IPO Report: NMI Holdings (NMIH)

Francis Gaskins |

NMI Holdings ($NMIH) is a development stage company (no reported revenues) that raised $510 million pre-IPO to fund a private mortgage insurance business in the United States.

12 other IPOs scheduled for this week. The full IPO calendar can be found at IPOpremium.

NMIHscheduled a $25 million IPO on Nasdaq with a market capitalization of $693 million at a price range midpoint of $12 for Friday, November 8, 2013.

The S-1 with price ranges was filed November 1, 2013.  The Manager, Joint managers are FBR Capital Markets.


Valuation Ratios


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NMI Holdings (NMIH)







Essent Group (ESNT)







Radian Group (RDN)







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Notice that established private mortgage insurance companies sell at much higher price-to-book values than NMIH.



  • Because established private mortgage insurance companies sell at much higher price-to-book values,
  • the rating on NMIH is neutral to hold (at the price range mid-point) for perhaps three months, not expecting much of a pop in the first few weeks
  • to give the investment banker a chance to sell the story to investors
  • of a startup (development stage) private mortgage insurer, with significant institutional shareholders.


NMIH is a Delaware corporation that through its subsidiaries provides private mortgage insurance (“MI”) in the United States.

In April 2012, NMIH raised net proceeds of $510 million from a private placement of its common stock and purchased MAC Financial Holding Corporation, a Delaware corporation and its Wisconsin licensed insurance subsidiaries, which have been renamed National Mortgage Insurance Corporation National MI), National Mortgage Reinsurance Inc One ("NMRI One") and National Mortgage Reinsurance Inc Two ("NMRI Two").

The proceeds from the private placement were and will be primarily used to capitalize NMIH’s MI subsidiaries and fund its operating expenses until its MI subsidiaries generate positive cash flows.

In January 2013, the Federal National Mortgage Association, commonly known as Fannie Mae, and the Federal Home Loan Mortgage Corporation, commonly known as Freddie Mac, approved NMIC as a qualified mortgage insurance provider ("GSE Approval").

NMIH refers to Fannie Mae and Freddie Mac collectively as the "GSEs", Government Sponsored Enterprises.  With GSE Approval, NMIH’s customers who originate loans insured by NMIC may sell such loans to the GSEs (as of April 1, 2013 for Freddie Mac and as of June 1, 2013 for Fannie Mae).

NMIH’s primary insurance subsidiary, NMIC, requires a certificate of authority, or insurance license, in each state or jurisdiction where NMIH issues insurance policies. NMIC first applied for a certificate of authority in each of the 50 states and the District of Columbia ("D.C.") in June 2012.

NMIC is currently licensed in 48 states and D.C. and commenced, on a limited test basis, writing insurance business on April 1, 2013.

As of September 30, 2013, NMIC has insured under NMIH’s primary mortgage insurance policy 22 loans with an aggregate unpaid principal balance of $4.6 million, representing insurance risk-in-force of approximately $1.2 million.

With respect to each policy, primary Risk-In-Force ("RIF") is the product of an insured loan's coverage percentage (the level of insurance protection) specified in the policy multiplied by that loan's unpaid principal balance.

Effective September 1, 2013, NMIC also insures under a pool mortgage insurance policy 22,000 loans with an aggregate unpaid principal balance of $5.2 billion, with net RIF of $93.1 million (as of such date), which represents the amount between a deductible payable by Fannie Mae on initial losses and a stop loss, above which, losses are borne by Fannie Mae.

Dividend policy

No dividends


5% stockholders

Claren Road Asset Management LLC  12.6%

Hayman Capital Management, LP  9.9%

Blue Mountain Capital Management LLC 9.8%

Perry Corporation Investment Manager 7.2%

CI Investments Inc. 6.5%

Amici Capital LLC 5.1%

Use of proceeds

NMIH expect to net $22.8 million from its IPO.  Proceeds are allocated for working capital and other general corporate purposes.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer


Symbol Name Price Change % Volume
BYNEY Banyan Tree Hldg Unsp/Adr n/a n/a n/a 0
NMIH NMI Holdings Inc 8.11 -0.06 -0.73 145,372


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