NMI Holdings, Inc. Reports Record First Quarter 2018 Financial Results


EMERYVILLE, Calif., May 01, 2018 (GLOBE NEWSWIRE) -- NMI Holdings, Inc. (Nasdaq:NMIH) today reported GAAP net income of $22.4 million, or $0.34 per diluted share, and adjusted net income of $22.0 million, or $0.34 per diluted share, for its first quarter ended March 31, 2018.  Adjusted net income and adjusted net income per diluted share exclude a pre-tax non-cash gain of $0.4 million related to the change in fair value of the company’s warrant liability.  This compares with a net loss of $1.8 million, or ($0.03) per diluted share, and adjusted net income of $14.0 million, or $0.22 per diluted share, after adjusting for the one-time non-cash expense primarily related to the re-measurement of the company’s net deferred tax asset as a result of tax reform and the change in fair value of the warrant liability, in the prior quarter. In the first quarter of 2017, the company reported net income of $5.5 million, or $0.09 per diluted share, and adjusted net income of $5.6 million, or $0.09 per diluted share, after adjusting for the change in fair value of the warrant liability. The non-GAAP financial measures adjusted net income and adjusted net income per share are presented to increase the comparability of financial results between periods.  See "Use of Non-GAAP Financial Measures" below.

Bradley Shuster, Chairman and CEO of National MI, said, "National MI  delivered record first quarter financial results, including new insurance written of $6.5 billion, record net premiums earned of $54.9 million, record net income of $22.4 million, and record return-on-equity of 16.1%. We continued to build our portfolio of high-quality insurance-in-force at a rate that leads our industry.  We also continued to make significant strides in customer development, activating 21 new customers in the first quarter and continuing to increase our volume with existing customers.”

  • As of March 31, 2018, the company had primary insurance-in-force of $53.4 billion, up 10% from $48.5 billion at the prior quarter end and up 54% over $34.8 billion as of March 31, 2017.

  • Net premiums earned for the quarter were $54.9 million, including $2.8 million attributable to cancellation of single premium policies, which compares with $50.1 million, including $4.2 million related to cancellations, in the prior quarter.  Net premiums earned in the first quarter of 2018 were up 65% over net premiums earned of $33.2 million in the same quarter a year ago, which included $2.5 million related to cancellations.

  • NIW mix was 84% monthly premium product, which compares with 83% in the prior quarter and 81% in the first quarter of 2017.

  • During the quarter, the company completed the sale of 4.3 million shares of common stock, raising proceeds of $79.2 million, net of underwriting discounts, commissions and other direct offering expenses.

  • At quarter-end, cash and investments were $826 million, including $123 million at the holding company, and book equity was $602 million, equal to $9.18 per share.

  • At quarter-end, the company had total PMIERs available assets of $555 million, which compares with risk-based required assets under PMIERs of $522 million. Subsequent to the close of the quarter, the company contributed $70 million to National Mortgage Insurance Corporation, its primary mortgage insurance subsidiary.
       
  Quarter EndedQuarter EndedQuarter EndedChangeChange
  3/31/201812/31/20173/31/2017Q/QY/Y
Primary Insurance-in-Force ($billions)53.43 48.47 34.78 10%54%
New Insurance Written - NIW ($billions)     
 Monthly premium5.44 5.74 2.89 (5)%88%
 Single premium1.02 1.14 0.67 (11)%52%
 Total6.46 6.88 3.56 (6)%82%
      
Premiums Earned ($millions)54.91 50.08 33.23 10%65%
Underwriting & Operating Expense ($millions)28.45 28.30 25.99 1%9%
Loss Expense ($millions)1.57 2.37 0.64 (34)%145%
Loss Ratio2.9%4.7%1.9%  
Cash & Investments ($millions)826 735 671 12%23%
Book Equity ($millions)602 509 484 18%24%
Book Value per Share9.18 8.41 8.09 9%13%
           

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 (888) 734-0328 in the U.S., or (914) 495-8578 for international callers using Conference ID: 1986684, 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 Fannie Mae and Freddie Mac (collectively, the GSEs), including decisions that have the impact of decreasing or discontinuing the use of mortgage insurance as credit enhancement; our ability to remain an eligible mortgage insurer under the current or future versions of their 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 other private mortgage insurers and governmental mortgage insurers like the Federal Housing Administration and the Veterans Administration and potential market entry by new competitors or consolidation of existing competitors; developments in the world's financial capital and reinsurance markets and our access to such markets; 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  driven by Congressional or regulatory action or other changes that could affect the residential mortgage industry generally or mortgage insurance industry 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  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 for 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  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 our pricing, risk management  or investment strategies; emergence of unexpected claims and coverage issues, including claims exceeding our reserves or amounts we 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;  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 as expected; and, our ability to recruit, train and retain key personnel.   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, 2017, 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.

Use of Non-GAAP Financial Measures

We believe that use of the non-GAAP measures of adjusted pre-tax income, adjusted net income, adjusted net income per share and adjusted return-on-equity facilitate the evaluation of our fundamental financial performance, thereby providing 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 recognized in accordance with GAAP and should not be viewed as alternatives to GAAP measures of performance.  These measures have been established in order to increase transparency for the purposes of evaluating our fundamental operating trends and enabling more meaningful comparisons with our peers.

Adjusted pre-tax income is defined as GAAP income before tax, excluding the effects of the non-cash loss or gain related to the change in fair value of our warrant liability.

Adjusted net income is defined as GAAP net income (loss) excluding the after-tax impact of the aforementioned change in the fair value of our warrant liability and other discrete tax (benefits) expense which are infrequent and unusual non-operating items, such as the one-time non-cash charge due to a re-measurement of our net deferred tax assets in connection with the enactment of the Tax Cuts and Jobs Act (the "Tax Act") in 2017. The amounts of adjustments to components of pre-tax income are tax effected using the applicable federal statutory tax rate for the respective periods.

Adjusted net income per diluted share is calculated in a manner consistent with the accounting standard regarding earnings per share by dividing (i) adjusted net income by (ii) diluted weighted average common shares outstanding, which reflects share dilution from non-vested restricted stock units and from warrants when dilutive.

Adjusted return-on-equity is calculated by dividing the adjusted income on an annualized basis by the average shareholders’ equity for the period.

Although adjusted pre-tax income and adjusted net income exclude certain items that have occurred in the past and are expected to occur in the future, the excluded items represent items that are: (1) not viewed as part of the operating performance of our primary activities; or (2) impacted by market, economic or regulatory factors and are not necessarily indicative of operating trends, or both. These adjustments, along with the reasons for their treatment, are described below. Trends in the profitability of our fundamental operating activities can be more clearly identified without the fluctuations of these adjustments. Other companies may calculate these measures differently. Therefore, their measures may not be comparable to those used by us.

(1) 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 statements of operations in the period in which the change occurred.  The change in the fair value of our warrant liability can vary significantly across periods and is influenced principally by equity market and general economic factors which may not impact or reflect our current period operating results. Trends in our operating performance can be more clearly identified without the fluctuations of the change in fair value of our warrant liability.
  
(2)Infrequent or unusual non-operating items.  Our income tax expense for 2017 reflects a one-time non-cash charge due to a re-measurement of our net deferred tax assets in connection with the enactment of the Tax Act in the fourth quarter of 2017.
  


Investor Contact
John M. Swenson
Vice President, Investor Relations and Treasury
john.swenson@nationalmi.com
(510) 788-8417

Press Contact
Mary McGarity
Strategic Vantage Mortgage Public Relations
(203) 513-2721
MaryMcGarity@StrategicVantage.com


  
Consolidated statements of operations and comprehensive incomeFor the three months ended March 31,
 2018 2017
Revenues(In Thousands, except for per share data)
Net premiums earned$54,914  $33,225 
Net investment income4,574  3,807 
Net realized investment  (losses)  (58)
Other revenues64  80 
Total revenues59,552  37,054 
Expenses   
Insurance claims and claim expenses1,569  635 
Underwriting and operating expenses28,453  25,989 
Total expenses30,022  26,624 
Other expense   
Gain (Loss) from change in fair value of warrant liability420  (196)
Interest expense(3,419) (3,494)
Total other expense(2,999) (3,690)
    
Income before income taxes26,531  6,740 
Income tax expense4,176  1,248 
Net income$22,355  $5,492 
    
Earnings per share   
Basic$0.36  $0.09 
Diluted$0.34  $0.09 
    
Weighted average common shares outstanding   
Basic62,099  59,184 
Diluted65,697  62,339 
    
Loss Ratio(1)2.9% 1.9%
Expense Ratio(2)51.8% 78.2%
Combined ratio54.7% 80.1%
    
Net income$22,355  $5,492 
Other comprehensive income (loss), net of tax:   
Net unrealized (losses) gains in accumulated other comprehensive income, net of tax benefit of $423 and tax expense $664 for the quarters ended March 31, 2018 and 2017, respectively(10,956) 1,175 
Reclassification adjustment for realized losses included in net income, net of tax expenses of $0 for the quarters ended March 31, 2018 and 2017, respectively  58 
Other comprehensive income (loss), net of tax(10,956) 1,233 
Comprehensive income$11,399  $6,725 
        
(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 sheetsMarch 31, 2018 December 31, 2017
Assets(In Thousands, except for share data)
Fixed maturities, available-for-sale, at fair value (amortized cost of $733,153 and $713,859 as of March 31, 2018 and December 31, 2017, respectively)$723,790  $715,875 
Cash and cash equivalents101,890  19,196 
Premiums receivable28,164  25,179 
Accrued investment income4,765  4,212 
Prepaid expenses3,602  2,151 
Deferred policy acquisition costs, net40,026  37,925 
Software and equipment, net22,857  22,802 
Intangible assets and goodwill3,634  3,634 
Prepaid reinsurance premiums38,557  40,250 
Deferred tax asset, net16,343  19,929 
Other assets3,963  3,695 
Total assets$987,591  $894,848 
    
Liabilities   
Term loan$143,868  $143,882 
Unearned premiums165,590  163,166 
Accounts payable and accrued expenses21,218  23,364 
Reserve for insurance claims and claim expenses10,391  8,761 
Reinsurance funds withheld33,179  34,102 
Deferred ceding commission4,838  5,024 
Warrant liability, at fair value6,563  7,472 
Total liabilities385,647  385,771 
Commitments and contingencies   
    
Shareholders' equity   
Common stock - class A shares, $0.01 par value;
65,569,342 and 60,517,512 shares issued and outstanding as of March 31, 2018 and December 31, 2017, respectively (250,000,000 shares authorized)
656  605 
Additional paid-in capital666,905  585,488 
Accumulated other comprehensive loss, net of tax(13,533) (2,859)
Accumulated deficit(52,084) (74,157)
Total shareholders' equity601,944  509,077 
Total liabilities and shareholders' equity$987,591  $894,848 
        


 
Non-GAAP Financial Measure Reconciliations
 Quarter ended Quarter ended Quarter ended
 3/31/2018 12/31/2017 3/31/2017
 As Reported(In Thousands, except for per share data)
Revenues     
Net premiums earned$54,914  $50,079  $33,225 
Net investment income4,574  4,388  3,807 
Net realized investment gains (losses)  9  (58)
Other revenues64  62  80 
Total revenues59,552  54,538  37,054 
Expenses     
Insurance claims and claims expenses1,569  2,374  635 
Underwriting and operating expenses28,453  28,297  25,989 
Total expenses30,022  30,671  26,624 
Other Expense     
Gain (loss) from change in fair value of warrant liability420  (3,426) (196)
Interest expense(3,419) (3,382) (3,494)
Total other expense(2,999) (6,808) (3,690)
Income before income taxes26,531  17,059  6,740 
Income tax expense4,176  18,825  1,248 
Net income$22,355  $(1,766) $5,492 
      
Adjustments:     
(Gain) loss from change in fair value of warrant liability(420) 3,426  196 
Adjusted Income before income taxes26,111  20,485  6,936 
      
After-tax warrant adjustment(332) 2,227  127 
Deferred tax asset adjustments  13,554   
Adjusted Net income$22,023  $14,015  $5,619 
      
Weighted average diluted shares outstanding - Reported65,697  60,219  62,339 
Dilutive effect of non-vested shares and warrants  3,449   
Weighted average diluted shares outstanding - Adjusted65,697  63,668  62,339 
      
Diluted EPS - Reported$0.34  $(0.03) $0.09 
Diluted EPS - Adjusted$0.34  $0.22  $0.09 
      
Return on Equity - Reported16.1% (1.4)% 4.6%
Return on Equity - Adjusted15.9% 11.0% 4.7%
         


      
Historical Quarterly Data2018 2017 2016
            
 March 31 December 31 September 30 June 30 March 31 December 31 (4)
Revenues(In Thousands, except for per share data)
Net premiums earned$54,914  $50,079  $44,519  $37,917  $33,225  $32,825 
Net investment income4,574  4,388  4,170  3,908  3,807  3,634 
Net realized investment gains (losses)  9  69  188  (58) 65 
Other revenues64  62  195  185  80  105 
Total revenues59,552  54,538  48,953  42,198  37,054  36,629 
Expenses           
Insurance claims and claim expenses1,569  2,374  957  1,373  635  800 
Underwriting and operating expenses28,453  28,297  24,645  28,048  25,989  23,281 
Total expenses30,022  30,671  25,602  29,421  26,624  24,081 
            
Other expense (1)(2,999) (6,808) (3,854) (3,281) (3,690) (5,490)
            
Income before income taxes26,531  17,059  19,497  9,496  6,740  7,058 
Income tax expense (benefit)4,176  18,825  7,185  3,484  1,248  (52,664)
Net income$22,355  $(1,766) $12,312  $6,012  $5,492  $59,722 
            
Earnings per share           
Basic$0.36  $(0.03) $0.21  $0.10  $0.09  $1.01 
Diluted$0.34  $(0.03) $0.20  $0.10  $0.09  $0.98 
            
Weighted average common shares outstanding           
Basic62,099  60,219  59,884  59,823  59,184  59,140 
Diluted65,697  60,219  63,089  63,010  62,339  61,229 
            
Other data           
Loss Ratio  (2)2.9% 4.7% 2.1% 3.6% 1.9% 2.4%
Expense Ratio (3)51.8% 56.5% 55.4% 74.0% 78.2% 70.9%
Combined ratio54.7% 61.2% 57.5% 77.6% 80.1% 73.3%
                  
(1) Other expense includes the gain from change in fair value of warrant liability 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 2016 prior period consolidated results of operations have been revised. Please refer to our Form 10-K for the year ended December 31, 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 NIWThree months ended
 March 31, 2018 December 31, 2017 September 30, 2017 June 30, 2017 March 31, 2017 December 31, 2016
 (In Millions)
Monthly$5,441  $5,736  $4,833  $4,099  $2,892  $3,904 
Single1,019  1,140  1,282  938  667  1,336 
Primary$6,460  $6,876  $6,115  $5,037  $3,559  $5,240 
                        


  
Primary and pool IIFAs of
 March 31, 2018 December 31, 2017 September 30, 2017 June 30, 2017 March 31, 2017 December 31, 2016
 (In Millions)
Monthly$37,574  $33,268  $28,707  $24,865  $21,511  $19,205 
Single15,860  15,197  14,552  13,764  13,268  12,963 
Primary53,434  48,465  43,259  38,629  34,779  32,168 
            
Pool3,153  3,233  3,330  3,447  3,545  3,650 
Total$56,587  $51,698  $46,589  $42,076  $38,324  $35,818 
                        

The following table presents the amounts related to the company's quota-share reinsurance transactions (the 2016 QSR Transaction and 2018 QSR Transaction, and collectively, the QSR Transactions) for the periods indicated.

  
 March 31, 2018 December 31, 2017 September 30, 2017 June 30, 2017 March 31, 2017 December 31, 2016
 (In Thousands)
Ceded risk-in-force$3,304,335  $2,983,353  $2,682,982  $2,403,027  $2,167,745  $2,008,385 
Ceded premiums written(14,525) (15,233) (14,389) (12,034) (10,292) (11,576)
Ceded premiums earned(16,218) (14,898) (13,393) (11,463) (9,865) (9,746)
Ceded claims and claims expenses543  800  277  342  268  206 
Ceding commission written2,905  3,047  2,878  2,407  2,058  2,316 
Ceding commission earned3,151  2,885  2,581  2,275  2,065  1,752 
Profit commission9,201  8,139  7,758  6,536  5,651  5,642 
                  

Portfolio Statistics

The table below highlights trends in our primary portfolio as of the date and for the periods indicated.

  
Primary portfolio trendsAs of and for the three months ended
 March 31, 2018 December 31, 2017 September 30, 2017 June 30, 2017 March 31, 2017 December 31, 2016
 ($ Values In Millions)
New insurance written$6,460  $6,876  $6,115  $5,037  $3,559  $5,240 
New risk written1,580  1,665  1,496  1,242  868  1,244 
Insurance in force (IIF) (1)53,434  48,465  43,259  38,629  34,779  32,168 
Risk in force (1)13,085  11,843  10,572  9,417  8,444  7,790 
Policies in force (count) (1)223,263  202,351  180,089  161,195  145,632  134,662 
Average loan size (1)$0.239  $0.240  $0.240  $0.240  $0.239  $0.239 
Average coverage (2)24.5% 24.4% 24.4% 24.4% 24.3% 24.2%
Loans in default (count)1,000  928  350  249   207   179 
Percentage of loans in default0.5% 0.5% 0.2% 0.2% 0.1% 0.1%
Risk in force on defaulted loans$57  $53  $19  $14  $12  $10 
Average premium yield (3)0.43% 0.44% 0.43% 0.41% 0.40% 0.43%
Earnings from cancellations$2.8  $4.2  $4.3  $3.8  $2.5  $5.1 
Annual persistency (4)85.7% 86.1% 85.1% 83.1% 81.3% 80.7%
Quarterly run-off (5)3.1% 3.9% 3.8% 3.4% 2.9% 4.6%
                  
(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 present our total primary NIW by FICO, loan-to-value (LTV) ratio, and purchase/refinance mix for the periods indicated.

  
Primary NIW by FICOFor the three months ended
 March 31, 2018 December 31, 2017 March 31, 2017
 ($ In Millions)
>= 760$2,619  $2,847  $1,683 
740-7591,073  1,055  551 
720-739914  943  456 
700-719811  877  396 
680-699567  611  264 
<=679476  543  209 
Total$6,460  $6,876  $3,559 
Weighted average FICO743  743  749 
         


  
Primary NIW by LTVFor the three months ended
 March 31, 2018 December 31, 2017 March 31, 2017
 (In Millions)
95.01% and above$997  $988  $274 
90.01% to 95.00%2,765  2,889  1,612 
85.01% to 90.00%1,755  1,870  1,101 
85.00% and below943  1,129  572 
Total$6,460  $6,876  $3,559 
Weighted average LTV92.5% 92.3% 92.0%
         


  
Primary NIW by purchase/refinance mixFor the three months ended
 March 31, 2018 December 31, 2017
 March 31, 2017
 (In Millions)
Purchase$5,425  $5,738  $2,984 
Refinance1,035  1,137  575 
Total$6,460  $6,875  $3,559 
            

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 March 31, 2018
 IIF RIF
 (In Millions)
March 31, 2018$6,427  $1,573 
201720,272  4,948 
201617,497  4,262 
20157,913  1,971 
20141,292  323 
201333  8 
Total$53,434  $13,085 
        

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, 2018 December 31, 2017 March 31, 2017
 (In Millions)
>= 760$25,371  $23,438  $17,408 
740-7598,635  7,781  5,658 
720-7396,981  6,259  4,460 
700-7195,814  5,179  3,533 
680-6993,852  3,408  2,336 
<=6792,781  2,400  1,384 
Total$53,434  $48,465  $34,779 
            


  
Primary RIF by FICOAs of
 March 31, 2018 December 31, 2017 March 31, 2017
 (In Millions)
>= 760$6,246  $5,764  $4,253 
740-7592,125  1,909  1,383 
720-7391,710  1,527  1,081 
700-7191,416  1,256  851 
680-699932  821  556 
<=679656  566  320 
Total$13,085  $11,843  $8,444 
            


  
Primary IIF by LTVAs of
 March 31, 2018 December 31, 2017 March 31, 2017
 (In Millions)
95.01% and above$4,872  $3,946  $1,931 
90.01% to 95.00%23,937  21,763  15,601 
85.01% to 90.00%16,034  14,766  11,058 
85.00% and below8,591  7,990  6,189 
Total$53,434  $48,465  $34,779 
            


Primary RIF by LTVAs of
 March 31, 2018 December 31, 2017 March 31, 2017
 (In Millions)
95.01% and above$1,294  $1,054  $533 
90.01% to 95.00%6,978  6,354  4,585 
85.01% to 90.00%3,831  3,523  2,626 
85.00% and below982  912  700 
Total$13,085  $11,843  $8,444 
            


  
Primary RIF by Loan TypeAs of
 March 31, 2018 December 31, 2017 March 31, 2017
      
Fixed98% 98% 99%
Adjustable rate mortgages:     
Less than five years     
Five years and longer2  2  1 
Total100% 100% 100%
         

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

  
Primary IIFFor the three months ended
 March 31, 2018 December 31, 2017 March 31, 2017
 (In Millions)
IIF, beginning of period$48,465  $43,259  $32,168 
NIW6,460  6,876  3,559 
Cancellations and other reductions(1,491) (1,670) (948)
IIF, end of period$53,434  $48,465  $34,779 
            

Geographic Dispersion

The following table shows the distribution by state of our primary RIF as of the periods indicated.

  
Top 10 primary RIF by stateAs of
 March 31, 2018 December 31, 2017 March 31, 2017
California13.5% 13.5% 13.8%
Texas8.0  7.8  7.2 
Virginia5.1  5.3  6.3 
Arizona4.8  4.6  4.1 
Florida4.7  4.5  4.4 
Michigan3.7  3.7  3.7 
Pennsylvania3.6  3.6  3.6 
Colorado3.5  3.6  3.9 
Maryland3.4  3.5  3.7 
Utah3.4  3.5  3.6 
Total53.7% 53.6% 54.3%
         

The following table shows portfolio data by book year, as of December 31, 2017.

  
 As of March 31, 2018
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  $33  20% 655  177  1  1  0.3% 0.3%
20143,451  1,292  37% 14,786  6,627  79  17  3.8% 0.6%
201512,422  7,913  64% 52,548  36,383  338  27  3.1% 0.7%
201621,187  17,497  83% 83,626  72,004  374  11  2.4% 0.5%
201721,583  20,272  94% 85,900  82,145  207    2.3% 0.2%
20186,460  6,427  99% 26,026  25,927  1    0.5% %
Total$65,265  $53,434    263,541  223,263  1,000  56     
                          
(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
    
 March 31, 2018 March 31, 2017
    
 (In Thousands)
Beginning balance$8,761  $3,001 
Less reinsurance recoverables (1)(1,902) (297)
Beginning balance, net of reinsurance recoverables6,859  2,704 
    
Add claims incurred:   
Claims and claim expenses incurred:   
Current year (2)1,940  955 
Prior years (3)(371) (320)
Total claims and claims expenses incurred1,569  635 
    
Less claims paid:   
Claims and claim expenses paid:   
Current year (2)   
Prior years (3)371  142 
Total claims and claim expenses paid371  142 
    
Reserve at end of period, net of reinsurance recoverables8,057  3,197 
Add reinsurance recoverables (1)2,334  564 
Ending balance$10,391  $3,761 
        
(1) Related to ceded losses recoverable under the QSR Transactions, included in "Other Assets" on the Condensed Consolidated Balance Sheets.
(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.

  
 For the three months ended
 March 31, 2018 March 31, 2017
Beginning default inventory928  179 
Plus: new defaults413  124 
Less: cures(324) (92)
Less: claims paid(17) (4)
Ending default inventory1,000  207 
      

The following table provides details of our claims paid, before giving effect to claims ceded under the 2016 QSR Transaction, for the periods indicated. No claims were ceded under the 2018 QSR Transaction during the periods indicated.

  
 For the three months ended
 March 31, 2018 March 31, 2017
 (In Thousands)
Number of claims paid (1)17  4 
Total amount paid for claims$482  $142 
Average amount paid per claim (2)$34  $35 
Severity(3)74% 88%
      
(1)  Count includes claims settled without payment.
(2)  Calculation is net of claims settled without payment.
(3)  Severity represents the total amount of claims paid divided by the related RIF on the loan at the time the claim is perfected.
      

The following table shows our average reserve per default, before giving effect to reserves ceded under the QSR Transactions, as of the periods indicated.

    
Average reserve per default:As of March 31, 2018 As of March 31, 2017
 (In Thousands)
Case (1)$9  $16 
IBNR1  2 
Total$10  $18 
        
(1) Defined as the gross reserve per insured loan in default.
 

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

  
 As of
 March 31, 2018 December 31, 2017 March 31, 2017
 (In Thousands)
Available assets$555,336  $527,897  $466,982 
Risk-based required assets522,260  446,226  398,859