NMI Holdings, Inc. Reports Second Quarter 2017 Financial Results

EMERYVILLE, CA--(Marketwired - August 01, 2017) - NMI Holdings, Inc. (NASDAQ: NMIH) today reported net income of $6.0 million, or $0.10 per share, for the second quarter ended June 30, 2017. Results for the quarter include previously disclosed fees and expenses of approximately $3.1 million related to the May 2017 issuance of Insurance-Linked Notes (ILN). The company reported net income of $2.0 million, or $0.03 per share, in the second quarter of 2016.

Bradley Shuster, chairman and CEO of National MI, said, "In the second quarter, National MI again delivered solid financial results, including record pre-tax income, and continued to advance the key metrics that will drive realization of our mid-teens return objectives. We made significant strides in customer development, activating 36 new customers in the second quarter and 73 new customers for the year-to-date. We also continued to build a high-quality portfolio of insurance-in-force at a growth rate that leads our industry, while maintaining our focus on prudently and proactively managing risk, expenses, and capital."

• As of June 30, 2017, the company had primary insurance-in-force of $38.6 billion, up 11% from $34.8 billion at the prior quarter end and up 64% over $23.6 billion as of June 30, 2016.
• Premiums earned for the quarter were $37.9 million, including $3.8 million attributable to cancellation of single premium policies, which compares with $33.2 million, including $2.5 million related to cancellations, in the prior quarter. Premiums earned in the second quarter of 2017 were up 46% over premium revenue of $26.0 million in the same quarter a year ago, which included $3.5 million related to cancellations.
• NIW mix was 81% monthly premium product, which compares with 81% in the prior quarter and 63% in the second quarter of 2016.
• Total underwriting and operating expenses in the second quarter were $28.0 million and include approximately $3.1 million of transaction costs related to the previously disclosed ILN issuance. This compares with total underwriting and operating expenses of $26.0 million, including financing-related transaction costs of $1.6 million in the prior quarter, and $23.2 million in the same quarter a year ago.
• Claims expense for the quarter was $1.4 million, resulting in a loss ratio of 3.6%.
• At quarter-end, cash and investments were $694 million, including $57 million at the holding company, and book equity was $495 million, equal to $8.27 per share.
• At quarter-end, the company had total PMIERs available assets of $485 million, which compares with risk- based required assets under PMIERs of $298 million.

				Quarter		Quarter		Quarter
				Ended		Ended		Ended		Change		Change
				6/30/2017		3/31/2017		6/30/2016		Q/Q		Y/Y
Primary Insurance-in-Force ($billions)				38.63		34.78		23.62		11%		64%
New Insurance Written - NIW ($billions)
		Monthly premium		4.10		2.89		3.70		42%		11%
		Single premium		0.94		0.67		2.14		40%		-56%
		Total		5.04		3.56		5.84		42%		-14%
Premiums Earned ($millions)				37.92		33.23		26.04		14%		46%
Underwriting & Operating Expense ($millions)				28.05		25.99		23.23		8%		21%
Claims Expense ($millions)				1.37		0.64		0.47		114%		191%
Loss Ratio				3.6%		1.9%		1.8%
Cash & Investments ($millions)				694		671		654		3%		6%
Book Equity ($millions)				495		484		422		2%		17%
Book Value per Share				8.27		8.09		7.14		2%		16%

Conference Call and Webcast Details

The company will hold a conference call and live webcast at 2:00 p.m. Pacific Time / 5:00 p.m. Eastern Time. The webcast will be available on the company's website, www.nationalmi.com, in the "Investor Relations" section. The call also can be accessed by dialing [phone] in the U.S., or [phone] for international callers using Conference ID: 47660998, or by referencing NMI Holdings, Inc.

About National MI

National Mortgage Insurance Corporation (National MI), a subsidiary of NMI Holdings, Inc. (NASDAQ: NMIH), is a U.S.-based, private mortgage insurance company enabling low down payment borrowers to realize home ownership while protecting lenders and investors against losses related to a borrower's default. To learn more, please visit www.nationalmi.com.

Cautionary Note Regarding Forward-Looking Statements

Certain statements contained in this press release or any other written or oral statements made by or on behalf of the Company in connection therewith may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (Securities Act), Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act), and the U.S. Private Securities Litigation Reform Act of 1995 (PSLRA). The PSLRA provides a "safe harbor" for any forward-looking statements. All statements other than statements of historical fact included in or incorporated by reference in this release are forward-looking statements, including any statements about our expectations, outlook, beliefs, plans, predictions, forecasts, objectives, assumptions or future events or performance. These statements are often, but not always, made through the use of words or phrases such as "anticipate," "believe," "can," "could," "may," "predict," "assume," "potential," "should," "will," "estimate," "plan," "project," "continuing," "ongoing," "expect," "intend" and similar words or phrases. All forward-looking statements are only predictions and involve estimates, known and unknown risks, assumptions and uncertainties that may turn out to be inaccurate and could cause actual results to differ materially from those expressed in them. Many risks and uncertainties are inherent in our industry and markets. Others are more specific to our business and operations. Important factors that could cause actual events or results to differ materially from those indicated in such statements include, but are not limited to: changes in the business practices of the GSEs that may impact the use of private mortgage insurance as credit enhancement; our ability to remain an eligible mortgage insurer under the PMIERs, including the financial requirements, and other requirements of 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 like the Federal Housing Administration (FHA) and the Veterans Administration (VA), 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 and regulations that impact our business or financial condition directly or the mortgage insurance industry generally or their enforcement and implementation by regulators; changes to the GSEs' role in the secondary mortgage market or other changes that could affect the residential mortgage industry generally or mortgage insurance in particular; potential future lawsuits, investigations or inquiries or resolution of current lawsuits or inquiries; changes in general economic, market and political conditions and policies, interest rates, inflation and investment results or other conditions that affect the housing market or the markets for home mortgages or mortgage insurance; our ability to successfully execute and implement our capital plans, including our ability to access the reinsurance market and to enter into, and receive approval of, reinsurance arrangements on terms and conditions that are acceptable to us, the GSEs and our regulators; 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; emergence of unexpected claims and coverage issues, including claims exceeding our reserves or amounts we expected to experience; the inability of our counter-parties, including third 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 systems or the failure of technology providers to perform; ability to recruit, train and retain key personnel; and general economic downturns and volatility. These risks and uncertainties also include, but are not limited to, those set forth under the heading "Risk Factors" detailed in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2016, as subsequently updated through other reports we file with the SEC. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. We caution you not to place undue reliance on any forward-looking statement, which speaks only as of the date on which it is made, and we undertake no obligation to publicly update or revise any forward-looking statement to reflect new information, future events or circumstances that occur after the date on which the statement is made or to reflect the occurrence of unanticipated events except as required by law.

Investor Contact
John M. Swenson
Vice President, Investor Relations and Treasury
[e-mail]
[phone]

Press Contact
Mary McGarity
Strategic Vantage Mortgage Public Relations
[phone]
[e-mail]

Consolidated statements of operations and comprehensive
income			For the three months ended June 30,									For the six months ended June 30,
				2017				2016				2017				2016
Revenues			(In Thousands, except for share data)
	Net premiums earned		$	37,917			$	26,041			$	71,142			$	45,848
	Net investment income			3,908				3,342				7,715				6,573
	Net realized investment gains (losses)			188				61				130				(824	)
	Other revenues			185				37				265				69
Total revenues				42,198				29,481				79,252				51,666
Expenses
	Insurance claims and claims expenses			1,373				470				2,008				928
	Underwriting and operating expenses			28,048				23,234				54,037				45,906
Total expenses				29,421				23,704				56,045				46,834
Other (expense) income
	Gain (loss) from change in fair value of warrant liability			19				(59	)			(177	)			611
	Interest expense			(3,300	)			(3,707	)			(6,794	)			(7,339	)
Total other expense				(3,281	)			(3,766	)			(6,971	)			(6,728	)
Income (loss) before income taxes				9,496				2,011				16,236				(1,896	)
	Income tax expense			3,484				-				4,732				-
Net income (loss)			$	6,012			$	2,011			$	11,504			$	(1,896	)
Earnings (loss) per share
	Basic		$	0.10			$	0.03			$	0.19			$	(0.03	)
	Diluted		$	0.10			$	0.03			$	0.18			$	(0.03	)
Weighted average common shares outstanding
Basic				59,823,396				59,105,613				59,576,747				59,005,983
Diluted				63,010,362				59,830,899				62,688,563				59,005,983
Loss Ratio(1)				3.6	%			1.8	%			2.8	%			2.0	%
Expense Ratio(2)				74.0				89.2				76.0				100.1
Combined ratio				77.6	%			91.0	%			78.8	%			102.1	%
Net income (loss)			$	6,012			$	2,011			$	11,504			$	(1,896	)
Other comprehensive income, net of tax:
	Net unrealized gains in accumulated other comprehensive income, net of tax expense of $1,388 and $0 for the three months ended June 30, 2017 and 2016, respectively, and $2,073 and $0 for the six months ended June 30, 2017 and 2016			2,822				8,670				4,017				17,771
	Reclassification adjustment for losses (gains) included in net income, net of tax expense of $66 and $0 for the three months ended June 30, 2017 and 2016, respectively, and $45 and $0 for the six months ended June 30, 2017 and 2016			(122	)			(61	)			(84	)			824
Other comprehensive income, net of tax				2,700				8,609				3,933				18,595
Comprehensive income			$	8,712			$	10,620			$	15,437			$	16,699
(1) Loss ratio is calculated by dividing the provision for insurance claims and claims expenses by net premiums earned.
(2) Expense ratio is calculated by dividing other underwriting and operating expenses by net premiums earned.

Consolidated balance sheets				June 30, 2017			December 31, 2016 (1)
Assets				(In Thousands, except for share data)
	Fixed maturities, available-for-sale, at fair value (amortized cost of $669,363 and $630,688 as of June 30, 2017 and December 31, 2016, respectively)		$	673,695			$	628,969
	Cash and cash equivalents			20,035				47,746
	Premiums receivable			17,795				13,728
	Accrued investment income			3,867				3,421
	Prepaid expenses			2,072				1,991
	Deferred policy acquisition costs, net			34,206				30,109
	Software and equipment, net			21,530				20,402
	Intangible assets and goodwill			3,634				3,634
	Prepaid reinsurance premiums			38,919				37,921
	Deferred tax asset, net			45,771				51,434
	Other assets			1,471				542
Total assets			$	862,995			$	839,897
Liabilities
	Term loan		$	143,990			$	144,353
	Unearned premiums			157,152				152,906
	Accounts payable and accrued expenses			21,349				25,297
	Reserve for insurance claims and claim expenses			5,048				3,001
	Reinsurance funds withheld			32,042				30,633
	Deferred ceding commission			4,830				4,831
	Warrant liability, at fair value			3,544				3,367
	Deferred tax liability, net			-				-
Total liabilities				367,955				364,388
Commitments and contingencies
Shareholders' equity
	Common stock - class A shares, $0.01 par value; 59,858,418 and 59,145,161 shares issued and outstanding as of June 30, 2017 and December 31, 2016, respectively (250,000,000 shares authorized)			598				591
	Additional paid-in capital			580,499				576,927
	Accumulated other comprehensive loss, net of tax			(1,354	)			(5,287	)
	Accumulated deficit			(84,703	)			(96,722	)
Total shareholders' equity				495,040				475,509
Total liabilities and shareholders' equity			$	862,995			$	839,897
(1)The 2016 prior period balance sheet has been revised. Please refer to our Form 10-Q for the quarter ended June 30, 2017 for further details.

Historical Quarterly Data			2017								2016
											December				September
				June 30				March 31				31(4)				30				June 30				March 31
Revenues			(In Thousands, except for share data)
	Net premiums earned		$	37,917			$	33,225			$	32,825			$	31,808			$	26,041			$	19,807
	Net investment income			3,908				3,807				3,634				3,544				3,342				3,231
	Net realized investment (losses) gains			188				(58	)			65				66				61				(885	)
	Other revenues			185				80				105				102				37				32
Total revenues				42,198				37,054				36,629				35,520				29,481				22,185
Expenses
	Insurance claims and claims expenses			1,373				635				800				664				470				458
	Underwriting and operating expenses			28,048				25,989				23,281				24,037				23,234				22,672
Total expenses				29,421				26,624				24,081				24,701				23,704				23,130
Other expense				(3,281	)			(3,690	)			(5,490	)			(4,530	)			(3,766	)			(2,962	)
Income (loss) before income taxes				9,496				6,740				7,058				6,289				2,011				(3,907	)
	Income tax expense (benefit)			3,484				1,248				(52,664	)			114				-				-
Net income (loss)			$	6,012			$	5,492			$	59,722			$	6,175			$	2,011			$	(3,907	)
Earnings (loss) per share
	Basic		$	0.10			$	0.09			$	1.01			$	0.10			$	0.03			$	(0.07	)
	Diluted		$	0.10			$	0.09			$	0.98			$	0.10			$	0.03			$	(0.07	)
Weighted average common shares
outstanding
Basic				59,823,396				59,183,973				59,140,011				59,130,401				59,105,613				58,936,694
Diluted				63,010,362				62,338,856				61,229,338				60,284,746				59,830,899				58,936,694
Other data
Loss Ratio (2)				3.6	%			1.9	%			2.4	%			2.1	%			1.8	%			2.3	%
Expense Ratio (3)				74.0	%			78.2	%			70.9	%			75.6	%			89.2	%			114.5	%
Combined ratio				77.6	%			80.1	%			73.3	%			77.7	%			91.0	%			116.8	%
(1) Other expense includes the gain from change in fair value of warrant liability, gain from settlement of warrants, and interest expense.
(2) Loss ratio is calculated by dividing the provision for insurance claims and claims expenses by net premiums earned.
(3) Expense ratio is calculated by dividing other underwriting and operating expenses by net premiums earned.
(4) The Q4 2016 quarterly data has been revised. Please refer to our Form 10-Q for the quarter ended June 30, 2017 for further details.

New Insurance Written (NIW), Insurance in Force (IIF) and Premiums
The tables below present primary and pool NIW and IIF, as of the dates and for the periods indicated.
Primary NIW		Three months ended
		June 30, 2017			March 31, 2017			December 31, 2016			September 30, 2016			June 30, 2016			March 31, 2016
		(In Millions)
Monthly		$	4,099		$	2,892		$	3,904		$	4,162		$	3,700		$	2,492
Single			938			667			1,336			1,695			2,138			1,762
Primary		$	5,037		$	3,559		$	5,240		$	5,857		$	5,838		$	4,254

Primary and pool IIF		As of
		June 30, 2017			March 31, 2017			December 31, 2016			September 30, 2016			June 30, 2016			March 31, 2016
		(In Millions)
Monthly		$	24,865		$	21,551		$	19,205		$	16,038		$	12,529		$	9,210
Single			13,764			13,268			12,963			12,190			11,095			9,354
Primary			38,629			34,779			32,168			28,228			23,624			18,564
Pool			3,447			3,545			3,650			3,826			3,999			4,136
Total		$	42,076		$	38,324		$	35,818		$	32,054		$	27,623		$	22,700

The following table presents the amounts related to the 2016 QSR transaction, for the last four quarters.

	For the three months ended
		June 30, 2017				March 31, 2017				December 31, 2016				September 30, 2016
	In Thousands
Ceded risk-in-force		$	2,403,027			$	2,167,745			$	2,008,385			$	1,778,235
Ceded premiums written			(12,034	)			(10,292	)			(11,576	)			(38,977	)
Ceded premiums earned			(11,463	)			(9,865	)			(9,746	)			(2,885	)
Ceded claims and claims expenses			342				268				206				90
Ceding commission written			2,407				2,058				2,316				7,795
Ceding commission earned			2,275				2,065				1,752				551
Profit commission			6,536				5,651				5,642				1,641

Portfolio Statistics
The table below highlights trends in our primary portfolio as of the date and for the periods indicated.
Primary portfolio trends		As of and for the three months ended
		June 30, 2017				March 31, 2017				December 31, 2016				September 30, 2016				June 30, 2016				March 31, 2016
		($ Values In Millions)
New insurance written		$	5,037			$	3,559			$	5,240			$	5,857			$	5,838			$	4,254
New risk written			1,242				868				1,244				1,415				1,411				1,016
Insurance in force (1)			38,629				34,779				32,168				28,228				23,624				18,564
Risk in force (1)			9,417				8,444				7,790				6,847				5,721				4,487
Policies in force (count) (1)			161,195				145,632				134,662				119,002				100,547				79,700
Weighted-average coverage (2)			24.4	%			24.3	%			24.2	%			24.3	%			24.2	%			24.2	%
Loans in default (count)			249				207				179				115				79				55
Percentage of loans in default			0.2	%			0.1	%			0.1	%			0.1	%			0.1	%			0.1	%
Risk in force on defaulted loans		$	14			$	12			$	10			$	6			$	4			$	3
Average premium yield (3)			0.41	%			0.40	%			0.44	%			0.48	%			0.47	%			0.45	%
Earnings from cancellations		$	3.8			$	2.5			$	5.1			$	5.8			$	3.5				2.3	%
Annual persistency			83.1	%			81.3	%			80.7	%			81.8	%			83.3	%			82.7	%
Quarterly run-off (4)			3.4	%			2.9	%			4.6	%			5.3	%			4.2	%			3.5	%
(1) Reported as of the end of the period.
(2) Calculated as end of period risk in force (RIF) divided by IIF.
(3) Calculated as net primary and pool premiums earned, net of reinsurance, divided by average gross IIF for the period, annualized.
(4) Defined as the percentage of IIF that remains on our books after any 12-month period.
(5) Defined as the percentage of IIF that are no longer on our books after any 3-month period

The tables below reflect our total primary NIW by FICO, loan-to-value (LTV) ratio, and purchase/refinance mix for the periods indicated.

Primary NIW by FICO			For the three months ended
				June 30, 2017			March 31, 2017			June 30, 2016
			($ In Millions)
	>= 760		$	2,376	$		1,683	$		3,160
	740-759			793			551			961
	720-739			626			456			672
	700-719			568			396			541
	680-699			368			264			308
	<=679			306			209			196
Total			$	5,037		$	3,559		$	5,838
Weighted average FICO				749			749			756

Primary NIW by LTV			For the three months ended
				June 30, 2017				March 31, 2017				June 30, 2016
			(In Millions)
	95.01% and above		$	474			$	274			$	362
	90.01% to 95.00%			2,297				1,612				2,633
	85.01% to 90.00%			1,506				1,101				1,732
	85.00% and below			760				572				1,111
Total			$	5,037			$	3,559			$	5,838
Weighted average LTV				92.18	%			92.00	%			91.73	%
Primary NIW by purchase/refinance mix				For the three months ended
				June 30, 2017				March 31, 2017				June 30, 2016
				(In Millions)
	Purchase		$	4,518			$	2,984			$	4,199
	Refinance			519				575				1,639
Total			$	5,037			$	3,559			$	5,838

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

Primary IIF and RIF	As of June 30, 2017
	IIF		RIF
	(In Millions)
June 30, 2017	$ 8,460		$ 2,078
2016	19,288		4,650
2015	9,243		2,284
2014	1,596		395
2013	42		10
Total	$ 38,629		$ 9,417

The tables below reflect 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 FICO			As of
				June 30, 2017			March 31, 2017			June 30, 2016
			(In Millions)
	>= 760		$	19,224		$	17,408		$	11,929
	740-759			6,269			5,658			3,876
	720-739			4,927			4,460			3,082
	700-719			3,973			3,533			2,341
	680-699			2,615			2,336			1,561
	<=679			1,621			1,384			835
Total			$	38,629		$	34,779		$	23,624

Primary RIF by FICO			As of
				June 30, 2017			March 31, 2017			June 30, 2016
			(In Millions)
	>= 760		$	4,720		$	4,253		$	2,895
	740-759			1,535			1,383			951
	720-739			1,198			1,081			750
	700-719			960			851			566
	680-699			627			556			369
	<=679			377			320			190
Total			$	9,417		$	8,444		$	5,721
Primary IIF by LTV				As of
				June 30, 2017			March 31, 2017			June 30, 2016
				(In Millions)
	95.01% and above		$	2,367		$	1,931		$	1,049
	90.01% to 95.00%			17,441			15,601			10,574
	85.01% to 90.00%			12,157			11,058			7,754
	85.00% and below			6,664			6,189			4,247
Total			$	38,629		$	34,779		$	23,624
Primary RIF by LTV				As of
				June 30, 2017			March 31, 2017			June 30, 2016
				(In Millions)
	95.01% and above		$	648		$	533		$	293
	90.01% to 95.00%			5,120			4,585			3,116
	85.01% to 90.00%			2,893			2,626			1,838
	85.00% and below			756			700			474
Total			$	9,417		$	8,444		$	5,721
Primary RIF by Loan Type				As of
				June 30, 2017			March 31, 2017			June 30, 2016
Fixed				98%			99%			98%
Adjustable rate mortgages:
	Five years and longer			2			1			2
Total				100%			100%			100%

The table below reflects a summary of the change in total primary IIF during the periods indicated.

Primary IIF			For the three months ended
			June 30, 2017				March 31, 2017				June 30, 2016
			(In Millions)
IIF, beginning of period			$	34,779			$	32,168			$	18,564
	NIW			5,037				3,559				5,838
	Cancellations and other reductions			(1,187	)			(948	)			(778	)
IIF, end of period			$	38,629			$	34,779			$	23,624

Geographic Dispersion
The following table shows the distribution by state of our primary RIF as of the periods indicated.
Top 10 primary RIF by state		As of
		June 30, 2017			March 31, 2017			June 30, 2016
California		13.8	%		13.8	%		13.0	%
Texas		7.5			7.2			6.8
Virginia		6.0			6.3			6.4
Florida		4.4			4.4			5.0
Arizona		4.2			4.1			3.8
Colorado		3.9			3.9			4.1
Maryland		3.7			3.7			3.4
Utah		3.7			3.6			3.4
Pennsylvania		3.6			3.6			3.5
Michigan		3.6			3.7			4.1
Total		54.4	%		54.3	%		53.5	%

The following table shows portfolio data by book year, as of June 30, 2017.

		As of June 30, 2017
		Original Insurance Written			Remaining Insurance in Force			% Remaining of Original Insurance			Policies Ever in Force		Number of Policies in Force		Number of Loans in Default		# of Claims Paid		Incurred Loss Ratio (Inception to Date) (1)			Cumulative default rate (2)
Book year
		($ Values in Millions)
2013		$	162		$	42		26	%		655		212		1		1		0.2	%		0.3	%
2014			3,451			1,596		46	%		14,786		7,963		53		7		3.5	%		0.4	%
2015			12,422			9,243		74	%		52,548		41,747		128		13		2.7	%		0.3	%
2016			21,187			19,288		91	%		83,626		78,111		67		2		1.3	%		0.1	%
2017		$	8,596		$	8,460		98	%		33,593		33,162		-		-		-	%		-	%
Total		$	45,818		$	38,629					185,208		161,195		249		23
(1) The ratio of claims incurred (paid and reserved) divided by cumulative premiums earned, net of reinsurance.
(2) The sum of claims paid ever to date and notices of default as of the end of the period divided by policies ever in force.

The following table provides a reconciliation of the beginning and ending reserve balances for primary insurance claims and claims expenses:

				For the three months ended								For the six months ended
				June 30, 2017				June 30, 2016				June 30, 2017				June 30, 2016
				(In Thousands)
Beginning balance				$	3,761			$	1,137			$	3,001			$	679
Less reinsurance recoverables (1)					(564	)			-				(297	)			-
Beginning balance, net of reinsurance recoverables					3,197				1,137				2,704				679
Add claims incurred:
	Claims and claim expenses incurred:
		Current year (2)			1,376				560				2,331				1,113
		Prior years			(3	)			(90	)			(323	)			(185	)
Total claims and claims expenses incurred					1,373				470				2,008				928
Less claims paid:
	Claims and claim expenses paid:
		Current year (2)			-				-				-				-
		Prior years (3)			421				132				563				132
Total claims and claim expenses paid					421				132				563				132
Reserve at end of period, net of reinsurance
recoverables					4,149				1,475				4,149				1,475
Add reinsurance recoverables (1)					899				-				899				-
Balance, June 30				$	5,048			$	1,475			$	5,048			$	1,475
(1) Related to ceded losses recoverable on our 2016 quota-share reinsurance transaction, included in "Other Assets" on the Condensed Consolidated Balance Sheet.
(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, that default would be included in the current year.
(3) Related to insured loans with defaults occurring in prior years, which have been continuously in default since that time.

The following table provides a reconciliation of the beginning and ending count of loans in default for the periods indicated.

		Three months ended						Six months ended
		June 30, 2017			June 30, 2016			June 30, 2017			June 30, 2016
Beginning default inventory		207			55			179			36
Plus: new defaults		147			50			271			89
Less: cures		(97	)		(23	)		(189	)		(43	)
Less: claims paid		(8	)		(3	)		(12	)		(3	)
Ending default inventory		249			79			249			79

The following tables provide details of our claims and reserves for the periods indicated.

		For the three months ended								For the six months ended
			June 30, 2017				June 30, 2016			June 30, 2017					June 30, 2016
		($ Values In Thousands)
Number of claims paid			8				3				12				3
Total amount paid for claims		$	429			$	132			$	571			$	132
Average amount paid per claim		$	54			$	44			$	48			$	44
Severity			86	%			71	%			87	%			71	%
Average reserve per default:											As of June 30, 2017				As of June 30, 2016
											(In Thousands)
Case										$	19			$	17
IBNR											1				1
Total										$	20			$	18

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

		As of
		June 30, 2017			March 31, 2017			June 30, 2016
		(In thousands)
Available assets		$	485,019		$	466,982		$	432,074
Risk-based required assets			298,091			398,859			377,468

Investor Contact
John M. Swenson
Vice President, Investor Relations and Treasury
[e-mail]
[phone]

Press Contact
Mary McGarity
Strategic Vantage Mortgage Public Relations
[phone]
[e-mail]