MTG - Earnings call transcript Q1 2018 | MGIC Investment Corporation

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, my name is Felicia and I will be your conference operator today. At this time I would like to welcome everyone to the MGIC Investment Corporation First Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers remarks there will be a question-and-answer session. [Operator Instructions]. you. Thank Mr. Vice Relations, Senior your may of conference. President Zimmerman, you Investor begin Mike

Michael J. Zimmerman

morning for Corporation. thank morning Felicia. and Thanks Good you your in and interest joining MGIC Investment for this us

discuss that Joining is the we which at to Mackey. earnings the call quarter accessed XXXX to financial this and Financial on non-GAAP Chief me are I Newsroom, Chief release our remind Chief additional mtg.mgic.com for Officer, Sinks; Tim call to want of during Pat measures. on Executive certain morning, be includes website, of under Officer, may company's the the which MGIC's quarterly today Risk will first the located information participants results about includes all results and that Mattke; Steve Officer, refer

posted we a insurance find the you force, contains We presentation risk our which our new valuable. to have website information that think primary other also pertaining information in will written and on

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

factors earlier those Pat. At fact I'd the that makes call time the or about to in future on subsequent of this undertaking X-K. guidance not other parties this time any developments. should those in Form results over light the such the statements, call update contained statements like issuance or of Further, cause was call, the could no from statements If the time, of to turn on those at in information than Additional discussed to are differ rely the Form that forward-looking X-K the are we current any the this interested are actual morning. filed materially that forward-looking company obligation to

Patrick Sinks

Thanks morning. good Mike and

pleased are me had of that last to quarter before business quarter. am billion continues the financial a another in and strategies In targeting write a let share we the full operate quarter but years to we I which ago of Tim report than same year we we provide and the does will door $XX has we highlights. were billion market since results In as still purchase details evolve on was possible and environment the the executing few minutes strong focused opened our This it we XX While from our some XX% new the to year. he strong are reflects FHA. for $XX.X few higher gain business mortgage the cover the

than Mortgage volume securitization private GSE Inside reported FHA purchase at data increased MI while Finance purchase by decreased Looking more XX% volume year-over-year X%.

this seems suggest to lagged, its origination it market. share does the industry our is that of total data increasing be While

fellow The a well on force share plus, at and returns is persistency XX% driver market insurance XXXX. the that a written X% deliver market, new customer to XX% the company's a there of force is accounting billion. the XX% $XXX.X was XX% decrease refinanced to During of our compared for the quarter quarter on period in the refinance insurance as same the it Compared business. in resulted at loans than our coworkers focus is of as Since key we approximately first applications remained which just transactions originations purchase low quarter A industry's annual new for expected the total for of was year the in last insurance an and activity hard as purchase ending purchase as in times offset our metric in positive primary to purchase X% in higher a is higher half four refis. share percentage increase expanding of dedication than three a our work applications. stellar shift our for market by my mortgage service towards to greater revenues increase industry of

me BPMI on announcement insurance changes a our to last Let borrower-paid or few mortgage week's on pricing. moments touch take to

provide not I currently Imagine than more benefits majority we these Despite which to was announcement of making marginally BPMI let by the not effort our A state that some is a speculation into a the core get more Nevertheless to for share a is our response items. mortgage revision of from or a price offer pilot write. Before FHA. of it not modest lender-paid LPMI At me is insurance Freddie insight lower has the premium offer changes. from price what some Imagine mine Mac a pricing another what motivation a of form that we both also the LPMI concentrated on changes its was to program.

last corporate Over the to the premiums earnings asked on about did and On week we not that some how in pricing to so to had did. any the our adjust why our want I past that rate question tax in the investors time. material significance manner the a to did came change seen have decision pricing that in we to and I did we call and a many mind related point provide perspective answered decision yet we of it response about at we changes have not tax I pricing our

popular different our a the card premium is mortgage the This select large took had learned this that our competitors. the discussed offer one revised insurer. prohibit early you as involved of and more competitors account point and BPMI from rate been where by decided few respond meet plans all they we from had time to as began that lenders mortgage one However reports premium more of of February selectively than hearing they establish necessarily off the just customer cards. rates about are private rate are says blog inquiries business to discounting new lender but not very were a change one than the we in state is interpretation. structure a Regulator we From prices risk act insurer already a not doing off that regulations volume that widespread rates in vary from being into to rate were BPMI rate clearly point mid-to-late our offering deciding These how California deals March other about rapidly and discounted judgment offered widespread. began needs to for in the our typically and hear published according increase that customers of BPMI not was types price California the much industry which discounts to he we lower unusual to few. the mortgage in regulator just not criteria began proactively we time that to a from to if Insurance want we criteria objective, environment that related our an to When lower to At implemented. lenders that Then

with to fortunate in when to when We do business just every do pricing. MI want not country. of are level about majority playing loans. want the it to The field overwhelming competing lenders other very to customers disadvantaged They for comes lender a these be

said all lowered to share, through been this very borrowers. result have price our use remains that market true we often MGIC and rates week that last lenders not all does have gain a today. premium for I proactively transparent As

Our adjustment conditions. a premium is reaction market to

new and transparent conditions open to in these We are market reacting manner. simply an

lower we be the premium into the as private to our mortgage of rate exist that the reflected business share actions been never has today. returns and expected tax federal number we in on I number new returns being it have the on sake have this. or is structure they one our after said by that one to insurance requirements incorporating goal in XXXX priority wrote the consistently in return I expected for market tax believe Our generate line eligibility under repeatedly with brings PMIERs GSE's capital

due to result very consideration. be we how every While never to could the have attractive tax been number. returns. to reason I've expected share a much the right specific market over the share lower willing otherwise give for they cut than the years I've we I lose. will would still in it been provided asked If lifetime lose have

Our for book generate premium with share goals that market level. sense relevant remain long-term our customer are growth some In and partner shareholders. a business at to value our matters and prudently

we for at better in reasons, we are share from right ample received a we have we customers the we prepared how it. hope decision understand in instance our helps this which to put manner did you manner the this lose evidence in if market reached would In some answer So risk. I be announced transparent participate is our this yes. not relevance

over return With to and to our We continue policyholders, help that people me turn let have it a will that attain provide protect shareholders. our meaningful pricing Tim. home ownership, to

Timothy Mattke

income into results and Pat. diluted Thanks in make $XX.X we year. period better of were a compared operating non-GAAP share measure our along the the operating To share or in release. last $XXX.X to disclosed comparisons per income meaningful diluted first In year-over-year GAAP net to the our financial million income, or provide with the $X.XX more insight million to results at adjusted press to same net we reconciliation quarter $X.XX per net

for operating the of non-net XXXX. or share the was primary quarter performance first million first a lower of diluted driver for first was per of a for per XXXX lower of income to year. or financial last provision tax diluted new provision. quarter $X.XX improvement quarter adjusted compared our quarter quarter compared in share tax Our tax the the $XXX.X million $X.XX corporate The for to the rate The $XXX.X reflects the

million to IRS included an the provision additional litigation. that QX $XX.X relative tax Additionally was XXXX recorded the

notification incurred changes plus loss objection completed quarters. this now in that we second notified on next the compared few settlement Committee this towards incurred quarter IRS for same consist Taxation the finally that finalizing moving the to Regarding were million all required established in on have had the matter last previously period Joint the are received the to Losses notices reserves. and million documentation. no hope that reserves established is the $XX.X new $XX.X were any we We they year. delinquent of litigation to from Losses

estimated we factors notices. determine review of each of be the previously to various what quarter and received the should changes delinquent performance to As rate claim inventory do made any we if the

in reserve prior we seen We than continue periods. to development less loss some have see but primary positive

recognize we primary $XX development positive million of first in development quarter of of on Specifically the reserves compared to loss positive $XX million XXXX.

received in fewer rates rate the activity in new we was period reflects cured quarter. the in nearly to received hurricane zones X% notices down the the in than we new X% received the XX.X% were notices which quarter we and received Notices [ph] of last same the X% all compared the The historically including affected delinquent so economic have The hurricane XXXX level of higher from mind same line year. claim areas of was quarters. quarter XXXX. of the approximately cure quarter notice rate with environment for current impacted those in subsequent did outside affected compares the the year. in used areas hurricane During last first quarter in in that Keep quarter in claim anticipated and notices first the to first

reflecting written since the books the XX% the delinquent The notices approximately quality as risk book During conditions. in new current declining to of new from activity of for delinquent inventory in high of XX% business in economic the remains the delinquent legacy does recently as low much larger, the This books. the force. XXXX while notices the delinquent new it speaks credit quality received quite well as nearly the quarter accounting generated for more our written as legacy

points the $XXX last yield for activity. notice the in The year. quarter the compared primary same declined about the We from number source books XXXX and delinquent the XX% of premium were for smaller basis was impact closure claims is expect claims Net to million moratoriums to inventories XX% reason. from Reflecting effective new received the that quarter the of GSE the period related last XX.X of be will for quarter. legacy quarter million same basis points stake quarter approximately of the hurricanes the first the two last down which $XX in first down average the to to continue

trend As yield effective timing the for difficult I is variety in exact the to will and of the predict. discussed however have that we a past have premium amount expected lower reasons

point manner single I insurance rate out is of than premium average we on we benefits this new that monthly periods. review them. in older in of to a included have like quarter BPMI of for had For reported premium reported calculation than less acceleration previous to accruals, premium premiums premium decrease which higher of continued insurance with of being and the continued written the to direct been would also we borrower-paid upon earned previously overstated. new saw There lower the the refund to run premium accounts from rate less cancellations, is off the which premiums be associated X% discovered books due reduction disclosed in that the no change causing written but that the weighted split our was average

period compared XXXX due purposes required assets. price end in million for over expenses higher state requirement. is same So the paid, in we and non-executive to year. a this. $XX impact reported expenses premiums upfront this the effective based being PMIER's the first best MGIC the the over premium last yield life. approximately was rate an calculation which grants changed billion Net The in excess $XXX third were on to in was underwriting was in capital compensation of -- million essence versus other million plans. stock quarter available has a $X.X any the compensation our the quarter totaled benefit spread in of changes no prior billion what the primarily [indiscernible] was higher $XX.X being first increase the In $X.X from quarter of to This quarter. to resulted At assets or reflect recurring average and the of excess included change employee premium as occurring resulting stock

and need of In level When out to various company that to of options the well as by business to not company. of they we reviewing source seek at holding into and analyze writing dividends manage company's try from writing new company exploring the opportunities new while we capital account to any the created amount the the MGIC. to continually use the of arise need capital [ph] as is PMIERs pay resources SBOIC writing addition holding excess notify to capital being we'll company deploy our our primary continuing writing dividends reinsurance so take is adjust to we payments to

all debt to ratio, ability continue the consider to ratings ability service management capital the of leverage We'll also evaluate holding We of positive to resulting the options. and course the changes our company PMIERs. trajectory, continue

holding $XX MGIC in dividend the million during reported As the release we press quarter paid a the to company.

continue The of optimistic end totaled dividend to consolidated least of investment cash at securities, and XX% $XXX $X.X a billion quarterly are and At tax exempt the that company. of pretax level paid mix be investments years. X.X%, at will a We holding X.X yield basis. portfolio a this on taxable million our quarter investments XX% cash and including and duration a had consolidated of

service. for of ratio ongoing was end years more resources holding the total XX% first XXXX. the capital than adjusted of target company debt has three of Our approximately at quarter of our The

holding million company's of debt the the million. subordinated MGIC juniors $XX debt which that $XXX This our $XX is approximately company remaining includes March owns outstanding annual the pays As approximately X% XXst million of holding service on debt.

agreement. any you that GSEs in or that detail know of possible to shared are had the Unfortunately the discuss are of I we the not has non-disclosure interested changes we at in us. Finally PMIERs discussions by changes liberty with proposed GSE recently any have to bound many subsequent we with are as

proposed would access in our PMIERs has implemented As on December be taken of at and that the position December lower XX, than $XXX materially were changes, due GSE XXXX a as if million. reminder our they informed proposed current access time PMIERs FHA however effective on we yet a not of XXXX as

be dividends expect access continue $XX to that and pay to million will a that an our at maintain we we'll However, able company we quarterly to holding rate. quarterly

a this of we PMIERs GSEs expect company holding the increase result first at end XXXX been at of the effective a six XXXX. As discussion at to effective it FHA me the the Pat. quarter the period they back to will be and quarter plan We and prior to let on the that not the provide for be status of not implementation until to end At month would our have will told there cash of changes are over With turn by the we level finalized. update fourth do date. that the time XXXX to GSEs the

Patrick Sinks

Thanks Tim.

actions optimistic regards continues Before on have taken any of the moving and fronts. industry difficult political finance give can such me remain With the timing to reform actions. and to and it to regulatory role we questions let to what but gauge our that update a quick may future be the about very housing be company

individual U.S. is possible M.I. that we we and GSE through engaged various company in in this proposals is may they upon XXXX. are from that it an trade do reform be likely Senate and be As topic would What Washington. forthcoming acted House, actively think not associations on including the the

more as are versus separate of FHA, of inclusive as We the are the now the GSEs, role about encouraged topics. discussions private treating them capital and each

program a it brings Freddie we to specifically will foreseeable respect tracking Freddie Regarding Director the hold been new fact counter one the lacks that future. is footprint various a exact the introduced transparent playing public that the Based and appears competition is charge by pilot collateral find most about the new so required as and PMIERs less similar a has to expand stringent. same capital get in this the of to risk same less unlevel in is housing capital it new has new sets parties program and is With and administration can two its lower we result risk; a much not through field. party finance that on FHA for an the discussions but in to nominated. rather are having We our FHA the public parties not the and the they that what believe one SHFHA the not is support believe Clearly a with troubling is creating requirements that counter and price of transparency that return.

conservatorship agency reach have primary into government In expanding in now we the market. while addition a its

am about to I serve to confident market. very MGIC excited ahead continue has and the the housing Looking opportunities

at quarter access book. of been continue for we and on take focus to legacy level challenging to write. expect management focus the claims Our attractive for us reducing in weeks to that few and GSE I insurance The good continues inventory consumers the we to number more we activities to paid, our those operator billion, trends let's the favorably in to insurance our and and delinquency by will increased to believe mortgage I improve to while to grow continue force that a continue in continue the continue credit but I credit capital shareholders. and shareholders for for greater are pursuing And providing risk committed will the finally long-term. have due generating on very to there that credit role generating in returns new returns last questions. to increased delinquency play on persistency X% Further is continue With opportunities. to than $XXX.X that decline. the business notices, will force expect we of anticipate new trend

Operator

Instructions]. [Operator

comes question Mark first DeVries. Your from

Mark DeVries

expect the to decision share cuts? Yes, thoughts all couple price down what one the BPMI ups; the to your industry could cut on is, had to the on a thanks. be just around the but the response Pat you you context follow price I appreciate

Patrick Sinks

heard to have they're just Mark honestly to point not to I and I at what going speculate. don't anything this can't do, I'll it leave that. know We've

Mark DeVries

you reason are plenty don't that kind think on prior rate response and found goes return this mean, fear the investors cuts, of response of who new you isn't public to the how a the help low touches set the I new do we Okay, price asked you the is you've of card. would kind there that that a back cuts? a up know assuming getting rate off I kind set questions equilibrium below series that from now tax are It there where of is of I concerned but a that level was kind it of it to a

Patrick Sinks

is I into targeted pricing we that back mean that that do. structure was Well, I find strong we that our that's generated year's to certainly reasonable. bar. something what think Last go it And returns we that was was hopefully very was objective, the sets to return why point. to believe

Michael J. Zimmerman

Mark, Mike. is this

Just response, a to add already that to response is what's to this in marketplace. maybe

did better we to [indiscernible] about response know place. taking publicly whether in respond, that's we So, was what what what's already don’t but

Mark DeVries

potential Pat, kind share potential alluded of which unintended sorry you little could and could pressure the think that where some Understood, relative to FHA and to of a and then, I Imagine, to offset more those market of think the from sense on a give you you gains how couple were benefits on meaningful be? elaborate bit points some us could be benefits

Patrick Sinks

relative criticism. off well is on a as is off start a don't headed, it's That's it's Imagine our that customer it. can't mean to to it based just I slow relatively a Sure, and where reduce feedback to understanding

arbitrage that offers through pointed as I that Imagine discussion we and know actual capital pricing. structures. being comments pitched So, believe comes it's out Again were from lower I there expense some my not in

that reasonable So to that a I going math Specific as segment the more opportunity volume the in more on insurer XX% this FHA side. a looking XX% on private but have that attractive to much FHA us the think we should am in reduction at there of mortgage rather. win say execution. to the now we not regard in greater regard prepared that competitive to it's we're looks make simple of FHA, to that as LPMI or it the side think

Michael J. Zimmerman

borrower we to on now theoretically that And from now the what Mark, think is and around the down more what's play line [indiscernible] dropped down example, on bright be we potentially maybe give preference. color to moved on around maybe in this to XX the for is some preference Mike, the down LTVs, that's I down -- attractive lender -- XXX. XXX, FHA are so a where a in but XX, the then we depending to just to that XXXs is used

again but our So segment to to certainly of sector move XX% to all a that we come X% that wouldn’t that could way. expect

Mark DeVries

great, Okay, thank you.

Operator

Your next question from Sean comes Dargan.

Sean Dargan

that think Tim you we of is that weren’t step expect guidance go we to premium of take just but correct? the shift higher pricing shouldn't course back from think then I to year, give going it the and actions said you a this margin if refi to and purchase over that probably

Timothy Mattke

That correct, would be yes.

Sean Dargan

over But of that and course first the mortgage the should move of penetration to if do it your of market more estimate of over private is sounds continue continued increase MI purchase year? correct total of market if like the to we origination share quarter rate see the the

Michael J. Zimmerman

is Hey this Sean Mike.

purchase within an data securitization mean MVS little obviously we that's [ph] within three MI the But our traditionally activity to were lagged a market as about XX% think again bit. have half talk purchase. four and I the yeah, [indiscernible] higher as industry times purchase share and I we space

the we is both the on So as purchase as share dollar market growing and versus in outperform basis forecasted [refi] to would [ph]. we expect which is and our win purchase to fair long unit market

Sean Dargan

that write that getting and capital, internally mean question, on fear that on this closer to going to there is keep expected new you is the an realize addresses final but Okay, I business there I -- one is that won't your And number a is below? new investor of cost just return business.

Timothy Mattke

perspective would have that I levels we to level think a what at a we are to after up of at. end standpoint, returns so Well pre reform we comfortable of tax those done we been part a this business think have is Tim, and hopeful is pricing the closer this the and large our I pricing be back again of feel going from where where that's sort from is from very perspective return the

Sean Dargan

thank Okay, you.

Operator

you. Thank

next Your Doug comes Harter. question from

Douglas Harter

internally to less Sticking thought business, that about might I around new help Thanks. X.X? required, about but give any just can't change kind us pricing I cushion how understand capital with returns have on sort of way guess I you -- the the said detail the there think more given that you've of PMIERs, new PMIERs? of process that you is under Now guess PMIERs under think

Timothy Mattke

thing guess, I what if at is from the where that. been point one have the this is. it to Tim, do know at have the we so, be don’t least has able that information think I again we will GSE proposed We final see this

that at our that guess with where perspective tools from as put least pricing thinking put point I are So, had out. to the card we data the wanted we we about we rate

able to discuss that. had we information you you So that standpoint and see from least at to able recognize perspective though aren’t our even that we from market a not with we are

Douglas Harter

Understandable, you. thank

Operator

from question next comes George. Bose Your

Bose George

cuts the Hey responds. rest of potential guys, on industry the and on just one more how price the the

industry You rate move transparency, we there's player we uses there's there who is just of one mean where less given cards know that doesn't already have their to where an pricing reset Do less think towards I transparency there. everyone have so based you just could -- on box this? black kind

Patrick Sinks

black but why if than the them is not to we that to the Pat. is Guaranty. will possible, What own It's then very demand their United box our stay instituted we This number and have react black them model is customers. for bought United more we brought from the started been has in and close We Arch by in accordingly. years then market and Guaranty now of comes anything have react Arch to box a the

Bose George

at last to back reform? that you now think people before stable a the look go away the the stable just which extended willing was sort landscape then the were you happened benefit that's when tax we tax things for year, compete an And landscape looked do quite I period versus and to mean that's difference competitive of like that now were

Patrick Sinks

is This again. Pat

it call as appeared is what opening premise were certainly correct. XXXX be it on what was let's to based we back but that in heard targeted doing to that going not where to with what comments competition certainty. the to February think they described I'm lands have my we I That's say can't returns. I Again sure return but I

Bose George

just then the goes loans the making that XX, but impacts with you goes it switching assume terms curious to the mean down market. over subject, Okay, it that down in expectation actually just of do meaningfully I change what's is think the and Fannie DTI there? I how the

Stephen Mackey

This is Steve Mackey.

but while that I think little most of it's a grid a it trim XX just a that change maybe that of would see our take DTI the two couple four points. to to expectation couple by but going at to points in is

they a way so. the takes of we'll But and that or originations hold the was layered next in have see we as see risks. XX combination Just come to through the that days targeted

Bose George

thanks. great, Okay,

Patrick Sinks

the low And above year mind in Bose of scores the earlier XX. change XXX we FICO everybody than just less a on did question make we this eliminated where

that eye exited but demonstrated better credit manage a keep is that but which on. something have we have certainly they obviously above to So, XXX still an ability is they where

Bose George

great, Okay, thanks.

Operator

Aron. Mackenzie comes Your next question from

Mackenzie Aron

morning. good Thanks,

premium cancellations you question, of provide dollar First value the can this just single quarter? the

Patrick Sinks

cancellation of sort single was think million. premium accelerated the $X around I Yeah,

Mackenzie Aron

and to what thinking and with great, you NIW the start seeming update just for quarter pretty on broadly full then off can you're be first us on Okay, more the year. good to a

for a be just increase reasonable what the feel of remainder we should quarter thinking saw similar the Does growth slight to that in had still last said and how think year? we you XXXX. I about

Patrick Sinks

earnings the to is continue rate first quarter This call which is Pat, had in back year-end think in we in to January. the that we what going disclosed we are billion XX

So the still for on XX target we're billion.

Mackenzie Aron

the compete question already give even in customers said you and and it's know I what to to the forced discounted, be can on with pricing market? would you're reaction news lender that your that industry from just as it hearing the an a you're us getting then out though came to not paid you on on just into does got update last slow when that Okay, that the think I start, much the LPMI, mean pressure program expectation the Imagine off out seeing

Timothy Mattke

versus the Imagine LPMI I comments majority of Mackenzie, positioning or to to closes the the just close our relative that's two very program. so Yes, as the there thirds it exists business in more Imagine the heard pricing. is of question the there currently our

out plays in the said how immediately to do is the has it the -- lending conversation. MI the with with that's with but least not the certain it we related business At not doing by versus I would directly been us close in program see prefer the feedback that will pricing been is say early GSEs. initial they but As by stopping community.

the look of the Pat where So program lack is the how of out. Imagine requirements, the in we PMIERS like, and it about does the comment successful. part let's as -- all plays and what to the is where what it figure and shake and get how is the versus price the that's see the how that program of is Obviously is if landscape at transparency troubling it requirements transparency around his what of competitive out is kind capital out today mentioned to

Mackenzie Aron

Okay, thank you.

Operator

Micenko. comes question next from Jack Your

Unidentified Analyst

morning guys, is Som this actually Jack Hey, [ph] it for good on morning.

should rate think direct a and average premium an you've much on by overstated was forward we it premium yields net going stated as in So about cards? how your yield how your

Timothy Mattke

try singles, sort fallout accelerated talked enacted that we of you quarter last three probably we think We on pieces a point. are of a basis the and premium address about of at half that from it look about probably When reduced saw I'll were that's I the in we again. this there's where by things sort quarter. quarter -- couple to fourth take that

a loss direct of say think the sort because rate our about well. claim point on about with what about I we that point basis. other basis basis this that sort how of refund premium is had really and interacts we And the accrual think and quarter total you reserves in the as out If less half of would probably of two

when pie about of part that ten premium is the as as you legacy basis smaller think through of the on on of basis one So, That was sort points. that the business years. reset the those a becoming of falloff direct well a after books

is how across three tool So, spread at all in really it. those look years we the

Unidentified Analyst

forward premiums with Okay, going and card? think the should rate about we how new

Timothy Mattke

yield we to obviously be have expect think that's the I that the XX%. we to Well said from with yield a again going card been that continue rate are saying to perspective downward to we newer trend where premium of we off at currently XX%

years. to the put additional we that get the while take pressure to a yield new into premium baked the on next as go It'll business year. the but for on downward going that's yield over fully obviously through it's premium So, upcoming to pressure few continue the

Unidentified Analyst

an of to years, next say one two the expectation so Okay, over right?

Michael J. Zimmerman

year you is June Mike. going by are start with it to -- feel this you this impact say would each and to in the see much So, because year [indiscernible] goes starting impact it to applications won't is but take is year. as I going effective

have in of each until stake fully five out closer on probably one three, before year a -- maybe little but a fully year a years basis that's force but NIW year you it total year to of Next it of two full is reflected. four, the think is years I farther

Unidentified Analyst

it, dial market structure peers we've going seen take capital okay, year. forward in past so over on of your and mean the to then obviously some Got I

proposed to if have and structure that a you to to as remain X.X your PMIER considered the a of So was is implemented excess as reduction just point wondering part some today? is down where guys way you maybe disclosed be offset line capital ION capital at

Timothy Mattke

reinsurance think and how conversations our we traditional insurance current reinsurers from we about pay the doing like I doing in an close execute we have Yeah, attention obviously with something knowledge industry very structure it what versus perspective. to was with

It can that industry one is it the to we we'll we've and a I potential resource look about done risk it it but industry so additional of perspective. is very the to something thinking us sort pretty good is management something for is well. over I seen and we as continue time shows look think or has that from think will layoff continue as at It's lay off for is release good, or risk will something capital purposes. at it's what execution it's that whether look capital for that whether at

Unidentified Analyst

way Got cure to I anyway? get on it, ratio, ratio to on by the book and is default a just one hurricane just a loss the quick mean there

Patrick Sinks

difficult So, have do this from come that notices we not do the areas that is anything to because to we -- don’t have storms. with may get

which forward is get probably will broke doing of it's kind activity of why notice the prior definitely that's we difficult going return levels. stop period we and normal a in it to that from out level So, perspective to care But granularity.

So is the long answer no.

Unidentified Analyst

great, guys. thanks Right, okay

Operator

Phil from comes question next Stefano. Your

Philip Stefano

how stock than help maybe good a mid going probably morning. plans. the thank us like benefit should higher expense I seems first there's be growth, think any benefit Guidance about and single-digit poked kind benefit Yeah, wondering forward to -- past employee way expense in are the that comp higher changes plans expected, stock try versus issue growth quarters? triangulate the with we how the to can severe. stock commentary the around much a the Presumably to if comp the of is where was little it employee a expenses more quarter you the you driven persistence of and more we plans by of is and that idea was in

Timothy Mattke

day stock sort price pretty book is Stock and about we you thing executed in January a had would on and it's too it that from say perspective one stock recurring I on we replacing grant especially it this price the ran year would think granted ago. the have three function Phil years that good. up guess was is a a of the of it really where good Tim. a would I be question,

fixed really by is expense and of that And point so is sort we at that in granted. our dictated

penalty the know you change the discount So benefit about and as etc not as well all during expense. rates, accounting and things assumptions reflect get benefit have in the plans but as you there much to recurring the too that years is that and that plans in

of So, that we the year that's as sort for based think well.

the we that. expense to then rest a year. -- year, million quite than higher the think think we running last don't X are think of Because a maybe be the this sort we to of going I been that I X% bit expect of be that much end gross higher basis I we last But run sort quarter of have at something the year. on tried it's around know mark. You it little talked those going to single-digit probably probably is items people of

to we is than quarter be additional always first little year. a The going but expenses definitely last have higher bit it

we going we not X somewhere So, probably quarter but that is year. million rest to to it in over the running last as of I basis it's were XX this fully X where think that year to had million be of look we this

Philip Stefano

terms in first got it, that then significantly were for were the feels was I K just sometime an there treaties? that implication It previous Got reinsurance was guess and fee done right quarter. the probably and placed it is in the like there, different the XXXX the than

Timothy Mattke

putting similar. that very that treaty. we're of and finalizing I were originations out Terms No, think

included, looks made and as sense include we got tweaks we the is capital a standpoint panel. for made with we edges on bit with pricing what to the what been discussion what doing better standpoint larger think we similar as think most a most it But I around have far far thought to the from as before. part very structure a as we from little reinsurance the

Philip Stefano

Got had. That's I all it, thanks.

Operator

Your next comes from question Randy Binner.

Randy Binner

more that a the first On is there you to just want share pick thanks. prospective did you clarify Hey, statement? to of any see I expect in or you FHA up of that noted quarter that market but

Michael J. Zimmerman

is this Randy, Mike.

competitive out statement we've was prospective will the couple really put that more become and plays we that premium we see won't that adjustment But purchase prospective But kind FHA. it all the we out. made. talking securitization typically statistics when data the made market a premium until in we better come Begin I was we how strong adjustments that using cells appears more So got that mentioned the about than you of we it lag there so definitively. of the if more that know it do

Randy Binner

persistency in up was I bit it if this decision one higher know there has quarter, persistency on quarter? the little being don't was this and this a any higher come Then time

Patrick Sinks

with in against be mid kind think I where no and can that we -- higher through it of would thought is order it's XXs. things get we Yeah, was it in higher just so line upper it some of

We they have to yield at get probably consistent XX could level. we kind can the been as probably portfolio is of a best XX is

Randy Binner

the that function little press one just down one, there was a disclosure kind business the I I change notable more little just winding think or off release the to that capital? then at of was Okay, old legacy is any the in required capital think of bit, a X.X in and PMIERs require take just looking you X.X

Timothy Mattke

probably No, the a there have from delinquent loans I you pretty think biggest increase your requirement. sizable going standpoint driver PMIER with in

gearing into the quarter up delinquent So had lot of we with lot it fourth eventually matter reduces is year that the would doesn't those the move delta a that last and notices that losses on. come a loans Got that's our inventory current our requirement. hurricanes to from PMIERs that probably the we to so of being being of biggest so and out are starting hurricane thought

Randy Binner

it, thanks. got Okay,

Operator

question comes Mihir Bhatia. from next Your

Mihir Bhatia

was typically thanks pricing any you taking to there guess confirm just I Imagine to a your my premium that your like questions. single rate do go more lower second, was card first so impact I for but just, pricing on a any from if question you there to my off wanted want discounted of back understand or Imagine, discounts? lenders demand pricing Hi, from to for any just the will

Timothy Mattke

answer no short is but There is that. to the

Mihir Bhatia

buffer. guys PMIERs, run a to but historically you moving PMIERs X.X specific you not XX% have to to XX% again then on been Good, have

like X.X, around need thoughts don't X.X as any implemented? that Is how of build you back PMIERs think you about maybe your uncertainty or up capital, assets. so around to excess talked you is to to expectation XX% much lower have excess want was thinking build to of PMIERs that I some because just materially XX% that having up about as buffer you're

Timothy Mattke

it. XX% We've said is Yes, look X.X it I to to Tim, XX% excess. that think obviously at at we sort of the is way right PMIERs targeting were

being don’t part what to depending would it reason release hold But uncertainty the fully bit why We would uncertainty around we of want where to of we get recognizing are excess we just excess, PMIERs out was control the a X.X having now that that out. there. little the dividends turns able upon

some that X.X, So, hold look I an final we of it to won't is will and PMIERs after something is once the will take rules access a we our we think know what appropriate at that target. think be but as That on well. far mean we a take as options cancellation away there early features that right that have reinsurance do down necessarily that contract as would with we will our get for look at we example

So where standpoint. I an think from target we think should that once we updating we we be X.X will know above the excess rule PMIERs of final

Mihir Bhatia

be market you of had you want function comfortable the to XX% a terms changing the which market XXXX, it's XX% think Got of I high just and I a in XX% and I DTI on I is notice little around of gears was guess in four that bit to back how XXXX? would last XXXX quarter, business that because it, just over -- times shifting in is that what what guess getting don't get XX% what the is the writing, you're you that driving it or mortgage the to some assume

Stephen Mackey

this is Mackey. Yes, Steve

scorecard up changes it And Mae DU back would So they QX. it really market went driven what that allow as change by to in made ramped their really that through and in the Fannie was July.

we than Fannie much that than changes -- why we Mae's greater That's XX Mae are further. comes and rules with. it comfortable that. one than had of about FICO. above XXX XX mean in announced around to the their and to anything discussions limit up it tightened they've on limited what with higher we it's the Fannie greater And guideline So based evaluation, January reduce own DTI reasons I

further is what it we action down come if level we'll XX% is then need to will. with that comfortable and that monitor and from take expect to we above we are So well where which continue to we

Mihir Bhatia

that -- impact bit of then the now maybe under tax sizes versus your is a you belt, make last salt from you seeing in is just a salt see had question states of just loan but difference, just you impacts Alright, and don't that versus different impact are with that on any little market, states to mitigate particularly reform going quarter mortgage non-salt that?

Stephen Mackey

mix and again. that more the that across There very change of demand in our still and we be else. to not such things changes. driving be We're of business anything markets seems to is strong to Steve is dynamics scene many such that tax any could Mackey supply flow this shortage are seems marking attribute firm many, Yeah, seeing in than

Mihir Bhatia

Thanks, thank you taking questions. for my

Operator

Gamiatoni Chris from comes question next Your

Chris Gamiatoni

morning, the be about of that still call. for that my thanks The new of is the start at should XX% taking one. percentage I'll -- by treaty? covered this any should reinsurance housekeeping is with NIW Good being quarter, what we think from

Timothy Mattke

Chris, this Tim. is

I level think to think good probably that's about. a

really. As treaty didn't XXXX we much loans excluded that we I see we mentioned capital some as think looked us as to gave

should reinsurance that. little on less would on you So the because NIW treaty to coverage XXXX of that previous have you of expect a treaty bit the seen from see a

Chris Gamiatoni

go back I'll question. the and ROE Okay, to

net X.X, that With that lower PMIERs were the BPMI rate, under said doesn't so the ROE is underwritten imply will under ROE's PMIERs tax that to change back be X.X, card you previously gets negative? reform rate it

Michael J. Zimmerman

Mike. to as capital that the is because answer Chris, do be be. I the is All we the incremental unfortunately some would you to to hold and on it. dependent the give hope this think that's guidance equal, that pressure that but the upon GSE level SHFHA this of can't able yet The more have to quarter right totally would that the requirement yes things of PMIERs. downward question some capital being completing put of is NDA we what We

Chris Gamiatoni

us Can the heading you think where of give future. are a underwritten you in sense or worries

I in be would kind mid just of type past teens helpful? think rough the you said sense unlevered had any returns, of

Patrick Sinks

sort where have so and mid marketplace of but perspective. based reinsurance from seen from unlevered think, we we we said on returns I with I are a it teens mean yeah, think X.X I

that's think sort now right about we think too. of I the way things to right as forward move

Chris Gamiatoni

kind Okay, us national helpful about First mean banks broad lower future? I color premium of be and of types based, type any a would lenders, the color rates, give -- of that there was the were it for lenders was the to it of any non-bank pushing think was any

Patrick Sinks

about and calls We business we the different then in given of from history just sizes. and business public coming Again sales the large the our calls was and of about it blog from offering got sorry first regard. became as or Sorry it I of But kind When that am two that of in ours were that, described is deals. of we in all do typically and customers in everybody a from a our started I strength organization. so do or this the again larger small. Pat. one competitor with They deal coming come country lenders

were customers example concerned an smaller field. they're that a very As asking about playing level

some get. It the frame bank Washington us, timeframe you were about us large or If sure hear making D.C. like calling same dot get it's banks similar things and that behind. under that about that leave of the of also saying terms coming rhetoric in don’t to banks smaller community the changes this all when was the what customers out

did midsized really large spectrum small. the range from to it So

Chris Gamiatoni

the then would housekeeping and be XX% rate you the on XX% to just said premium another BPMI Okay, that card lower. from

BPMI just XX surround does put bps? that on took mix it, from card and So QX we if your new the get a

Patrick Sinks

this higher but that than directionally think slightly right. I Yes, that is is yeah,

Chris Gamiatoni

thank much. you Okay, so

Operator

comes question next Geoffrey The Dunn. from

Geoffrey Dunn

to the we the you idea about yield current the pressure premium Thanks, cost good morning. with yield the before this new settle provide we XX Tim a versus the rough might think of impact? legacy mix see premium so can pricing rate on yield, issue respect can out where

Timothy Mattke

have that front don't mix of I Geoff. me in

if primarily was and it reset. we I And little that sort about the XXXX think obviously also way right book XXXX. in and we drop a of bit XXXX a and of way result of of saw falling getting off pretty just about have think you a the think big volume the is year ten beginning I

with out it So to yield point think thought getting your sort to I where start that go more I stabilize. think pressure close on we puts the where question to the of where we're recently we're to rates down. getting will put premium we the And that of going

bit what to change of able think but I might think I We perspective. change go about think the pressure will we sort on that without So we from little forward. more obviously the guess I a to anything in rate be out going that's have still would way card put but about put a additional

Geoffrey Dunn

Okay, think so XX refunding range on we reinsurance above I think the XX-XX if out the adjusting strip then about a about that? maybe in bps it per and cruel card and impact core basis without was rate autumn

Timothy Mattke

probably way to think it, about think I yeah. good that's a

Geoffrey Dunn

in the think relevant remain certain in to was do the call thought Okay, obviously you discounting a having Pat share and mentioned first market pickup hurt volume your process by of and level, then March you the in the quarter? at

Patrick Sinks

how words of I more action. work some their evaluate some someone's mean it. a to phone question, and can I That own it tell reason partners. say coming lender MI match really other a this, got mean the say to early the revolves of case to they've I've takes their doesn't offered start will, processes. In Too immediate call deal the better around for to it's I not am you got just the will in dodging evaluate, say often lenders me

become here time risk. share enough point at our was in to view put forward But early is widespread So tell. going you this view that few clear that market it in know that my we'll at little a relevance to it the was clear had was know going be next but and weeks

Geoffrey Dunn

production say that new you April June? at effective risk fair rates the your since it you were be could Is not May till in to on

Patrick Sinks

start when could will to say to it, you it can't you that fair that's see tell It's but happen happen. I yes.

Geoffrey Dunn

Okay, thanks.

Operator

Your from Eric Goshim [ph]. next question comes

Unidentified Analyst

as market relevance risk? just would smaller call you the asked, can when gentlemen, well morning you for share that have started been the much that how Good of question. at term lenders my taking of you is thank lenders, from Pat mentioned as the kind gauge was say that you on coming the question that relevance relevance larger in Similar

Patrick Sinks

some Well I'm not going to it number hang I examples. give will a on but you

prices. everybody company bps our by had been were where I I day is week and in in have We public an the example a information years few or the the competitors next will down premiums cut past X road next by our and believe think We it this cut Radian ago their action. this was

We fee to in our reinsurance have the in drop the back us more captives. been We early captive had dramatic number XX% of to share. offering immediately when would and XXXXs. for example We XX%. who've around be high a you pulled for those while a We go our competitors back market dramatic saw

the north XX in of just Our of range XX%. share inside months from to market of dropped XX% national

is in is also experience happen and in shares. great case, in it would reallocating market that this a recession that went the say customers with can't but I the this So our call we judgment through

In you I've harder is get It at one see on six your suddenly at every year some don't month. months, The to they've able share then already me when come to over and deal MI this is to I the drop doing them. market They sitting would to great it to answer find there. and should with on but you're case to you reward locations to XX need the just so and inside from we've will you're back may If might be thing as look X. why years four outside back or be is you XX. look I every the customers a that cases their brought who customer the the yourself you are guys learned on every their got that outside

we in the had circumstances we've described if going can't So we the on half XX%. judgment of share were lit share to is lose I market our national where is hang to experience take if wouldn’t a it. If it share in is a have don't point way it but call past that number a action certain this it, a point a I or I

of that wouldn't day to like flows I sleep we sales of wouldn’t Our organization it one I lose But it just get because the any market. that's that. like over day fight will a ebbs and

volume and However gets calls when it this what question. had, the we now the is then start to to going to going becomes market of way let's you that get the into be, do, are we widespread again more that relevant is called say

we've got like to excellent. our was returns we things drove that It back believe our up our brings to not courage key tax was Now that It we generate and tax XX% that. case make picking cut could of the now of have teens. by that excess we at this still to mid benefit obviously convictions something the the able returns this where which in say the one case in not and the or decision after to had gosh, fact returns. a are decision them that was were all. We're well still We

sense and returns it's XXXX they December kind XXst, of people like if on like had be today. to in about in it the not returns So, cavalier like the a

can't the back. and on give dialogue experience based asking a our question So years many I a hard to of with It's of specific judgment again, just you're lot again share it's but so right material market call customers number. get a

Unidentified Analyst

Fantastic and appreciate I that color.

point shareholders So to based I'll I'm in a competitors we to all excess going but that the is to the tax competition all opposed was via industry Corporations tax via broaden receiving a the XXXX the a competition I as was the what them is at level a and in majority I competitors, away the maybe what for have erased you suffer and going the all vast we can than out. your industry just not happened whole but question U.S. the ask of some difficult if cut. unclear will reform? the in what the is why of knowing benefits and different up wound response sense match in probably receive that's driving drive to benefit know of these basically returns shareholders suffers tax so we're industry to say was of on benefit question great, your have going reform. big everyone that and to time MI in the this Do going it driving

Patrick Sinks

the That's who sure. not direct a And really I'm great your questions question it. all and I those have that did to to question myself ask time. you

Unidentified Analyst

know them Pat were, am so You mention kidding. they I I don't didn't who

Patrick Sinks

it could was are. your that dismiss wide one motivations spread, you probably not Well, question, sure your question a MI. than not guess. But we ourselves is ask more what not trying I'm again more to just I'm became Then widespread so

your because yesterday tomorrow. if is like We not motivation the Our these long-term. happen. way next to days and try point the exactly long-term. for think premiums things drop We're we I match buy market mean by to share to trying can XX share we that's

I know to they're speak to but ask their going have teams. what move Now motivations, with don't management their I particular to you this do cannot

Unidentified Analyst

got probably maybe were of was was returns into I future reform to you and expectation reform to of not ROEs and thinking a you question capital capital came your how is shareholders under when doing XXXX and returns? buybacks actions anyway, so coming give that were basically to tax tax of be maybe initiation be that about have of may into a actions when one but capital been the can then what with returns generation you now you'll had much or what could versus you and out going delta the is that the beneficial and whether to before one is mentioned And some capital take of looking you I'll ask place returns this you -- capital I ask returns the and because improved us of target. that one fair management -- it that's dividend sense is Well, your

Patrick Sinks

Well, as announcements things and of A across take America. corporate and about corporate very that you January America. bonuses what example lot talked different and did cautious think buying a we was and employees was back approach in stock for December doing I an

extent Tim very dividend at looked differently a us we compete cash will away cautious premature should tax out look influences to and it that his in The returns. as the were strong. realized the business the our it good getting naturally we million what the any out felt action writing that that company was at specific remain we say well thoughtful don't risk to that. so flows holding think possibility take more we And so in about we in to Jeanne at were those we're that are cut $XX fortunately in rate to of than it us very to run a planning that of of we may feel a being very than do. it in I increase same of we try alluded that to too But was was back very we position comments case at do of again now we companies terms were December if The you so capital

will changed board closely those very our capital we we consider, So still we forward. perspective in management a from have work and monitor not still this options, regard so as things we go fundamentals and weigh our with

Unidentified Analyst

Fantastic, very you thank much.

Operator

Instructions]. further at [Operator questions There this no are time.

Patrick Sinks

comments as thinking we my been took hope why five, we be deeper want we're we we And realize weeks always explanation that the what challenging. said This is provide did. the to in was as morning I did Pat. I to transparent. six four, a the why steps last that way well did, have full I this We

We've what in the are believe in for XX long-term the can long-term We cause drives us. pain but some sometimes at for definitely thinking the that's been short-term and value which we this business. years most of the

everybody I is to calls take for up. Thank always the to thank as So continue management call you. follow available participating on and you

Operator

call. conference today's concludes This

disconnect. now may You

Michael J. Zimmerman	SVP, IR
Patrick Sinks	CEO
Timothy Mattke	EVP and CFO
Stephen Mackey	EVP and CRO
Mark DeVries	Barclays Capital
Sean Dargan	Wells Fargo
Douglas Harter	Credit Suisse
Bose George	Keefe, Bruyette & Woods
Mackenzie Aron	Zelman and Associates
Unidentified Analyst	SIG
Philip Stefano	Deutsche Bank
Randy Binner	Friedman, Billings, Ramsey
Mihir Bhatia	Bank of America Merrill Lynch
Chris Gamaitoni	Compass Point
Geoffrey Dunn	Dowling & Partners

MGIC Investment (MTG) 18 Apr 182018 Q1 Earnings call transcript