MTG - Earnings call transcript Q2 2024 | MGIC Investment Corporation

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the MGIC Investment Corporation Second 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, Andrew. Good morning, and welcome, everyone. interest your for you in MGIC. Thank

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

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

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

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

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

Additional are information those call also. cause the actual discussed X-K on the materially today could to differ results in XX-Q filed from our and yesterday factors contained about that

I and call that, the this the call of the Tim. XX-Q. With time have or to current make subsequent on update are obligation we If those than of that forward-looking such forward-looking light other are issuance our fact developments. the time in to not statements an statements undertaking any we X-K No statements, any at the over one rely in the future turn of to should now or guidance pleasure

Timothy Mattke

that first everyone. and solid the morning, . half with Dianna, report that, and Thank I another am excellent good quarter pleased year. of an had you, we to

and mid-teen have returns while shareholders meaningful consistently for been generating capital long-term value our to our on creating stakeholders. returning We equity

serve our our flexibility business of the to are customers dream prudent to sooner. we achieve Our strength offerings and affordable strategies, Coupled through-the-cycle performance. with the risk results quality focus ongoing homeownership on solutions, model, management our demonstrate able of borrowers commitment and and help with

Now financial our of let's for quarter. dive into the the second highlights results

we of income generated return the revenue billion, in main the $XXX force, driver For quarter million the an net our of up the annualized Insurance equity. at quarter. ended quarter, and in on slightly $XXX XX% earned

relatively we what Our have persistency with we insurance $XX.X strong has insurance ended XX%, the quarter. to in credit up were first new at consistent the force write quarter over several continues remained expected. past billion Annual quarters, slightly in new characteristics. insurance the in We and down flat

risk a Our management us to focus insurance on prudent build strategies portfolio. balanced and maintain has enabled strong and

with performance credit very performance We continue for continues of the our be tailwind financial to our credit results. to pleased quality portfolio. a be overall This

is the limited, of and to be by market. the expected interest creating beginning last MI challenges year's supply we affordability the at continues for market to mortgage homes The year's demand. As rate similar hindered this resulting of year, in environment origination sale pent-up the being higher industry

continue to the be we home the reasons and optimistic homes the to of strong While the support MI Z are desire on to opportunities Gen homebuyers, about run. challenges and for Pent-up creates supply/demand the prices. dynamic populations first-time in continue current demand millennial long

the $XX dividend the repurchase at ratio The $XXX quarter's stock in we from of payout holding a represents company the liquidity net previously position Shifting stock quarterly and as quarter common the for dividend income. of This MGIC a of ended for million with company. $XXX million. of of XX% holding to $XXX our a paid X.X to announced the total quarter, in quarter activities. And capital million of this flexibility common of the million a our million and shares capital payment strength the supported

our In last stock and a authorized week, rate over increase April, the dividend Board increases annual for Board to share dividend $XXX addition, authorized to program XX% XX% compound an additional repurchase share comp X years of quarterly growth a in million that marking of per consecutive period. the $X.XX

strength financial to and are Maintaining management. capital the our flexibility of cornerstones approach

due While over the to prudent size X growth prioritize opportunities have our capital insurance been of force last years over market. we return, in grow the the constrained to

recent During quarters. have time, been to payout ratios that performance results and exceptional credit operating same leading higher in

we the As options future assess management, expected shareholder environment operating value. maximize part to long-term best current and capital order to of our and deploy capital in

position. is stable capital company remain risk performance remain holding expected our both We improving, capital our credit is as and at above excellent and continually targets and monitor the our will or elevated. ratios And as payout MGIC long position our and risk levels

step and financial strength back our provides a view, long-term to a maintaining Taking managing our position. on ability grow to perspective while capital

our dynamic financial approach prioritizing our always We operating to management, X capital last faced range the a striking wide to in environments of serve stakeholders years, well. while over flexibility

from or Over increased $XX X to have we last billion by the billion $XXX insurance XX% $XXX force in billion. years, our

of we through elimination period, cash reduced in repurchases. debt diluted billion our The and the that to billion purchased $X.X operating by million and convertible income, During same of and $X of has flows after we generated dividends approximately shares net by $X.X shares GAAP combination legacy shareholders XX equity XX%. returning billion billion $X.X increased share

financial during same commitment our growth further $X.X to our period billion the demonstrates excess robust PMIERs X-year maintaining The of from to $X.X strength. billion

the me to Nathan it results With over that, let into on details get to more for financial turn our quarter.

Nathaniel Colson

morning. good and Tim, Thanks,

continue another quarter detailed to a As reserve compared negative credit and ratio also experience, last reconciliation operating was to to earnings Tim second release. The last loss income share the year. Adjusted found net had diluted net we per year. $X.XX compared diluted income per quarter. to with resulted $X.XX quarter our share per of of again for of adjusted for A We income in performance earned $X.XX results mentioned, share led operating loss diluted can net income reflective $X.XX development to results. be excellent net GAAP financial in this we the which were strong favorable

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

As curates on those our favorable exceed expectations, notices delinquency loss to made continue ultimate have we our to adjustments expectations.

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

maintain our ultimate most to related assumptions delinquencies from to quarters. loss continue We recent new the initial

new cures inventory decreased delinquency second outpacing Our notices. slightly quarter by X%, with in the

second to premium seasonality and increase XXXX of large higher due the that We XXXX half of emergent continue books points level notices XX.X the to the what expect may was XXXX basis in quarter, years. the through quarter-over-quarter. in-force yield in new historically from flat The loss were delinquency in being

another persistency As year. premium expectations the in market, MI a of for to I mentioned yield in-force higher given call, smaller we remain on for year our the the last expect flat relatively

focused remain the approach expense quarter operational down in in and in management We quarter year. expenses million $XX quarter the efficiency. on our million were disciplined and last second Operating to last million from $XX $XX

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

year us and grow capital to balance to of sheet, Our ago value returning strong through to enabled dividends up repurchases. accretive XX% excess share million per with book after $XX.XX, shareholders our operating to a share results, $XXX together compared

potential interest positive book the and be income higher investment valuations of for been While for interest lower earnings rates the to fixed investments per share, the a for a higher resulting continue headwind have portfolio. value rates

quarter, The XX quarter, book was ago. in X.X% $X.X the up on second up at the quarter basis was the million from points sequentially in yield up and and million XX investment points up a end year $XX year. last $X second the from of quarter basis the investment income million portfolio Net the

which benefited was $XXX in compared in increase the and million the last last $XXX quarter quarter investment million year. income to The million in has $XXX revenue quarter second total

During to book similar increase, difference continue a assuming income portfolio we book the continues as our yield rate to rates. yield yield at to environment, book expect above and between rate narrow rates our but the increase in were fixed the the in quarter, yield book the and reinvestment second a interest slower reinvestment the

to our strength management capital structure to maintain $X billion includes objectives discussed, balance our that in achieve is dynamic approach financial positions varying and of MGIC's capital. capital intended to sheet us Tim As environments. macroeconomic

well-established remains program integral and management Our strategies. reinsurance to capital our risk

to of capital billion reducing the to agreements at costs of In quarter. and attractive assets our PMIERs the second reduced at addition $X.X the in required provide sources scenarios, end our and stress diversification of reinsurance at our volatility flexibility losses

of with year excess complements quota the the our the to reinsurance in the We reinsurance quarter we program This place to loss cover NIW. reinsurers the agreement most at further highly our NIW. the of had of of rated XXXX start agreement panel with bolstered in XXXX XX% share cover agreement an second

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

Timothy Mattke

Thanks, In closing, excellent and year. successful of half first had quarter we Nathan. an another the

We have been returns for our meaningful shareholders. consistently generating

resiliency remain existing credit in favorable of market. and sheet the our housing are balance by strong. employment to continue trends and the liquidity we I Our encouraged positive be trends the the insurance experiencing portfolio,

half execute as and position second in of our we as to leadership strategies. the navigate we our business year, market, As our ability confident the in the well remain

let's Andrew, that, With take questions.

Operator

BTIG. comes Soham from And with of [Operator our question first Instructions] the line Bhonsle

Soham Bhonsle

really to a sort $X funding of And looking in to there of over X you guys markets noted been mean, PMIER chart. way I'm for So assets and Nathan, the Slide required Is your good it helpful I time. reinsurance like about forward? going your billion credit deck, of which think you optimal sort a to profile you've is of of able at see XX% sort looks the

Nathaniel Colson

question. the Yes, Soham, thanks for

future what I concentrate think really which reinsurance we reinsurance, that to on our does the chart most really recent how NIW. approach try and show is we buying --

that. what from quarter do business. look the prior quota when this very at look of We we're covering have, that deals agreement risk we're like So and try we we concentrate announced excess you covering, with share covering if previously, not you XXXX our very the the much that that and deals at XXXX comfortable chart loss to feel of and

the think a much more in I concentrated level trying book, get on recent a standpoint the coverage reinsurance future overall, -- target NIW. don't So overall we reinsurance specific from don't to most on funding

Soham Bhonsle

too how here now. now. with a you're and remains the just through right just market, getting good just credit of everything seems zooming pretty downside us But It from scenarios maybe making not sure Tim, disciplined right comfortable performance on out the feels then, MI And stellar. planning things just the walk we're market little seems Okay. like that for really bit. state current and pricing,

Timothy Mattke

Yes.

always we appreciate I day. company, every we on I question. It's And have Tim. I think executing stay do market something, focused it's to mean, downside. about we we pricing. Soham, think the in an about being the the that and think, insurance

is much well Our for focus, quite over think it expectations on we X us -- frankly, critical that to and downside better of that's more is company being of run, because healthy served decades. on sort think part a long the the we that's the than

to So really credit. haven't we're past. look The a have something these we seen space. right in is been make good the thing we news something for do it good it's is we adjust of We be afraid moves pricing of. and sort standpoint, and can to tools conscious have it's very diligent But for. really any in with to The from that softening the quickly remain days, on in haven't we our we

Operator

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

Bose George

just start there high end the trends of we market far, of on market? reported kind so have guys share Can trends just insurance at or the Any in the with range. written just thoughts you the look the new like you're companies on

Timothy Mattke

Yes, want we still report. Bose, to I think

or we share as to where can thought. would going there. there. a any I similar there's a we're the bit size of have little expect Share that's one the to would think is from in what don't quarter volatility we Again, market move here I coming pretty perspective, be at probably look

just say focused we bit gained felt right deploying. like we are on about So I we it's as for the about good safe I a feel the we're good think mostly return capital quarter, but it's last well. this to little quarter getting

to really here, base to to wide get business through as business gives we able and an when at win returns. the that capital move the have to we opportunity year good we think us customer be the able want . be I deploy

time we another So look that quarter. and to amount and again, yes, to I period sort picked are think of business fair say little do well. we barometer over have think, as able up longer with it's of is when of customers I a bit But a we activated this the

Bose George

Okay. terms price of terms do some you share terms versus in Makes I sense. let's say, it balance share price role -- play how continues in mix? does the up share that, return, price in the do And sort of to is point then actually capital mean a buybacks and that of at dividends? the of the

Nathaniel Colson

Nathan. as that company capital an the holding above things we consideration But this have price company use is The that us is yes. is at Bose, share Certainly, share has been, we #X for. consideration holding Yes. the answer capital think recently, important other the we do about to at for excess the repurchases.

at month more here, But I X.Xx were very returned So the share long-term at we little increase to repurchases. less of book. in value increase levels even capital repurchases. think the through July still share have looked But the price, repurchases ratios share accretion think we in attractive a than we're via with that our tangible and have payout for

price still for think well. quite our in and obviously, And that's news. trading at creation levels the in we the company. has sector as think we're come a great very But So bit I attractive long-term value up

Operator

from And line with Terry Barclays. question comes the our next Ma of

Terry Ma

color quarter? makeup any per of implied to or can and Is was on you notice there quarter notices the XXXX. this kind of provide compared characteristic provision elevated new The last

can you color any there? So provide

Nathaniel Colson

descriptive the in supplement. some portfolio new notices, do Terry, have it's we on information mean I Nathan.

I think used at have notice as for the the was same we recent X.X%. rate claim we that the quarters new

start has the levels, average the I do to from and and is on maybe shift think loan I higher recent less we basis. years balances, the X those the per expected be biggest on a notices higher notice more to a provision say, driver really notices. per increasing the, And of most exposure from as amounts years, towards coverage or average on with then loan new XXXX think basis prior risk to that X higher have

that's I assumption kind not the the of the a ratio severity an think is we reserve. the increase -- really risk So just of policy, in size driving the that up to have

target continue We for new around to XXX% notices.

delinquent what terms for we're of In risk those reserving items. compared the to on

Operator

of with next UBS. Doug comes from question line Our the Harter

Douglas Harter

and of the XX yield Can you talk kind that in-force your of of, what how therefore, kind about pricing is and seeing you're the compares expectation the to kind over coming months?

Timothy Mattke

Nathan too I talk think, anything Doug, add. has don't I to we can pricing. on start specific and Again,

you than by -- of the think to I quarters, dictated the portfolio if new the last about our that's it's think been I it's the here, at sort stable. from course if down of going few that you look comes think business. any be And over portfolio the really the yield really in-force more year on over anything

be said that's that of remainder year, So the year, think I stable that I we which confident expect coming relatively saying felt pretty we into to case. the going think we was feel the in we can the over

capital think we're I good on a from comfortable perspective, we that feel Again, good able we really have able feel about scenarios, the the current to again, deploying with we're we to really market the but always for we're market. So this It's overall get to deploying. return we're price downside in careful be get capital an environment.

Operator

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

Mihir Bhatia

you to defaults, weaken to curious strong maybe in little is than rate wanted trend been the I And notices backdrop. that think I'm backdrop in continue thoughts the quarters? But any of obviously, little elevated next on will need to where it? the a I Does Look, last few pretty to what over was the like default housing credit cure up? trying push total the would as about for activity with be quarters, of understand activity it, cure and notices? a change start new to Or bit. new bit could really about the here uptick kind stronger rate your couple a it's

Nathaniel Colson

And that, I some think of what return on least. last years a it's observed we've over level I of I'll the is Mihir, start think X at Nathan. seasonalities.

second So but good from pure the of quarters number historically seasonally new credit notices also and quarters, are first a activity. both

last some -- do expect second we do year. expect we softening So and we that saw year, in the this the of of half

that while not terms cures outpacing kind seasonally say we'll happen and the So year. things first notices, declines drive But cure we really expect guess, I driven activity. inventory we adjusted, delinquency that in had the don't the in half kind of of could quarter second by and second in broader the to trends, new of of

that backdrop that we do with has operate think the to I in. general macroeconomic

unemployment has to Wage increase. So low. has Home been prices continued have strong. remained growth

how that very rates things all also working if all to over But of performance could think has come in they're claims. out, more it's level ultimately, for we've many not And how would of quickly macroeconomics, because home last those had the for but several notices of So under key credit tailwinds only in are been or kind prices favorable that new cure the whether to us. experience a results one that quite factors, been And direction carrying? or of the favorable pressure, all have many -- impact those I how of interest those the performance. credit years started

Mihir Bhatia

capital returns. switching Maybe to Okay.

XX% the that XX%-ish extent operating right for you final it, think enough you this the to Maybe them to about talked little is environment on gives you it? a you're fund bit. store staying growth think is the That to that? that seeing in enough, way a about elevated point this ratio, I payout put to

Nathaniel Colson

issue payout a quarter. any Mihir, in one I wouldn't target specific

operating for we there, with and the variety comments, mentioned opening the to of that operating we've I we company target books in operating . From and risk do It has the this enough that the on company have at our able dividends, support think have has doesn't us level it it But company, write to a the return a up what's starts for to right the seen. Tim last to ratio really the like company. from round for been to making payout us, that dividends years environments. be led in us. the to larger that capital enabled we've at of us the capital several at sure capital that holding have starts target risk really pay want we which with start operating above levels over the up

ifs and right? the So lot experienced, ratios. that not conditions performance growth, there's is the those of of are think But to the here, a excellent similar environment I what credit remains we've higher lead lot if which payout to a

Mihir Bhatia

for last Got question. up to maybe second it. pretty -- in is you helpful. on second And up unusual wanted episodic anything guys would anything Really, business, quarter? drove far little than just any Bose's specific pick that about point more question there some you a quarter No, so that I peers little my bit you or bit who've about just Was just being being that's did share. follow then question uptick the like the a reported to the straightforward. of bulk the my

Timothy Mattke

bulk business sort day. the that. of It's deals all for appreciate No winning us. every Mihir, I no, type

even more quarter broad this base, I be representative think not think of think you a I customer sort where about normally going end bit probably it's would where our is we our higher. to of little probably share when is up

being closer inflated business sort a anything opposed every reflection that's -- deals -- but maybe should just . winning bit. we no we in quarter, like back where but as to probably where QX, It's to this a or more in So of day. it's be of the

Operator

next Dowling. comes Dunn from Our question with of the line Geoffrey

Geoffrey Dunn

books? lower can of the 'XX with books. getting notices HPA relative those growing notices the I know 'XX, to you the to seasoning bigger XXXX coming new from respect provide the but it's how you pattern, of Any still early are performing in quality amount commentary with are a

Nathaniel Colson

carrying of Nathan. do from how look the a we've but are And it's standpoint, we we that on I out. activity take at Geoff, I and a think one. at look mean notice level performance kind also I'll looking monthly both things seen this transition that vintage basis. cure to

months, in So patterns changes we've months. a seen. X X that month We're curates, not lot of seeing X months, the X

So should some it be some those does there like differential of feel in vintages. performance

back elevated we do ultimate think scheme And mean somewhat very, very I year, half 'XX slight. because cure the driver the But think things, I activity see kind we or a this the to then is especially so not losses XX% XXXX, been which, compared of vintages. of of good. the grand of big has

looking vintages that things ratio. the post-delinquency to we're try seeing more a cure a a much out relative for incurred really they're we stress, fully actual delinquency below vintage developed on to ultimately been point then more has some post-COVID which activity And And of vintages recent level. to loss and ground recent was running into loss lot favorable sub that and back so XXXX, that XXXX, ratios that are strong patterns

lot specifically cure because eye right level. terms we're an look not definitely when we I think that don't on performance So at now differential it something post-delinquency we have keep a in an on, a But just you of seeing cohort eye on. and for at we'll keep it's I much that

Geoffrey Dunn

kind Magic far of as portfolio. the on the I equity, and for embedded As embedded companies provided as maybe average has think well equity some overall

too the it was speculate think Is in Or HPM X%, number equity more embedded general? to the and book average, I so X% is that latest maybe on 'XX that on there's, fair 'XX the book? over X%.

Nathaniel Colson

experienced experience or up if way market don't And delinquent that's homes that average do some that X%. for that disclosed lower is averages even better of those the have one the don't over than it. is reasons areas. even it look that also also appreciation at certainly a geographic we think Again, large than are I to fair overall loans and there's average depreciation, appreciation there's but

you We're X% on to average. kind X% ensuring in our of the focused business And not worst of mortgage credit tail performance, most the of really risk. X% to

So outcomes. at we on the focused book that XXXX But using regional you we either numbers But national wanted kind book. home I same if see the those distribution home full full or we're kind our prices of think look of prices. more when for run to localized or of

think I there would on the same the of that and same you that's it's distribution the the think because -- focused what that But those worst you're not see we're I more us, really of kind for kind describing. dynamic really kind to of full average distribution cover XX% loan. of

Operator

Thank management turn to closing are back will There the call further questions. I remarks. over you. now for no

Timothy Mattke

you, I to for in want interest Andrew. everyone thank your Thank MGIC.

Financial Have the Housing a your the week be great Services in and Summit Conference will participating and in We rest Thanks, September. of everyone. Zelman Barclays summer.

Operator

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

MGIC Investment (MTG) 1 Aug 242024 Q2 Earnings call transcript