NMI Holdings (NMIH) Q3 2026 earnings review
Mortgage insurer National MI covers more loans, but claims jump
National MI, which protects lenders when small-down-payment buyers default, covered more loans than ever but earned less. Its claims bill rose by more than half from a year ago, so net income slipped 3%. Premiums grew slower than the insured book, because older single-payment policies contributed less.
| Insured mortgages | $229.7 billion +5% from a year ago |
|---|---|
| Claims costs | $29.1 million $18.6 million a year ago |
| Profit per share | $1.23 $1.22 a year ago |
| Outlook | None given buybacks to stay near the recent pace |
⚖️ Verdict: 🔴 Bearish
The story got worse because claims rose against the year-ago quarter, so the seasonal reasons finance chief Aurora Swithenbank gave cannot explain them. Releases of reserves set aside in earlier years shrank to about $2 million, from $9 million. One offset: fewer policies left than in the second quarter, and chief executive Adam Pollitzer said retention steadied in the latest data.
The question now is whether claims settle near this level as loans written since 2022 age. Pollitzer says those loans lose no more than the insurer priced for; if he is wrong, defaults keep climbing and reserve releases stay small. The fourth-quarter default count and reserve releases will tell.
🐂 Bull Case
New Business Grew 4% Despite a Harder Comparison
National MI sells insurance that pays lenders when a home buyer with a small down payment defaults. New policies replace older ones that end.
The insurer wrote $13.6 billion of new cover, 4% more than a year earlier. Growth had reached 29% in the second quarter, but the year-ago third quarter set a far larger base. The company credited "increased penetration of existing customer accounts and new customer activations".
Chief executive Adam Pollitzer said the insured book has grown 51% since the buyback began, against 14% for rivals. So lenders keep choosing National MI despite high mortgage rates.
What to watch: fourth-quarter new business against $14.2 billion a year earlier. Matching that base would show lenders still shifting business to National MI after the refinancing boost faded.
Capital Above the Required Minimum Reached $1.6 Billion
Fannie Mae and Freddie Mac, which buy most US mortgages, set rules on how many assets an insurer must hold. National MI holds far more, and the surplus funds buybacks.
The surplus reached $1.6 billion in September, 16% more than a year earlier. The insurer also kept buying back stock, quarter after quarter.
- Diluted share count: down 3.4% from a year ago
- Profit per share: up 1%, while net income fell 3%
Those buybacks turned a small fall in profit into a small gain per share. Chief executive Adam Pollitzer said "we'll continue to pace roughly in line with where we've been", so the surplus keeps building.
What to watch: the fourth-quarter buyback. A larger one would show the insurer spending its surplus rather than holding it for a downturn.
🐻 Bear Case
Claims Costs Rose 57% From a Year Ago
When a borrower misses two payments, National MI sets money aside for a possible claim. Finance chief Aurora Swithenbank attributed the rise to "normal seasonal activity and the continued growth and seasoning of our portfolio". Yet the year-ago quarter had the same seasons, and claims expense reached $29.1 million, against $18.6 million then.
- Loans in default: 8,571, up 21%
- Earlier-year reserve releases: $2.4 million, against $8.7 million
- Share of insured amount paid per claim: 87%, against 73%
- Claims as a share of revenue: 15.5%, up 5.1 percentage points
- Texas and Florida share of insured risk: 14.9%, against 15.5%
Releases of old reserves, which come when borrowers catch up, nearly stopped. The filing blamed "an increase in the proportion of claims related to loans originated in more recent years", because those borrowers hold less home equity.
Chief executive Adam Pollitzer said losses on books written since 2022 sit "in line to better than our priced expectations". Yet defaults keep rising, so those books have not finished adding claims.
What to watch: fourth-quarter releases of earlier-year reserves. Small releases would keep claims high even without new stress in housing.
Premiums Grew Slower Than the Insured Book
In October the insurer signed treaties covering "all new business produced through 2030", which finance chief Aurora Swithenbank called "among the best we've ever achieved".
- Premium rate before reinsurance and cancellation gains: 0.334% a year, against 0.336% last quarter
- Share of risk passed to reinsurers on 2027–2029 loans: 35%, against 20% on 2023–2025 loans
Premiums trail the book: net premiums earned rose 2.7%, while insured loans grew 5%. The filing cited "a reduction in the contribution of earnings from single premium policies".
Chief executive Adam Pollitzer said "we price on a gross line basis", so sharing more risk cuts the premium the insurer keeps.
What to watch: premium growth against insured-loan growth in early 2027, when the 35% share begins. A wider gap would show the cost reaching profit.
More Borrowers Cancel Their Mortgage Insurance Early
Mortgage insurance ends when a borrower repays the loan or uses home equity to cancel it. Persistency, the share of insured loans still covered a year later, fell to 80.8% from 83.9%. Chief executive Adam Pollitzer said homeowners who borrow against their homes use the new appraisals to cancel cover. The decline has steadied in the latest data, he added.
On October 22 the US president signed an executive order on housing costs. It lets the housing regulator start a trial for borrowers who meet "equity-related and other requirements for cancellation of mortgage insurance". The trial would cover only new mortgages, and regulators have not issued details.
What to watch: the regulator's first rules for the trial. Wide eligibility would cut the years of premium each new policy earns.
Paper Losses on Its Bonds More Than Doubled
National MI invests the premiums it collects in bonds, and the interest now makes up a larger share of revenue. Investment income rose 20% to $32.2 million, because the insurer reinvests "rolling maturities at incrementally higher rates".
But the recent rise in interest rates also cut the value of bonds it already holds. Unrealized losses reached $184.9 million in September, against $86.3 million in December, "primarily driven by fluctuations in interest rates", the filing said.
Reported profit includes these losses only if the insurer sells the bonds before they mature. Equity absorbs them either way, so comprehensive income, which counts them, came to just $17.9 million.
What to watch: unrealized losses in the fourth-quarter filing. Further growth would slow the rise in book value that supports buybacks.
👓 Other Themes
Lenders Start Using a New Credit Score
Since April 22, Fannie Mae and Freddie Mac have accepted loans scored with VantageScore 4.0, a credit score that competes with FICO. National MI judged the score fit for its underwriting and pricing. These loans make up less than 1% of insured loans. The insurer wrote that "we expect volume will increase in future periods as more lenders incorporate the new standard".
💲 Other KPIs
Book value per share, before paper gains and losses on bonds, rose 14.4% from a year ago. The pace has eased from 16% in late 2025. Including the bond marks, book value per share was $36.13. Buybacks help, because they spread equity over fewer shares.
Operating costs took 19.8% of net premiums, against 19.3% a year ago. Underwriting and operating expenses rose 5.6%, and the filing pointed to higher employee pay. The ratio has stayed between 19.3% and 20.4% for five quarters.
Premiums owed to the insurer jumped 16.7% from a year ago, far ahead of premium growth. The balance had sat near $86 million for four quarters. The 10-Q says it moves with monthly policies, which pay a month late, and with how fast older bills settle.
By our math, the insured book added $2.6 billion in the quarter, against $3.7 billion a year earlier. Cancellations and repayments took $11.0 billion of loans off the book, so new business added less. The quarterly share of loans leaving eased to 4.9% from 5.1% in the second quarter.
🔮 Guidance
Unchanged. Chief executive Adam Pollitzer said repurchases will continue at roughly the recent pace. By our math, they averaged about $29 million a quarter over the last four quarters, fees included. The amount has barely moved for six quarters, even as the capital surplus kept growing.
New. Finance chief Aurora Swithenbank said the fourth quarter "does tend to have higher accruals in years that we have performed well", tied to employee pay. A year ago, these costs rose to $31.1 million in the fourth quarter from $29.2 million in the third. By our math that step was 6.6%, and a repeat would lift the expense ratio again.
❓ Key Questions
How much will the bigger reinsurance share cut premiums?
Reinsurers will take 35% of the risk on new loans from early next year, up from 20% on recent books. Neither executive has said how much that trims the premium rate National MI keeps.
How much reserve release is left from earlier years?
Releases of earlier-year reserves nearly stopped this quarter. The insurer still holds $103.5 million of gross reserves on older defaults, and how much returns through cures decides whether claims stay this high.
Who could qualify for the federal cancellation trial?
The October executive order lets the housing regulator start a trial in which borrowers with enough equity can cancel their mortgage insurance. Regulators have not issued details, so National MI cannot yet say how much sooner new policies might end.
How many cancellations do borrowers start themselves?
Chief executive Adam Pollitzer said many borrowers use new appraisals to cancel cover early. He declined to size this against automatic cancellations once a loan falls to 78% of the home's original value. That split shows how fast newer books will shrink.
What surplus level would change the buyback pace?
The capital surplus above the required minimum keeps rising while buybacks stay near the same quarterly amount. The insurer has not said what it holds the extra capital for, or what level would prompt larger returns.