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Reinsurance | 9 Months Ended
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Sep. 30, 2025
Reinsurance Disclosures [Abstract] |
Reinsurance | Reinsurance We enter into third-party reinsurance transactions to actively manage our risk, ensure compliance with PMIERs, state regulatory and other applicable capital requirements (respectively, as defined therein), and support the growth of our business. The Wisconsin Office of the Commissioner of Insurance (Wisconsin OCI) has approved and the GSEs have indicated their non-objection to all such transactions (subject to certain conditions and ongoing review). The effect of our reinsurance agreements on premiums written and earned is as follows:
| For the three months ended September 30, |  | For the nine months ended September 30,
| 2025 |  | 2024 |  | 2025 |  | 2024
| (In Thousands)
Net premiums written |  |  |  |  |  |  |
Direct | $ | 181,416 |  |  | $ | 170,541 |  |  | $ | 533,745 |  |  | $ | 499,931 |
Ceded (1) | (34,456) |  |  | (33,860) |  |  | (99,346) |  |  | (99,191) |
Net premiums written | $ | 146,960 |  |  | $ | 136,681 |  |  | $ | 434,399 |  |  | $ | 400,740 |
Net premiums earned |  |  |  |  |  |  |
Direct | $ | 185,779 |  |  | $ | 177,283 |  |  | $ | 549,166 |  |  | $ | 520,634 |
Ceded (1) | (34,456) |  |  | (33,940) |  |  | (99,411) |  |  | (99,466) |
Net premiums earned | $ | 151,323 |  |  | $ | 143,343 |  |  | $ | 449,755 |  |  | $ | 421,168 |
(1) Net of profit commission. Quota Share Reinsurance NMIC is party to eight quota share reinsurance treaties – the 2018 QSR Transaction, effective January 1, 2018 and as modified April 1, 2025, the 2020 QSR Transaction, effective April 1, 2020 and as amended January 1, 2024, the 2021 QSR Transaction, effective January 1, 2021 and as modified July 1, 2025, the 2022 QSR Transaction, effective October 1, 2021, the 2022 Seasoned QSR Transaction, effective July 1, 2022, the 2023 QSR Transaction, effective January 1, 2023, the 2024 QSR Transaction, effective January 1, 2024, and the 2025 QSR Transaction, effective January 1, 2025 – which we refer to collectively as the QSR Transactions. Under each of the QSR Transactions, NMIC cedes a proportional share of its risk on eligible policies to panels of third-party reinsurance providers in exchange for reimbursement of ceded claims and claim expenses on covered policies, a ceding commission and a profit commission (up to a contractually defined maximum) that varies directly and inversely with ceded claims. NMIC may terminate any or all of the QSR Transactions without penalty if, due to a change in PMIERs requirements, it is no longer able to take full PMIERs asset credit for the RIF ceded under the respective agreements. Additionally, under the terms of the QSR Transactions, NMIC may elect to selectively terminate its engagement with individual reinsurers on a run-off basis (i.e., reinsurers continue providing coverage on all risk ceded prior to the termination date, with no new cessions going forward) or cut-off basis (i.e., the reinsurance arrangement is completely terminated with NMIC recapturing all previously ceded risk) under certain circumstances. Such selective termination rights arise when, among other reasons, a reinsurer experiences a deterioration in its capital position below a prescribed threshold and/or a reinsurer breaches (and fails to cure) its collateral posting obligations under the relevant agreement. Each of the third-party reinsurance providers that is party to the QSR Transactions has an insurer financial strength rating of A- or better by S&P, A.M. Best or both. The following table presents the inception date, covered production period, contractual and optional termination dates, current cession rate, ceding commission and profit commission for each outstanding QSR Transaction. Current amounts are presented as of September 30, 2025.
| Inception Date | Covered Production |  | Contractual Termination date |  | Optional Termination date |  | Ceding Percentage |  | Ceding Commission |  | Profit Commission
2018 QSR | 1/1/2018 | 1/1/2018 – 12/31/2018 1/1/2019 – 12/31/2019 |  | 12/31/2029 |  | 12/31/2022 (1) |  | 21% 17% (5) |  | 20% |  | up to 61%
2020 QSR | 4/1/2020 | 4/1/2020 – 12/31/2020 |  | 12/31/2030 |  | 12/31/2025 (1) |  | 21% |  | 36% |  | up to 50%
2021 QSR | 1/1/2021 | 1/1/2021 – 10/30/2021 |  | 12/31/2031 |  | 12/31/2024 (1) |  | 20% |  | 35% |  | up to 54%
2022 QSR | 10/1/2021 | 10/30/2021 – 12/31/2022 |  | 12/31/2032 |  | 12/31/2024 (2) |  | 20% |  | 20% |  | up to 62%
2022 Seasoned QSR | 7/1/2022 | 1/1/2013 – 12/31/2016 7/1/2019 –3/31/2020 |  | 6/30/2032 |  | 6/30/2025 (3) |  | 95% (6) |  | 35% |  | up to 55%
2023 QSR | 1/1/2023 | 1/1/2023 – 12/31/2023 |  | 12/31/2033 |  | 12/31/2025 (2) |  | 20% |  | 20% |  | up to 62%
2024 QSR | 1/1/2024 | 1/1/2024 – 12/31/2024 |  | 12/31/2034 |  | 12/31/2027 (1) |  | 20% |  | 20% |  | up to 56%
2025 QSR | 1/1/2025 | 1/1/2025 – 12/31/2025 |  | 12/31/2035 |  | 12/31/2027 (4) |  | 20% |  | 20% |  | up to 62%
(1) NMIC has the option, based on certain conditions and subject to a termination fee, to terminate the agreement as of the optional termination date, or at the end of any calendar quarter thereafter which could result in NMIC recapturing the related risk. (2) NMIC has the option, based on certain conditions and subject to a termination fee, to terminate the agreement as of the optional termination, or semi-annually thereafter, which could result in NMIC recapturing the related risk. (3) NMIC has the option, based on certain conditions, to terminate the agreement as of June 30, 2025 or quarterly thereafter through December 31, 2027 with the payment of a termination fee, and as of March 31, 2028 or quarterly thereafter without the payment of a termination fee. Such termination could result in NMIC recapturing the related risk. (4) NMIC also holds a clean-up call that provides for termination of the agreement at its election at any time on or after the date the risk on remaining covered policies falls to 10% or less of the risk on covered policies at December 31, 2025. (5) Under the terms of the 2018 QSR Transaction, NMIC cedes premiums earned related to 21% of the risk on eligible policies written in 2018 and 17% of the risk on eligible policies written in 2019. (6) Under the terms of the 2022 Seasoned QSR Transaction, NMIC cedes premiums earned related to 95% of the risk on eligible policies after the consideration of coverage provided by other QSR transactions. Concurrent with the placement of the 2025 QSR Transaction, NMIC entered into two additional sequential quota share reinsurance treaties that will provide coverage for mortgage insurance policies to be written in 2026 and 2027 (the 2026 QSR Transaction and 2027 QSR Transaction). Under the terms of the 2026 QSR Transaction, NMIC will cede premiums earned related to 20% of the risk on eligible policies written between January 1, 2026 and December 31, 2026. Under the terms of the 2027 QSR Transaction, NMIC will cede premiums earned related to 12% of the risk on eligible policies written between January 1, 2027 and December 31, 2027. The following table shows amounts related to the QSR Transactions:
| As of and for the three months ended |  | As of and for the nine months ended
| September 30, 2025 |  | September 30, 2024 |  | September 30, 2025 |  | September 30, 2024
| (In Thousands)
Ceded risk-in-force | $ | 12,699,082 |  |  | $ | 12,968,039 |  |  | $ | 12,699,082 |  |  | $ | 12,968,039 |
Ceded premiums earned | (39,847) |  |  | (41,761) |  |  | (121,085) |  |  | (124,585) |
Ceded claims and claim expenses (1) | 4,123 |  |  | 2,449 |  |  | 7,899 |  |  | 2,970 |
Ceding commission earned | 10,246 |  |  | 10,152 |  |  | 29,683 |  |  | 30,666 |
Profit commission | 19,083 |  |  | 21,883 |  |  | 62,439 |  |  | 69,641 |
(1) Includes a $0.3 million termination fee for the nine months ended September 30, 2025 incurred in connection with the termination of the 2016 QSR Transaction and amendment of the 2018 and 2021 QSR Transactions. Under the QSR Transactions, payments for ceded premiums earned are accrued and settled on a quarterly basis, offset by amounts due to NMIC for ceding commissions, profit commissions and loss recoveries. Ceded claims and claim expenses reduce the profit commission due to NMIC under each respective QSR Transaction on a dollar-for-dollar basis. NMIC's reinsurance recoverable balance is supported by collateral trust accounts established and maintained by each reinsurer in accordance with the terms of the QSR Transactions and the PMIERs funding requirements for risk ceded to non-affiliates. The aggregate reinsurance recoverable on loss reserves related to the QSR Transactions was $35.3 million and $31.2 million as of September 30, 2025 and December 31, 2024, respectively. The reinsurance recoverable on loss reserves as of December 31, 2024 included $1.1 million related to the 2016 QSR Transaction, which was terminated as of July 1, 2025. We remain directly liable for all claim payments if we are unable to collect the recoverables due from our reinsurers and establish an allowance for expected credit loss against our reinsurance recoverable if we do not expect to recover amounts due from one or more of our reinsurance counterparties. Our reinsurance recoverable is reported net of such allowance, if any. We actively monitor the counterparty credit profiles of our reinsurers and each is required to partially collateralize its obligations under the terms of the QSR Transactions. The allowance for credit loss established against our reinsurance recoverable was deemed immaterial as of September 30, 2025 and December 31, 2024. Excess-of-loss Reinsurance Traditional Reinsurance NMIC is party to seven excess-of-loss reinsurance agreements with broad panels of third-party reinsurers – the 2022-1 XOL Transaction, effective April 1, 2022, the 2022-2 XOL Transaction, effective July 1, 2022, the 2022-3 XOL Transaction, effective October 1, 2022, the 2023-1 XOL Transaction, effective January 1, 2023, the 2023-2 XOL Transaction, effective July 1, 2023, the 2024 XOL Transaction, effective January 1, 2024, and the 2025 XOL Transaction, effective January 1, 2025 – which we refer to collectively as the XOL Transactions. Each XOL Transaction provides NMIC with aggregate excess-of-loss reinsurance coverage on a defined portfolio of mortgage insurance policies. Under each agreement, NMIC retains a first layer of aggregate loss exposure on covered policies and the reinsurers then provide second layer loss protection up to a defined reinsurance coverage amount. The reinsurance coverage amount of each XOL Transaction is set to approximate the PMIERs minimum required assets of its reference pool and decreases from its peak over a ten-year period in the event the PMIERs minimum required assets of the pool declines. NMIC retains losses in excess of the outstanding reinsurance coverage amount. Under the terms of the XOL Transactions, NMIC makes risk premium payments to its third-party reinsurance providers for the outstanding reinsurance coverage amount and ceded aggregate premiums earned of $10.7 million and $31.2 million during the three and nine months ended September 30, 2025, respectively, and $9.8 million and $28.4 million during the three and nine months ended September 30, 2024, respectively. NMIC applies claims paid on covered policies against its first layer aggregate retained loss exposure under each agreement. NMIC did not cede any incurred losses on covered policies under the XOL Transactions during the three and nine months ended September 30, 2025 and 2024, as the aggregate first layer risk retention for each agreement was not exhausted during such periods. NMIC holds optional termination rights which provide it the discretion to terminate each XOL Transaction on or after a specified date. NMIC may also elect to terminate the XOL Transactions at any point if the outstanding reinsurance coverage amount amortizes to 10% or less of the reinsurance coverage amount provided at inception, or if it determines that it will no longer be able to take full PMIERs asset credit for the coverage. Additionally, under the terms of the treaties, NMIC may selectively terminate its engagement with individual reinsurers under certain circumstances. Such selective termination rights arise when, among other reasons, a reinsurer experiences a deterioration in its capital position below a prescribed threshold, and/or a reinsurer breaches (and fails to cure) its collateral posting obligation. Each of the third-party reinsurance providers that is party to the XOL Transactions has an insurer financial strength rating of A- or better by S&P Global Ratings (S&P), A.M. Best Company Inc. (A.M. Best) or both. The following table presents the inception date, covered production period, initial and current reinsurance coverage amount, and initial and current first layer retained aggregate loss under each outstanding XOL Transaction. Current amounts are presented as of September 30, 2025.
($ values in thousands) | Inception Date | Covered Production |  | Initial Reinsurance Coverage |  | Current Reinsurance Coverage |  | Initial First Layer Retained Loss |  | Current First Layer Retained Loss (1)
2022-1 XOL | April 1, 2022 | 10/1/2021 – 3/31/2022 (2) |  | $ | 289,741 |  |  | $ | 156,776 |  |  | $ | 133,366 |  |  | $ | 130,371 |
2022-2 XOL | July 1, 2022 | 4/1/2022 – 6/30/2022 (3) |  | 154,306 |  |  | 111,008 |  |  | 78,906 |  |  | 74,989 |
2022-3 XOL | October 1, 2022 | 7/1/2022 – 9/30/2022 |  | 96,779 |  |  | 71,976 |  |  | 106,265 |  |  | 102,730 |
2023-1 XOL | January 1, 2023 | 10/1/2022 – 6/30/2023 |  | 89,864 |  |  | 66,578 |  |  | 146,513 |  |  | 143,341 |
2023-2 XOL | July 1, 2023 | 7/1/2023 – 12/31/2023 |  | 100,777 |  |  | 77,129 |  |  | 136,875 |  |  | 136,070 |
2024 XOL | January 1, 2024 | 1/1/2024 – 12/31/2024 |  | 162,500 |  |  | 162,500 |  |  | 312,172 |  |  | 312,057 |
2025 XOL(4) | January 1, 2025 | 1/1/2025 – 12/31/2025 |  | 206,217 |  |  | 206,217 |  |  | 233,783 |  |  | 233,783 |
(1) NMIC applies claims paid on covered policies against its first layer aggregate retained loss exposure and cedes reserves for incurred claims and claim expenses to each applicable XOL Transaction and recognizes a reinsurance recoverable if such incurred claims and claim expenses exceed its current first layer retained loss. (2) Approximately 1% of the production covered by the 2022-1 XOL Transaction has coverage reporting dates between October 21, 2019 and September 30, 2021. (3) Approximately 1% of the production covered by the 2022-2 XOL Transaction has coverage reporting dates between January 4, 2021 and March 31, 2022. (4) The initial reinsurance coverage, current reinsurance coverage, initial first layer retained loss and current first layer retained loss for the 2025 XOL Transaction will increase as incremental covered production is ceded under the transaction through December 31, 2025. Concurrent with the placement of the 2025 XOL, NMIC entered into an excess-of-loss reinsurance treaty that will provide aggregate coverage for mortgage insurance policies to be written in 2026 (the 2026 XOL Transaction). Under the terms of the agreement, NMIC will retain a first layer of aggregate loss exposure on covered policies and its reinsurance counterparties will then provide second layer loss protection up to a defined reinsurance coverage amount of $164.2 million. NMIC retains losses in excess of the respective reinsurance coverage amounts. NMIC entered into an additional excess-of-loss reinsurance treaty that will provide aggregate coverage for mortgage insurance policies covered under the existing 2021-1 ILN Transaction from April 1, 2026 (the 2026-2 XOL Transaction), at the time of its early redemption. The treaty incepts on April 1, 2026 and will expire on March 31, 2036. Under the terms of the agreement, NMIC will retain a first layer of aggregate loss exposure on covered policies, and its reinsurance counterparties will then provide second layer loss protection up to a defined reinsurance coverage amount of $160 million subject to adjustment on the date of inception based on the persistency of the underlying reference pool through such date. NMIC retains losses in excess of the respective reinsurance coverage amounts. Insurance-Linked Notes NMIC is a party to reinsurance agreements with Oaktown Re VI Ltd. and Oaktown Re VII Ltd. (special purpose reinsurance entities collectively referred to as the Oaktown Re Vehicles) effective April 27, 2021 and October 26, 2021, respectively. Each agreement provides NMIC with aggregate excess-of-loss reinsurance coverage on a defined portfolio of mortgage insurance policies. Under each agreement, NMIC retains a first layer of aggregate loss exposure on covered policies and the respective Oaktown Re Vehicle then provides second layer loss protection up to a defined reinsurance coverage amount. NMIC then retains losses in excess of the respective reinsurance coverage amounts. NMIC makes risk premium payments to the Oaktown Re Vehicles for the applicable outstanding reinsurance coverage amount and pays an additional amount for anticipated operating expenses (capped at $250 thousand per year). NMIC ceded aggregate premiums to the Oaktown Re Vehicles of $3.0 million and $9.6 million during the three and nine months ended September 30, 2025, respectively, and $4.3 million and $16.1 million during the three and nine months ended September 30, 2024, respectively. NMIC applies claims paid on covered policies against its first layer aggregate retained loss exposure under each excess-of-loss agreement. NMIC did not cede any incurred losses on covered policies to the Oaktown Re Vehicles during the three and nine months ended September 30, 2025 and 2024, as the aggregate first layer risk retention for each applicable agreement was not exhausted during such periods. Under the terms of each excess-of-loss reinsurance agreement, the Oaktown Re Vehicles are required to fully collateralize their outstanding reinsurance coverage amount to NMIC with funds deposited into segregated reinsurance trusts. Such trust funds are required to be invested in short-term U.S. Treasury money market funds at all times. Each Oaktown Re Vehicle financed its respective collateral requirement through the issuance of mortgage insurance-linked notes to unaffiliated investors. Such insurance-linked notes mature 12.5 years from the inception date of their associated reinsurance agreement. We refer to NMIC’s reinsurance agreements with and the insurance-linked note issuances by Oaktown Re Vehicles individually as the 2021-1 ILN Transaction and 2021-2 ILN Transaction, and collectively as the ILN Transactions. The respective reinsurance coverage amounts provided by the Oaktown Re Vehicles decrease over a 12.5-year period as the underlying insured mortgages are amortized or repaid, and/or the mortgage insurance coverage is canceled. As the reinsurance coverage decreases, a prescribed amount of collateral held in trust by the Oaktown Re Vehicles is distributed to ILN Transaction noteholders as amortization of the outstanding insurance-linked note principal balances. The outstanding reinsurance coverage amounts stop amortizing, and the distribution of collateral assets to ILN Transaction noteholders and amortization of insurance-linked note principal is suspended if certain credit enhancement or delinquency thresholds, as defined in each agreement, are triggered (each, a Lock-Out Event). NMIC holds optional termination rights under each ILN Transaction, including, among others, an optional call feature which provides NMIC the discretion to terminate the transaction on or after a prescribed date, and a clean-up call if the outstanding reinsurance coverage amount amortizes to 10% or less of the reinsurance coverage amount at inception or if NMIC reasonably determines that changes to GSE or rating agency asset requirements would cause a material and adverse effect on the capital treatment afforded to NMIC under a given agreement. In addition, there are certain events that trigger mandatory termination of an agreement, including NMIC’s failure to pay premiums or consent to reductions in a trust account to make principal payments to noteholders, among others. The following table presents the inception date, covered production period, initial and current reinsurance coverage amount, and initial and current first layer retained aggregate loss under each outstanding ILN Transaction. Current amounts are presented as of September 30, 2025.
($ values in thousands) | Inception Date |  | Covered Production |  | Initial Reinsurance Coverage |  | Current Reinsurance Coverage |  | Initial First Layer Retained Loss |  | Current First Layer Retained Loss (1) |  |  |  |
2021-1 ILN | April 27, 2021 |  | 10/1/2020 – 3/31/2021 (2) |  | $ | 367,238 |  |  | $ | 101,337 |  |  | $ | 163,708 |  |  | $ | 162,246 |  |  |  |  |
2021-2 ILN | October 26, 2021 |  | 4/1/2021 – 9/30/2021 (3) |  | 363,596 |  |  | 188,327 |  |  | 146,229 |  |  | 144,446 |  |  |  |  |
(1) NMIC applies claims paid on covered policies against its first layer aggregate retained loss exposure and cedes reserves for incurred claims and claim expenses to each applicable ILN Transaction and recognizes a reinsurance recoverable if such incurred claims and claim expenses exceed its current first layer retained loss. (2) Approximately 1% of the production covered by the 2021-1 ILN Transaction has coverage reporting dates between July 1, 2019 and September 30, 2020. (3) Approximately 2% of the production covered by the 2021-2 ILN Transaction has coverage reporting dates between July 1, 2019 and March 31, 2021. Under the terms of our ILN Transactions, we are required to maintain a certain level of restricted funds in premium deposit accounts with Bank of New York Mellon until the respective notes have been redeemed in full. “Cash and Cash Equivalents” on our condensed consolidated balance sheets includes a de minimis restricted amount as of September 30, 2025 and $0.1 million as of December 31, 2024.

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