligations
We had no material off-balance sheet arrangementsdid not recognize an allowance for credit loss for any security in the investment portfolio as of September 30, 2017. In connection withMarch 31, 2023 or December 31, 2022, and we did not record any provision for credit loss for investment securities during the 2017 ILN Transaction, we have certain future contractual commitments to Oaktown Re,three months ended March 31, 2023 or 2022.
As of March 31, 2023, the investment portfolio had gross unrealized losses of $215.8 million, of which $209.2 million had been in an unrealized loss position for a special purpose VIE that is not consolidatedperiod of twelve months or longer. As of December 31, 2022, the investment portfolio had gross unrealized losses of $254.7 million, of which $218.5 million had been in our financial results. See Item 1, "Financial Statements - Notes to Condensed Consolidated Financial Statements - Note 1, Organization and Basisan unrealized loss position for a period of Presentation - Variable interest entity" and "Note 5, Reinsurance."twelve months or longer.
There are no material changes outside the ordinary course of businessThe decrease in the contractual obligations specifiedaggregate size of the unrealized loss position as of March 31, 2023, was primarily driven by fluctuations in interest rates and, to a lesser extent, movements in credit spreads since December 31, 2022. We evaluated the securities in an unrealized loss position as of March 31, 2023, assessing their credit ratings as well as any adverse conditions specifically related to the security. Based upon our 2016 10-K.estimate of the amount and timing of cash flows to be collected over the remaining life of each instrument, we believe the unrealized losses as of March 31, 2023 are not indicative of the ultimate collectability of the current amortized cost of the securities.
Critical Accounting Estimates
We use accounting principles and methods that conform to GAAP. Where GAAP specifically excludes mortgage insurance we follow general industry practices. We are required to apply significant judgment and make material estimates in the preparation of our financial statements and with regard to various accounting, reporting and disclosure matters. Assumptions and estimates are required to apply these principles where actual measurement is not possible or practical. On an ongoing basis, we evaluate our estimates and assumptions. Our actual results may differ from these estimates under different assumptions or conditions.
We believe that the assumptions and estimates associated with revenue recognition, fair value measurements, our investment portfolio, deferred policy acquisition costs, premium deficiency reserves, income taxes,and reserves for insurance claims and claimsclaim expenses warrants and share-based compensation have the greatest potential impact on our consolidated financial statements. Therefore, we consider these to be our critical accounting estimates. There have not been noany material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates described in our 20162022 10-K.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk
We own and manage a large investment portfolio of various holdings, types and maturities. NMIH's principal source of operating cash is investment income. The assets within the investment portfolio are exposed to the same factors that affect overall financial market performance.
We manage market risk via a defined investment policy implemented by our treasury function with oversight from our Board of Director'sBoard's Risk Committee. Important drivers of our market risk exposure monitored and managed by us include but are not limited to:
•Changes to the level of interest rates. Increasing interest rates may reduce the value of certain fixed-rate bonds held in the investment portfolio. Higher rates may cause variable rate assets to generate additional income. Decreasing rates will have the reverse impact. Significant changes in interest rates can also affect persistency and claim rates of our insurance portfolio, and as a result we may determine that our investment portfolio needs to be restructured to better align it with future liabilities and claim payments. Such restructuring may cause investments to be liquidated when market conditions are adverse. Additionally, the changes in Eurodollar based interest rates affect the interest expense related to the Company's debt.
•Changes to the term structure of interest rates. Rising or falling rates typically change by different amounts along the yield curve. These changes may have unforeseen impacts on the value of certain assets.
•Market volatility/changes in the real or perceived credit quality of investments. Deterioration in the quality of investments, identified through changes to our own or third party (e.g.third-party (e.g., rating agency) assessments, will reduce the value and potentially the liquidity of investments.
•Concentration Risk. If the investment portfolio is highly concentrated in one asset, or in multiple assets whose values are highly correlated, the value of the total portfolio may be greatly affected by the change in value of just one asset or a group of highly correlated assets.
•Prepayment Risk. Bonds may have call provisions that permit debtors to repay prior to maturity when it is to their advantage. This typically occurs when rates fall below the interest rate of the debt.
The carrying value of our investment portfolio as of September 30, 2017March 31, 2023 and December 31, 20162022 was $693 million$2.2 billion and $629 million,$2.1 billion, respectively, all of which 100% waswere invested in fixed maturity securities. The primary market risk to our investment portfolio is interest rate risk associated with investments in fixed maturity securities. We mitigate the market risk associated with our fixed maturity securities portfolio by matching the duration of our fixed maturity securities with the expected duration of the liabilities that those securities are intended to support.
As of September 30, 2017,March 31, 2023, the duration of our fixed income portfolio, including cash and cash equivalents, was 3.953.90 years, which means that an instantaneous parallel shift (movement up or down) in the yield curve of 100 basis points would result in a change of 3.95%3.90% in fair value of our fixed income portfolio. Excluding cash, our fixed income portfolio duration was 4.134.00 years, which means that an instantaneous parallel shift (movement up or down) in the yield curve of 100 basis points would result in a change of 4.13%4.00% in fair value of our fixed income portfolio.
We are also subject to market risk related to our Term Loanthe 2021 Revolving Credit Facility and 2017the ILN Transaction.Transactions. As discussed in Item 1, "Financial Statements - Notes to Condensed Consolidated Financial Statements - Note 4, Term Loan,Debt" the Term Loan2021 Revolving Credit Facility bears interest at a variable rate and, as a result, increases in market interest rates would generally result in increased interest expense on ourany outstanding principal.drawn balances.
The risk premium amounts under the 2017 ILN TransactionTransactions are calculated by multiplying the outstanding reinsurance coverage amount at the beginning of any payment period by a coupon rate, which is the sum of 1-monthone-month LIBOR or SOFR, as applicable, and a risk margin, and then subtracting actual investment income earned on the trust balance during that payment period. An increase in 1-monthone-month LIBOR ratesor SOFR, as applicable, would generally increase the risk premium payments, while an increase to money market rates, which directly affect investment income earned on the trust balance, would generally decrease them. Although we expect the two rates to move in tandem, to the extent they do not, it could increase or decrease the risk premium payments that otherwise would be due.

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Item 4. Controls and Procedures
Disclosure Controls and Procedures
We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, including our PrincipalChief Executive Officer and PrincipalChief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Our management, including our PrincipalChief Executive Officer and PrincipalChief Financial Officer, conducted an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) as of September 30, 2017,March 31, 2023, pursuant to Rule 13a-15(e) under the Exchange Act. Management applied its judgment in assessing the costs and benefits of such controls and procedures, which by their nature, can provide only reasonable assurance regarding management's control objectives. Management does not expect that our disclosure controls and procedures will prevent or detect all errors and fraud. A control system, irrespective of how well it is designed and operated, can only provide reasonable assurance and cannot guarantee that it will succeed in its stated objectives.
Based upon that evaluation, our PrincipalChief Executive Officer and PrincipalChief Financial Officer concluded that, as of September 30, 2017,March 31, 2023, our disclosure controls and procedures were not effective due to provide reasonable assurance that the existence of a material weaknessinformation required to be disclosed by us in the design and operating effectiveness of an internal control related to reconciliation support used to validate our deferred tax inventory. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected in a timely basis. As described in Item 1, "Financial Statements - Notes to Consolidated Financial Statements - Note 1, Organization and Basis of Presentation - Immaterial Correction of Prior Period Amounts," above, we detected a $1.8 million error in the deferred tax balance that was immaterial to the 2016 financial statements. Notwithstanding the material weakness identified, our management has concluded that the consolidated financial statements included in this Form 10-Q fairly present, in all material respects, our financial condition, results of operations and cash flows at and for the periods presented. In addition, there were no material errors in our financial results or balances identified as a result of this control deficiency, and accordingly, amendment of our 2016 Form 10-K is not required.
We enhanced existing controls and designed and implemented new controls applicable to our deferred tax accounting, including those related to stock compensation, to ensure that our DTA is accurately calculated and appropriately reflected in our financial statements and reports we file withor submit under the SEC. We believe these actions are sufficient to remediateExchange Act is recorded, processed, summarized, and reported within the identified material weaknesstime periods specified in the SEC's rules and strengthen our internal control over financial reporting; however, there can be no guarantee that such remediation will be sufficient. We will continue to monitor the effectiveness of our controls and will make any further changes management determines appropriate.forms.
Internal Control Over Financial Reporting
Other than noted above, there wereThere was no changeschange in our internal control over financial reporting that occurred during the period covered by this report that havehas materially affected, or areis reasonably likely to materially affect, our internal control over financial reporting.



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PART II
Item 1. Legal Proceedings
Certain lawsuits and claims arising in the ordinary course of business may be filed or pending against us or our affiliates from time to time. In accordance with applicable accounting guidance, we establish accruals for all lawsuits, claims and expected settlements when we believe it is probable that a loss has been incurred and the amount of the loss is reasonably estimable. When a loss contingency is not both probable and estimable, we do not establish an accrual. Any such loss estimates are inherently uncertain, based on currently available information and are subject to management’smanagement's judgment and various assumptions. Due to the inherent subjectivity of these estimates and unpredictability of outcomes of legal proceedings, any amounts accrued may not represent the ultimate resolution of such matters.
To the extent we believe any potential loss relating to such lawsuits and claims may have a material impact on our liquidity, consolidated financial position, results of operations, and/or our business as a whole and is reasonably possible but not probable, we will disclose information relating to any such potential loss, whether in excess of any established accruals or where there is no established accrual. We will also disclose information relating to any material potential loss that is probable but not reasonably estimable. Where reasonably practicable, we will provide an estimate of loss or range of potential loss. No disclosures are generally made for any loss contingencies that are deemed to be remote.
We have been named as a defendant in one litigation case that involves refunds of mortgage insurance premiums under the Homeowners Protection Act. We currently are unable to assess the outcome of this litigation nor whether this litigation may become material over time. Based upon information available to us and our review of lawsuits and claims filed or pending against us to date, we have not recognized a material accrual liability for these matters, nor do we currently expect it is reasonably possible that these matters will result in a material liability to the Company. However, the outcome of litigation and other legal and regulatory matters is inherently uncertain, and it is possible that one or more of such matters currently pending or threatened could have an unanticipated material adverse effect on our liquidity, consolidated financial position, results of operations, and/or our business as a whole, in the future.
Item 1A. Risk Factors
Risk factors that affect our business and financial results are discussed in Part I, Item 1A of our 20162022 10-K. As of the date of this report, other than as included below, we are not aware of any material changes in our risk factors from the risk factors disclosed in our 20162022 10-K. You should carefully consider the risks and uncertainties described herein and in our 20162022 10-K, which have the potential to affect our business, financial condition, results of operations, cash flows or prospects in a material and adverse manner. The risks described herein and in our 20162022 10-K are not the only risks we face, as there are additional risks and uncertainties not currently known to us or that we currently deem to be immaterial which may in the future adversely affect our business, financial condition and/or operating results.

The recent SEC proposal on conflicted transactions could materially adversely affect our business, results of operations and financial condition.

The SEC issued a proposed rule in January 2023 that, among other things, prohibits certain participants in an asset-backed security, including a synthetic asset-backed security (synthetic ABS), from engaging in transactions that would involve or result in any material conflict of interest with respect to any investor in a transaction arising out of such activity (conflicted transaction). The definition of conflicted transactions is broadly defined and synthetic ABS could be broadly interpreted to include ILN Transactions. If this SEC proposal is adopted as proposed, it could affect or prohibit our ability to enter into credit risk transfer transactions using ILN Transactions. We are still assessing the potential impact of the rule on our credit risk transfer transactions if the rule is adopted as proposed.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Equity Securities
The following table provides information about purchases of NMI Holdings, Inc. common stock by us during the three months ended March 31, 2023.
($ In Thousands, except for per share data)Total Number of Shares PurchasedAverage Price Paid per Share
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)
Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Program (1)
Period:
1/1/2023 to 1/31/2023— $— — $68,483 
2/1/2023 to 2/28/2023— — — 68,483 
3/1/2023 to 3/31/2023666,420 22.19 666,420 53,697 
Total666,420 $22.19 666,420 
(1)    On February 10, 2022, our Board of Directors approved a $125 million share repurchase program effective through December 31, 2023, excluding associated costs and applicable taxes. As of March 31, 2023, $53.7 million of repurchase authority remained available under the program. See Part I, Item 1, "Financial Statements - Notes to Condensed Consolidated Financial Statements - Note 9, Shareholder's Equity," for additional information.
54

Item 6. Exhibits
An index to exhibits has been filed as part of this report and is incorporated herein by reference.



SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

NMI HOLDINGS, INC.
November 1, 2017


By: /s/ Adam Pollitzer
     Name: Adam Pollitzer
     Title: Chief Financial Officer and Duly Authorized Signatory



EXHIBIT INDEX
Exhibit NumberDescription
2.13.1
Stock Purchase Agreement, dated November 30, 2011, between NMI Holdings, Inc. and MAC Financial Ltd. (incorporated herein by reference to Exhibit 2.1 to our Form S-1 Registration Statement (Registration No. 333-191635), filed on October 9, 2013)
2.2
Amendment to Stock Purchase Agreement, dated April 6, 2012, between NMI Holdings, Inc. and MAC Financial Ltd. (incorporated herein by reference to Exhibit 2.2 to our Form S-1 Registration Statement (Registration No. 333-191635), filed on October 9, 2013)
3.1
Second Amended and Restated Certificate of Incorporation (incorporated herein by reference to Exhibit 3.1 to our Form S-1 Registration Statement (Registration No. 333-191635), filed on October 9, 2013)
3.2
ThirdFourth Amended and Restated By-Laws (incorporated herein by reference to Exhibit 3.13.2 to our Form 8-K, filed on December 9, 2014)November 10, 2022)
4.1
Specimen Class A common stock certificateIndenture, dated as of June 19, 2020, among NMI Holdings, Inc., NMI Services, Inc. as the Initial Guarantor, and the Bank of New York Mellon Trust Company, N.A. as Trustee and Notes Collateral Agent(incorporated herein by reference to Exhibit 4.1 to our Form 8-K, filed on June 19, 2020)
4.2
Description of Securities (incorporated by reference to Exhibit 4.8 to our Form 10-8, filed on February 16, 2022)
10.1 ~
NMI Holdings, Inc. 2012 Stock Incentive Plan (incorporated herein by reference to Exhibit 4.110.1 to our Form S-1 Registration Statement (Registration No. 333-191635), filed on October 9, 2013)
4.210.2 ~
Registration Rights Agreement between NMI Holdings, Inc. and FBR Capital Markets & Co., dated April 24, 2012 (incorporated herein by reference to Exhibit 4.2 to our Form S-1 Registration Statement (Registration No. 333-191635), filed on October 9, 2013)
4.3
Registration Rights Agreement by and between MAC Financial Ltd. and NMI Holdings, Inc., dated April 24, 2012 (incorporated herein by reference to Exhibit 4.3 to our Form S-1 Registration Statement (Registration No. 333-191635), filed on October 9, 2013)
4.4
Registration Rights Agreement between FBR & Co., FBR Capital Markets LT, Inc., FBR Capital Markets & Co., FBR Capital Markets PT, Inc. and NMI Holdings, Inc., dated April 24, 2012 (incorporated herein by reference to Exhibit 4.4 to our Form S-1 Registration Statement (Registration No. 333-191635), filed on October 9, 2013)
4.5
Warrant No. 1 to Purchase Common Stock of NMI Holdings, Inc. issued to FBR Capital Markets & Co., dated June 13, 2013 (incorporated herein by reference to Exhibit 4.5 to our Form S-1 Registration Statement (Registration No. 333-191635), filed on October 9, 2013)
4.6
Form of Warrant to Purchase Common Stock of NMI Holdings, Inc. issued to former stockholders of MAC Financial Ltd. (incorporated herein by reference to Exhibit 4.6 to our Form S-1 Registration Statement (Registration No. 333-191635), filed on October 9, 2013)
10.1 ~
NMI Holdings Inc. 2012 Stock Incentive Plan (incorporated herein by reference to Exhibit 10.1 to our Form S-1 Registration Statement (registration No. 333-191635), filed on October 9, 2013)
10.2 ~
Form of NMI Holdings, Inc. 2012 Stock Incentive Plan Restricted Stock Unit Award Agreement for Chief Executive Officer(For Management) (Other than CEO and Chief Financial Officer (incorporated herein by reference to Exhibit 10.2 to our Form S-1 Registration Statement (Registration No. 333-191635), filed on October 9, 2013)
10.3 ~
Form of NMI Holdings, Inc. 2012 Stock Incentive Plan Restricted Stock Unit Award Agreement for ManagementCFO) (incorporated herein by reference to Exhibit 10.3 to our Form S-1 Registration Statement (Registration No. 333-191635), filed on October 9, 2013)
10.410.3 ~
Form of NMI Holdings, Inc. 2012 Stock Incentive Plan Restricted Stock Unit Award Agreement for Directors (incorporated herein by reference to Exhibit 10.4 to our Form S-1 Registration Statement (Registration No. 333-191635), filed on October 9, 2013)
10.5 ~
Form of NMI Holdings, Inc. 2012 Stock Incentive Plan Nonqualified Stock Option Award Agreement for Chief Executive Officer(For CEO and Chief Financial OfficerCFO) (incorporated herein by reference to Exhibit 10.5 to our Form S-1 Registration Statement (Registration No. 333-191635), filed on October 9, 2013)
10.610.4 ~
Form of NMI Holdings, Inc. 2012 Stock Incentive Plan Nonqualified Stock Option Award Agreement for Management(For Management) (incorporated herein by reference to Exhibit 10.6 to our Form S-1 Registration Statement (Registration No. 333-191635), filed on October 9, 2013)
10.710.5 ~
Form of NMI Holdings, Inc. 2012 Stock Incentive Plan Nonqualified Stock Option Award Agreement for Directors(For Non-Employee Directors)  (incorporated(incorporated herein by reference to Exhibit 10.7 to our Form S-1 Registration Statement (Registration No. 333-191635), filed on October 9, 2013)
10.810.6 ~
10.910.7 ~
Form of NMI Holdings, Inc. 2012 Stock Incentive Plan Nonqualified Stock Option Award Agreement for Employees (For Employees) (incorporated herein by reference to Exhibit 10.9 to our Form 10-K, filed on February 17, 2017)
10.8 ~
Form of NMI Holdings, Inc. 2012 Stock Incentive Plan Restricted Stock Unit Award Agreement (For Independent Directors) (incorporated herein by reference to Exhibit 10.30 to our Form 10-Q, filed on May 2, 2019)
10.9 ~
Form of NMI Holdings, Inc. 2012 Stock Incentive Plan Restricted Stock Unit Award Agreement (For Employees) (incorporated herein by reference to Exhibit 10.31 to our Form 10-Q, filed on May 2, 2019)
10.10 ~
Form of NMI Holdings, Inc. 2012 Stock Incentive Plan Nonqualified Stock Option Agreement (For Employees) (incorporated herein by reference to Exhibit 10.32 to our Form 10-Q, filed on May 2, 2019)
10.11 ~
NMI Holdings, Inc. Amended and Restated Employment2014 Omnibus Incentive Plan (incorporated herein by reference to Appendix A to our 2022 Annual Proxy Statement, filed on March 29, 2022)
10.12 ~
Form of NMI Holdings, Inc. Amended and Restated 2014 Omnibus Incentive Plan Restricted Stock Unit Award Agreement (For CEO) (incorporated herein by reference to Exhibit 10.19 to our Form 10-Q filed on August 1, 2017)
10.13 ~
Form of NMI Holdings, Inc. Amended and Restated 2014 Omnibus Incentive Plan Restricted Stock Unit Award Agreement (For Executive Officers) (incorporated herein by reference to Exhibit 10.20 to our Form 10-Q filed on August 1, 2017)
10.14 ~
Form of NMI Holdings, Inc. Amended and Restated 2014 Omnibus Incentive Plan Restricted Stock Unit Award Agreement (For Employees) (incorporated herein by reference to Exhibit 10.21 to our Form 10-Q filed on August 1, 2017)
10.15 ~
Form of NMI Holdings, Inc. Amended and Restated 2014 Omnibus Incentive Plan Restricted Stock Unit Award Agreement (For Independent Directors) (incorporated herein by reference to Exhibit 10.22 to our Form 10-Q filed on August 1, 2017)
10.16 ~
Form of NMI Holdings, Inc. Amended and Restated 2014 Omnibus Incentive Plan Nonqualified Stock Option Award Agreement (For CEO) (incorporated herein by reference to Exhibit 10.23 to our Form 10-Q filed on August 1, 2017)
55

10.17 ~
Form of NMI Holdings, Inc. Amended and Restated 2014 Omnibus Incentive Plan Nonqualified Stock Option Award Agreement (For Executive Officers and Employees) (incorporated herein by reference to Exhibit 10.24 to our Form 10-Q filed on August 1, 2017)
10.18 ~
Form of NMI Holdings, Inc. Amended and Restated 2014 Omnibus Incentive Plan Restricted Stock Unit Award Agreement (Performance Based) (incorporated herein by reference to Exhibit 10.38 to our Form 10-Q, filed on May 7, 2020)
10.19 ~
Form of NMI Holdings, Inc. Amended and Restated 2014 Omnibus Incentive Plan Restricted Stock Unit Award Agreement (For Independent Directors) (incorporated herein by reference to Exhibit 10.33 to our Form 10-Q, filed on May 2, 2019)
10.20 ~
Form of NMI Holdings, Inc. Amended and Restated 2014 Omnibus Incentive Plan Restricted Stock Unit Award Agreement (For Employees) (incorporated herein by reference to Exhibit 10.34 to our Form 10-Q, filed on May 2, 2019)
10.21 ~
Form of NMI Holdings, Inc. Amended and Restated 2014 Omnibus Incentive Plan Nonqualified Stock Option Agreement (For Employees) (incorporated herein by reference to Exhibit 10.35 to our Form 10-Q, filed on May 2, 2019)
10.22 ~
Form of Indemnification Agreement between NMI Holdings, Inc. and Bradley M. Shuster, dated December 23, 2015its directors and certain executive officers (incorporated herein by reference to Exhibit 10.1 to our Form 8-K, filed on December 29, 2015)November 25, 2014)

i


10.23 ~
10.11 ~
Offer Letter by and between NMI Holdings, Inc. and Glenn Farrell, effective December 4, 2014Severance Benefit Plan (incorporated herein by reference to Exhibit 10.1 to our Form 8-K, filed on December 9, 2014)February 17, 2016)
10.1210.24 ~
NMI Holdings, Inc. Amended and Restated Change in Control Severance Benefit Plan (incorporated herein by reference to Exhibit 10.30 to our Form 10-Q, filed on October 30, 2018)
10.25 ~
NMI Holdings, Inc. Clawback Policy (incorporated herein by reference to Exhibit 10.2 to our Form 8-K, filed on February 23, 2017)
10.26 ~
Offer Letter by and between NMI Holdings, Inc. and William Leatherberry, dated July 11, 2014 (incorporated herein by reference to Exhibit 10.10 to our Form 10-Q, filed on April 28, 2016)
10.1310.27 ~
Employment Letter by and between NMI Holdings, Inc. and Bradley M. Shuster, effective as of January 1, 2019 (incorporated herein by reference to Exhibit 10.1 to our Form 8-K, filed on December 28, 2018)
10.28 ~
Offer Letter by and between NMI Holdings, Inc. and Adam Pollitzer, dated February 1, 2017September 9, 2021 (incorporated herein by reference to Exhibit 10.1 to our Form 8-K, filed on February 3, 2017)September 9, 2021)
10.1410.29 ~
Form of Indemnification AgreementOffer letter by and between NMI Holdings, Inc. and its directors and certain executive officersRavi Mallela, dated December 20, 2021 (incorporated herein by reference to Exhibit 10.1 to our Form 8-K, filed on November 25, 2014)December 21, 2021)
10.1510.30 +
Commitment Letter dated July 12, 2013 for Bulk Fannie Mae-Paid Loss-on-Sale Mortgage Insurance on the Portfolio of approximately $5.46 billion Purchased by Fannie Mae and Identified by Fannie Mae as Deal No. 2013 MIRT 01 and by the Company as Policy No. P-0001-01 (incorporated herein by reference to Exhibit 10.14 to our Form S-1 Registration Statement (Registration No. 333-191635), filed on October 9, 2013)
10.1610.31
Amended and Restated Credit Agreement, dated as of November 10, 2015, between NMI Holdings, Inc.,29, 2021, by and among the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (incorporated herein by reference to Exhibit 4.1 to our Form 8-K, filed on November 10, 2015)
10.17
Amendment No. 1, dated February 10, 2017, to the Credit Agreement dated November 10, 2015, between NMI Holdings, Inc.,Company, the lender parties thereto and JPMorgan Chase Bank, N.A., as administrative agent (incorporated herein by reference to Exhibit 10.1 to our Form 8-K filed on February 10, 2017)November 30, 2021)
10.1821.1
Amendment No. 2, dated October 25, 2017, to the Credit Agreement dated November 10, 2015, between NMI Holdings, Inc., the lender parties thereto and JPMorgan Chase Bank, N.A., as administrative agent (incorporated herein by reference to Exhibit 10.1 to our Form 8-K, filed on October 26, 2017)
10.19 ~
NMI Holdings, Inc. Amended and Restated 2014 Omnibus Incentive Plan (incorporated herein by reference to Appendix A to our 2017 Annual Proxy Statement, filed on March 30, 2017)
10.20 ~

Form of NMI Holdings, Inc. Amended and Restated 2014 Omnibus Incentive Plan Restricted Stock Unit Award Agreement for Chief Executive Officer (incorporated herein by reference to Exhibit 10.19 to our Form 10-Q filed on August 1, 2017)
10.21 ~
Form of NMI Holdings, Inc. Amended and Restated 2014 Omnibus Incentive Plan Restricted Stock Unit Award Agreement for Executive Officers (incorporated herein by reference to Exhibit 10.20 to our Form 10-Q filed on August 1, 2017)
10.22 ~
Form of NMI Holdings, Inc. Amended and Restated 2014 Omnibus Incentive Plan Restricted Stock Unit Award Agreement for Employees (incorporated herein by reference to Exhibit 10.21 to our Form 10-Q filed on August 1, 2017)
10.23 ~

Form of NMI Holdings, Inc. Amended and Restated 2014 Omnibus Incentive Plan Restricted Stock Unit Award Agreement for Independent Directors (incorporated herein by reference to Exhibit 10.22 to our Form 10-Q filed on August 1, 2017)
10.24 ~
Form of NMI Holdings, Inc. Amended and Restated 2014 Omnibus Incentive Plan Nonqualified Stock Option Award Agreement for Chief Executive Officer (incorporated herein by reference to Exhibit 10.23 to our Form 10-Q filed on August 1, 2017)
10.25 ~

Form of NMI Holdings, Inc. Amended and Restated 2014 Omnibus Incentive Plan Nonqualified Stock Option Award Agreement for Executive Officers and Employees (incorporated herein by reference to Exhibit 10.24 to our Form 10-Q filed on August 1, 2017)
10.26 ~
Form of NMI Holdings, Inc. 2014 Omnibus Incentive Plan Phantom Unit Award Agreement for Independent Directors (incorporated herein by reference to Exhibit 10.21 to our Form 10-Q, filed on August 5, 2015)
10.27 ~

Form of NMI Holdings, Inc. 2014 Omnibus Incentive Plan Performance Based Restricted Stock Unit Award Agreement for Chief Executive Officer (incorporated herein by reference to Exhibit 10.26 to our Form 10-K, filed on February 17, 2017)
10.28 ~
NMI Holdings, Inc. Severance Benefit Plan (incorporated herein by reference to Exhibit 10.1 to our Form 8-K, filed on February 17, 2016)
10.29 ~
NMI Holdings, Inc. Change in Control Severance Benefit Plan (incorporated herein by reference to Exhibit 10.1 to our Form 8-K, filed on February 23, 2017)
10.30 ~
NMI Holdings, Inc. Clawback Policy (incorporated herein by reference to Exhibit 10.2 to our Form 8-K, filed on February 23, 2017)
10.31 ~
Separation Agreement between NMI Holdings, Inc. and Glenn Farrell effective July 31, 2017 (incorporated herein by reference to Exhibit 10.1 to our Form 8-K, filed on August 1, 2017)
21.1
Subsidiaries of NMI Holdings, Inc. (incorporated herein by reference to Exhibit 21.1 to our Form 10-Q, filed on October 30, 2015)
31.122.1
Guaranteed Securities by Subsidiary Guarantor (incorporated herein by reference to Exhibit 22.1 to our Form 10-K, filed on February 16, 2022)
31.1
Principal Executive Officer's Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2
Principal Financial Officer's Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

ii


32.1 #
32.1 #
Certifications of CEO and CFO Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101 *
The following financial information from NMI Holdings, Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017March 31, 2023 (Unaudited) formatted in XBRL (eXtensible Business Reporting Language):
(i) Condensed Consolidated Balance Sheets as of September 30, 2017March 31, 2023 (Unaudited) and December 31, 2016
2022;
(ii) Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and nine months ended September 30, 2017March 31, 2023 and 2016
2022 (Unaudited);
(iii) Condensed Consolidated Statements of Changes in Shareholders' Equity for the ninethree months ended September 30, 2017March 31, 2023 and the year ended December 31, 2016
2022 (Unaudited);
56

(iv) Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2017March 31, 2023 and 2016,2022 (Unaudited); and
(v) Notes to Condensed Consolidated Financial Statements. The instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.
104The cover page from NMI Holdings, Inc.'s Quarterly Report on Form 10-Q for the quarter ended March 31, 2023 (formatted as Inline XBRL and contained in Exhibit 101).
~Indicates a management contract or compensatory plan or contract.
+Confidential treatment granted as to certain portions, which portions have been filed separately with the SEC.
#
In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release No. 34-47986, the certifications furnished in Exhibit 32 hereto are deemed to accompany this Form 10-Q and will not be deemed "filed" for purposes of Section 18 of the Exchange Act or deemed to be incorporated by reference into any filing under the Exchange Act or the Securities Act except to the extent that the registrant specifically incorporates it by reference.

57

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

NMI HOLDINGS, INC.
Date: May 2, 2023
By: /s/ Ravi Mallela                 
*In accordance with Rule 406T of Regulation S-T, the information furnished in these exhibits will not be deemed "filed" for purposes of Section 18 of the Exchange Act.  Such exhibits will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act except to the extent that the registrant specifically incorporates it by reference.Name: Ravi Mallela
Title: Chief Financial Officer and Duly Authorized Signatory




iii
58