MTG - Earnings call transcript Q3 2019 | MGIC Investment Corporation

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Operator

Thank you for standing by and welcome to the MGIC Investment Corporation Third Quarter Earnings Call. At this time all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session [Operator Instructions].

I would now like to hand the conference over to your speaker today, Mr. Mike Zimmerman, Senior Vice President of Investor Relations. ahead. go please you, Thank

Mike Zimmerman

Thanks, Lee us MGIC you joining And Corporation. good morning and morning. this in thank for for [ph], your Investment interest

Joining welcome Officer, Tim the and Chief to quarter call Nathan XXXX, call. Mattke; me Colson. Officer, the Nathan, of Executive for the third discuss Chief our Financial on the to results today

at includes on our morning which this information want I MGIC’s which company's that release website, earnings quarterly to Newsroom, financial call remind to we all of include mtg.mgic.com is the about will measures. located be certain non-GAAP additional during participants, accessed under and that results may the refer

insurance on to other post information remind we about that written information corrections, past listeners our presentations information posted on I presentations presentation a valuable think in our underwriting you'll and parties have we find from our website that or time-to-time, want in and other pertaining as risk well. the interested valuable. that our may find to contains new may and We guidelines primary also other website investors and force

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

any was light factors that those developments. the future statements, filed on materially we from earlier statements the to in actual morning. that those forward-looking about update information X-K an results obligation this Additional the of discussed the are in call cause could to in makes company Form those differ not are undertaking If subsequent contained

time call, the Form statements or that fact time issuance of the of are this on guidance or rely should party the interested current any at than no forward-looking the X-K other Further, such

call I'd time, turn to this At over to the Tim. like

Tim Mattke

to executing but financial the Nathan preliminary results does, quarter succeed before a Mike. let morning. our me continued of that. strategies and few report the third take results, reflect details minutes, will I'm pleased on cover financial our business a in Good In we Thanks, to few he comments.

characteristics in economic environments, we're on housing a on of As our credit equity. in the favorable GAAP force strong insurance earnings return generating and meaningful result and

sheet to per of stronger get end by XXXX. book compared to share balance as the increase the value in Our continues evidenced

Our the market grew quarter last volume, the at ending by refinance X% mortgage year. written force insurance XX and purchase continued in months increased compared origination in was billion. last of over the to $XXX.X our new quarter the third approximately strength XX% up insurance Reflecting

business the impact I the The volume size origination remain of confidence meaningful will healthy, market and market consumer the mortgage a rates remains of we would insure. strong, attractive. total has on mortgage characterize origination overall mortgage is

still growth supply modest in the homes a in our for there insurance force, insurance in in is in slowdown refinances. strong homes rate sale tight, for of reflects due demand The increased activity. while refinance available X% to growth the year-over-year force the So, is of part rate

to has XXXX. refinancing refinance in explain me and in majority of exposed that are cycles. as not let policies The is are been it early pronounced why However, slowdown other most as the written XXXX

being period Given Therefore, these underlying policies only level of modest experienced the been on short new have price homes relatively the likely books, many the a loans insurance. need have appreciation. mortgage refinanced

our to and confident feel a our our compelling our customers, in business consumers optimistic to continue feel ability market. I capital strength about our insurance prospects. proposition remain given about the grow for serve force we ability and very our confident future economic the because position customers to prudently I about in have

existing performance to low, our be and tailwind notices in delinquency strong the results. quality, credit the of for a financial to continues continues Turning of insurance be credit our force inventory to

is expected meaningful and insurance new we returns the shareholders. for In addition, to writing credit generate characteristics are strong has

I'll Now, on some objectives. thoughts business our share

of sharp customers risk-adjusted that We services long-term company offering competitive are a dynamic expenses. products maintaining while We operate by on in and recognize success returns focus our the on marketplace. on focused a the capital and

continue options thresholds to premium and in competitive involved. our prudently with these shareholders. generate So, Staying for work our value our insurance us manner allow customers all to a flows, works to will in focused for will create we things deliver return grow best force, on that meet long-term to

me With to that, Nathan. turn let it over

Nathan Colson

Thanks, Tim.

quarter, I'm a opportunity the really part Tim team. the take minute turning thank be a as talented such the I such its serve to lead finance wanted to CFO. and excited Board for great team a financial to Before results bigger and of for the to to MGIC a management

we the numbers. third per quarter, diluted or third earned year. In $X.XX onto per same million income net share is the diluted the the $XXX.X quarter last share, of earnings which of as Now

$XX XXXX. The recognized we the increased $XX cancellations policy from million of year. development compared the quarter third of to quarter $XX premiums This accelerated same reserve last compared in million million positive period single loss to

quarter, equity. the beginning return XX.X% annualized For generated on we on shareholders’ basis, an

to on premiums higher and in accelerated increase force year, premium same Net offset cancellations, the partially from policy premiums compared last lower premium insurance in X% the period insurance increased earned in by single rates to primarily force. due

$X.X the $XX delinquency established incurred loss a year. were losses incurred reserve mentioned. reflects last level of plus loss positive new just I changes development consist in the to in notices previously incurred compared primarily reserves reserves. net on same million Net million negative The Losses of period losses increase to established

to any with previously claim rates or experiencing. estimated continuation this determine credit delinquencies we do the development be driven severity should the each performance cycle higher expected to we made of were XX and factors As we associated and if rate the delinquency by received favorable attribute reviewed is positive notices. The quarter, changes primarily are reserve than cure the the loss We months primarily of to that aged greater. what inventory

written year. this year-over-year levels an notice more more approximately that notices not books in same is X% received having recently we In activity quarter, delinquency are period did view, new into of we their indication rather of than the business reflects it of low years. were our peak loss delinquency our very new increase deteriorating coming credit, During last larger, the

While pre-XXXX to that books we will continuing expect of to in the the coming notice continue diminish the quarters. majority be number, in new activity

in the quality. regarding The level first X.X%, insured This current in as during quarter below loans the continues of achieved percentage reported remain XXXX. that beginning at the a were the credit our but delinquent third to subsequently view of quarter, quarter supports further the

was XX% approximately XX% of of X%, environment XX% new was and anticipated cures but risk X% inventory, for with the The than of which September accounts claim is book of quarter post-XXXX quarter the and notices in third rate of of first in XXXX. account delinquent reflects second for the quarters claim The consistent just in and XXXX. on the received This third as the the the estimated XXXX new of notices force lower delinquency economic rate current the and estimate XX, XXXX.

declined the from activity period Net were in paid quarter the reflects claims quarter same year. delinquency XX% number claims in the decline the the This $XX the of in while continued third received by inventory. last million,

XX.X XX.X points, XXXX. of the quarter XXXX The basis from in in quarter was XX.X effective up of premium third average third points basis yield quarter points the basis for the and second

our reminder, last of yield additional XXXX million a quarter share non-recurring as The ceded. restructuring was of cancellations, premium in rates, with associated $X.X change the changes commission. premium which fee in reflects level a policy reinsurance the various As in the incurred reinsurance accruals, quota transaction, and single our we recorded ceded and premium accelerated changes premium to associated effective changes premiums from transactions premium refund also in profit of

effective yield at business will continue we trend expected off premium to the on books rates. the some expect in that written are at because be new could premium insurance periods. lower books force premium written business This higher older replaced there run mainly of lower decline the While and volatility, future with of rates is in

low newer characteristics presence and that reinsurance Of meaningful their placed to expected the the course, shareholder books of given credit has are of books. losses these these also returns and on generate been levels coverage

of million attributable in lower year. third from million primarily expenses to the other Net quarter $XX.X to underwriting is compared were restructuring same increase resulting The commissions last and share. $XX.X ceding period XXXX the quota in of the XXXX the

$XX paid the dividend million holding to the a MGIC quarter company. During

capital expect we anticipate to able insurance foreseeable force. position of as MGIC for strong be rate are we continue dividend of to the an being We able to to generate dividends level annual in from our in, million as pay capital well at demonstrate future. payments The $XXX at the least

dividend any notify we to ensure a object of to reminder to dividend not are from Board, As subject it approval any the OCI MGIC. does payments our payments

management minutes Finally, capital I and activities. our spend capital position to wanted discussing few a our

capital. continue with analyze the the discuss deploying Board, to We and options best for

use is long-term maximize new to in common options shareholder and stock such support first other will Our insurance capital find grow then evaluate prudently if value appropriate share to not force. to we're priority opportunities able as But our repurchases dividends. business to we and

returns in expect thresholds. We been provided risk meet participating have the and our to GSE remain active transactions the transfer

options will XXXX as like utilize present to did themselves. adjust evaluate of share we we options We have periodic transaction those level the also to and share the reinsurance with quota they quota

holding $XXX had securities portfolio. cash tax of yield in investment a of consolidated income exempt as a Investment investment larger $X.X and portfolio consolidated years. our XX% and of pre-tax The increased primarily the X.XX% result taxable million company. including at end quarter a At totaled cash four investments the investments and a and mix duration billion, of XX% year-over-year, of

$X.X was purposes At total billion for assets. the our excess resulting XX% the minimum to required totaled ratio assets available debt in and third over quarter the approximately of MGIC’s end $X.X approximately PMIERs capital a billion,

requirements manage paying As it given these target a assets discussed available our we specific previously is to the excess regulatory actively have on dividends. for difficult to calls,

adverse occur Some the provides in the buffer excess scenarios, nice against of from GSC as they future. requirements should potential capital well for level the economic in as increases a

take available some new positions pay from support for business and dividends our And to excess the occur provide as us of continue opportunities assets PMIERs to also to ability of under they holding to advantage company. MGIC

including deciding like volatile. consider factors a discounted to when shares which million million repurchased XXXX. we runs end be the program, and share we million quarter, well under have as our to metrics as opportunistic I been but ratios, remaining using that $XX we to number in to price the under based through purchase of price program utilized share authorization us remaining continue our book and XXXX of recognize historically, our intrinsic earnings would $XXX the in market valuation also X.X to has During repurchase flows, approximately that an price additional authorization using expect cash shares,

in stock $XX to we the common we and third per the payment purchases, after was quarter in total approximately the share, As shareholders July, million. initiated that of announced capital considering share a of amount $X.XX dividend dividend return our of

With back let Joe. me turn it to

Tim Mattke

Thanks, Nathan.

any and Before quick let a update moving to me give political on fronts. the regulatory questions,

and role it such in actions. finance future taken reform, the gauge the remain timing be that to may to actions about we our housing difficult Regarding any be play. continues can encouraged But company what industry of

directed taxpayer role housing As U.S. at private and risk, that are Department administrative finance the modernizing sectors’ system. reducing Trump, the plan Treasury achieving outlines programs, President by sustainable for housing reforms the The homeownership. and government issued the reforms housing finance, expanding legislative in a aimed

GSE plan so directives FHA. appropriate The on and did roles [ph] as to still plan the detailed indicate The and understanding any specific the our and that Hutch the FHFA company and did is overlap impact uncertain. implement n develop to contain a plan of the the industry between not

the providing of that treasury market. market reform unlikely fulfilled the calls traditional and that housing to This to in be mortgage reinforces calls cannot mission continue to for support FHA coordinate underwriting. its which the disruptions. belief plan to expand But our finance on to release efforts its presence is plan, the the refocus Additionally, through its avoid for also CFPB FHFA their housing FHA

and pilots updates no in programs, regarding eliminated the have has been GSEs and programs. are to involved imagine some there begun EPMI the While various FHFA the review even

has request as of and eventual a take for these financial allowing the finalizing reported, develop more conservatorship would and it GSEs them for issued GSE this The However, in turn programs FHFA retain their plan attention significant end begun includes to will assist traction to the to for also plan. The we of believe implement. capital. to the We developing previously a not have creation has gained the this advisors from conservatorship. model with have proposal the path time This as FHFA to complicated capital to-date. end lenders

XXXX. intent of has meet be relates the the requested even to eligible QM if about request GSE include to comments of the GSE purchased so GSEs January by QM. XX%. or the Patch Patch let This ratio definition limit CFPB called their of the definition the DTI mortgages expire The Qualified Mortgage mortgages Finally, to in do not expands to the

they Patch, line how of best USMI. the the and and In and ask is judge Safe draw comment comments how the the creditworthiness comments, trade about upright including Harbor lenders. our CFPB requests, borrowers, in for The closed commentary own group September of our the for reviewing these to to

CFPB help believe in create the available, has and or is to the a market provisions, request private market. mortgage do insurers, role permanent the initiatives definition for that qualified intent intent CFPB credit homeownership is mortgage of We make capital considering to access and make of believe affordable reaction we the of to deserving and to of initial the restrict comments a originators increase more unattainable. expensive the homeowners temporary CFPB other mortgage or Although not for for the negative the eliminate was homeownership

are actively stronger to what week private the achievable. ease to capital, our insurance investors, Washington notes business ratings. on well mortgage upgraded mentioned include be of private Last in the recognizing topic line do reinsurance will several while our and reinsurance could improved through to model evolving excessive link MI. lead years, and and pointing on we loss opportunistic occur past We to further traditional this the as engaged credit issued insurers believe They adequacy, Moody's continue capital all as including industry's other mono and coverage, financial improved income, over strength profile net very remain use that of upgrades changes

be capital more a supports to play industry our This and role. private away risk that able from company as the sought taxpayers, will our view the is transfer that to

overcome company and offer many for value the payment. lenders solutions number barrier industry proposition one the to consumers Our a and great to homeownership, down and

by credit well includes believe markets. to is forms that I company treaties manage that and distribute capital and sheet, supported a in variety strong of our where acquire, risk a positioned our robust and appropriate mortgage reinsurance balance capital structure the

well, performing generating we're returns. and Our meaningful business is

very grew remained income, million held we our $XX force and shareholders. In in we and were check, the quarter investment to returned losses insurance in credit low, expenses

an We be business that are shareholder expected value. significant we're quality exceptionally in high new business and is generating writing performing is business that added what new to environment of book to a low is being existing well loss

the future very expect continue. of and economic am Given we MGIC. I conditions, the excited market labor to that confident about and

the company am minutes market through we many mortgage to cycles. open a a with honored Before economic serving And line the one of want of questions, up XXXX been that few how I a humbled reputation take to and I to has be say MGIC. CEO to since

the not co-workers team company. have that that and I MGIC I of is the everyday position at past plus and that know customers in these that over feel demonstrates preceded our be co-workers for not it to XX them dedication and commitment today. will a years, fortunate company the it our if very a was co-workers to

success dedication of the doing and ensure I'm market same been to to my I come to experience me that home that able that housing I've ownership, and but that could going enjoy. service focus not maintaining that co-workers after legacy energy can only I'm to the all

way down MGIC ad the looked recently a responding this at so newspaper staff the of is as as someone of career spent entire his accountant from words up team did and of his want Sinks, story his industry. gaining an great I He after CEO. to role the while and this to a a organization. position his lead I've organization in for Finally, a and respect few to worked who Pat success stepped Pat about who say

of thought even and of entire spent finance difficult learned how having industry. tirelessly and get understand critical appreciate Pat to as customers emerged to had with his While industry. company survive role not can much they and the questioned of crisis to CEO many from Washington company XXXX. a co-workers period would and industry the the our them the company XXXX the the of in Pat the relevancy and the assumed through he time worked mortgage the in and industry and With CEO company role MI financial play stronger continue our

instill financial maintain balance now as helps concept from restore to advanced affordable the to to He provide acquires, rewarding industry discipline buy of and my led the returns all led risk led future. consumers, Pat a the to managing to team the the that co-workers, the for strength manages company one to and the that distributes MGIC MGIC's hold of of homeownership charge and and to that has sheet meaningful our shareholders. in He risk. and further environment to ability position access fellow myself provide create a and sustainable

am sure myself thank listening, on you rest I of service. hopefully for our the a queue, company and Pat, the behalf you're caller and shareholders, of years in XX the of and not

questions. let's that take With operator,

Operator

first Mackenzie. [Operator line from Instructions] the of question Your comes Aron

line open. Your is

Mackenzie Aron

quarter. Thanks. Good morning and strong congrats on the

within Can question the continued has clearly the down around you has talk we've just just business come First risk of that shifted. the pricing, seen to and about, average driving when premium business on new to going expect also the the stabilize? starting we shift specifically any also during quarter, on to should there premiums see MiQ was adjustments that anything that were

Tim Mattke

Tim. is Mackenzie, this

from in you premium the can shift, see the quarter, a at look is we XX. mix as some think less I there

try not to on ability although within the often. regular do a make too to tweaks have basis, MiQ We

marketplace, sure very the feel want make our from that the think sort about level this difficult getting of business might it's to Obviously, the really to we're point. we're competitive new good perspective, that marketplace. I on competitive off. when It’s know at in a that return risk but

Mackenzie Aron

or right quarter would with engines to you're other the the say Tim quarter environment stable another in market you pricing characterize any now how and that out the MiQ just what for And, is seeing the Great. during now? you being competitive changes would

Tim Mattke

Yes, just a it's -- marketplace. would always I guess, I competitive

that standpoint, I said good like marketplace And view from quarter and business. lot competitive that from a it's but it so competition the with anything I a a that as exceptional I noticed haven't about standpoint, quality was of

Mackenzie Aron

you Great. can And premium last quarter? amount single then one, during just quantify cancellations the of the

Nathan Colson

I it think Yes, the was million quarter. $XX.X in

So, from the quarter. it ago year million the is up quarter prior $XX or

Mackenzie Aron

you. thank Great,

Tim Mattke

Thanks.

Operator

Your line Harter next from of question Credit Douglas Suisse. comes the with

is line Your open.

Douglas Harter

Thanks.

kind the expected Just following whether credit this past just look the are there of writing, could the very wrote and said versus over in that kind or you're business year at any last if the you return the returns of of quality mix was pricing you changed quarter if has returns, given were the still how up, to that business you you Tim, quantify attractive on kind changes? kind quarter of change

Tim Mattke

MiQ it’s of a quality a a been bit held capital we which Yes, write standpoint, it. might I'd against as came little it's thought little higher bit from again, consistent as mean, return Tim. say I on less board, happen relatively we

what have getting as been very comparable down, to premium And view comes returns getting. we so, we're we the even

Douglas Harter

had you the best that for you MiQ see if different more returns can while, could within then of kind market of how now the now you that a and opportunity of talk kind granularly risk And kind the and about, see of adjusted just the price? marketplace of you've you pockets where Great. within kind

Tim Mattke

pocket guess say one we I from wouldn't perspective, I mean, are that there's targeting. any I my Yes,

what's a to trying good cross available out of we're there. think I section get

I that think across returns are spectrum comparable still. pretty

one So returns that of good say I get good we're that. that from rather would section for across the to area that cross trying standpoint, targeting particularly there's not market but a

Douglas Harter

you, Tim. All right. Thank

Tim Mattke

Sure.

Operator

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

open. is line Your

Randy Binner

of now Thanks. home morning. provide that, commentary regional aspect dynamic. good more is to you insurance. to Is the could Hey, wanted skewed refis a have mortgage if are individuals that, that less there ask to on moving to there likely out I certain a color value

to I quarter? the that was hear about would that's presume Just -- interested And NIW incremental a development. more to the growth an be driver in that

Mike Zimmerman

incremental this even it and driver. Mike, are substantially year-over-year Randy, pretty Yes, is you're up right Refis an sequentially. was

the helped front. that's clearly So on NIW

they years. book, So, prior sort versus given from the really were at the a that XXXX, XXXX ones there prepaying of early most right the originated coupons the

And accelerated let's have that. been so prices certainly that that, markets X%. are been some than and more that relatively There than some home nationally, call right, have have X%, less

type a any $XXX,XXX the So geographic a -- ensuring, few but LTV to loan skew I large XXish average we to loans that call minor amount. we're that, XX, wouldn't say there's it's $XXX,XXX it of XX

prices to purchase $XXX,XXX are there's talking higher you're nationally, clearly that be regions So, going that. under than

you [indiscernible] geographic no, I markets, home about then when eight across took that had get more markets XX, mortgage from a longer really go down the probably from more saying the you not that's back certainly refinance driver refi they cycle, been what's but national generally time and it to a and lot you as down equity. time a than up to have up, more four, board the buildup as more if but and So a whole from speaking to the XX specific into skewing, to insurance, gone look which appreciation you is price in average, that haven't five is to the had can or coupons out of the see driving that lot past as build that to some had

Randy Binner

question. those of know cohorts mentioned, kind has of tough developed guess a The sense how there I Is how is? any how you helpful. you That's of process the of refied? been sense give much I you have do that of any out that's much follow-up, is,

Tim Mattke

regions. about talking Yes, coupon that's mean, right, -- completely, or follow-up far like as by you're by month-by-month or as I the

Randy Binner

for a time, have HPA of relatively moved in has you the to that are they refi. they mortgage versus Do there didn't how may of cohorts so short any has group who still? of No, of but refi moving much sense who get those amount been to

Tim Mattke

I book guess in insurance a year. great into, look decline can at that’s I force specificity the by quarter-to-quarter you of the the with mean, not XXXX

book there's But much as get So it's real left particular rapid I far of was those accurate as it how is be kind years. -- pretty sense to to prepayments a difficult on refied, that. think of

Randy Binner

Thanks. fair Okay, enough.

Operator

next Your the Mark DeVries line with from question comes Barclays. of

Your line is open.

Mark DeVries

the all get seeing likely comments for Washington, little is QM Thanks what a the on of on you're you're Patch and Yes. most but the bit there? kind I to what was hoping on color hearing outcome more

Tim Mattke

Hey, there's I've Mark, one with factors. clear from tell to obviously well factors. negatives going can lot AX's hear compensating what outcome odds about and discussion to I most as AX's part heard I of the basically haven't as where really tough the been as direction go. you it’s Tim. compensating with [ph] conversations likely it's of I is on well guess put a it's of, associated positives the can I as

think a I've constituents change They necessarily doesn't durable, from be I to changes. administration want that's that doesn't regularly. something just lot change of is can’t as heard -- they what

work needle. thread figure I out good a to amount And that still that sort probably to be to of needs there's think of done so how

the the that of affordable. that's to tough rid really out it's now, than goal and -- get housing to isn’t camp guess saying, less So fall to going structure. temporary It's shrink patch other permanent I pretty I make exactly convinced more and I think it's something and make where we're candy

Mark DeVries

helpful. any senses conforming currently that’s not create whether meaningful necessarily from and one market just financed just to it, getting the it's applies AX's AX's non-conforming -- kick definition fair? push it’s of that kind mortgages. to that that it's going clarify consistent Okay, Is the solutions, to And QM of more your it's out to both other today of a

Tim Mattke

very Yes, that's fair.

Mark DeVries

the saw terms question, next to you first out activity quarters know, I a what sense rolling of the based lost some in guys the during easy are the whether quarter, couple you you do have may have I on it's that of were of but as report question like And last you you customer time great. not for regain Okay, an over since you share the MiQ?

Tim Mattke

Yes, reports, is tough quantify how it sense tough to share, it's but I really our is know some until we much. mean, everybody that probably Mark, gained to

Mark DeVries

you. fair enough. Okay, Thank

Operator

Bose Your line next with KBW. question of George comes from the

open. line Your is

Bose George

Hey -- percentage guys, was DTI volume, to the you there's morning. that’s you you, down Do something think think also specific volume continues decline. declining? to industry High good do

Mike Zimmerman

made changes this never two will think Bose, Yes, level the that I -- is is GSE this that Mike. were or a we the their GSEs ago, quarter they commented up. industry certainly relative feel what accepting No, have some go to engines to will

organization. more I of think I just broad approach, our seeing So it’s based a a you're to so don’t think necessarily specific anything

Bose George

of on to $XXX way a there targeting capital distribute to holding And guys to you're how Is million the have shareholders? one that then company. about thanks. given to coming level capital, you of the much just just Okay, the think back actually

Mike Zimmerman

that remaining returnable we've it use consistent for $XXX company. for dividends the that to like for $XXX And options of talked million million and to And of million still the the the best those is don't evaluated is extent the kind felt we've money. have date, have $XX past debt of that I repurchases share would other say, things as funds. the are the we it that other way today, I then carry pretty is at about think holding interest about in

$XX provide dividend remaining $XXX use a stock of about common for million. that the Implementing does million

XXX-ish the available of the stock to at like in think something range common you about So, repurchases the $XXX share at after are and current that level paying other. dividend the million funds and dividend interest after run current left with of rate, kind things paying

Bose George

can helpful. the give premium, And Okay, the benefit just commission you me that's actually for to Thanks. the development? back the from profit to the number great, then reserve one positive

Mike Zimmerman

small I in consistent. it's the think would had premium of I materially say. don't number have And $XX there million last refund right it's -- this us it is I that adjustment specific specific, positive right is quarter. Mike. Because a have pretty fairly, accrual front think don't development somewhat pretty one I here. I but we've it's

Nathan Colson

things long of in Yes, would say, I some most past of is in inventory one has this that And the reserve profit the level been is transactions. it loans for well. restructured when were time have commission that been of some included just development the the a the weren't that as those quota than we share lower of Nathan. delinquent the that in XXXX of absolute driving there are

So, mentioned, like commission the quarter. profit I being big at development driver Mike in as reserve the wouldn't the look of a

Bose George

great. Okay, Thanks.

Operator

comes from the Jack of Your question Micenko line with next SIG.

is line open. Your

Jack Micenko

morning. change XQ wise is valuation small in were bought maybe thinking quarter good much as this of this price a much your through, the of at CEO. and environment I at XQ dividend and you first looking Hi, mentality? how from is this a the in different all looking lot the we buyback. how being and coincidence XQ is your I a buyback, Tim, mean, up know, on where

dots Just we how that? sort of do all on the connect

Tim Mattke

philosophy. between Jack, ask to I coincidence guess, I Yes, in going change me probably or if a you're

I more think of it's coincidence. a

have trading this could had at things we If built where those the be combined. holding look at felt the you like we felt was cash the all that active quarter, more look stock up you we at company

would sort to philosophy deploy we was ordinary where to a what do to to of did, having of a is as dividend well As as clarity opportunity what created the good going we sort what it of say. we shareholders change in were sort thought opposed I from as quarter

Jack Micenko

share Mark's -- I gaining as question, quarter. maybe you you of a how Okay. market sort bit that important back share role? in to is And following this and much of was on little market How suggestion mean, maybe of took that some your new then we're planned?

Tim Mattke

return competitive I guess that share the It's lot guess the that's metric about market as from in that still really any I a perspective, And competitive the we're one talked don't capital, all end we've sure the my I is in on thing feel making making sure we're and here marketplace. means. marketplace. by

equal feeling mainly being main little to we sort want sure as number competitive maybe and there. across has on the we the price options standpoint, things But from generally a make from of think winning great out we're do of slipped our very had our that that priority. our return should think, we share. I the And of we a bit, But business that’s shares weren’t quality well so, capital to take good as share value pricing market marketplace all a in a fair

Jack Micenko

All right, thank you.

Tim Mattke

Thanks.

Operator

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

Your open. line is

Chris Gamaitoni

my questions of good everyone. been answered. Hi, have Most morning

Following on expectations in there share increases clients volume you of have any was market that types above the question saw been? would what market

Tim Mattke

at beginning I type we there's this MiQ of any year. wouldn't of out rolled clients. the Again, say

So bit that needs guess made focus the But I from pick bit. or this little under you think market our was now, if a competitive, obviously, getting what sort did a about more the plays of operating we feet little marketplace volume share I with a how anything really customer it [indiscernible] up difference in from the how us a standpoint. into wouldn't say of and its type one any

Chris Gamaitoni

data you Can what your as you us outlook the the more vintage any in right. for we of versus give have? maybe All persistency details look at near-term

Mike Zimmerman

is Mike, Chris. This

refi year high. at I what at was given a still mortgage rates is think where XX are activity quite and

rate level still lower from though perspective. you going that are of to getting headwinds environment going near-term to on print expect part even there still is the think activity know the some that into be don’t basis forward. The annual an slower obviously year you have I traditionally precise

-- we concerned getting wouldn’t in it's enough but here trend about were to a but in the we’ve drift know, persistency cycles. down level don’t don’t that I past continue lower but think specific refinance expect long-term near-term, overly that So in it like I seen

Chris Gamaitoni

Okay. And approach commentary year? any is there how excess at the you you wondering toward regulators on of of if your thoughts subsidiary capital I end with will conversations was have additional the

Nathan Colson

This Nathan. is

strategy and little with what an do And what regulators views how on is, starts I level talk think we think that of the or one annual achieve million the current in to is dividends form are in think level scenarios combination thing dividend the best the we higher type bit the like feel dividends, the rate, thereof. than that absolute be really we do about form appropriate of stress what's is, capital more of the of run is started a we or handle should -- that. we annual then if and quarterly $XXX a the conversation

fourth are think of about enough stress our business quarter in to But expect that at So wide and have economic results having position, year. that scenarios. to I looking I think or that testing January handle in of comfortable with the PMIERs think will in range early which sure sometime next either everyone's overall I those we happen position making as potential on future our the starts all options we conversation, capital it relative table capital the of

Chris Gamaitoni

much. Thank you so

Operator

comes of BTIG. next Your with question Palmer from Mark the line

open. line Your is now

Mark Palmer

of have going timing and very you. answered been ILN to may my I quickly your Yes, thank terms wanted issuance lot transactions the of of reinsurance forward? what A but sense additional questions get in be

Nathan Colson

Nathan, take done This programmatically several first. past we commitment is agreements. years I reassurance of one year We've kind share question quota the over will issued the forward

share that something that, level. programmatic agreement have to expect while, always been XX% forward about has the to be right the been plan whether we our evaluate similar for will at share we we’ve quota quota continue level a commitment We that's

us. really So I working been that's for think well

of about XXXX by covered -- ILN. the ILN we’ve March was first till XXXX really so the end it of production, our the side, through for quarter On us up one

volumes a relative So another we I given have quarters risk there enough little the second the level transaction. then for getting and as build We're what in we've the it forecasts tell was would've can to than written third in do to as refinance you, would warehousing us, activity. that a we period thought. we faster

to issue well. into ILN markets So the always our as intent programmatically was

to of that well. when strategy would have sufficient So expect on mass us execute I enforced risk continue as to there, we

Mark Palmer

you. Thank

Operator

line Geoffrey Dunn comes of next & Dowling with the from question Your Partners.

Your line is now open.

Geoffrey Dunn

a the been Thanks, of this risk, regulator taking for say et could change conversation subsidiary. excess in time the it question the talking it cetera about hasn't in around go felt like The has shift in used you capital aggressively good dividend. it at or QX seems while. this model, morning. the about to and and the the special the I started get more while wanted where is to to treatment And distribution we conversation have start a like better more regulator follow-up understand after ago. of XXXX Chris's to risk, should been the to more position needed Is the that company it the on

Tim Mattke

sort relation is this Tim. I Geoff, would level. XXXX I say dividend start to Hey, will guess the of conversations in

And so of I Nathan to. that's what was referring think sort

specific up targets, things that an we that they evolution, comfortable overtime where from really we feel carry the have and I with we I feel to you good making level dividend, and would interest that overtime. we are cover that's sure of think sustainable very the our standpoint, want regulator relationship it's our the standpoint, I with those stepping are a started and sure think make they and with quarterly tell from

of but get in and forms we've quarterly specific last about and have more be we've quarter larger, out that to the had more I those I to think there'll year, first to them fourth comfortable quarter conversations them other the had because dividends potential As conversations with them even think able would targets than that we conversations here. make other be Nathan meaningful said, talked dividends we've over

marketplace, feel we that size we making of try we sure from push the comfortable coming would of demands would that they I making regulator our tell but you we always where them comfortable, feel to sure understands dividend the understands guess to the be the line out. I we're appropriately of where toe that that coming with

Geoffrey Dunn

impact pricing you of of On all? consider the acceptable your at the to you ILNs return maybe levels approach cost seeing on are affected that or has what capital competitors Okay. at

Tim Mattke

really I can that real viewing it's back others and think thought or exactly to step traditional programmatic, reinsurance are things we pricing we on you as ILNs From that take standpoint, along assume with become in. are say, that that a and that it’s I always pricing whether over it. look reinsurance, tough our can know the that I tell others guess have how time. change things we've

so been put into very pricing that And leery to methodology. our have

of takes as of of out it are would volatility programmatic of something's some if viewing tell others of see view that happening they as you part the structure some I nature the takes of can risk, earnings. strategy, of it you But volatility capital part how the the wouldn't as that the the of sort and out me pricing the surprise

think direct our at always natural let's then way. that's And I look a view So view basis. it for to things potentially has others that on

rewrite consider have what be for reinsurance the our Let's if with what to might aware of the that's a how really on it. it to good on business be look a they ILNs appreciation would like added also the at consider marketplace we forward and basis traditional commitment looks

Geoffrey Dunn

how -- to-date haven't you But about changed you what Okay. consider you think acceptable returns?

Tim Mattke

what standpoint. But the we're our and the No, of philosophy would what sort capital is tell actually the about it. always focused I we that through think reinsurance return go changed direct materials, pricing from on really the when gets leverage pricing that. haven't of I we how when we're talk you on of we we’re cognizant

Geoffrey Dunn

is to is Okay. And of deals? last when what question a next quota past option your one -- reduction consider your on is share

Tim Mattke

on we At the of XXXX, agreements. XXXX quota end share and have XXXX our options both

Geoffrey Dunn

to have XX to from And XX? go

Tim Mattke

time. That to early would terminate at that

Geoffrey Dunn

you. Okay, all right. Thank

Nathan Colson

point say a point to as No, I going for XXXX launching option that at discussion. terminate. the that was a renegotiation was We use just to the

the that right the XXXX, restructured have for agreement on So and we that's I would contractually all time. a to an at parties, XXXX if too. But obviously, terminate say option works certainly

Geoffrey Dunn

Okay, thanks.

Operator

Stefano Bank. line Deutsche next Phil comes of with from the question Your

Your line is open.

Phil Stefano

Nathan to to opportunistic. us be being about to definition or think of Yes, opportunistic? Has of past ILNs or how over else years want still kind thanks. $XXX the the million you then opportunistic of up kind couple another was through the helped has earlier, change of call wanted you changed anything I walked cadence having and it back the I go dividend repurchases, on think for to mentioned the

Nathan Colson

that of has consistent growth value, book value the obviously methodology opportunistic a business price we means. would several transact how that level years kind for is what to intrinsic evolved absolute and of we I feel we've think But terms we what generated, earnings time. an the the and performance say in used we've of the attractive of over evaluate now the

active little seeing very more quarters. was think third and wanted attractive well I you're that to we like felt quarter be price in that this a as in than of been the the previous some we had quarter

Phil Stefano

has as the see because most off severed the ILNs the three buying, forward or something and maybe calculus instead been you feel for value has updated? along been of mean, you years mean, book changed either part example, they has has tail -- intrinsic lines. years and how the those of for question comfortable intrinsic is I value of four have I value

Nathan Colson

about like the extra value would in that I feeling scenarios about way ILN, would think scenarios. is we intrinsic the kind of say way that I tail the or those maybe need that impacting less for potentially hold to tail

all company dividends a that the else of company cash potentially those that in that what the would the does could value increasing we that think benefit. would we writing now money doing holding these -- and at that out think given I to just to think profile company the whereas ultimately need I And drive be think which are capital some -- And, that way around get means the flow about ILN level the about help that the discussions risk company, big writing things is be that tail the mitigating ILNs of ability that we levels at more about, equal. less the operating way

Phil Stefano

Got it.

was pretty Everyone thorough. Okay.

for Thanks, it my end. was that So guys.

Tim Mattke

Thanks.

Operator

Mihir line Bhatia of last comes America. the from Bank of with Your question

Your line open. is

Mihir Bhatia

my taking for thanks questions. Hi,

I start the claims a roles. there with me wondering, portion notices, of congratulate on was that. continue is let Nathan on on Firstly, new I pre-crisis -- obviously couple vintages. me question drive but just questions your well, significant a your and Tim to and had new let of a And Those

getting the XX XX vintages. I which is, off, then a there the fall One passed I at point years already we're XXXX think think year mark, they like is to on starts and XXXX from

getting of or XX% has not those understand point to some just renewals, a those that be at So of process where some are them will they gradual it hop off but some the XX%, requirement? going subject to just to for dropping it? with start that just is to get Or and been there each

Mike Zimmerman

Yes, asking is It’s question, Mike. a Mihir, this number we've years. been of a for ourselves

Mihir Bhatia

Right.

Mike Zimmerman

go those do away. When

that's left Protection right to it, and of subject that stuff part Act. Homeowners was So the cancellation legacy of some bulk the without businesses the written through that channel

You mentioned others. the some of things other about HARP, and

needs performance and then some a cope to -- those also to credit there's place of that lot take So up. [indiscernible] for underneath

the So question. our expectation to years. number it book I’d on book extended -- say years those pretty XXXX out. it’s short going Obviously your we talking of a to to we’re continue answer a is be XX will the be gradual process

Mihir Bhatia

Right.

Mike Zimmerman

small it that delinquencies of lion but the population, is the a been have share it's generated. still But

Mihir Bhatia

really? what what on Are less not no just -- severe those or about severity? given like And time sorry, the about

Mike Zimmerman

are markets and that is out take still and on on as those. recovery. some Yes, well, there's XXXX a quite still they've just Central good have relative bit equity from the had still the severity, underwater because some it as markets HBA example an negative But there's improvement Florida alone, of

they're still that But majority better. on paying it's relatively of -- out So much plays we're -- full it's still business. pretty gotten the but still --

Mihir Bhatia

a guess and think call. bit from, cadence I about we've talked buybacks small this then And Got just structure, a the guess I capital it. on host away really, on question, just stay I

just So a to managing was your -- of terms capital focus, ratio. your capital think, talking to ago, bit generally, structure, XX%-ish, I about more this used maybe as in more a was and few it little we years in debt a talk

business the thinking word. can XX% the or being maybe risk target off is target taking risk, thoughts right guess, some of maybe and the debt? out that I support still changing Given not if in of Are -- are the any or the the you more the all any is region you're model tail that will. you that the still not to changes business thinking, But there with is laid

Tim Mattke

issues, to I is I say getting it. it. want the to XX% continue I'd for average earnings, under Otherwise target, fall that. rating sure at Obviously, one I think, continue as say that as under we from double always a agencies to mark, be to of Tim. we key under This would make ratio we we a you're have from least guess, a the do

return leverage powder standpoint the we I XX%, thought if you tell stack, lever would a I think right insurance which ability back in think a up, we like we with in I with some we have lever sit where capital dry just don't any additional now, but we needed think the we get a to look is good company. to to back I the lot of leverage up reinsurance, from to

our sort an where type even rates they significant a are lead it's but of ROE especially And at get the of having a to holding same times some amount standpoint, interest, of interest by don’t not that from for right leverage back to X X methodology example. now, XX% even leverage company, from we it, holding the with get

lever make guess that short, standpoint. agency agencies And it I right and now. I'd use rating got more XX% an it sure below make from was rating sure the like to in not it to back And to of get wasn't say this something it up I at it target, expect to the point below much. by we if issue But penalized we a being so XX% wouldn't as we we as hopefully have I for, too need can

Mihir Bhatia

Got you. it, thank

Nathan Colson

would I what said. thing one Just Tim add to

release at late -- for put could an that's might cap as Moody's they ratings the threshold an XX% revised upgrade, another week for their leverage and considered introduced maybe on press necessary target lead total to in that be upgrade that out the factors So a last upgrade.

on very that whether bright a XX% close had haven't So that's to extended we line discussions currently. or we're at

now of agencies thought rating may may the -- have the it with XX% might what Moody's, we line the we rating in from XX% is created the have threshold, business If new be feel a perspective, like whereas important the and future.

Mihir Bhatia

No, it. ratings? from help Moody's or that. And S&P’s if us, Got current then Thanks. imperatives are business business higher the you will what have to perspective, appreciate just the in a can you environment

Tim Mattke

standpoint, current can be I the reform, the that involved CRT, ratings business in would in when think business every think it's risk about as talk GSE being day, us broader being laying and I write dialogue beneficial start on to well. as from a as is meaningful, housing matter, flow the off that DMIs we you rated, higher you the about finance I can far tell not

Our meaningful it's and available, it's make then has advantage rating that be if always we been something if want it's position that of take it can in model. the think really we to view from agencies business the a

about and CRT, not a about being GSE business we start standpoint when And right to say be for a talk in people differentiator looking Difficulty]. so talking again, from active I'd flow [Technical you mortgage now, how it's it able

I into think have consideration. take it's something we to

Mihir Bhatia

FHA hearing year been it. question, the terms there pricing get year? based any the risk some to from moving Affordability the or that my they piece, concerns so -- moving FHA lower end couple pricing has weren't telegraphed FHA insurance early then FHA was ago thoughts last Because Got year's last I they that get any talk that think year from of that this whether to moving this just are to Act, what adjusting there would FHA implications was of just mortgage think year? we months just prices on bushel I and we a this Congress, the just of as just And and curious of like do, you MMI prices, Loan or about in report, going pretty regulators on they was concerns any year, what to just the the I a based be risk this would

Mike Zimmerman

or is inside that that implications is now, this asking They I where the more with something think will the the re-propose have for the been don't comments be they're they right great based something there underway and that's FHFA you take is and Mike, certainly rule is will are thinking risk internally to capital and about -- answered Calabria final GSEs to in and have had out we would Mihir, something they that already really line what more about they that land. capital to the question solution that's in some waiting then set the model going a as is Director, issue have comments long-term So capital.

bet re-proposal think that's come given little year, the to some say that accepting their risk I mean, will safe to out, issuance move based into I think but it's structure. it's this see reveal, and FHFA will the something inside so which we we a They've to at MI exists -- you wait see. based, capital we'll really been type if wait that rolls of they have yet that that they do it's of final that a will, of rule, and that’s they their when level, whether or we'll there. be PMIERs how a But presence within risk already have how --

So you direction don't can't we because what tell take. know the implications that would

Mihir Bhatia

you. thank Okay,

Tim Mattke

good everybody's Well, the and day. interest in I have a appreciate company

Operator

This concludes call. today's conference

may disconnect. You now

MGIC Investment (MTG) 22 Oct 192019 Q3 Earnings call transcript