ACGL - Earnings call transcript Q1 2020

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Operator

Good day, ladies and gentlemen, and welcome to the Arch Capital Group First Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded.

Before the company gets started with its update, management wants to first remind everyone that certain statements in today's press release and discussed on this call may constitute forward-looking statements under the federal securities laws. upon a assessments uncertainties. number based are assumptions are to subject of statements management's and current and These risks and

actual materially differ results expressed Consequently, implied. or from those may

other information factors investors the review that with the reports filed periodic more time-to-time. the For risks SEC should that affect from future on may performance, by company are and

XXXX. meaning to Additionally, The to Reform are forward-looking facts based on certain statements historical forward-looking Litigation the contained intends be Harbor Securities in within company the thereby. of the statements call Act call Private of that the are not the created the statements in Safe subject

company's Management also X-K furnished report the performance. definition the financial GAAP and on SEC will of to and the on contains available yesterday, release reference company's the make of press operating non-GAAP website. be company's current measures reconciliation is can earnings to some Form The income which to in found

Mr. would now and to host Morin. introduce Mr. your I today's like you begin. Marc François Grandisson Sirs may conference for

Marc Grandisson

morning ago. and call the be that, not understatement Thank the an you, three would It say to has just months since you you. our to with changed world last coronavirus Shannon, good

our the while Fortunately, investments to beginning are navigates turbulence. period mortgage entering made through in at group Arch off, this P&C our we we with business have pay the current

its its and like you are have, highs insurance bound I work the you business, in experience industry enough If cycle the long to lows.

goal for growth book in management, share. we keep sustainable generating As Arch value is on to eye which have our per the

adapt. to of us which financial occur stress can in the changes reminds current markets The insurance we need to that and

result that assessment exposure is the to coronavirus, direct indirect will be industry in we and clear still will our profound changes. While of event significant and early a the loss it are in this claims

However, dislocation opportunity. leads to often

has cycle As know, one inception management. Arch's from principles of been you strategic

more of the foundation in both We than that position us a with financial ability are this embarking that creative strong X,XXX for opportunities our new and employees emerge. the environment, market will

saw mortgage produce conditions remain our P&C We to the our market improving in continued businesses, to quarter. as even while contracts. P&C Turning economy evident, the good results. conditions Strengthening operations

seen have it accelerating increases, along QX. continuing lines here of rate QX multiple across submission our in with in activity business a is We rise and in

elements of play five, risk companies capital continuation in belief related is to a P&C a Our has need to effect be rates elements heightened all to allocating in claims six, address These a shortfalls industry risk two, market alternative continuing reduced risk. perception risk in availability capital These hardening economic future dampening the likely factors soft of to reserves; accumulation cautious lead and today the last in returns; and COVID-XX; of three, the market to more the investment are; our general. four, over years on and are one, litigation casualty the of and covered retro for potential due in risk of conditions. and interest uncertainty; of five in the to general; low are insurance

ex-cat quarter our market. saw improved XX%. PYD grow to group, allowed combined remains this as, On such in our we years in in rates selective improve spots ratio past The profitably to basis, and margins reported and accident many strategy of improving our the have as sectors, E&S and our COVID D&O E&S current us casualty. a dislocation insurance property, this to our and be two In markets the environment in rising pick

clients has a of The by protection hallmark business, we reinsurance helping will in capital improving our that dynamic to events. quarter. group large needs tightening remains returns, terms reinsurance tool are growth a with our to solutions tailored allocation been in provide factor that of of capital contracts observe pricing value our reinsurance lines. to appropriate this also the and many In continue conditions the while of their is and enhanced and risk-adjusted as recent The was

segment, test, product industry improvements the since crisis is its mortgage now reforms Switching global adopted and significant or fundamental first facing the our that the following GFC. to insurance financial were

better As is the analytics-driven Arch model predicated MI know, and a and a our new than in was to on prior XXXX. the employed industry you data investment company sector operating and MI

buys is precise, are products the protection more pricing industry documentation downside. Now, and better and MI against

at their in programs government forbearance taken borrowers in and that provide can industry be; change the cure early result to delinquencies support GSE's the the program in delinquent will in the actions economy – improves the and helping directed seen another addition, in unprecedented as homes. should fewer aggressive stay The In borrowers benefits of pandemic enable the losses. stages unemployment

a finally, noted less creditworthy is than a More two-thirds portfolios mortgage been insurance were would speculative recession in housing last And time, and was the products that mortgage our borrowers. a better HaMMR was As quarterly that XX in the they MI XXXX. in facing risky report, bubble mortgage overbuilt, than insurance industry significantly there for market prices. during years. positioned far At written have were XXXX of uninsurable in home

program X.XX% can This GSE months, April payment mortgage Mortgages of of homeowners under for the forbearance XX. another which months. up suspend were filed extended mortgages FHFA's the be programs, allows to to six six at then for estimated as

as in almost borrowers While time catastrophes GAAP, all data utilized loans forbearance delinquencies return by providing recent to cure under indicates to programs initially recorded that natural our these work. of on

instituted loss solutions that loans to forbearance lead the expire, Over list ratios quarters, once the few GSEs enable programs of remedial back-performing. the in a once again MI next the under should sturdy have rising will elevated rates be delinquency GAAP, Furthermore, segment. to

we what an that moderate view in than a net GFC. realize our can is Arch. will expect, worth this this We see is today, than is event in on this even for not recession pandemic-led severe again, losses we recession. our we worse hold a that be on different But risk protection recession is reinsurance currently noting would earnings that based capital force a It more significant if our even

reinsurers' our some becomes While we’ll $X recession this first-dollar additional our an at Bellemeade industry know index-linked loss that billion to loss that from a excess of provide protection, than what quota attaches GFC. if up worse securitization, a in of and share experienced the

on maintained likely enabled future our pandemic to to margins impact investment require investment strategy, In as avoid of that their for foreseeable through focus time operations. our our that risk-adjusted return turning while improve Lastly, enabled levels over the increases. We are interest negative the to in our approach, investments we rates insurers believe much -- this have underwriting which on historically the of stay will low total price underwriting at us our and us quarter. to

that risk risk reminds perception world present, As capital is role so reinsurance always include does us margin an of and premiums underwriting becomes that an the of cost returns. plays events capital increases, protecting and of adequate in that and must Again, recent important. insurance important discipline safety

to track to summary, and for record cycle fortified In this of value risk sheet, growth. on by its is to Arch's well-positioned balance through and crisis our continue build Arch management is and conservative book prepared principles

the all as the responsible thank are throughout to of they of tirelessly Arch, and for of the to needs success our are want our the working I closing, insurers. employees meet In around world, world

call to that, over I'll François. turn With the you. Thank

François Morin

morning We, health Arch, times. in and are that you, in Thank difficult and at all. these Marc, hope good uncertain you to good

may addition items of This detail in a with please in take the have, on quarter, may items. of notable than this more bear some elaborate in will longer some discussion you financial regular usual, me. I to anticipation questions of try recognize bit to I so the

the results. quarter Now on to first

the are the consolidated a which reminder other our corresponds the to basis financial a results, In operations Watford core As segment Holdings following consistent Arch's prior filings, and with term excluding the includes i.e. Watford. Ltd. on of comments practice,

the operating per and million, of March and which translates slight $XXX.X decreased Book $XX.XX operating return to X.X% share value a quarter XX.X% income from a to for one annualized X.X% common from equity reduction on ago. an quarter XX, last per share. After-tax increase average at year $X.XX was

posture the later relatively well capital us I portfolio in defensive of months. this recent investment served COVID-XX our extremely crisis during environment preserving on. on base the more detail our economic The elaborate ahead of stressed will intact of in

results, losses Outside of COVID-XX underwriting strong with related groups quarter the quarter very operations. property this to through underwriting our insurance fared the well generally first results casualty on improving impacted and reinsurance pandemic, our and our which growth

losses the we pandemic, unusual classified COVID-XX a breadth have Given catastrophe. circumstances as of the and

of also However, the financial our analysis the assist performance as of supplement, book provided estimates of our underlying the the level saw you we with to of in business. detail current have segment

minimum. this XXXX We until approach of follow a the at end expect to

in the U.S. combined both first bushfires. to and primarily $XX.X in The points recoverables and events not reinstatement severe due of points and combined or U.K. XXXX. various convective and million catastrophic losses ratio were X.X our insurance storms, floods, and XXXX stood premiums of from Losses Australian quarter, reinsurance quarter to net impacted ratio COVID-XX, at including storms X.X reinsurance the compared segments

to of split $XX operations, approximately COVID-XX recorded We insurance losses and to million reinsurance. XX% XX% P&C across our

including have establish still limits, on and occurrences of and sublimits believe reserves to that March based for exposure deductibles. is a early potential was level XX, to prudent limited pandemic, we terms certain it quantify the and to extremely our very it information we conditions policy While IBNR accurately through

These under explicitly do of exclusion limited a of and/or where pandemic policies number very reserves interruption have were a specific small across and property, we a lines of coverage not contain trade number as credit. such recorded a business business, afford pandemic that

primary at we our important rest book COVID-XX credit potential the and mortgage policies. this segment distinction U.S. segment estimation as time risk transfer our believe and regards our between As which insurance refer international a includes GSE make our and to process USMI the our unit to it's on of impact of portfolio of we mortgage which this

delinquencies to pursuant of as are estimates reported XX GAAP on based March XXXX. USMI our For only

at such conservatism confidence across reserve to of within was this level potential However, impact the of segment. a points the approximately ratio of X.X loss known The for delinquencies. of the reserves level our range we pandemic, financial higher given elected of increased effect book estimates

delinquencies and with the business is loss future where are more For traditional picks earned. the on able level already property ratio policy to the rest approach casualty techniques of we at set this consider segment loss-reserving consistent are use

points response across policies, for segment to in of X.X which loss-ratio quarter an pandemic loss-ratio our results. the in our increase impact overall resulted from adjusted potential portfolio, This we the picks to some the

level. adjustment Based and moderately on believe severe a consistent the the book across with date to known stress non-USMI we and economic the forecast, is information prudent

loans mortgage remainder from XXXX Act. to more rate level on As delinquency of the under request expecting we CARES forbearance progressively are unit, the as for increase we current look their the towards our USMI the borrowers

As mandated economy many the normal Over by a as back loss likely time, GAAP, we record losses we would quarters. delinquencies expect increase and into loans the on which more of our levels these most of in returns will translate revert to performing reserves over expect to cure to state. to an delinquencies these incurred coming

this claims on alone an at not the At have us. to forecast reported be forbearance ultimately basis. will to predictably annual time, which let visibility quarterly we into Cure enough are a delinquencies rate do turned

segment for current said, current will XXXX, of for minimal quarter pretax event, the our us our which earnings second our pandemic capital that mortgage the through represent not from that income the the XXXX. on based a will is and i.e. event That entire of tells mortgage our the be fourth segment remainder underwriting analysis for expectation an

to However, defaults. of there between underwriting in of the based be quarters of receipt is likely timing income notice variability on

favorable quarter three in net period of in points loss ratio development quarter adjustments X.X development, recognized related ratio we first or net the XXXX. prior reserve compared of to to combined first the $XX.X Turning points of combined million

million experienced $X.X segments All $X.X the million mortgage and our three million for and at $XX insurance, of favorable reinsurance, segments respectively. development

was insurance combined insurance XX.X% excellent year We lower quarter the ratio from as one premium in period written by cats quarter COVID-XX one include segment's points XXX The growth had a same basis excluding ago. reminder of XX.X% same the segment net losses which ago. accident year over the

premium basis primarily of the XXXX base to first a XXX quarter XXXX. of of quarter rate the is most ratio, The throughout one loss Approximately increases lower primarily ex-cat the from year accident expense ratio points of ago. and achieved the benefits in the reflects difference over lower due growth

transaction transfer line significant other of our the reinsurance which in specialty had for results quarter our As operations, the a underwriting affected we of business. earned an written million fully in in $XX loss the and period the comparability portfolio

been combination have around This increases, was new would the most of transaction, observed premium -- higher includes a one premiums net written across lines sorry this Barbican Absent ago. and quarter integration XX.X% and opportunities, business year than business. written rate of our the growth same the of net reinsurance

While its impact a the on ratio increase combined resulting the ratio basis and the of very loss to the loss transfer loss points, XXX this more quarter. decrease XX growth ratio. had points the of good expense a impact segment, overall basis XXX components to Overall, the and performance was minimal this of and decrease a ratio on with points portfolio segment underlying of for observable reinsurance our approximately was of each basis expense a

estimates segment XX.X% impact the ratio including loss resulting was level earlier. conservatism from our combined reserve of overall segment's XX-point ratio mortgage at increased The -- the ratio discussed loss in

basis year same by employee reflecting costs reductions the points profit commissions higher expense over ago business compensation was The benefits. and and in XXX on one higher quarter ratio ceded

Total investment period. as on was portfolio of XX return U.S. negative served in dollar the a our defensive well the for quarter positioning points this us difficult basis extremely basis

some investments first quarter their in on are included typically our financials. performance our three months, quarter fund Given second will a of be lag reported

-- portfolio results investment in but positive to quarter allocation first slightly the XXst, financial markets relative approximately our than last of years December a help some return the compared quarter. by at at reverse target of had in Most overweight should years observed which our duration to lower was The years. April X.XX we're remain we X.XX X.XX

rate pretax on pretax our tax discrete income point quarter basis tax in in operating geographic the benefit and and the a the mix income reflects XX.X% effective of XXX quarter. items was The from

vary on income could As and always, rates loss jurisdiction. each location varying and rate level of the tax depending in the effective tax or

risk briefly management. Turning to

basis approximately X-in-XXX-year equity as increased on net had at April $XXX X, single event well X% million of limits tangible the level. natural of Our cat below internal a PML which common remains to our return

to With a to we sheet. committed balance management, maintaining respect and remain capital liquid strong

at of we quarter, million shares the $XX.X an During aggregate repurchased X.X approximately million. cost

While not to we we XXXX. do have repurchase remainder our shares for under share of remaining authorization expect program, the meaningful a current

link at with remained approximately March the March These notes. our capital afforded billion of USMI, structures ratio reflects our a strong reinsurance insurance coverage At XXXX. sufficiency end position mortgage XX, PMIERs provide of the $X.X which coverage XX, XXX% XXXX, by of at Bellemeade aggregate as

live have to to patience, business a creativity, the give they shout more of Marc's a special echo colleagues to tremendous around Finally, compassion I'd our like communities resilience X,XXX out comments, and with than demonstrated the world and clients amount about that a seven-plus essence partners, ones loved and what part They you. the couldn't such over and the of to prouder Thank be I last and of all families of each are their in, be great individuals. weeks. team Arch is other

prepared now comments, these to questions. are take we introductory With your

Operator

Wells Our Instructions] from question Elyse [Operator with Greenspan first comes Fargo.

open. line is Your

Elyse Greenspan

the on segment. question first My morning. is Good mortgage Thanks.

kind be I three around that total that to what difficult But the within put still underwriting no did hands you for -- expect loss the your difficulty say So, heard say could you you quarters. of MI. income next guys

of So, might vicinity $XXX of that look if it -- back into and been in generated guys translates an what few at what the million I seems and quarters about you've have at you maybe expecting, look XXXX right like loss.

guys around there disclosed why last of for Now RDS tangible the business I at reason your of equity. that is year that go your X% end you the was

of the seem same numbers ballpark the each So within other.

could together? putting something assuming or you're thoughts those to that RDS, correct in equivalent this triangulating I I loss am be that am missing your So,

Marc Grandisson

Yes.

the think thanks for question. I Elyse --

to appear The different coming against same a have I think next the the source. will actually million that the be they're put number from but to level, a referred numbers to three it's losses. And premium. incurred great you be say, $XXX that that quarters could that let's for two be you

look we at PML. we the future RDS our paid what that all we scenario, and is this the and rollout look would by all you receive the offset the it of constitutes in at if actually And claims the premiums

different. P&L a very is they're One net So impact.

first one other you around. incurred the loss is of The $XXX time the mentioned million the

Elyse Greenspan

losses the balance had I million quarters said the $XXX next the three that the generate wouldn't thought you not So is -- expect income? of over the any you it underwriting

François Morin

I it's I just think, clarify the nine in-force really to runoff Yes. next full mean the of versus difference a the between months portfolio.

minus I As made was income losses premiums for the we a of think comment income underwriting don't expenses. lot the we're XXXX. remainder minus what And underwriting saying, meaning XXXX expect whole of of we the -- of really remainder

to RDS, mean be to calendar a income quote RDS. future much that XX five, a the an to to about What we let's or because expect million be years $XXX may have fundamentally flows of think would similar was number premium would get years. premium us -- you we seven, material that larger loss When say which incurred really coming in

underwriting it's a So, premium RDS full and comprehensive full gain/loss in-force the income -- the the is really of runoff portfolio. across -- just

Elyse Greenspan

Okay. can the guys about are for price figure? think to delinquency rates what we RDS, that as well And the like coming and as X% depreciation you loss then us you how remind within assumptions housing

Marc Grandisson

two when it than two The much length crisis XXXX is -- unemployment time generated. would period of that our a major RDS stressing these There longer. have X% or now fundamental, below to and years. many at so high from rates price a three decrease in-house going major assumptions, Yes. Interest staying X% XX% longer our XX% lasting we the shooting are are level through portfolio is down there but even that the of ones that course for up go

something It's versus is for X% claims. To out hard claims conversion delinquency to me parse the what rate. delinquency like equivalent, ultimate to more it's

rate. to terms of prefer we in claims level high a think at So,

we now, happen is off which above stands of were equivalent what just expect we for it what above months. as is right to -- we benefit be RDS default XX So, for that to to significantly to it your significantly you the the run if expect just that and portfolio the will which it net X% now right next have

Elyse Greenspan

the or And you that lack the then guys covers? -- -- to might mortgage, have to those of assuming one this not last any does you going for the for do point Bellemeade guide ILS year-end you -- securities, think and income into are you're attach one of you guys of your underwriting at do the some use on you

François Morin

Well, two guys. that clarification for of good just think things -- for I you points

in amount in the second least maybe maybe later. all, of will First will the basically amortize and quarter available But maybe a that time. the happen XXXX, there's basically protections once sometime of you them some likely certain would think most duration we remain that at on the Bellemeade that do and third of they stop know structures. expect you for those quarter covereds exceed of probably period for level of delinquencies, each as And we likely that us, in to amortizing. is most a freeze over And trigger the

But under trigger I more the think do would provided the the of to expect answer Bellemeade question, protection. that directly not we to by your scenarios most coverage we

well, is we where we we of to know coverage of talk cover excess we'd scenarios, to it's the exposures. $X or receive fully would cede of don't we would -- pierce the attachment -- time expect So that that most we at start our under billion this available, we there. But some actually about, loss know

Elyse Greenspan

you Thank all the Okay. for color.

François Morin

welcome. You’re

Marc Grandisson

Welcome.

Operator

Thank you.

with from JPMorgan. next comes Jimmy question Our Bhullar

Your open. line is

Jimmy Bhullar

Thanks. Good morning.

MI question business. a first just the on So

reflection sort GAAP and does think of it reserve rest ultimate for to But that of at it primarily -- also than and lower of of be reflects cure you people Your delinquencies on of like will more year, just delinquencies, views given at a because your be that the that forbearance taking or does seems you of or the having rates at is then the reflect given stuff higher it's higher. rules, having underwriting that that from comments, a not assumption level advantage and reflects -- it are the -- to reserve your defaults? the -- will also level ultimate defaults you and no income you

François Morin

more certainly the former. It's Yes. of

normal given be do we programs reported we that reality expect expect than higher So been the the to forbearance place right to of flow a in us. delinquencies have

the play Some and just take just of and falling the mortgage programs payments. people not are to just behind be they'd on rather safe taking advantage safe risk their of

of will do it pick these -- is So will QX have what we we to expect yet will and will I up that -- happen, we expect we we in seen much but delinquencies. QX that mean, receive haven't

at certainly delinquencies nature that to make we have the on we'll fact those QX, we'll us. just based When It's that come kind tell today set the what assess too the early what will on information, to based by probability to cure just reserves, number of to an those be delinquencies. end will We'll But look of you elevated in to that reported of that the on trigger time. front like. us on expect we will of have that determinations actually us we'll

that reserve claims will I the We at how -- delinquencies quarters. some just and those think paid Time for we'll least incur in but into the work don't losses. mean, Whether few know. we accounting for will really next certainly will that's will year we ultimately, the tell, translate those

Jimmy Bhullar

you're And your pandemics about assuming actually then of in you viruses. that primary interruption on contracts. provisions talking contracts or mentioned of I'm because most business losses, exclude

the On either, assume a your the then because clients hook lose -- lawsuit you coverage a you or and to the paying they to provision as well? provided that should would wasn't case reinsurance then we have extent be are and on there side, a if because

Marc Grandisson

Yes.

yes, for exclusion. majority you a than has comment vast more virus majority with exclusion of vast is insurance, the to we the I or – what had do as which appreciate an the -- think viral can do it

clients. going for out say, to then or We share they the and through come they'll losses still are be reinsurance, matter it's On figure BI on of And quota to to have a our whether go excess protection loss still risk on fruition to that the basis. the cat there's right? have if or what early, for

So going out several play to over next quarters. this is the

a to start clause when kinds we events. we There'll A how lot hours those and lot for discussions of counting, do of of have back count do as contracts forth be them.

there's what uncertainty be because those some in the a the So longer lot event. little kinds more written it and in out echoed comments same to it's I've to are industry, means, to not for other that going of figure a folks bit general, the contracts cater

There's be really primarily property perspective. not virus from a by I'm cat-excessive meant coverage specific loss from protection. It's to large a talking -- and

to to it will language what sift the of through people So and every them. and one see each have means

Jimmy Bhullar

Okay. and in just much reinsurance gaining of growth share that in? And the this insurance lastly or some is your pricing how acceleration versus on lines then you increased of potentially premiums, you're demand of the for just

Marc Grandisson

of premium about level in X-X the acquisition. came Barbican them. definitely high a one of through At Yes. is increase XX%,

a on the is due credit X% and acquired P&C rate. had of quarter year. about second last our The XX% increase Aspen XX%. towards X-X, also and was rate to That's between We across team XX%. half this surety from

or or better business rest in the in and is actually one new one-offs of mentioned of opportunities which XXXX, XX% François comments. his fourth than truly quarter unique situations it's So growth the exposure

Jimmy Bhullar

Thank Okay. you.

Marc Grandisson

Sure.

You’re welcome.

Operator

Thank you.

Our from with Credit question next comes Zaremski Suisse. Mike

open. is line Your

Mike Zaremski

potentially just Can kind it will efficiency about of that requirements months higher you loans. means think are next capital, the or investors Arch and MI. deferred It performing designation XXX%. said prepared to remarks, the materially capital for to requirements? Capital as the ratio should and increase? Is that PMIERs FEMA talk the could in back for to than play is about usually MIs allow moving non-payment I and loan Sticking in afternoon. over out in? know we loan charges as how of well excess we levels it or the three nonperforming good XX I less loans saw Hey, kicked levels other that hold how capital

François Morin

of wording by actually mean I your reduced the Yes. FEMA-designated the capital in when are XX%. it's answer answer in is that requirements to question, the a the yes for delinquencies there's PMIERs zone, -- --

given a at Currently, and at actually declared have charges going -- XX of requirements for haircut delinquent zone. to we on end say disaster the are that capital have the the I'd capital So PMIERs March adjusting FEMA end forward, reflect declared that been the -- loans. we're states -- adjusting all and starting

a There's FHFA discussion long be will a bit of around with going available. on that how

industry and come I together think clarify up working to the to everything. and on FHFA GSEs that the are

technicalities go think back maybe some performing. that charges -- call loans considered cure say awarded will of a and it we the will bit to capital in think wording but until how it the I'd a place and of we I haircut that remain on the on we're we some PMIERs, have bit those the perfectly visibility more there's wasn't still or the in of -- they'll expect

Mike Zaremski

call year? I decided final mentioned it just play to a like in does to is guess were of that below offense how capital earnings purchasing trading guys MI a of most it question. and this value? change clarification the kind And I playing not kind of maybe And repurchase why you book of Does is it's into you more not for the remaining I'd part the you're lack I when playbook? some long, broader -- COVID, maybe the question. is the terms stock, than this why of of has François the clarification carriers. of broader stock that on prior likely the know most COVID feels Arch

François Morin

like on offense of in on bit it a to a flip played QX amount think you. I'd Well P&C Yes. I'd we fair side. little the

it our keep we we it strong said opportunities able think is And before way. advantage the again to to balance we I to be -- may sheet, we want have fact like of that view optionality. want a take that We So that we that surface.

XXXX So -- emerge does probably maybe and end of per disruption we fair going COVID se, there that's of will playbook? be change amount through in think but to Not a beyond. the the

can to So Arch how that's those playbook the the that's opportunity we in, opportunities. or but having Marc that's really ability -- and about think the on really chime execute

Marc Grandisson

And we with We know very in on still We side and and develop allocation to reviews through market MI do we the after are first I very were of even had better a the what to and allocate that with business other perspectives, and lot and Clearly, more get important there. the Yes. we as capital look you the the but have hearing would it's us, quarter the as the the were something P&C of COVID-XX. guys every we capital more and MI shift played everyone more involved. piece and day understanding market. think the large lookout always we by

months might there. be in the little a and François quarter, clear second in deploy capital. there dip that of mentioned is third as it's opportunities to is premium first of And do are increased bit there though insurance Even months a This our mission what I we I our wasn't deploy ago. believe an underwriting. is have to six to us or level think that want nine shareholders capital opportunities towards And

year as capital very so. or becomes the we capital. So And as important go next I said, through

great we'll returns it So hopefully able and shareholders. deploy for be to make our

Mike Zaremski

to what would guess a operations fairly you So non-MI at and offense to continue should -- expect continue then pace? the we playing Marc I fast growing

Marc Grandisson

Absent answer market that and should and focus of for while. because based opportunities, exposure as side and we what in by said, happen. is right on reinsurance. on P&C of see terms to we both stagnating yes the a to I But yes, GDP, terms bit offense and getting in the play now more large, our insurance is, Well a expect conditions the softer

Mike Zaremski

you. Thank

Operator

you. Thank

from Kinar Yaron with Our Goldman next comes question Sachs.

line the button. is open. open. your mute is Yaron, Please line Your shut

question Capital Returns. from Our Ron Bobman next with

open. is line Your

Ron Bobman

you primary Yaron purchases of back as they like-sized worry and place? and to and can Don't you I sure. of to you mortgage be mortgage Bellemeade in to on in like-structured that you. hope put will And of hear book? am everyone's Thanks is couple mortgage prospectively, book I'm plan sort effect for will the circle of protections and put the in to sort through I I of wondering the capacity the reinsurance notes. had continue that there to well particular be The into do sort think pricing the buy a course. the in best game continue questions. business And

Marc Grandisson

going don't question back. first it's the when So to know I come is,

to expect back. We come this

I interest was a healthy a healthy think market, level of there before COVID-XX.

it will the does guess and be less. might profile, So to And to expect But the continue back, that of would economic things were don't those of to us. within that's our would going do know If decision, to we transactions a fit bit is ahead doing risk we more, right? We we normalcy back sort. return way some we We come question an come do gone happen. if more back might did. when I when it time

So be of on what the it view we will depending recovery our this. pricing kind get of and from

a proves general I very And have do mantra as rule important. think like in management useful to this is protection. events that a some our downside risk believe they them to I these we still We do bit part would and were that us in a little worse things would play go than expect so. supporting late if come of to in big

things them I a mentioned. this argue would at conditions, that or us a I just reason reason things which price, would are at do but to I to expect still So bit within which difficult there's definitely for do

Ron Bobman

going context reinsurance, there a losses as going Are peril-defined market and of, are be have cat is of a or sort I and isn't and instances I pandemic not to classified coverage lot treaty? a guess there question. have COVID as there Thanks. where in be that primaries of listings of are in the ceded be a towers natural lot reinsurance peril -- that in catastrophes, a reinsurance to instances the cat stated would -- narrow natural protections treaties cat being deemed this losses, the because or cat a

Marc Grandisson

quota just add in share the mean, Ron on a excess. risk case. the fortunes Yeah. I you I What is this would though and sorting many have to contracts followed

now. So and purchased natural of on it's are the majority -- think a I coverage right don't that perils,

I a different. think bit it's little

a because -- for peril you it think think versus think sure expect of it's But softer U.S. discussions, market natural It lot a could that it's specific in also be. different I as a the as while. I'm reinsurance the was we'll not international. I

be expect. So when that tend one than happens, conditions to a would broader bit

Ron Bobman

gentlemen. Thanks All the Good best. lot. luck, Okay. a

Marc Grandisson

you. Thank

Operator

you. Thank

Our Sachs. next from Kinar Yaron question with Goldman is

Your open. line is

Yaron Kinar

Thank you. now? me hear Hopefully, you can

Marc Grandisson

can. we Yes,

François Morin

Yes.

Yaron Kinar

morning Good Great. everybody.

able First loss MI you MI the quarter? U.S. would this book? the been ratio question book on MI. the rest to that was used Have consistent like methodology using What a by of look the

François Morin

extrapolate going just year -- of roughly the on XXX the year speaking mean saying the call mean for we're combined the for be the we we be I to if -- ratio remainder if safe. to I is it Well,

expense you you annualize minus. minus it if ratio XX% the or a plus So ballpark, ratio XX% loss gets

Yaron Kinar

GAAP do -- my the the maybe it of worse range progressively also accounting the be answers flattish question, the business or through in make And you next basically the year? breakeven the Okay. was to in results rest which would MI quarter-over-quarter, that expect

François Morin

I on are show to delinquencies hard how May second X. I If They payment see depends flip-flop. right It all missed where April might forbearance scenario start not their they on significant way could mean, to a mortgage told their show QX that missed payments servicer People a people we want you they could of as their and And in up in call on the July. a know. Very X. they to as in I much take expect don't their delinquencies know. show servicer the -- making of along to mean going amount advantage keep might be delinquencies we to -- program, it payment quickly QX QX. try up. first the the up when

XXXX delinquencies think ratios function will very like. in a the calendar show to much it's quarter-to-quarter going quickly the look So volatility how up on we bit are are to that a going the from the loss quarter dictate more it of call how

Yaron Kinar

maybe and perspective in line Okay, if perform margin insurance, you okay. you'd COVID? programs top to the to both expect turn from that talk I about how And business can the face of

Marc Grandisson

a that's comp question. really workers not yeah, good Well, exposed. It's

of off. to policies -- exclusion. -- property. -- exclude can It piece we exposed all The lines. the is have credit be that would it virus have So think of could the we that almost And lines really a take doesn't totality viral it's maturity

to contributor So that should experience on not programs the a loss business. the be significant

Yaron Kinar

very you much. Thank Okay.

Marc Grandisson

Welcome.

Operator

you. Thank

Bank. next comes Stefano Our Deutsche question Phil from with

Your line open. is

Phil Stefano

of that Yes. of shake are was out? flow hoping I around what around can your in the originations for does feel you my this where there refi the could MI mind we're the see and time rates to this as it the might to risk-based up. in environment. And in Does economic And purchase give business maybe commentary a originations going new embed pricing business… extent instances could pricing are How on starting versus of see would to one year. actually flex some the were real that I changes pricing. feel like this you react come those within flow -- that with through you you commentary like thoughts guess be

Marc Grandisson

number if the So this The Three one what is questions forward, it to this keep -- industry, cool. me there. the production we we be know, consensus right? tell had XX% less don't industry tell you up, one. wrong I'm origination That's the seems but pretty on do to with you to going I'm year. the can trying in so

and What we us mean I that the along. means market follow for

one-third mortgage lesser we so XX% MI can private all so decrease, through, equal, if from perspective. We you should else XX% look being if expect at -- the about that production MBA, have you insurance, about of XX% so XX% to penetration follow

think I mortgage the still at much to of and are there's origination actually blocked although very lot because right, the of continuing lot that, you're there's low -- to there's and that lot so a due of for rates. originators, movement historically mortgage continuing we're a glut the refinancing, a And see demand we a are things of

we to But think purchasing over going last quarters. rolling lines it's do last along -- I happening. it's some But the going more be of see probably three -- the rate to actually be the

I expect. should think is we what

hard purchase it's again, come to back, So is if in market going tell fashion. wild to the

down, demand But certainly price there, pent-up there, house are going which talks over still believe lot index. not not helps being to much purchasing year percentage to so, demand, market the think all of because of a pent-up We single-digit also go which you as its altogether. as this there in is gone out maybe a the might the house prices the

second as Street a housing. -- the of result higher Journal, in I there's morning a lot part. demand Wall think the a that article of sustained, this pricing there's good That's for

in things with various different about our characteristics. more look which course through risk of The a the parameters. things changed. we -- once We risk-based pricing We on I at look third our and than the light was the went part -- right assumptions and mean, through portfolio, pricing, at different our have risk

There's a across And more we're making adjustments, risk. to as losses. appropriate, industry. hey! think want it that sees bit as we a it industry more There's do see I bit a, the MI the

general. We in something we pricing. do maybe do increased their them loss do expected And about their suit So it. people -- I in to follow have have expect should indication are that

Phil Stefano

they or use, to that capital is better And point put be materially? this the about seeing a in returns that? you're exercising When any think a thoughts changed insurance maybe have expected at place lever -- we just to you to around MI, can better

Marc Grandisson

very, It's No. well very put.

think think, I exactly would except this -- superior ago, to for said MI have and is on provided insurance reinsurance a years I on two you by I spots P&C -- the mean, that, the few far I that, return.

there probably MI it it's while. the modified businesses, the we And through low. was go So I up executive it. there. expectation order go François and team things, order repurchasing rank It's probably through And when three -- And not rank our We a has as investment, for in quite somewhat. been is our I think, shares it. loss

how inflating we'll for and them has higher But been the out. allocation, unit the relative putting forward, So, see depending on the pricing then, positioning falls returns the positioning P&C that -- the going doubt. clearly, capital without a from in

Phil Stefano

it. you. Got And be Thank well.

Marc Grandisson

you. Thank

François Morin

You too, thanks, Phil.

Operator

you. Thank

is Our Meyer Shields KBW. next from question with

Your line is open.

Meyer Shields

assume damage an does first like have dead Does that requires here. your COVID assume P&C, feel do I'm physical that that, Defense? beating occlusion? absolute that but FDA quarter that's reserve, in a policy direct doesn't But I thanks. virus does horse a Great

François Morin

start. I'll chime will in. And sure Marc I'm Well,

some it's on small and I right there very but certainly exclusion. mean books have early, we very of -- that, reserves property know a we policies taken are said have an you our subset As – it's don't again, particularly where on is

go So, those through expect for against those prudent we come we to and we to to -- ID&R felt policies. losses the booked it's

U.S. And those of I outside of generally mean the are outside are they U.S. the

U.K., in the a expect specifically small that respond. have fact side. pandemic. the Canada, will of some to that cover it's insurance So, And in property we certificates these of some some -- And may it's also amount have in deals on the we

and a of a it's bit reserves So, we mean that people the -- question want bit Yeah. -- I kind challenge mostly you that property on There’s have proposal damage booking U.S. in a need to fact. it BI Yes, little no out BI. there retroactive how But in That's that. that's where insurance reinsurance. to the respond. thought about the we in a make that's

those. time don't it's We right. its goes, don't for we We correct. think see think, to how far reserves the want have being that -- on but We'll how

we've those on our of make wording assessments relied the policy policies. on to reserves So

Marc Grandisson

Meyer and say the that, data piece would we this, And trade there can this think what expect I other lines And point one these to. business of we is to three add to that this we is would to develop François is we credit. have example other are

the small we -- of this expecting we the year. on fact a actually an we reflect -- might portfolio but what for we're write have based do did We increased claims proactively, level that

something that loss So our ratio, that's pick specifically. we

lines level think historically we've we've property So said at them portfolio most such of seen did agree as where claims ratio side business losses level. loss the as what granularly the taken events, more absolutely, François And we emerge I one. approach other a the result on I the level of a of to a this

Meyer Shields

Okay. very helpful. That's

constitute related trying of events around, arms sort what losses. second just my quarter P&C second would The getting question, COVID-related I'm

François Morin

whatnot. thing business, brokers feet insurance development Meyer mean will a evaluates process the we think an through evaluating BI I things the to firstly, is of to position. this insurance do go claims the every clients’ to have go have companies you – losses the and I losses from through XX,XXX claim. to not their easy talk telling

So, a get to take out. before things while sorted it's going

A of things that. couple coverage of comp, that's on of part presumption also workers

I think lot of was things -- it developing.

quarter, does the accumulate. it it So, I'm all And going not had question accumulate earlier, to even recovery. these sure. It's picture. if ultimate That's in towards going they have through go second the just to take for how how we're longer how in -- if sure losses, I line bit and to it a reinsurance a with and also does,

So this of that end also might happen year. towards the

So litigation this is little happen and could whatever there. going even to potential else about take a talking to out that's And not while sort out.

to going be it's while. So a

Marc Grandisson

going slow cat a developing loss. This to is be

Meyer Shields

That’s guys. so very much helpful. Absolutely. you Thank

Marc Grandisson

Thanks, Meyer.

Operator

you. Thank

next comes Our Brian question from with UBS. Meredith

Your line open. is

Brian Meredith

Yes. Thanks.

here. So two quick questions one or

is given Coface First, what of investment? close, stock anticipate through, on agreed if you your Marc, is impairment investment? type Coface tell charge the to indeed, relative should transaction status the can where the goes some we And us, of

Marc Grandisson

long-term point in at looking early at this time, and evaluating So, They we right? made you know, investment are going a and as too with strategic everything vision. is themselves lot through this a -- that our

also credit it last that of we know in had also through that proactive know was what been end than also And credit the -- was they year -- We well XXXX. many in the what they is they are of the quality different underwritten as have -- things. that

these a lot We go still of regulatory from trying all to through perspective. have a to triangulate things. we're process So

to this expect towards of receive year. We the the end

if So to to do we it about say going anything it. sort staying what close I'm it to that's we're monitoring see Coface, we are going is about of and all about do

Brian Meredith

the XXXX? much going MI this Bellemeade into far does could to for the If far seeing, And to How What be of year lawsuits mean my you. Got we How as the that second are potentially are for back that transactions? you're I as the about think have. guys the MI. going results? in rest one, additional there you XXXX, deductible the potentially on then just

François Morin

it's again, Well, premature. very

the answer economy will the very going come see little question, And to that think how quickly bit. up delinquencies -- now to of get depend much they level back, I opening us. on again, a the we and

So cetera. we to to And go back work. fourth et some see loans, having current XXXX, -- already the carrying will by people people back going quarter of

coming some for convert a some question that XXXX, XXXX. think was I level be -- yes, we reasonable and -- will but be yes, there'll The would down. expectation lost we ratio loss the I But, -- as should is let's would think should all actually because that, go forbearance -- XX-month don't claims to take do than in it XXXX people that better to then that in will or there think no and jobs -- the quite some may as late that be actually to actual XXXX, claims, convert pay program delinquencies claim paying process, may that that to go a to some claims time. and be you to know, to real with the the time really through

was that, level same ratio XXXX, I would or as in in at as XXXX, the XXXX I would low would not at sure. the think be as but lower better loss been it for level, a So, than it has high -- --

Brian Meredith

you. sense. makes That Got

additional here right? much do the hit how there? kind think I Just what like, potentially is, so this trying could the have what's of Bellemeade to And MI a before loss deductibles, in scale just book you worst-case I'm we

François Morin

Marc try a maybe We've -- let of scenarios. at in. this economic bunch a Well, variety me will looked chime and of

internal we our the Some that own based like test our run through on analysis, are RDS stress portfolio.

the economic and such economic Moody's SX what's -- scenario. the published are on as external SX based Moody's, Some by the severe -- scenarios,

we again, -- where we are close, down And close. but attach few we road, most don't SX, Bellemeade to the expect but years -- particular We don't transactions. like the start we under get those attaching in might very those are expect And stresses. to severe scenarios, with the a get it's

probably it a really It not. the does starts road. -- answer years few about is The recover XXXX? think we to we even start it down really how probably So, to impact is,

we but to to we're we've with mean, to seem severe -- it's sleep-at-night say, I And, stresses. I some what got tell don't us, Bellemeade, We often thinking, -- there the really, us, to -- attach don't want say a they run very or but get insurance if it's necessarily They think well, could of the worse worse ourselves, available worse. that a get we're to billion coverage to scenarios little much is be than like. $X things look we bit what coverage,

Marc Grandisson

retention Bellemeade level, we high is ourselves of billion think about about very that, and $X.X Brian, a $X.X to retention. we billion you of At this if have amongst the talk

So start get for to sense through go how that recovery. losses you a gives much -- need we of many how to sort to would some

should you billion that think, a earned. I give -- that premium So $X year

some of benchmark. So that gives you kind

a explain. it bit to to more -- make thing Yes. to to couple retention François. We'll what the I because But, just the don't true, think try easy I figure find in is is said and clear we'll years. it next expect you that a enough it's we that we of we're trying obviously, everyone, think, a to not talk to way a high level, way of Don, to level an high at

Brian Meredith

you. Thank Great.

Marc Grandisson

Sure. Thanks.

Operator

you. Thank

Our next with Dwelle Capital Mark from RBC comes Markets. question

open. is line Your

Mark Dwelle

Yes. Good morning.

continue Just MI to with the discussion.

no average hurricanes of earnings within similar or per assuming of the at, reserving reserve year, for -- something to like, balance the you've or more are As to what something been you guidance of the contemplating after a the you're case similar that nature?

Marc Grandisson

forbearance XXX% claims we close is we those of a would apply we and then cases. severity -- the And that to forbearance assuming from just pretty to apply do. We're on rate most conversion

is. more might binary than you really think it's So it

I which the that at not uncertain the mean big in ultimately, time. very and really two from -- there's forbearance much point So variables the forbearance are of to view conversion our claim, is

Mark Dwelle

losses that, some sort or then, some you you bank that -- evaluated is of of, case-by-case formula whatever presents just, literally being it period are a Within time? these are of or on particular the to over the all applying basis, a

François Morin

Well, environment. it that delinquencies as it's delinquency everything from out. we typical -- would through. play question I early rate that in bit a -- going higher a No to earlier see know would how no think, those on more come mean to we normal a we're we expect I exactly I question call expect said cure economic to a is than

-- know we're the second let the we So fourth quarter. and and how book third but at reserves alone end our don't yet going of to quarter

probably through what yes, we're there's compare a forbearance So get the et we question with there's is severity to that cetera. the no delinquencies mean I rate. a answer expect that regular programs you And -- the if we higher then delinquency cure associated

So a regular I the incurred bit mean it's we a total will quarter. of would for in we – them otherwise if than those quarter. differently it product you in the the sure But at a look call loss gives it's

Marc Grandisson

we you individual and shock loan of go But -- do did it's specifically at you see what's And the price scenario. risk the And going to because we assumptions result. you our the do with develop applying have have just on level ask and loan unemployment whatever the index. characteristics sure through to how go to that we Mark around make we house clear and lifetime and -- else

end of claims You come up with decision of the that series projection tree on assumption then we can think ladders ultimate sort. at of series ladders the the And based forward had. we it the as going -- the of

and we a which a the SX top-down this SX. And verified some was at François try bottom-up mentioned we to least get Moody's that approach perspective So approach did. from

to would So coincidence I -- and by to for seem ultimate nicely claims. and those number add converge a similar very

Mark Dwelle

I as advantage question default just get I sometime is And of And in process mean, month June. recorded I beginning I'm a question. described last the of another, François before. May again individual and in let's then And this in But I say, X delinquency suppose April the forbearance, take then as an and and requirement. sort

delinquent? you would which second up for to newly quarter. the the that of back months, against in quickly further who would let's quarter offset X reserve Will for as put which able are taking adds delinquent reserve some say type me the October be the in additional as, otherwise then You'll be provide or of that probably fourth you release then any be would people end say,

François Morin

mean, program. work people say exit payment, thought wouldn't if they there's the a think I little cetera. borrower going are I be confusion, well on the have to balloon bit Correct. there's I mean, payments and how to cures done just et initially do make borrowers I I has of that to defer but exactly my a

-- government that the sides. are clear sure there both think is mean on in I to the no make I stepping expectations is

had four strike October -- back But effectively, go correct that after to and five if a -- missed that their to December particular somebody eliminated in current put everybody's whatever borrower, new work they six an end they're back payments at November there's reduction… if reduced reserves they -- would of we period they so agreement their borrower mortgage reach -- to coming back. for yes particular we to zero or we in a they those and and that or available agreed on on think with be mean would up just they get they I would they it's just months add say, the and to let's they loan

Mark Dwelle

Just develop beginning quarter, start see pattern. assuming fourth to in would to third a reserve accumulation think and kind clarify the type and would follow people that perhaps second as then of of quarter, you you of offsets

François Morin

the back don't a is going and is the then make is use again -- I programs or they QX. But try in say They what I to vast it's fourth assuming QX. and would for the Assuming who it they QX they to payments think -- program potentially would reversal that and we earlier in mean to mean couple reserves the be think everybody see I assuming, quarter, correct. there be saw accumulation QX what what there'll be are of forbearance go the delinquency of in were go you then majority back yes, to -- their a but – we in which current. of let's or -- see just to timing yet and going I maybe assuming cure and more do QX of forbearance where is are I people on of -- somebody temporary uncertain. is starts and work the -- QX we know mean,

Marc Grandisson

Yes.

really the the could to more go add plus reported this So we of very versus cautious -- point delinquencies of delinquencies a having front-loading when minus, was it and of again real for now your or to the Mark, took I recognized up cautious it to a in front-loading beginning be at a took two, to XXXX that XXXX -- lot three than development claim peak. like compare for but delinquencies while of the to -- where more would from there pick years be GSEs and

So this it time takes a think going don't we're around. I see while to that to there. get

I should in activity the little loss of the -- in from perspective bit first next of means more think which quarters. a a front-loading, couple expect a we more

Mark Dwelle

helpful Very you. Thank Understood.

Marc Grandisson

sure. Yeah,

Operator

you. Thank

Our with Dowling Dunn next question from & comes Geoff Partners.

line is Your open.

Geoff Dunn

morning. Good Thanks.

Marc Grandisson

morning, Good Geoff.

Geoff Dunn

that an from technical just First initial point same there's question on that in It standpoint progression or charge that interpretations you'll on meaning well, confusing PMIERs. front. charge? it that out seems as the forbearance of kind treated aging is asset get time a there way loans asset Are

François Morin

loudly you're -- hear. mean very not I I we couldn't Geoff so. Sorry, through quite coming

Geoff Dunn

better? any that Is

François Morin

A little bit.

Marc Grandisson

bit. Little

Geoff Dunn

What forbearance point that of seems the It out up I to is a interpretation. subject and was confusing the loans they to charge? like aging at are initial asking the time language are asset in been PMIERs or there some just on has charges held

Marc Grandisson

true. Yes

it's for as GSEs. that territories I think unchartered well the

and of lot a and between I FHFA MIs GSEs the the to try to there think the discussions figure are out.

to one So Geoff. I don't answer this have an

Geoff Dunn

like it to together sounds Okay. of for from seems math that potential maybe the that expectation at implication And times a It piece forbearance because or year. we've of level I'm three higher then I'm that near seen It's looking the will below a is be the the still trying two the if normalized outlook cure XX. is X% for right. activity. April lot the number clear than And your assumptions underwriting not remainder your incidents

So whether generated. expectation loss home for But the your maybe are cumulative a not have outlook activity to assumptions that support it what you of – all for level remainder higher year of be of some that the unemployment the that of you pieces kind assumptions cumulative macro are that loss get obviously, year? the level the of the some loss what

Marc Grandisson

that's Yes – a good yes I think question.

forbearance X%. to I on comment. we going don't don't think right X% were think think I – or it's the you

much what our us pretty forbearance peak we're then we the think like to XX%. That's at. is you I of would modeling if expect ask – And to question your remains point to pin you know conversion to in that something can between the one hard the about seven so one is one which is XX. down. But use as in we sort

delinquencies the know the that what or at rate the in There's look that as closer ascribed it be If current we the industry would real expect. claims other of ultimate reason X%. than is no current you to we ballpark to to seems we annuities X% Geoff, or an as

biggest a you right at I to, where one does too what XX% not seem the use of sort of you to we our converge – now. go SX that's we assumption sort of the if The – think if would XX% look crazy will. sort to or So so

You all know that model.

are. pretty So this we much is where

biggest think That's quarters to from is that debate thing going convert to to mark the I we'll the do have have forbearance the for you be that we'll question through. know go as next how to claim. biggest several we

Geoff Dunn

XX%, or you higher that said or And – be normal you will the sorry. normal? than I'm are assumption you incident XX% lower suggesting than the are suggesting

Marc Grandisson

hear can't repeat I you. Geoff? you Can sorry I'm it please,

Geoff Dunn

than Are be You're normal that XX%... incident than normal? you the lower or saying suggesting higher assumption will

Marc Grandisson

or it one of in That's to about of the saying one than and but modeling. one eight. this this going six, the in to X% is in is asking not delinquencies, what is If new implies. of parameters would the model – sort be what seven XX in deal what's normal. expect one happen the what I'm I right you're XX, higher on of normal one Higher, now in

Geoff Dunn

strategy. to now. to a of right. Well, last longer strategy that right interest the my your hot has do with is Does market Obviously, And Okay. with your all supplement reinsurance any then ILN traditional term? question ILN QSR looking create company at the

Marc Grandisson

We it. at looked haven't really

François Morin

everything the for couple get very a Bellemeade the last No table, us transactions relief right? economics. I a protection I good question all to a I was that in to thought have we capital the variety it's of reasons. the is years of lot on mean efficient, provide were – it mean we mean, on and of based

they're the we back back until that end of come think that the no assuming be maybe not – of for portfolio. the agreement protect let's we will Again reinsurance the to that table on them or traditional expect the probably is would but sure. for of to say year end And question ways the something beyond, a other

Geoff Dunn

you. Thank Okay.

Marc Grandisson

asked you've well. I as about MSRs Geoff, think

evaluate -- is table. to these we're things. We're on think I starting all So again but everything is at the everything. Nothing looking

François Morin

right? Goeff, said QSR,

Marc Grandisson

that we Geoff? just to question mean make answered correctly. I I is we I Did I sure answer want it your Geoff? correct, QSR. heard mean

Geoff Dunn

did. You you. Thank

Marc Grandisson

Okay, great.

François Morin

luck. Good

Operator

you. Thank

Ryan from Autonomous next comes Our Tunis with Research. question

is open. Your line

Ryan Tunis

Hey, thanks.

correctly, the trying rate your So gets claims the last to breakeven that heard the you December. assuming random higher to unpack to received actually is on that say, than I'm guess in that have yeah, forbearance -- answer notice that question that's to if a I I higher that than, modeling being

François Morin

true. That's Yes.

Marc Grandisson

This is the model.

It's while opinion. stress But for scenarios, uncertain. it pushing the who testing because stress you knows, an You're you're -- so it's right?

Ryan Tunis

might of five months plus. four year? these as Like I about that rest guess are to it's in is or sound how -- most thinking like buckets XX think be? recondition not you that three think on expected of there Right. But the XX you quite Is is I delinquencies thing about pressure -- months age? terms that in the certainly potentially it. yeah, somewhat and the and one I like it's I gave you've does people a conservative. got what pressure loss year, the I like of do noticed thinking kind of these like three delinquent Is expected think, And source there [Indiscernible] later It's

Marc Grandisson

claims, Well, high it's a that's of number amount. a so not massive not

older I'm believe me, I delinquency. in $XXX or that there of this a We is have of if And have them François of out million one. this. are -- something wrong so been also about reserves and like But do correct on will lot vintage

them in Some back coming cure. of are and of out

is pressure not -- it we're typically going there will the So, forward, recent if more impact only bookings.

-- can will because all it not have. ones it that themselves in the would the -- they years And worse borrowers, might forbearance they're avail may event they impact XXXX. -- prior that specifically, It delinquency, does are of of those may currently book in you And before position program. delinquent been have if in default a the at were that be than currently most they They end be occurred.

So, incidents higher yes, ascribe to tend a possible those it claims. to would

Ryan Tunis

how I of premium quarter the the changes. the any refinancing the But I one of Understood. housekeeping. number, is given by stuff? -- then, sure of activity? kind not that was helped changed elevated outlook has last premium the this the on all, at And for I'm then, yield that And first of book single all just composition much guess guess

Marc Grandisson

because of for of the refinancing. It the felt quarter, premium about XX% to XX%

Ryan Tunis

you. Okay. Thank

Marc Grandisson

Welcome.

François Morin

welcome. You’re

Operator

to like at time. Mr. I I'm turn questions Thank the not closing conference for to this now over Marc you. further Grandisson showing any would remarks.

Marc Grandisson

very much and forward report you be meantime everyone. Thank Stay quarter. have out at about Thank to second good. talk you. the there. to safe We're looking more the In

Operator

gentlemen, program. concludes and conference. for thank This the in Ladies participating today's you

disconnect. all may You

Arch Capital (ACGL) 5 May 202020 Q1 Earnings call transcript