MTG - Earnings call transcript Q4 2019 | MGIC Investment Corporation

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

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the MGIC Investment Corporation Fourth Quarter 2019 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].

With that, I would now like to hand the conference over to your speaker today, Mr. Mike Zimmerman. you. Thank sir. ahead, go Please

Mike Zimmerman

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

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

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

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

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

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

let me turn to And Mattke. with the CEO, over Tim our call that,

Tim Mattke

morning. Good Mike. Thanks

we success financial But let our few focus the and a that company. the in long-term few does minutes, on to strong kept quarter before a cover report the of the XXXX me on to strategies, results. kept the he results financial our of a fourth Nathan continue comments. will solid as make execute pleased I'm our In details it,

GAAP accomplishment. million income very all-time an this proud we're of net First, of our was high $XXX and

force X% our insurance persistency. size did increase in of Reflecting XX% share of in we that Our origination market our rolled than insurance approximately despite refinancing more year-over-year, increased mortgage presence increased the annual the in market, transactions, our refinancing lowered new and the XXXX. we

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

number for received XXXX. of credit current be incurred low of the notices should good are remain be new losses continues rates conditions delinquency favorable, in both Overall, to cure news and which strong,

to There's We million XXXX. XXXX. And to I'll from increased amount address XXXX from in our holding insurance we're on upstream front in of the our $XXX to minute. news more company capital MGIC in million $XXX that subsidiary able a for

to common common portion We to manage holding our These used and strategy supported actions shareholders, capital the a long-term of and value. repurchasing company capital return re-establishing our dividends. liquidity our shares of stock to maximize our deploy to increased stock our

Over the this last so, asked been we year about capital management or have strategy.

moment a take address that issue. to me Let

capital reinsurance now acquire, is manage to one say we static, must transitioned to we has cannot base and risk, seek capital our mortgage that it be today of volatility and transactions. more diversify but This me let our strategy through because reduce First, model the actively be dynamic. market pertinent capital business where losses particularly still

XXXX markets We books. the share in have XXXX, XXXX have executed and since notes capital of on through used used transactions quota like transactions insurance portions the

it makes to capital intend capital and of transactions to sources cost economic execute continue We these these have attractive when been sense. able at long-term

capital, of transactions sources weaker to and these economic our addition losses diversifying returns environments. enhance our and reduce In

times acquiring times, returning risk In With can for to will our we more capital it capital mortgage capital our our next adjusted than to deploy mortgage prudently include risks We'd as return we generate mortgage set residential alternatives we targets. be that prefer residential those insurer. where by meets best model, business acquiring primary in there our risk a shareholders. deploy

While to our by expertise, in ways to risk we look and certainly will transactions. use transfer as participating other capital credit GSE such

debt of of consider the and This quota insurance impacts share capital. how future. reliance of and increased notes traditional allocation our use sources our like decreases in The the on we equity capital

that based retain upon expect in. return deployment routinely levels of business the shareholders, we the level we So versus environment the for to be to future consider we or capital vary as will are

currently is to tell and to from $XX pay special and company. you million PMIERs the that statutory XX million approval $XXX sheet in strength balance our over perspective. the to the dividend months Reflecting balance and next of Our XX strong outlook our holding both I'm to quarterly this our received necessary year, sheet dividend MGIC pleased January

an Our remaining This the is authorized under addition million board also to in XXXX program. the million share repurchase additional $XXX $XXX authorization.

business, total rates mortgage healthy. Circling and origination is strong would confidence Consumer back characterize attractive. to market mortgage the remain the remains I core

still While homeownership. for demand there's homes the strong tight, supply is of available sale for

transactions. most XXXX mortgage $X modestly forecast. fewer that from transaction is the mind difficult XXXX is trillion, to total market will of course to of expectation approximately that due clearly current which refinancing be keep primarily is And refinancing the Our item in down amount origination the

in could there outlook. some So be this variability

given market. insurance As to our ability the in I grow position healthy in origination ahead our mortgage strength, about we look our the remain and XXXX, optimistic capital to market, force prudently our

primary the growth our range level. $XX rate mid-single-digit assumes the write XXXX. range. will insurance insurance persistency in then force course the $XX in the in billion billion that This in And over of year estimate current grow its We improves annual from new to we of

risk capital competitive and a products by services adjusted customers, and We're focused that think maintaining while this offering expected of on on We strategy for winning focus the the do company. returns on expenses. stakeholders. is long-term a success to all We sharp

to let turn that, Nathan. With me it over

Nathan Colson

Tim. Thanks

$X.XX earned million to net of share, per diluted we from or income compares In the the share which year. $XXX.X quarter, last $X.XX per fourth period same diluted

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

to same increased premiums year was two period X% last Net primarily the compared which earned driven by factors.

First, later. insurance offset discuss force this by although is net average on higher rates I partially in which was insurance force, premium will in lower

the $X Second, million cancellations of the in XXXX accelerated nearly fourth premiums fourth reflecting increased refinancing single market. the $XX premium from from XXXX to in quarter strong of quarter million policy

year. reserves lower established on same consists to delinquencies net of and million Net established Losses incurred incurred $XX plus notices losses for new were incurred last The compared the of to delinquency reserves. lower primarily new previously rate a number notices. received $XX in changes claim on reflects losses decrease million period those loss

X% than same quarter, we the did fewer we last approximately new in the received delinquency year. period notices During

on loss reserve received Positive as notices delinquency was development previously modestly year-over-year higher well.

XX% quarter, from the of the books notices delinquency legacy XXXX prior. of the were and new In

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

we was XX% the approximately of published XXXX credit in these XXXX, XX, notices received from books. of supplement later. is estimated risk-in-force portfolio trends strong The and rate December the the insight fourth XXXX our X%. on The of quarter into claim gives of you some new As

of fourth the estimate XXXX, favorable the was claim consistent the rate prior this Just with than reflects lower credit XXXX. of and the quarters current X% conditions in quarter

current delinquent that The reported The were quarter of XX-year as loans continues near at X.X%. the quarter our fourth the subsequently the during lows. in number insured to percentage but of below delinquency loans remains remain beginning of inventory were

Reflecting from level the Primary quarter in the rates, paid same improved by declined XX% $XX XX% million. $XX of of the delinquency claims million period cure last low received declined claims by and inventory, to from the number year.

of which quarter yield has portfolio of what yield basis premium from net component XXXX, for points, components. our third but QX the in XX.X and we XX.X in affects from largest basis call down yield, The Net basis points XX.X premium points is several insurance-in-force. of in-force reflects XXXX. our XXXX was premium the rates The quarter the up fourth

trending years. rates lower new over have the business Premium been on past several

to we rates replaced of with continue lower business portfolio premium new premium at continue are and written expect of books rates. as run-off a higher lower to older our written in-force books As yield at will result, trend business

the of premium components the single from yield quarterly other net and refunds, commission. premium and profit include seated The in of associated accelerated premiums various changes transactions premium policy reinsurance levels cancellations, to our the premium

newer books generate low levels have they're returns. associated losses While lifetime risk-adjusted lower rates the meaningful with also them, of to and expected premium

a a otherwise risk good would on we In books these addition, plan basis. increase going returns basis. This to direct report our is on is on the coverage adjusted mention earned forward a to have we information the expected point reinsurance to

have reporting reporting insurance-in-force. quarterly new insurance notices and statistics statistics delinquency also about and single We premium written reporting premium about previously policies monthly been premium quarterly been Pardon We've we've policies. statistics. our been rates me; monthly from on

about that longer we will announced delinquency the activity quarter have statistics and data we because no previously we same again will we notices quarterly delinquencies As we monthly do. the publish detailed currently this continue about publish to

of along on We credit and insights the we XXXX, ensure. the the provides the performing information of think quarter with policies detailed supplement data beginning is the how to that quarterly providing to the first insurance-in-force, about direct yield. yield away from the quarterly information our transition premium on net a premium on NIW to the quarterly of including premium will we reconciliation yield the direct providing rates In

both this included quarter, we For sets information. have of

press the supplement new to the to continue information insurance both insurance-in-force will about website. and report we release written We in posted and our

direct and our things, become returns believe cost impacted information element new increasingly and are also estimated on new competitive expected the which We of business of losses, adjusted capital. among written one risk insurance overemphasizes rates that premium the of by capital, required on other amount of sensitive has disclosure

before business. on term because addition, immediate number rates to an indicator years the the yield a premium it In not was takes disclosure premium of of converge new near- revenues would the

insurance-in-force believe of insights near-term disclosure trend of on into and the trends our our net the of provide the We and meaningful new the yield value. revenue premium components that the can

Continuing commission period flat quarter in other the to of net the is of underwriting which same the expenses on with the and XXXX, fourth year. ceding quarter, $XX last were discussion before million

continue we those franchise. as than to XXXX, increase higher make expenses we expect inflation, our For in investments modestly will

fourth our the paid and to X.X repurchased XXXX quarter, authorization approximately we $XX repurchase shares. During and million company, million share utilized the million $XX holding MGIC dividend under

million. considering have of the remaining capital fourth We total of $XXX returned all was quarter share our After approximately the to the that amount the repurchases, and under of for of payment was XXXX. in dividend, of and million XXXX the approximately common $XXX shareholders runs stock end million authorization to program, which $XX

strong January our our of because dividend capital and mentioned an MGIC both board in our Tim year, from we the company. earnings dividend this million $XXX received quarterly the for to As pay approval additional million to position, special of and and $XX holding regulator

We level the expect MGIC continue quarterly to able pay to be going dividend forward. at this to

February per also $X.XX declared of common share dividend a payable board The stock on XX.

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

with Associated company, the share MGIC an the of runs million holding that approves dividend our to $XXX million of approval through from repurchase additional the authorization XXXX. our end $XXX special board

we I for volume period remaining the the XXXX as million authorizations, have as may timing us given on was any vary $XXX reasons. share and just both of repurchases But prior with a million to in authorization that execute authorized. as well the $XXX expect variety of The

not company's have generation good writing sheet the of portion a strong of and capital that strategic additional we options. currently balance repurchase feel needs the the company, the of importantly capital represents and does and a outlook share our the for Given authorization we use expected limit

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

difficult is our assets. manage available excess It precisely to

the preserves only and capital, potential third-party an strategic future. adverse requirements reliance However the but on offset it they should some provides economic from GSE scenarios, level increases in optionality, not excess in of against occur capital for the

quarter-end, holding at and totaled our billion cash investments company. included consolidated of and million $X.X investments At the cash $XXX

pre-tax as primarily of result had consolidated XX% the XX% X.X%, of investment and and The X.X exempt yield investment portfolio of duration year-over-year increased tax mix income years. taxable a a securities, of portfolio. larger Investment a a

to a So up, a would XXXX wrap we're I XXXX. in off and great that great start was say to year

back it to me turn let Tim. that, with And

Tim Mattke

Thanks, Nathan.

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

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

discussed last and reducing directives. Department and contain private taxpayer housing that we issued achieving aimed at sector's not system. As finance Treasury legislative quarter, reforms administrative in government outlines for plan sustainable risk; modernizing plan role are the do programs, The housing the finance, any The expand housing detailed a the homeownership. U.S. the reforms

So the our impact industry uncertain. of still the companies is plan on and

plan and Treasury the market their the calls finalizing disruptions. end GSEs. eventual CFPB end, the that plan conservatorship. FHFA efforts for includes to capital avoid focused the This is coordinate for rule for on of FHFA continue to the To to our developing GSE

an be their selected advisor to this rule We The has released plan. assist early expect proposed FHFA developing to year. in another capital

pathway to reviewing and implement. in continues and programs. this updates GSE involved and FHFA end of conservatorship the that take have pilots GSEs and develop there The are of process the EPMI is IMAGIN complicated to been The time regarding no but programs will various

gained these discussions the programs to-date. have not Our notion continue lenders significant to with traction support that

by of common in to or of be waiting pricing Patch set the and that Regarding The include other of to limits alternative XX%. expands income do a mortgages XXXX, for later updates expects indicated to recently as January proposed QM rule even the ratio which definition mortgage to debt would that definition mortgage update if in and GSE CFPB to market to any use issue the so-called the CFPB, expire eligible has participants the QM meet of than DTI measure Patch the is such CFPB's GSEs of GSE ability-to-repay no and XXXX. are not new relates May specifically threshold. the to with ratio the definition The mortgages purchased qualified the replace we QM an

that indicated alternative date The or proposed the effective the CFPB one GSE also the exits these expiration until Patch has GSEs conservatorship. it the the extend of earlier of until would of of

comments it because At several effective this point, And access take an to the before for predict review proposed expensive make credit be homeownership for rules it CFPB the the We and not intent once is deserving of yet determined. the unattainable. be is to to do published. restrict months public or date it’s to hard it's more published, final or alternative can believe to that request homeowners will materially

what to We continue to for be optimistic actively engaged in all including these topics, will and of and we that advocate MI. use include continue occur private capital, do changes the remain private

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

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

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

in We're is added That performing and to And an is a businesses existing we being outlook be expect to environment. labor what for shareholder new conditions, well writing given book generating and significant value. that high expected of economic business quality continue. low new market loss our we're to exceptionally business

I take MGIC. With am future let's very questions. for confident and that, about excited the operator,

Operator

[Operator Instructions]. you. Thank

of KBW. question first our have we from line George from Bose coming the And

go ahead. Please open. Your is line

Boss George

that wanted with you good your industry. guys, stays do Hi about the insurance-in-force gave think line morning. mid-single-digits, in insurance-in-force ask the you growth to I first the growth guidance for

to expect as industry is So whole? a decline talking the about you're for really modest that something the

Mike Zimmerman

market is mean, reflecting much that. really companies But volumes, of refinance as we get share a here handle Bose, then sit and lower as as that, expectation can individual today, an within how opportunity. refi volume, the this right? getting is the I to we market obviously then influence on Mike. Still would what,

or it market not MI So share is small, the like [indiscernible]. pro the would exactly is rata overall straight seem but market smaller,

Boss George

shift. and share on anything there expectations suggesting at really not looking cetera, okay. just et it's But Okay. your It's optimizing

Mike Zimmerman

correct. No. Right, Yes, that's right.

Boss George

about that sense. And makes your no, Okay, authorization. the then comments repurchase

Can say, you complete to timeline by complete be you the terms just in it XXXX -- goal complete expecting mentioned with it are to timing. for expect the by of authorization? the you it, You to the

Tim Mattke

Yes, Tim. this is

I is that will our by the date, when authorization think, complete out that's in expectation place the be yes, it put we the we timeline for.

Operator

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

Your line ahead. go is open. Please

Randy Binner

Hey, thanks.

Just following up on Bose's last question.

buyback -- through authorization. the of the it the So of the the be ratable use would end

it how the to to might Just come forecast. trying understand

Tim Mattke

that, about being the wouldn't necessarily think Well amount think again. all way. of even it periods. guess I it's about Tim as that ratable, I when I about across it from guess, almost sort I I think

think authorization to same all, utilize fairly is programmatic, the you it we amount being but quarter might can example. I of as if think every the in an about we utilize not intend

Randy Binner

Okay. or And in kind it reception on market it, then changing might has to to with this MiQ that's the year. pricing still stabilized of has markets the that is of tool about you thinking do other trying how and just share I end-up where and guess a understand follow-up

think some is stabilizing think I there. year, you last perspective on in But market your that? up transition and new you I the I perception gave tool is interested my be would to the share as

Tim Mattke

again. Tim Yes,

I when our don't think I tell sales on MiQ we not customers push a to, look think don't any it that accept like we point, you're with they our I to I customers feel at by this group. and seems trying we have you, at that would it I adoption when will MiQ, reflection their of talk we're stable means.

the want. the pricing provide then through all customers along we view to mechanism want Our is that

early level get fairly like on And that continue we just we XXXX, penetration sort a roll to quarter, fourth good about standpoint. that I relationships we feel we MiQ a we think moving got and forward. stable on and once of from felt as customer into execute third, through really now probably

Operator

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

Your line is go open. Please ahead.

Douglas Harter

Thanks.

of that to quarter talk decline sequential kind nature that could just for it's does it of mix that's else there the NIW, anything does shift the the it continues all the driving you're look about on the like on take account the yield this you risk, that last of So the question. decline move towards of providing competitive sort Since if of but advantage kind decline in market the premium or is lower as well? of

Nathan Colson

Nathan. This one parts year a of key of the doesn't obviously throughout and improved capital under is capital DTI threshold, our seen under we've is the even I say required. DTI And rates the required in decline would premium returns well. throughout seen a include really PMIERs as has in as we've the that but XXXX

big So because we continuing have year capital we throughout the decline think about for business, really the fourth seen pretty quarter. the a and through the necessary

Douglas Harter

kind something you're is credit that the that -- that ILNs that just writing So or that of else requirement? is the better or the required capital quality is is that's shift that mix that required factoring there in of capital in lowering

Nathan Colson

certainly or like as of a before true think those so direct considering true, call insurance reinsurance I but notes, would it's on well. it's we what guess I basis net

attractive be continue structure tools in capital the as well. kind of those So to

Operator

Our go Please Mackenzie comes Aron from from Zelman Associates. next line question ahead. & the of

Your open. line is

Mackenzie Aron

morning. Good Thanks.

rationale bit expected of special about the be conversation? the the with annual their the forward? on you review then and thinking going Can timing talk that an there and Is a regulator. just to question dividend little First

Nathan Colson

on Those $XXX the then dividend, being also quality started them. capital have in credit our continued of was second would how available And or the we basis. The to the January. approval. formally I the to mechanisms into business the year, Nathan. distribution utilizing And received is position. in we timing when half This of last the were conversations a direct written requested conversations market, we we really say million the relative

ILN the I In and reevaluate is of where future at would time this feel think of we this the what to become we're for of function those to other in to a where really capital could the continuing attractive. I could of exist Part is, going we something be appropriate do. it reinsurance position persist, that like a in the is but this the us where way no situations business not terms a thing structure forward, to think kind of being we this things we have every an there's additional do continuing written the we function that year. then about be might want markets do today, capital, If

an to special the the dividend that but dividend strong the I we're in. impression wouldn't currently want special So annual reflection is position of leave that

Mackenzie Aron

amount quarter? then can Okay, of during amortizations the just quantify that's Nathan single the helpful. premium And

Nathan Colson

Yes, it was $XX million.

Mackenzie Aron

thank $XX million, okay, you.

Nathan Colson

Thanks.

Operator

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

line Your go Please open. is ahead.

Geoffrey Dunn

specify to good average different amplitude on question said about maybe charge maybe the Thanks, give and over the last year or Well, years. coming morning. about Can the the wanted ask of you charge last the us Tim pricing way. PMIERs year? I you a what capital guess over change follow-up capital a down I the you

Nathan Colson

Nathan. of that from basis but fourth is I and from pretty the low I the PMIERs fourth moved to a the this so of like before change. is the we’ve think sixes, mentioned right it to XXXX, of risk-in-force on think low quarter the Geoff XXXX seen about quarter meaningful have to think had I way X%

Tim Mattke

even on I Geoff plus pronounced DTI so for doesn't Nathan And as more cuts consider above now amount that that. when to point, the just DTI account that XX example is DTI mentioned, price argue that think DTI, that that it's XXXX XX the PMIERs and XXXX, things than you to changed take from we probably all of I'd so into and

Geoffrey Dunn

loss and the and executions? estimates as then pricing of have given thoughts your your normalized credit change seeing think ILN Magic recurring are the or Do or estimates curious its at sticking look given on and to of you Okay. capital reinsurance well. in cost performance I'm you And is those you when competitively and nature expectations what longer-term

Tim Mattke

know that number Geoff, it's it how at It's tough to good others really obviously a I lenses. look it. I can different you know at we of very focused a had look period sure tell making think question. cycle through that And whatever might on about nice We're through for time extension here. like. obviously, the look we've things of a we a cycle,

pricing, different consider you there's stress can think we think that we what about is, can less I reflected when environments we where pricing. would scenarios. like. the And in the being with can around and But volatility be credit tell book those be it I look quality I think that the

think direct the how and without you access place. those on to well a would I capital looks like markets in as it ignore, basis at place, I say that would the we as consider reinsured although you being as that Nathan something returns can't in both that the with is structures tell look

We But in can processes markets we markets. we we that think have of with know can think again, part capital change that the those while sell over relationships reinsurers, very we good time. our

versus upon advantage available dependent So of those priced and attractively. we become don't to want they're those when they're take outlooks

we're that reduce say. a losses, does variability quota the on all would really volatility through of both the information cycle, we to some at the also a the think that some be really wasting, basis. I the credit from happen quality, share of I we And we but focused not, eye need our we the blind on. it But and turn prepare is can around with leverage a reinsurance. ILNs what So look returns on don't most and really that's higher direct of on what But

Geoffrey Dunn

All right.

it sounds like So adjustments not overly but I some on, guess going aggressive? getting

Tim Mattke

what way a I short, And put Geoff. succinct expect that's I that's us. think from think think, that's nice very I it Yes, to you'd

Operator

question Our of the from comes line Micenko. next Jack

Your line open. go ahead. Please is

Jack Micenko

to wanted bit. your then up Hi, run rate to so rate, I got dividend like I look good the morning. a If the old at to is timer. you’ve and the XXX XXX run little the curve come back question number

at what's years I drawn to if the not look dividend, And at So number. plus down put that two I like XXX. plus buyback high-XXXs get then of close

dividend end or of question laid the is of the all When them of special to XXXX? today? the look to I the sort you've through as it and be out So guess going we out is, you're sources safe now assume do at uses conversation you

Nathan Colson

next This back a about position is And that that obviously for to will the period, could that the of over the previously, question say, we a and point of that in in Nathan. we'll continue two I $XX at reassess having where I alternative anything not, conversation, this I operating be with years over the conversation the needs capital, way won't want two-year run we next either. think done I rate like just do ask level. would would but from our kind go company the or some answered money for at I mean kind the I beyond million the We're got wouldn't structure, future. of we think don't us precludes a to similar availability say capital other

Tim Mattke

questions been dividends tying MGIC out little Jack MGIC there, out activity when about you of I out one dividends we've, a basis. Yes, larger one any of I transaction with being thing on versus sort guess, a cautious always we had think before we've of and think ongoing capital get and doing ILN about, more the with bit the sort can

natural spot about of a us it's the annually think OCI conversation a go and at. we're I where for have to so sort And to

sustainable all different of dividends we think quarterly good cycles. sorts the being about feel really I through

those on to in where as well. have was the I at conversations the special this think conversation so And have we future the the dividend really are about opportunity think time. with them we'll And I

Jack Micenko

in Tim, in XXXX picked that then versus versus And a The bit up thanks. Okay, suggested XXXX. delinquencies XXXX comments, down would the little prepared XXXX. come in notices you

you now of thinking down do or I'm -- that bring notices expect delinquency retrade So net share better guessing activity to are we sort while lower number next year?

Mike Zimmerman

Jack, right Hey, But at a mean about mean low the comments you're pretty on there. I we're now. Mike. right is level I this

year-over-year X% notice think activity. I decline So in new

X.X%, like running We're rolling delinquent X.X% range. that in be to of quarter. going each it's portfolio, the So

are I the those looking be to kind not changes think dramatic any metrics numbers. we'll those for of

Jack Micenko

same. Okay, it's the of so more

Mike Zimmerman

Yes.

Operator

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

Your go ahead. Please line is open.

Chris Gamaitoni

I same to question follow-up is everyone else the on want asking.

kind So I the next $XXX if the in will I and do million announced special the over years more my get the coming dividends based two sub usage. from roughly is math off versus the be quarterly there of

holdco Just not you that additional plan are opportunities that? out what's million at de-leveraging capital XXX right there this the or like lot additional of the point. TF for need deleveraging there's XX% now the a $XXX What for seem debt-to-cap for at given doesn't

Nathan Colson

it's not you Can the on $XXX I'm you're? following Chris, that Hey, the you just walk that, through can just me -- above Nathan. math

Chris Gamaitoni

Sure.

So to regular $XXX the Annual million. million. special, $XXX XXX I to are million, million, is this $XXX expenses million debt dividends, $XXX year, $XX get $XXX million believe dividends $XXX of you million

$XXX there's going million million $XXX million coming in, $XXX delta? out So about

Nathan Colson

through looking you’re so Yes, XXXX? if out

Chris Gamaitoni

XXXX for for authorization two-year Yes, period is XXX. the two the years

Nathan Colson

able expired. we've that to get demonstrated I to The even at kind get evaluate Got for think it. repurchase We authorization we'll of authorizations for has here dividend. point, the obviously have that been uses other mean the share the this optimizations been money. we've able over time, continue them to Yes, I increased quarterly as

So I have money, think today. highlight over kind nothing but options we'll that time, of for to

Chris Gamaitoni

mind non-buyback put that anything, we thinking Okay. might become I you're or our was opportunities interesting? in any there's wondering about if other should Yes

Nathan Colson

to that and the to at nothing -- near-term point I communicating that would front. but in in It's nothing nothing certainly this that think be highlight could we we something continue evaluate

Operator

Bank line Our of America. of next question the from comes from Bhatia Mihir

Your line go is ahead. open. Please

Mihir Bhatia

for question. thanks Hi, my taking

maybe, I'll premium go that. real Maybe and the premium talk we're yields quick going about since in-force yields talk back forward. going about to to of Sort

there is materially should something are wondering, decline we Just they focused drive QX? in seems in something was pretty it on special where QX in yields that premium the in-force would be that? maybe What the or in-force actually it like refined

Mike Zimmerman

of Mike. you is Mihir, into things, I are right this mean going that. a that number have

by exited on has prepaid a the quarter. cumulative the faster for that little all in been been pricing going several the last new on effect have You quarters bit that's the of business coming the fourth and

look bit see be much So turn we little would to that persistency, at look lower. you're higher annual persistency -- going quarterly again, at a it

had you what's newer of business in-force existing being off. that And bit going more on coming a churning little the the replaced. So is

got some place. dynamic think of have that taking that's I you

Mihir Bhatia

Right. just in a given good much good how you a I share? willing in-force would to have Is guess just run how decline rate there to yield terms you expect trending, that of been be that things

Nathan Colson

time, because function do mean; a thing think This rates business. it's function that say I It's and to of activity. period writing is kind over a quality of future I Nathan, refinance I of premium would it's a that on of a the project longer difficult credit we’re

there's think profile quarter I the wrote the at we fourth a of in-force books. change number quarter our to fourth as larger factors better I in a risk lot of So look than a would the in much business

of in-force the credit quarter. as book So fourth a a lot the in of result that the of reflecting refinance activity is just the profile improved

Mihir Bhatia

Okay, got it.

climbing. maybe you've nice So some on just color? like quality where to anything writing any that else cure-to-default on steadily think particularly that anything been now? the credit comment would that development stabilize? driven And you that turning rates expect to credit, it's I up ratio, cure, Is you've do XX% quickly the it's more you that or by been the economy, had better just pretty to

Mike Zimmerman

the books testing, all-time kind the and we're will. lows, contributing, new cure business strong, new Mihir as economically legacy Where it’s claim kind the you small mean piece of, quality of is right. on is got and Mike. then simple such it's of solid a rates, the I rates if yes. I We've strong. credit so driven, that's a mean economy the is

at. that's So so. that lower, kind of could rates hovering claim from just roll to indicator of we've in been I they the range something few think last good cure go where delinquent, kind of why or to a calls that It's things are XX, about XX that focusing see rate being

pretty been that's So stable.

a but bit of see little the variance might you in material. other nothing numbers So

Mihir Bhatia

the and the year? think of year have and one. ILN just six, I just see reduce rest amount option are you then almost did plans thinking last last If about this And on it's I'm QSR been question, you you to now how XXXX thoughts reinsurance the ILN, then remembering July. since months I think it an seven for on correctly in you

Nathan Colson

would XXXX our I Nathan. our we transactions. is terms share quota this the have to with quota for say for forward-looking share, Yes, agreed panel

that So will quota similar the generally again we've be share past. with in a XX% terms to had what

So there. really nothing highlight to

the panel of interesting were the coverage we The able with we was vintage. thing extended that some to got accomplish XXXX one to

reduced XXXX relative share on So the the you're already to place. book but structure certainly the to kind do but coverage, frankly, these But full of of main a quota really that's loan XX% level provides the coverage wouldn't we've we so have of to on for already on in XXXX I and session option. quota previous deals, something any benefit option we But are we points have continues kind of bit on do XXXX little coverage that think like the kind that couple our share so optionality I it agreements, being of kind attractive or in the XX.X%, optionality like for like be decided. either as the some right I still we our out it on reduced quota is older -- wouldn't of for nice of options, keeping but the us, have share executing it. We it not

Tim Mattke

Tim the ILNs, its adding on think I in. And

I expect quota ILNs the have I think quota the quota think, to ILNs doesn't it active to are as the think there. to share on doesn't shares think the preclude structure we're I the to able Nathan share, valuable way in any the we to us that And in utilizing us. from you'd be us extent continue that shares said

this you I So in continue space expect should well. as think to be active that

Operator

Instructions]. [Operator

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

is ahead. open. Please line go Your

Phil Stefano

thanks. Yes,

new of since in the the of messaging I inflection. around like same, be was should does change what an new you're or mid-XX it's a last And more appreciate coming wanted off mid-XXXX kind it that recently the for year-over-year. drive seeing in material, again, we're not go their back in feels that notices helping there that. ways notices the backing were was the Just like an decline And vintages it And to I feels had written felt mid-XX. to some Has think into the notice peak in I been but outlook was inflection coming we new about new years. it's up question notices of there it like and the down. feels And just to at the like time

Tim Mattke

I probably more would nuanced. it's say

the we here, the little us don't good I that's about I obviously, to I think the wrote really the credit and think but dramatically, in numbers characteristics, persisted we talked the in that those feel bit that of this XXXX and one again, XXXX. thing that moves think book it we book a about compared wrote help quality

are same losses. future, those think how we I as years, have difficult as the about you peak low sometimes into might so similar now those in I it's factors to exactly, especially go far premium And larger level think what of last the you where on that's all coming predict some project we right to the of talk sort books true,

has quality again, coming the We're do also into those a to years, exactly loss is and the but the vintages. sort what their lot are of with that peak of of vintages bottom where credit

I try obviously that upon originated. it Mike talking of book there. as about the years think quality project we as and as view said we what based earlier, changes things out we're the to there's material, they're don't But really, So subtle anything

Phil Stefano

something they uses on of earnings Okay. being aligned and debt think this I given that And conversation? maybe coming ask one to extent the the your over rating was to just going growth other years? the Or one little you're is is XX%, capital, a below debt of rating a get du to you you you contemplating differently. look excess contemplated mechanism that in through the have is got involved reduction there equity there's topic that's jour, to XX% get maybe a How favorable agencies Is it the naturally deleveraging much more there? reduction is

Nathan Colson

we it's -- it's say would I about. talk Nathan. certainly that continue something is to This

we that time So we Bank, do for we kind Loan the consolidated XX% do getting that's was threshold any if Federal have of felt as pre-payable us. like under drawn that Home have really part debt, of which important

frankly, kind over an but that So that. conversation need used agencies. we'll get bright get we do line that take it a we ever we quickly debt-to-cap of view as active if have that under it's a threshold, frankly, pretty the mechanism XX% to a with haven't as then to but that And to rating we action

by XXXX $XXX debt level time, the outstanding, to relative desire other range. of debt reduce million to the debt, that and the market So upwards prices is part overall XXX strong at at the of this is no trading that driven of

feel was or say good opportunity to it well that, like that us continue we versus for a do. I'd So, something we it's do to about evaluate, think something if that would we we there to need

Operator

Winston line Art comes Advisors. of next Our from Pilot from question the

open. ahead. is line Your Please go

Arthur Winston

morning. Good

last any those to on of XXX? is conversions force X% are junior question, there trading up way the Following that conversion XXX, at

Tim Mattke

threshold. be threshold involves price XXXX. is, share There certain That a needs the it above to is

Arthur Winston

XXXX.

Tim Mattke

the the I we're I paying now mean of cash price continue on the conversion can adjust at time. basis, force a Yes, to is force which that now, But over it varies quarterly think convert. will mid-XXs dividend level we right

Operator

this are no time. And there questions Please continue. at

Tim Mattke

interest We in forward Thanks, appreciate great to and the a look everyone's everyone. company XXXX.

Operator

Ladies conference and gentlemen, participating. you this Thank all call. for concludes today's

may You day. now Have great disconnect. a

MGIC Investment (MTG) 4 Feb 202019 Q4 Earnings call transcript