National MI Reduces Second-Quarter Loss as Business Increases

NMI Holdings Inc., the parent company of National Mortgage Insurance, lost $10.4 million in the second quarter, compared with a $12.9 million loss one year prior.

The improvement in the company's results includes increasing its new insurance written to $2.5 billion for the period, up from $430 million for the second quarter of 2014.

National MI, based in Emeryville, Calif., is the newer of the two post-crisis startup private mortgage insurers and has seen its NIW grow over the past four quarters, including $975 million in in the third quarter of 2014 and nearly $1.7 billion for each in the fourth quarter of 2014 and first quarter of 2015.

Revenue for the company increased to $10.9 million in the most recent period from $3.5 million in the second quarter of last year. But over the same time frame, expenses also increased to $20.9 million from $18.6 million.

The growth in NIW "is primarily attributable to strength in our flow business, which grew 69% over the prior quarter, driven by significant gains with customers who delivered NIW in 2014, contributions from new customers added in 2015 and a stronger-than-expected origination market," said chairman and CEO Bradley Shuster in a press release.

Separately, the U.S. private mortgage insurance business of Genworth Financial had second-quarter net operating income of $49 million, compared with $39 million one year prior.

NIW increased to $8.2 billion from $6.1 billion over the same time frame.

During the quarter, the company sold an additional 14% stake in its Australian MI company. This was followed by an intercompany transaction resulting in $200 million in cash (mostly from the proceeds of that sale) going to the U.S. mortgage insurer to help it meet the secondary market capital standards that go into effect at the end of the year.

In addition, Genworth entered into two reinsurance transactions (one already approved by the government-sponsored enterprises, the other pending approval) that would provide $300 million more towards meeting the capital requirements.

Because of these transactions, as of June 30, Genworth's U.S. MI unit was in compliance with the capital standards.

During the quarter Genworth Financial lost $193 million due to an after-tax loss of $306 million related to the planned sale of its lifestyle protection business. At the time, the company said it would also use the proceeds of this sale to help meet the MI capital requirements.