Release Date: April 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Can you discuss the drivers behind the increase in your 95% plus LTV bucket to 11% of total NIW from 4% in last year's first quarter?
A: (Adam Pollitzer - President, CEO, Director) The increase is partly due to a deliberate decision to accept more 97 LTV volume as the market stabilized and house prices began to climb again. This adjustment was made after curtailing this volume in late 2022 and early 2023 due to less certain market conditions. Despite the increase, our volume in this risk cohort still meaningfully under indexes compared to the broader MI market.
Q: How should we think about excess capital moving forward, and is PMIERs still the best metric to consider?
A: (Adam Pollitzer - President, CEO, Director) PMIERs continues to set the binding capital constraint for the industry. Our excess capital position is balanced to ensure we manage our needs prudently while also considering the cost of carrying excess capital. We aim to strike the right balance between maintaining a prudent excess and delivering value to shareholders.
Q: What factors contributed to the decision to release accident year reserves this quarter?
A: (Adam Pollitzer - President, CEO, Director) The release was driven by higher cure rates and better-than-expected macro and housing market conditions. Cure rates reached their highest levels in two years, allowing us to release reserves held against defaults. Our reserves are generally anchored towards downside scenarios, but actual macro developments have been more favorable.
Q: Could you discuss the current pricing environment in the MI industry?
A: (Adam Pollitzer - President, CEO, Director) The pricing environment is stable and balanced, which is constructive for the industry. This stability allows us to support our customers and their borrowers effectively while protecting our balance sheet and shareholder value.
Q: What is driving the higher cure rates observed in the portfolio?
A: (Adam Pollitzer - President, CEO, Director) The high cure rates are primarily due to the strong credit profiles of borrowers, significant embedded equity, and manageable debt service obligations. These factors provide borrowers with both the incentive and ability to cure defaults and avoid progressing to foreclosure.
Q: How are you managing capital return, particularly regarding stock repurchases and the potential introduction of a dividend?
A: (Adam Pollitzer - President, CEO, Director) Our focus is currently on our stock repurchase program, which allows shareholders to directly participate in the value we are creating. While we have no immediate plans to introduce a dividend, it may become a possibility as we continue to grow and perform well.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
