NMIH - Earnings call transcript Q1 2018

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Operator

Good day, ladies and gentlemen, and welcome to the NMI Holdings First Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions]. Later, we'll conduct a question-and-answer session and instructions will follow at that time. At a reminder, today’s conference may be recorded. introduce for to conference, like now your today's host Mr. I’d of Management. Swenson John Sir, please ahead. go

John Swenson

of afternoon Good quarter MI. Vice for you. welcome conference National and President Swenson, John Thank I'm and call first to Relations Treasury. Investor the XXXX

market are Norberg, call Claudia Operating results The were on the our today. Pollitzer, Controller. on Adam Chairman Financial Chief released Chief Shuster, close quarter today Investors Financial us at may and Brad after tab. of release Joining Officer; be Officer, website our NMI's the CEO; www.nationalmi.com, Merkle, and the the the press under Julie for accessed located

During the forward-looking Actual about future. results comments course could differ statements. make those of these call, may materially expectations in the we our for from this contained

cause events. regulatory party fact the factors current results the we used on SEC. statements materially provided in with that measures on of and could our obligation comparable do interested rely on call information differ to release not on that time on to is other measures a Further, the website, GAAP. non-GAAP our the future undertake most found at any have call. such subsequent If, can statements than under this time certain note to Also makes those no extent, those be guidance trends through filings any in reconciliation the should this of call we Additional of from or to about in the today's of press the statements, or discussed update company our the forward-looking the the and light website the actual that

the that, will the update With will some discuss take conference with from will open closing After provide development questions. Shuster. market we turn the remarks the environment over an our customer Adam overview to quarter, of call to Brad results let your financial detail. then me the and Brad in Brad, an and call. on Now will Claudia

Bradley Shuster

the was John. used quarter highs the National Thank billion as afternoon, it We Primary force mortgage MI to than another XX% of record everyone. we of of insurance XXXX sequentially over key new success. new, up insurance measure you, In billion quarter $X.X the for of up first and was wrote XXXX. metric achieved good of And $XX across every the of XXXX quarter XX% first XX% high over quarter over first more fourth we quarter last year. and quality up

insurance million, deliver Net and to a premiums sequentially industry. first record continued over and last were the We year. the quarter force rate growth of of in of earned the $XX fastest up XX% XX%

income line Our bottom $XX line a was diluted $XX.X net $X.XX continues shares, growth per top and or diluted was drive our was Adjusted XX%. GAAP per also equity net $X.XX million Return share. million quarter on record the results. to income for

of recent We With momentum to return by are evaluating pricing, the record are rate regard financial customer positive competitors. and announcements with to we in appropriateness XXXX results development, on growth pleased have starting delivered portfolio equity. significant are again our and

from sustainable pricing we Instead we service these market maintain view terms that have and that always competitive tool the best do values. presence customer as to market coverage view is achieve the core a of rule, As or not presence. and matter, an held means efficient in built

two and evidence these share wallet of growth certainly past stability years over strong in are this. customers Our of price

granular evaluation customers own our advanced and return needs an and these We of to increasingly shortly. update setting competitive how objectives environment in their our take conclude risk strategy pricing be on and borrowers the of into our provide of and might expect pricing our evaluation risk. continue the consider we our strategy In to through will management in account

enabled will of consider policy the in external XXX,XXX families Since framework. NMI as understanding the riding has X.X our homeownership. current than also XXXX, maintain our achieve PMIERs first dream and variables We more key such of American to

for strategy. returns the developed recognize will on attractive the We in pricing allow an vendors balance adjusted measured excess also it our of and and thoughtful of strong of strong and financial risk customer reform continually cost position strengthen Tax bottom-line to generating sheet of counter lasting service results this with party and That capital approach. coverage delivering through profile. we our to group based immediate partnerships incremental deliver provides importance our shareholders our to said, innovative and hundreds and to us benefit will have a value

strategy pricing to desire and desire objectives, shareholders. our their borrowers will serve balance our deliver and customers to these Our our for our

maintaining we mid-teens in for around were the been our FHFA returns equity engaged any have and our a other term and that with December. to proposed XXXX in with Washington deliver and we pricing PMIERs a after regarding expect changes continue are the to return We will over long giving any change outlook actively GSEs us Shifting on in industry mid-teens strategy. that the to shared matters, effect

rules expect the a before the will the any would of not fourth this year. industry We be of that publication of six final changes that afforded following and period any end take to month continue implementation quarter new affect

mid-March maintain Freddie effectiveness We program. and be In will upon Mac’s anticipate we learned Pilot our plan. on about upon compliance capital to continue that expect position ex-desk an we based all full IMAGIN current in to implementation

GSC and well as directly to the actively how relative have U.S. nature state which through program the PMIER the introduced as was framework the trade our to pilot We fits standard and shared insurance and group the requirements, about in the manner regulatory market. our views charter MI it of

opportunities the the the highest LPMIs accomplishes question at state contribution and home-ownership a not we We to have program are we and structured, capital sustainability finance As a the that qualified loan constrained support PMIER provides with their of increased believe innovation program. to held commitment the singles not the who long-term have lost goals. furthers providers on commitment point these to of Broadly regulatory program relies demonstrated IMAGIN and to the don’t from is not we standards believe a cycle. this do and borrowers that access single market speaking, and full across temporary value We system. IMAGIN housing

to discourse Washington Over capital is term, a and permanent mortgage reform. around and high the risk long we primary and LTV unique National to provide market, underwriting our GSE that the private basis. value broader the in an level of on MI believe industry through insurance increased ability There evaluate support stability

to of in within early any meaningful in and to With emerge. preferred for expand of of policy is its unlikely a reform at the what regard it if always, reinforced of we payor initiatives activities be of to As need will private FHA, To framework first the decisions will that XXXX And future the we to tell and date, all complex it may continue and that’s industry. participation our footprint risk. to believe positive to any is for tax too serious a topic benign direction private capital reform. continue a HUD have front capital mortgage more believe that is proposals FHA be policy insurance

more Claudia on it turn customer the over and development detail market. for to Now me let

Claudia Merkle

respond our you, customer unique to strong value team Thank proposition. and In Brad. continued lenders the to first quarter,

we end, master quarter of had nearly XXXX approved policies. As

top platform to including XX top new mortgage to lenders lenders. attract XXX expands the of to originators lenders continued in customer XXX our approximately base new We including quarter country. activated our XXX four in This the the and customers active XXX new

growing our counter underwriting We commitment the broad business increasingly also our approach. in party, based with as market, customer continued expand to accounts recognize strength presence superior service our and to to the our of our a existing value a

a the the at volume quarter develop the will precise QX were for too than purchase market, first early of year, still market. rates it’s Current insurance more to broader mortgage Looking view last how of the XXXX. over interest up although constructive was market XX% remainder believe from we have

to our expect the MIW XX% down modestly some represent fourth do see quarter, refinancing in move Refinancing rates first as in contraction XX% we XXXX. of in higher. of continue However, quarter to the volume from

higher XXXX generated be we production, our In meaningfully billion $XX.X terms the we XXXX. of expect than in MIW to

driven of their efforts and entire focus the pursuing relationship MI National customer and impact Our reflect high team results the lender on by delivering experience. are a superior

quality continue perform also issues the efforts grateful than better monitor the continuously and slower of remained and continues initially inforce in of our nonetheless and long customers have business identify credit and who they for portfolio the portfolio. credit and trends view to term priced. before to take We expected cycle our entrusted environment, underwriting become our us for to loan to a their are support market Shifting We our their business. solid the with

of we risk which lender also in We than granted majority and an are industry. Adam. move us important With I’ll portfolio. a offer on more announce of to the to it we that, loans our XXX,XXX to It the pleased the have This underwrite our more feedback relief our practices. we ensure XX month far We to accelerated over passed that the in address continuous that to underwriting this or validate individual emerging customers to in manufacturing insured identify allows unique than we individually believe either milestone were on April rest of a because portion or us environment larger provide month rescission allows XX broad regard, relief is precision and and loans. vast turn

Adam Pollitzer

drove $X.XX financial key on of Claudia of business million quarter continued and record This good insurance and first achieved outlook growth premiums every reinforce of and adjusted return million, across quality XX.X%. force. equity had generated for high $XX rapid These or and adjusted in financial Thank share of the record record $X.X quarter strong results our diluted metric. net results We earned billion income We you, $XX.X and record per another our our NIW and record strong afternoon performance. net everyone.

Now end up to of XXXX and quarter $XX.X the XXXX. detailed was the insurance-in-force XX% results. the from billion at $XX.X quarter end, with of first at billion compared up XX% Primary

in was contribution basis reinsurance basis up by XX% force single cancellation from $X.X across average $X.X XX monthly of quarter premium first for compared first premium the XX% quarter line year. the from first Weighted quarter the roughly basis compared quarter cancellation up earned of XX% with premium of Monthly a in with fourth fourth impact in XX compares for is the the offset XX% compared was the to XXXX. fourth product Net fourth and rate XX% XXXX. primary Reported our primary of guidance persistency our in all the insurance-in-force, quarter-end, on basis with the was mix the of up of XX% to XX.X million, year. quarter XXXX. yield, our single XX.X of product benefit with $XX.X continued quarter represented was We earned XX.X the in and portfolio Gross products end the to quarter. million which the quarter was The monthly first the quarter, of with basis NIW XX% was first in XX%, with in NIW from policies at decreased billion million points. the NIW, yield compared flat were the in last down of and insurance quarter the fourth quarter quarter points in policies. premiums in basis points of which the for of before the XX $XX.X quarter. of points the higher of XX quarter volumes first of from Total $X.X XX.X million represented of fourth compared As points points the in up XX% month

price up Over million term, was the expect us achieve that from million income mid-teen our we yields our the strong deliver target. to returns in $X.X on and portfolio prior long quarter. Investment to allow business $X.X

and our The expect portfolio portfolio the on as investment first income investment we incrementally rates. book increase in higher the investment money We X.X% quarter. was continue realize of our will to yields new grows benefit

of yields $XX.X were compared quarter assets. X.X% operating the the reinvestment quarter. on first Underwriting similarly are situated expenses fourth in approximately $XX.X million We achieving now generally and in to million

the significant leverage our in in Our ratio nearly XX.X% X point model. the one quarter, improvement in was to highlights financial a expense the quarter in compared operating XX.X% just quarter fourth

FEMA as fault might of incur and We ratio focus quarter-to-quarter the the trend Claims million. with book base to areas compares to the quarter, quarter XXXX. and primary or including the down additional our ever-to-date expect the cost efficiently X.X managing fires. last in exporting XXX XXX to We XXX paid XX ILN in our from the wild in the We hurricanes we notices connection with the claims continue at compares disaster issuance. the year’s first loan loans refinancing end including notices XX. total XXXX bringing XX paid of claims to consistently in to quarter expense had This cost the in related of were fourth FEMA quarter from claims notices paid end on zones in term of which

claims quarter by premiums defined first as expense was X.X%. loss ratio, divided Our earned, net

fair As mentioned our to gain of XXX,XXX was in to the over few digits of value last low quarter our quarter, loss liability. we next recorded in $X.X the we attributable the warrant and mid-single expect million a be a expense ratio in years. the Interest decrease to

per in for a $XX quarter XX.X% diluted or quarter $XX.X Adjusted for million warrant share value fair the Effective income per Now quarter. million also income, the net compensation. the vested to the $XX up excludes which diluted share reflecting moving treatment was million $X.XX $X.XX diluted for Net equity bottom the gain share. tax the fourth first from per or line. $X.XX was was rate accounting

up We year prior and Cash the end, for XX%. expect to approximately from our investments million at were the be effective in rate $XXX quarter. $XXX full million tax quarter

assets the $XXX at grew we of our million March $X.XX end and would equity required quarter to the continued have assets quarter At of with to compares million growth the with support company million. which contributed $XXX Giving cash our investments total the compares cash proceeds XXst, risk $XX approximately we business. $X.XX available holding per In per equal effect company NMIC million April, PMIERs quarter Shareholders’ to or available at million. of the first $XX of been $XX the was at have based including As the of which XXXX. assets to of offering. under end, of from $XXX at net $XXX million $XXX from of end contribution, to $XXX end million equity million million share, access share holding

return compared on quarter fourth in XX.X% was to in adjusted Our the first quarter. equity XX% the

to for return the deliver XXXX. a equity continue year we will that mid-teens on full expect We in

contribution term, in following our longer our earnings continue in expect to mid-teens are significantly cost and the The financial embedded of billion and insurance tax will an in primary potential extended Over immediate $XX.X access reform capital. and that to deliver corporate our returns performance return we manner to increased be an of portfolio the to permanent period. of force driver

and these will our trends is PMIERs investment positive of nearly We at PMIERs approximately XX% our cost the the from to the term reinsurance of all approximately long of yields of our success we XXXX needs, fund effect. Additionally, a incrementally the deliver and rates weighted strong continued X, industry average our shareholders XX% expense mid-teens at of returns income contribution portfolio over the average in changes our funding and force context into scaling even when X%, actions PMIERs further an framework. the far had pricing continued by to recent our went us expanding weighted today cost the for to our significant and spectrum capital long-term migration when We’ve potential monthly PMIERs our rate growing markets of significant higher industry. expect and expect NIW success estimate of funding continue XX:XX in that full towards higher first accessing reinvestment which to over footprint and balance the down January considered and allow returns and continued fastest our returns, fixed carries phase mix our increasing The insurance support at in our will

force and We funding net on insurance on expect summary, to adjusted an premiums equity. return and efficient for in this continue equally might solutions pursue in to any lead increased results manner. GSEs in and achieved earned, we regard the their record impose income requirements PMEIRs and FHFA In

operating margin turn continue manage our will closing As our of hat quality leverage high expenses, that, strong of expect With I’ll return t mortgage drive continue to grow on it his for over to cost to exceed our insurance mid-teens that risk embedded we equity remarks. Brad we portfolio and expansion and and capital.

Bradley Shuster

you, Thank Adam.

modern a us was National more than than don’t past. the and in risk results Before ever diminish to recent at continue increased help made it vision like that investment available Q&A, across have The the unit industry. opportunity today is for in we MI dream started customers, of We XX for has or environment in and had we fashion efficiently with home-ownership offer some and sustainable a on validate to evaluate shareholders. majority and deliver and Recent shareholders National the returns and with of operate attractive I’d our for fundamentally or perspective purpose. the to MI borrowers turn adjusted specific believe the key allows our announcements and lower lender and the cost is to any customers and borrowers significant the Supporting significant to mortgage a impacting two I market our our ability MI have insurance in developing National granular a greater worked my before. we point of ensure. at goals. IT attractive and our industry precision significant delivering I in deploying years a speed that We attain more different cycle. risk a to can platform for underwrite loans developments

and to available before. aggregate National risk to portfolio been economic funding at equally a ever market regulatory The MI a needs than across our transfer in modern establishing broader our in capital funds successful in and spectrum and risk and have lower the deeper us capital and solutions allows the a We reinsurance profile and manage framework cost

U.S. have guardrails we how of technology and absolute to unique and the manage are we the to mortgage long-term that regulatory expense maintaining a believe housing quality deployed have with to capital risk many positioned while of the take the mission the to on come years industry. and lowest can finance and We evaluate questions. dual have positive With market the reinsurance established so These to capital solutions system. ask that, market its through combined Within in we manage framework that National view operator MI footprint and on on ability the risk, been efficiently back we the regulatory cost your deliver come. capabilities in for both I'll

Operator

Instructions] [Operator of line Bose question with from Our George first comes KBW. the

now Your open. line is

Bose George

afternoon. good Hey,

have the but premiums do be ILN might this going on side? remarks, address just You leaving anything prepared think the in stable forward, your you will aside

Adam Pollitzer

Yes. market. XXXX we'll Bose, that's might stability our in absent Certainly yields right. ILN we in anything through I see do the think that premium

term In expect mix to long XXXX revenue to of our way and don't number on higher of but yield reinsurance the of pull towards expectations continue new that we call are guidance, generally terms core rate our that, exclusive benefit to shift to our before beyond see what we blend a giving XX.XX have from there through. we come in cancellation We'll that insurance-in-force, continue positives the and effect NIW. dynamic yield provide towards long-term would

of business do yield, our impact higher is in the environment happens or sector. reinsurance the improve will reinsurance marginally. a We even other early it we at us the price And about different so of impact particularly effect for didn't legacy – run-off For vintages talking post though less either us less to excluding in the is cost crisis of we're that run-off that believe continue for consequence.

be higher deal transaction than pricing to it considered we profit quota moves is where pricing that than executed context in And achieve strategy on we'll be of Our first expect next deal. our would latest share deal and in the shortly. was we incrementally the obviously of announcing better all on first cancellation our and has that to on revenue the the commission ILN

Bose George

terms in any That's the update great. Okay, you there? the actually us Is there just can timing then remind of for helpful. And ILN.

Adam Pollitzer

to Yes. near a strong us. issurers they're we're going specific open to market I I that for to it’s and say MI something the a would terms on it's that's but we yet, in don't when on have capitalize the targeted like term. transaction focus available markets at date terms favorable

Bose George

is color to The you Actually Okay, in me. clarify not more great. the on that IMAGIN helpful there -- that advantage any Thanks. the was one losing or loans into because would or about much that meaningful market but helpful? program, from it just program wanted program any that pricing just the be is that commentary don't just it see of not just

Bradley Shuster

IMAGIN, loan to any life counterparties close as required of the And after advantage out initially somewhat Yes. executed pretty of number the Bose, And at that pricing to the levels we're most coming oppose advantage its of on uptick that is the combined view our them there of its that IMAGIN for was are coverage. extend and cancelled type hold And to is PMIERs the part limited the the in we're is XX of levels customers that aren't a years seeing that that have fact capital it. the with over pricing that fact promoted today lender that aware our program. our LPMI pricing. given opted stated to from is

Bose George

Thanks. helpful. That's Okay.

Bradley Shuster

Thanks.

Operator

Our question Zelman from Associates. comes the line Mackenzie Aron with & of next

line now open. Your is

Mackenzie Aron

Thanks. and strong afternoon Good congrats on the quarter.

quick. guess going back real I question First to capital just

remind there? refinancing would be you debt the the what can of looking that achieve what time and On us you'd be to

Adam Pollitzer

continue both will Mackenzie, but that loan it. any capital term. it's paths believe support of on our we'd strategy important another near remain components it's and attractive the pursue specific take We'll Similarly haven't market both we're in near-term. Adam. overall we and funding and item PMIERs the term to to capital offer indication, Again, ILN focused will We in provided us terms, expect

Mackenzie Aron

is on given commentary looks and strong just expenses, in like expense investment volume curious is Adam the the it operating company thoughts last the infrastructure strong then on operating had provided quarter, And incremental know, how opportunity perfect. some how side? Is just the helpful for I or on right the Okay, any now. there updated so you people

Adam Pollitzer

It’s is. good is system and company platform scalable one the our And Mackenzie. of how a question of and virtues our it

don't not to investment significant so support withstanding strong that any And make flow expect incremental volume to we the seeing, that volume we're flow.

at half not growth the the this provided So relative point we're we're of changing we second about quantum dollar expenses February the in XXXX. to guidance of and the that that expecting

Mackenzie Aron

just then, one, Brad, And last Okay. this one is for you.

appreciate Is on the the that you is towards fact it potentially can nature away across more years, in that curious, of that the the seems does market, move maybe system. like It the risk we the customers differentiation for a various based adoption feel more what Just pricing so that just in were granularity. provided in industry some based reception you more pricing you've very seen what feel commoditize Does shift of it that you and over move having, industry like from MIs has like pricing there more among the conversations maybe that see direction? suggesting? on the can been last three

Bradley Shuster

other that I frankly so evolution our we risk more think returns. And with in we're the and all continual perspective and make see one. positive the technological migration capabilities selection so our risk appropriate of and and managing advance about able Mackenzie, on technology granularity very our concentration similar we've its a seen discussion on and their a a as part I adjusted volume the part such Yes. levels, as granularity from for of sure operate market our counterparties, to and are customers they maintaining

Mackenzie Aron

Great.

you. Thank Okay.

Operator

with question Riley Randy the of B. next from line Our Binner comes FBR.

Your is now open. line

Randy Binner

pickup I'll Thanks. evening. good there. Hey, right

of like bit So I to a would what a little Black referred shift towards, as seems pricing. this guess, Box

the to rolled So something way the going that little give that that's roll going it in from and now? the understanding you just your is the or Can way a you're it perspective pricing of feel different kind to more would market into versus out how that really out? you've if come something business the lender future already that's doing

Bradley Shuster

Hi, Randy, Brad. it's

Let clear, announcing we're me not anything.

our market are said that had competitors. our by some the of evaluating in we changes As the which occurring remarks we in prepared been are announced

looking take our of So, when of pricing. risk the we more are technology looking to develop and developed the take evolving are market its advantage into ability account we what's and in at we to we've aspects

need so on on to our and coming future. we access we are to receptivity further taking And in customer on the the marketplace and extended back to that announcements working we'll some the approach an that of be with basis

Randy Binner

quarter. planning And tax tax and was Okay. is this, for would One housekeeping items. just in be it. let the Was But you I couple get in you a if one-timer me then if the rate missed apologize on the Adam but there XX% covered there? purposes, I in little rate said it a bit lower

Adam Pollitzer

No.

items occur in that period we rate we the awards. on lower discrete to would we our notable XXXX particular that discrete account expect the we but rate, the most predictability with items is that reflect is and occur have quarter towards tax a in pattern year those quarter guided of same the in fourth some we quarter what amounts in take of item equity XX% vesting that but and relates notable which our think into as a the would call full a I most first Randy, rate, tax the saw first and in where So, repeatability the effective

– GAAP through me, and expense shortfall And which so through tax period benefit is what a our windfall the expense in our take charge either the excuse in we vesting occurs.

second, XX%. fourth we're is see rate translates quarterly What windfall benefit rate to effective and and And first still quarter third that's on through we stock of that effective quarters price an the a in see so our why basis effective the that approximately through a given expecting that rise XX.X%, you in is full translates the XX% of to a rate. year a but

Randy Binner

of And of last that Understood. expense or was absolute that -- I off we expense – – you'd can half you I expense digit something about like said we ratio XXXX is appreciate double level which talk was the lower. off But expenses is kind this, a growth the rate think the on it call that there of something then second normalized base. run time of

So what the would… think going forward be expenses is that, would that way to right still is this because about

Adam Pollitzer

Yes. That's right.

Randy Binner

bit above that. a It’s little

Adam Pollitzer

would so below. down. it It No. be let's break Well,

so half annualized rate. So it create double the was we XXXX expense then a total $XX.X and right, million, second that, run said

expenses rate think it million were $XX.X And of fourth in context so equally have quarter -- quarter and million if would first is third the in way the that the that a came to of than not $XX.X if it quarterly half about the but second XXXX would that in your X.X% estimate. total $XX.X as a we layer basis roughly million the in higher base, $XX.X which The the as first on indicate that rate run deliver rate to quarter million. is growth run

so will about full how XXXX. where that's land we for year how And about it we're thinking still thinking that the in

Randy Binner

All right. Thank perfect. That's you.

Operator

of with comes question from next line Jack Besaiko Our SIG.

open. is line now Your

Jack Besaiko

Adam, back to premium wanted to question. the Hi. go I Good afternoon.

it think was Bose I question.

or ask want or list, make help that's are us NMI flat what we through the and on think just the year, is maybe what, that five about but to paid, I you'd money beyond I to sure number basis you way the remixing to how correctly? there way we is, can of will points think you this a about to you as other year, I two because new like think saying trajectory the Bose understood -- at that said said to six, not the something net three higher I portfolio continue a stable book in guess think coming do borrower about

Adam Pollitzer

Yes.

we will that was you of was strip all what cost actually revenue XX fourth number XX.X first points – XX the and we'll was basis XXXX -- exactly points the it first quarter our see yield. pull quarter. core days, up it the points. quarter in basis and about in of the way about was the away to and basis XX that expecting call It back a trace impact if It’s was our yield, are core we roughly was the it reinsurance of So continued cancellation

so quarter XX in writing reflecting about points. And average weighted that's our we is NIW this basis generating what was are and

through move our yield basis our signal in actions will pricing So its our that we'll of first and for XX our to plans of XX more insurance-in-force, pursue layers The faces entirely in be average in XX of quarter of of range seat continue. basis roughly how rate the and that of sort points announced XX so basis That to of term. year NIW pool XXXX reflects this terms, first increase the estimate point in monthly. XXXX the to offering quarter ILN ILN that to the weighted will of indicated to near it so and of cost Brad I the dynamic core some premium, continue we're what seeing Bose our in that XX% to almost the our it that in and a given near competitors the will end moving much have XX% or importantly of from context points rolls mix mix also that the we guidance be the in in those on sharing in and

of year. remains that's the through XX level it so basis point XX And the to how course at that

it Over base to over on pull yield yield in term to it, We items XX% XX% portfolio of the to some on a there's yield XX% there's a our continue forward expect similar to of that weight that turnover, we – go. net and basis expect core on math see, period where that yield when from roll between we'll yield. longer our yield is NIW. to sort mix you will completely a competing a move the balance extreme we'd the but to up of approximate expect We core out a specific the expect points, that series XX the number longer the dragged the the and our of XX see not we're move absolutely will to drag In will going would down. XX%, mix from put but happen roughly our these went time, move from just on would works that what we core a way

Jack Besaiko

June pricing early When are helpful. your you Thank the early timeframe rollout you ultimate, about talk That's January to or -- you. referring an essentially very rather?

Bradley Shuster

future will point decision throughout. made point far this announcement important the where to it and We founded an have be that emphasize a you've and too just want consistent a Jack, we make been we on won't on that, one front. in we but I since us on known the company

leading need on be cognizant fully We in pricing industry, an that intention overall have we we're basis. the our to competitive no price but being of

embedded future. kind in expect roll So that change see to can that the philosophy you in out any we of

Jack Besaiko

All the questions. taking right. Great. for Appreciate

Bradley Shuster

you. Thank

Operator

Gamaitoni Our next from the of question line Chris Point. Compass comes with

Your open. line is now

Chris Gamaitoni

further Thanks program, some dynamic enough But some on my opting customers been on my on? pricing for you maybe call. simply are or answered. isn't I of the out taking is is love more questions going clarity IMAGIN think would why some color there Most the other it of

Bradley Shuster

dynamics think I going Well, a there's different lot of on.

important quality that the or and risk post-close the of in is that program. backing factors review important of the we the One insurers IMAGIN as step underwrite mortgage is

our reinsurers ultimately think risk think how of some do. type agreement. we such high share in while and same we of to those market FICO the DTI, early may that could quota is IMAGIN acceptance terms participate uncapped no reinsurers growth low high in factor amount LTV, so it going with program the as are under of we There days. risk much maybe you see limits those attribute limit limiting see that lot the in have share And program, competitors the for I reinsurance quota of agreements because the agreements a and the

that those I characteristic. the extent think fairly dry appetite may to risk for adversely you'll program you the is – out rapidly selected see

Chris Gamaitoni

related underwriting no do card in return change pricing, score tax Okay. currently today? think the rate And then and your future or you the right card the what to given now to benefit is

Bradley Shuster

the low on to It's high XXs teens risk depending cohort.

Chris Gamaitoni

two you would competitors that changes, of the announced where where And kind have a have other of view Okay. do be under model? your

Bradley Shuster

strongly profile. return mid-teens Back into

Chris Gamaitoni

to Okay. aggressive trying want level relevant be whatever of going kind And business you customers? in be where to a start of make you or is rethinking how to you kind there the to always return of

Bradley Shuster

No.

saying been in difficult appropriate taken but haul, I only not on and of achievable of that's given to the the the consistent the the nature also its term are history in mid-teens sustainable patches past. when long running been of it the pretty they're we reprice industry kind over and ever I can't long risks the think think fact we

given return we're a And that. the that mid-teens think and customers I risk think I the sustainable solid appropriate taking. is So appreciate

Adam Pollitzer

targeted that pricing to our think these none in we're a around other to of relative our the The vacuum capital so is on we capital. side there. our the are deliver But actually generate consider that returns, about that cost making and we think of the pricing returns impact direct decisions a those and and because really items excess exist want decisions value we're and in of have the risk significantly cost that on making side

the we're pricing of capital aggressive as as overly risk to cost risk increase those Our profile our our will decisions. with increase, extent increase will profile

that over saying say and term, let's X% relative One, the And Its if creative to but as average we think think of simple means an we XX% return. as we that chase so its would rates today also most position just be profile that we're company an a deviate down there at a to as to deliver funding position. between to value weighted but natural to from cost our risk long two. meaningful should we think deliver importantly it industry, as and because the funding a PMIERs what mid-teens is returns balance our we not about

Chris Gamaitoni

view capital made? there conceptually probably number, won't you given commentary just the us Okay. for give internally? how And you you just I any a you view you view that do to your is like way know give how but to a own cost

Bradley Shuster

but risk and overall we them. atop calculation our transactions pretty the the which Today share are stacking the to we and deals that funding in them hard debt, those and It's reduced how we PMIERs – our we reduces X% the balance said and because we that sources at quota so forward, roughly dept as view into, there's and each executed – for each equity, its and about of straight framework each we and those as dollar methodology relative have of Yes. we equity of the pretax funding portion that quota each ILN ILN funding, what other look that to calculate through tapped to other. contributes cost for to right. a We for share four have we've and the actually up, builds reinsurance think simply it requirement not since

cap-end that weighted to where and reasonably measure. Our is where straight-forward we know is average LIBOR basis at look our today. and debt after then on equity We level. know a our what we spread means We on access a tax

Chris Gamaitoni

you so much. Thank Perfect.

Bradley Shuster

Thank you.

Operator

of [Operator Partners. next Dowling with Dunn from comes & Geoffrey Instructions] Our line the question

now Your open. is line

Geoffrey Dunn

the nuances Thanks. and for pricing This as back to they time in suggesting come versus differentiated pricing to least shifting with nuances historically are some banks you for there XXXX I'm there of mentally Historically the spring and in when XX curious well? seen around selection. it risk a that spot. same the pricing, MGIC. the come this nuances something different what its sustainable? offer pricing. now out as ends the granular sounds Is up Genworth time from comments Brad, MI might the top of looking we might uniform variant day with about to your as recently is everybody the that like want that we've saw Radian maybe well. to I at for potential pricing end more but at allow that's What type as difference pricing particularly this could make stick

Bradley Shuster

and all going require of that continue remarks across So, certainly part pricing certain we I and appreciate their appreciate will that. customers we're a partners that uniform be your to MI to

part. many risk. going about differentiation But various and increasingly we're able I of not And and on or talking about to handle selection think that's across I technology So customers the change. to as our our volumes granularity, aspect managing tools its and risk said the are

a running MI over long more of terms really in important it's management successful haul, really than about business just that platform it risk the so about think we production. So

Adam Pollitzer

in top this suspect the has to each want XX banks evolves to important own it's The those top banks I landscape changed top a and of you MI continuous landscape as within point and dynamic small wasn't to to XX their how industry move fact forward. the and are they the about top with asked originators customer distinction, one has the not the but just that Geoff, deliberate mortgage view customer the XX XX but note and customer today. obviously have engage

Geoffrey Dunn

of it sounds don't there's maybe it kind but it and granularity one have you sounds where kind added the one structure, and there, added suggesting we like effective I the two granularity suggesting? a market, but already tier you're uniform we're which you're card pricing towards like I move think already So Box, we're Back is there -- of where that becomes is but what that where in

Adam Pollitzer

occurring we we��ll there we so it but that we’ll and leave going remarks and to more. back the it, come revert – the something directionally, I clear my I that earlier to comments we’ve an is back mean, studying with but pretty there have I'll prepared been just think in soon, are are hour evolution

Geoffrey Dunn

Okay, thanks.

Bradley Shuster

Thanks.

Operator

further I’m in remarks. to showing time. like to I closing this at turn no the management queue questions back call for

Bradley Shuster

to you the on us today. thank like we’d Well for call all Great. joining

be in XX XX. Conference forward conferences. KBW to those and FBR May you. will York at New the Thank in on the you May And presenting California Conference look Riley B. on We seeing at Southern we

Operator

disconnect. gentlemen, participation day. concludes now a This today’s thank and program Everyone and your you Ladies have conference. may great you in for the

NMI (NMIH) 1 May 182018 Q1 Earnings call transcript