NMI Holdings (NMIH) risk factors, FY2024 10-K

Risks Related to Our Business Operations

1. 01We face intense competition for business in our industry, and if we are unable to compete effectively, we may not be able to achieve our business goals, which would adversely affect our business, financial condition and operating results
2. 02Our NIW volumes could be adversely affected if lenders and investors select alternatives to private MI
3. 03Any of these alternatives to private MI could reduce or eliminate the need for our products, cause us to lose existing business and/or limit our ability to attract the new business that we may prefer to insure
4. 04If we are unable to continue to attract and retain the most significant mortgage originators as customers, our ability to achieve our business goals could be negatively impacted
5. 05If the volume of high-LTV loan originations declines, our NIW volume could decline, which would reduce our revenues
6. 06Our underwriting and credit risk management policies and practices may not anticipate all risks and/or the magnitude of potential for loss as the result of unforeseen risks
7. 07Unexpected material increases in borrower defaults could cause our actual losses to materially exceed our expected loss rates, including in certain geographic regions in which our business may be concentrated and more susceptible to downturns
8. 08The premiums we charge may be insufficient to cover claim payments and our operating costs
9. 09Changes in factors that impact the length of time that our policies remain in force may adversely affect our future revenues and claims experience
10. 10observed in recent years prior to 2022, and therefore decreased turnover in our IIF. Despite the Federal Reserve lowering interest rates in 2024, the 10-year Treasury yield and 30-year fixed rate mortgage interest rates remained elevated
11. 11Changes in inflation, interest rates and mortgage interest rates may have an adverse impact on our business, future revenue and financial condition
12. 12The mix of business we write affects our revenue stream and the likelihood of losses occurring
13. 13We expect our claims to increase as our insured loan portfolio grows and matures
14. 14Our business depends, in part, on effective and reliable loan servicing
15. 15If the estimates we use in establishing claims reserves are incorrect, the actual claim payments we make may materially exceed the amount of our corresponding claims reserves, resulting in unexpected charges to income, which could be material and adversely affect our results of operations
16. 16The occurrence of natural or man-made disasters or pandemics could adversely affect our business, financial condition and operating results
17. 17Climate change and efforts to manage climate risk by government agencies could affect our business and operations
18. 18Our operating results depend in large part on our ability to manage the risks related to the growth of our business and on maintaining and enhancing effective operating procedures and internal controls
19. 19We are exposed to operational risk from fraud, malfeasance or error by borrowers, employees and third-party service providers, and any such fraud, malfeasance or error could materially and adversely affect us
20. 20If we do not maintain connectivity with or otherwise meet the technological demands of our customers or are unable to develop, enhance and maintain our proprietary technology platform, our business and financial performance could be adversely affected
21. 21We may not be able to prevent the unauthorized disclosure or misuse of confidential, personal or proprietary information
22. 22stolen, lost or misused, making information accessible through such devices more vulnerable to unauthorized access, including by employee malfeasance
23. 23Adverse investment performance may affect our financial results and ability to conduct business
24. 24We face regulatory and litigation risks associated with offering loan review services

Risks Related to Regulation of the Mortgage Insurance Industry

1. 25There can be no assurance that the GSEs will continue to treat us as an approved insurer in the future, and changes to, or our failure to maintain compliance with the GSEs' PMIERs, could adversely impact our business, financial condition and operating results
2. 26We are subject to comprehensive state insurance regulations and capital adequacy requirements, which we must satisfy to continue to operate our MI business
3. 27The private MI industry is, and as a participant we are, subject to litigation and regulatory enforcement risk generally
4. 28Our business prospects and operating results could be adversely impacted if, and to the extent that, the Consumer Financial Protection Bureau's ATR Rules defining a QM negatively impact the size of the origination market
5. 29The implementation of the Basel rules may discourage the use of mortgage insurance

Risks Related to Our Holding Company and Capital Structure

1. 30Our holding company structure and certain regulatory and other constraints could affect our ability to satisfy our obligations and potentially require us to raise more capital
2. 31We currently have and will continue to have a substantial amount of indebtedness. As of December 31, 2024 our debt totaled approximately $415.1 million
3. 32Our existing, and any future, variable rate indebtedness subjects us to interest rate risk, which could cause our annual debt service obligations to increase significantly
4. 33Despite our substantial level of debt, we may incur more debt, which could exacerbate any or all of the risks described above
5. 34Our current credit ratings may adversely affect our ability to access capital and the cost of such capital, which could have a material adverse effect on our business, financial condition and operating results

Risks Related to Ownership of Our Common Stock

1. 35We do not currently pay any dividends on our common stock and may not pay any dividends on our common stock in the future, and payment of any declared dividends may be delayed
2. 36The market price of our common stock may be volatile, which could cause the value of an investment in our common stock to decline
3. 37The market price of our common stock could decline due to the large number of outstanding shares of our common stock eligible for future sale, and future issuances of our common stock may depress our share price and dilute the book value of our common stock
4. 38Our Amended and Restated 2014 Omnibus Incentive Plan (2014 Plan) has a total of 8,250,000 shares authorized for issuance. Any shares issued under our 2014 Plan, including as a result of the exercise of stock options, would dilute the percentage ownership held by investors who purchase our shares prior to such issuance
5. 39Future issuance of debt or preferred stock, which would rank senior to our common stock upon our liquidation, may adversely affect the market value of our common stock
6. 40Provisions contained in our organizational documents, as well as provisions of Delaware law and Wisconsin insurance law, could delay or prevent a change of control of us, which could adversely affect the price of shares of our common stock
7. 41These provisions, alone or together, could delay hostile takeovers and changes of control of the Company or changes in our management. Additionally, cumulative voting in the election of our directors is not allowed