Q2 2020 Essent Group Ltd Earnings Call
You'll need to press star one on your telephone please be advised that today's conference is being recorded if you require any further assistance. Please press star zero I would now with the coal over to Chris Curran Senior Vice President of Investor Relations. Please go ahead.
[music].
Thank you Denise good morning, everyone and welcome to our call.
Joining me today, our markets out chairman and CEO, Larry Mcalee, Chief Financial Officer.
Our press release, which contains essence financial results for the second quarter or 20.
Was issued earlier today and is available on our website at <unk> Dot com.
Our press release also includes non-GAAP financial measures that maybe discuss during today's call.
The complete description of these measures on the reconciliation to GAAP, maybe found in exhibit EM of our press release.
Prior to getting started I would like to remind participants that todays discussions are being recorded and will include the use of forward looking statements.
These statements are based on current expectations estimates projections and assumptions that are subject to risks and uncertainties, which may cause actual results to differ materially.
For a discussion of these risks and uncertainties. Please review the cautionary language regarding forward looking statements in today's press release the risk factors included in our form 10-K filed with the FCC on February 18 2020.
And any other reports and registration statements filed with the FCC, which are also available on our website.
Now, let me turn the call over to Mark.
Thanks, Chris Good morning, everyone and thank you for joining US. This morning, we released our second quarter results, which reflect the impact of cobot 19 on our insured portfolio.
During the quarter, we experienced an increase in default, which resulted in a 176 million dollar loss provision compared to $8 million last quarter, and 5 million dollar for the second quarter a year ago.
Our outlook on the economy remains cautious, but we're confident that our by managing distribute operating model is well suited to navigate this challenging environment.
In response to the Pandemics and the weakening economy during the quarter, we strengthened our balance sheet by raising $440 million of equity capital.
We believe that raising equity was prudent as it strengthens our balance sheet and increases our liquidity.
Now, let me touch on our results.
For the second quarter, we aren't $15 million or 15 cents per diluted share compared to $136 million or $1.39 cents per diluted share for the second quarter a year ago.
Even though our results were impacted by increased default, we grew adjusted book value per share to $31.02.
15% increase from June Thirtyth 2019.
At June Thirtyth, our default inventory increased to 38000 of which 34000 had been identified its cobot 19 related.
We believe that programs such as a federal stimulus foreclosure moratoriums and mortgage forbearance may extend traditional default to claim timelines.
Accordingly, we estimate that the cobot 19 claims will be modestly lower than our historical experience, where borrowers did not have access to these type of programs.
For our second quarter loss provision, we are using a 7% claim rate assumption on the cobot 19 default versus 9%, which was the estimate use in the first quarter for early stage defaults.
During the quarter housing continued its resilience with home prices being supported by limited inventory increased demand and low rates.
Both new and existing home sales are being fueled by first time homebuyers, such as the millennials along with those moving out of densely populated areas in response to the pandemic.
As a result purchase and refi mortgage originations were robust during the quarter.
Due to the strong housing environment, we grew insurance in force to $175 billion, which is a 14% increase compared to June of 2019.
Our growth this quarter was driven by $28 billion of and I W. Offset by runoff as our persistency was 60% compared to 74% last quarter and 85% for the second quarter a year ago.
On the competitor front, we increased rates on new business by approximately 10% a response to the pandemic.
Also the credit quality of our second quarter and I W. was higher with an average FICO 749 compared to 744 a year ago.
Much of the shift was the result of increased pricing on a lower credits tighter GRC underwriting and increased share re Fi business.
At June Thirtyth, our balance sheet is strong with over $3.6 billion and GAAP equity at a conservative debt to capital ratio of 10%.
We also have access to $1.6 billion of excess of loss reinsurance.
As validation of our financial strength during the quarter A.M. best affirmed its a rating of Essent guaranty and Essent Re's, and we continued to be rated Athree triple B, plus by Moody's and S&P, respectively.
And it remains the highest rated Mana line in our industry.
Our liquidity remained strong as we have $4.5 billion of cash and investments and generated $183 million, an operating cash flow during the quarter.
Including the net proceeds from our capital raise we maintain $700 million in cash and investments at the holding company.
[noise], although there are no immediate capital needs in our operating businesses, we believe that maintaining this amount of capital at the holding company is prudent.
Also excess capital enables us to take advantage many growth opportunities should they arise.
From a p. Myers perspective, we are well positioned at June Thirtyth, we've applied the 0.3 factor to the Pmires asset requirements for defaulted loans, resulting from cobot 19, including those in forbearance.
At June Thirtyth, Aesynt guarantees pmires sufficiency ratio inclusive of the 0.3 factor is strong and 177% with $1.1 billion in excess assets.
Excluding the 0.3 factor our Pmires sufficiency ratio would continue to be strong at 138% with approximately $700 million in excess assets note that these excess asset amounts do not include cash and investments at the holding company.
Finally in connection with our strong capital position and liquidity our board of directors approved a quarterly dividend of 16 cents per share to be paid on September 10th.
We will evaluate future dividends as we continue to navigate the cobot 19 economic environment.
Our by managing distribute operating model provides us confidence in managing our business in generating cash, even though things can be challenging over the near term.
Since the founding investment we have built and manage this business for the long term and we'll continue to do so now let me turn the call over to Lars.
Thanks, Mark and good morning, everyone I will now discuss our results for the quarter in more detail.
Net earned premium for the second quarter of 2020 was $211 million, which represents an increase of $23 million were 12% from $188 million in the second quarter 2019.
Second quarter earned premiums are up $5 million compared to the first quarter 2020.
Similarly, due to a 2% increase in average insurance in force and an increase in singles cancellation income of $12 million, partially offset by an $8 million increase in ceded premiums.
Persistency declined during the quarter to 67.9% at June Thirtyth 2020 from 73.9% at March 30 Onest.
The average net premium rate for the us mortgage insurance business in the second quarter was 48 basis points.
Consistent with the first quarter 2020, and down from 49 basis points in the second quarter 2019.
Single premium cancellation income contributed six basis points to the average net premium rate in the second quarter, while ceded premiums reduced the premium rate by five basis points.
Note that these rates exclude the impact of premiums earned by Essent re order GFC risk share transactions.
Net investment income, excluding unrealized gains and losses was $20 million in the second quarter 2020, compared to $21 million in the first quarter and $21 million in the second quarter a year ago.
The yield on the investment portfolio in the second quarter was 2.2%.
Compared to 2.5% in the first quarter of 2020 and 2.8% in the second quarter of 2019.
The impact of lower rates on the investment income was partially offset by higher average investment balance.
Net realized losses on the sale of investments in the second quarter 2020 for $1.3 million.
Compared to net realized gains of $3.1 million in the first quarter.
For the second quarter, we recorded a gain of $2.5 million for the change in fair value of embedded derivatives associated with the insurance linked note reinsurance transactions.
Compared to a loss of $4.2 million in the first quarter a 2020.
Gains and losses on the embedded derivatives are included in other income and our condensed consolidated statement of comprehensive income.
As a result of the pandemic and the related dislocation experience since mid March 2020, the default rate on the U.S. mortgage insurance portfolio increased from 83 basis points at March 30, Onest to 5.2% at June Thirtyth 2020.
We have assumed that all new defaults reported in the second quarter relate to cobot 19.
The provision for losses and loss adjustment expenses recorded during the quarter includes $182 million specifically for the new Cobot 19 defaults reported between April Onest and June Thirtyth 2020.
Additionally, we experienced net favorable prior period development with respect to the pre Kevin 19 default, resulting in a consolidated provision for losses and loss adjustment expenses for the second quarter of $176 million.
As of June Thirtyth, our consolidated reserve for losses and loss adjustment expenses was $251 million.
Of this amount $189 million relates specifically to the cobot 19 defaults.
$7 million of these reserves were ceded under the quota share reinsurance agreement.
This reserve represents our best estimate of the ultimate losses to be incurred for claims associated with these defaults.
Looking forward, we will continue to monitor the economic environment and gather information on this segment of the default inventory and update our estimate of the reserve as appropriate.
Other underwriting in operating expenses were $39 million in the second quarter 2020, compared to $42 million in the first quarter, principally due to lower travel expenses and a reduction in payroll taxes and benefits associated with bonus payments in stock vesting in the first quarter.
The effective income tax rate for the six months ended June Thirtyth was 16%.
Resulting in an 18% tax rate for the second quarter.
As Mark previously noted we earned 15 cents per diluted share in the second quarter of 2020.
Our weighted average diluted shares for the second quarter was 103 million shares up from 98 million shares in the first quarter 2020, due to a partial quarter impact of the equity offering which was completed in early June.
We estimate weighted average diluted shares of approximately 112 million in the third quarter 2020, which includes a full quarter impact of the equity offering.
The consolidated balance of cash and investments at June Thirtyth 2020 was $4.5 billion.
The cash and investment balance at the holding company was $702 million, which includes the proceeds of $440 million from our equity offering that closed in June.
Essent Group limited paid a quarterly cash dividend totaling 17.9.
Million dollars to shareholders in June.
Consolidated debt outstanding under our credit facility at June Thirtyth, 2020 was $425 million with a weighted average interest rate of 1.9%.
As of June Thirtyth, the combined us mortgage insurance business statutory capital was $2.5 billion with a risk to capital ratio of 11.7 to one.
The risk to capital ratio reflects a reduction in risk in force associated with the affiliate quota share as well as reinsurance provided by third parties.
Aesynt guarantees available assets exceeded its minimum required assets has competed under pmires by $1.1 billion.
Aesynt guarantees pmires sufficiency ratio was 177% as of June Thirtyth 2020.
Under temporary provisions released by the Gses with respect to Pmires private mortgage insurers will apply to 0.3 multiplier to the risk base required asset amount factor for each insured loan into fall that has an initial miss payment occurring on or after March 1st 2020, and prior to January Onest 2020.
One, which the gses have defined as the coated 19 crisis periods.
The 0.3 multiplier will be applicable to any loan as long as it is in forbearance for any loan not subject to a forbearance plan. The 0.3 multiplier will be applicable up to three calendar months. Following the month of the initial missed payments.
34352 of our default having initial miss payment in the Cobot 19 crisis period and received a 0.3 multiplier in calculating the P. Myers required assets as of June Thirtyth 2020.
Finally at the end of the second quarter Essent re a GAAP equity of $1 billion supporting $11.1 billion of net risk in force now, let me turn the call back over to Mark.
Thanks, Larry and closing, although our quarter was impacted by the pandemic. We were encouraged by housings resilience as mortgage demand continues to be driven by low rates and first time home buying.
We also believe that the pandemic and people working remote will be additional drivers of home buying especially for those wanting to move out of densely populated areas.
Coven 19 environment is a tremendous test for our by manage and distribute operating model. However, with our robust capital level strong liquidity and access to over $1.6 billion of Xol reinsurance Essent is well positioned we believe that our business model will emerge stronger with a new sensitive appreciation for private mortgage insurance.
And its role in supporting a well functioning housing finance system now, let's get to your questions operator.
Ladies and gentlemen to ask a question. Please press Star then the number one on your telephone keypad.
Your first question comes from Phil Stephano with Deutsche Bank. Your line is open.
Yes, thanks, and good morning.
I was hoping you could provide it's just a quick update on fonts around iowans at this point.
There's at least one transaction that happened that was closer to the what I'd call traditional islands.
Co bid, but the pricing was up significantly.
How are you thinking about pricing versus need for tail risk.
Feels like there's enough capital, but this capital relief that comes with it as well.
On the moving parts, there and how you're thinking about it.
Hey, Phil Yes, I think we're encouraged that the I'll end market has kind of reopened two of the amies. We're in it have done deals Freddie has done a couple deals, which I think is important really to the long term.
Our ability to market, which we think it will recover longer term yet the pricing is not quite there yet but.
But we think it will return over time it wasn't there early.
When they when they started now five six years ago. So I think from our view is so we have time times on our side.
Part of.
The benefit of the capital raises we have the ability to warehouse that risk for a period of time.
That being said, we'll certainly look and evaluate.
Doing a transaction in the back half a year and I think if it works for us from an economic standpoint, you could see us doing if not again I think we have the patients to execute it when we feel the time is right.
Okay, and now that we have a couple months under our belt post the pricing changes did you learn anything about the competitive dynamics.
Of these risk based pricing engines or any interesting learning.
From your own pricing as you might you kind of adjusted dials and things like that on the on the pricing scale. Yeah. I think it continue to learn with the pricing engines I think the market continues to be very very sensitive the price more so than ever was and I think thats just a reality of the market whether its bid cards or the engine. So yes.
So a lot of moving parts in the second quarter.
In terms of pricing I think the mines were a little bit all over the ball feel so to speak.
In terms of pricing, so im not going to read too much into the second quarter.
In terms of the pricing other than I think we didn't realize how really really price sensitive.
The lenders are.
Okay. Thank you and hope everyone as well.
Sure.
Your next question comes from Douglas Harter with Credit Suisse. Your line is open.
Thanks.
Just following up on that train of thought your sequential growth in the second quarter and again into july's seems stronger than than peers. I guess can you just talk about kind of what you were seeing that kind of led to that your ability to kind of have that faster insurance in force growth.
Yes, I mean, I think two things Doug to understand one just in terms of our pricing. It was very kind of unit economic driven when we entered into the pandemic in our view is home prices would would flatten and start to decline, which is really is really still still our view as a result in a kind of need to raise pricing in order to.
Maintain that kind of return profile that you're looking for.
New business. So the result of it kind of was more share, but I don't really think it was driven so much by our pricing is just too again some of that competitive environment. It's clear. If you just look at how the share has kind of kind of tallied up.
A couple of the mice really reduced share and deferred for various reasons.
And I think we were we kind of benefited from that but not so much firmer pricing standpoint, just because we were there and some of the other guys kind of backed off it seems like so again, the pricing is really driven and unit economics.
Market share it always ebbs and flows so was it was higher this quarter, but it could be lower the next quarter the previous quarter. So I wouldn't read too much into it other than.
Housing is strong so I would look at it from a secular standpoint, Doug if you take a step back housing is larger than we thought it would be especially around the purchase side and the second quarter It really dips.
Most pandemic immediately filing and then has bounced back into how long is that sustainable I think it's hard to tell but I do think it's encouraging.
That housing has has been as strong as it has brings I think it bodes well from a from a claim side too right I mean at home prices stay stay elevated when and if a borrower goes to claim and this is going to be like 12 months from now radar could be 24 months from now from a from a foreclosure standpoint, given just the timeline at home prices are.
Rob that really gives the bar or the ability to sell to house and get out from under the property and that wasn't really the case.
And in the Great recession, I don't think Thats is really well understood its not factored into a lot of our loss estimates, yet, but I think thats, where that's where you'll see some of the benefit and I think again thats a positive that we didnt have in the last downturn.
Hi, Mark just following up on your comments about the share gains.
How much of that can be sticking on the fact that you were going in there for.
The lenders kind of a period of stress or others might have been.
Been pulling back.
How much does that kind of give you goodwill with them and does that help you kind of sort of keep some of that's fair in the long term.
Yeah, No I think it doesn't mean you wish it did but it's a price game.
This is more of a commodity product and I think a lot of VM lines would care to admit.
And its price driven so thats why it really gets down to.
Capital.
But balance sheet and maintaining low expenses again. This is we were able to be in the market because we had the capital to do so I mean, we had said enough to do it that way, we strengthened the balance sheet.
As we talked about in the equity raise it gave us the ability to bring on more business and not rely just on reinsurance as we talked about earlier in my in my response to Phil's comments as we were able to kind of warehouse that risk I think thats. The important factor here as we go through this period of uncertainty and remember guys to the back half of the are still uncertain.
You have an election coming you have the stimulus bill, which may or may not happen, what's going to come on with what's going to happen with unemployment benefits. This is still clearly a balance sheet game and I think our our ability to have a strong balance sheet as evidenced by the ratings maintained strong liquidity.
Mars excess both within the entities and then Holdco cash is really is really the keys I wouldn't get too caught up again and share has kind of ebb and flow, but if were there to that I think the shares reflective of our capital strength not so much our pricing.
I appreciate it thanks.
Your next question comes from Rick Shane with Jpmorgan. Your line is open.
Hey, guys. Thanks for taking my question this morning.
One other things I'm interested in is when we compare.
The reserves as a percentage of risk and default risk in force.
The reserve grade.
For 211 payments bucket.
Historically is being.
Mid twenties, it's now remain teams.
Two questions there.
Fleet that is a reflection of the.
The loans and forbearance.
David related loans are likely to have a lower lifetime.
Our eventual default rate or.
Claim rate.
But im curious how calibrate that and also as we moved through the year.
Looking at the later pocket the reserve rates are historically the same I'm curious if we could see surge.
As the loan season in default.
Hey, Rick its Mark I would I would I would not read anything into Florida, 11, I mean, it to be very careful were and we were trying to be clear on the script, but the 7% that we estimated.
On a default to claim on the co that is our best estimate, it's we're not going to changes as it rolls through the buckets. That's really how to think about held defaults normally work pretty cove. It we had a 9%.
Estimate as it rolls through claims that's going on it's obviously going to rise as some cure and other stay there your probability of default actually goes up however, if you take again a step back.
A new default pre cove at nine 9% to 10% of them eventually want to claim here since it's not going to be than normal roll rate pattern. We've taken the stance and we did the same thing with the hurricanes that we're going to do an upfront reserve for that amount and we will adjust that we'll look at that reserve and evaluate and potentially adjusted every quarter.
Order, but we're not going to follow the model that we do for our normal kind of role to claim.
Got it and that makes sense, what we agree with you the.
Well, we're exceeding eight ish.
Our team is an appropriate analogy the only difference in my mind that I think that.
In a hurricane scenario one of the reasons loans during the fall.
Because the utility in the property may have been diminished if it's not it you can.
Use and that's not the situation here.
I completely agree it's apples and oranges, it's like the hurricanes only in our reserving process I don't think of it as we're not we're not comparing it to the hurricane it's really just in terms of the process hurricane as an unknown event and so is this I mean, we havent never it's not like we can go back and look at it will how was the that was.
The economy during the 19 eighties pandemic I mean, there is no kind of there is no history to look at so I think our view was think about it as in a normal to fall 9%. Eventually go from default to claim here, we're looking at and say because of forbearance, we're kind of the delta between the nine of the seven as us give increase.
For the benefit of that the borrowers have to be in forbearance that 7% could prove to be conservative or could prove to be aggressive. This was really just are you know our estimate based on this just a second quarter.
I appreciate that you were clearly all across the board struggling with the same.
Math as well so thank you for for sort of explaining your thought process absolutely.
Your next question comes from Jack Micenko with ESI GE. Your line is open.
Hi, guys good morning.
Okay last question.
You look at the 7% claim rate on the loss incurred this quarter.
It appears that perhaps the severity assumptions.
Changed.
Or increase.
And just sort of back of the outlook. So.
Loss incurred on just the seven so was there a change in your thinking also there already.
Increases from note.
Conservatism on your severity assumptions.
On this quarter's reserving.
No Jack there wasn't I mean, I think previously I mean again anything below 100 is just a result, we haven't paid a lot of claims to date. So normally when we look at our reserve we assume 100% what's driving it is really just the higher loan balance that are in default remain I think.
It's probably is probably 215 this time last year and insight to 60 this year and some of it is just to defaults hurt a little bit more weighted on the coastal properties because they've got hit work Thats, where were seeing kind of higher default. So it's really the loan size no not so much us being conservative.
Okay got it.
And I've got 34.
Thousand.
This year for the signing as.
Do you know how many of those or forbearance currently what kind of percentage that that looks like.
It's about 90%, which account for the life for me figure out why it's not 100% I mean think over time borrowers would you would want to borrowers to do it. So I think thats a little bit of at just over the discrepancy in data and hopefully over time as servicers would be reaching out to make sure the borrowers enter into the forge forbearance program that given the flexibility.
Kind of and the time needed to get back on their feet.
Okay.
Real quick the operating expense line, certainly understand the year quarter to quarter shutdown payroll et cetera, but running well under the.
Year ago quarter.
Dollar rate as well.
Criminal cost cutting anything there efficiency wise or opportunity.
Better than a year ago.
Jack.
Touted in the past that we have really just low nominal dollar civic of expenses, we focus a little bit more on the nominal dollars than the than the expense ratio, but we have provided some guidance in the first quarter of a range of 165 to 170 million for the year, we maybe towards the lower end of that range. We're sticking with that range for now, but we may be a little bit towards the lower end of that range.
Based on the rate were out so far.
Hi, guys. Thanks, Good luck.
Your next question comes from Mark Devries with Barclays. Your line is open.
Yes. Thanks.
Just had a question about expected returns on new business.
One of your competitors recently comment I think given some of the pricing actions that have been taken that they take returns could actually come in higher than kind of the long term average just curious what your thoughts on that.
Yeah, we probably disagree with that Mark I think again, I think we price to be kind of in that mid teen returns were kind of in.
I would say the 12% to 15% you can you can financially engineer that to make it higher based on your pmires assumption, but in order to get too.
Kind of above mid teens, you need to have a super low claim rate assumption I think that's a difficult thing to have in this environment.
Again, we're at a 10% unemployment rate or kind of we're still in the midst of the pandemic. So for for us to say that we feel with any confidence that these are above our long term returns I don't I don't think mean, we can't speak for others. That's not something we could say I still say, it's still kind of in and that kind of 12.
The 15, which is really how how we gauge it and again, we'll see we'll see how the economy unfolds as to what the end result is.
But we and again, we're still relatively cautious when it comes to kind of the back half of the year.
Got it.
Is there anything in the you know the new re propose Jesse capital standards that you're monitoring.
Which may have the potential to impact your business other for the go to the bad.
Yes, I mean, it's certainly something we're looking at I would say the big picture, we've talked about this in the past is when the capital standards become final if they become final there could be a kind of a rollover effect of P. Myers, which could potentially increase the capital requirements for the industry and that's something.
We factored in for a long time as part of why we looked at the capital raise.
And it's and it's something we're comfortable with again clear and transparent standards and capital for an industry like ours is important so and I think the result of that if there was increased capital Mark as you would just see pricing adjust.
And I think the fact that pricing adjusted so quickly across the industry.
And in response to the pandemic I think bodes well for the Amies ability to price for us correctly, and I think the industry kind of got a bad rap.
Over the past couple of years based on pricing is a went down but remember it went down because HP was up losses were down. It was again result of unit economics am I felt like they could price lower and still achieve.
Achieved those returns and now in the face of potentially higher claim rates right. We raised pricing to achieve those returns. So if the capital or the he changed I don't think there would be I.
I don't think there'll be a lot of hesitation for the amies to raise pricing accordingly to get get to those returns and it's something I mentioned last quarter and I've mentioned, a few times in the past is most lenders don't care with our EMI prices stay just care if its relative to others. So.
I had a large lender say heating care.
60 basis points 50 basis points 40 basis points long as he wasn't disadvantaged and again I think that bodes well for the long term kind of pricing sustainability of the business.
And again, I think that would be factored in as the capital requirements changed.
Okay, but anything around like just the risk sharing that you're monitoring I know the the treatment under the re propose standards is getting a lot of attention as being a lot more onerous for them potentially discouraging just thoughts around that yeah. I mean, again, I think thats, where it's a little bit apples and oranges with us.
I don't we don't see anything on the horizon that would change that and that's not final yet remember that is going to be a lot of pushback. We believe the CRT market in general has been a great thing for all holders of mortgage risk right. It allows us to distribute that risk to other parties and really disbursement amongst many parties and I think it's the same thing with the GRC.
The result for the G ceases and protect the taxpayer so longer term I would expect that.
I know, it's in the rules, but I know and I know, it's open for comment, but I would expect over time.
Forward to come in line, where the Gses would be would be allowed to to use and take advantage of risk transfer.
Great. Thank you.
Your next question comes from Bose, George with KBW. Your line is open.
Yes, good morning.
The FHLB the last couple of months it looks like the insurance in force has contracted you think that could help my or do you think thats happening really at apartment market that everyone's kind of shying away from that just given broader caution.
Yes, I mean, I don't look at our look at our.
Just our nine w. for the for the quarter Bose is actually a higher higher FICO. Some of that was driven pricing driven as we raised pricing probably more than 10%.
Around some of the tail. So in a lot of it had to do with the GRC just tightening jesse's that a really good job quickly coming in and kind of slicing the tails.
So I think for us from an efficacy perspective, we don't look too much into it again weve longer term said, we don't want it to us FHLB pay is actually not a competitor, it's a counterpart right and they allow the borrowers that don't really fit our needs to kind of have a successful homeownership experience. So if there if their volume goes up or share goes.
Up or down and its and results in a good thing for the borrower. That's a good thing for us. So we don't spend as much time.
Looking at FHLB kind of share versus our share maybe as the investor community does and I wouldn't read I wouldn't read too much into it, especially with a market of this size Boes, you're talking about a second quarter market that was $250 billion I mean, it's like the size of most annual markets was 150 I'm sorry.
Hundred 50, but to 50 for the year for six months.
And so we're on pace, maybe to exceed the largest eni w. market ever I believe it was like things like 2003, It was 400 business. So.
When you have a market of this size amongst six competitors I'm not sure FHLB really kind of doesn't really enter into the equation too much for us.
Okay.
Thanks, and then if you wanted to ask about M&A I know, there's a lot of other things on People's minds, but just given the valuations in the sector can you. Just curious if you think there could be acquiring spent looking at the sector.
Again, we haven't thought too much about M&A. When this environment I think we're more focused on kind of continuing to build the strength of the balance sheet, but one of the byproducts of strengthening the balance sheeting, having so much liquidity is we are able.
To take advantage of any opportunities should they arise and M&A as you know I've never I think consolidation in the industry longer term is just the good thing.
Talking about a commodity type product where pricing is relatively.
It's in different and pricing is actually drive drives volume.
Which kind of removes a whole market share arguments.
It allows you to leverage costs.
And obviously if its share if insurance in force did decline amongst a large acquisition that frees up a lot of capital. So I think it's a good thing for shareholders long term.
Many other mature industries over time have consolidated so I still think thats in the cards I mean look at the lenders you just saw rockets IPO. They can stay continue to kind of gather share. So we think there's going to be less lenders overtime.
And I think less lenders means again and again I think from permanent investor standpoint shareholder perspective consolidation is still going to be a good good outcome for the industry.
Great. Thanks.
There are no further questions queued up at this time turn the call back over to Mark So for closing remarks.
Okay, well, thanks, everyone for your participation today and enjoy a weekend.
We.
Today's conference call you may now disconnect.
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