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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Presentation
Executive
Bradley Shuster

diluted shares, and our GAAP net income was $22.4 million also $0.34 per diluted share. Return on equity for the quarter was 16%. We are pleased to have again delivered record financial results and are starting 2018 with significant positive momentum in customer development, portfolio growth and return on equity.

With regard to pricing, we are evaluating the appropriateness of recent rate announcements by our competitors. As a rule, we do not view pricing as an efficient competitive tool or the best means to achieve and maintain market presence. Instead we have always held the view that customer service in terms of coverage matter, and that sustainable market presence is built from these core values. Our strong growth in customers and wallet share over these past two years of price stability are certainly evidence of this. We expect to conclude our evaluation of the competitive environment and provide an update on our pricing strategy shortly.

In setting our pricing strategy we will continue to take into account the needs of our customers and their borrowers and our own risk management in return objectives and consider how these might be advanced through in increasingly granular evaluation of risk. We will also consider key external variables such as our current understanding of the PMIERs 2.0 framework. Since riding our first policy in 2013, NMI has enabled more than 260,000 American families to achieve and maintain the dream of homeownership. We have developed strong partnerships with hundreds of vendors based on an innovative coverage and customer service approach.

Tax reform and the immediate and lasting benefit it provides to our financial position will allow us to deliver incremental value to this group through a thoughtful and measured pricing strategy. That said, we will also recognize the importance of delivering attractive risk adjusted returns in excess of our cost of capital for our shareholders and generating strong bottom-line results to continually strengthen our balance sheet and counter party profile. Our pricing strategy will balance these objectives, our desire to serve our customers and their borrowers and our desire to deliver for our shareholders.

We are maintaining our outlook for a mid-teens return on equity in 2018 and expect that we will continue to deliver mid-teens returns over the long term after giving a effect to any change in our pricing strategy. Shifting to Washington matters. Regarding PMIERs we have been actively engaged with the GSEs and FHFA around the proposed changes that were shared with us and other any industry in December. We continue to expect that the industry will be afforded a six month implementation period following publication of any final changes and that any new rules would not take affect before the end of the fourth quarter of this year.

We expect to be in full compliance upon effectiveness and anticipate that we will continue to maintain an ex-desk position upon implementation based on our current capital plan. In mid-March we all learned about Freddie Mac's IMAGIN Pilot program. We have actively