MTG - Earnings call transcript Q1 2024 | MGIC Investment Corporation

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the MGIC Investment Corporation First Quarter 2024 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded. I'll now turn the conference over to Dianna Higgins, Head of Investor Relations. Please go ahead.

Dianna Higgins

Thank you, Nadia. Good morning, and welcome, everyone. interest your for you in MGIC. Thank

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

a to quarter It about Our issued of results most that our reconciliation our at quarterly yesterday MGIC's Newsroom, also under refer on was mtg available results financial mgic.com measures press during is includes financial contains today. to release, GAAP website comparable which includes the first call and additional non-GAAP we'll information their measures.

we our information in posted full In may quarterly addition, risk pertaining other and on you supplement information that contains force primary find a our to valuable. website

our presentations and to a or corrections our presentations on underwriting guidelines As time-to-time, information from reminder, past other we website. may about post

started Before I those make the during materially could remind the we everyone about differ of to future. our that want may forward-looking this statements. expectations in of these call, results comments we course get Actual contained today, from

time in those current call are this statements and No one other statements at fact X-K yesterday. If of statements, the subsequent of of guidance discussed an factors those results make to differ that issuance any actual to that future and in forward-looking the or contained also cause should forward-looking than undertaking that update our could from XX-Q the were filed XX-Q. events. light or about today any rely X-K such the materially in our we're call on on not results are we time obligation the Additional the

to pleasure the I over that, with to turn have the Now Tim. call

Timothy Mattke

are resulting million first business morning, net the model. company results good continuation reported quarter return exceptional results the another of income financial The of and quarter, of annualized in $XXX of strength Thank an equity These highlight our on you, of XX.X%. Dianna, and the in everyone.

of and manage of for we that model approach loss capital is attractive a business consistently demonstrated the conditions to capital distribute through-the-cycle Reinsurance has and market balanced in performance execution and returns. risk acquire, focus stakeholders. the to is on and the both The our risk efficiency Our programs way generated of market. reflects responsive benefit address allocation

portfolio. The mortgage from as supply by with below elevated mortgages origination volumes that the sale transition well During new lock-in $X limited for insurance. main ago. the with credit year been force, overall was credit have strong driver billion of quality the little to industry away the of wrote market underwriting market a quarter, current insurance interest the effect from insurance $XXX our affordability very interest from we continues record a experience performance write in new of our have down pleased In at rate. to challenges. recent past we we of years, origination the and change of the X.X% still due and homes We're the and is standards recently continues rates over billion, revenue, to The characteristics. driven There's headwinds rates smaller insurance homeowners

to While dynamics prices. the it homebuyers, demand current challenges supply continues support and first-time for create home

lower persistency the relatively I is remained NIW insurance consistent that tailwinds XX%, and in force. expected. with As what at the has flat rates high that several The by higher headwinds our force persistency calls, net been largely in flat quarters, over to we past on offset have persistency ended on the quarter mortgage first Annual originations mentioned has prior the interest our the of quarter-over-quarter. of insurance result

for opportunities demand to to Gen and to quarter's millennial desire to in long net $XX this quarterly quarter, up of to reasons million payout ratio Z income. our about homes last Pent-up stock the capital paid a and to stock of dividend the XX% market We million, MI the look common and own year. shares total a activities. populations common MI of for that are repurchased X.X continue similar million believe term. Shifting strong shaping the a is pretty we of be the $XX In optimistic representing

to In addition, Both shares an announced share Board capital levels, repurchased these X.X we we week, a of company. we in were for stock MGIC our the both an of are repurchase that release, MGIC million $XXX a earnings week, announced in $XX dividend million. company. announcements and which the above paid supported million And $XXX additional earlier total holding of by program. the April, targets authorized of this common Last million holding our additional

remains dynamic approach $X capital billion management of risk to integral balance financial be so Our maintain structure strategies. to that remain achieve well objectives has macroeconomic capital to in strength continue and and we environments. our program, capital varying includes reinsurance which can done and our our to will MGIC's well-established capital and positioned management sheet

to the billion first shareholders. of monitor In retain losses by attractive quarter. We capital versus capital addition sources at of continually level of holding in our and reduce considering agreements at PMIERs scenarios, our to level MGIC diversification of the the the $X.X reinsurance of provide reducing return company, and our flexibility stress to the volatility costs of and both end capital required to assets

we to to and a results we value. With financial continually our this, will generation a the our capital to repurchase which of means we turn returning operating credit related strong smaller in share future to with combined Nathan primary origination insurance remain on me of we're long-term shareholders. With expected challenging capital results. and that, let part deploy it give over continue assess shareholder and capital to growth environment the our required best capital, and performance, more details As market, the of maximize expect experiencing, evaluate current is to you force financial options

Nathaniel Colson

and Thanks, good morning. Tim,

diluted Adjusted found share net adjusted earned We $X.XX resulted reflective income income share operating experiencing, of favorable diluted A year. mentioned, results. Tim income earnings was with a net $X.XX of continued per to the the led net results year. As income compared to of share net financial per for we year in quarter. last $X.XX in detailed quarter operating last which loss release. The per reconciliation to diluted been reserve development of we've began quarter X% a can and $X.XX solid again be performance GAAP strong ratio to were credit first our loss this compared

delinquency Our reserve $XX re-estimation and the ultimate favorable XXXX. quarter. of losses favorable this the from loss first prior received in in development development delinquencies of XXXX resulted came of million quarter notices quarter primarily in The on

our adjustments to those on made notices expectations. favorable ultimate loss to exceed expectations, As we've continue delinquency rates our cure

we a during will As reminder, from book-year include quarter the received delinquency different many a notices loans vintages.

assumptions XX,XXX to peers new new loss In recent the to loans ultimate the initial outpacing our maintain to X% quarters. delinquencies quarter, notices. our delinquency with most by continue approximately related from inventory We decreased

on XX% context level, it current delinquency the pre-pandemic some For quarter the of lower the inventory XXXX. than from is first level

loss expect level to seasoning may higher and being delinquency and to increase historically of years what notices the continue the new the due of in are years We that XXXX seasonality. emergence XXXX large book

premium and and months subsequent for but it March February, best may April pandemic credit subsequent we the the do the quarter, returning. was seasonally The quarter-over-quarter. quarters had it points seasonality, first in performance. The mortgage in in-force XX.X year. not will we historically credit disrupted in were inventory be repeat flat expect this appears mortgage yield a And decline governmental seasonality, quarter, response significantly in delinquency the basis Regarding

relatively of increase to and high book last per to year. Book repurchases, the our As for persistency our remain share to somewhat strong was results shareholder with due another at dividend. the compared expectations per XX% we expect share yield first year the accretive our year up ago. I the given end a offset by $XX.XX, in-force quarter for The quarterly mentioned value flat call, was MI value market, and in share a on smaller the premium

quarter While higher potential results. to to higher for that earnings rates The income from been ago. interest XX a and a up XX up the in quarter, and the for come ended quarter portfolio value the investment from up be first last quarter book investment portfolio, million rates points the sequentially year through in positive share, first $XX the million the the continues X.X%, on have of our $XX a in interest per up yield million book basis headwind continue at was investment $X Net and points basis year.

$XX and Operating million, our approach book focus yield and increase the first During we current a the reinvestment to rates. We in were quarter, first expenses remain increase, the continue reinvestment rate a and quarter to but to the from book the in last between were expense slower similar our year. narrow million the disciplined to $XX yield yield at yield the rate efficiency. book quarter on management continues interest assuming in as expect rates environment, difference down in our book above

to continue of the expect range be $XXX in expenses million full year will February in $XXX operating provided the million. we We to

turn S&P mentioned is A- BBB-, stable upgraded Best financial Moody's The strength January, Lastly, as positive positive it over back In holding investment MGIC's to The in ratings that, was now for the MGIC's to the S&P and grade. and upgraded rating holding of fully March, stable. and let last rating credit for AX the changed MGIC's call, rating outlook September. With credit company is to last to we affirmed me AM from from and to from on outlook stable. the the outlook rating the Tim. company rating changed

Timothy Mattke

quarter. we in every knowing play an and We're We Thanks, in families Nathan. of comments. we the critical has last Few solid housing with impact we pride and the year that take and a started communities. role the day supporting matters what market, on proud do

delivering the While our it there housing resilient generally the remains stakeholders. are for We've customers is uncertainties an still unwavering to some commitment landscape, value market outlook to and in and shareholders, the positive. economic

has to continuously adapt long-term ability instrumented evolve and success. our in been Our

remain strategies. With to we confident that, operator, the As we market ahead, leadership execute ability business let's in our our as the in well take navigate our position as road and questions.

Operator

comes we're our George Instructions] and [Operator now of KBW. from take question, it going line And the Bose to from first

Bose George

Actually, or in just this you slow Is to first from to It looked sort caused bit a quarter. there I of that blip growth we slower quarter? slow the saw a wanted anything peers. a NIW about little it is seasonally down ask than what a

Timothy Mattke

December, reflective we to want environment And remain But of think, we sort I safe to of Bose, question. say think surprise a in share appreciate that's lost is we a I quarter us. Well, not little from NIW to of of lost good on to this bit say disciplined really a I probably the it's return, that share. January. mean, the little I safe the November, mean, I perspective, pricing QX it's bit our price.

lost haven't access We type thing. that customers, any to of

And concerned a us, the look long run we at aren't so and QX it dip perspective. from over for that overly about

Bose George

in return, Okay. Great. And earnings capital insurance flattish terms guess, I then Should return? we go capital year, you in your assume be could this all force to leverage essentially year of towards low. this noted

Timothy Mattke

the Nathan wants quarters at allowed the ultimately, repurchase debt, on add needed couple I both repurchase. cash debt of have if company, And a access as the think, when demonstrated couple repurchase and service the it's through increasing to talked viewed of at can -- that to he share company ultimately well share us last capital I fewer we've more return as shareholders of But we've activity. with to the think as MGIC the willingness dividend to or and holding Bose to. we've that last years we've holding

the a when and of there repurchase we've we of of of sort the sort to I it's quarters good pretty the representative couple So, value. last flexibility think think are willingness

Operator

the from Harter Now, the next Doug our Barclays. line And I'll of next Terry comes next question we're UBS. Dear of next to speakers, going proceed from take just with from the from the question comes Ma line question. question. And the

Terry Ma

a I'm you just if cure activity quarter. provide wondering the bit more the little can in color on

there seasonality. mentioned could you be of return think a I

cures a meaningful is just I guess, to, And Is there attributable in now? the was there then seasonality from less that that or increase bucket. maybe something the also driving in there? X payments else So to what's return purely speak or

Nathaniel Colson

plans and two. were I Terry, and think Because existed that for I it's March flat even we environment. factors kind that ended, there activity new a and out have credit the response the a timing in other bit really new of notices outpace mean the notices in months as that, seasonal any when these cure of government seasonality XXXX, subsequent really starting XXXX, April in of the those in I performance cures between for months 'XX, ratio pandemic Nathan. Yes, then and this and question. think really saw more. of kind delinquency of impact the had I seasonality February, happened. But timing and into called then The Thanks the of little lot and dwarfed by wasn't forbearance would a the relatively overall for retrospect may 'XX historically

seeing certainly the activity the loans X think we happened observe we're that cure same again. the I were also early feel And like out and we bucket disclosed intra-quarter. thing less about that or months we it of cures

rate than coming that Again, new That the lot I like we think within cures maybe both rate of to So a that and level. are this those to quarter. same notices resurgence from loans elevated this down quarter. a more attribute delinquency seasonality are the was

Terry Ma

the the more notices. can That's came color you vintage they guess, mentioned, helpful. from XXXX on I first what in quarter, release of Any provide mainly you origination kind it. of quarter from? like and And 'XX Got on, reserve

Nathaniel Colson

in years, and delinquencies those some come The 'XX we'd time our have book. to delinquencies prior that XXXX, -- we've received XX% our have had for of for the XX% delinquencies in from those

of some about been that, those XX% quarter, I delinquent. disclosed this also but statistics think interestingly, We loans about previously have

a a out cure out think notable, a in otherwise. of that, coming And our I other was about spectrum, we've the book the are it FICO coming the bucket. of that of that loans concentrated So, kind coming the at and think inventory seems spectrum, be It don't from lot there But in the I geographies. of from, delinquency just of appear DTI was cross-section than that across any LTV lot like of look activity major think details to and it's we where cohort. across spectrum, across as across doesn't it's

ultimately, of X.X% -- that, we very actual point, cure the it quarters, than half on cases our expectations less for this at many based think of loss on those for notice I initial feels And broad-based particularly So, us. had, that rate actual basis claim in estimates activity. the are just

at those XX%, XX% of notice even XX%, are quarters point. some this And developed

going for on losses some So, zeroing and be to lot expected. of we're lower in a those kind ultimate we just of than they're

Operator

line Now, of from question. Soham to next our we're going the And Bhonsle from comes BTIG. take next question the

Soham Bhonsle

or sort you if buyback. on provide macro -- around the you one was could book how first some the the curious build that I what particularly the of sort considered I'm decision color any guess, particular I to to end at the Tim, of assumptions on XXXX your Board and into like introduce $XXX million plan wondering all looks business the you of that just you here? arrived right? out maybe of the as figure,

Timothy Mattke

question. I things of Yes. a account. the appreciate I take number into

an to repurchase example, time when a through the over that's capacity ultimately believe we'll time execute of sort plan. period. be something wanted be period we'd authorized shouldn't different sort able bit scenarios. we're as able declared execute current range in $XXX just to but think our a able similar work little to that think we the on as one we've environment, a to we've had of of I more be work it program in ones the even pandemic previous should under over went range that of Obviously, And repurchase been a is principles were of to now, million about be we I the scenarios. And we've able of it that

looked scenarios think the generation over importantly, what at authorization. should when and we But feeling next be years, the to expectation from able we is. against about market confident that varying of it capital obviously full execute And we under few our so, more size a cap use that

Soham Bhonsle

how improvement sort maybe then Am Great. of -- Okay. out? that read of that. other claim like this sorry, correctly, X, of severity come look I'm should other not reading the like reading it And seems break like line, you and things I'm I this -- the Slide the at looking into something I from a Like claim what that? development it to but not wrong? if related did quarter we It so at or lot percentage was rate,

Nathaniel Colson

I severity I'll Nathan. that. claim think a QX, little It's in less a it I bit take just had, mean, more because Yes. I think, the bit was rate improvement. we little

I our another that severity think, two is quarter our the XXX%. But drove those little bit. think, So typically of XXs reserving the the XX%, where above ratio actual assumptions claims on in low was, versus I are between reflective a

we've that curing, as than But we'd claims a those what as lot have lower think, also loans at of also that are adjusted. is -- being severities only actual also are severities not So, I realized are expected. are

it's we forward the that, go and it's where first to last the X. look show XXX% not So, I in going probably on what think like quarter year, here of

I in continuation think we've the just I rate split we'll actual severity, assumptions. severities what a claim current of now environment, running between both the think we've if so than reserve current lower claim this much and because improvement rate right severity a both environment, in and are see

Soham Bhonsle

Got it. And just one Nathan, more.

as it developing line, I the quarter. income sort of about investment that mean, million is and think money looks through run you net yield? of come How line $X we sort the new that growing portfolio you've sustainable a every into rolls that rate like here should off year? been On about

Nathaniel Colson

We some bit. XX said time, yield a that points. a will And XX out increase, a at I we've basis pace. to book like approximately two what that increases already think this of things. mean, quarter maybe basis but had seen for it continue quarter little I'd points slower probably was call was we the Yes, we do

slower increasing a rate. but it's at So, still

slow will income, that net sequel growth the well. as So investment all in

that The factor is sheet invested. other of amount the balance of kind we've assets

of there has yield well As kind we of as net the no investment balance of increasing. closer the what years, -- we will in, of about -- growth as what Depending income. But is. also grown from managing we're limit to sheet capital couple strategy capital terms over the is last and what hold think return levels I changes thinking our invested really to that a we're the the that flat, on what are, in

than around higher somewhere rates continue the book basis points Just yield. be to reinvestment XXX current

So provide incremental increase that new money book as the for in and will an as that comes opportunity over, in, rolls yield.

Operator

going Now next question question. the comes from Bhatia Bank line we're to our of America. Mihir And take of from the

Nathaniel Richam-Odoi

a is embedded This also, the of Nate you settles you then stats actually relative you inventory? little expect you Nate delinquency a on but I that on. equity levels? pre-pandemic for delinquent kind to time, like over normalize talk share on Richam Can in there? the to steady know about bit state And Mihir. out think Any can where

Nathaniel Colson

question. and Nathan, missed the take equity, embedded It's part last I the I'll of the

recover something capital. scenarios. you're of around home situations. And that's isn't The X%. It's a now So, tail is I with average we've certainly and home tail the are and of really gotten the prices. ask a around that have embedded business this not the that, -- dealing the with CBSA I to of for prices situation in But may think you geared distribution that it's us, typically you've of we really based geared But mean, those these I equity. we're we've -- kind holding case, average mean, not level for the economic kind to statistics when I inventory question And you're really delinquent average. right lot on on. repeat the us dealing about

at look it's experienced haven't loans for that, those less comfort get So average for price that maybe in from of think I I think could that, just more likely a but because resolution us, home loans delinquent we the appreciation. they

Nathaniel Richam-Odoi

follow-up Got just like you think like how to delinquencies just it. like a things origination that upwards, as like has impact curious on to partners peak until like higher state, what go then pre-pandemic changed, my levels? like you're where like I if from to realized rates recent housing normalize relative interest follow-up you they're much That's Like my like go I normalize? And in can steady up was hearing ask helpful. there? they like now, and And going think but move that enter any we do season too, the

Nathaniel Colson

audio our else? at but something I'm about sorry, end, normalizing rates or delinquency you it's probably were asking the

Nathaniel Richam-Odoi

Yes.

housing out then delinquency So, And first steady-state And like you like on just origination of hearing changed we my enter up, conversations on the a curious of higher couple the normalizes like follow-up how is you're sorry, rates like part, higher, would back those as interest rate if like partners has last peak environment going think what over on be as season. that from kind just the like ticked months? that level?

Nathaniel Colson

it. Got

this stays obviously, range. for Tim the of quarter, bit Just on take that is been of origination that I move economic on down tied X% I of right and said that's rates call X% The we delinquency cover think typical out on mean, movement mortgages let unemployment. kind us delinquency an I'll the to but low indicative X% what experiencing trying a we've may rates, expectation the down the a kind for that think notices of little in the a continue. But -- to don't will rate. were We've But in type we really, the recently, are that very are -- we basis we're the delinquency is to think in us probably or question. higher, an -- environment general account new a in for now

macroeconomic the very to low react think rate worsens, So, delinquencies. will it if like delinquency if for beneficial is be rates unemployment as that now, But I unemployment condition well. then that right remains or will

Timothy Mattke

year. some and meaningfully a bit them not last higher what that, and little hearing say think the Tim, a question it's market, into to there safe your the corners spur originators just I might we're activity. just the from some year year think of be reductions answer for it's could this was year origination interest of not I And more to that than bit we challenge, I from volume on hope, of the a what coming rates guess over Obviously, course ton a little thought

it's this I still there's our standpoint, similar more like From bit for of and we an say think though, lot and at origination on that. a to people transacting on beginning comfortable coming I somewhat to this of people the get think as year lot standpoint, though you've refi as there's going little accustomed pessimism were that to a dilemma lock-in we're coming, is there. I do an talked interest we homes think more lot incentive there in rates just a feel around we point. where housing supply safe do from a that MI the this to supply a about far -- feel I'm we do There's effect think volume. that market, put position of their is not not of I at because the of that weren't see pretty we've market. a the that believer in interesting

overall a think tension a it's to where bringing I origination lot surprising of supply basis. it is on which said strong of far comments, good support pretty prices, creating create enough in for opening prices home volume. our market is, actually so to home an sort as we've that's as are, the our And standpoint from But as

Nathaniel Richam-Odoi

That's helpful.

audio. about the Sorry

Timothy Mattke

No Sure. worries.

Operator

the to Harter our comes of And going the next UBS. from question from Doug we're question. line take Now

Douglas Harter

how older about of could talk potential opportunity retire of you that returns a look of the use deals as to reinsurance the kind your capital and today? some Hoping on

Nathaniel Colson

the our lot That a a we've It's into Thanks reinsurance that something for of We've question. exercised market. the is lot those in agreements, reinsurance options. especially built of Nathan. traditional

some most think on evaluate, the little tranches market I to tender we kind we cancel X X recapture ways a kind something is So, have a something deals. to different. calls, related of There's that for recaptured deals. it depending offer on of we've ILN think bit no and capital is options as target through risk We've with The there. look be we about how what strategy our think kind reinsurance, our vintages, kind retained than I most the to position economic is the would of or without and think of on impacted? risk, we XXXX natural only buying is not kind really results older of like year PMIERs of And the recent modeled that of risk, that our where more profile done X But XXXX, or then focus reinsurance what results. volatility upcoming there's deals the is anything, continuously the wanted really of outside financial or up that excess some most

kind ourselves look concentrated this and reinsurance our point. of program years, when you all the and at of that So captured X at X last it's really -- we've are to from effectively risk holding today, in recaptured everything XXXX and prior

we've situated very happy the with managing deals to new you've deals maintaining just today. think how keep doing program keep as to today. reinsurance I they get So, keep older the that is Obviously, and position

comfortable think the like for continue and do, they evaluate risk. we sense So I'd expect in that that And feel to those make that us recapturing to things. past, we'll we've season

Operator

questions. no I'll Dear turn call the remarks. now management further to there the for speakers, back are over closing

Timothy Mattke

thank Sure. your to Housing Have May of Tuesday, MGIC. interest BTIG all your X. a look Thank I near great Conference the you you, in want rest on be Nadia. participating in I to everyone week. to talking future. of for in the We'll forward

Operator

call. your for concludes Thank today's conference gentlemen, participation. this and you Ladies

all disconnect. may You now

MGIC Investment (MTG) 2 May 242024 Q1 Earnings call transcript