NMI Holdings (NMIH) Q3 2025: Book Value Per Share Up 16% as Expense Ratio Hits Record Low

November 4, 2025 | By EarningsIQ Research

NMI Holdings delivered a quarter defined by disciplined cost control and continued insured portfolio growth, with book value per share up double digits and expense efficiency at a record low. Management’s proactive stance on risk selection and capital allocation reflects both confidence in the sector’s resilience and caution amid normalizing credit trends. Investors should watch persistency, reinsurance pricing, and the competitive landscape as new entrants eye the MI market.

Summary

• Expense Discipline Drives Profitability: Record low expense ratio and steady core yield underpin margin strength.
• Portfolio Quality Remains High: Insured book growth and muted default uptick support credit outlook.
• Strategic Focus on Risk and Capital: Management signals ongoing caution on macro and competitive risks.

Performance Analysis

NMI Holdings’ Q3 results showcased the company’s ability to grow its primary insurance in force—up 5% year over year to $218.4 billion—while maintaining robust profitability and expense control. Total revenue reached a record $178.7 million, with net premiums earned and investment income both advancing sequentially and year over year. The expense ratio dropped to a record low of 19.3%, reflecting operational leverage and cost discipline, while underwriting and operating expenses were tightly managed with only minimal quarter-over-quarter variance.

Credit metrics remain solid despite a seasonal uptick in defaults, with the default rate at 1.05% and 7,093 defaults at quarter end, up from 6,709 in Q2. Persistency held at 83.9%, supporting core yield stability at 34.2 basis points. Book value per share excluding net unrealized gains and losses climbed 16% year over year, demonstrating embedded value growth. Share repurchases continued, with $24.6 million deployed in Q3 and $256 million capacity remaining.

• Expense Ratio Efficiency: Record low 19.3% ratio highlights scalable cost structure and reinforces margin durability.
• Default Rate Contained: Uptick in defaults attributed mainly to seasonality and seasoning, not underlying credit stress.
• Capital Deployment: Ongoing buybacks and robust capital position signal confidence in balance sheet strength.

Overall, NMIH’s financial model continues to balance growth, risk, and capital return, positioning the company to navigate both upside and emerging headwinds.

Executive Commentary

Strategic Positioning

1. High-Quality Insured Portfolio

NMIH’s insured book is defined by strong credit performance and prudent risk selection. The company’s focus on high-quality borrowers and comprehensive risk transfer solutions (reinsurance contracts and risk-sharing structures) has limited credit losses and supported stable core yields. Management continues to monitor seasoning and normalization trends but remains encouraged by the portfolio’s resilience.

2. Cost Structure and Operating Leverage

The record low expense ratio and minimal quarter-over-quarter expense growth demonstrate NMIH’s scalable platform. Operating leverage is increasingly evident, as revenue growth outpaces expense increases. Management flagged that Q4 and Q1 typically see higher expenses due to people-related accruals, but the underlying trend supports further margin expansion over time.

3. Capital Allocation and Shareholder Returns

Share repurchases remain a core capital allocation lever, with $24.6 million deployed in Q3 and significant capacity remaining. Book value per share growth (up 16% year over year) reflects both retained earnings and disciplined buybacks. The company’s $1.4 billion in excess available assets under PMIRs (Private Mortgage Insurer Eligibility Requirements) provides flexibility for future capital deployment or risk absorption.

4. Reinsurance and Risk Transfer Strategy

NMIH is leveraging robust reinsurance markets, favoring traditional structures for forward coverage and cost efficiency. Management highlighted locked-in capacity for 2025 and 2026, with ongoing discussions to optimize further. The company remains active in both XOL (excess of loss) and ILN (insurance-linked notes) markets, but sees current value in traditional reinsurance for its flexibility and cost.

5. Market Position and Competitive Dynamics

Management downplayed the threat of new entrants, citing the high capital and operational barriers to entry in private MI. The industry’s six incumbents are serving the market effectively, and NMIH’s market share in new business outpaces its share of in-force insurance, positioning it to benefit from potential refinancing cycles. The company’s “everywhere in the market” strategy is designed to capture business in motion and maintain relevance with lenders.

Key Considerations

This quarter’s results reflect NMIH’s disciplined execution and focus on sustainable growth, but investors should remain attentive to evolving market and macro dynamics.

Key Considerations:

• Persistency and Rate Sensitivity: Persistency remains high, but falling rates could drive both refi churn and new business opportunity—impacting portfolio mix and embedded value.
• Credit Normalization: Default uptick is currently seasonal, but management expects continued normalization as the book seasons and macro conditions evolve.
• Reinsurance Market Health: Robust traditional reinsurance pricing and capacity are supporting risk transfer, but any market dislocation could impact future cost or coverage.
• Expense Seasonality: Q4 and Q1 typically see higher expenses due to compensation accruals; investors should not over-extrapolate Q3’s record efficiency.
• Competitive Landscape: While new entrant risk is low, any shift in competitive behavior or pricing discipline could pressure margins or market share.

Risks

Key risks include normalization of credit losses as the portfolio seasons, potential pressure on persistency from falling rates, and exposure to geographic housing market softness in regions like Florida, Texas, and the Sunbelt. Regulatory changes, reinsurance market volatility, and any deterioration in consumer fundamentals could also impact future results. Management’s proactive posture reflects both confidence and caution, but the sector’s cyclicality remains a core risk factor.

Forward Outlook

For Q4 2025, NMIH did not provide explicit numeric guidance but management commentary signals:

• Continued growth in insured portfolio, though with some expected credit normalization and seasonal expense uptick
• Stable core yield, with net yield influenced by claims and reinsurance flows

For full-year 2025, management maintained a constructive outlook:

• Ongoing capital return through buybacks, disciplined expense management, and robust risk transfer activity

Management highlighted several factors that will shape future performance:

• Persistence of high-quality credit performance amid macro uncertainty
• Ability to capture new business in both purchase and refi environments

Takeaways

NMIH’s Q3 results reinforce its position as a disciplined, high-quality operator in private mortgage insurance, balancing growth, risk, and capital return.

• Margin Expansion: Record low expense ratio and stable yields showcase scalable operating model and cost discipline.
• Credit Quality and Embedded Value: Portfolio growth, high persistency, and prudent risk transfer support ongoing book value gains.
• Refinancing Cycle and Market Share: Falling rates could pressure persistency but also unlock incremental new business, with NMIH’s lender connectivity positioning it to capture share.

Conclusion

NMI Holdings delivered a quarter of record profitability and portfolio growth, underpinned by disciplined expense management and robust risk controls. With a strong capital position and embedded value gains, the company is well-equipped to navigate both upside and emerging risks in the mortgage insurance cycle.

Industry Read-Through

NMIH’s results highlight the resilience and discipline across the private mortgage insurance sector, with robust reinsurance markets and high persistency supporting industry profitability. The muted impact of macro volatility and the limited threat from new entrants underscore the strength of incumbent platforms. However, investors should watch for credit normalization and competitive pricing shifts as the housing cycle evolves. The company’s focus on scalable cost structure and risk transfer is a template for sector peers seeking to balance growth and cyclicality in a shifting macro landscape.

NMIH Financials Mortgage Insurance Expense Management Credit Quality Capital Return Reinsurance