MTG - Earnings call transcript Q3 2024 | MGIC Investment Corporation

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Operator

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

Dianna Higgins

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

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

contains additional release, quarter third quarterly will that information and about which issued at mtg.mgic.com refer financial our we the available our on Our website was call to under yesterday MGIC's press results is Newsroom, today. during includes results

reconciliation a comparable includes It financial most non-GAAP also to their of GAAP measures measures.

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

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

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

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

Timothy Mattke

morning, Thank everyone. Dianna, you, good and

model with We response which quarter in of our to business our continue to are results, market changing demonstrate the strength conditions. very financial pleased third

and best-in-class customers improving strategies, offerings stakeholders. service with our Our risk drive value in serving focus on our to our disciplined to market with and for together leadership management approach capital quality management, the continue

XX%, we Let's a annualized income persistency get Insurance with of $XXX quarter-over-quarter, started billion few annual return quarter, ending at and in of force portfolio. high, an quarter highlights. the the last million on quarter. slightly focused in equity with up XX.X%. and the In the are earned net the the compared of ended $XXX financial generated a $XX.X up quarter. from flat new at we billion quarter Underwriting strong wrote to quarter, remain standards We on balanced XX% prior insurance and maintaining insurance

quality performance and We continue performance the to credit and have overall portfolio our of financial been our benefited be from we results pleased the with credit have experiencing. favorable

of capital stock payment of a net to XX% our payout activities. quarterly quarter's strength the in the for our the of $XXX X.X million. stock of these dividend capital million ratio quarter income. The and million and $XX of shares flexibility supported common of the Turning position common Combined, repurchase a represent

of variety addition, our a of in million and stock we additional When repurchased determining shares total common October, a for external activity, and internal consider X.X of $XX repurchase In an we million. years. and factors levels valuation continued higher was we I repurchase price. credit experienced metrics, strong than discussed activity have and also market results share The in just including and financial reflective performance recent of evaluate

We shareholders. primary expect capital our share repurchases to will returning of means remain

the quarterly a holding reflected on paid common levels And company. November the stock target. last MGIC The company to dividend capital announced, MGIC $XXX dividend the a above XX. week, payable MGIC $X.XX that our Board holding to million at from to dividend continue previously As be authorized share per

environments our and for assets. financial approach the strategy. of and ] enables to achieve ourselves be flexibility serves structure and available to both stakeholders in strength dynamic Our position This billion it us $X varying of our PMIERs to approach to capital well. currenstones MGIC's management includes macroeconomic capital [ continues maintaining our objectives

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

In and attractive XX% addition at $X.X and risk-based required taxpayers GSEs volatility credit requirements stress strong to the to while PMIERs capital down the to of provide the or risk. reducing diversification flexibility billion end agreements undue of of PMIERs at quarter. costs a capital protecting sources operational reduced our our reinsurance losses third mortgage the foundation borrowers low serve and assets scenarios, and in our by payment from provide

fully issued September these of a In on assets, relating a updates the risk-based to We strategy. available in MGIC's our have the date XX-month period to assets which available phase for updates GSEs XXXX. be of over will investment XX, material requirements a August, calculation will expect effective with impact the implemented don't

broadly The constrained Turning market challenges remains mortgage a supply by and of conditions. rates. limited for more housing the homes compounded high to market affordability by sale

However, the third signs lower interest increase applications in to year-over-year in years. first be there may rates and mortgage in of led quarter recent X The rate generally easing. the Fed mortgage cut

housing addition, of In appreciation saw homeownership populations optimistic home to of about continue for and suggesting that Gen demographics XXXX the highs are sale from be millennial the and Pent-up to in of our will homes we and continues the resiliency the demand rate inventory add for demand Z the price to business. slow is reasons to increasing.

credit September, revised enterprise and stable. ratings to in the upgraded to Best as operating as balance financial A.M. Best to A.M. assesses to robust ratings A.M. risk the sheet credit MGC's framework. MGIC's A- outlook that the strength management performance and ratings reflect MGIC's Lastly, from dated report which I'm strongest A strength the happy and well Best

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

Nathaniel Colson

and good morning. Tim, Thanks,

financial mentioned, had another we quarter excellent with results. Tim As

credit again compared a strong performance of The this income net found net loss last to quarter. earnings be per detailed to $X.XX are net $X.XX to We continue income negative of ratio income adjusted we net adjusted experience operating year. and income diluted our per A share reconciliation operating GAAP diluted to in can release. share led

reestimation development came primarily prior on and ultimate those our our resulted from million quarter. favorable adjustments we Curates development of to delinquency delinquencies notices to notices favorable losses XXXX quarter reserve in made $XX have exceed ultimate this and expectations XXXX. loss Our received The delinquency therefore, loss on in in the we of continue favorable expectations.

seen In the XXXX. the of the below to quarter, discussed rate the increased XX the X.XX% last consistent and trends is quarter third delinquency third X.XX% our quarter with account-based we end basis delinquency which and points rate of at pre-pandemic seasonal

We for increase seasonality and basis impact the basis in fourth considering part loans, points in-force quarter. any last in-force quarter yield expect rate the before estimating current to in was The XX.X XX.X premium The of a point the in our quarter. increase due updating compared modestly in-force yield our to premium that our Hurricane in the in Helene to quarter points in resulted quarter method the mortgage delinquency amount Milton. for increase will and basis in the X.X lower which was due force insurance from

the continue up quarter and as from expect at from the million Net declined year. The the quarter, quarter-over-quarter last $X premium of will offsetting on was third remain flat a X.X% year. quarter, $XX income basis in-force reinvestment. cash investment We end the on and investment up million year yield the yield improvements points the book million a the relatively to up marginal was yield ago third cash from portfolio in sequentially XX increase for and equivalents the $X

rates During third in portfolio the income the yield. reinvestment the book to fixed continued quarter, our be above

rate slower at to book with to the yield a through but cuts of expect continue rate. of end increase, facing more next pressure downward expectation the We rates are Re-investment year. the

million third quarter management. was last were on down the The $XXX the quarter and prices quarter the in curve the last unrealized to expense Fed's XX to declines loss from rise, has year. addition, continued to efficiency the fixed income quarter $XX last on flat million, million in which income increase million the million investment investment quarter point in improving rate million September and cut total significant remain last by with In Operating $XXX resulting and expenses year. in and yields basis We position caused our $XX operational in third quarter focused across benefit revenue, $XXX in portfolio, treasury the in in the quarter. compared $XXX

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

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

component either flexibility losses quota As of and forward well-established to share macroeconomic agreements a Tim or discussed, reduce of and ILN which in the capital adverse sources use and volatility reinsurance loss agreements includes of capital. agreements strategy. the market is diversification management provide program, key environments the our commitment and These excess of traditional our of our executed

our Our overall as coverage our scenarios. reinsurers NIW of with a we reinsurance highly quota value the the written the in in policies and than more our agreement longer cover certainty to recent enough to decade. with XXXX share a XXXX. Quarter vintages coverage reinsurance and tail reinsurance bolstered program share most most a XX% risk on is vintages and of consistent future on if and will strategy our book recapture protection the multiyear that commitment no we of October, of seasoned year been foundation for reinsurance program buyers have forward rated In risk further and prioritize share quota is offers stress panel

XX, our of have and and these same share to approach managing December consistent elected the the in overall years treaties recent taken reinsurance NIW XXXX also quota our both cancel we actions XXXX, risk followed positions. to capital covering We effective are our strategy with

One a assets level and further million the expect fluctuate At excess cancellation share the with assets PMIER's Tim. payments the PMIERs end, comment will MGIC level our available [indiscernible] required exceeded to of company the we at and dividend it back quarter by in year-end. transactions quota MGIC's in dividend the to XXXX $X.X of holding result from over will $XXX and timing billion. decrease reinsurance before turning

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

Timothy Mattke

Nathan. business third Thanks, we by and deliver strategies quarter closing, our as on successfully demonstrated In results. our execute to return continue equity and meaningful

and persist, fundamentals solid some standards is underwriting outlook positive. generally economic the housing remain near-term While uncertainties in

market that, the solutions leadership best-in-class are questions. and in Gerald, service and creating position remain confident our stakeholders. and our let's delivering customers value for and in to to long-term committed our take We With

Operator

Instructions]. [Operator

Barclays. question from from Ma first Our comes Terry

Terry Ma

kind out Thank the kind of in the put look out quarter vintage slide deck, your last quarter? than the curves -- out put different this you in to you you. put you static Maybe curves at look guys just ones the change a XX off pool Slide I start housekeeping how report you If of delinquency there curves. to a question with. Was

Nathaniel Colson

Nathan. Terry, data how it's the We as update curves point are. frequently did just

So annual previously, really on on data points at were it each each an we doing as basis, and reporting the the curve quarter. we're like full year, a of now

the amounts to points a So the full but little year there. bit same, there's curves different look might more are data the

Terry Ma

it. Got

performance seeing XXXX any vintages. you're Okay. maybe color on And XXXX then just of the and

already default, 'XX it looks of can expectations. coming rates 'XX. cure are you worse performing that than about curves the You just like are better the 'XX your into Maybe mentioned talk and kind kind of than in entry

So to pre-pandemic start kind of the we levels? default more, and we forward those of kind as rate exceeding kind the total should of season look of kind expect

Nathaniel Colson

from mean, of the year typically certainly then near mean oftentimes remarks, in our excluding saw And mean, said in the first certainly time, rate basis the the Terry, of decreases we rather that's increased I the delinquency in term. year. year half hurricanes, that decreased the of the half -- possible. the in we points that's again. I delinquency -- increases I then seen in happen and rate the Nathan and has XX half last back or sorry, don't in -- rate, to Seasonally, half business year. I it's the in sorry, impact the in think I potentially think first like we've prepared any over likely the right. second that's the in in the first And quarter or increased of XX the I'm that year

in still the basis in year. was what XXXX with you think decrease can this of same last in curves. like increase a quarter or XX I as line third We half XX in it are of expect. around books it, than basis But look very versus, the the marginally year. that first QX points very, think other track cumulative And I by 'XX. other now. is delinquency or what in at points it saw cohorts And the worse those that on right looks at from It's really kind new different performing cure either vintage, looking we much do rates don't the see is we vintage delinquency 'XX is how the thing if the time. difference we are various see good perspective these curing, And levels. points at we

So it's of continue we'll to that there will. And notes while something is certainly monitor. we something to if report,

the led now, again well, this quarter. us books both are strong right all significant has they perspective. loans the delinquent, rates quite development cumulative of be think that think new And cure to kind curing, I from vintages a how once for performing which I think favorable delinquency are continue are to quite

Operator

floor The next is comes Bose the of yours. KBW. from from Our question line George

Bose George

far. couple of in terms other positioning that this just really you're of quarter? companies so noise how grew insurance or the reported new the Your far have anything than meaningfully different Is more written

Timothy Mattke

get think of the that of capital with Bose, market base, in quarter-over-quarter I it's to Ultimately, market think can more we the broad more deploy. focused on end sort broad overall. going but the the say Last what share some share fair long share higher to we which market being some the industry were, think term also think But that we probably think especially, say, for us we're world, probably is returns and probably pricing grew we quarter, little I we're our I grew overall Yes, with versus to market share around say sort on market neutral market probably we the line we're fair line with that more sort customer in think of quarter we quarter. more pricing on quarter. alluded price that this bit, I this grew risk-based risk up year. in first ] the probably we the it's a this we base [ to with

Bose George

delinquencies Okay. credit. going to on And stuff? the back to of was loan-to-value some compared vintage 'XX then mark-to-market the What the older 'XX,

Nathaniel Colson

Yes, Bose, this Nathan. is

similar just mark-to-market more experiencing We appreciation. that various average the we as see talked about especially haven't home delinquent that about what situations on see numbers is reported. our while we're broadly cohorts, because view on price aren't much are to most loans concerned The situations you'll the

basis, price kind XXXX So then a much experienced for certainly, appreciation, vintages, prior a bit of a are home on have and of and just being maybe as amount most and tremendous partly the less such little recent to those price vintages the those. a on vintage more modest, home 'XX, not pro but appreciation forma importantly, 'XX for 'XX due

claim where price low, home We is quite we rising in even environments But see see still average the losses. still events. mark-to-market

a to feel delinquent maybe So less overall I try from matters how think stress we think it position, on a I loans. and bit little capital. emphasize testing book But it about

Operator

is from Bank Tahita Neha [ from of comes yours. ] America. question next Our The floor

Unknown Analyst

share the this Maybe with looks premium quarter. stabilized here. the premium in rates like market your like It rate gain start I'll and just

direct the right actions function premium comment up. Can competitive you turnover. of What Also seeing just Was the to on you are think on that? and the just ticked what pricing maybe just I a actually you take more now? environment. drove comment opportunity the pricing took, rate portfolio

Timothy Mattke

wants Nathan start to here, add Yes, and if I can anything.

portfolio, falling the right, you you're on. I rate think also look it's when what It's average bringing on at premium off. just the not what's

quarter. little it's bit I we're so happy a moved And while it up that think this

stable, dynamic as think, again, standpoint, over that From remarks, it we would market. it's competitive which the Nathan thought course competitive be year. said prepared relatively we a of a the view the I in as

is average good stable. relatively it I rate think that is the premium staying

of up And with have down depending alluded think That's make goes is Bose, goal the of the last going priced little to more a bit output. is I But risk market right? we year, as when regular factors. outside different of goes probably I reality of I sort and it a get but sort bit adjustments early in we're sort an different probably par to something a spots, share. of my response, for and on were in think itself, risk-based, off. on We we pricing more basis that's a this we're by upon little the

it's between so business winning sort and down regards. to in tough the some mean up And pricing up, difference that not say or or adjustments making if are we're is can sometimes specifically down, because of that sometimes

And for that make difference. other customers, as much doesn't a of

We're very able the returns been business, something on been that's I again, time we've that getting to really been sort and a of with true comfortable deploy. for it's long we've been solid that capital So think now.

Unknown Analyst

turning a can you lower coming rate maybe just happened? us? you LTV Did particularly portfolio? change down. expectations tick little talk that Just saw your rates your Okay. see persistency, And any you intra-quarter, on any blip we comments talk Maybe to about on note had you if persistency. just stats maybe a curious around the your can of with on about additional Any the persistency -- bit give persistency, when

Nathaniel Colson

Mihir it's Nathan. [ Yes, ],

close has persistency in for we're think peaked percentage to of XX%. point. declines -- a did seeing cycle tenth are has we the But that more think us I this probably

nature of If rates rates of the the persistency. have XX still pressure in order is we below. calling through will points significant -- or And that the not X% like So the is do I tens of portion do percentage note and to days we book lot book on saw of certainly a the that points, in has or a level of now we maybe XXs kind of 'XX. mean I percentage certainly saw or down couple that that a into there, decline low the out But XXXX now. for you're XX think of like with

the it's would rates or XX from really, or to XX XX down money or here. months. be that only the were business And points kind say, we've written even basis over to XX that the close in XXX if it last, of

would So information very and by XXXX, XXXX I I our don't rate that, that's vintages books something largest our supplemental be that provide know like rates. that have any at can but and we things additional no think, But written vintage certainly, or in on. was of we materials to low note continue XXXX, add

expect to even come some high significantly those pretty were down have current time if we persistency to rates for So from levels.

Unknown Analyst

then related the last just year. deal guess can it. you And looks It only on anything Got like there's just comment in some below, question, expense just termination, to the reinsurance my just update expense the but additional Any outlook mentioned expense I for you're outlook. there? coming the you

Nathaniel Colson

it's Yes. here, again. Nathan

just expense be said that of expected kind now we the gave ceded I clarify, will January through to in $XXX premium initially for reinsurance, the million. the the line, QX. line of throughout year to remarks not expenses in and consistently the we think that prepared range on fee the termination at the have run given We in to still $XXX million

feel XXXX than expenses beyond. they be guidance our we'll lower be spot in XXXX to expectations XXXX. that update good at call, in going to taken expenses and in XXXX were into So have We'll I actions expect the for the think we've directionally QX good but about a that

Operator

of comes The Dunn from line question and Geoffrey yours. Dowling floor next is from Our the Partners.

Geoffrey Dunn

threshold the profit for new the on QSR? commission comment you Can

Nathaniel Colson

Geoff, -- it's is is other years the and one Yes, XX%. the book of XX%,

-- [indiscernible] ahead. I'm sorry, go So

Geoffrey Dunn

of the and guys later here? XX% what going was to come like change year Why added of the you gate. at a going typically process XX% out then past, was XX% process I are or in the something that. the In say out

Nathaniel Colson

really market. a Yes. reaction It's to the

always of has the Where is Our is they is kind right what the approach telling reinsurance been where us market us. the want, for execution capacity?

always term has preference Our longer do forward been commitments. to

XXXX year X one we X deal the time, quarter did go in that the covered over first than Our out more share got almost capacity years, to narrower.

I in we would a a the reinsurance the on quite doing of space X-year right base our demand from to in perspective. say some basis, the kind is and now market capacity shifted on attractive So X-year some

that what of hence, XX% the that's, done we've from of a at So management capital for to we happy having we value. that if good reinsurance is is capacity think attractive XX% felt that other some share pricing, multiyear the I for found the of we commitment that NIW us. to a importantly, with space have quota But upsizing recently market think execution what very, here the got like for very then X to capital level transact, doesn't testament risk but right for it's we has something market the and now But performance good years time. business cost the have ways and most always enough very, level little kind next space And getting in in broader. the been very now. And overlay the I bit also this in our just quite

it And isn't to as much as think, as the as demand couple market ago, years mortgage was much I for not was market risk growing credit is, a with as which here, primary the helping growing well. it's of reinsurance it similar

And attractive telling goals us really forward our is place capacity at market a our I there's really now. this is accomplish So like pricing the the that said, right us basis. to preference, on multiyear. multiyear for

Operator

from Scott comes question Markets. Heleniak last from RBC Our Capital

Scott Heleniak

that about Are any like of this high seeing know And hurricanes Just delinquencies on would you past yet. rates quarter might maybe in first cure fourth wonder thinking have year? that we -- storms? have impact you the what still, Anything any the the you kind early think could at on you point? but it's can in you anticipate could if you're impacts I touch you share on next seeing quarter, very

Timothy Mattke

sort I of I'll to is and us, it early, got appreciate it's through. It before Tim, we'd normally, the again, it's for come off. see question, too Yes, X Scott. delinquent be start months

we've the yet. for historically, fourth these higher anything significantly alluded happened though. horrible as in quarter higher to, you activity really they've We had delinquency, like expect us, hurricanes would But some our rates I rates. had than cure haven't events average So seen cure

of we will delinquencies of standpoint do so how for coming we something of hurricanes related influx a in higher those release at have propensity to we'll from get to that sort to we -- something that and has a life event, but event feet reserving it's it's it's hopefully if nature in And fourth federal come the reserve over sort has the based that have do into just look sort a it's get -- cure it a believe temporary quarter, but are That for one of of time rate of that on seen upon be funds that high to average cure, loss, propensity more permanent a things like delinquency back disasters our that maybe sort like be with not related that hurricanes. of we've a sort ultimately is financial their more job they that. the for life versus at could still

Scott Heleniak

-- they the helpful. continue And Just debt the rates That That's makes to just can get interest probably expiring money what's you rate question the sense. as what yield exposure then that is other the And sensitivity to to trying any floating down. yield? go versus new -- Yes. was on point out? your

Nathaniel Colson

rate, against is there maybe low mid-X% loan little terms the to bit. new I a money to think range of Scott, on in of close Xs, to yield X% floating book recently, portfolio. kind And then the exposure rates

rate years. portfolio things. duration kind floating some a our sized mid-single-digit is But generally, on around that's of other have We and a X portfolio CLO

I cash to there. So biggest rates would having equivalents we've X-plus percent cash in just our rates exposure the shorter-term benefited portfolio think and be somewhat where from

terms will the to of a modest. of rates, relatively Fed So headwind. be it's investment longer kind if cut true in portfolio, the But that exposure in continues

Operator

gentlemen, remarks. session. this would and management to Ladies turn concludes I back closing the to for like it question-and-answer now

Timothy Mattke

a Thank your everyone already. I so done in thank and get haven't hope of want your finds vote you rest interest Have for week. election MGIC Gerald. everyone I out day. you, to time if great to today's

Operator

in Thank conclude you This your for does participation the today's conference. program.

You disconnect. now may

MGIC Investment (MTG) 5 Nov 242024 Q3 Earnings call transcript