NMI Holdings (NMIH -0.88%), a specialist in private mortgage insurance for high loan-to-value mortgages, released its second quarter 2025 results on July 29, 2025. The company reported non-GAAP EPS of $1.22, above analyst expectations of $1.20. Revenue reached $173.8 million for the second quarter ended June 30, 2025, also beating the analyst forecast of $149.57 million in GAAP revenue. Top-line revenue growth reflected steady portfolio expansion, but higher claims expenses drove a year-over-year jump in the GAAP loss ratio. Overall, the quarter delivered steady growth and robust capital strength, balanced by signs of normalization in credit metrics.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $1.22 | $1.20 | $1.20 | 1.7% |
| Revenue | $173.8 million | $149.57 million | $162.1 million | 7.2% |
| Net Premiums Earned | $149.1 million | $141.2 million | 5.6% | |
| Adjusted Net Income | $96.5 million | $97.6 million | (1.1%) | |
| Loss Ratio | 9.0% | 0.2% | +8.8 pp |
Source: Analyst estimates for the quarter provided by FactSet.
Business Overview and Recent Focus
NMI Holdings provides private mortgage insurance (MI) to lenders, helping borrowers qualify for home loans with smaller down payments. Its core business centers on insuring high loan-to-value mortgages that would otherwise require buyers to put down 20% or more. This insurance protects lenders in case a borrower defaults.
Key to its business are relationships with government-sponsored enterprises (GSEs) such as Fannie Mae and Freddie Mac, which purchase mortgages in the secondary market only if they carry qualifying MI. NMI is licensed in all 50 states, uses its proprietary Rate GPS® pricing system to set risk-based premiums, and relies on disciplined underwriting to keep claims manageable. Sustaining GSE eligibility, managing risk, and maintaining regulatory compliance are all critical to its success. Strong capital reserves and external reinsurance help insulate the company from unexpected losses.
Quarter in Review: Growth, Risks, and Key Metrics
In Q2 2025, GAAP revenue climbed to $173.8 million, well above expectations and up 7.2% from $162.1 million in Q2 2024. This increase reflected continued growth in insurance-in-force (IIF), which reached $214.7 billion at the end of Q2 2025, an increase of 5% from $203.5 billion at the end of Q2 2024. New insurance written (NIW) was $12.5 billion, up 35% from $9.2 billion in Q1 2025, reflecting a recovery from a seasonally slow start to the year. The company's persistent focus on purchase mortgages continued, with 94.8% of new business in this category.
While portfolio growth remained steady, claims and loss metrics signaled a shift. Insurance claims and claims expenses (GAAP) jumped to $13.4 million, up significantly from both the prior quarter ($4.5 million in Q1 2025) and the prior year ($0.3 million in Q2 2024). As a result, the loss ratio—a measure of claims and claims expenses as a share of net premiums—jumped to 9.0% (GAAP). This was an uptick from 0.2% in Q2 2024 and 3.0% in Q1 2025. According to management, this increase was driven by changes in the embedded equity of newer loan vintages (specifically, 2022 and more recent books) rather than weakening borrower quality. The average FICO credit score for new insurance remained stable at 756, while the weighted average loan-to-value ratio was 92.0%.
Operating expenses remained controlled, coming in at $29.5 million for the quarter. The expense ratio—operating expenses divided by net premiums—was 19.8% (GAAP), slightly lower than last quarter (Q1 2025) and a modest improvement over the prior year (Q2 2024). Despite higher claims, the company's capital position was strong. Book value per share (excluding net unrealized gains and losses) rose to $32.08, up 4% quarter over quarter and 16% from a year ago (Q2 2024). Total shareholders’ equity stood at $2.4 billion, and the company reported a surplus of $1.3 billion above required regulatory capital per PMIERs rules, which set standards for mortgage insurer safety and soundness.
Loss reserves for insurance claims (GAAP) reached $163.0 million as of June 30, 2025, up from $125.4 million a year earlier. Default inventory—the number of loans currently in default—was 6,709 at quarter-end, modestly lower than a quarter ago but up from 4,904 in the prior year. Claims paid increased to $5.5 million, dispersed over 93 claims, for an average of $59,000 per claim. The persistency rate, which measures how much insurance stays on the books as older loans pay off or refinance away, slipped slightly to 84.1% from 85.4% in Q2 2024.
The company continued its use of reinsurance, with $32.7 million in reinsurance recoverables at period-end. This risk transfer strategy is an important element of capital management, ensuring regulatory compliance and providing additional loss absorption capacity if claims rise further. Geographic diversification remains broad, with the largest concentrations in California (10.1%), Texas (8.4%), and Florida (7.2%).
It remains fully eligible with both major GSEs. Management reaffirmed its ongoing pricing conservatism and use of comprehensive risk management strategies. No material adjustments or announcements regarding dividends occurred during the quarter. NMIH does not currently pay a dividend.
Looking Ahead and Management's Outlook
Management did not provide explicit financial guidance for the third quarter or for fiscal 2025. Instead, leadership maintained a constructive tone, highlighting a focus on capital strength, high-quality risk selection, and continued growth in the insured portfolio. Operating costs are expected to remain steady following the recent renewal of the Tata Consultancy Services partnership, which supports the company's technology needs and operational efficiency.
Since no specific forward guidance was issued, any shifts in these key metrics will likely serve as the main signposts for the direction of NMI’s earnings in the coming quarters. NMIH does not currently pay a dividend.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
