Good day, ladies and gentlemen and welcome to the NMI Holdings Second Quarter 2015 Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to John Swenson of NMI Holdings. Sir, you may begin.

Thank you. Good afternoon and welcome to the 2015 second quarter conference call for National MI. I’m John Swenson, Vice President of Investor Relations and Treasury. Joining me on the call today are Brad Shuster, Chairman and CEO, Jay Sherwood, our President; and Glenn Farrell, our Chief Financial Officer. Financial results for the second quarter were released after the close of market today. The release may be accessed on our website located at www.nationalmi.com under the Investors tab. During the course of this call, we may make comments about our expectations for the future. Actual results could differ materially from those contained in these forward-looking statements. Additional information about the factors that could cause actual results or trends to differ materially from those discussed on the call can be found on our website again www.nationalmi.com under the Investors tab or through our regulatory filings with the SEC. If and to the extent the company makes forward-looking statements, we do not undertake any obligation to update those statements in the future in light of subsequent developments. Further, no interested party should rely on the fact that the guidance of forward-looking statements is current at any time other than the time of this call. Now to our conference call. Brad will open with an update on the state of the business. Jay will provide comments on our progress with new and existing customers and then Glenn will discuss the financial results, then we’ll take your questions. One final note, Jay Sherwood is conducting this call for a remote location, so please bear with us if there are any connection problems on his line.. With that, let me turn it over to Bradley Shuster. Jay?

Thank you John, and thank you to all for joining us on the call today. In the second quarter we generated $2.5 billion of total NIW up 50% from the first quarter. Most of this growth came in our flow business which was up 69% quarter-over-quarter Although NIW numbers for the industry have not yet been released, we believe our growth in the quarter was driven by the three factors, share gains with existing customers, who are were generating NIW as of the end of 2014. Contributions from new customers added this year and a better than expected origination market. We believe our strong results reflect customer increasing appreciation of our differentiated value proposition as well as solid execution by our team. The market growth, we are seeing so far in 2015 is partially attributable to refinancing activity which was robust in the first quarter but begin to evade in the second quarter as mortgage rates bottomed. That said, we believe the purchase market in the second quarter will also show solid year-over-year growth following a 11% increase reported by Fannie Mae for the first quarter of 2015. We are excited about growth in the purchase market, because when compared to refinancing the purchase market has roughly four times the penetration rates for mortgage insurance. As a result, we could see some slow down of refinance activity yet still have year-over-year growth in the private MI market. This year, we expect the private MI market will be roughly $200 billion which is approximately 10% higher than our original expectation and roughly 20% higher than last year. In the last few months, we have seen a release to the final PMIERs as well as the updated capital requirements for Lender Paid Mortgage Insurance or LPMI. The new LPMI rules impose additional…

Thanks, Brad. I’ll provide additional detail on customer developments and NIW results for the second quarter and year-to-date and then turn it over to Glenn for more on our financial results and outlook. As of the end of the second quarter, we had approved master policies in place with 842 customers up from 777 as of the end of the prior quarter and up from 570 as of the end of the second quarter of 2014. Customers delivering NIW in the quarter grew to 340, which compares with 291 in the prior quarter and 94 in the same quarter a year ago. 40% of master policy holders generated NIW in the second quarter up from 37% in the prior quarter. Our flow NIW is growing among our diversified customer base with roughly half coming from our top 20 largest customers and the remainder coming from more 300 smaller lenders. As Brad mentioned, primary NIW in the quarter was $2.5 billion up 50% from the first quarter NIW of $1.7 billion. We estimate that the private MI market grew approximately 25% sequentially in the second quarter with the remainder of our growth coming from market share gains. There are two drivers to the market share gains, the first and most impactful is increasing volume with existing customers who are generating NIW for us as of the end of 2014. The second is contributions from new customers we’ve activated in 2015, existing customers accounted for 89% of flow NIW in the second quarter and 91% of flow NIW for the year-to-date. In the second quarter, we increased volume with these existing customers by 55% which is roughly twice the market growth for the period. We believe this is a great demonstration of our ability to increase volume with existing customers once we…

Thank you, Jay, and good afternoon, everyone. I’m pleased to give you a review of the second quarter results. First total policies in force as of the end of the quarter were approximately 32,000, up 49% from 21,000 in the prior quarter. Primary insurance and force at quarter end was $7.2 billion which compares with $4.8 billion at the end of the first quarter. Pool insurance in-force as of the end of the second quarter was $4.5 billion, which compares with $4.6 billion as of the end of the first quarter. Looking at the mix of insurance in-force by product we ended the second quarter with monthly BPMI representing 50% of primary insurance in-force, up from 47% in the first quarter. Aggregated single was 34% of insurance of course in the second quarter, down from 39% in the Q1. And flow singles were 16% of insurance in-force in Q2 up from 14% in Q1. As Jay mentioned, we expect our product mix to over time to roughly aligned with industry averages. Overall, Persistency as of the second quarter was 72%, up from 66% from for Q1.Excluding aggregated singles, persistency was 89%, flat with the prior quarter and persistency in the aggregated single book was 58%. Premiums written for the second quarter were $20.3 million, up significantly from $12.9 million in the prior quarter. Premiums earned for the quarter were $8.9 million, up from $6.9 million in the prior quarter. Annualized premium yield for the quarter was 51 basis points, down slightly from 55 basis points in the first quarter. But, excluding the impact of cancellations of single-premium policies, premium yield improved by four basis points quarter-on-quarter. Given our rapid rise – rapid pace of growth and what is still a relatively immature book, we expect to see continued volatility in…

Thank you. [Operator Instructions] And the first question is from Bose George of KBW. Your line is open.

Hey, guys. Good afternoon. The 842 customers that you guys have, do you have a history for what percentage of the market that represents?

So this is Jay calling in and it’s fair to answer any question. It’s purely an estimate, but I would say it’s on the order of 75% of the market.

Okay, great. Thanks. And then if you just be what was the dollar amount for the accelerated premiums during the quarter?

Bose. This is Glenn. The cancellations or the prepayments was approximately $700,000 in the second quarter.

Okay, great. And then just one on the LPMI on the new capital – new capital requirements. How do you see that playing out. Is it do you I guess premiums presumably will have to come up with that most likely scenarios?

Yeah, Bose. This is Brad. We think the written effect clearly suggests that premium should rise as you need the whole more capital against that risk but we haven’t yet seen that occurring in the marketplace, but we’re keeping our ear to the ground and going to see what happens.

Okay, great. Thanks and nice quarter.

Thank you very much.

Thank you. The next question is from Mackenzie Kelley of Zelman & Associates. Your line is open.

Thanks and congratulations on a solid quarter.

Thank you.

Mackenzie, this is Jay Sherwood. So, I would say there are still opportunity there. As you said we don’t disclose the number specifically, but there is still plenty of opportunity not only with new customers on the national accounts side, and also increasing our penetration within those customers that we have.

Okay. And how often would you say that you’re unable to move forward with the smaller whether it be corresponding [indiscernible] lender, because you don’t already have all the national accounts. Is that a common impediment or not so much?

No that’s a very rare occurring so, I mean, we have the majority of the correspondent channel improved and so that’s a very rare occurrence, where we find a medium to small lender they can’t do business with us, because they don’t have an outlet for the loan.

Okay. Great. And then could you just give us an update on what was going on in the lender pay channel this quarter whether there was any change in the pricing competition or demand from some of the lenders that participate there?

We haven’t seen any material changes since the beginning of the year there Mackenzie, I mean it still continues to be a very competitive market on the LPMI side. We’ll have to see what happens with the new capital requirements as Brad mentioned earlier. Our logical extension is that prices increase there, but we’ll have to see how the competition reacts.

Okay. Great thanks.

Thank you. And the next question is from Patrick Kealey of FBR. Your line is open.

Good afternoon guys. Thanks for having me on. [indiscernible] The first question just on your updated guidance here. You gave us kind of your thoughts on market strength for 2015. So I know in the past you guys have not baked in much if any new account growth contributing NIW. How much of that is baked into that new $10 million to $11 million number?

So Pat, this is Jay. So, we’re really just looking at the customers that we have as of June 30, all right. So we will continue to add new customers as we mentioned in the prepared remarks. But the majority of the NIW referenced in that $10 million to $11 million is from visibility that we have with existing customers.

Okay. Great. And then also sticking with that, if you have that agreed if not just kind of thinking about going forward into July. Have you guys continued to see momentum on kind of the master policy integration and NIW contributing account growth?

So Pat, we’ve mentioned previously that we and you can do the math yourself based on what we disclosed. We generally add about 20 new customers a month, not all customers are created equal they’re varying size but that pace has continued.

Very helpful. Thanks guys.

Thanks, Pat.

Thank you. The next question is from Geoffrey Dunn of Dowling & Partners. Your line is open.

Thanks. Good afternoon. Jay, could you maybe give us some color on how a relationship with the top 25 lender develops. I guess when you get admitted to actuals into their flow rotation. Is it something or it’s like a month trial period of ex-percent and then you get bumped up to another one. Is there a typical progression among a big lender that gives you a good insight into the pipeline not just for next six months, but next 18 months, or is there not any general rule of thumb of how that might develop?

So Geoff, I would say generally speaking for larger lenders you do start out at the smaller end of the shares spectrum and it takes time to increase the share of these larger lenders. That becomes quite a bit more variable when you get down to the small and medium size lender where your initial share can vary from something small down as low as 5% to something much greater than that, but I would say you’re right, generally speaking with the larger lenders you tend to start out at a small share allocation and increase that over time.

Is there any kind of general rule of thumb of how long you’re in that kind of trial initial period versus moving up into the tiers?

No. unfortunately not Geoff, it varies by the number of lenders out there.

Okay. And of the top 10 lenders in the country right now, how much are actually delivering business to you on a flow basis?

Yeah. So Geoff we have – we sort of stop disclosing that maybe a year ago and it’s just because we become more mature, we have over 300 nearly, 400 customers generating NIW at this point and it became a less meaningful statistic. Also you have to remember when you get down around the tenth largest lender in the country, the amount of MI they produced actually isn’t that great, it becomes a very fragmented market pass the top sort of four or five.

Okay. All right. And then just last detail question. And I’m sorry if I miss this, I have been on and off, but can you update your expense guidance for the year?

Geoff, this is Glenn. We did not updated, we kept it constant at what we guided to in February at a total of $83 million which includes the $8 million of share based compensation.

All right. Great. Thank you.

Thank you. [Operator Instructions] The next question is from Christine Worley of JMP Securities. Your line is open.

Hi. On the updated guidance that you gave of $10 billion to $11 billion of NIW, do you also have an update for how we should think about the split between flow and aggregated single. I know you had previously said you expected $1 billion to $2 billion of aggregated single in the year and I just – I didn’t know if that was a number that we should hold a little bit more constant or that there is probably upside to that.

Christine, this is Brad. So you’ve seen the updated guidance we have given $10 billion to $11 billion and we’ve decided not to break that up this time, but as Glenn said earlier, the vast majority of that increase is coming from the flow business. So we’re – we’re still on the ballpark of what we were thinking about before for the aggregated single product.

Okay. Great. Thank you.

Thanks.

Thank you. There are no further questions in queue at this time. I’ll turn the call back over for closing remarks.

Operator, perhaps you could do one more around.

Yes. We do have a question. Yes, ladies and gentlemen [Operator Instructions] And the next question is from Mackenzie Kelley of Zelman & Associates. Your line is open.

Thanks. Just two quick follow-up. 00:24:49 just want to know if you could provide us the split between the purchase and refi volume the flow business this quarter?

This is John. It was – it was about 75-25 mix purchase versus refi..

Okay. And then...

I guess it is that number if you like?

Okay. Great. Yeah, I’ll [indiscernible] the line. And then just trying to get some color around the losses you had the favorable developments this quarter. Just what drove that? And then how many loans, I know it’s really small still at this point, but how any loans were delinquent in the quarter?

Mackenzie, this is Glenn, yeah it’s really small. We started out with some six NODs at the beginning of the quarter and we end up with nine. We actually had five new notices during the quarter and [ph] Q2, so we ended up with a net increase of three NODs.

Great. Thanks.

Thank you. And the next question is from [indiscernible] of New River Investments. Your line is open.

Hi, guys. Good afternoon. One question regarding additional capital. It looks like you are going to make that capital $16 billion to $17 billion of insurance before [indiscernible].

That’s correct.

And so at this run rate could we expect or maybe you have – we’re looking at that capital raise in between three and four quarters from now?

You know we don’t comment on exactly when we’re going to raise capital. As we said in the remarks, we’re pleased to see the strong growth in NIW and deployment of our capital, great returns, and so we’re continually evaluating capital opportunities going forward, be it a debt equity or some combination, but no timing. We’re not putting any timing around that.

All right. And just one last thing. I guess right now due to the base effect, we can’t see any seasonals in the quarterly numbers yet. When do you guys think that we will be able to see that seasonal pattern kind of show up to the growth. Is that something you guys think maybe we’re a year away from or do you guys think that’s still probably pretty far out.

You know we’re at – you’re right we’re at a stage in our development where it’s hard to see that. We do I mean, when we look at the numbers we still can see some impact from that, but it over shattered by the rapid growth we’re experiencing and it won’t be anything like this seasonality you observe in a more mature player in the marketplace for some time.

All right. That’s all. Thank you.

Thank you. There are no further questions in the queue at this time. I’ll turn back for closing remarks.

Thank you, operator. As a remainder we’ll be presenting next week at the Susquehanna Financial Conference and we look forward to talking with some of you there.

Thank you ladies and gentlemen. This concludes today’s conference. You may now disconnect. Good day.