RDN - Earnings call transcript Q1 2018

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to Radian's First Quarter 2018 Earnings conference call. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] And as a reminder, the call is being recorded. to President conference of like Riley, to now Vice Senior Investor would turn over the Emily I Relations.

Emily Riley

Thank First you Quarter Radian's XXXX conference and call. welcome to

share, Exhibits Section hear results Officer issued Our Radian's measures Vice tangible Risk This diluted the Investor of equity. which Also their release Section the found today's hand Thornberry, adjusted at GAAP will for Chief reconciliation is Radian's per includes Rick F Services. which Derek will Website from press complete the Senior adjusted adjusted financial Frank is Executive of morning and income including our Officer. you a The release, to posted to Financial during quarter this release be and the earlier Insurance and www.radian.biz. was net of Hall, on and morning measure our on certain services and income, call, quarter, contains of on net G of Mortgage be measures, A for press Website. book call per new Investors Brummer, these share, and discussed portion may operating press pre-tax operating adjusted value return EBITDA this operating description Chief Q&A and the President in non-GAAP Executive

during results on comments may to Before include These subject to based uncertainties, materially. we to which like begin that are this differ estimates, expectations, current cause call will made projections, would and you that remind statements. statements and risks are actual I forward-looking assumptions

our our included and the reports our regarding these cautionary of XXXX Form the on are risk with Website. risks, factors the discussion in statements For and forward-looking filed These available in statements included release review also earnings SEC. XX-K subsequent a please

like would the turn I Rick. over to call to Now,

Richard Thornberry

Radian. each to for and today and interest you your in like Emily I'd morning. of for Thank thank you good us joining

results financial with achieved and this net XX%. As XX% ROE we adjusted we for an a quarter the of reported excellent morning, first ROE operating

the mortgage customer XX% our an These grow business our is to of high success and financial the quality of portfolio how future and top-of-mind strength $XXX which with to insurance with relationships, related beyond. we portfolio the provide our XXXX outstanding as over for I'd is you pleased well that update insurance increase strategic our performance making This and of like the the are continued reflect remarks, shift value which our of the will I it an know I you to financial We Frank the many our positions well landscape billion of us After results my flexibility, industry for of cover results. strength team; and strategy, turn the I'm primary driver earnings. are of we positioned well say to future. year-over-year our as for morning to to the

business understand and over and I've to the program price by requirements Radian been of given have Imagin our value strength fundamental interest PMIER's GSE's As separately. that know future of these you changes in from the I've and the occurring strategic with in will insurance support its there I've context like what year, are implications gotten mortgage important of top-of-mind; concerns better come heard to past the of of you financial and the attempt competition. under I and your enterprise concerns as well the extra some been to These From this potential to business our view particularly balanced investors, market. a provide three in the pilot address X.X, by to capital encroachment as fueled each time industry. MI morning competitive like take and your regarding put and concerns I'd news concerns recent these have many of

which discuss First, strong, industry. framework let a consistent pricing across X.X. our capital the transparent granular and established the industry risk-based for PMIER's years as capital under for a requirements future three me serves Almost ago foundation PMIER's more

capital stronger required increased to the counterparties understand PMIER, under of MI's result liquidity span are are the stress all significantly scenario. requirements as CMI's maintain claim and a significant As resources, adequate

been we We changes we complied were have maintain to on an the effective well inform to successfully and to We've planning. excess be know fully using the are actively our X access anticipating and over the decisions related date our positioned this comply the expected changes expect minimal the available Based of operated under [indiscernible] working PMIER's under of current what able changes late to and X.X. GSE's We therefore with with proposed in PMIER's reviewing and and PMIER's and we incorporate of PMIER's pricing today, to to believe into to assets update expected XXXX. been and model. business changes required as proposed capital proposed

reinsurers. that that the currently address is reinsurers by mortgage both Mac indiscernible who a encroachment the to potential program or by credit with mortgage has Mac follow a the position The announced, greater program can month marketed this cycle loans business management. related have of through which there's depth concern is panel anytime similar the LTD. the particular participating the the for a Fannie any paid not which program product business that investor of with at speculation market Freddie pilot any how and concern fueled Last going programs GSE's. MI transfers this this for Second, our impact insurance through new market further will of a integrated called materially is loss a an have Freddie Since program we our for limited Mae or the alternative several mortgage It insurance way program deliver we easily non-PMIER's the XXX% structure announced kind to is focused management good reason. portion been I to like being was today could to than of are forward. to upon in intermediary as and risk we of or as of question been indiscernible mortgage XX% that and over Radian dependent would This a tested programs is called lenders remember a a years. LPMI long-term insurance, a exit on lender not market At pilot reduced to at which important viability first support past was

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this credit loss of a competition Imagin should have master provides products the to of field in to the Imagin and LPMI. playing expect be a with in FHFA There running proven the doubt level no and of form capital group RTMRT regulated the believe path believe this first also innovation with the highly mortgage is RTMRT insurance have through counterparties we with the but risk, between taxpayers. GSE's to industry GSE's lending program the cycle transfer capital investors We reinsure as product PMIER's lenders risk We do framework fully uniform support which transfer, and place between that PMIER's to the the and associated forward. risk align Imagin another simply provides industry compliance an and protection strong distributors we We with is effort and credit policy the highlighted reliable difference sustainable ILTD other scalable, structure forms credit competition. efficient of through whereas a not need U.S. transfer strong and and in mortgage companies for of per a

have and our work fronts with together many opportunities the to both successfully improve teams GSE's, processes. We including seeking current product insurance relationships strong continually across mortgage

will coverage strong our At working loss and portfolio operational performance and quality creates all are requirements well efficiencies mortgage certainty deep to develop by parties we all We business Radian, capital proprietary for the continually leveraging also from innovate to our our mortgage meets are base. to compete involved believe customers and positioned that our to ensure analytics support a mortgage shareholder value. risk. business insurance transaction We of we PMIER's customer a first and perspective, to in innovative solutions understanding each risk compliant with that indiscernible our of improve

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We purpose, enterprise organization. the to strategy the operate and values a shared have across evolved to quickly integrate with

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customers We to our are refining offered set that the indiscernible with product of align across business our our needs forward. going services

our We drive the deliver and are services digitally and by our needs leveraging customers. enabling against of technology our business products future and data to

February, shareholders. our created business and products. of goal businesses for model. that Head oversight FinTech on winning importance and This of create industrial strength to Eric We experience, this will are our a to Eric a a Transaction With financial is digital spirit Ray strategic team. provide of services combined technology delivery as services value the was our evolve the Technology to our brings new and strategic Services. role perspective drive technology to our entrepreneurial In business and scale fresh based his combination valuable believe future the and over leveraging the of this industrial with transformation the team with broad business our FinTech and and towards distribution strength the We joined

XXXX licensing of diversification It's we focus expands acquisition and announced execution our Radian. indiscernible relatively customers across now and core services XX,XXX a Entitle customer products. network title realtors country. the acquisition Direct, of reach our more growing for the broad of part serve mortgage an strategic the of a geographic but As small on and last and than services month a strategy, title can services state Radian

right I that relationships, well in diversify a expected resources, valuable a the indiscernible that positioned even the execute and diversified grow managing customer of core plan. strength focus, in to and right financial periods, shareholders. earnings we the own capital is net/net, highly products compete, believe are strong our future portfolio place for So greater with flexibility by fueled expertise our with our and to for customers value our future and serve insurance produce progress create strategic team to our significant the set This

call to to like I'd results. to financial Now, our turn over Frank the review

Franklin Hall

for $X.XX of morning To $X.XX the XXXX first the and quarter to $X.XX earlier XXXX compared Rick you quarter for of and first over Thank quarter $X.XX an last net $XXX.X and increase over fourth last good of year. income everyone. in diluted million results quarter share the our recap share reported was reported financial same morning, the Adjusted we of diluted operating quarter income XX% this of XX% or XXXX XXXX. net first and the quarter per per

on highlighted return to average We of illustrate both on shareholders reported enterprise. quarter, adjusted our a have net equity also this our basis and basis the profitability operating

During the had our first start key detail provide ROE of some I'll of of reported we now ROE elements the operating drivers of operating performance. the revenue. and XX.X%. net adjusted XX.X% with quarter key of I'll our

Our written This seasonal $XX.X billion patterns decrease of insurance quarter. $XX.X increase healthy over during so with the XX% XX% XXXX. compared first $XX.X quarter is [indiscernible] new we last was to billion in expected a billion enjoy quarter did written quarter of consistent the the

same the in year-over-year quarter shift of premium Further, In up had XX% continues concentration fact, decade. premium our period X% in a a is monthly volume business our the a volume higher was NIW production decline first we mix XXXX we quarter to last highest NIW year. premium had while new monthly have over first of over toward as single

growth and end continues increased source expected period reflected increase value remain book in quarter returns at of to it statements mix in highest in pays, pays, production last not earnings first lender the XX% consistent the a X% and to XXXX. continues to paid our are with our recent conversely, was future the our the borrower from XX- future volume fourth to single premium indiscernible it indiscernible and are over mix quarter reported see single The five basis, period our for to in generate the XXXX consists is first focus gross production, at in produce XXXX our XX.X% is our reflected year-over-year the as NIW billion first represented to before writing Also, but expect that and to retained the in to we in rate of reinsurance, of in of month that to the relatively our lender net of increased X% be after product insurers, are basis XX% recognized quarter current flat time the the today the expected to such financial first of of premium NIW over year. is monthly a on X% trends XX% periods. strategic primary business compared share the over from quarter quarter in of quarter, and a future It retained shifting years. nor our only XX% XXXX. quarter continued quarter premium positive risk On Persistency the XXXX. quarter of This outstanding. first persistency adjusted XX% category. the expected that first premium was borrower decreased same of we of Primary policies has single is to to percentage earned sessions is On compared $XXX single single loans net this insurances and excellent our share new paid premiums year-over-year business would XX% of near-term important remember our portfolio the XX% be

Our cancellations XX.X% for with XX.X% of quarter the quarterly the single from reported to associated persistency, to premium to increased quarter our however, low in quarter XXXX part in rate significantly process persistency fourth fourth the the due XXXX increased servicer policies. of due monitoring this relatively ongoing in

persistency. impact quarter activities not XXXX did that would materials, first any anomalous The of have

compared portfolio Our slightly to Slide quarter increased direct basis XX. this XX.X in-force seen basis as to quarter XX.X last points yield points on

of include quarter business deal direct the recent our shows to to decrease over first compared writing quarter $XX.X also the as premiums fourth Our on current portfolio cancellations and impact servicer Single mix Net premium stable primary $XX.X basis earned today from to quarter. compared ceded which we prior well decrease the earned increase the earlier substantially year. arrangements, a in-force $XXX.X XXXX quarter XXXX. our for quarter recurring the prior million reinsurance under premium premiums of our $XX.X to last of the the million evolve increase premiums in yields, the This quarter more An and XXXX in of ceded of mentioned services million for the revenue premium single of to million most expected million line was XXXX mortgage premium quarter direct this as of the new quarter compared XXXX. premium decreased in real quarter Total quarter sustainable net XXXX XX first the growth are single-premium cancellations these the premium regards $XX.X million five slight we in X% of the of has to due portfolio decrease segment of for our continue is in premiums are to acceleration XXXX. This attributable premium monthly as and were our cancellations been quarters. estate first the in in which was accounts as are single premium in Webcast to in reinsurance related quarter policy. decline the XXXX was deal. compared revenue create offset our services several sources. and decrease quarter our yields over enhanced million and to the $XX.X yields the million with XXXX Net quarter first premiums effects to attributable quarter has $XX.X Slide monitoring our primarily in monthly of net on on This deals presented relatively due in indiscernible million in that the primarily $XXX.X and fourth process to first components for first last The in in roughly of in-force single particularly fourth quarter policy with past to of insurance quarters from the expected $XXX.X as policies. increase first primarily business

for first of services EBITDA and included quarter Our charges adjusted margin the of XXXX was restructuring million. approximately $X.X X.X% approximately

We continue margin to services expect the adjusted EBITDA range the this second to year. be by of the XX% XX% to in half

in We second annualized million between also revenue XXXX. of run continue $XXX to beginning expect $XXX of rate million and half our the

now credit our Turning and loss quality. provision to

reduction noted first provision of on a of and This the in new default related of defaults had reduction as on XXXX current we compared XX, defaults. quarter the new reduction As our a XXXX. claim during to the loss our quarter primarily number to during the in period on of decline rate fourth Slide in the to quarter default

fourth the quarter in quarter. of which continue, as rates, have default have again default primary reflects designated X% approximately the higher to on the the is our this new The to patterns are received although first rate first the in decline than Historically, defaults was XXXX. difficult areas. quarters applied We seasonal of not defaults this default predict. considered continued as trends quarter and cured at estimated developing rates X%, pattern in and low rates XXXX tier defaulted of claim reduced recent improvement believe in observed and notices in quarter FEMA claim the Given claim estimates and XX% quarter in new the that fall in compares that average to XX.X% could if received rate the of we observed trends to to subsequent timing new we

compared the XXXX. new areas the default total by notices defaults X.X% to and of Harvey and Irma, from decreased of fourth new number quarter quarter FEMA XX.X% the of of Excluding compared Hurricane with the to associated designated first XXXX

defaults We expect XXXX between than most we new a of FEMA within received designated higher secure XXXX areas February non-FEMA rate designated at in defaults. the and area September XXXX have

So assigned on estimated claim defaults did much not these provision. a a these to therefore our rate defaults. new loss we And have significant incremental lower impact

We on areas. indiscernible please see cures details and observed Slide have related the hurricane since portfolios XXXX, on in increase for We Slide default designated further on between new activity post-XXXX our in defaults segregate our a XX FEMA significant pre-XXXX XX. December defaults

impact As default increase Slide activity number expected quarter years decreased in portfolio XX, our fourth compared in as on post-XXXX XX% Also low post-XXXX loans around vintages of as areas of positive quarter of quarter of both we the the defaults in six, after greater of associated the and XXXX the including the of Overall, performance in new hard a our of portfolio. in-force new a written XXXX years which risk business to first peak hurricanes with well predictability the the our our impact now of portfolio evidence remains continuing. reached strong default XXXX, XXXX. XXXX primary notices are profile MI an to four at trends the credit as Further seeing with as in its are designated default which pre-XXXX indiscernible received fourth is very typically strong rate. noted

first expenses were the fourth of the Other million and operating $XX.X compared first turning to quarter million the in of in $XX XXXX. XXXX of to quarter $XX.X million XXXX expenses. in Now quarter

than positive that still faster a we such expense will our not would other rate future expenses our we operating our that grow leverage that operating expectations, XXXX exceed our XXXX for for As revenues total and expect achieve expense expenses. will levels

objectives disciplined other Exhibit strategic may Details operating restructuring revenues found XXXX of quarter exit increasing growth first impacting expense costs regarding expenses and increased and a X%, earned results For X% by net other the the operating both XXXX. compared of revenue as These driven Radian's be to with decreased increase items leverage and consistent variable through first revenue in modestly while quarter by are D. in managing. notable of premiums primarily

down the XX% of due XX.X% difference our items rate tax rate tax effective and to impact XX.X%. between the taxes; rate primarily was Moving to The positions. the was of quarter the our statutory quarter of accounting effective for as uncertain for discrete first tax for such

Our tax annualized items the effective rate for approximately of discrete statutory before XX%. expectation XXXX rate our is

of Rick creation Subsequent notified near-term to now the As had quarter which enforced on we insurance no reform the within tax expect and the instant to taxation the mentioned, joint months. terms Radian IRS several previously impact objection is portfolio. the settlement to value end, previously existing next of permanent would with was that the proposed our the greatest committee occur companies disclosed related

XXXX. not While tax on of company determined. per will expected any recognize to and the a $X.XX reduce re-measurement than expects potential the fourth value the from interest net to of holding impact the estimated due lower amount the in the tax of under income accrued impact benefit to share. tax the available book the income company the approximately to net quarter final expense, $XX positive expected impact Radian's of This primarily is related related the by deferred million, settlement second liquidity the state does enactment on This efficiency quarter taxes yet benefit reform been which of has impact companies of and include the taxes not approximately

will the of our We we on IRS. million receive $XX million $XX approximately deposit that with also anticipate back

thereof. capital use $XX first value for a Radian This and quarter shares is management opportunistic million its XXX,XXX is in purchased forward-looking stock second million. through $XX approximately company quarter in for approximately and common clear an the XXXX, providing a that of in being shareholder of committed to additional and its the shares During demonstration by prudent XXX,XXX the

cushion. As guarantee million available our the $XX the This with assets were plan available of million that period quarter minimum required us predetermined over criteria on And assets a where share utilizes assets value-based million throughout premium finally, $X.X excess previously billion shares with have minimum billion we a first and criteria. remaining, required authorization had XXXX. under approximately to of predetermined our repurchase assets of end XXbX-X $XX are represents purchase PMIER's authorization The of of Radian $XXX $X.X indiscernible based as the the PMIER's, met. XX% the are disclosed, current allows

if Slide We required consolidated $XXX resources our represents I the utilized, on to of call turn XX% basis will have XX assets. available now also our back PMIER's Rick. over current minimum which excess noted over on million fully of a

Richard Thornberry

you Thank Frank.

let diluted with services XX% XX% open year-over-year growth sustained the call second per [indiscernible], also we value share grow per We future share, X% year-over-year our progress earnings. of questions made your income for and we book for first the which tangible to adjusted for to of the Before for indiscernible value per that net growth repositioning XX% operating in book mortgages portfolios quarter primary you and share. profitability me and is XX% excellent financial remind for results achieved driver

open would call operator the like to Now, to we questions.

Operator

[Operator Instructions].

comes today from question first Our Mark the DeVries Barclays. of with line

Mark DeVries

card we in you. should thank I to expect that will a coalesces comments this you're announce rate pricing equilibrium expect would mean the to expect think MGIC that's done? to the moving around? be new line weeks case, a Yes, announce industry in kind of response with Rick, coming can that effectively And the you kind to that Genworth the to you adjustments you that and the near-term have the if pricing take you of your what in that down represent

Franklin Hall

Yes, thanks Mark.

about making as where two the the view obviously from some at of as we've a a of pricing what's happening about we we're You continually, know, forward. thinking of the are we've news we about deliberate pricing we point we, adjustments. structural so way, from as point responsible, observing going they're and I disclosed been discounting selective By and been how very think view other seen do exactly from competitors very disciplined XX-K, we've which across these market the our think the and same

we you those I tax that saw, If as pricing think business pricing, business, think -- going to PMIER's we our we the is kind you announce that very, assume into insurance post returns very is forward to of taking generate and we're how are books something we forward this on changes. so to up permanent the up will XX's, evaluating down is the X it's business insurance across different long-term about back where a actions as know think our not very -- today returns and competitive on in-force new in at to that a obviously returns we the we of in to with think from what business, this on disciplined point business approach bit all our do right? a value our I we I think into expectation on view of come mid-teens settle of going industry. forward mortgage we which kind low account had taking this the how that about is just attractive expect reform creation sustainable mean, safe structure new our looking very deliberate material, still of and it's in I on pricing pressures, we and take think shareholder we and So of -- near-term. place today adjustment I portfolio, think go look expect at going the business we're

be to think pricing to little risk the at more thoughtful changing from going marketplace risk an on that really to occurring going we're we I opportunity are in as the about bit really a forward. and return this be thoughtful adjusted dynamics looking reflect how use our

tuned, answer here the So stay our out soon. with is, be we coming thoughts will

Mark DeVries

just or an this an Okay, agent fair underwriter? Direct Entitled actually enough. is that on And they acquisition, are then

Richard Thornberry

our right withstand including Radian the the and with underwriter I -- the I country. America, our those a opportunity mortgage XX our -- probably is This footprint, across it's with licenses think, business all actually total states the total they as think are their I we I combination Value services. go a title as across which are expands title underwriter, XX their businesses So license footprint, in refer an under to licenses if remember states insurance across high other and to think percentage Columbia, done significantly in deliver across, the of of business California including footprint of District

we at very opportunity accretive look really I highly So cost. at a geographic it as a expansion think low

Mark DeVries

would expect smaller pretty the as dramatic that covering in players. we from the to a in larger a because margins out you foothold scale a there's difference build Okay, see this that title know, be, business insurers of you the players longer-term and between

Richard Thornberry

and would Yes, with that. I agree

know, we the providing of out some top mentioned relationships look, everyday, the products some think to the customer extremely the the organization, I I market. a services there believe players relationships our and across of very -- -- insurance of of scope different other from the settlement we're house, and lender our have XXXX than titled in given base, title you large lender. we traditional than remember the different we're company even

title business to in thoughtful start upon the provider you taking to I services very where the have so here we're the been some in opportunity of very assignments. is build being have past products Secondly, of build title us fresh to market what's the building So kind much XX,XXX what services nice some I opposed we versus of do know, how the we everyday look distribution the we that from and with realtors how and is those with much of market to product want of see the we title develop think forward-thinking part delivery we're past. settlement a trying future as on to our canvas we about of the the we the moving think of have services so bring more number contemporary, to past, not and two the of I and future one -- done base as as really our we're across, the to product visually business we that forward we're right? Number a focused being enabled lot the we settlement how and we to embedded a is distribute one. leverage are

capabilities distribution our I expect grow business a level achieve a leveraging big will other start. they're technology our are our leveraging overnight to think advantage allow bring, this margins given of I players competitive today don't I we and done strong market team the us and that it We think and but at to the greater position, can done about think that. to of people from us some part gives think to be the to should and think the how be joining our of is I which

our I design the to as we're future distribution leverage kind that grow business and-- past and of and and opposed well the positioned think do to the silently

Operator

Douglas Suisse. of Credit line the with from question Harter a have we And

Douglas Harter

willingness to kind the kind are the maybe $XX remaining? talk accelerate of the Thanks, hold what your about of liquidity and and levels company can that's that what to want required holding you the -- there are repurchase kind you your beyond of stock million and

Franklin Hall

Sure, this is Frank.

you question. So thank that for

-- the totality know, in it think, set really so share of You us capital account at that lenses taking know, cushion the a as so gives credit capital for liquidity last about we the repurchase is, planning into as agency into really about that even evaluate liquidity takes plan And different we entities you to think context which which ability PMIER's our operating in we which broader of into all those facility it to some balancing most and think couple from of and move returning I a particular, remain through think I still is context factors it's of and entering standpoint. our year we also as -- had hard say leverage the considerations, it's account a and different position target company we've just the in really reducing liquidity grade to those accomplishments I noted year dues, we've to one investment is the flexibility that a significant among it holding to of and got so increased for would overall points surplus company demonstrated holding company there. liquidity late objectives. we legal a recently you the our the last committed did And tremendous relates as an instance,

right like level. So but right at the level are as certainly encounter We up, a now, little we the a opportunity landscape. very that now, bit perhaps general I in right feels either it's or to comfortable may say, decrease over increase the current level we're time where an

Douglas Harter

to guess from I or up the of moving the that appetite dividend across legal kind liquidity on MI holding there your any looking what's is And entities, a institute to thought company? for subsidiary

Franklin Hall

doing we when that is consider we're You planning. certainly our capital know, that something

hard I think around more PMIER's and and getting X.X more now the is part context in of certainty just about that the that. certainty

that The other really to company holding is the arrangement, sharing operating tax we to preapproved also predetermined in parent allows policy cover interest that's of companies us the -- have through important expense remember that that thing agreement an liquidity is arrangement.

So, yes --

Operator

And do KBW. Bose with of have George we the line a from question

Bose George

Good morning.

that go the wanted made on on the that XX-ish to the say premiums with line Just you Did you back are you roughly guys yield. have in new premium the comments to the book? existing

Franklin Hall

the to expect outer so Yes, to there. expect correct. actually but look over relatively for quarters is XX been portfolio we of relatively do the Schedule you XX.X years deal if Slide be that stability that decline and a presented and the five stable import foreseeable That's at [indiscernible] or in XX, stable some yes, some those slight the we in future do see has

Bose George

seen it comment pricing Thanks in better I sort made of PMIER's and kind know, to make -- you what that PMIER's time? over then you've of it do at return assume a actually when high extent the the comes or of was range in positions, you the end I you about your impacts or division, guess and that and that's that -- great. in you at comes better then the how as Okay, proposed guess

Richard Thornberry

Hi the X.X PMIER's today. is you I really account of factors know think Rick community all to take what this into Bose, try we as we yes, a and including different know,

a to in but come course hopefully there's account, you obviously M&A that and, would over of the we So to a industry and said, know, the good as year it and we've be benefit better [indiscernible] question I taken than dialogue between it think your point GSE's came today. into will your this we've to all this the expectations know as

Bose George

you that great just number to number clarify, X% going the to sort just is default claim, of the something that changes? forward, actually Okay, so know, and until on then

Franklin Hall

a is credit approximately us also describe and of to we that as way the improvement Frank, portfolio is quarter far X%. it the into those seasonality in the this the roughly behavior between split what drove down it's two XX% first taking so in that from the So is factors but account continued both X% as approximately

Operator

And Wells have Fargo. we of from line Sean a do with question Dargan the

Sean Dargan

Yet they industry there I'm PMIER. subject the a were that wondering primary were fears the competitors allowed few were known. they any was below would remember where a if when are is not ago years MI's competitors thoughts pricing have opine FHFA effectively pre-tax of this made at to on if concerns their you price around tech to further where seem time the I a war to I on and such undercut they've that LPMI reason those FHFA -- cut to point whether reform? were the a And ask returns the

think cut you where the of if would be pricing have further regulatory some be competitors wondering just I'm level set? to pushback from were industry there So if

Richard Thornberry

Sean, Rick. this Hi is

Let questions there's add maybe I and me it But two there. as really take that think can to Derek just in well.

is that think and I taxpayers. have as provides to regard to that in think making cutting and party think FHFA might going I to to is risk view are through respond they stability to want I continue any relative one further stability one price to the and private probably that create industry MI -- how the strength their decisions of has

look So they the know, through. probably lens I you that's think,

investors probably on kind probably radar. their would possibly I certainly quickly of something say FHFA more but than react think I say

the not in capital competition our we really hear commented Imagine your earlier. conversations on consistent say the making the about MI focused counterparties. industry I the is make it's right are to rightfully sure comment structure sure credible which to Back generally on the other second -- something think that I from is program

mentioned think that highlight to interesting really is structure because the it competitive talk I aspect of quite having really entity. this the capital through, as to [indiscernible] of I loan you kind ten-year. difference Also certainly in both characteristics, product I know, in my things the combination comments, coverage of almost length think The about alternative PMIER's entirely all come non-PMIER's length, one could of of is our product of we the versus to the that LPMI at cost the right? differential versus relates

very of earlier the the products of that surface the on products; loan. life be other kind have lives different those that of can or more like lives are some fixed end much So than -- the

capital I FHFA GSE's when of competitive and So that's a differences actively product advantage. as the I -- talking you outright a of program, Kind at competitive think arbitrage; but think of is we're more about it advantage. don't a of arbitrage, that think kind look a really I those to

Derek Brummer

you've seen been return around I edges seeing you're reform From had that as but not don't no industry is that at mid-teens the and computed so a I idea we a levels so competition still new returns pointed tax see the so competition not extremely the on it business is very level returns to but and and mind, attractive always where that the the that, that competition with Rick to reflects perspective, see get books the in would returns, competitions, are the mean, that's some out, to important thing level attractive. still keep on down the at involved be seeing you're there's least in only and someone our in current the see competition FHFA

Richard Thornberry

business, that. this think we in generating know, business, even returns, measure than to levels of this at on highly look overall ROE -- know, you adjusted you of GAAP we kind as want this of ROE where ROE sit settle the expect when of we dynamics but today this business a I and to was of the we're of also risk mid-teens our and not through mid-teens organically higher sort the very part combination is, the kind think going all about of from we I capital. we think PMIER's obviously of other reason really competitive, looked an and to the business our today, quarter changes; the of you be pricing the of this cost strength our evolving the on business relative with value think out all only creation you think in portfolio just remain the and you insurance the XX% X, is kind adjusted at a But, to competitive your operating ROE of think of of view, strong I reflect we to XX% earnings, forth this, think transparent where levered know, of brought of attractive, a Yes, why business, all different the you we've kind business know, point kind I a going dynamics know,

Sean Dargan

And just with decision share can regarding you. I Thank a follow-up repurchase. quick process if your just

Your trading book quite above a come obviously share. shares per have still bit off but value they're

what figure you're comped trying is -- I or do if view about that excess of can something this if you view So, I'm are help how mean, on highest you to is think trying as this drive -- repurchase? you use returning growth you the us capital? just to EPS to just out

Franklin Hall

Sure, this Frank. is

said that to done what place. The today. are will be today plan a approach true know, We report we how about share repurchase. we've You remains activity that said we our we do that did the have in XXbX-X previously terms date we public and plan historically is not we've as opportunistic but of

said in question, the plan capital in totality capital. I our know, we do previously context response uses as you and to first and in another the view -- it of of So in

remaining -- the of which XX. authorization is million there as So current today, on July $XX expires on

helpful. So, hopefully that's

Richard Thornberry

jump just add Franks and comments. might to I And in

we If this kind in firm. where you value think you today of our the look really at company business, look and at value reflective we book value is obviously this see of of don't

mortgage different so what we perspective of of that of take as we think that how value is of part and see forward value today the we relative as here look think and significant value sit is. business [indiscernible] business, we and from about where inherently company services our the I of I insurance in we our going into to opportunity kind our in account of significant going kind and growth and portfolio our are think forward at a components all certainly growth our

Operator

a Compass have of the Point. with question line do we And Chris Gamaitoni from

Edward Gamaitoni

call. for Thanks taking my

stated of think returns capital, of You will your economic economic, cost view how exceed that cost you you capital? economic the do

Richard Thornberry

perspective, different of the view know, we do coming kind our I risk risk different a how categories think insurance, different we types a lot at at and it risks from we portfolios, that of view ways different of out it? So across I mean, of take. looking it you

evaluating to if have the you risks across Derek looking at approach is I We don't to fairly know taking it, portfolio it a you -- broad we're very know, want our quantitative and sector,

Derek Brummer

so those returns when when terms and of seeing at in that are Sure we you're looking talking capital. PMIER's we're about

capital. portfolio from projected is when loss scenarios you do the to various required and differentials or we're what it PMIER's kind versus capital economic the capital trying how between optimal under looking of a So find economic to we we about an at think look do might the perspective when perspective

at optimize of kind is And looking then so those returns that the what to we're attempting do factors. basis both on of

Edward Gamaitoni

to would capital you cost return is the like level to you you And what are for what willing of taking? you're or risk believe your inappropriate disclose deem

Richard Thornberry

we capital binded That's don't that's and you kind all at all start we're of think disclose based looking -- as economic the across know, you disclose. not of capital that something at our obviously it's looking allocation. So PMIER's on also I of in we sudden it something terms

mid-teens, the and when highly we returns to this are attractive think and to allow pricing on we of where so I forward; [indiscernible]. are PMIER's business that the mid-teens new reflect the our think we X.X expect I going we're business forward think business we in returns about taking from forward, we it, going mentioned that how see risk really kind the

Edward Gamaitoni

I more call which about to favorably your about an let's one understanding in you more Okay, more pricing you others want just like more risk it of two is credit approach to or may have selective types In like? matching just by of actions right instead versus be -- that taken priced competitively competitors, for your and the comment that response am follow-up. may

Richard Thornberry

our and think of kind to just how of the near-term. until complete our opportunity you'll us Yes, -- from announce very it. a spectrum think for to ready very kind We risk across it's thoughtful very a we're approach I do taking think about approach disciplined, us there's priced. And an being to so the hear in and that I think we're we'll analysis then more

mean, say in well about of I back returns, Going your see safe to to that our costly previous question we it's excess returns capital.

in we true created So think really that's shareholders. economic is value business this for where

again, sure So, up, try not to have go state just back questions that your well. I'll and to to make mix as

Operator

do line the we have a of America. of question And with Bank Mihir from Bhatia

Mihir Bhatia

could if competitors on premiums on comment To just what have the done. follow-up I and start

is announced know, I that. one gold Now, been there has bit adjustments and little things two difference between the you who borrowers a think, for more, have DTI's like and

we how last be bands and get saw evaluate the -- now to see adjustments, more FICO you I seeing reaction price more the the to think adjustments narrower -- industry we how the developing developing granular price last continue that that see more that the that. you is way we're for for something thinking adjustments your -- is about or should just like industry more I'd is further you and So,

Derek Brummer

upon to is our this competitors the This approach. take exactly risk-based say but I perspective what is not and Rick do Derek. touched it's will say mean, a we can I from industry or

portfolio. taking it or pricing to the instill we impact we of we're then that of the characteristics level, in a lender that So level a risk of a see loan and the expected direction under the trying portfolio would that at is in at move performance

kind So and more granularity, we more of see to place towards something see towards. risk-based the you extent that us move putting we I kind in could it's know, of shifting that,

Richard Thornberry

would I line to how view portfolio. leveraging risk-based just the with we to kind our add Derek's our I our in just approach and think economic value comments, business creation across reemphasize, of

just the in the the fits think I we of want a management the business marketplace and way, business to those to expect today very targets fits -- well characteristics of through and our it's and a view how a point list how regards manager portfolio know, amount our evolving and think that portfolio want we compete be across things we the disciplined about in by significant [indiscernible] We you be price we thoughtful to from to to risk industry kind are to very of portfolio. be a

Mihir Bhatia

Can thank last expectations wanted after -- you think just to I changes -- at $XX your to mentioned had year any industry you. the for so I billion quarter? check. this around time to Okay, you NIW your

Richard Thornberry

you thank so Yes, Mihir.

lower expect we volumes, have and one three times across volumes five the growing likely market policy we're to guidance stick year-over-year as the billion think then we're very see we're really I decline We business the our kind you X%, is refinance of of to said we're we're the of -- we've on think positive on mortgage an lenders a I business past. year. more in the impact first purchases now our so to to seeing key the being know, obviously market in to we with for of are approximately the and purchase is only MI for for the going feel mortgage $XX see the right quarter year-over-year X%. MI NIW the But

business good so our we we'll stick know, very the we're it's we're develops, guns with very you well to going and MI we're we I industry but this think the with-- sticking our growing see think I performing and pleased So point year where a how to for think at sit and strong environment see we

Mihir Bhatia

run remind once finally more year? it's expectations the this Got or you like just some it, charges, then just rate little obviously what and are But revenue you of goal. EBITDA charges you're through a restructuring bit sounds thank us, can these it for on your services, restructuring

Richard Thornberry

so Yes, great question.

at quarter. expenses the think So of I back with end projected line what I think restructuring are third XXX% in the we the

between XX% of and in continue track EBITDA. for with very towards of have XXXX run services that the revenue we feel million and XX% said we're think to with be I the we'd to of on second And that. million year move to expect to the business about rate two we half good $XXX is $XXX Number So continue the that. that

So I the to given we've before guidance. guidance continues think that be the

Mihir Bhatia

business LTV just Great been last that's been and then you would happened XX% yield that wouldn't will. obviously it hasn't from that one They've -- added just round as guess the basis premium much. XX premium and more but the year on -- you've price become up? I Because or would last is over a pressure for decline the example cuts, XX and just a know, for obviously between use has the mix it and function have pretty of points thing, held just seem of if stable you

Franklin Hall

is this it gradual is Frank and and in quarters if and to that I Yes, we shifts recall that seen decrease a a guide seen you'll few materialize started due production. we have think back we've to not for the

Operator

SIG. of And Micenko we Jack question do a with have line the from

John Micenko

and be the more buyback bit point Is the not sheet at different back a to clarity value ask are PMIER's is It in XX%, know, here probably questions maybe I Sean's anyway. buyback, Market to the cap like my around all it wanted to important investment else we X.X be next at why returns low to more me seems this it aggressive? buybacks? aggressive for is maybe on I grow I a aggressive balance guess equal the debt being, to Net maybe now, months. accretive Doug is maybe in come XX%, we looking guess close about to caps book XX would more point there to, go step question grade you're you was little and $X.XX least on and on than going the become shape. more great more way. before over book a

Franklin Hall

full very, the context used Yeah, -- is capital question use John, of is you that. appreciate NIW. this that capital it That one I and best know of highest of to our very support profitable things quality, those great growth Frank the very and organic is in The or planning. high our of is is

the make acknowledge said, primary as utilizing to path planning it capital that the think all the that should we know, the first, totality unknown's to program exist mindful on sure time. But is first. you support known's objective as really and over to want the of you forward. the repurchase us of the we and tools being available resources far of we share in That rest know, and have have we're it the repurchase expected I this do So of such full that willingness as to the the demonstrated that the

plans So, the XXbX-X [indiscernible] really what can I've for all and the are? I what that say around said is

John Micenko

programmable enough. there would part? your change a the the on maybe plan even a trigger on board On an on that expiration that's or more from fair side automatic, something is Okay, authorization XXb subjective more something new

Franklin Hall

the plan predetermined shares during that the Well in intended of be XXbX-X criteria far time for purchased to market we of set longer authorization. the as a period be us to in the be period market allows is automatic so to and for

expires authorization an our are again July the program, capital this part of current have year it, Our the not in of authorization on planning etc., whether it terms the repurchase XX and exercise-- of amount we or

Operator

of & from have we do And with line question Dowling Geoffrey Dunn Partners. the a

Geoffrey Dunn

facility cap How ho-co question terms ho-co to your fully level. here as kind the buyback as weighing I next where just How the to on I'm year your as well below of seeing important a your debt Jack get over flows important of it priority. spin asked it cash my at and for capital next the maturity what weighing year. guess -- the XX%? of is Thanks, in weighing It's opportunity debt you're not is picture priority as credit is you're your

Franklin Hall

Sure.

So tell provide what the share responded I this think to organic -- plan plan you described our plan the opportunistic. have in priority an about with just repurchases, I company are so really previous to mindful uses this strategic overall that mechanics is of tremendous the and overall ration say of as that is a the demonstrated of and to I capital a is utilized we which that to are that highest plan the would around the cap is we flexibility the is priority think we for for XX% business and that I approaching would that does willingness and to we is plans us rest Jack capital important us very investment because XXbX-X Frank. opportunistic do the debt support grade being intended us with of significant the well thus intent is be have of I've but far, the be

Geoffrey Dunn

your credit it in When the borrow any but on intuitive that's X.X comfort for sounds advance debt reducing be like really we like of would look anything to at facility, other of counter initiative your blanket as there cap. that a or goals to to it

Franklin Hall

and to in that's I right think long-term of Geoff. facility The nature sort of any about facilities that way Yes is really mean, credit intended not in to plan. to the it the down for nature think credit is be I general. temporary it on draw

said. what would I just agree with yes, So you

Operator

to And over to the Thornberry. turn now Rick conference for closing remarks like I'd

Richard Thornberry

also the appreciate company. interest Well I appreciate taking and call our and in of questions this to the appreciate your time the join morning everybody all

and to to into got a and talking forward of we year. excellent I through and I quarter great momentum think go Have year we've had of seeing think going you day. an great as each remainder we've the look this the I

Operator

thank conclude does participation that your and conference gentlemen, and ladies teleconference for your executive today, And you for AT&T using for service. the

disconnect. You now may

Radian (RDN) 27 Apr 182018 Q1 Earnings call transcript