Fitch Rates NMI's Unsecured Senior Notes 'BBB-'

Fitch Ratings has assigned a 'BBB-' rating to NMI Holdings Inc's (National) $425 million of senior unsecured notes due 2029.

Key Rating Drivers

The new notes' rating has standard notching relative to National's Issuer Default Rating of 'BBB'. Net proceeds from the issuance are expected to be used to redeem the company's outstanding senior secured notes and for general corporate purposes.

Financial leverage as of March 31, 2024 was 15.8%. Pro forma leverage including the new notes and the redemption of the existing senior secured notes, increases modestly to 16.6%.

National's profitability promotes strong interest coverage. Fixed-charge coverage was over 15x at 1Q24, compared to a prior three-year average (2021-2023) of 12x. Fitch believes GAAP fixed-charge coverage will range in the low to mid-double digits over the near term.

RATING SENSITIVITIES

Factors that could, individually or collectively, lead to negative rating action/downgrade:

A decline in company profile score to below 'bbb+';

A decline in capital strength, such as a decline in the reported Private Mortgage Insurer Eligibility Requirements (PMIERs) coverage ratio to consistently below 130%;

Due to its monoline nature, any strongly negative event for the mortgage insurance industry.

Factors that could, individually or collectively, lead to positive rating action/upgrade:

An improvement in company profile score to 'a-';

Consistently maintaining PMIERs coverage ratio above 150% with a meaningful reduction in operating leverage;

Due to its monoline nature, any strongly positive event for the mortgage insurance industry.

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING

The principal sources of information used in the analysis are described in the Applicable Criteria.

ESG Considerations

The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. For more information on Fitch's ESG Relevance Scores, visit https://www.fitchratings.com/topics/esg/products#esg-relevance-scores.

RATING ACTIONS

Entity / Debt

Rating

NMI Holdings, Inc.

senior unsecured

LT

BBB-

New Rating

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Additional information is available on www.fitchratings.com