Q1 2020 Earnings Call
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Cheminova.
Capital Group first quarter 2020 earnings conference call.
At this time, all participants are in listen only mode.
Later, we will find its a question answer session instructions will follow the time.
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Before the company gets started with its update national 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.
Yes, I based upon management's current assessments and assumptions that are subject to a number of what's gonna certainties.
Consequently, actual results may differ materially from those expressed or implied.
For more information on the this could not the factors that may affect future performance investors should review periodic reports filed by the company with the FCC from time to time.
Additionally, certain statements containing costs that are not based on historical facts. All forward looking statements within the meaning of the private Securities litigation reform that the 1995.
The company attends the forward looking statements in call it could be subject to the safe Harbor created thereby.
Management also will make reference to some non-GAAP measures of financial performance. The reconciliation to GAAP and definition of operating income can be found in the company's current report on form 8-K furnished to the FCC yesterday, which maintains the company's earnings press release and is available in the company's website.
I like to introduce your host for today's conference Mr., Marc Grandisson and Mr. French swomley certain meet again.
Thank you Shannon and good morning to you.
It would not be an understatement to say that a corner virus has changed a world since our last call with you would just three months ago.
Fortunately at arch, we are entering the spirit with the investments we have made in our PNC business beginning to pay off.
While our mortgage group navigate through the current turbulence.
If your work long enough in the insurance business like I have you're bound to experience.
Industry cycle is hobbies and its low.
As management.
We have to keep our eye on the goal, which for arch is generating sustainable growth in book value per share.
The current stressing the financial in insurance markets.
Reminds us of changes that can occur to which we need to adapt while we are still early in the assessment of our direct and indirect claims exposure to the corner virus. It is clear that this event will be a significant industry loss and will result in profound changes.
However, dislocation often leads to opportunity.
As you know one of the arches strategic principles from inception has been cycle management.
We are embarking on this new market environment with boat is strong financial foundation, and the creative ability, although more than 4200 employees that position us for the opportunities that will emerge.
Turning to the quarter.
We saw improving conditions in an hour PNC businesses, while our mortgage operations continued to produce good result, strengthening PNC market conditions remain evident even as the economy contract.
We have seen a rise in our submission activity along with accelerating rate increases across multiple lines of business in Q1, and it is continuing here in Q2.
Our belief in a continuing hardening of the PNC market is due to the need our industry has to address the accumulation of risk factors over the last five years of soft market conditions.
These risk elements are one future claims and covers litigation related to covert 19 to the heightened perception of risk in general three economic uncertainty for you continuation of low interest rates and their dampening effect on investment returns five potential for shortfalls in cash.
On T. reserves, and six reduced availability of retro and alternative capital in general.
These risk elements are all in play today and are likely to lead insurance companies to be more cautious in allocating capital to risk in our insurance group our strategy remains to be selective and pick our spots in this improving market.
The rising rate environment and dislocation in the markets have allowed us to grow profitably in the past two years in many sectors, such as DNS property Dino and DNS casualty on a reported basis. We saw our margins improved this current quarter has our accident combined ratio ex cat or core bid.
NP why the improved to 97%.
In our reinsurance business pricing is also improving and we continue to observe tightening of terms and conditions in many lines the value of reinsurance as a capital protection tool has been enhanced by the recent recent events.
The hallmark of our reinsurance group remains the dynamic allocation of capital to contract that will provide appropriate risk adjusted returns while at helping clients with solutions that are tailored to their needs and was a large factor in our growth this quarter.
Switching now to our mortgage insurance segment. The industry is facing its first significant test since the fundamental reforms and product improvements that were adopted following the global financial crisis or GFC as you know our semi is a data and analytic analytics driven company.
And our investment in the sector was predicated on a new and better and my operating model than the industry employed prior to 2008.
Now pricing is more precise products and documentation are better and the semi industry buys protection against downside.
In addition, another change in the industry can be seen any aggressive government actions taken in the early stages of the pandemic directed at helping borrowers stay in their homes. The Gs East Forbearance program and the unemployment benefits programs provide unprecedented support that should enable borrowers.
Procure delicately delinquencies as the economy improves and we will result in fewer losses.
As noted in our quarterly Hammer report the EMI industry is far better positioned for recession than they were in 2008 at that time mortgage insurance portfolio is we're facing.
A housing market that was significantly overbuilt.
Risky mortgage products and less creditworthy borrowers more than two thirds of mortgage insurance written in 2007 would have been uninsurable. During the last 10 years and finally, there was is speculative bubble in home prices.
Mortgages filed under the FHLB phase forbearance programs were estimated at 5.85% or the GST mortgages as of April 26.
This program allows homeowners to suspend mortgage payment for six months.
Which can then be extended for up to another six month.
While initially recorded as delinquencies under GAAP, our data on forbearance programs utilize in recent natural catastrophes indicates that almost all of these loans cure.
By providing borrowers time to return to work over the next few quarters rising delinquency rates under GAAP should lead to elevated loss ratio is in the EMEA segment. Furthermore, once the forbearance programs expire the Gses I've instituted a sturdy list of remedial solutions that once again will enable loans.
To be back performing.
We realized that this pandemic led recession will be different than a GFC, but based on what we can see today. I'll review is this is an earnings not a capital event for March It is worth noting again that even if this recession is worse than we currently expect we hold significant reinsurance protection on our risk in force that would moderate our.
Net losses, even in a more severe recession.
While some of our reinsurance at quota share and attaches at first dollar loss that index linked note that from our Bellamy Securitizations will provide up to an additional 3 billion of excess of loss protection. If this becomes a recession worse than what the industry experience and the GFC Lastly.
Turning to our investment operations.
We believe that interest rates are likely to stay at historically low levels for the foreseeable future and that will overtime require insurers to improve their underwriting margins through price increases in our investment strategy as in our underwriting approach. We have maintained our focus on risk adjusted total return while in.
They've told us which enabled us to avoid much of the negative impact of the pandemic on our investments this quarter.
As perception of risk increases so does the cost of capital and underwriting discipline becomes important again.
Recent world events reminds us that risk is always present that insurance premiums must include an adequate margin of safety and that reinsurance plays an important role in protecting capital and returns.
In summary, Trudeau, our to cycle and risk management principles and fortified.
By our conservative balance sheet arch has prepared for this crisis and is well position to continue to build on its track record of book value growth.
In closing I want to thank all of our employees around the world.
As they are responsible for the success of arch and are working tirelessly throughout the world to meet the needs of our insured. Thank you with that I'll turn the call over to Francois.
Thank you Mark and good morning to all we at arch Hope that you are in good health and these difficult and uncertain times.
This quarter in anticipation of some other questions. You may have I will try to elaborate in more detail on some notable items. In addition to the regular discussion of financial items.
I recognize this may take a bit longer than usual. So please bear with me.
Now onto the first quarter results as a reminder, and consistent with prior practice. The following comments are on a core basis, which corresponds to arches financial results. Excluding the other segment.
The operations of Watford Holdings limited.
In our filings the term consolidated includes Watford.
After tax operating income for the quarter was 189.8 million, which translates to an annualized 7.1% operating return on average common equity and 46 cents per share.
Book value per share decreased to $26.10 at March 31, a slight reduction of 1.2% from last quarter and a 12.9% increased from one year ago.
The defensive posture of our investment portfolio ahead of the Cobot 19 crisis served us extremely well and preserving our capital base relatively intact during the stress economic environment. Our recent launch.
I will elaborate on this in more detail later on.
Outside of the losses related to the Kogan, 19, pandemic, which impacted on our first quarter results our underwriting groups fared very well this quarter with strong growth and generally improving underwriting results from our property casualty insurance and reinsurance operations.
Given the unusual circumstances and breadth of the pandemic, we have classified coven 19 losses as a catastrophe.
However, as you saw in the financial supplement we have also provided this segment leave segment level detail of our current estimates to assist with the analysis of the underlying performance of our book of business.
We expect to follow this approach until the end of 2020 had a minimal.
Losses from 2020 catastrophe catastrophic events in the quarter not included not including Cobot 19, net of reinsurance Recoverables and reinstatement premiums stood at 31.8 million or 2.0 combined ratio points compared to 0.6 combined ratio points in the first quarter of 2019.
The losses impacted both our insurance and reinsurance segments and were primarily due to various us severe convective storms, UK storms and floods and Australian Bushfires.
We recorded approximately 87 million of Covidien 19 losses are cross or PNC operations split, 41% to insurance and 59% to reinsurance.
While it is still very early and we have extremely limited information to accurately quantify or potential exposure to the pandemic. We believe it was prudent to establish a certain level up in our reserves for occurrences through March 30, Onest based on policy terms and conditions, including limits. So.
Limits and deductibles.
These reserves were recorded a cross a limited number of lines of business such as property, where we have a very small number of policies that do not contain a specific pandemic exclusion and or explicitly afford business interruption coverage under a pandemic.
And trade credit.
As regards the potential impact of Coven 19 on our mortgage segment and our estimation process. At this time, we believe it's important to make a distinction between our US primary mortgage insurance unit, which we referred to as you are semi and the rest of this segment, which includes our international book in our portfolio of GST.
Credit risk transfer policies.
For us semi pursuant to gap. Our estimates are based only on a reported delinquencies as of March 30, Onest 2020.
However, given the potential effect of the pandemic, we elected to book reserves at a higher level of confidence within a range of reserve estimates for such known delinquency.
The financial impact of this increased level of because conservatism was approximately 5.2 loss ratio points across the segment.
For the rest of this segment the loss reserving approach, we use as more consistent with traditional property casualty techniques were loss ratio picks are set at the policy level and are able to consider future delinquencies on business already earned.
This quarter in response to the potential impact from the pandemic across our portfolio. We adjusted our loss ratio picks for some policies, which resulted in an increase of 6.8 loss ratio points to the overall segment results.
Based on the information known to date and economic forecasts, we believe the adjustment across the non US semi book is prudent and consistent with a moderately severe stress level.
As we look towards the remainder of 20 to 24, our U.S semi unit.
We are expecting the doubling the delinquency rate to increase per aggressively from the current level has more borrowers request forbearance on their mortgage loans under the care as act.
As mandated by gap, we expect to record loss reserves on these on these delinquencies, which will most likely translates into an increase in our levels of incurred losses over the coming quarters.
Overtime, we would expect many of these delinquencies to cure and revert back to performing loans as the economy returns to a more normal state.
At this time, we do not have enough visibility to predictably forecast a rate at which forbearance delinquencies will be reported to us cure or ultimately turn into claims on an annual let alone a quarterly basis.
That said based on our current analysis, which which tells us that the pandemic will represent an earnings event for our mortgage segment and not a capital events.
Our current expectation is that our pretax underwriting income for the entire mortgage segment will be minimal for the remainder of 2020.
From the second through the fourth quarter of 2020.
However, there is likely to be variability in underwriting income between quarters based on the timing of receipt of notice of defaults.
Turning to prior period net loss reserve development, we recognize 17.8 million a favorable developments in the first quarter net of related adjustments or 1.1 combined ratio points compared to three combined ratio points in the first quarter of 2019.
All three of our segments experienced favorable development at 0.8 million 11 million and $6.1 million for the insurance reinsurance and mortgage segments respectively.
We had excellent net written premium growth in insurance segment of 33.4% over the same quarter one year ago.
The insurance segments accident quarter combined ratio, excluding cats, which as a reminder include cobot 19 losses was 97.1% lower by 310 basis points from the same period, one year ago.
Approximately 190 basis points of the difference is due to a lower expense ratio primarily from the growth in the premium base over one year ago.
The lower ex cat accident quarter loss ratio, primarily reflects the benefits of rate increases achieved throughout most of 2019 and the first quarter of 2020.
As for our reinsurance operations, we had a significant transaction in the quarter, which affected the comparability of our underwrite cover underwriting results and 88 million loss portfolio transfer written and fully earned in the period in the other specialty line of business.
Absent this transaction net premiums written would have been 57.2% higher than the same quarter one year ago.
This net written premium growth was observed around XR across most of our lines and includes a combination of new business opportunities rate increases and the integration of the Barbecuing reinsurance business.
While the loss portfolio transfer had a minimal impact on the overall combined ratio for the segment a decrease of approximately 50 basis points its impact on each of the loss and expense ratio components was more observable where the resulting increase of 400 basis points to the loss ratio and a decrease.
Piece of 450 basis points to the expense ratio.
Overall, the growth and underlying performance of our reinsurance segment was very good this quarter.
The mortgage segments combined ratio was at 44.1%, including the 12 point loss ratio loss loss ratio impact, resulting from the increased level of conservatism in our overall segment reserve estimates discussed earlier.
The expense ratio was higher by 240 basis points over the same quarter, one year ago, reflecting reductions and profit commissions on c. that business and higher compensation costs and employee benefits.
Total investment return for the quarter was negative 80 basis points on a U.S dollar basis has the defensive positioning of our portfolio served us extremely well in this difficult period.
Given some of our fund investments our report on the lag typically three months there first quarter performance will be included in our second quarter financials.
The duration of our investment portfolio was slightly lower than last quarter at three point 19 years compared to three point 40 years at December 31.
But remain overweight relative to our target allocation by approximately zero point 35 years.
Most financial markets at a positive return in April which should help reverse some of the results. We have we observed in the first quarter.
The effective tax rate in the quarter on pretax operating income was 10.5%.
And reflects the geographic mix of our pretax income and a 110 basis point benefit from discrete tax items in the quarter.
As always the effective tax rate could vary depending on the level and location of income or loss and varying tax rates in each jurisdiction.
Turning briefly to risk management part natural cat PML on a net basis increased to $680 million as early as of April one, which at approximately 7% of tangible common equity remains well below our internal limits at the single event, one and 250 year return level.
With respect to capital management, we remain committed to maintaining a strong and liquid balance sheet during the quarter, we repurchased approximately 2.6 million shares at an aggregate cost of 75.5 million.
While we have a meaningful remaining share authorization under our current program, we do not expect to repurchase shares for the remainder of 2020.
At U.S. semi per capital position remains strong with our Pmires sufficiency ratio at 165% at the end of March 30, Onest 2020, which reflects the coverage afforded by your Bellamy mortgage insurance linked notes.
These these structures provide approximately 3.1 billion of aggregate reinsurance coverage has a March 31 2020.
Finally to Echo marks comments I'd like to give a special shout out two or more than 4000 colleagues around the world that have demonstrated a tremendous amount of creativity patients resilience and compassion with clients and business partners that communities. They live in their family.
And loved ones and each other over the last seven plus weeks.
They are the essence of what arch is all about and I couldn't be prouder to be starts to be part of such a great team of individuals. Thank you.
With these introductory comments, we're not prepared to take your questions.
Thank you and I will begin the question at this time. Please press Star then one key are you touched on telephone.
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Our first question comes from lease Greenspan with Wells Fargo. Your line is open.
Hi, Thanks, good morning.
Morning.
Hi, My first question is on the mortgage segment on so I heard you guys, saying kind of still on difficulty difficult to put on your hands around what the total loss could be within and I, but you did say that that.
No underwriting income for the next week quarter. So if I look at what you guys might have been expecting it seems like.
Look at what you generated light in the back from quarter to 2019 that translates maybe answer that at 800 million dollar vicinity lot now than we originally goal there is your R&D yet.
Total is at the end of last year for that business was around 8% of your tangible equity. So the numbers team within the same ballpark of each other so our my Triangulating. Congrats. Thank you are assuming that this loss to be hoagland, your R&D or am I missing something in putting.
But together.
Yes, I think thanks, Lisa question I think that the the two numbers.
Appear to be the same the same level, but they are actually coming from a different source. The 800 million that you referred to there could be let's say, it's a great number for the next few quarters will be incurred losses and against that you have to put premium.
And if you look at our Rds scenario, we actually look at the rollout of all the claims paid in the future and Weve offsetted by all the premiums that we would receive and this is what constitutes to PML. So they are very different one is a net PNM impact near to one is incurred loss in the 800 that you mentioned first the first time around.
So the 800 million in is the losses that you expect over the balance.
Nestle quarter not the.
That.
Any.
Yes, I mean, just to clarify I think.
It's really a difference between the next nine months versus the full run off of the in force portfolio. As we think of the remainder of 2020, what that the comment I made was really underwriting income, meaning premium is minus losses minus expenses and we're saying we don't expect a whole lot of underwriting income for the.
The remainder of 2020.
When we think about the Rds.
Fundamentally getaway, a similar let's say an 800 million number that you quote of Rds would that would mean was really would be a much larger incurred loss because we expect to have material premium flows were premium income coming to us in future calendar years, which may be five.
710 years. So it's just the Rds is really a full comprehensive.
Premium and gain loss.
Underwriting income across the full run off of the in force portfolio.
Okay and then within.
Can you remind us.
What are the assumptions for delinquency rate as well as like housing price depreciation.
And how we think about size coming to that.
Percent boss figure.
Yes many.
Assumptions, but at a high level.
Decrease in house price, 25% below fundamental so 25% from now going down and staying there for two to three years.
Interest rates shooting up seven or 8%.
On that deal at a major to two major ones debt and all employment of course lasting longer the length of time that Rds is stressing our portfolio. When we go through it is a much longer period than than even the 2007 crisis would have generated.
To the delinquency equivalent is something more like 9% Ultimate claims rates. It's hard for me to parse out what is delinquency versus conversion to claim so at a high level. We prefer to think in terms of claims rate. So the portfolio as it stands right now if you run it off and 9% of it.
War to default that will be equivalent to a too.
Turn to the audio scenario that we have.
Which is significantly above what we expect right now just to just will you benefit which significantly above what we expect to happen for next 12 months.
And then.
Hi.
Operating income for the year and mortgage debt.
Do you guys are you guys, assuming that you're going to have you saw of your I'll ask the bell need securities or.
Thank you my passion.
[music].
Well two things that just for.
I think good point of clarification for for you guys.
First of all the Bellamy protections.
As you probably do know amortize over time.
But there is a trigger on them that basically once you exceed a certain level of delinquencies.
They stop amortizing and that we think we expect will happen most likely sometime in 2020 and maybe in the second quarter, maybe in the third quarter, maybe later and that will basically freeze at least for some period. The the amount of coverage studies of it that is available to us and.
Would remain most likely for the duration of each of those trends structures.
But to answer I think more directly your question, we do not expect to under most scenario is that we would trigger the coverage of the provided by the Bellamy protection. So the 3 billion of.
Just a loss cover that we talk about.
We know is available we know it's there but at this time under most scenarios, we don't expect too.
PRC deal with the attachment that we would where we would actually fully research, where we start to receive coverage or some of our exposures.
Okay. Thank you for now thank you bought the color.
Youre welcome.
Thank you. Our next question comes from Jim going with Jpmorgan. Your line is open.
Hi, Good morning, So just first a question on the my business your assumption of no underwriting income for the rest the or does that reflect primarily you having deserve.
At the level that reflects soda delinquencies.
Given GAAP rules or does it also and not the ultimate a new from your comments. It seems like you think ultimate defaults will be lower than that given that people are taking advantage of forbearance.
And stuff and then that fill rates will be higher but it's more because of just you having to reserve at a higher at a level that reflect delinquencies or is it also reflection of your views on ultimate defaults.
Yes, it's certainly more more of the former so right. We do expect a reality given the forbearance programs are going in place we expect.
Yes, and higher than the normal flow of delinquencies to be reported to us.
Some people are just taking advantage of of the programs just to be safe and they'd rather just play safe and not not take the risk of of falling behind on their mortgage payments. So what we expect will happen we haven't seen much of it yet, but we do expect stymied that that will pick up in Q2 in Q3 is that we will have to.
We will receive these delinquencies when we come to the end of Q2 will have to assess what kind of reserves will set on those delinquencies.
We will make determinations on the probability of that those will actually Q were based on the information we'll have in front of us at the time.
It's too early today to tell you what that will look like but certainly based on the fact that we expect just an elevated number delinquencies to be reported to us that will just by nature trigger.
AOS, we will reserve for those delinquencies and.
What will encourage them want incur some losses, whether those will translate into.
Claims paid ultimately we don't know time will tell but thats really just how we think that does the the the accounting will work at least in your opinion that certainly for the next few quarters.
And then on business interruption, you mentioned revisions in multiyear contracts that actually.
Fluid losses, because it's been dynamics are viruses I'm, assuming you're dogma primary contracts on the reinsurance side should we assume that if youre clients are being.
Either because it wasn't a provision or because they lose a case and.
A lawsuit then you would have to be under hook to the extent you provided coverage as well.
Yes, I think that you had a common had to do with insurance, which as you can appreciated the vast majority to more than the vast majority will be do.
Has an exclusion for viral clearly there's a virus exclusion on the reasons. It's still early late we still have to figure out what the BDI losses are going to be if they come to fruition for our clients and they'll have to go through and say, whether there's protection on the risk score quota share or for that matter excess of loss Mckesson bases. So this is going to play out over the next.
Several several quarters.
Lot of contract have hours clause for those kinds of event.
There'll be a lot of discussions back and forth us when do we start counting how do we count them. So there's a lot more uncertainty.
In some other folks in the industry of echoed the same comments that might be little bit longer to figure out what it means.
Because in general the contract on a written to Rudy cater for those kinds of event is not a specific.
Virus.
Protection is really men primarily to be a property coverage by and large from them talking from the cat excess of loss perspective. So.
People will have to snow sift through the language and see what it means to each and every one of them.
Okay, and then just lastly on the acceleration of growth in your insurance and reinsurance premiums how much of this is.
Pricing versus you potentially gaining share or just increased demand for some of the lines that you then.
Yes at a high level.
About about 15% one five of the the increase in premium came through acquisition Barbican is definitely one of them. We also had acquired a team on credit and surety from from Aspen.
Towards it and the second half of last year, that's about one 515%.
25% is due to rate the rate increase this quarter across our PNC was between five and 10%. So it is actually better than.
Fourth quarter of 19, and the rest of 60% is truly.
Growth in exposure to new business, one offs or you know unique situations or opportunities one of which front as I mentioned in his comments.
Thank you.
Sure you're welcome.
Our next question comes from Michael Salinsky with Credit Suisse. Your line is open.
Hey, good afternoon sticking.
Moving back to am I.
Can we talk about capital requirements.
Capital charges for loans on non payment are usually materially higher than for performing loans.
I know I saw in the prepared remarks, you said that PMR sufficiency ratio as.
It is well in excess of 100%.
As is the FEMA designation kicked in and it will allow arch and other am I actually hold.
Less capital or just how how should we as investors think about the capital requirements and how that could play out over the next.
Right.
To 12 months' as nonperforming loan levels or deferrals on levels increase.
Yes, let me answer your question the answer is yes the.
It's actually in the wording in NPL Myers that.
When there is a FEMA designated zone.
The capital requirements of.
For delinquencies are reduced by 70% so.
And given that all 50 states have actually declared a been declared a FEMA disasters owned currently we are adjusting at the end starting it into March and going forward.
We're adjusting the pmiers capital requirements to reflect that that haircuts I'd say on on the capital charges for delinquent loans. There is a bit of discussions going on with FHLB around how long they will be.
Available I think the industry and I think if they are working together on that than the gses to to come up to clarify everything I think there's a bit as some technicalities and maybe it wasn't.
I'd say perfectly considered or or wanted in in the wording of the pmires.
Pmires, but still we think that below we expect that the call at the the hair cut on the capital charges will will remain in place until were.
We have a bit more visibility on how some of those loans will cure and.
Go back to performing.
And.
Does the final part France, why that you mentioned that in terms of the clarification on how long does that play into to why arch has decided to most likely not repurchase stock for the remaining of the year.
I guess, maybe this is a broader question I.
Feels like.
Prior to co bid you guys, playing kind of more I caught off fence than most carriers.
Does this cold to change the playbook and obviously the broader question and.
And just the lack of my earnings and maybe some of the clarification capital kind of why not purchasing stock.
When it's trading below book value, Yeah, well I I slipped a little bit on you I would like to think we played a fair amount of offense in Q1 on the PNC side. So I think our view is that.
We.
I guess, we started before we like Optionality and the fact that we we have a strong balance sheet, we want to keep it that way, we want to be able to take advantage of opportunities that may surface. So theres KOVA changed our playbook not per se, but we think there will be probably a fair amount of disruption thats going to emerge in.
Through the end of 2020, maybe beyond so thats really that's the arch playbook and Mark can chime in but that's really how we think about having the opportunity or the the ability to execute on on those opportunities.
Clearly we had played the in my.
Market, we still are in the market very involved.
We were buying large a.
Lots more allocation of capital to the am I always with the look out as you guys know us, but it's something more to develop and get better on the other side to more until the very important piece of what we do everyday to PNC that we would shift and allocate more capital there and I think as we look through the first quarter and the perspectives, we have business reviews with everyone and understanding and hearing.
Even after coals in 19, even though they might be little bit of a dip and premium in the second and third quarter. It's clear that opportunities are there and our first mission. That's once were mentioned is to deploy capital. This would I believe our shareholders want us to do is to deploy capital.
Towards insurance insurance underwriting and I think we have.
An increase a level of opportunities at.
Wasn't there six months or nine months ago, So capital and as I said capital becomes very important as we go through the next year or so so we'll be able to deploy it and make hopefully no great returns for our shareholders.
So I guess Mark will use then we should it continue expect the.
Non semi operations to continue playing offense and grow and get out at a fairly fast pace.
Well right now based on what we see in terms and conditions and opportunities. The answer is yes, we should expect that to happen.
Absent as I said the market.
Getting a bit softer in terms of GDP because of exposure.
Stagnating for awhile, but yes by enlarge our focus is to play more offense on on the PNC side, both insurance and reinsurance.
Thank you.
Thank you. Our next question comes from your entire with Goldman Sachs. Your line is open.
Yes, Sir your line is open to check your mute button.
Our next question.
Yes on Ron Bobman with capital returns your line is open.
Don't worry around those circle, you back and I'm sure.
Nice to hear wins voice.
Hi.
And I hope everyone is well of course I.
I do a couple of questions.
The mortgage business and the reinsurance purchases and in particular the Bellamy.
Im wondering perspective really do you think that the the capacity will be there to sort of continue to be put in place.
And is the game plan to sort of continue to as best you can buy sort of like like like size 10, like structured protections for the mortgage book and in effect.
[music].
With that through into primary pricing on the mortgage book.
So the first quarter first question is I don't know no.
One is going to cut that we expect this to come back I think there was a healthy market a healthy level of interest have before coven 19. So we would expect that to come back when things really know going back to some more normalcy of sort, but time is in all the time is ahead of US we don't know when that's going to happen and if it were to come back I get the question will be in economic decision.
One might if if it does.
Fit within our return and risk profile, we would continue doing those transactions.
We we did we might do more we might do a bit less so we'll be depending on our view of the pricing and what kind of recovery we get from this.
I do believe at a general rule that our risk management.
Mantra is still important we'd like to have some downside protection and I think this proves very useful than this and this.
This these events of of late.
It would come in play a big part and and supporting US if things work to go a little bit worse than we would expect and expect them to do so so I would argue that.
Definitely a price have which things or conditions I wish things are difficult to do but I would expect us to to still do them within reason for this reason I just mentioned.
Thanks.
Great Cat reinsurance sort of market question.
Are there going to be a lot of instances in the context of covidien and losses and ceded losses.
I think it'd be a lot of instances, where primaries have cat towers in cap protections that are.
Barrel defined as being sort of natural catastrophes or or is this a narrow apparel apparel listings in there in the reinsurance treaties.
That.
Because the the pandemic isn't I guess deemed are classified as a natural cat.
There would not be stated coverage it in a reinsurance treaty.
Yeah, I mean, just starting to case, what I would add to this Doe loan is you have.
You have follow the four twos in many contracts in a quarter shared risk excess so in a natural apparels I don't think it's a majority of the of the covers it into the coverage is our purchased right now I think it's a little bit different I think the.
It's also different use versus international but I think that.
We will expect a lot of discussions because I'm not sure. It's as natural payroll specific as you as you think it could be.
Okay was it was a softer reinsurance market for a while to when that happens conditions tend to be a broader than one would expect.
Okay. Thanks, a lot good luck gentlemen, communist thank you.
Okay.
Thank you. Our next question that's on your entire with Goldman Sachs. Your line is open.
Back Hey, Thank you hopefully you can hear me now.
Yes, we can.
Great.
Good morning, everybody.
First question on Am I.
How you've been able to book the USMLE by using a consistent methodology to that that was used by the rest of the in my book.
What would be loss ratio has looked like this quarter.
Well I mean, roughly speaking if we I mean.
If we extrapolate for the year for the.
We're saying the remainder of the year is going to be call, let's call. It 100 combined ratio just to be to be on the safe. So.
Ill.
If you annualize the minus 25% expense ratio ballpark get gives you a 75% loss ratio.
Most of my Okay.
Okay.
And maybe that offer answered my next question, which was would be you with a GAAP accounting basically make the.
Results and the semi business progressively worse quarter over quarter or do you expect it to be kind of flattish in the breakeven range.
Theres Wrestlemania.
Very hard to know I mean, we yeah, I mean depends on how quickly the delinquencies are going to show up if all the delinquencies.
You show up in Q2, when they start right. The if you could see a scenario where people miss their first mortgage payment on April one the Mr. second payment on on April on May one and along the way. They they can that older service or that there are they want to take advantage of the forbearance program, we could expect a.
Significant amount of delinquencies to show up in Q2, not as much as Q3, it might be flip flop people might try to keep making payments and Calder servicer in July I don't know so it's very much a function of how quickly. We think the delinquencies are going to show up that will dictate a bit more the volatility from quarter to quarter in 2020 on.
How how the call uptick calendar quarter loss ratios are going to look like.
Okay. Okay.
And if I turn to insurance can you talk about the programs of business, how you'd expect that that performed but some top line and margin perspective.
The face of cobot.
Well, yes, that's a good question, it's not very workers comp exposed so that piece, we can take off that doesn't really have maturity of credit lines. The lines that we could think it's been it would be exposed to is.
As property.
And our most amongst the totality of all the policies exclude how the viral as virus exclusion so that should not be a significant.
Due to the to the loss experienced on the programs business.
Okay. Thank you very much.
Yeah.
Thank you. Our next question comes from sales personnel with Deutsche Bank. Your line is open.
Yes, I suppose I was hoping you could give some comments or your thoughts around.
Slow new business for a minor this year.
How does the Schilling purchase originations versus refi originations are going to shake out and maybe was in that you can embed a commentary.
Around what you see with pricing is in my mind, the risk based pricing and rates are.
Would react in real time.
The extent that there were changes indeed, the economic environment into this might be one of those businesses, where you could actually flex breaking up does it feel like we're starting to see that come through as the flow of business.
Yes was required to.
Three questions in there that's a pretty cool I'm, sorry to keep their keep it up sales that you tell me if I'm wrong on this month.
The ones and had to do with the origination going forward right. So them. What we can tell you with the industry, we don't know, but the industry consensus seems to be 20% less production this year.
What that means for us and the market I mean, we sort of follow along we have about a third if you look at the MBA, 35% penetration of of more.
Mortgage insurer of mortgage insurance, 45% private am IC can follow through so that it 18% to 20% decrease so.
If all else being equal we should expect in a lesser production from that perspective.
And Youre right I think we are still continuing we're continuing to see.
A lot of refinancing although it is a gluttons a lot of movement and lot of things are blocked actually at the origination in the mortgage originators because it's so much demand for that.
Due to the historically very low mortgage rates.
But we do actually see some purchasing happening, but I think it's going to be.
It's going to be probably more along the lines of Alaska Rolling rate over last three quarters I think is what we should expect.
So again.
It's hard to tell as the purchase Mark is going to come back and.
No and while fashion, but certainly there is a lot of pent up demand out there, which also helps.
The House price Index, we believe the house prices are going to go down and as much as you might think maybe in a single digit percentage was this year because of all the pent up demand, so which talks to the purchasing market being still they're not going altogether I think article this morning on Wall Street Journal that there's a lot of.
As a good pricing sustained as a result us and higher demand for housing starts second part a third part which was about the pricing of course, why we look at I mean, the things have changed we look at things in a different in light with a risk.
Different risk characteristics, we went through more than once through our portfolio on a risk based pricing in various assumptions and parameters and we're making adjustment as we see as we see it appropriate across the industry.
I do want to thing that the semi industry sees it as a hey, you know, there's a bit more risk because of it more losses. So maybe we should do something about it and as do expect them to follow suit in general.
Do we do have indication that people are.
Have increased their expected loss.
In the pricing.
When we think about the expected returns that you're seeing in and Mike.
Have they changed materially in May.
Maybe the insurance is a better place where better leverage to be exercising at this point to put capital to use use any thoughts around that.
It's very very well put I think this is exactly I mean, I think two years ago I would've said to you that except for a few spots on the PMC insurance and reinsurance that the EMI provided by far the superior returns when you we rank order things.
So when I go through it in our executive team go through it we rank order to three business the investment and we shirt repurchasing price shares.
And I was up there.
Had been therefore for quite awhile and I think if it's our loss expectation is probably not not as low as Bobby modify somewhat so.
Depending on the pricing going forward, we'll see how that falls out, but clearly the return from the PNC unit has been has been inflating and putting then higher in the positioning in the relative positioning for capital allocation without a doubt.
Got it thanks.
Well.
Thank you you too.
Thanks, Phil.
Thank you. Our next question from Meyer Shields KBW. Your line is open.
Great. Thanks, I do feel like beating a dead horse here, but.
Your first quarter coated reserved in PMC does that assume that a policy requires direct physical damage but.
But doesn't have the buyers inclusion developing that that's an absolute defense.
Well I'll start on for Mark will chime in as you know it's it's again, we said it is very early but when winter we have taken some books some reserves on particularly on property right.
Is there are certainly very small subset of our policies that.
Don't have an exclusion so for those we felt was prudent to we expect losses to come through and we booked the IB on our to go against those policies.
And those are generally outside of the US I mean, they are outside of the right. So it's in the UK from Canada on the insurance side and we also have a small amount in some property fact deals that.
Maybe ill, specifically copper pandemic and we expect that some of these some of that certificates, we'll we'll have to respond so.
It's a bit mostly insurance, a little bit and reinsurance, but thats, where we that's kind of how we thought about.
Booking the reserves on on on B I.
Yes, I mean in the US no question that you need you need property damage to have the VI respond that that's that's a fact.
Yes, there's proposals out there that people want to make it retroactive and challenge that we'll see how far how that goes but for the time being we don't we don't have reserves on those we don't think it's correct. When I think it's right. So we we.
We've relied on the policy wording to to make or assessments of reserves on those policies.
And the other piece I would add to this first why is that there are other lines of business Meyer, where we have the sthree data that we can point to instead, it's what we think we would expect this could develop two in one example is trade credit the small portfolio, but we do it did actually do proactively.
Reflect the fact that we mine, we're expecting an increased level of claims for them.
Based on what we write this year, so thats something that we picked our loss ratio.
Specifically, so most of them in on the property side I agree with Citi with processes, and we did more granularly at a level the claims level the portfolio level and I think we've taken a loss ratio approach to to the other lines of business, where we've seen historically loss has emerged as a result of events such as this one.
Okay. That's very helpful second related question.
Secondly, arms around what sort of event would constitute second quarter.
Coated related.
NC losses.
Boy.
I think the development of the development of the I losses will first you have to go through the insurance business the insurance companies, telling the losses evaluating every clearly this is not an easy thing to do from the 30000 feet position Meyer you have to go through that.
Claims process evaluate things talk to clients brokers and whatnot, so well take a while before things get sorted out.
Couple of things on presumption of work is come covered US also part of that things was a lot of things developing so I'm not even sure second quarter, we're going to have a.
The ultimate picture that's for sure is going to take a bit longer to go through all these losses, how the accumulate and also in line with an a question I just had earlier in how it if it does and how and if it does accumulate towards a reinsurance.
Recovery, So thats also might happen in or towards the end of this year. So this is going to take a little while to sort out and that's not even talking about potential litigation and whatever else could happen.
In a lot there.
So it's going to be a why because there is obviously this is going to be a slow developing a cat loss.
Absolutely. Thank you some I.
Thanks, Mike.
Thank you. Our next question comes from Brian Meredith.
Your line is open.
Yes, thanks, so one or two quick questions here first.
I can tell us what is the Scottish since it comes next you guys investment and.
If indeed the transaction goes through should we anticipate some type of impairment.
Charge on close given where common stock is relative to your beauty basket.
So everything is everything is a lot too early at this point in time by their themselves are going through evaluating and.
And looking at this an hour as you know we made that investment with a long term strategic vision.
We also know that they have them they've been proactive in many things and we also know that the credit.
That to credit quality of what they had underwritten.
Through the NSS here was also a different as well then and what it was in 2008. So we're trying to triangulate. All these things we still have a lot of process to go through from a regulatory perspective, we expect to receive this towards the end of the year.
So that's all I'm going to see about Colfaxs, we're sort of.
Monitoring staying close to it and see what we're going to do about it if we do anything about it.
Gotcha and then my second one just going back in the on my.
I think about isn't the lawsuits you guys are same potentially for the rest of this year that you're going to have.
What does that mean for 2021 this far east the mine results how far are we intend to deductible.
On the Delome transactions, how much additional could there potentially being 21.
Well I again, it's very premature I think the answer to that question again will very much depend on the level delinquencies and how quickly they get and come to us and and now we see the economy going back opening up a little bit. So the people go back to work and by fourth quarter of 2020, we.
The already some people curing and.
Ill go back to having current loans et cetera, but yeah, I would think that.
A reasonable expectation for 2021 is that yes, we should do better than 2020, the loss ratio should be coming down I don't think there's a level. It wasn't 2019, but as an because I. We would think that no question that some people will there'll be some John.
Lost on there may be some actual claims that actually convert to actually are delinquencies or convert to real claims and pay claims.
That may be late in 2021, as you know with a 12 month Forbearance program and then the time to.
Really go through all the process that go through our to paying the claim will will take quite some time. So I would add a high level I would think that the 2021 loss ratio would be.
Better or lower than 2020, but not at the same level as low as it has been in 2000 as it was in 2019 for sure.
Gosh, maybe six I think when I'm trying to use this scale that's like.
How much additional loss could we potentially have hearing in my book before you hit the don't meet deductibles I, just what's kind of a worst case scenario.
Well.
Let me try this on maybe Mark will chime in we've looked at a bunch of a variety of economic scenarios. Some are based on our own internal analysis like the Rds us a stressed that that we went through a portfolio. Some are based on external.
Economic scenarios, such as the Moody's Whats published by Moody's the severe the S. Three and asked for economic scenario is that an under most scenarios again, we don't expect to where we get close but we don't expect to attached with the Bellamy transaction and those are in particular like the asphalt.
Are we got very close we might start attaching a few years down the road, but if those are severe stress is so how we think about it is.
Does it even impact 2021, the answer is probably not that probably starts to really we really starts to recover.
A few years down the road and though I mean to us it's it's edge.
I want to see necessarily sleep at night insurance or coverage, but it's really there to say we think we've run some.
Very severe stresses.
They don't seem to with ads for the Bellamy, but.
For off and they get to be a worse, a little bit worse than than what we're thinking would distinguish could look like.
We tell ourselves when we got $3 billion a coverage that is available to us if things get much worse.
They are very high level. Thank Brian if you think if you think of the Bellamy retention. We talk to you talk about this amongst ourselves that we have about a billion to have 2 billion six of retention. So that's what gives you a sense for how many how much losses, we would need.
To go through to start to get some recovery to that thing that should give you a billion dollar year premium earned so that give you some kind of benchmark I think we're trying to figure a way.
We'll talk to dawn, obviously interest level try to find a way to make it.
But more of a bit more clear to everyone thats not an easy thing to explain but I think at high level, where we just said to you is true that the level of retention. So is high enough that we don't expect if next couple of years, yes.
Great. Thank you.
Sure. Thanks.
Thank you. Our next question comes from Mark Levin with RBC capital markets. Your line is open.
Yes, good morning.
Just to continue with the EMI discussion as you as you're contemplating within the guidance is no earnings the balance of the year are you assuming.
Our case average per reserve similar to what you've been reserving out or something more similar.
To the.
Like after hurricanes or something of that nature.
We're just assuming a we apply a forbearance rate and we then we apply conversion from forbearance to claims.
Now we would do in the severity is pretty close to 100% on most of those cases. So it's really more binary than you might think it is so there's not much. We did two big variables are really the forbearance and our view of the conversion from some berens to claim ultimately which is very uncertain indefinitely in time.
Within that then our these being evaluated on literally a case by case basis or is it are you apply and you know just sort of a formula to.
All of the losses that whatever some particular bank presents you over some period of time.
Well.
I think it's a good early to know exactly how how everything is going to play out with I mean, no question that as I said earlier, we get we expect more delinquencies to come through the no question that we would expect a high your cure rate on those than we would see from a typical delinquency in a call at normal economic environment. So.
No.
And but we don't know yet how we're going to book our reserves at the end of the second quarter, and let alone third or fourth quarter. So the answer is yes, probably come if you compare a regular delinquency to what were we expect the delinquencies we get for forbearance programs is no question that they there's a higher cure rate.
And then associate with that.
Severity et cetera, So I mean, it's done in the product to those gives you the total incurred loss in the quarters, but its if we will look at them a bit differently for sure than we would otherwise.
In a call it a regular quarter.
But I guess the cycle.
So this is mark just to make sure. It's clear to you because you did ask specifically, where how do we develop our AR.
Our scenario and we have we do go led the individual loan level with the risk characteristics and applying.
Assumptions and or shock on the unemployment and whatever else you have around house price index and we go through the lifetime of that loan and see what's going to results. You can think of it at the lattice a series of that is going forward. This inventory of sort and then at the end would come up with the ultimate projection of the claims basically assumption that we have that was up.
Bottom up approach, we did and we verified this at least try to get some perspective from the top non approach, which for US were mentioned.
The Moody's has three Ns four so and those seem to converge very nicely by coincidence I would add.
To a similar number for ultimate claims.
And just the last question and again this is another another sort of process questions but.
I mean, suppose diamond individual and I defaults beginning in April and May is France, while just described before.
And then I get recorded as a delinquency and forbearance lets say sometime in June and I take advantage as the six month requirement.
To put up some type of reserved for me in probably the second quarter, we you'd be able to release that reserve back then.
As quickly as lets say October which it would be the end of the six months.
Which would then provide offset against any additional adds that you would otherwise be taking in fourth quarter for people, who are newly delinquent or or further delinquent.
Correct I mean, if if the borrower cures and.
I think there's a little bit on a work that has to be done exactly on how borrowers are going to exit the program I mean initially.
There is I wouldn't say confusion, but people thought while they have to make a balloon payment due I just defer my my payments et cetera, I think that the government is stepping in to make sure that there is no I mean that the expectations are clear on both sides.
But correct if somebody after six months in October and November December they.
Everybody's back that means that for that particular borrower, they're back to work and they go back to current and they strike a they reach an agreement.
With their borrower to just effectively.
Let's say they miss four or five payments on they agreed to just tank there was on at the end of their mortgage.
Period they would.
The whatever reserves, we put up on on that particular alone would fit would get eliminated reduced as zero and they would be available. If we think theres new coming in that we yet so it's.
Reduction and currently.
Just to close.
To clarify second and third quarter I would you would think as kind of as reserve accumulation and then beginning and perhaps the fourth quarter you would start to see offsets develop assuming people.
Follow that type of a pattern, assuming yes, but again, what we don't know yet this is everybody or is a vast majority people going to use a forbearance programs in Q2 or are they going to trying to make a couple of payments and then maybe there'll be more into June.
Q Q3 in Q4, we I mean, the timing of it is uncertain, but assuming I think which is what you're assuming I think where you where youre assuming is for somebody who starts on the forbearance program earlier and then let's say, it's just temporary where they do go back to work and they go back to current there to cure there.
There are there the delinquency in the fourth quarter correct. I mean, there would be would be see potentially see a reversal of the accumulation of reserves that we saw in Q2 in Q3.
So mark I would add to this to be cautious to be very cautious when we compare the development of the gses versus now again, having more of a front loading of reported delinquencies that could from there.
To your point go plus or minus but there's a lot more front loading of delinquencies recognized at the beginning that in was in 2007, eight where it took a while for the clean took like two three years for really delinquencies to really pick up and peak. So it takes a while to get there I don't think we're going to see that this time around I think we should expect more the front loading which meet who did more active.
Pivoting from a loss perspective in the first next couple of quarters.
Understood. Thank you very helpful.
Okay.
Thank you and our next question comes from Jeff Dunn with Dowling <unk> partners. Your line is open.
Thanks, Good morning.
Jeff first the technical question on.
Our forbearance.
Aging standpoint.
The chart progression as well.
Yes.
Charge.
Thank you for patients.
Kevin.
Sorry, Jeff I could we could quite here I mean, you're you're not going through very loudly.
Got any better.
Little bit of it.
Yeah.
What I was asking is our baron.
Aging asset charges on the Pmiers or they just tell disappoint.
Okay that initial charge it seems like some of the language out there.
Up to interpreters.
Yes through I think that it's on charter territories as well for the for the Jesse So I think there's lot of discussions between the semis and adjust season, the FHLB to try to figure out. So I don't have an answer to this one Jeff.
Okay and then.
So trying to piece together.
The year.
It seems clear.
Incidents assumptions will be below normalized level.
Because of the potential for cure activity.
And.
It seems like the implication is that forbearance expectation is a lot higher than 6% number we've seen.
Thanks.
It's not maybe two or three times that looking at the math right. So.
Obviously, your cumulative loss expectations year, maybe not all the pieces that generated.
What are some of the higher level assumptions that gets you to that level of loss activity.
Right.
Assumptions that.
For the terminal.
Yes.
Yes, I think yes, thats a good question I think youre right on the forbearance a comment I don't if we don't think it can be five or six I think if you ask us were a modeling is pretty much like 15% that sort of what we would expect forbearance to to be cat and then a question remains to your question. Your point about the conversion, which is the one that is so hard.
As you know two to pin down, but we can use something between.
One and seven to one in 10.
There's no reason to that other than its seems to be in the ballpark of what we would expect if we look at the current and with these are the current delinquencies as you know Jeff the ultimate claims rate that we ascribe as an industry is closer to seven or 8%. So to go to a 14% to 15% does not seem too crazy right now.
Biggest quite until we just sort of what do we use I think you'd look at the S. Three to sort of where our assumption sort of wood.
Converged too if you will you will know that model.
So this is pretty much where we are I think the biggest the biggest thing that we'll have to debate for the next several quarters is how do we convert from forbearance to claim that's going to be the as you know the biggest a question and market will have to go through.
I'm sorry.
Absolutely.
Looking at.
Assumption.
We are lower than.
I'm sorry, I can hear you can you repeat it please jeff.
Are you, suggesting that yes.
Higher than normal or lower than the same 40, no higher higher than normal.
If normal is 7% a one in 14 right now one in 13 on new.
New delinquencies.
I would expect it to be one is having on one and 6008.
That's what sort of what the model implies I'm not saying is what's going to happen were you asking about the parameters of the of the deal and this is what of the modeling.
Okay.
And then my last question.
Sure.
Obviously the island markets now.
The company of looking at a traditional QSR supplement your island.
Yes.
We have been.
We haven't really yes, I mean.
We have over there I mean everything's on the table right I mean, it's.
It's all based on economics no question that in the last couple of years to watch the Bellamy transactions were very efficient provide a lot of capital relief and we thought it was a good protection together.
For a variety of reasons.
Again, we expect them to come back, but assuming that they are not back for let's say the entity until the end of the year or maybe you know maybe beyond no question that we will probably think of other other ways to protect the portfolio and a traditional reinsurance agreements.
He is something that would be on the table for sure.
Okay. Thanks, Jeff I think you back about NSR as well so I think we're starting to evaluate all these things nothing is but everything again is on the table, we're looking at everything.
I think that QSR.
Right. I mean is is that correct me I heard QSR Peter I. Thanks.
Did we answer your question, Jeff just want to make sure. We we answered correctly that you.
Yes. Thank you.
Okay, great good luck.
Thank you. Our next question comes on line teams with Autonomous Research. Your line is open.
Hey, thanks.
So, yes, I listened trying to unpack that you mentioned the last question on the.
Forbearance claims rate.
Being higher than.
Higher that correctly.
Your modeling that gets the breakeven is assuming a touch actually higher than say a random notice that you have received in December.
Yes.
This is the model just stress testing as well you stressed pushing for the scenario is because it's so uncertain, but who knows but it's an opinion.
Right.
Certainly not quite now mostly more thinking about it.
Yes.
Im somewhat conservative.
And I guess.
And just thinking about the rest of the year like lending I noticed I gave you time buys as you've got these three buckets like I think it's like three or four months delinquent minutes I think spiga 11 months from 12 plus.
Is your there.
Second pressure as the new delinquencies age like is there.
Thank you kind of reconditioning, what you expected wash might be is that potentially assertion pressure later on in the year.
What's not a high number of claims so thats that.
That's not.
And that's it and not worry about a 250 million of reserves or something like this enforceable correct me if I'm wrong on this one.
But I do believe that you know days a lot of them also our older vintage so I've been in out of delinquency some of them are.
Coming back in and out a cure so we're.
If there is pressure going forward typically it will impact not only the more recent bookings it will it will it would in fact all prior book here that you have and specifically those are currently in delinquency because it does.
They may not be the ones are can avail themselves of the forbearance programmed in EBIT in default no before that events occurred.
And then maybe in a horse positioned and most borrowers have there currently they were delinquent in the end of 19. So yes. It would tend to ascribe a higher possible incidents to those claims.
Understood and then I guess my assumption is kind of housekeeping, but on the premium yield.
A number first of all what was how much was that helped this quarter mining the single premium stuff and then.
The outlook for that changed at all and just given the.
I guess I will say on day to refinance activity and actually the competition amongst changes.
He felt about 10% to 15% of premium for the quarter because of the refinancing.
Okay.
Yeah.
Welcome.
You're welcome thank you.
I'm not showing any further questions at this time, we'll now turn the conference over to Mr. Mark Green.
Thanks.
Thank you very much everyone stay safe up there were looking forward to have more to report and talk about.
The second quarter anytime you good thank you.
Ladies and gentlemen, thank you so participating in today's conference. This concludes the program you may now disconnect.
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