Q4 2020 Radian Group Inc Earnings Call
Welcome to the Radian fourth quarter 2020 earnings call. My name is Ian and I'll be your operator for today's call. At this time all participants are in a listen only mode. Later, we will conduct a question and answer session. During the question and answer session and we have a question. Please press Star then one IR touchtone phone.
Please note that this conference is being recorded and I'll turn the call over to John Damian <unk> head of Investor Relations and corporate development. Mr. Damian you may begin.
Thank you and welcome to radians fourth quarter and year end 2020 conference call on.
Our press release, which contains radians financial results for the quarter and the year was issued yesterday evening and is posted to the investors section of our website at www Dot Radian dotcom.
This press release includes certain non-GAAP measures, which will be discussed during today's call, including adjusted pretax operating income adjusted diluted net operating income per share adjusted net operating return on equity and real estate adjusted EBITDA and <unk>.
Please description of these measures and the reconciliation to GAAP may be found and press release exhibits F and G and.
On the investors section of our website and.
In addition, our related non-GAAP measure real estate adjusted EBITDA margin is calculated by dividing real estate adjusted EBITDA by GAAP total revenue for the real estate segment.
This morning, you will hear from Rick Thornberry, Radians, Chief Executive Officer, and Frank Hall, Chief Financial Officer.
And so on hand for the Q&A portion of the call is Derek Brummer President of Radian mortgage due to the current environment all of our speakers on our remote I would ask that you. Please excuse any sound quality or technical issues that may arise during the call.
Before we begin I would like to remind you that comments made during this call will include 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.
For a discussion of these risks. Please review the cautionary statements regarding forward looking statements, including in our earnings release and the risk factors included in our 2019 form 10-K and its up.
Update it and our quarterly report on form 10-Q for the third quarter of 2020 and subsequent reports filed with the SEC. These are also available on our website now I would like to turn the call over to Rick.
Thank you John and good morning. Thank you all for joining us today and for your interest and Radian as.
As we look back and last year and safe to say, the 'twenty and 'twenty did not play out as.
As we had originally planned and March the COVID-19, pandemic triggered a global health and economic crisis, and causes and abrupt shift and our day to day focus.
Combining a pandemic with heightened social unrest and the device for political environment I think it's fair to say that 2020 was the perfect storm.
Spike to challenges of 'twenty, and 'twenty, including shifting to a largely virtual work environment, we were able to write record breaking levels of new mortgage insurance business and grow revenues and our real estate segment and while our quarterly and full year results were impacted by the environment I'm proud to say that our business model and weathered the storm as does.
And demonstrating the through the cycle resiliency and the mortgage industry, but building since the last financial crisis, I'm pleased with our ability to operate well with strong momentum throughout a challenging year.
Although we continue to navigate the pandemic economic environment as we enter 2021, and we're encouraged by the signs of recovery and improvement and the overall economy, the continued strength and momentum and the housing market and the positive default trends and our portfolio.
I'd like to recognize our team across radian and thank our customers and.
And investors business partners and board for their commitment and support and helping us deliver solid results. During this unprecedented time.
Frank will discuss the details of our financial position shortly but let me first share a few highlights for 2020.
We wrote nearly $30 billion are going to <unk> on the fourth quarter, which is a 49% increase over the fourth quarter of 2019.
This contributed to our record breaking volume on new flow business written in 2020 of $105 billion, which represented a 47% increase year over year and marked our fifth consecutive year of record annual volume.
We grew our primary insurance in force for 246 billion.
While the high volume of refinance and started year resulted in lower persistency and it's important to note that our high quality insurance portfolio grew approximately 2% year over year, and our monthly premium insurance and force grew 11% year over year, our mortgage insurance portfolio, which is one of the largest and our industry.
Mary driver of future earnings for our company.
The economic value and the projected future earnings of this portfolio include. The addition of the high quality 'twenty and 'twenty advantage, which represented more than 40% of our insurance and force as of December 31 2020.
We grew our book value per share by more than 11%. We achieved this growth even after accounting for nearly $100 million and dividends that we return to stockholders in 'twenty and 'twenty through the significant increase to our quarterly cash dividend and the first quarter.
And our mortgage segment, we continued our focus on meeting the needs of our customers and maximizing the economic value and future earnings of our mortgage insurance portfolio given the flexibility of our radar range price remodel we were able to respond to the rapidly changing economic environment and 2020.
Our strong customer relationships and excellent service delivery combined with market intelligence and value based pricing decisions helped our team effectively navigate the competitive environment you originate a high quality book of business with significant economic value.
Written and historically low interest rates, which should benefit persistency, we expect for 2020 voting should produce attractive returns and contribute significant earnings and future periods.
For our real estate segment, despite the challenging pandemic environment total revenues for the full year were one hundreds and 2 billion on.
A 14% increase compared to 2019.
While certain of our businesses experienced slowdowns, starting 2020 as a result for the pandemic, we saw strong growth on our title business, including the 238% year over year increase and closed title insurance orders with a strong sales pipeline of large customers going into 'twenty and 'twenty one.
Operating loss and the real estate segment for the fourth quarter and the year was largely the result of slowdowns and our valuation and Oreo businesses, resulting from the foreclosure and eviction moratoria share.
And up to support our growing title business and our continued strategic investment and data analytics and technology across our digital valuation and real estate business platforms, and we remain focused on positioning our real estate businesses for future growth by driving competitively differentiated data driven digital <unk>.
Alex and services to our customers lender.
Lenders realtors consumers and mortgage investors, although these real estate businesses are and the early stages of their development and maturity. We are very excited about their future and remain confident that we are well positioned with our customer relationships and an experienced team to drive increased stockholder value going forward, we will share more details.
These businesses as we progress, including during our next Investor day, which.
Which we plan to announce for later this year.
And in 2020, we took steps to fortify our capital position and increased our strategic financial flexibility.
During the second quarter, we strengthened our available liquidity by extending the term of our existing credit facility to January of 'twenty, and 'twenty, two and issuing $525 million of senior notes due 2025, we.
To execute our aggregate manage and distribute business model and I'll focus on lowering the risk profile and the through the cycle volatility of the business.
And 2020, we entered into a single premium quota share reinsurance program, which covers for 'twenty 'twenty and 2021 vintages.
Our single premium production and executed two mortgage insurance linked notes transactions for a total of $878 million.
At December 31, Radian group maintained a strong capital position with $1 4 billion of total holding company liquidity and Radian Guaranty's pmiers excess available assets grew 38% to more than $1 $3 billion during the fourth quarter of 2020.
Pleased with our ability to strengthen our capital position and increase our financial flexibility is a true testament of our through the cycle business model. We believe the impact of the pandemic has been on earnings not a capital event for the industry and that radian is well positioned to weather. The remaining uncertainty ahead with our strong <unk>.
Capital and holding company available liquidity.
Moving now to the broader mortgage and real estate market. We continue to see this market perform extremely well through the pandemic environment with strong purchase volume growth and significant home price appreciation.
As we have all redefine the significance of home and so many aspects of our lives during the pandemic.
Housing market's worst in 'twenty, and 'twenty, driven by low interest rates and strong demand.
Positive momentum continued in the fourth quarter with December existing home sales, increasing 1% from the prior months and 23% from December 2019.
And based on the latest data from our own Radian home price index over the last three months of 'twenty and 'twenty strong housing demand and relatively limited supply and the market led to an annualized 9% increase and home prices across the country.
We expect the rate of home price appreciation and a moderate this year and believe the combination of continued strong supply and demand dynamics low interest rates and income growth are well aligned for healthy and sustainable housing market.
Looking ahead, we expect the vaccine Rollouts and government support to sustain continued improvements and the economy and U S housing market and anticipate continued growth and home purchase activity and gradual reductions and refinances.
For 2021 recent market projections estimate total mortgage originations of approximately three trillion.
While the overall origination market and is expected to be smaller and 2021.
As compared to last year and expectations for refinance volume and Barry there is consensus around the growing purchase market and 2021, which is positive for our industry given the higher likelihood of purchase loans.
To utilize private mortgage insurance as compared to a refinance flow based on these projections for private mortgage insurance market is expected to be approximately $450 to 500 billion.
It is also.
For Danone net as refinance volume declines we benefit from increased persistency and our portfolio further supported insurance and force growth.
Turning to the regulatory and legislative landscape for by the administration was laid out an ambitious plan for housing focused on increasing access and affordability for low and moderate income borrowers increasing the inventory of affordable homes.
And ensuring and equitable housing finance system, we support the administration's focus on these areas, which are aligned with our corporate mission of ensuring a pathway to responsible sustainable homeownership.
And with the change of administration. There has been increased discussion of a potential FHA premium reduction based on recent reports about a possible 25 basis point decrease we would anticipate a small impact to our industry and to our business volume.
The government continues to provide broad support for homeowners impacted by the pandemic. The recent announcement by the FHFA or an extension of GSE mortgage forbearance from 12 to 15 months should help to further assist borrowers through the crisis and the unprecedented level of government stimulus, including the new relief package.
Net is expected to pass Congress shortly should help accelerate the economic recovery already underway.
We are very proud of and the role of private mortgage insurance industry.
And our served throughout this crisis.
Aligning our policies and procedures with the GSE for support struggling homeowners while at the same time continuing to serve our critical role has taken on first loss mortgage credit risk and one of the largest housing markets and history.
Finally, as we've said before our industry is the only committed source of permanent private capital for U S mortgage credit risk and has continued to consistently underwrite and support mortgage credit risk through the market cycles. Our overall performance during the pandemic, which has been a period of extreme economic stress.
As well as our ability to continue to effectively manage and distribute risk through the cycle will further strengthen our company has proven the resilience of our business model and capital structure.
Now I would like to turn the call over to Frank for details of our financial position.
Thank you Rick and good morning, everyone.
To recap our financial results issued last evening, we reported GAAP net income of $148 million for.
For <unk> 76 per diluted share for the fourth quarter of 2020 as compared to net income of 70 cents per diluted share in the third quarter of 2020, and net income of 79 per diluted share in the fourth quarter of 2019.
Adjusted diluted net operating income was 69 per share and the fourth quarter of 2020 as compared to adjusted diluted net operating income per share at <unk> 59, and the third quarter of 2020 and adjusted diluted net operating income per share of <unk> 86, and the fourth.
Quarter of 2019.
I'll now turn to the key drivers of our revenue.
As Rick mentioned earlier, our new insurance written was $29 8 billion during the quarter compared to $33 3 billion and the third quarter of 2020, and $20 billion and the fourth quarter of 2019.
New insurance written for refinances with 35% of total new insurance written for the fourth quarter of 2020.
<unk> to 30% and the third quarter of 2020, and 33% for the same quarter and the prior year.
Direct monthly and other recurring premium policies for 91% of our new insurance written this quarter, a slight increase from 90% for the third quarter of 2020, and 82% for the fourth quarter a year ago, which also means that single premium policies were down significantly.
So only 9% of our quarterly new business.
And total borrower paid policies were 99% for new business for the fourth quarter.
Primary insurance in force increased to $246 1 billion at the end of the quarter as compared to $245 5 billion.
And the third quarter of 2020.
And with year over year insurance and force growth of approximately 2%.
And as a reminder, last quarter and addition to elevated policy cancellations due to the current low interest rate environment. We also experienced additional single premium policy cancellations during both the third and fourth quarters and part of our ongoing servicer monitoring and reconciliation process.
These additional cancellations represented approximately one $8 billion.
Of insurance and force and the fourth quarter of 2020, and $2 $9 billion for the third quarter for.
A total of $4 $7 billion.
Absent these cancellations insurance and force growth would've been approximately 4% year over year and it is important to note that monthly premium insurance and force, which was not materially affected by these cancellations has grown 11% year over year and the overall mix of our in force portfolio.
And has shifted from 28% singles a year ago.
So 22% as of yearend and once in 'twenty.
Our 12 month persistency rate of 61, 2% decreased from 65, 6% and the prior quarter and 78, 2% and the fourth quarter of 2019.
Our quarterly annualized persistency rate was 64% this quarter, a slight increase from 60% and the third quarter of 2020, and a decrease from 75% in the fourth quarter of 2019.
The year over year decline and quarterly annualized persistency is primarily driven by the continued high level of refinance activity.
Given the current mortgage rate environment. It is expected that near term persistency will remain below our expected long term trends.
Moving now to our earned premiums.
Net premiums earned were $302 1 million for the fourth quarter of 2020 compared to $286 5 million and on the third quarter of 2020, and $301 5 million and the fourth quarter of 2019.
The increase of 5% on a linked quarter basis, primarily driven by $11 3 million.
Related to changes and present value estimates for initial premiums on monthly mortgage insurance policies that are deferred but not collected and sell cancellation.
And the impact of a line item and Reclassifications related to our title insurance business reported in the fourth quarter to adjust earlier periods in 2020, which increased net premiums earned and decreased services revenue by $7 8 million.
Further details of which are presented on exhibit E.
Slide 11 shows the mortgage insurance premium yield trend over the past five quarters, excluding the impact on both the previously noted 11 $3 million adjustment and the fourth quarter as well as the simple or $17 4 million dollar adjustment and the fourth quarter of 2019.
Our direct in force premium yield as noted on slide 11 was 42 eight basis points this quarter compared to $43 two basis points last quarter, and 47, one basis points and the fourth quarter of 2019.
As noted in previous quarters, we expect our in force portfolio yield and we continue to decline due to the difference and credit and mix and associated premium rates of todays and IW relative to prior vintages.
Recent trends of lower persistency and higher levels of new insurance written.
Also contributed to a faster rate of change and the yield of our mortgage insurance portfolio.
The timing and magnitude of future portfolio yield changes will continue to depend on several factors, including the volume mix and pricing of new business relative to volume and mix of cancellations and prepayments and our portfolio.
And our level of premium yields driven by single premium cancellations was eight seven basis points compared to $10 seven basis points and the third quarter of 2020 and for.
And for four basis points of yield and the same quarter a year ago.
On a linked quarter basis, the decline and cancellations associated with our ongoing servicer reconciliation process is the primary driver and the decrease.
Approximately one five basis points of the gross yield related to cancellations was due to the previously mentioned servicer reconciliation and activity that occurred in the quarter.
With regard to pricing on new business, we remain focused on maximizing economic value and generating attractive risk adjusted returns, which we target at between 13% to 17%.
These targeted returns do not include the impact of insurance linked notes transaction, but do incorporate the impact of our single premium quota share reinsurance program.
It is a forward commitment by our panel of reinsurers.
And is in place at the time of loan origination.
Real estate segment revenues were $23 6 million for the fourth quarter of 2020, representing a 21% decrease compared to $29 8 million.
For the third quarter of 2020, and a 7% increase compared to $22 million from the fourth quarter of 2019.
Our reported real estate adjusted EBITDA for the fourth quarter of 2020 was a loss of $7 million.
The decrease and real estate, adjusted EBITDA, and the fourth quarter and full year 2020, compared to the fourth quarter of 2020 and full year 2019 was primarily related to the negative impact of the COVID-19 pandemic on the operating environment for certain of our businesses.
And our continued strategic investment and growing our title and digital valuation and real estate businesses.
Due to certain changes that we made and the composition of our reportable segments and the fourth quarter of 2020.
Our results for both the real estate segments and.
And the all other category.
Been restated for all prior periods to reflect these changes.
Exhibit E for more details on these reclassifications.
And finally, our investment income this quarter up $38 million.
And was up 5% from the prior quarter and down 8% from the same quarter prior year due to lower investment yields which were partially offset by additional investment balances from underwriting cash flow and proceeds from our May 2020, and your debt offering at.
At quarter ends and the investment portfolio duration was approximately $4 seven years.
For six years and the prior quarter due to both portfolio reallocation and longer duration on recently purchased securities.
Moving now to our loss provision and credit quality.
As noted on slide 14, the mortgage provision for losses for the fourth quarter of 2020 decreased to $56 $3 million.
Compared to $87 8 million and the third quarter of 2020, and an increase from $34 $4 million and the fourth quarter of 2019.
As shown on slide 15, we had approximately 15000, new defaults and the fourth quarter of 2020.
Compared to approximately 21000, and the third quarter of 2020, and approximately 11 balance and the fourth quarter of 2019.
In addition to the loss provision related to new defaults in the fourth quarter, We reported modest positive reserve development of $7 $7 million with all of this development related to defaults originated prior to 2020.
The default to claim rate assumption on new defaults remained at eight 5% for the fourth quarter of 2020.
Unchanged from the third quarter of 2020, and an increase from seven 5% for the fourth quarter of 2019.
As shown on slide 17, approximately 66% of new defaults and the fourth quarter and approximately 74% of all defaults at year end were reported to be in a COVID-19 related forbearance program as of December 31, 2020.
We have share and additional information on forbearance program and mechanics related to these loans on webcast slide 17.
These forbearance programs are positive for our industry and for homeowners and they are intended to keep and their homes through what is expected to be a temporary economic disruption.
I'll also note debt of our total defaulted loans approximately 95% of these loans are estimated to have at least 10% homeowners equity.
This factor along with improving overall economic indicators, such as home price appreciation lower unemployment governmental support on.
Going for bearings programs, and having some and insight for the COVID-19 environment helped make us cautiously optimistic about the ultimate claim levels.
It is important to remember that our reserve estimate is based upon the best available information we have per tonne.
Which includes both external economic metrics and the outcomes of our own proprietary models.
As we noted at the beginning of the pandemic our loss reserve is an estimate of future claim payments, which under normal circumstances will not be realized for several years.
A broad availability of mortgage forbearance options, and 2020 and continuing into 2021 base or to extend the timeline for claim developments.
On slide 15, we show the percentage of new defaults from each of the previous five quarters that have cured as of <unk>.
December 31 2020.
As noted approximately 61% of defaults from the second quarter, 2020, and 50% of defaults for the third quarter 2020 have already tier.
Earlier. This month, we released an update for January operating statistics that showed a further decline and our primary default inventory as the number of new defaults was relatively flat to December while share activity continued to exceed new defaults.
Our January cure activity represented 122% of the new defaults reported in the months.
Now turning to the expenses.
Other operating expenses were $81 $6 million and the fourth quarter of 2020 compared to $69 4 million and the third quarter of 2020.
And $89 million and the fourth quarter of 2019.
The increase and operating expenses and the fourth quarter of 2020 compared to the third quarter of 2020.
And is primarily related to a $6 $5 million increase in non.
Non operating items and adjustments to share based incentive compensation expense.
Moving now to taxes.
Our overall effective tax rate for the fourth quarter of 2020 was 17, 9%.
The decrease and our effective tax rate for the fourth quarter was primarily due to the effect of a one time discrete item reported following the successful completion of an IRS exam of our 2016 and 2017 tax years.
Our annualized effective tax rate for 2021 before discrete items remains generally consistent with the statutory rate of 21%.
Now moving to capital and available liquidity.
As previously announced in October 2020, Radian Guaranty entered into a fully collateralized reinsurance agreement with Eagle re 2020 dash to limit.
This reinsurance agreement provides for up to $393 million of.
Debt excessive loss reinsurance coverage with initial risk in force of $13 billion recovered policies that were issued between October one 2019 and July 31 2020.
As of the end of the fourth quarter of 2020, Radian Guaranty had P. Myers available assets of approximately $4 7 billion.
And our minimum required assets for approximately $3 4 billion.
The excess available assets over minimum required assets of $1 3 billion.
<unk> represents a 40% pmiers cushion.
We have also noted on slide 20, our pmiers excess available resources on a consolidated basis of $2 7 billion.
Which if fully utilized represents 80% of our minimum required assets as of December 31 2020.
The reduction and the minimum required assets attributable to the <unk> multiplier on the required asset amount factor, which reduces the minimum required assets on applicable COVID-19 related delinquencies by 70%.
Was approximately $650 million at year end.
This has contributed to the significant pmiers cushion at Radian Guaranty as of December 31, 2020 and.
We expect that the application of this multiplier will continue to materially reduce radian guaranty's minimum required assets for COVID-19 defaulted loans.
The expected future benefits for Radian Guaranty, However is expected to continue to diminish over time.
As a reminder, this benefit has thus far peaked and the second quarter of 2020, when we received an approximate $1 billion reduction and the minimum required assets.
Our current period P Myers cushion, including this benefit is 40% and excluding this benefit our pmiers cushion would be approximately 17%.
As of December 31, 2020, we have reduced radian guaranty's pmiers minimum required asset requirement by one $4 billion by distributing risk for both insurance linked notes free insurance and other third party reinsurance arrangements as noted on press release exhibit.
Al.
For Radian group as of December 31, 2020, we maintained $1 1 billion of available liquidity.
Total liquidity, which includes the company's 267 $5 million credit facility.
It was $1 4 billion.
As of December 31, 2020.
It is important to note that most of the cash flows of the parent company are funded by long established regulator approved expense interest and tax sharing agreements.
And subsidiaries and not through dividends from subsidiaries.
This provides us with an enhanced level of certainty and predictability and parent company cash flows.
Radian remains committed to managing excess capital and a responsible manner in light of the economic landscape.
A strong history of taking thoughtful and prudent and shareholder friendly actions and managing our sources and uses of capital.
We have continued to a dividend to common shareholders throughout the pandemic, returning approximately $100 million for shareholders over the past year.
During 2020, we returned approximately 25% of our net earnings and dividends to our shareholders.
We continue to be encouraged by the trends, we are seeing and the business day and believe we are well positioned to leverage the strength of our existing overall capital position.
As a reminder, we've returned $226 million to shareholders via our buyback program price.
Here to temporarily suspending the program on March 19th due to the pandemic and we still have purchase authority of up to $198 $9 million available under the existing program, which does not expire and so August 31 2021.
Given the capital strength that radian guaranty and the financial flexibility provided by our available liquidity at Radian group. We believe that we are well positioned to grow our businesses and deliver value to our shareholders.
I will now turn the call back over to Rick.
Thank you Frank.
Before we open the call to your questions. Let me remind you that our success in 'twenty and 'twenty as a result of our outstanding team that was able to not only meet the challenges of the pandemic environment personally and professionally but on.
Also successfully support our customers and each other and are demanding and high volume market, we focus on supporting our communities through thoughtful and high impact charitable contribution programs and 2020, both as a company and in support of our employees and we will continue to do the same this year, we grew our valuable insurance portfolio and the two <unk>.
Third $46 billion.
And increased book value per share by 11%, we fortified our capital position and increased our financial flexibility to return $326 million for stockholders through a combination of dividends and share repurchase and finally, our business model and whether the store demonstrating a through the cycle resiliency.
And the mortgage industry have been building since the last financial crisis.
Now operator, we'd like to take questions.
Thank you we have a question. Please press Star then one on your Touchtone phone.
Wish to be removed from the queue. Please press the pound or the hash key if youre using a speakerphone you may need to pick up the handset first before pressing the numbers. Once again if you have a question. Please press Star then one on your touch talk on.
And our first question comes from Randy Binner from B Riley. Please go ahead.
Oh, Hey, good morning, Thank you.
I had a question about the commentary around new insurance written.
Rick I think I think you sized them on market at $4 50 to 500 billion and and Debbie I just wanted to clarify.
And then I had that right and.
And if there is also kind of a.
Our guide to.
How your and IW might change year over year.
Yes. Thank you Randy I appreciate the question and yes that is.
As we see the market given.
Pretty varied forecast across the <unk> and the mortgage bankers Association I think.
So as we kind of look at the market year over year, we do see a declining overall originations declining we see that driven by refinance is declining which ultimately is a decline that will improve our persistency as well and.
We see a strong purchase market going into next year continued to be fueled by first time, homebuyers and requiring low down payment. So we continue to see a strong mortgage insurance market fueled by a purchase market probably smaller than next year and.
And we've not given any guidance relative to our own.
Kind of forecast for and IW, but I think look we're.
We're going to participate and the market and we're going to we're going to get our.
Per share of the market based upon where we see and economic value and I think.
Again, I think it's going to be one of the if not it's going to be probably the second largest.
Potentially the second largest and IW market and ever so I think thats share continues to look strong.
Okay and my follow up is on the refi piece and understanding the MBA data.
But.
I guess, it's a two part question here one I mean.
There was an expectation of lower refi going into this year I'd be curious what you've seen so far and 21 relative to your initial expectation.
And.
And related to that I mean is it.
Are you seeing lenders out there who have and agenda to grow.
Possibly kind of pushing refi more than we'd normally expect meaning all and is it possible that debt refi is going to exceed expectation this year.
Above MDA levels.
Yes, I think the MBA versus some of the other forecasts are largely driven by interest rate paths right in terms of how they view the progression and interest rates through 2021, and so I think that's kind of a largely drive and there also was a factor the spreads the primary and the secondary market spreads could tighten and provide.
And the opportunity for continued refinance and so we're watching.
All of that and.
And I think right still and relatively low even though we've seen them back off a little bit and I.
I think it's too early to tell the path of refinances.
I think from our our viewpoint is that.
Purchase mortgages are more likely to have on mind. So we're more focused on the purchase market certainly refinances drive persistency and I think our.
Patients and staff.
Refinances continue, but ultimately over and over the year, probably slowdown, which will drive improved persistency overall across our industry, but it's very hard to forecast and predict I think we are and a point and time today, where there are so many macroeconomic factors at play interest rates and obviously the COVID-19.
And the environment.
And just theres a shortage of housing supply right. So I think you could see the purchase market.
And a lot stronger for it was able to meet the demand but.
And Theyre just many factors so I would say refinances are going to probably be with us.
And we would expect them to slow through the year, but im not here to predict the direction of interest rates on let others do that.
Alright fair enough thanks for the comments.
Thank you Amy.
And our next question comes from Bose George from TCW. Please go ahead.
Hi, everyone. Good morning.
Good morning, first one just to ask about <unk>.
And for its growth.
Moderated and even with the numbers you noted, it's about 4% versus the industry return on 8% and it looks like you and I W sort of struck a little bit as well.
Some of this is being driven by not being on.
And the bulk market.
Any color on so it would help and also can you just talk about some positive trends.
Yes, Thank you and Dirk and I will tag team. This one.
But I think as you think about insurance and force of our business. Yes, there is some and I'll, let derrick comment on the market share.
Kind of splits because I do think some of that does drive and stuff.
Where we choose to compete and we don't think all and IW.
Is created equal from a economic value point of view able to go and what their come back to that but overall, our insurance and force year over year grew 2%.
If you take out some of the servicer reconciliations and I think it was around 4% and I think as you think about our insurance in force portfolio. We came a couple of years ago. I think our single premium policy mix was probably 30 or higher and I don't have the exact number we're down to about 22% today and.
So what we've seen is really the transition and repositioning of our insurance and force to a much greater percentage of monthly books. So we probably have a disproportionate share of the single market.
And being into these refinances, which so the expectation that we would see that portfolio kind of churn at a higher rate consistent with our thoughts we've seen a mix fall, but I think the other thing. That's interesting news is that we've been able to as the single prepay. So we saw our monthly business grow 11 per site.
Yes.
From a portfolio perspective, we saw a single premium business declined 21% year over year, but and that decline were asking about and we're able to recognize the earned premium on and accelerated basis. We're also able to return and free capital for investment and the other parts of our business. So we've seen that.
<unk> from a higher percentage of singles to let's say a more consistent level of monthly <unk> happen.
And over 2020 in fact, there's an interest in fact, Frank and I, both mentioned, 40% of our insurance and force is relative to.
The 2020 book, but if you look at our monthly book, 45% of our monthly book just from the 2020 percentage and so we're seeing this transition this pivot.
Into a more monthly.
Focus book, which we think is good for the long term and going forward.
I think youre going to see not only the 20 book kind of play an increasing role on our insurance enforced, but as we head into 2021 was another strong purchase market youre seeing and really the reshaping of our insurance and force towards something that going forward given the macro market economic fundamentals that we see we.
We believe.
The continued expansion on a low purchase.
Purchased our low downpayment purchase market.
Providing a great backdrop for the market going forward. We see this pivot is really kind of evolving our book to a strong monthly premium business high quality low coupon that we expect to have significant economic value and we will continue to provide strong earnings.
Profile going forward and so.
I would just characterize our insurance and force growth is somewhat of a pivot and a kind of repositioning.
Towards the monthly book, which I think bodes well for the future. So I'll, let derrick comment on the market share.
Sure. Thanks, Rick in terms of market share one of the things you alluded to or the bulk bids and that can affect market share. So to the extent that more on the origination market and went to those originators, where we're not participating that can have an impact and the volatility around market share is not unexpected we talked about that especially as the industry.
Moving towards a black box pricing framework, you can expect some quarter to quarter volatility, but long term, what we expect to see and the industry is kind of a distribution more towards kind of a pro rata distribution with some volatility this quarter not surprising you looked at it kind of pre COVID-19 pricing is pretty stable and then COVID-19 hit and there was.
For a lot of adjustment in terms of pricing and so kind of across the industry pricing was adjusted upward and in terms of our black box pricing and Q4, we still had pricing elevated probably and aggregate more than 10% relative to pre COVID-19 levels. We think some of our competitors and I kind of day back more of their price increase probably in Q4.
And again, that's not unexpected as the macroeconomic environment becomes more positive you'd expect to see kind of on that pricing adjust and.
So when we're looking at our focus visibility as we had indicated on long term economic value. So what we're always trying to do kind of expecting a long term kind of pro rata distribution and we're looking for that share of the market with the highest relative value and when we're trying to find that we're looking at not only our view in terms of the ultimate performance from a return on.
On capital perspective, but also very mindful of where the market clearing pricing levels are what price do we need to set for that to win that business. How does that translate from a return perspective, and so anytime you are trying to find those spots, we're constantly adjusting our price up and down to kind of find those spots.
And quarter to quarter, sometimes our market share will go up when you are kind of finding those spots, sometimes you'll go down quarter to quarter. The main thing is it's a large market and we find the business to be accretive. So we're just going to continue to kind of execute on our strategy. We think that's the best strategy and most accretive from kind of a long term shareholder value perspective.
Okay, great great. Thanks, a lot for both responses.
That's helpful. And then just a quick other one just on the financial services segment.
Just the run rates on this quarter, how should we think about the run rate for that.
That segment and that other line item.
We modeled 21.
Thanks.
You're talking about real estate services.
Yes.
Services segment.
So there's really two components I will take the real estate side, just real quickly I think look we continue to and.
And these businesses and I think we are.
And we're at a point today, where we're going to continue to do that and I'm happy to talk about why but I think the.
What we saw on the fourth quarter was really and really for the full year and there was some impact from the from the pandemic environment around our Oreo business and and really our valuation business specifically around <unk>.
And that's driven by the eviction and foreclosure moratorium.
Those have been in place throughout the year those are businesses that have strong revenues and margins and they're really poised for a comeback.
As those moratoriums are lifted because we have kind of a strong market position and.
And both of those I would say our title business, we're focused on investing and scaling that business. So when we look at the growth and that business that we're beginning to see in terms of our many of rmi customers coming over to be title clients and as we look to scale that business. We are staffing ahead and investing and.
Technology, and so thats going to continue as we scaled up business Bose and I would say <unk> seen this carve away the Clayton business and kind of our traditional IMC business, but we're highly highly focused on our digital valuation and real estate businesses, and we're investing and advanced technology across those businesses to really leverage.
The assets that we have and so I'd say look.
We will provide more detail.
We get through the year.
We expect to provide more information on our Investor day, which we'll announce for later the share but I think the business is today, we're going to continue and invest towards growth and value and theres going to be a little bit of volatility. These businesses are not going to move the EPS needle and the short term, but as I've said before we do believe that there.
Building value ahead of kind of ultimate financial contribution and I think a good indication of the businesses that we're in is all you have to do is kind of look at what's going on and Thats Genentech and prop Tech world today from a valuation point of view and our businesses squarely fit and the digital mortgage and real estate ecosystem today. They are.
Align very well with our mortgage insurance bills and skills today, we get data from them. They are accretive to our customer relationships, we have great market insights across the mortgage and real estate business, what's happening and you can see on the rating and home price index, but today, that's a value we get while we're investing towards being part of the whole.
Transformation towards a digital mortgage and real estate and ecosystem and we think these businesses.
Embedded value.
And I think.
Market observations around Fintech prop tech businesses, I think where we are.
Well positioned from a shareholder value perspective to continue to invest and develop those business towards future value. So.
From a going forward point of view and we're going to continue to make investments I'm not going to manage it on a quarter to quarter EBITDA.
We're making investments and these business towards our our view.
How best to create value from a shareholder perspective and well.
We'll continue to do that at our Investor day, when we get it when we announced a day for that will provide much more detail on this that would be our plan.
Okay. That's helpful. Thanks very much.
Sure.
And our next question comes from Mark Devries from Barclays. Please go ahead.
Yes. Thanks.
And frankly, I think I ask you about capital returns every quarter, So I'm sure you're well prepared for this but.
Just wanted to hear your latest thoughts on on your App.
Appetite to resume buybacks here just given the favorable trends, we're seeing and the default and also the substantial liquidity at the holding company as well as the large <unk> excess at Radian Guaranty.
Thanks, Mark and yes, I appreciate the consistency of your question so.
And we're going to respond similar to have and the past, which is our thoughts on capital planning really havent been consistent over time, and that's the balance organic growth and make sure we've got an adequate risk buffer.
Sure that we're considering any strategic opportunities and.
And make sure our debt to total capital level is appropriate and I think what you've seen over the last six years and even through the pandemic.
We have been able to address those priorities and still return capital to shareholders and our dividend has been uninterrupted.
But we did pause our share repurchase program as you noted for out of the pandemic.
When there was elevated uncertainty regarding the broad economy and potential losses, but I will say now that we do have greater visibility toward the future and have seen improvement and the economic landscape over the past several quarters. The overall economic environment does seem to support for.
Our quote return to normal if you will approach to capital management.
And so.
In that regard as a reminder, and to the extent that we.
We might.
Reengage and any repurchase activity or for.
A lot for the.
Would remain a value based approach regarding the repurchase pricing levels and.
So we do have the flexibility to initiate a new <unk> five one plan.
Discretion and the future during an open trading window.
And we do have remaining authorization of $198 $9 million.
On that.
And does it expire August 31 so.
So, yes, I would say overall things are looking better overall and.
So.
And I hope that's helpful.
That's very helpful. Thanks, Frank.
And then just a question on the.
And the yield the premium yield.
Really helpful color and also disclosure on <unk>.
Slide 11.
And just was hoping there Frank you could give us a little bit more color on what we should expect kind of directionally and maybe even though dimensionalize. Some of the moves we could see on the different lines.
The in force portfolio yield the single premium cancellations.
And.
And the ceded.
And on premium wines and help us think about where kind of the net.
Might move under different assumptions and then.
Clearly understand like for example, the.
Premium cancellation has to do with expectations around prepayments and runoff of the singles, but anything you can provide to help us think about kind of all those different moving pieces.
Sure.
Each of those components is his.
It has different drivers if you will I think we've continued to guide this really for many quarters now that we do expect the overall portfolio yield to continue to decline.
And we won't give guidance on the on the magnitude of what debt declined would be but I think you noted.
Some of the drivers there for single premium cancellations.
Certainly as a big driver there.
Premiums is another.
So I think those.
It would need to have a view on those but as Rick said.
Less of our portfolio is single premium now so.
And the.
Unity for refinance activity is something you'd have to put your view too.
To predict debt so.
I wouldn't want to put too fine of a point on anything other than just to say directionally.
And where we've continued to guide.
Of course, all of that especially on the day enforce yoga for excuse me.
Pricing on and IW and the yield that we're getting on new business is dependent upon mix.
As as what's coming on so.
It's difficult to predict but but again I hope.
Thats helpful and somewhat.
Yes, well if I could just follow up on that.
Take like the ceded earned premium line I assume the drag there is still being impacted by higher losses and and.
And the profit Commission should we think about that as things normalize moving back closer to that.
For four five basis.
Points, we saw back kind of pre Covid is that the right way to think about that one.
Yes, I think thats right.
Yes.
As we do return to what normal looks like I think many of these things would continue.
On a relative basis similar.
Okay got it alright, thanks, and thanks for the comments.
And our next question comes from me here about tier from Bank of America for please go ahead.
Alright, Thank you for taking my question.
Maybe.
I'll start with slide 15 on the gallery and I just wanted to confirm that we're looking at this information correctly.
Just thinking Q2 with an example, chiari data suggest 60, so I think it's 60% of <unk> debt.
And Quincy the yard I believe you and issue default to claim ratio on billings was eight five per se.
Great. So is the expectation and your reserving that and about another 30% will kill and then I guess related me and can you just talk about how that 60% and our most compares to you all.
What you had been expecting at this time.
Maybe even like last quarter and like as you had been seeing the trends definitely.
Sure. This is Fred and I think your interpretation of the slide is correct.
And at 61 for the tier $2061 one.
Secured.
The thing that's challenging is and we've said this and I really since the beginning of the pandemic and we saw the search and defaults.
We've got an estimate of what the ultimate claim rate will be we don't have clarity into is the timing of when that will occur.
So I wouldn't want to be too precise about any expectations there.
And I think given a little more time some of that might become a little more.
Predictable just based on on.
Our experience actually is but and Thats why we thought it would be helpful to provide that information on that slide.
And I think.
And here to your question on it.
And it's.
And that run rate towards the 5% ultimate decline rate.
Our claim rate is kind of what we're working towards and I don't know I think we saw this morning on kind of a quick news flash about the FHFA.
And also extending forbearance potentially for another three months out to 18 months. So some of those people have an incentive to continue to kind of stay on the forbearance state for an extended period of time and extensive accounts. So.
Think back to Frank's point is just the timing part of it is.
And something that we're all just for monitoring and watching but I think forbearance programs and are generally positive for the market, allowing homeowners to get back on their feet and kind of get through this economic stress caused by the pandemic. So I think we generally continue to feel good about the progress we're seeing.
So that is actually quite helpful. Thank you and then just a couple of quick ones.
Axis, the Texas event last week fair to assume that that would be a non event from my perspective right.
Yes, we don't see and that is a material of that and in terms of the overall portfolio.
Got it Okay and then just last question on persistency.
So it kind of depends on interest rates and you've talked a little bit about the size of the market being lower because refis go down but any numbers you would be willing to put on where you think persistency gets due towards the.
End of 'twenty and 'twenty, one maybe at a minimum at least do you think it's dropped for now.
Yes. This is Frank it really is hard to say on what near term persistency is going to be I think we've continued to say that.
Longer term persistency and the low Eighty's is still what we would expect but near term I think the wildcard is certainly refinance activity. So.
Wouldn't want to try to get too precise on the near term.
Okay. Thank you for those all my questions.
And our next question comes from Ryan Gilbert from <unk>, Inc. Please go ahead.
Hi, Thanks, good morning.
I also saw that FHFA press release, it looks like they extended.
The forbearance period to 18 months and extended the foreclosure moratorium to June 30th.
And I'm just wondering if you had any kind of initial comments.
On how that would impact your business and how we should think about the impact to loss reserving and in particular the prior year.
Reserve in 2021, just thinking about all day.
The reserve and Thats been done in 2020, and then also on capital return potential and 'twenty 'twenty, one if the extension of the moratorium or the forbearance period.
Would impact your capital return.
The decision making process.
Sure. This is Frank I'll start and Rick and Derek can add on.
On the.
But for various extensions but.
And as we've said before the forbearance programs are very good for us.
These people and their homes.
Vince.
A claim.
Payment for recurring so anything that occurs to keep people on their homes, especially over longer periods of time, where home price appreciation and develop et cetera all of that.
Bodes very well for us so.
And those are all very positive things for the industry. Overall, so we feel good about debt as it relates to reserving.
Our reserves as I mentioned on the prepared comments are made.
It's our best estimate at a moment in time it takes these things into account but.
I would say we feel.
Obviously very good about where our reserve levels are now they are appropriate.
And for for the risk that we see and.
And those things certainly can't and changed over time, as new facts and circumstances and trends develop so.
I would say things things are certainly a trend and a good direction and how that ultimately.
It makes its way into what our estimates on the ultimate claims.
Wait and see how those play out and then I think.
Your last question was on.
Your last question was on capital return.
And.
And Mark had asked about this.
Previously so I think we feel good about our current capital levels are.
The holding company resources and certainly the trends that we're seeing.
Roughly speaking so I think we feel we feel like many things are starting to return to normal.
History would show that we're very good stewards of capital and returning capital to shareholders.
And when it's appropriate.
Richard Derek I don't know if you want to add anything.
Baird.
Sure I was just going to add I mean in terms of the extension on the forbearance period, and then a foreclosure moratorium not surprising making if there is a good recognition among policymakers that kind of time is helpful. So not only on the home price appreciation from our perspective, but just in terms of the vaccine rollout reemployment rate so giving.
Borrowers that are having temporary difficulties more time to kind of right that is a positive also in terms of just the options to exit for balance are also very borrower and MRI.
Friendly and we continue to see those exits to be quite positive to date. So overall as expected and I think and good recognition in the industry and as to how best to deal with the kind of current situation.
Okay, great. Thanks, I really appreciate that I, just I did just want to circle back on and on the capital return question because.
And I.
And I'm just wondering if the gift.
For foreclosure moratorium extension for the forbearance extension influences your decision, making on capital just around the timing of capital return not necessarily the absolute level of capital itself, but when do you think you could.
And you could increase capital return to shareholders.
And I don't know day would necessarily influence timing I mean, its just another positive on a list of positives that we're looking at so.
And all of these things are taken into account and fatalities.
Yes, I would just add Ryan that when you think about this.
And the.
And the relief program going through kind of gross you think about all the support and the marketplace.
Putting politics. Aside these are all good from a macroeconomic point of view in terms of supporting the homeowners are and our.
Small businesses and communities should get back on their feet I think that just adds to the general positive trends and the macroeconomic scenario and that we're all starting to see but we still have to be cautious because there's still uncertainty and the market, but I'd say net net.
And these types of changes and a very supportive to providing.
Kind of a transition for people in harm's way.
And ultimately be positive from a macroeconomic point of view.
Okay got it. Thank you and then second question was just around the January new default trends I think you mentioned in the prepared remarks, but.
I was a little surprised to see it.
On kind of flat lined from December and I'm wondering if we should expect further improvement in the months ahead or if youre seeing further improvement and February or at this level of new defaults is net new post COVID-19 and normal.
Yeah. This is Derek so in terms of that and I'll, let you see some month to month and movement and also you have some seasonal effect because we're adjusting pretty quickly as Brian indicated in terms of the new default, they're down dramatically from Q2, almost 80% theyre down and so they're getting closer and closer to that kind of what they were pre COVID-19, but theres still about 30% above.
We would expect kind of through the year, assuming continued kind of positive economic trends, assuming that theres not somehow I turned downward we would expect to see that kind of positive development on a year over year basis understanding that theres going to be your kind of typical seasonal effects. Because we are filling debt from a macroeconomic perspective, the housing market is still.
Extremely strong recovery embedded equity is very strong in terms of the portfolio you have unemployment rate going down and so all of those kind of macro factors continue to point and a positive direction and how it would impact any defaults.
Okay, great. Thank you very much I appreciate it.
And our next question comes from Geoffrey Dunn from Dowling and partners. Please go ahead.
Thanks, Good morning.
First question, obviously 2020 has some unique considerations from expenses with respect to travel et cetera. So Frank can you.
Given that consideration maybe help frame up the expectations for <unk> expenses operating expenses on 'twenty one.
Sure Jeff.
Good morning.
And so expenses.
I think if you'll recall last quarter and this was after the sale.
And we estimated a debt for quarterly expenses sort of a normalized run rate basis would be about $70 million a quarter and I think if.
If you look back through 2020, and Youll see that Thats about where to average down and actually it was less and that about $68 million per quarter. So I would say going forward.
A similar type of run rate is at 70, plus or minus $1 million or two thats, probably the right level. The thing that is always difficult to predict as you know there are some.
Some variability due to usually compensation related items.
And then also we do recognize a expense bad debt.
For the ceding commissions under the single CSR.
And so periods of high singles cancellation for elevate their benefit but for.
Generally speaking, that's where I would put you subject to some change, but if there is and expectation.
And rich, we certainly bring that to your attention.
Okay, and then with respect to your reserving methodology.
My sense is I'm not sure if you've ever talked about it directly but that the industry was very conservative with the home price appreciation assumption.
And at least back in Q2, and I think it was probably flat to down.
Has your HPA assumption and your reserve assumptions evolve since Q2 and roughly if you can share kind of what are your assumptions going into the reserves and Q4 and as you went through 'twenty one.
Yes, Jeff it's hard it's hard to pin anything on a particular assumption I would say that we can look at all of these assumptions and such.
And make our assessment.
And so you saw no change and the default to claim rate.
Over the period.
And thats consistent with our view.
And as things change.
Or doubts.
We need to but for the moment.
And what we felt was the most appropriate for the period.
No I understand the claim rate and I'm talking more on the severity assumption and how youre factoring and HPA and to that.
Okay.
Yes, Eric if you've got a thought on there yeah, Jeff Derek now and so in terms on severity, we kept that pretty stable quarter to quarter and obviously the HPA. It does expect express itself significantly and the default to claim rate as well and it's more of a frequency and severity.
Do think over time that'll given kind of the home price accretion embedded equity that could have an impact, but we haven't realized any of that and our reserve assumption by decreasing the severity and taking that and then DUC count to date okay.
Thanks.
Yes.
And our next question comes from Jack and with Banco from ISI Group. Please go ahead.
Hi.
Morning.
Rick earlier, you talked about picking your spots.
And a big market and.
And it looks like on the NSW more recently some of the FICO.
SCOR is migrated down a bit but.
And the Ltvs have gotten stronger in terms of the mix of the business.
Is that is that the right interpretation.
In terms of what what the pricing model is kind of putting out as LTV, becoming a bigger part of the consideration and the model then.
And then and FICO.
In terms of predictability of future loss just curious.
I'm reading too much into the press release numbers or if there is a more pronounced shift underway.
Yes, no I think.
Appreciate the question Jack and good morning, I think and there can pick up on this and <unk> on the details, but I think as we've mentioned we focus on where we see economics and costs are.
And.
Across our.
Customer base and across our distribution, so I think youre going to see month to month quarter to quarter kind of changes based upon our pursuit and economic value, but let me let me just pass it over to Derrick and he can talk about things and see season progressing.
Yes, Jack I mean, one of the things I talked about earlier was kind of have to look on two dimensions. One dimension is what we think kind of the modeling for our ultimate performance. So what's our prediction in terms of default profitability.
And prepayment profitability right. So that's not really changing so much and the model and what would move it kind of the bigger factor oftentimes. It's just the competitive landscape as I referred to it before whats the market clearing level and at times that market clearing level, we are going to shift around the credit spectrum, and sometimes it might be and higher FICO buckets and lower FICO buckets.
Meaning market clearing levels that we find attractive from a return perspective, so generally if youre going to kind of see movements like that which I don't think that we really have a significant change in terms of any of those dimensions. It would be more sell probably debit and by competitive dynamics and where we want to allocate the capital going back to where we find the highest relative value.
And that's much more likely as to what youre going to see when you see those change and trends.
Okay.
And then maybe maybe asking Jess.
And <unk> question, a little bit differently.
It seems like.
We're coming out of forbearance at a better clip and we thought.
But at some point, there's going to be this sort of.
Terminal number of forbearance debt.
<unk> net.
And I think we're all wait and see what happens when.
They switched the lights on and at the end of the night and.
And it was really a default and.
Who goes back to paying.
If we kind of progressed through 'twenty, one and we get another three months and another three months and.
No one's going to lose the house on under by the administration does does the loss reserving.
Canada pivot more towards HPA, because frankly, you talked about.
And 90, LTV kind of number I think or less.
Do you anticipate moving more towards and HPA weighted.
Approach, if we just don't get.
To the end of the line on on on what day, what these forbearance and keep it looked like and 21.
Yes, I'll start and Derek and can add and I think it's I think it is.
<unk>.
It's tough to play that out Jack I mean, I think what you are saying in theory makes sense.
But there are obviously some more moving pieces there.
And what Youre describing is a.
Claim just can't happen and what does that look like and I.
Well.
I think as oil prices keep going up high single low double.
And there's just more and better equity there for that for that for that borrower.
Yes, Yes look Jack that's exactly right and if you look at our kind of default and population right now I'd say around 95%, probably haven't better equity at 10% and around 65% haven't bet and equity at 20% and Youre right that continues to increase now we always and thats unusual on a recession, so sometimes and youre trying to model that out right that can be a.
Little bit tricky, because he usually home prices are going down but to your point, yes that and certainly a positive trend with respect to it and that would certainly kind of all things being equal will have downward pressure in terms of that ultimate roll rate. So when you look at and I also wouldn't frame it adds and either or rights and when youre kind of looking at low rates you're taking into.
Account multiple things and so not only HPA and things like re employment rates is going to matter with respect to that and get some of that realized trends because you always have a certain amount of model are so youre kind of looking at historical trends or trying to predict it going forward utilizing things like embedded equity future equity reemployment rates and terms of those and we're at.
And default and then also just looking at the policy landscape. So I would say it is not like a single dimensional thing. So it's kind of on and I Wouldnt think of it that way Hayward on a switch necessarily we might way certain factors relatively more or less and I would agree home price appreciation. One would think would have more of an impact in terms of your ultimate flow rate in these circumstances.
Dancers and has historically been the case.
And back to Derek's point earlier about and affecting frequency because ultimately borrowers have more ways to exit their property today and the strong house markets within equity and so they'll go on it. So I think these are all factors that go in and as we think about ultimately default claim ratio and also remember the longer this forbearance period does it extend.
And that the claims still come years after that right. So.
Sure.
Multiple periods before and there's actually a cash claims paid which is another interesting factor and all of those so a lot of flow pieces for the puzzle, but Jack I think.
We're going to continue and watches continue to monitor it very carefully and we will express our opinions as we go each quarter.
Alright, I appreciate the comments everybody.
Thank you.
So we have no further questions at this time I will now turn it over to Rick Thornberry for final remarks.
Well, we appreciate everybody joining the call and thank you for your thoughtful questions.
We look forward to talking to.
Each of you soon as we have the opportunity most of all stay healthy and well and wish you all much success in the coming year and we'll talk soon thank you again take care Bye bye.
Thank you ladies and gentlemen. This concludes today's conference. Thank you for participating you may now disconnect.
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