NMI Holdings, Inc. (NASDAQ:NMIH) Q1 2018 Earnings Conference Call - Preliminary Transcript

May 01, 2018 • 05:00 pm ET

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NMI Holdings, Inc. (NASDAQ:NMIH) Q1 2018 Earnings Conference Call - Preliminary Transcript

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Q & A
Operator
Operator

(Operator Instructions)

Our first question comes from the line of Bose George with KBW. Your line is now open.

Analyst
Bose George

Hey, good afternoon. You might have address this in the prepared remarks, but do you think your premiums will be stable going forward, just leaving aside anything on the ILN side?

Executive
Unidentified Speaker

Yeah. Bose, I think that's right. Certainly through 2018 we'll see stability in our premium yields absent anything that we might do in the ILN market. In terms of our expectations beyond 2018 we generally don't provide exclusive long-term guidance, but there are number of positives that we would expect to come through. We'll continue to see a yield benefit from the shift in our mix of insurance-in-force, that 80:20 long term blend and have that, what we call the core yield dynamic before giving effect to reinsurance and cancellation revenue continue to pull towards higher way towards our rate on new NIW.

For us the run-off effect that happens is different for other in the sector. We didn't price business either in a legacy environment or early post crisis vintages at particularly higher yield, so the run-off impact for us is less -- of less consequence. And even though we're talking about it excluding the impact of reinsurance we do believe that our cost of reinsurance will continue to improve marginally. Our profit commission on our latest quota share deal is higher than it was on our first deal and we would expect to achieve incrementally better pricing on the next ILN transaction than we executed in the first deal.

And obviously all of that has to be considered in the context of where cancellation revenue moves and the pricing strategy that we'll be announcing shortly.

Analyst
Bose George

Okay, great. That's helpful. And then actually just can you remind us in terms of the timing for the ILN. Is there any update there?

Executive
Unidentified Speaker

Yeah. I would say it's something that we're going to focus on in the near term. I don't have a specific transaction date targeted yet, but it's a market that's open on strong terms to MI issurers and we like to capitalize the markets when they're available at favorable terms for us.

Analyst
Bose George

Okay, great. Thanks. Actually just one more from me. The commentary on the IMAGIN program that was helpful about not losing any loans into that program, but just wanted to clarify is that -- because the pricing advantage of that program is not meaningful or it just you don't see it in the market that much or just any color there would be helpful.

Executive
Unidentified Speaker

Yes. Bose, we're seeing limited uptick on the part of our lender customers for the program. And we're aware of a number of them that have opted out of it. And our view is that the pricing advantage that was promoted initially is somewhat over stated given that most LPMI today is executed at levels that are pretty close to the IMAGIN pricing. And to the extend there is any pricing advantage in