Good day, and welcome to the NMI Holdings Inc. First Quarter 2026 Earnings Conference Call. The operator provided instructions on the question-and-answer process. Please note this event is being recorded. I'd now like to turn the conference over to John Swenson of management. Please go ahead.

Thank you, operator. Good afternoon, and welcome to the 2026 First Quarter Conference Call for National MI. I'm John Swenson, Vice President of Investor Relations and Treasury. Joining us on the call today are Brad Shuster, Executive Chairman; Adam Pollitzer, President and Chief Executive Officer; and Aurora Swithenbank, our Chief Financial Officer. Financial results for the quarter were released after the close today. The press release may be accessed on NMI's website located at nationalmi.com under the Investors tab. During the course of this call, we may make comments about our expectations for the future. Actual results could differ materially from those contained in these forward-looking statements. Additional information about the factors that could cause actual results or trends to differ materially from those discussed on the call can be found on our website or through our filings with the SEC. If and to the extent the company makes forward-looking statements, we do not undertake any obligation to update those statements in the future in light of subsequent developments. Further, no one should rely on the fact that the guidance of such statements is current at any time other than the time of this call. Also note that on this call, we may refer to certain non-GAAP measures. In today's press release and on our website, we've provided a reconciliation of these measures to the most comparable measures under GAAP. Now I'll turn the call over to Brad.

Thank you, John, and good afternoon, everyone. I'm pleased to report that in the first quarter, National MI again delivered standout operating performance, continued growth in our insured portfolio and strong financial results. Our lenders and their borrowers continue to turn to us for critical down payment support. And in the first quarter, we generated $12.3 billion of NIW volume. Ending the period with a record $222.3 billion of high-quality, high-performing, primary insurance-in-force. In Washington, our conversations remain active and constructive. We have long noted that there is bipartisan recognition of the unique and valuable role that the private mortgage insurance industry plays. We are in the market every day with a clear mandate and purpose, offering a low-cost, high-value solution that helps borrowers bridge the down payment gap and meaningfully reduces the cash required at the closing table. In the process, we help to make homeownership more affordable and achievable for millions of Americans in communities across the country. With coverage that works to insulate the GSEs and taxpayers from risk and loss in a downturn. National MI and the broader private MI industry have never been stronger or better positioned to provide support than we are today, and we're looking forward to continuing to work with the administration to advance their important housing goals. With that, let me turn it over to Adam.

Thank you, Brad, and good afternoon, everyone. National MI continued to outperform in the first quarter, delivering significant new business production, consistent growth in our insured portfolio and strong financial results. We generated $12.3 billion of NIW volume and ended the period with a record $222.3 billion of high-quality, high-performing primary insurance-in-force. Total revenue in the first quarter was a record $183.5 million, and we delivered adjusted net income of $99.4 million or $1.28 per diluted share and a 15.2% adjusted return on equity. Overall, we had a terrific quarter and are confident as we look ahead. The macro environment and housing market have remained resilient through an extended period of headline volatility. Our lender customers and their borrowers continue to rely on us in size for critical down payment support, and we see an attractive and sustained new business opportunity fueled by long-term secular trends. We have an exceptionally high-quality insured portfolio covered by a comprehensive set of risk transfer solutions and our credit performance continues to stand ahead. We're delivering consistent growth and embedded value gains in our insured book. And we continue to manage our expenses and capital position with discipline and efficiency, building a robust balance sheet that's supported by the significant earnings power of our platform. Taken together, we see a clear opportunity for continued outperformance. Notwithstanding these strong positives, however, macro risks do remain and we've maintained a proactive stance with respect to our pricing, risk selection and reinsurance decisioning. It's an approach that has served us well and continues to be the prudent and appropriate course. More broadly, we've been encouraged by the continued discipline that we see across the private MI market. Underwriting standards remain rigorous, and the pricing environment remains balanced and constructive. Overall, we had a terrific quarter, delivering strong operating performance, consistent growth in our insured portfolio and strong financial results. Looking ahead, we're well positioned to continue to serve our customers and their borrowers, invest in our employees and their success, drive growth in our high-quality insured portfolio and deliver through the cycle growth, returns and value for our shareholders. With that, I'll turn it over to Aurora.

Thank you, Adam. We again delivered strong financial results in the first quarter. Total revenue was a record $183.5 million. Adjusted net income was $99.4 million or $1.28 per diluted share, and adjusted return on equity was 15.2%. We generated $12.3 billion of NIW and our primary insurance-in-force grew to $222.3 billion. 12-month persistency was 82.2% in the first quarter compared to 83.4% in the fourth quarter. Net premiums earned in the first quarter were a record $154.8 million compared to $152.5 million in the fourth quarter and $149.4 million in the first quarter of 2025. Net yield for the quarter was 28 basis points, consistent with the fourth quarter. Core yield, which excludes the cost of our reinsurance coverage and the contribution from cancellation earnings was 34 basis points, also unchanged from the fourth quarter. Investment income was $28.6 million in the first quarter compared to $27.5 million in the fourth quarter and $23.7 million in the first quarter of 2025. Total revenue was a record $183.5 million in the first quarter, up 2% compared to the fourth quarter and 6% compared to the first quarter of 2025. Underwriting and operating expenses were $30.6 million in the first quarter compared to $31.1 million in the fourth quarter. Our expense ratio was 19.8% in the quarter compared to 20.4% in the fourth quarter. We have a uniquely high-quality insured portfolio and our credit performance continues to stand out. We had 8,044 defaults at March 31, compared to 7,661 at December 31, and our default rate was 1.17% at quarter end. Claims expense in the first quarter were $20.7 million compared to $21.2 million in the fourth quarter and $4.5 million in the first quarter of 2025. GAAP net income for the first quarter was $99.3 million and diluted earnings per share was $1.28. Adjusted net income was $99.4 million and adjusted diluted EPS was also $1.28. Shareholders' equity as of March 31 was $2.6 billion and book value per share was $34.57. Book value per share, excluding the impact of net unrealized gains and losses in the investment portfolio was $35.46, up 3% compared to the fourth quarter and 15% compared to the first quarter of last year. In the first quarter, we repurchased $27.7 million of common stock, retiring 716,000 shares at an average price of $38.65. Since starting our buyback program in 2022, we've repurchased a total of $377 million of common stock, retiring 12.8 million shares at an average price of $29.43. We have $198 million of repurchase capacity remaining under our existing program. At quarter end, we reported $3.6 billion of total available assets under PMIERs and $2.2 billion of risk-based required assets. Excess available assets were $1.5 billion. Overall, we achieved robust financial results during the quarter, delivering consistent growth in our high-quality portfolio, record top line performance, continued expense efficiency and strong bottom line profitability and returns. With that, let me turn it back to Adam.

Thank you, Aurora. We had a terrific quarter, once again delivering significant new business production, consistent growth in our high-quality insured portfolio, and strong financial results. We have a strong customer franchise, a talented team driving us forward every day, an exceptionally high-quality book covered by a comprehensive set of risk transfer solutions, and a robust balance sheet supported by the significant earnings power of our platform. Taken together, we are well positioned to continue to serve our customers and their borrowers, invest in our employees and their success, drive growth in our high-quality insured portfolio and deliver through the cycle growth, returns and value for our shareholders. Thank you for joining us today. I'll now ask the operator to come back on so we can take your questions.

The first question today comes from Bose George with KBW.

First, I wanted to ask what was the default per new notice this quarter versus last quarter, that's a little hard to calculate sometimes just with the intra-quarter cures.

Sorry, Bose, was the question specifically around the reserve per new notice?

Yes, yes, the reserve per new notice for this quarter versus last?

It's $14,200, which is broadly consistent with the $14,500 that we established last quarter.

Okay. Great. And in terms of the delinquency rate in the first quarter over the fourth quarter, was that in line with expectations given the seasonality increase, but obviously, it's a very modest increase.

Yes. Bose, I think that's right. Look, broadly speaking, I'd say we're really encouraged by the credit performance of our portfolio, including the trends in our default population. We've talked about it. We're continuing to see a natural normalization in our experience tied to just the growth and seasoning of our book. That's nothing new. And then seasonality, you noted there's always going to be a plus/minus around that seasonality. Just one, depending on how things trended in the preceding quarter because it's a period-to-period view what's happening in the macro. And there's other factors also that can play into it, particularly in the first quarter, the timing of when borrowers received their tax refunds, for example. But as you noted, when we look at it, we have an incredibly high-quality portfolio. Our existing borrowers are broadly well situated and the resiliency that we continue to see in the macro environment and housing market continues to set a favorable backdrop. And when all of that comes through performance, we were really encouraged by the performance. Nothing stood out to us that we highlight as a point of concern.

Okay. Great. Actually, just one more on credit. The loss severity number trended up a little bit as well. Anything to call out there? Or is it just a small cohort of loans there?

Yes. I think it is that, it's a law of small numbers. And also, it reflects what Adam was just talking about of the growth of the seasoning of our book. More and more of our ultimate claims, both our NODs and those progressing through to claims are from those post-COVID vintages, the '22s and later, which inherently have less embedded equity in them.

Yes. We only paid 170 claims in Q1. So it's still a very small pool to draw from.

Yes. Yes. Absolutely.

The next question comes from Terry Ma with Barclays.

Maybe just a follow-up on credit. Anything kind of notable to kind of call out either within the vintages or regionally that you're kind of seeing? And then just overall, how are you thinking about the macro environment on just the consumer with higher energy prices?

Yes. Maybe I'll take them in reverse order because I think it's probably useful to talk about the big picture and then to talk about anything that stood out in the quarter. I think we've been, we use the phrase encouraged right across the board, but we've really been encouraged by the broad resiliency that we've seen in the housing market and the economy for a while now. Headline unemployment is still low. Consumers are still spending. Businesses are continuing to make significant investments. The equity market continues to set new highs. And I think we've got a little bit of stimulus coming in just in the form of larger tax refunds under the One Big Beautiful Bill Act. But real risks do remain, right? The labor market continues to show some signs of strain with the slowdown in hiring activity. Confidence is certainly down on the consumer side. And getting to what you've touched on, I think the conflict in the Middle East has certainly added a new dimension to things. The approach that we've generally taken all along is to plan for the possibility that stress could emerge. And if it doesn't, we'll be happy to have planned and protected nonetheless. I think we're at the point now of being happy to have built our business with an eye toward disciplined and long-term risk responsibility to make sure that we can continue to perform through all cycles. But right now, when we look at the backdrop, it's still a broadly encouraging one. In terms of the impact specifically from higher gas prices, I mentioned that the conflict in Iran has added a new dimension. But in terms of gas prices themselves, we really don't expect to see a notable impact. If you parse through all of the data, although oil prices are up dramatically and there is real impact for certain households, they're still actually below where they were in 2022 at the onset of the war in Ukraine. On an inflation-adjusted basis, they're still below where they were in the late 2000s and early 2010s. Gas today accounts for roughly 3% of household expenditures. So when you put all of that together, while there will certainly be pockets of the market that are impacted and it may affect broad consumer behavior, we don't really expect to see anything of consequence come through in our default activity or claims experience, again, in isolation related to gas prices. As to the second question, whether there's anything to call out in the default population, nothing new at all, I would say, in terms of borrower risk or geographic concentrations that emerged in Q1 compared to where they've been. All the same trends we've seen for a while continue, which is a little more strain in higher-risk cohorts. There's more default concentration in the geographies we've had in focus for a while now, like Florida and Texas. And just the natural movement that Aurora mentioned in terms of the vintage composition, with an incremental portion of our defaults now tracing to '22, '23, and '24. But none of this is new. It's just a continuation of the themes we've been talking about and seeing for a while now.

Got it. That's super helpful. I guess maybe taking a step back, big picture, I think it's well-known and also well messaged that the MI industry is experiencing measured credit normalization. Is there anything in this quarter that may suggest that, that rate of normalization may be accelerating? Because at least from the outside looking in, from what we could see, it looks like new notices are accelerating on a year-over-year basis. The cure rate is lower also relative to last year. So like anything that may suggest that the rate of credit normalization may be accelerating? Or should it just kind of stay stable? Like, any color would be helpful.

Yes, obviously, so much depends on what happens in the world around us, but there's nothing that stood out this quarter that makes us think we will get to normal quicker than where we were otherwise pacing. I do think the quarter-on-quarter trend is obviously instructive and it's valuable to look at. If you broaden the aperture a bit, though and look at, say, how NOD count has trended over the last 6 months, just not the last quarter and you compare the experience that we've had, say, from the end of Q3 '25 to Q1 '26. It actually comps favorably to the experience that we had at the end of the third quarter of '24 to the first quarter of '25. So again, I think there's nothing that really stands out. Borrowers are broadly well situated. The environment around us is still quite a favorable one. And movements quarter-to-quarter, nothing stood out in a way that we call attention to.

And just on the cure rate, it was down at 28%, but it was 31% in the first quarter of last year. So it was only very nominally down year-over-year.

The next question comes from Rick Shane with JPMorgan.

I apologize, I've got a few things going on here. But look, first quarter, and we talked about this a lot with the consumer finance names. The first quarter was sort of a tale of two quarters. I would describe it as January and February being pre-Iran, and March and April being post. I am curious how that impacted the contours of your quarter in terms of volume, and whether you saw anything else we should be aware of?

Yes. Rick, it's a good question. I think confidence obviously plays an important role in the consumer decision to purchase a home. For most borrowers, it's the single largest asset they'll ever own. Not only do you need to be at a point in life where it makes sense in terms of family dynamics and wanting to put down roots in the community and consider the schools and all these life events, the math also has to pencil out from an affordability and value standpoint, but you have to feel confident to make such a significant leap. So that does play a role in it. But even more important is the arc of interest rates. In the period you mentioned, January and February, we saw a continued rally in rates, and toward the end of February we touched a multiyear low at 5.99 percent. Even though that's just below 6 percent, the psychological value of seeing a rate with a 5 handle is really powerful. Since then, rates have sold off and today we closed at roughly 6.5 percent on the 30-year fixed-rate mortgage. That has had the biggest impact on the pace of refinancing activity. The first quarter was a strong quarter for purchase volume and even stronger for refinancing volume, and we've seen some of that refinancing begin to slow as rates have moved higher — a 50 basis point move is a pretty significant change. I think that's going to be a much more significant driver than the psychology and confidence effects related to what's happening in the Middle East.

The next question comes from Mark Hughes with Truist.

I wonder if you could talk about the competition, the competitive dynamic in the quarter. Your NIW was quite strong year-over-year. I think you just touched on the cancellations, which I assume was a little more refi activity in the quarter. But anything you would say about competition, what that implies for the balance of the year?

Yes. I mentioned we see a broadly balanced and constructive market environment around us, both in terms of how lenders are engaging and where credit standards are set, and also the general tone of the competitive environment. In terms of our performance, we're delighted with our results for the quarter from an NIW volume standpoint — up 33% year-over-year is a terrific result. I point to two drivers. One is foundational on-the-ground execution: doing what we do every day, adding more customers, providing value-added input to existing accounts so we can win more of their business, and proactively managing our mix of business and flow by borrower, geography, product and risk attributes. The second is the market. Despite elevated rates, the MI market presents a compelling and durable opportunity. In Q1, particularly in January and February, declining rates added to that and helped spur incremental activity both on the purchase side and on the refi side. All in, because of what we're achieving with our customer franchise and the constructive market around us, it was a very constructive quarter. Looking out across the year, we don't provide guidance, but reflecting on comments from our Q4 call: coming into the year we generally expected 2026 volume would look similar to how 2025 volume trended from an overall market standpoint — a strong year where long-term secular drivers of demand and activity continue to come through, where resiliency in house prices supports larger loan sizes, and where affordability challenges drive a real need for private MI coverage and the down payment support we provide. That has been the case through the first quarter. Q1 was stronger than Q1 last year because we had the tailwind of rates; now that rates have sold off, we are still calibrating off 2025 performance, which was a highly constructive environment, and we would be delighted to see that type of experience this year.

Understood. And then on the expenses, just in absolute terms, you've been last 3 quarters kind of down a little bit, up a little bit. Year-over-year on expenses and that's contributed to nice leverage. Does that pattern continue in subsequent quarters on an absolute basis, maybe just a modest progression?

I think in terms of absolute dollars of expenditure, we've said this before, we will expect increases over time, but we try to be very disciplined about minimizing those increases. So each individual quarter has its own quirks and certain things that manifest in those quarters. So I think the best comparison is year-over-year. And in the first quarter of last year, we had $30.2 million of expense. This year, it's $30.6 million of expense. So again, as you indicated, a modest increase. But I think we need to balance against that. We have the smallest expense base in absolute dollar terms in the industry, and we want to make sure we're continuing to invest in our people, our systems, our data and analytics and risk management and making sure that we're making those investments for future value. So I think we're going to continue to remain disciplined but you should expect, over time, increases to that absolute dollar expenditure.

The next question comes from Mihir Bhatia with Bank of America.

Adam I wanted to go back to the credit discussion a little bit. Maybe just on credit losses, in-period losses in particular, I think they were up pretty materially like $13 million year-over-year versus new notices up being 300. It sounded like you didn't change any assumption. Maybe just talk a little bit about that. Is that just like the extra $13 million was just from the 300 new notices?

No. It's going to be a combination of things. One, the environment is never static. When we're going through this, we're not applying a blanket, homogeneous assumption around frequency or severity. We're actually modeling each individual default and where those defaults sit at the time we close the book, including an estimation of the mark-to-market LTV of that loan. There are different sets of actual experiences that go into how we're marking each of those defaults at a given point in time. The default composition itself has changed; we've talked about this idea of normalizing. If you rewind a year, there would have been fewer defaults in the overall population that trace to the post-COVID vintage — the '22, '23, '24, '25 years, for example, nothing in the 2025 year. Now that more of those are coming through, they're broadly similar to loans that experienced default in prior periods, with one big differential being that the mark-to-market LTV position is higher. That's because those are loans that, while originated in a constructive environment, didn't get the benefit of the record run-up in house prices during the pandemic, and that has a big impact on our expectation for ultimate claim outcomes from initial default. Over time, as house prices continue to move higher and loan sizes increase, the average risk exposure in force for each defaulted loan can grow, and that will contribute to a different reserve per NOD that we're establishing. It's all of those factors together that will drive the differences. Plus, as you noted, there's a larger number of notices that we reserve for.

Okay. And then is that the same, like I guess, is this the mix and the mark-to-market of the loss? Is that what's also driving the reserve per default assumption higher? I'm just trying to understand because obviously you released $26 million of prior period reserves but the reserve for default is moving higher. Is that the same thing that's driving that and would that make you think your results will be different than some of your peers?

Yes. I'm sorry. It is moving nominally higher. So if you look at our entire population of NODs, the average reserve is approximately $14,300, which is up approximately 2% quarter-over-quarter. And if you look at what's driving that change, it really is the larger loan size of the loans that are in default.

Got it. Maybe just turning to NIW for a second. I think it's down a little bit quarter-over-quarter. So I know everyone hasn't reported yet, so we don't have like market share. But I'm sure you do some ongoing monitoring. Maybe just decompose some of that for us? Like what are some of the key factors driving it? I imagine a little bit smaller market, but do you see any shift in market share? Is there any mix shift going on, whether from the bulk market or what have you, that's driving that would make you think your results will be different than some of your peers?

When we look at it, and to be clear because we're talking about share, we don't manage to market share; we never have and that remains true today. In terms of our performance in the quarter, we didn't see any significant moves. One of our competitors announced a bulk transaction over the last few days, which will skew the headline number and should be normalized because that's not flow business that traces to share. Our NIW was up 33% year-on-year. Roughly, we think the market was up about 35% year-on-year, so we are right in line with market growth, which is where we want to be. We're in a terrific position with our customer franchise, and as we continue to perform at that level from a new business flow standpoint, our embedded growth engine — our share of industry insurance-in-force — will naturally continue to accrete higher.

Got it. And then just I'll end with a reinsurance question. The profit commission has been trending a little bit lower. Is that just a function of normalizing credit default, something else going on there?

Yes, that's right. You put your finger on it.

This concludes our question-and-answer session. I'd like to turn the conference back over to management for any closing remarks.

Thank you again for joining us. We'll be participating in the BTIG Housing & Real Estate Conference in New York on May 6, the KBW Virtual Real Estate Finance Conference on May 19 and the Truist Securities Financial Services Conference in New York on May 20. We look forward to speaking with you again soon.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.