NMI Holdings Delivers Record Q1 2025 Results Amid Robust Mortgage Market Growth

NMI Holdings, Inc. (NASDAQ: NMIH) has cemented its position as a leader in the mortgage insurance sector with its first-quarter 2025 earnings report, showcasing record financial performance, operational resilience, and strategic execution. The results highlight strong premium growth, disciplined cost management, and a fortress balance sheet, positioning the company to capitalize on favorable market conditions while navigating macroeconomic headwinds.

Financial Performance: Revenue and Earnings Surge

NMI’s Q1 2025 results were marked by a 19% sequential jump in net income to $102.6 million, driven by robust premium growth and improved underwriting metrics. Diluted EPS soared to $1.28, surpassing both the $1.10 consensus estimate and the prior-year quarter’s $1.08, reflecting a 15% year-over-year increase. Total revenue reached $173.2 million, a 10.9% rise from Q1 2024, fueled by a 9% year-over-year expansion in net premiums earned to $149.4 million.

The company’s ability to generate consistent returns was underscored by an annualized return on equity (ROE) of 18.1%, aligning with its long-term target of 15–20%. While slightly below Q1 2024’s 18.2%, this metric remains strong given the challenging macroeconomic environment.

Operational Excellence: Cost Discipline and Portfolio Strength

NMI’s operational metrics reflect a focus on efficiency and risk management. The loss ratio dropped to 3.0%, a 74% decline from Q4 2024’s 12.0%, as lower claims activity and seasonal loan cures offset potential volatility. The expense ratio improved to 20.2%, down from 21.7% in the prior quarter, highlighting cost controls. Combined, these metrics drove the combined ratio to 23.2%, far below analysts’ 34.5% estimate and signaling superior underwriting discipline.

The primary insurance-in-force (IIF) grew 6% year-over-year to $211.3 billion, while new insurance written (NIW) of $9.2 billion demonstrated sustained demand for mortgage insurance solutions despite a 23% quarterly dip from Q4 2024’s peak. This dip aligns with typical seasonal fluctuations in mortgage origination activity.

Balance Sheet and Capital Management: A Fortress Foundation

NMI’s balance sheet remains a key competitive advantage. Shareholders’ equity rose to $2.3 billion, with book value per share increasing 4% sequentially to $30.85 (excluding unrealized investments). This represents a 17% year-over-year jump, reflecting strong capital generation.

The company’s PMIERs available assets of $3.2 billion comfortably exceed its $1.9 billion risk-based capital requirement, ensuring regulatory compliance and liquidity. Additionally, NMI repurchased $25.9 million of its shares in Q1, reducing the total authorization remaining to $400 million, signaling confidence in its valuation.

Credit Metrics and Risk Management

NMI’s default rate held steady at 1.04%, slightly higher than Q4 2024 but within historical ranges. Claims expenses plummeted to $4.5 million from $17.3 million in Q4 2024, benefiting from reduced disaster-related claims. The average loan-to-value (LTV) ratio on defaults of 73.2% underscores borrower equity buffers, reducing potential losses.

Strategic Initiatives and Forward Outlook

Management emphasized long-term growth drivers, including:
1. Extended IT partnership: A 10-year renewal with Tata Consultancy Services through 2032 will enhance operational efficiency and innovation.
2. Share repurchases: The $271 million repurchased to date (10 million shares) supports shareholder returns.
3. Regulatory alignment: NMI remains compliant with evolving guidelines, with $1.4 billion in excess PMIERs liquidity.

While risks such as interest rate volatility and housing demand uncertainty persist, NMI’s conservative underwriting and high-quality portfolio mitigate these concerns.

Conclusion: NMI’s Position as a Mortgage Insurance Leader

NMI Holdings’ Q1 2025 results are a testament to its ability to deliver industry-leading performance even amid macroeconomic challenges. With record revenue, improved underwriting margins, and a fortress balance sheet, the company is well-positioned to capitalize on the $15.7 billion mortgage insurance market (projected to grow at a 4.5% CAGR through 2030).

Analysts project a 22% upside from current prices, with a price-to-earnings multiple of 7.48x—well below historical averages—suggesting undervaluation. Investors should note NMI’s strong book value growth, dividend yield of 2.8%, and consistent EPS growth of 15–20% annually.

In a sector where risk management and capital efficiency are paramount, NMI’s Q1 results reaffirm its status as a best-in-class mortgage insurer. With strategic initiatives and a robust capital base, the company is poised to outperform peers and deliver shareholder value in the years ahead.