NMI Holdings Inc's stock fell sharply by 5.96% during intraday trading on Thursday, as the mortgage insurer released its first-quarter financial results.

Despite reporting better-than-expected revenue and earnings, investors focused on the company's deteriorating claims experience. NMI Holdings' Q1 loss ratio surged to 13.3% from just 3.0% a year ago, driven by a significant increase in insurance claims and claim expenses to $20.7 million from $4.5 million.

The company beat analyst estimates for Q1 revenue, adjusted EPS, and adjusted net income, with primary insurance-in-force growing to $222.3 billion. However, the market reaction suggests concerns about the sustainability of profitability given the sharp rise in claims costs overshadowed the positive earnings surprise.