Q1 2020 Earnings Call

Thanks, Jim.

Please standby route to begin.

Good day welcome to the Old Republic International first quarter 2020 earnings Conference call.

If you like to ask your question during today's call. We signaled by pressing star one on your telephone keypad would like to remind everyone that this conference is being recorded.

I would now like turn the conference over to Marilynn Meek.

W. group. Please go ahead.

Thank you good afternoon, everyone and thank you for joining us for the Old Republic Conference call to discuss first quarter 2020 results. This morning, we distributed a copy of the press release until sort of start separate statistical supplement, which we assume you have seen and or otherwise have access to do.

In the call.

Both of the documents are available at old Republic's website, which is www dot.

I'll report the Dot com. Please be advised that this call my hands all forward looking statements as discussed in the press release and statistical supplement stayed at April 23, 2020 risks associated with these statements can be found in the company's latest FCC filings.

After news conference call will be led by Craig Smiddy, President and CEO of Old Republic International Corporation, and several other senior executive member members as planned for this meeting at this time I would like to turn the call over to quirks Buddy. Please go ahead Sir.

Thank you Marilyn.

Good afternoon, everyone and welcome to Old Republic first quarter 2020 earnings Conference call.

With me today, we have Carl no work over public International CFO.

We have Carolyn rolled the president of our title insurance group.

In the past Rande Yeager, our title group, Chairman and Mark Bilbrey or title group CEO has joined us on the call, but given that care home was promoted to president of the title group in January of 2019, and given or close proximity to the ongoing operations within the tide.

I'll group.

We got to the stuff that she.

Joining us for this call and talk about what's happening in the title operation.

Especially in the midst of the cobot 19 related challenges.

They are carowinds, Ben burning the midnight oil working with all the folks on the front lines and doing a remarkable job.

Keeping our title operations executing at a very high level. So welcome Carolyn appreciate having you joined us for that discussion today.

As we work through that the challenges, resulting from cold that 19, we certainly want to send all of you and your family friends and co workers are very best wishes.

I'd also like to take a moment to acknowledge all over public more than 9000 associates that have mobile life, so remote working capabilities and also all those.

Central workers in our offices.

All of whom are working to ensure that are our services and capabilities for our customers our agents and brokers continue uninterrupted.

Although in most states were recognized president central industry and social worker.

Her way more than 95% of our general insurance group.

At approximately 80% of our title insurance associates are working remotely.

Small number of a culture, we have no offices are working to ensure that mail gets processed checks get mail and that our I fear for structure remains vibrant to support all of those working remotely.

I'd also note that that were among the fortunate to be able to say that we have not furloughed any of our associates. During during this time.

So before handing went gilberto to Paul I'll offer a few initial comments regarding our first quarter.

As you saw at Arbor leaves old Republic posted strong first quarter.

2020 operating results relative to the first quarter of 2019, and these results were driven by an exceptionally strong quarter for our title insurance segment.

As noted in our release Colgate 19 had minimal effect on our first quarter was all however, we also acknowledge that the effects of cobot 19, and the associated governmental responses could have a negative effect on our topline rainy I've been.

Revenues.

In the second quarter in subsequent quarters at 2020.

And that's such a decline could also resulting in higher expense ratios in the short term.

Our first quarter operating results again demonstrates that our strategic diversification between title insurance in general insurance works very well to produce consolidated revenue and earnings growth overtime.

So at this point I'll turn matters over to coral to discuss our overall consolidated financial results, all black and to address our small RF like GE run off segment.

After which ill turn things back to me to discuss the general insurance.

And then Carolyn will discuss the title insurance segment.

I'll make a few closing comments.

And then finally, we'll open up the discussion to Q1 day.

So with that Carl pick up way.

Good afternoon, everyone before commenting on the first quarter results I'd like to add to Greg's earlier comments and recognize our accounting and financial reporting associates.

For their diligence and commitment during this period of turmoil.

Resulting from a cobot 19 pandemic.

Despite the fact that most of our employees. So we're working remotely.

We're able to complete the financial close without significant disruption.

While at the same try retaining the integrity of our internal control process.

Job well done by everyone.

Turning now to the a quarterly results. This morning, we announced first quarter net income.

If you exclude saw all investment gains and losses.

Almost 141 billion.

Which is up nearly 16% from year ago.

On a diluted per share basis that equates to 47 cents, which is an increase of seven figure in the half percent from from the prior year.

As noted in this mornings release, our operating results were largely unaffected by the covert 19 pandemic.

However, the resulting disruption to the financial markets.

That's a substantial declines.

Fair value of our equity portfolio.

Pre tax fair value decline of approximately 963 million.

It was really the main contributing factor to the first quarter.

Net loss and a corresponding reduction.

Book value.

Consolidated net premiums and fees earned.

Registered strong growth a little over 10% to 1.5 billion.

The General insurance group increased Oh, 2.5% Sundar title group.

Grew by almost 24% is a carolyn will address in a few moments.

Net investment income grew nearly 2% to read.

Due to a larger a invested asset base and greater dividend income.

Which uh huh.

Arises from the relatively higher yielding equity portfolio and that was offset by slightly lower yields on the bond portfolio.

From an underwriting perspective, this quarter's consolidated combined ratio of 94.9%.

Talked about a 1.1 percentage point improvement over 29 team.

The quarterly claims ratio trended lower.

On the expense ratio ticked up were slightly.

Primarily due to a mix of business you.

And that shipped with more towards the title segment, which are as you know carries a lower loss and a higher expense ratio.

Consolidated claim reserves developed slightly favorable in both periods.

Reducing the reported claim ratio by <unk> 0.8.

Yeah, 1.6 percentage points for the current and prior quarters respectively.

We experienced favorable prior year development on a reported claim ratios for each of our operating segments.

Varying degrees during the course.

This mornings release law with the financial supplement provide some additional detail.

About a those historical development trends.

Turning now to our financial condition.

Cash invested assets decreased to 13 and a half billion at the end of March.

Driving this change was the a combination of strong operating cash flow.

216 million.

Offset by as I mentioned earlier, the substantial unrealized markets appreciation.

In both the equity as well as a fixed income portfolio.

[noise] as a reminder, the composition of our portfolio is approximately 76% allocated to Boston short term investments.

And 24% to equity Securities.

Our equity portfolio consists of approximately 100 names.

That are predominantly large cap value oriented dividend paying companies.

We manage the portfolio within our risk management framework, which YOD does take into consideration express expected price volatility.

The value of our portfolio equity portfolio declined by approximately 24% during the quarter.

To an unrealized loss position of roughly 22 million at the end of March.

His of yesterday's close.

The portfolio had rebounded to 875 million dollar unrealized gain.

Despite a significant downdraft in valuation at the end of March we are still operating within our risk tolerance thresholds.

Consequently, we have not made.

Nor do we expect to make any material changes to our investment strategy.

Well the public's book value per share decreased from $19.98 at the end of 29 team to $17 from 29 cents at the end of March.

As previously noted the most significant contributor to this decline.

Relates to the two dollar 53 cents per share reduction in the fair value These equity portfolio.

Operating income of 47 cents was it additive to the book value.

And we returned capital to our shareholders in the form of the regular cash dividend and that amounted to 21 cents per share.

For 84 cents on an annual basis.

And this year Daniel dividend payout represents about 5% increase over last year's regular cash dividend rate.

This year 2020, a box is 79 year of paying uninterrupted regular cash dividends.

As well as Ah consecutive years is increasing the dividend rate.

For the past 39 years.

We ended the quarter with a 6.1 billion total capitalization.

No debt leverage ratios and adequate liquidity throughout the enterprise.

As highlighted in the release, so we believe that our strong financial position.

Enable us to weather these challenging times.

So it's Craig machine, let me now just briefly discuss our run off mortgage insurance segment.

From a capital management perspective, we entered this year.

With the anticipation of beginning to withdraw excess capital.

From our mortgage.

She wrote off operation.

During the quarter.

We did in fact, a obtained regulatory approval.

And she'd be 37, and a half million dollar extraordinary dividend.

Our two principal mortgage insurance companies.

Toll statutory capital at the end of March.

Continues to remain strong and registered $410 million.

The first quarter mortgage insurance results were not significantly affected by the cold at 19 can't them.

As Craig mentioned earlier.

The impact on unemployment levels of real estate markets.

Along with the mitigating the effects of the government loan forbearance programs are areas that we're monitoring closely.

By definition, they mortgage a in forbearance.

It's not considered to be in default.

[noise], let's also keep in mind that this is a mature book of business. Yeah, We got rid the new policy since 2011.

A large percentage of the enforced file was written in 2009 in earlier years.

In addition, approximately 60% of the the loans that are insured has previously been modified.

Or refinanced under the government's home afford it there will be programs, the harp and have programs.

So these factors along with the a rate of which the U.S. economy recovers could affect future claims experience.

And potentially slow the return of capital from the run off business.

Until there is a greater clarity.

So that said we continue to pursue all previously mentioned options in the interest of producing the most beneficial long term.

Outcome.

For all stakeholders.

With that I'll now turn things back to Craig for discussion of the journal I'm sure.

Okay.

[noise], so as the release indicate and as we show in the financial supplement.

Compared to first quarter 2019 general insurance saw quarter over quarter operating revenue increased by 2.9% in quarter over quarter operating income was up 1.7%.

Net premiums earned in commercial auto rose by 3.6% quarter over quarter, a attributable to the positive effect of rate increases.

That we have that continued to obtain a on the commercial auto line and in the first quarter those rate increases remained in the high teens.

Err on the other hand premiums were somewhat offset by a decline in the exposure dates.

As can be seen in that financial supplement workers' compensation experienced a 9% drop in net premiums earned quarter over quarter.

This is attributable to that negative effect of rate decreases.

That continued in the low single digits for us during the first quarter and also from a decline in the exposure based.

Thus far but the lower rate level that.

We have it in the workers compensation line continues to correspond with the lower claim frequency trends that we and the industry are seeing on that line.

Quarter over quarter, GAAP General insurance overall composite ratio rose slightly to 95.6%.

Up from 95.3% and this was attributable to a slightly higher expense ratio.

The first quarter expense ratio came in at 25.8% compared to first quarter of 2019, when it stood at 25.5%.

So turning to claim rate shows our first quarter commercial auto claim ratio came in at 77% compared with 79.1% in the same period of 2019.

As demonstrated by our continuing level.

Rate increases for this line along with our reduction and exposure from our risk selection efforts. We continue to work very hard to that to bring this claim ratio back into line with our target and below 70.

Turning to workers compensation, the first quarter claim ratio came in at 71% compared to 70.7% in the first quarter of 2019, and we continue to remain very pleased with this result, obviously.

For commercial auto workers comp NGL combined given that we typically provide these coverages together to an account.

We'd like to also look at that combined result in the quarter over quarter claim ratio for those three combined was flat at 74.1%.

I still looking at the financial supplement you can see that the remainder of our claim ratios are very much in line with our target.

And of course, all of the claim ratios, we report our inclusive of favorable or unfavorable prior year claim development and then the latest quarter. We saw favorable development of seven tenths of one percentage point.

So for general insurance as I mentioned earlier, the remaining quarters, a 2020 could prove challenging from a top line perspective, but we will continue to seek the at the appropriate price that we need for our products and we'll continue to focus on the long term when it comes to managing.

Our expense ratios.

So on that no I'll now turn the discussion over to Carolyn for her comments.

Title insurance Carolyn.

Thank you Craig.

These are really being challenging times the employees in the title Division have embraced this challenge and are working to the chaos in order to continue business and serve our customers.

Despite your toes is 19 pandemic residential and commercial sales and refinanced just continue to fund.

And transactions need to close amidst this we are ever mindful of the safety and well being of our employees and customers.

Access into our offices is generally restricted to employees only which is really caused us to be very creative and carrying out our business.

Direct operations and our title agents have conducted drive two closings set up change outside of offices provided single use pins resigning documents, all while continuing to practice social distancing.

My heartfelt appreciation goes out to all of our employees and our title agents on their creativity and most importantly, the positive and it really collegial attitude that we hear about on our daily called within leadership team in the title group.

The co Big 19 disruptions have led to a variety of emergency state orders did impact our business.

Meaning odorization statues have been amended in order to comply with distancing requirements and should create avenues through which closing transactions made continuous based on these orders our title technology company tobacco, So which was originally designed for electronic closings and Ryan legislation is able to.

Pivot and adjust its technology to allow our agents in offices to continue conducting closings.

Secure platform, which allows for adherents to social distancing restrictions.

This platform platform provides an essential notaries function that allows for the entire notification of documents to be completed remotely.

Between me and ingenuity ever offices in agent and the support of technology like for boss. So we've been able to keep pace than our current environment.

The title group chicks talk to first quarter of 2020 on a record pace the market experience near record lows and mortgage rates all time first quarter hardware set in terms of both direct and independent agency revenue and operating profitability.

Through the first quarter total premium and see revenue was 628.1 million, which was an increase it nearly 24% over the first quarter of 2019th.

Agency premiums were up around 21% and direct operating revenue approximately 31%.

In terms of operating profitability. The title group reported pretax operating income of 43.3 million for the quarter compared to 20.5 million into first quarter 2019, an increase of 110.6%.

We ended the first quarter with some of the highest open order counts in the history of our company.

We continue to adjust to doing business, while operating under the various state shelter in place orders and social distancing requirements.

We are mindful of the challenges ahead for our organization and our nation in general our firm belief is that they have continued unwavering commitment of our employees and the support of our title agents, we will be more than ready for these challenges.

We will rely on the same guiding principles of integrity managing for the long run financial strength protection of our policyholders and well being of our employees and customers that has served us well over the last 200 plus years.

With that I'll turn it back to crack.

Yes.

Okay. Thank you Caroline.

So again, our first quarter.

Operating results indicate that our business continues to perform very well.

We continue to focus on.

Underwriting excellent even during these challenging times.

And our capital position remains very strong, but significant dry powder to weather the macroeconomic bigger through options and.

To be well positioned when the economy eventually rebound.

I'll also note that.

Our m. DNA discussion in our upcoming 10-Q will provide additional more detailed disclosure around the risk factors.

Associated with coded 19.

So with that will conclude our prepared remarks, and we will open up the discussion for Q1 night.

Thank you for analysts and investors who are participating in this call and the interactive line you signaled by pressing the star key followed by the digit wondering your telephone keypad to ask a question.

If you are using a speakerphone. Please make sure your mute function is turned off trailer Cmos reach our equipment also if you press star one earlier during today's call. Please press star one again to ensure equipment has captured your signal.

Well pause for just a moment to not everyone an opportunity to signal for questions.

Thank you and our first question comes from Matt Carletti with JMP. Please go ahead. Your line is open.

Hey, Thanks, good afternoon.

Hello, Matt.

Craig just had a few questions for you if I start with general insurance.

The two major business lines said transportation your commercial auto and workers compensation I took a couple of questions on each one maybe start with commercial auto and you mentioned in your opening comments about kind of things some exposure fall off which makes sense. Following on that could you comment on.

What you've seen to date.

In both the frequency and severity side of things and I'd imagine to that as you dig into that book, but there's parts of that better you know, maybe even seeing favorable frequency trends in other parts that are seeing negative or I'm, sorry up revenue trends and others that are seeing negative revenue trends can you help us dissect it a little bit and what you're saying.

Sure, Matt I'd be happy to tip to provide some some color around that so I'll.

I'll talk about auto although.

There are a lot of similarities between auto and calm.

Certainly claim counts are down, but the majority of our premium is exposure based meaning the premium is based upon sales receipt miles driven.

For for work comp it's payroll. So you know, we really have to wait and see what when we get the exposure reporting from our insured.

And and through a premium audit.

To see what that denominator looks like.

You know it while well counts are down if you if you have a fix.

Denominator, you know you can perhaps declare an early.

Victory around frequency and and I'm on the other hand with with the denominator that is somewhat variable depending up on.

Where ultimately the premium set a land it's really too early.

To declare that that frequency is down so for instance, if if the denominator is miles driven.

Yeah, we have to see what those miles driven were and take those claim counts and divided by miles driven so it's a little different perhaps than say, a personal auto where the denominator might be a fixed annual premium.

And you can with pretty high degree of confidence.

Because of the cap the counts are down say that the frequencies down but with a denominator that that is one that that does fluctuate.

Depending upon on the exposure based it's a little bit harder to.

Be precise about where ultimately frequency will be but certainly claim counts are down for auto.

Workers compensation very much the same thing there.

The denominator when we look at frequency is is payroll for the most part we look at it a couple different ways.

But to the extent that.

No we have to see what payroll to ultimately reported what premium audit look like.

It's a little hard to tell whether those lower claim counts right now are an absolutely clear indicator that that frequency is down certainly claim counts are down.

I will just add one to one comment.

That's specific to what you asked but also.

You know, there's the question about well how do cobot 19 claims.

In pack things and you know there I would say that.

There are some pretty good analysis out there by a MPCI and definitely see RFP in California.

That talks about their observations and analysis on frequency and can make it a long story short a what it really indicates is that there's a lot of things that are.

Our driving frequency down.

And on the other hand, there's some things that are driving frequency up so with respect to covert 19, while there might be some uptick from that there is arguably a a a downward pressure on on frequency from other things such as auto accident.

For example, so.

I have a moving target, but hopefully that gives you some more color around how we're looking at at frequency when it comes to auto and and comp.

Very helpful. And then maybe just a follow up on each one of those the UN I'm workers common pretty familiar with kind of how the freedom audit process works, but less so on transportation says we think about your book and then getting that denominator right. You know how quickly or how often you kind of get that information from your insureds in terms of what the exposure really.

Is that is it a short lag the or is it more end of policy on it.

Great question, Yeah, usually we get the ER the report.

Within 60 days in some cases every 30 days.

So it its perhaps more more quickly then you would in a normal premium audio situation on where I think for example on workers comp where that a little more elongated as far as the ultimate ultimate audit.

Right right perfect and then I think Tom.

Just lastly question about if you could help us understand order of magnitude of of industry exposures and the one in particular being obviously retail hospitality restaurants, getting getting getting hit hard we've got a revenue side and then the other pocket being you know hospitals and first responders.

With some of the kinda proposed regulatory change and presumption of you know injury I'm. Just curious if you could help us those couple of buckets just.

Exposures within your workers comp book.

Sure. So Ah so we have very little travel.

Leisure.

Exposure, we do have some healthcare related exposure I will note though.

Where we do have health care related exposure, we don't provide general liability or professional liability. So it. It is just a workers' compensation exposure that we would have there and.

With respect to the presumptive regulations and the rebuttal presumption regulations.

That as you know are a rapidly evolving dynamic and vary from state to state.

You know, we're keeping a very close eye on that.

And.

Prepared to to handle.

Those claims and accordance with those those regulations in those states.

What we've seen so far is that.

More than 50% of the workers compensation claims we we have seen.

Don't.

Yes, I have a confirmed.

Covert 19 diagnosis.

I'd also I know I mentioned, then see supply and doubling its the IR D as well and.

W.P.I.R. again, particularly the other thing you have to keep in mind.

Is that.

80%.

One of 'em workers comp claims from Kobe 19 are don't require hospitalization mild symptoms Wi Fi IR be has had a total indemnity and medical benefit average cost projection of $1400 in those Vincent.

The.

15% require hospitalization, where Ah that's about a $50000 total workers' compensation.

Payment and then.

4.3% require I see you we're their projection as about a 140000.

Collars and then.

Less than a 0.7%.

Result, in a death benefit which they project at about 333000, So I give you that just because I think it's very important.

To keep things in perspective here and.

The other thing that I would give you very specific.

To our portfolio is that.

Over 90% of the work comp claims that we have reported thus far our watch sensitive mostly large deductible. So if you take those numbers that I gave you a as an example.

Yes, we would expect the majority the vast majority of those payments to be well within those large deductibles.

So.

For us given that we've made a very conservative strategic effort to move our business more toward loss sensitive business. I think this is a good indication of of why we do that and therefore.

Over 90% of these work comp claims we've seen thus far we would expect to be paid by the insured within their deductible.

Okay. That's very helpful. Thank you just one last numbers question and then I'll.

The other way I'm just on the on the little bit of favorable prior period development 70, Bips as you look at kind of the three major.

Coverage groups or segments were there any was it all kind of just small movements within those segments or was there, particularly notable the adverse in one favorable in the other that that offset to get to that 70 bets.

Yeah, Matt just Carl.

I would say in the current year quarter.

There is not significant movement between the three.

Primary lines workers comp commercial auto and she'll.

As you might suspect workers' comp or developed slightly favorable for the quarter.

Commercial auto was was basically neutral and GL did have a slight did have a.

Unfavorable development, but when you wrap it all together it was not significant.

Okay, great. Thank thank you very much the answers guys another thought going forward.

Yeah.

Thank you Matt.

Thank you and at this time, we have one one question remaining in the queue. Once again for analysts and investors who are participating in this call on the interactive line you know my pressing the star keep element. It did you one on your telephone keypad to ask a question or if you have follow up question.

We'll take our next question from Greg Peters with Raymond James. Please go ahead.

Good afternoon, everyone.

To kick off Oh my.

End of questioning with.

Craig you could comment.

On the risk management business and specifically you know the.

He moves in the market place about employers for lowland employees.

And you know all of the.

Huge numbers and increased unemployment seems like.

The risk for you guys is that.

That's a new world.

You know shrink.

In some fashion over the next.

Several quarters and I know you don't really want to provide guidance on that but maybe you could talk about how your conversations are going on the service management accounts currently and what kind of indications are giving you a state of their respective businesses.

Sure sure Greg.

Well you know.

On the risk management business or.

The majority of the exposure for that business is retained by the risk management clients.

So when you look at.

At at a premium that we take in it really is for some excess exposure for the servicing of the business.

Therefore, when I think about.

Revenue challenges going forward.

Risk management businesses is not.

The area that is is greatest concern it's probably.

The lesser concerned because again it.

It's us really.

Charging a fee more of a fee related kind of premium for the servicing of the business, where the clients taking risk and so it.

[noise] a decline in exposure or what have you. It it mostly would have come out of that portion that they're they're retaining.

So the more concerning.

Business is our mid size business and you know we're not.

That's a fairly a small business provider for.

Workers' comp and auto I would say that more of a mid size player and the bigger concern would be those those mid size players that are under such financial stress that they have difficulty rebounding when the economy comes around so.

I'd say, we feel we feel pretty.

Comfortable with where we sit with regard to our risk management business.

Okay.

Oh I know there's been a couple of really hot topics and I think it's probably appropriate to have you guys comment on the first you know you do break out a property component within your general insurance business and.

Business interruption, usually is associated with the property type coverage.

I'm not asking just signed on you know the card.

Chaos round business interruption, but maybe you could give us some color.

If you are exposed if you have exposure is just the vast majority of or policies are falling guy so form et cetera.

Yes that would be.

Helpful.

Sure I'd be.

Happy to do that Reg, So just working with the financial supplement since since.

The majority of you folks I'm sure have that nearby.

If you look at at our property writings, they make up about 8% of our overall net premiums earned.

Of that 8% three quarters of that is inland marine.

Which which there is no.

Be I component.

To that each other so the remaining 2%.

Of that property is a property policies that that would have a business interruption component and I can tell you that 99.8% of our policies for business interruption include.

The.

Exclusion for virus and and pandemic related event.

So we feel.

Very good about first that we don't have a significant exposure and second that we have a very.

Hi.

Box around that because.

Well I will find that.

You know two to invalidate that virus exclusion.

And and [noise].

Create contract uncertainty at and to abrogate that the contract that was struck between me and shirt in the insurer as you as a very well know from everything in the industry right now is viewed by many including us as something that would that would.

Undermine contract law and even beyond unconstitutional. So so we feel very strongly that that those virus.

And pandemic exclusions that we have on the vast majority of our policies will ultimately stand.

Okay and then the other piece that's popped up recently would be around force measure.

And I'm curious about your portfolio.

Clauses force majeure clauses in their et cetera, or maybe you could.

Peak or pine on that briefly.

Yes, so far are on our surety business right now in particular, there is the Fortunately as your clauses and we've done a an extensive.

Look into our into our surety business in particular end and therefore.

We think that we do have some protections there and thus far we haven't seen any.

The.

Increase in claim activity.

And our surety policies and we think that for the most part are.

Our.

Contractors are surety contractors.

We'll we'll also medley you'd be able to.

Conclude the the work and as you might also know the other good thing there is that in in most states contractors have also been deemed.

To be essential workers so.

Right now we don't have any heightened concern.

Around our surety business.

And the surety business within the categories you identify on page four which where'd you said surety business flow throughs had the financial indemnity or was that the other coverages components.

Yeah, it's under a footnote to.

Which is the financial indemnity.

Okay.

I want to pivot ever so briefly tell on.

You know the the the Wally I know you spoke positively about.

First quarter results it certainly seems like.

Order flow has the ball you may have ended the quarter on like decent note. It seems like it the rhetoric in the marketplace is come to a grinding halt.

Can you provide us any sort of color on on.

You know what we should be thinking about this business over the next several quarters considering all of the damage that's been done to the economy from this cope with 19 virus.

Well, Greg right now when we look at our current orders, they're keeping pace with where we were during the second quarter of last year. While you know the refinances have have certainly grown.

We just don't have an indication of a slowdown our revenue and our orders are right in line with second quarter of last year.

And so you are your you would expect the trends of last year to continue beyond the second quarter or is it just so you think there's just a wave of we you know refinancing because of lower rates are right. Yeah. We were at an all time low yeah on mortgage rates I just think it's too early.

It's a lot of its just going to depend on how long. This pandemic goes when people you know are able to get back to work. It's it's so early in the process to really tell what just full impact will have on us.

And can you just for my this is a percentage of direct versus agency.

85% of our revenue is comes from agents.

Premium revenue.

Okay.

Great.

I guess the final question I'll have probably going to call a.

Call I know you spoke about.

The change in the unrealized gain and loss I was a result to the fluctuations in the market as it did ended the quarter. But then you also gave us an indication of where that.

Unrealized loss position how it recovered since then do you have.

And estimate of what that means in terms of impact to book value per share.

<unk>.

Yes, Craig.

Or Greg I do not have that broken down on a book value per share basis.

Ms should views.

A simple matter.

So so you wonder is it is it just based on your comments at the unrealized loss that you booked and in the first quarter would be.

Reversed in the second quarter of the books, where the close of it as of yesterday.

Correct is that how I read your comments.

Well the first quarter the change from year end was 962 million depreciation that's now but recovered you know to seven.

175 million dollar unrealized gain so swing of Ah.

A swing of almost a $200 million.

So that divided by roughly 3 million.

Shares would get should the answer.

Perfect Alright.

Thanks for answers are going.

Thanks, Greg you have no additional color.

Thank you and it we currently have no additional callers in the queue at this time, but I would like to remind everyone. Once again that is star one on your telephone keypad to see my first question at this time.

Well pause for just a brief moment.

Thank you and we do have a follow up question from Greg Peters with Raymond James. Please go ahead. Your line is open.

I.

Couldn't help myself.

When I look at the.

The run off our fight GE business and I look at the dispersion of risk in force by policy or.

You know was the majority 41% is categorized as 2007.

Oh, how is it that these these mortgages from 2007 habits.

[noise] eight out their full or paid off and called covered at least the 20% 25% threshold.

Or you know for you you surpass that threshold for what you're required for two tab M.I. I don't understand that.

[noise] your question well.

I just think the answer is that Uh huh.

There's not a re measurement to investors.

Of the loan to value ratio, which would.

Resulting in dropping the U.M.I. coverage I think it stays in place.

Got it that would make sense okay. Thanks.

Thank you and it does appear we have no further questions at this time I'd like to turn the conference back over to management for any additional or closing remarks.

Okay, well, we were just like to thank.

Thank everyone for participating today and.

Hopefully when we reconvene in about 90 days from now will be.

In a situation that is a much better for this country and hopefully.

Folks are able to be back at work in the economy is back on track. So we.

We wish you all the best during the or the time between now and then and again. Thank you for your support and your participation on today's call. So thank you very much.

Thank you and again, ladies and gentlemen that does conclude today's call again, we thank you for your participation you may now disconnect.

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