NMI Holdings, Inc. Reports Record Third Quarter 2017 Financial Results

EMERYVILLE, CA--(Marketwired - November 01, 2017) - NMI Holdings, Inc. (NMIH) today reported net income of $12.3 million, or $0.21 per share, for the third quarter ended September 30, 2017. This compares with net income of $6.0 million, or $0.10 per share, in the prior quarter, and net income of $6.2 million, or $0.10 per share, in the third quarter of 2016.

Bradley Shuster, Chairman and CEO of National MI, said, "In the third quarter, National MI delivered record financial results, including record new insurance written of $6.1 billion, record net premiums earned of $44.5 million, and record pre-tax income of $19.5 million. We were also pleased to deliver annualized return-on-average equity of 9.8%. National MI continued to build its portfolio of high-quality insurance in force at a rate that leads our industry, and we continued to make significant strides in customer development, activating 25 new customers in the third quarter and 98 new customers for the year-to-date."

• As of September 30, 2017, the company had primary insurance-in-force of $43.3 billion, up 12% from $38.6 billion at the prior quarter end and up 53% over $28.2 billion as of September 30, 2016.

• Premiums earned for the quarter were $44.5 million, including $4.3 million attributable to cancellation of single premium policies, which compares with $37.9 million, including $3.8 million related to cancellations, in the prior quarter. Premiums earned in the third quarter of 2017 were up 40% over premium revenue of $31.8 million in the same quarter a year ago, which included $5.8 million related to cancellations.

• NIW mix was 79% monthly premium product, which compares with 81% in the prior quarter and 71% in the third quarter of 2016.

• Total underwriting and operating expenses in the third quarter were $24.6 million. This compares with total underwriting and operating expenses of $28.0 million, including approximately $3.1 million of fees and expenses associated with the issuance of Insurance-Linked Notes in the prior quarter and $24.0 million in the same quarter a year ago.

• Claims expense for the quarter was $1.0 million, resulting in a loss ratio of 2.1%.

• At quarter-end, cash and investments were $713 million, including $62 million at the holding company, and book equity was $511 million, equal to $8.53 per share.

• At quarter-end, the company had total PMIERs available assets of $495 million, which compares with risk- based required assets under PMIERs of $356 million.

			Quarter	Quarter	Quarter
			Ended	Ended	Ended	Change	Change
			9/30/2017	6/30/2017	9/30/2016	Q/Q	Y/Y
Primary Insurance-in-Force ($billions)			43.26	38.63	28.22	12%	53%
New Insurance Written - NIW ($billions)
		Monthly premium	4.83	4.10	4.16	18%	16%
		Single premium	1.28	0.94	1.70	36%	-25%
		Total	6.11	5.04	5.86	21%	4%
Premiums Earned ($millions)			44.52	37.92	31.81	17%	40%
Underwriting & Operating Expense ($millions)			24.65	28.05	24.04	-12%	3%
Loss Expense ($millions)			0.96	1.37	0.66	-30%	45%
Loss Ratio			2.1%	3.6%	2.1%
Cash & Investments ($millions)			713	694	686	3%	4%
Book Equity ($millions)			511	495	430	3%	19%
Book Value per Share			8.53	8.27	7.28	3%	17%

Conference Call and Webcast Details

The company will hold a conference call and live webcast at 2:00 p.m. Pacific Time / 5:00 p.m. Eastern Time. The webcast will be available on the company's website, www.nationalmi.com, in the "Investor Relations" section. The call also can be accessed by dialing (888) 734-0328 in the U.S., or (914) 495-8578 for international callers using Conference ID: 1906690, or by referencing NMI Holdings, Inc.

About National MI

National Mortgage Insurance Corporation (National MI), a subsidiary of NMI Holdings, Inc. (NMIH), is a U.S.-based, private mortgage insurance company enabling low down payment borrowers to realize home ownership while protecting lenders and investors against losses related to a borrower's default. To learn more, please visit www.nationalmi.com.

Cautionary Note Regarding Forward-Looking Statements

Certain statements contained in this press release or any other written or oral statements made by or on behalf of the Company in connection therewith may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (Securities Act), Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act), and the U.S. Private Securities Litigation Reform Act of 1995 (PSLRA). The PSLRA provides a "safe harbor" for any forward-looking statements. All statements other than statements of historical fact included in or incorporated by reference in this release are forward-looking statements, including any statements about our expectations, outlook, beliefs, plans, predictions, forecasts, objectives, assumptions or future events or performance. These statements are often, but not always, made through the use of words or phrases such as "anticipate," "believe," "can," "could," "may," "predict," "assume," "potential," "should," "will," "estimate," "plan," "project," "continuing," "ongoing," "expect," "intend" and similar words or phrases. All forward-looking statements are only predictions and involve estimates, known and unknown risks, assumptions and uncertainties that may turn out to be inaccurate and could cause actual results to differ materially from those expressed in them. Many risks and uncertainties are inherent in our industry and markets. Others are more specific to our business and operations. Important factors that could cause actual events or results to differ materially from those indicated in such statements include, but are not limited to: changes in the business practices of the GSEs that may impact the use of private mortgage insurance as credit enhancement; our ability to remain an eligible mortgage insurer under the PMIERs, including the financial requirements, and other requirements of the GSEs, which they may change at any time; retention of our existing certificates of authority in each state and the District of Columbia (D.C.) and our ability to remain a mortgage insurer in good standing in each state and D.C.; our future profitability, liquidity and capital resources; actions of existing competitors, including governmental agencies like the Federal Housing Administration (FHA) and the Veterans Administration (VA), and potential market entry by new competitors or consolidation of existing competitors; developments in the world's financial and capital markets and our access to such markets, including reinsurance; adoption of new or changes to existing laws and regulations that impact our business or financial condition directly or the mortgage insurance industry generally or their enforcement and implementation by regulators; changes to the GSEs' role in the secondary mortgage market or other changes that could affect the residential mortgage industry generally or mortgage insurance in particular; potential future lawsuits, investigations or inquiries or resolution of current lawsuits or inquiries; changes in general economic, market and political conditions and policies, interest rates, inflation and investment results or other conditions that affect the housing market or the markets for home mortgages or mortgage insurance; our ability to successfully execute and implement our capital plans, including our ability to access the reinsurance market and to enter into, and receive approval of, reinsurance arrangements on terms and conditions that are acceptable to us, the GSEs and our regulators; our ability to implement our business strategy, including our ability to write mortgage insurance on high quality low down payment residential mortgage loans, implement successfully and on a timely basis, complex infrastructure, systems, procedures, and internal controls to support our business and regulatory and reporting requirements of the insurance industry; our ability to attract and retain a diverse customer base, including the largest mortgage originators; failure of risk management or pricing or investment strategies; emergence of unexpected claims and coverage issues, including claims exceeding our reserves or amounts we expected to experience; potential adverse impacts arising from recent natural disasters, including, with respect to the affected areas, a decline in new business, adverse effects on home prices, and an increase in notices of default on insured mortgages; the inability of our counter-parties, including third party reinsurers, to meet their obligations to us; our ability to utilize our net operating loss carryforwards, which could be limited or eliminated in various ways, including if we experience an ownership change as defined in Section 382 of the Internal Revenue Code; failure to maintain, improve and continue to develop necessary information technology systems or the failure of technology providers to perform; and, our ability to recruit, train and retain key personnel. These risks and uncertainties also include, but are not limited to, those set forth under the heading "Risk Factors" detailed in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2016, as subsequently updated through other reports we file with the SEC. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. We caution you not to place undue reliance on any forward-looking statement, which speaks only as of the date on which it is made, and we undertake no obligation to publicly update or revise any forward-looking statement to reflect new information, future events or circumstances that occur after the date on which the statement is made or to reflect the occurrence of unanticipated events except as required by law.

Investor Contact
John M. Swenson
Vice President, Investor Relations and Treasury
john.swenson@nationalmi.com
(510) 788-8417

Press Contact
Mary McGarity
Strategic Vantage Mortgage Public Relations
(203) 513-2721
MaryMcGarity@StrategicVantage.com

Consolidated statements of operations and comprehensive income			For the three months ended								For the nine months ended
			September 30,								September 30,
			2017				2016				2017				2016
Revenues			(In Thousands, except for share data)
	Net premiums earned		$	44,519			$	31,808			$	115,661			$	77,656
	Net investment income			4,170				3,544				11,885				10,117
	Net realized investment gains (losses)			69				66				198				(758	)
	Other revenues			195				102				461				172
Total revenues				48,953				35,520				128,205				87,187
Expenses
	Insurance claims and claims expenses			957				664				2,965				1,592
	Underwriting and operating expenses			24,645				24,037				78,682				69,943
Total expenses				25,602				24,701				81,647				71,535
Other expense
	Loss from change in fair value of warrant liability			(502	)			(797	)			(679	)			(187	)
	Interest expense			(3,352	)			(3,733	)			(10,146	)			(11,072	)
Total other expense				(3,854	)			(4,530	)			(10,825	)			(11,259	)
Income before income taxes				19,497				6,289				35,733				4,393
	Income tax expense			7,185				114				11,917				114
Net income			$	12,312			$	6,175			$	23,816			$	4,279
Earnings per share
	Basic		$	0.21			$	0.10			$	0.40			$	0.07
	Diluted		$	0.20			$	0.10			$	0.38			$	0.07
Weighted average common shares outstanding
Basic				59,883,629				59,130,401				59,680,166				59,047,758
Diluted				63,088,958				60,284,746				62,773,333				59,861,916
Loss Ratio(1)				2.1	%			2.1	%			2.6	%			2.1	%
Expense Ratio(2)				55.4				75.6				68.0				90.1
Combined ratio				57.5	%			77.7	%			70.6	%			92.2	%
Net income			$	12,312			$	6,175			$	23,816			$	4,279
Other comprehensive income, net of tax:
	Net unrealized gain (loss) in accumulated other comprehensive income, net of tax expense of $366 and $0 for the three months ended September 30, 2017 and 2016, respectively, and $2,439 and $0 for the nine months ended September 30, 2017 and 2016			768				(82	)			4,786				17,690
	Reclassification adjustment for realized losses (gains) included in net income, net of tax expense of $24 and $0 for the three months ended September 30, 2017 and 2016, respectively, and $69 and $0 for the nine months ended September 30, 2017 and 2016			(45	)			(66	)			(129	)			758
Other comprehensive income, net of tax				723				(148	)			4,657				18,448
Comprehensive income			$	13,035			$	6,027			$	28,473			$	22,727

(1) Loss ratio is calculated by dividing the provision for insurance claims and claims expenses by net premiums earned.

(2) Expense ratio is calculated by dividing other underwriting and operating expenses by net premiums earned.

Consolidated balance sheets			September 30, 2017				December 31, 2016 (1)
Assets			(In Thousands, except for share data)
	Fixed maturities, available-for-sale, at fair value (amortized cost of $687,284 and $630,688 as of September 30, 2017 and December 31, 2016, respectively)		$	692,729			$	628,969
	Cash and cash equivalents			20,698				47,746
	Premiums receivable			21,056				13,728
	Accrued investment income			4,598				3,421
	Prepaid expenses			2,651				1,991
	Deferred policy acquisition costs, net			36,101				30,109
	Software and equipment, net			21,767				20,402
	Intangible assets and goodwill			3,634				3,634
	Prepaid reinsurance premiums			39,915				37,921
	Deferred tax asset, net			38,490				51,434
	Other assets			4,973				542
Total assets			$	886,612			$	839,897
Liabilities
	Term loan		$	143,969			$	144,353
	Unearned premiums			161,345				152,906
	Accounts payable and accrued expenses			22,028				25,297
	Reserve for insurance claims and claim expenses			6,123				3,001
	Reinsurance funds withheld			33,105				30,633
	Deferred ceding commission			4,971				4,831
	Warrant liability, at fair value			4,046				3,367
Total liabilities				375,587				364,388
Commitments and contingencies
Shareholders' equity
	Common stock - class A shares, $0.01 par value;59,928,092 and 59,145,161 shares issued and outstanding as of September 30,2017 and December 31, 2016, respectively (250,000,000 shares authorized)			599				591
	Additional paid-in capital			583,447				576,927
	Accumulated other comprehensive loss, net of tax			(630	)			(5,287	)
	Accumulated deficit			(72,391	)			(96,722	)
Total shareholders' equity				511,025				475,509
Total liabilities and shareholders' equity			$	886,612			$	839,897

(1)The 2016 prior period balance sheet has been revised. Please refer to our Form 10-Q for the quarter ended September 30, 2017 for further details.

Historical Quarterly Data			2017												2016
			September 30				June 30				March 31				December 31(4)				September 30				June 30
Revenues		(In Thousands, except for share data)
	Net premiums earned		$	44,519			$	37,917			$	33,225			$	32,825			$	31,808			$	26,041
	Net investment income			4,170				3,908				3,807				3,634				3,544				3,342
	Net realized investment gains (losses)			69				188				(58	)			65				66				61
	Other revenues			195				185				80				105				102				37
Total revenues				48,953				42,198				37,054				36,629				35,520				29,481
Expenses
	Insurance claims and claims expenses			957				1,373				635				800				664				470
	Underwriting and operating expenses			24,645				28,048				25,989				23,281				24,037				23,234
Total expenses				25,602				29,421				26,624				24,081				24,701				23,704
Other expense (1)				(3,854	)			(3,281	)			(3,690	)			(5,490	)			(4,530	)			(3,766	)
Income before income taxes				19,497				9,496				6,740				7,058				6,289				2,011
	Income tax expense (benefit)			7,185				3,484				1,248				(52,664	)			114				-
Net income			$	12,312			$	6,012			$	5,492			$	59,722			$	6,175			$	2,011
Earnings per share
	Basic		$	0.21			$	0.10			$	0.09			$	1.01			$	0.10			$	0.03
	Diluted		$	0.20			$	0.10			$	0.09			$	0.98			$	0.10			$	0.03
Weighted average common shares outstanding
Basic				59,883,629				59,823,396				59,183,973				59,140,011				59,130,401				59,105,613
Diluted				63,088,958				63,010,362				62,338,856				61,229,338				60,284,746				59,830,899
Other data
Loss Ratio (2)				2.1	%			3.6	%			1.9	%			2.4	%			2.1	%			1.8	%
Expense Ratio (3)				55.4	%			74.0	%			78.2	%			70.9	%			75.6	%			89.2	%
Combined ratio				57.5	%			77.6	%			80.1	%			73.3	%			77.7	%			91.0	%

(1) Other expense includes the gain from change in fair value of warrant liability, gain from settlement of warrants, and interest expense.

(2) Loss ratio is calculated by dividing the provision for insurance claims and claims expenses by net premiums earned.

(3) Expense ratio is calculated by dividing other underwriting and operating expenses by net premiums earned.

(4) The Q4 2016 quarterly data has been revised. Please refer to our Form 10-Q for the quarter ended September 30, 2017 for further details.

New Insurance Written (NIW), Insurance in Force (IIF) and Premiums
The tables below present primary and pool NIW and IIF, as of the dates and for the periods indicated.
Primary NIW		Three months ended
		September 30, 2017			June 30, 2017			March 31, 2017				December 31, 2016				September 30, 2016				June 30, 2016
			(In Millions)
Monthly		$	4,833		$	4,099		$	2,892			$	3,904			$	4,162			$	3,700
Single			1,282			938			667				1,336				1,695				2,138
Primary		$	6,115		$	5,037		$	3,559			$	5,240			$	5,857			$	5,838
Primary and pool IIF			As of
			September 30, 2017			June 30, 2017			March 31, 2017				December 31, 2016				September 30, 2016				June 30, 2016
			(In Millions)
Monthly		$	28,707		$	24,865		$	21,511			$	19,205			$	16,038			$	12,529
Single			14,552			13,764			13,268				12,963				12,190				11,095
Primary			43,259			38,629			34,779				32,168				28,228				23,624
Pool			3,330			3,447			3,545				3,650				3,826				3,999
Total		$	46,589		$	42,076		$	38,324			$	35,818			$	32,054			$	27,623
The following table presents the amounts related to the 2016 QSR transaction, for the last five quarters.
			September 30, 2017						June 30, 2017				March 31, 2017				December 31, 2016				September 30, 2016
			(In Thousands)
Ceded risk-in-force		$	2,682,982					$	2,403,027			$	2,167,745			$	2,008,385			$	1,778,235
Ceded premiums written			(14,389)						(12,034	)			(10,292	)			(11,576	)			(38,977	)
Ceded premiums earned			(13,393)						(11,463	)			(9,865	)			(9,746	)			(2,885	)
Ceded claims and claims expenses			277						342				268				206				90
Ceding commission written			2,878						2,407				2,058				2,316				7,795
Ceding commission earned			2,581						2,275				2,065				1,752				551
Profit commission			7,758						6,536				5,651				5,642				1,641

Portfolio Statistics
The table below highlights trends in our primary portfolio as of the date and for the periods indicated.
Primary portfolio trends			As of and for the three months ended
			September 30, 2017				June 30, 2017				March 31, 2017				December 31, 2016				September 30, 2016				June 30, 2016
			($ Values In Millions)
	New insurance written		$	6,115			$	5,037			$	3,559			$	5,240			$	5,857			$	5,838
	New risk written			1,496				1,242				868				1,244				1,415				1,411
	Insurance in force (1)			43,259				38,629				34,779				32,168				28,228				23,624
	Risk in force (1)			10,572				9,417				8,444				7,790				6,847				5,721
	Policies in force (count) (1)			180,089				161,195				145,632				134,662				119,002				100,547
	Average loan size (1)		$	0.240				0.240				0.239				0.239				0.237				0.235
	Weighted-average coverage (2)			24.4	%			24.4	%			24.3	%			24.2	%			24.3	%			24.2	%
	Loans in default (count)			350				249				207				179				115				79
	Percentage of loans in default			0.2	%			0.2	%			0.1	%			0.1	%			0.1	%			0.1	%
	Risk in force on defaulted loans		$	19			$	14			$	12			$	10			$	6			$	4
	Average premium yield (3)			0.43	%			0.41	%			0.40	%			0.44	%			0.48	%			0.47	%
	Earnings from cancellations		$	4.3			$	3.8			$	2.5			$	5.1			$	5.8			$	3.5
	Annual persistency (4)			85.1	%			83.1	%			81.3	%			80.7	%			81.8	%			83.3	%
	Quarterly run-off (5)			3.8	%			3.4	%			2.9	%			4.6	%			5.3	%			4.2	%

(1) Reported as of the end of the period.

(2) Calculated as end of period risk in force (RIF) divided by IIF.

(3) Calculated as net primary and pool premiums earned, net of reinsurance, divided by average gross IIF for the period, annualized.

(4) Defined as the percentage of IIF that remains on our books after any 12-month period.

(5) Defined as the percentage of IIF that are no longer on our books after any 3-month period

Primary NIW by FICO			For the three months ended
			September 30, 2017			June 30, 2017			September 30, 2016
			($ In Millions)
	>= 760		$	2,806		$	2,376		$	2,975
	740-759			934			793			934
	720-739			807			626			725
	700-719			697			568			588
	680-699			456			368			387
	<=679			415			306			248
Total			$	6,115		$	5,037		$	5,857
Weighted average FICO				747			749			753

Primary NIW by LTV			For the three months ended
			September 30, 2017				June 20, 2017				September 30, 2016
			(In Millions)
	95.01% and above		$	722			$	474			$	347
	90.01% to 95.00%			2,714				2,297				2,557
	85.01% to 90.00%			1,765				1,506				1,844
	85.00% and below			914				760				1,109
Total			$	6,115			$	5,037			$	5,857
Weighted average LTV				92.3	%			92.2	%			91.7	%
Primary NIW by purchase/refinance mix			For the three months ended
			September 30, 2017				June 30, 2017				September 30, 2016
			(In Millions)
	Purchase		$	5,387			$	4,518			$	4,400
	Refinance			728				519				1,457
Total			$	6,115			$	5,037			$	5,857
The table below presents a summary of our primary IIF and RIF by book year as of the dates indicated.
Primary IIF and RIF							As of September 30, 2017
							IIF				RIF
							(In Millions)
September 30, 2017							$	14,315			$	3,508
2016								18,684				4,520
2015								8,742				2,167
2014								1,479				368
2013								39				9
Total							$	43,259			$	10,572
The tables below present our total primary IIF and RIF by FICO and LTV and total primary RIF by loan type as of the dates indicated.
Primary IIF by FICO			As of
			September 30, 2017				June 30, 2017				September 30, 2016
			(In Millions)
	>= 760		$	21,329			$	19,224			$	14,258
	740-759			6,983				6,269				4,612
	720-739			5,547				4,927				3,648
	700-719			4,505				3,973				2,813
	680-699			2,942				2,615				1,863
	<=679			1,953				1,621				1,034
Total			$	43,259			$	38,629			$	28,228

Primary RIF by FICO				As of
				September 30, 2017				June 30, 2017				September 30, 2016
				(In Millions)
	>= 760			$	5,251			$	4,720				3,470
	740-759				1,713				1,535				1,130
	720-739				1,349				1,198				887
	700-719				1,092				960				680
	680-699				707				627				443
	<=679				460				377				237
Total				$	10,572			$	9,417			$	6,847
Primary IIF by LTV				As of
				September 30, 2017				June 30, 2017				September 30, 2016
				(In Millions)
	95.01% and above			$	3,038			$	2,367			$	1,363
	90.01% to 95.00%				19,562				17,441				12,644
	85.01% to 90.00%				13,437				12,157				9,157
	85.00% and below				7,222				6,664				5,064
Total				$	43,259			$	38,629			$	28,228
Primary RIF by LTV				As of
				September 30, 2017				June 30, 2017				September 30, 2016
				(In Millions)
	95.01% and above			$	822			$	648			$	380
	90.01% to 95.00%				5,722				5,120				3,725
	85.01% to 90.00%				3,205				2,893				2,174
	85.00% and below				823				756				568
Total				$	10,572			$	9,417			$	6,847
Primary RIF by Loan Type				As of
				September 30, 2017				June 30, 2017				September 30, 2016
	Fixed				98	%			98	%			98	%
	Adjustable rate mortgages:
		Five years and longer			2				2				2
Total					100	%			100	%			100	%
The table below presents a summary of the change in total primary IIF during the periods indicated.
Primary IIF				For the three months ended
				September 30, 2017				June 30, 2017				September 30, 2016
								(In Millions)
IIF, beginning of period				$	38,629			$	34,779			$	23,624
	NIW				6,115				5,037				5,857
	Cancellations and other reductions				(1,485	)			(1,187	)			(1,253	)
IIF, end of period				$	43,259			$	38,629			$	28,228

Geographic Dispersion
The following table shows the distribution by state of our primary RIF as of the periods indicated.
Top 10 primary RIF by state		As of
		September 30, 2017			June 30, 2017			September 30, 2016
California		13.6	%		13.8	%		13.2	%
Texas		7.6			7.5			6.8
Virginia		5.6			6.0			6.6
Arizona		4.4			4.2			3.8
Florida		4.3			4.4			4.7
Colorado		3.8			3.9			4.0
Michigan		3.7			3.6			3.9
Pennsylvania		3.6			3.6			3.6
Utah		3.6			3.7			3.6
Maryland		3.6			3.7			3.6
Total		53.8	%		54.4	%		53.8	%

The following table shows portfolio data by book year, as of September 30, 2017.

As of September 30, 2017
Book year		Original Insurance Written			Remaining Insurance in Force			% Remaining of Original Insurance		Policies Ever in Force		Number of Policies in Force		Number of Loans in Default		# of Claims Paid		Incurred Loss Ratio (Inception to Date) (1)		Cumulative default rate (2)
		($ Values in Millions)
2013		$	162		$	39		24%		655		201		-		1		0.2%		0.2%
2014			3,451			1,479		43%		14,786		7,451		54		9		3.8%		0.4%
2015			12,422			8,742		70%		52,548		39,727		164		14		2.9%		0.3%
2016			21,187			18,684		88%		83,626		76,095		119		3		1.6%		0.1%
2017		$	14,711		$	14,315		97%		57,800		56,615		13		-		0.5%		-
Total		$	51,933		$	43,259				209,415		180,089		350		27

(1) The ratio of claims incurred (paid and reserved) divided by cumulative premiums earned, net of reinsurance.

(2) The sum of claims paid ever to date and notices of default as of the end of the period divided by policies ever in force.

The following table provides a reconciliation of the beginning and ending reserve balances for primary insurance claims and claims expenses:

				For the three months ended								For the nine months ended
				September 30, 2017				September 30, 2016				September 30, 2017				September 30, 2016
				(In Thousands)
Beginning balance				$	5,048			$	1,475			$	3,001			$	679
Less reinsurance recoverables (1)					(899	)			-				(297	)			-
Beginning balance, net of reinsurance recoverables					4,149				1,475				2,704				679
Add claims incurred:
	Claims and claim expenses incurred:
		Current year (2)			1,215				690				3,546				1,803
		Prior years (3)			(258	)			(29	)			(581	)			(214	)
Total claims and claims expenses incurred					957				661				2,965				1,589
Less claims paid:
	Claims and claim expenses paid:
		Current year (2)			-				-				-				-
		Prior years (3)			157				93				720				225
Total claims and claim expenses paid					157				93				720				225
Reserve at end of period, net of reinsurance recoverables					4,949				2,043				4,949				2,043
Add reinsurance recoverables (1)					1,174				90				1,174				90
Ending balance				$	6,123			$	2,133			$	6,123			$	2,133

(1) Related to ceded losses recoverable on our 2016 quota-share reinsurance transaction, included in "Other Assets" on the Condensed Consolidated Balance Sheet.

(2) Related to insured loans with their most recent defaults occurring in the current year. For example, if a loan had defaulted in a prior year and subsequently cured and later re-defaulted in the current year, that default would be included in the current year.

(3) Related to insured loans with defaults occurring in prior years, which have been continuously in default since that time.

The following table provides a reconciliation of the beginning and ending count of loans in default for the periods indicated.

		For the three months ended						For the nine months ended
		September 30,			September 30,			September 30,			September 30,
		2017			2016			2017			2016
Beginning default inventory		249			79			179			36
Plus: new defaults		208			69			479			158
Less: cures		(103	)		(30	)		(292	)		(73	)
Less: claims paid		(4	)		(3	)		(16	)		(6	)
Ending default inventory		350			115			350			115

The following tables provide details of our claims and reserves for the periods indicated, before claims paid covered under the 2016 QSR Transaction.

			For the three months ended							For the nine months ended
			September 30,			September 30,				September 30,			September 30,
			2017			2016				2017			2016
			($ Values In Thousands)
Number of claims paid				4			3				16			6
Total amount paid for claims			$	160		$	93			$	731		$	225
Average amount paid per claim			$	40		$	31			$	46		$	32
Severity(1)				73%			53	%			83%			62	%
(1) Severity represents the total amount of claims paid divided by the related RIF on the loan at the time the claim is perfected.

Average reserve per default:		As of September 30, 2017			As of September 30, 2016
		(In Thousands)
Case (1)		$	16		$	17
IBNR			1			1
Total		$	17		$	18

(1)Defined as the gross reserve per insured loan in default.

The following table provides a comparison of the PMIERs financial requirements as reported by National MI as of the dates indicated.

		As of
		September 30, 2017			June 30, 2017			September 30, 2016
		(In thousands)
Available assets		$	495,182		$	485,019		$	488,635
Risk-based required assets			356,207			298,091			320,609