Q3 2024 MGIC Investment Corp Earnings Call
Ladies and gentlemen, thank you for standing by. Welcome to the MGIC Investment Corporation 3rd quarter 2024 earnings call. At this time, all lines have been placed on mute to prevent any background noise. At the end of today's presentation, we will have a question and answer session.
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Please be advised that today's conference is being recorded. I would now like to hand the conference over to Dianna Higgins.
Head of Investor Relations, please go ahead.
Dianna Higgins: Thank you, Gerald. Good morning and welcome, everyone.
Dianna Higgins: Thank you for your interest in MGIC. Joining me on the call today to discuss our results for the third quarter are Tim Mattke, Chief Executive Officer, and Nathan Colson, Chief Financial Officer.
Dianna Higgins: Our press release, which contains MGIC's third quarter financial results, was issued yesterday.
Dianna Higgins: and is available on our website at mtg.mgic.com under newsroom includes additional information about our quarterly results that we will refer to during the call today.
Dianna Higgins: It also includes a reconciliation of non-GAAP financial measures to their most comparable GAAP measures.
Dianna Higgins: In addition, we posted on our website a quarterly supplement that contains information pertaining to our primary risk and force and other information you may find valuable.
Dianna Higgins: As a reminder, from time to time we may post information about our underwriting guidelines and other presentations or corrections to past presentations on our website.
Dianna Higgins: Before we get started today, I want to remind everyone that during the course of this call, we may make comments about our expectations of the future. Actual results could differ materially from those contained in these forward-looking statements.
Dianna Higgins: Additional information about the factors that could cause actual results to differ materially from those discussed on the call today are contained in our 8K and 10Q also filed yesterday.
Dianna Higgins: If we make any forward-looking statements, we are not undertaking an obligation to update those statements in the future in light of subsequent developments.
Dianna Higgins: No one should rely on the fact that such guidance or forward-looking statements are current at any other time than the time of this call or the issuance of our 8K and 10Q. With that, I now have the pleasure to turn the call over to Tim.
Speaker Change: Thank you, Dianna. Good morning, everyone.
Tim Mattke: We are very pleased with our third quarter financial results, which continue to demonstrate the strength of our business model in response to changing market conditions.
Tim Mattke: Our disciplined approach to risk management, improving capital management strategies, together with our leadership in the market, and focus on serving our customers with quality offerings and best-in-class service, continue to drive value for our stakeholders.
Tim Mattke: Let's get started with a few financial highlights. In the quarter we earned net income of 200 million dollars and generated an annualized return on equity of 15.6 percent.
Tim Mattke: Insurance in force ended the quarter at 293 billion dollars, up slightly quarter over quarter, with annual persistency ending the quarter at 85 percent, flat compared to the last quarter.
Tim Mattke: We wrote $17.2 billion of new insurance in the quarter, up 27% from the prior quarter.
Dianna Higgins: Underwriting standards remain high, and we are focused on maintaining a strong and balanced insurance portfolio. We continue to be pleased with the overall credit quality and performance of our portfolio, and our financial results have benefited from the favorable credit performance we have been experiencing.
Dianna Higgins: Turning to our capital activities, the strength and flexibility of our capital position in the quarter supported the repurchase of 5.2 million shares of common stock for $123 million, and the payment of a quarterly common stock dividend of $34 million.
Tim Mattke: Combined, these represent a 79% payout ratio of the quarter's net income.
Dianna Higgins: In addition, in October we repurchased an additional 2.9 million shares of common stock for a total of $72 million.
Dianna Higgins: When determining our repurchase activity, we consider and evaluate a variety of internal and external factors and metrics, including share price.
Dianna Higgins: The repurchase activity I just discussed was reflective of continued strong credit performance and financial results, and also higher market valuation levels than we have experienced in recent years. We expect share repurchases will remain our primary means of returning capital to shareholders.
Dianna Higgins: As previously announced, the Board authorized a $0.13 per share quarterly common stock dividend payable on November 21, and last week, MGIC paid a $400 million dividend to the holding company. The dividend from MGIC to the holding company reflected capital levels at MGIC that continue to be above our target.
Dianna Higgins: Our approach to capital management continues to be dynamic and maintaining both financial strength and flexibility are the cornerstones of our strategy.
Dianna Higgins: This approach enables us to position ourselves to achieve our objectives in varying macroeconomic environments and it serves our stakeholders well.
Dianna Higgins: MGIC's capital structure includes six billion dollars of PMEYR's available assets.
Dianna Higgins: Our well-established reinsurance program remains integral to our risk and capital management strategies.
Dianna Higgins: In addition to reducing the volatility of losses and stress scenarios, our reinsurance agreements provide diversification and flexibility to our sources of capital at attractive costs and reduced our PMIers' required assets by $2.2 billion, or 40% at the end of the third quarter.
Dianna Higgins: PMIRE's operational and risk-based capital requirements provide a strong foundation to serve low-down payment borrowers while protecting the GFCs and taxpayers from undue mortgage credit risk.
Dianna Higgins: In August, the GSEs issued updates to the risk-based requirements relating to the calculation of available assets, which will be implemented over a 24-month phase and period, with a fully effective date of September 30, 2026.
Dianna Higgins: We don't expect these updates will have a material impact on MJIC's available assets or our investment strategy.
Dianna Higgins: Turning more broadly to the market conditions, the housing market remains constrained by a limited supply of homes for sale and affordability challenges compounded by high mortgage rates.
Dianna Higgins: However, there may be signs of easing.
Dianna Higgins: The recent Fed interest rate cut and generally lower mortgage rates in the third quarter led to the first year-over-year increase in mortgage applications in three years. In addition, the rate of home price appreciation continues to slow from the highs we saw in 2022, and the inventory of homes for sale is increasing.
Dianna Higgins: pent-up demand for home ownership and demographics suggesting that the millennial and Gen Z populations will continue to add to housing demand are reasons to be optimistic about the resiliency of our business.
Dianna Higgins: Lastly, I am happy to report that in September, AMVEST upgraded MGIC's financial strength and credit ratings to A from A- and revised the outlook to the credit ratings to stable.
Dianna Higgins: AMBEST data, the ratings reflect MGIC's balance sheet strength, which AMBEST assesses as strongest, as well as MGIC's operating performance and robust enterprise risk management framework.
Speaker Change: With that, let me turn it over to Nathan to get into more details on financial results for the quarter.
Nathan Colson: Thanks, Tim. Good morning. As Tim mentioned, we had another quarter with excellent financial results.
Nathan Colson: We earned net income and adjusted net operating income of $0.77 per diluted share compared to $0.64 per diluted share last year. A detailed reconciliation of GAAP net income to adjusted net operating income can be found in our earnings release.
Nathan Colson: The strong credit performance we continue to experience again led to a negative loss ratio this quarter. Our re-estimation of ultimate losses on prior delinquencies resulted in $66 million of favorable loss reserve development in the quarter.
Nathan Colson: The favorable development this quarter primarily came from delinquency notices we received in 2022 and 2023.
Nathan Colson: Curates on those delinquency notices continue to exceed our expectations and therefore we have made favorable adjustments to our ultimate loss expectations.
Nathan Colson: In the third quarter, our count-based delinquency rate increased 15 basis points to 2.24%, which is consistent with the seasonal trends we discussed last quarter and below the pre-pandemic 2.78% delinquency rate seen at the end of the third quarter of 2019.
Nathan Colson: We expect that the delinquency rate will increase modestly due to seasonality in the fourth quarter before considering any impact from Hurricanes Helene and Milton.
Nathan Colson: The Enforced Premium Yield was 38.9 basis points in the quarter, compared to 38.4 basis points last quarter.
Nathan Colson: The increase in the quarter was due in part to updating our method for estimating the current mortgage amount of our in-force loans, which resulted in lower insurance-in-force and a 0.2 basis point increase in our in-force premium yield for the quarter.
Nathan Colson: We continue to expect the enforced premium yield will remain relatively flat for the year.
Nathan Colson: Thank you very much.
Nathan Colson: The book yield on the investment portfolio was 3.8% at the end of the third quarter, up 40 basis points from a year ago, and a marginal increase quarter over quarter as the yield on cash and cash equivalents declined, offsetting improvements from reinvestment.
Nathan Colson: Net investment income was $62 million in the quarter, up $1 million sequentially, and up $7 million in the third quarter last year.
Nathan Colson: During the third quarter, the reinvestment rates in our fixed income portfolio continued to be above the book yield.
Nathan Colson: We expect the book yield to continue to increase but at a slower rate.
Nathan Colson: Reinvestment rates are facing downward pressure with the expectation of more rate cuts through the end of next year.
Nathan Colson: In addition, the Fed's 50 basis point rate cut in September and significant declines in yields across the Treasury curve caused fixed income prices to rise, resulting in the unrealized loss position on our investment portfolio, improving by $163 million in the quarter.
Nathan Colson: The increase in investment income has continued to benefit total revenue, which was $307 million in the quarter, compared to $305 million last quarter and $297 million in the third quarter last year.
Nathan Colson: We remain focused on operational efficiency and expense management.
Nathan Colson: Operating expenses in the quarter were 53 million dollars, down from 55 million dollars last quarter and flat with the third quarter last year.
Nathan Colson: We expect the full year operating expenses will be in the range we provided throughout the year of $215 million to $225 million.
Nathan Colson: Our operating results, together with our strong balance sheet, enabled us to grow book value per share to $20.66, up 19% compared to a year ago.
Nathan Colson: while returning $625 million of capital to shareholders through dividends and share repurchases and reducing outstanding shares by 8%.
Speaker Change: As Tim discussed, our well-established reinsurance program, which includes the use of forward commitment quarter share agreements and excessive loss agreements executed in either the traditional or ILM market, is a key component of our capital management strategy.
Speaker Change: These agreements reduce the volatility of losses in adverse macroeconomic environments and provide diversification and flexibility to our sources of capital.
Nathan Colson: Our overall reinsurance strategy is to prioritize coverage on the most recent book year vintages and future NIW and to recapture risk on season book year vintages if the reinsurance no longer offers enough tail risk protection in stress scenarios.
Nathan Colson: Quartershare Reinsurance is the foundation of our program as we value the forward commitment and certainty of coverage and have been consistent Quartershare buyers for more than a decade.
Nathan Colson: In October, we further bolstered our reinsurance program with a multi-year, 40% quota share agreement with a panel of highly rated reinsurers that will cover most of our policies written in 2025 and 2026.
Nathan Colson: We also elected to cancel the quarter-share treaties covering our 2021 NIW, effective December 31st, 2024.
Nathan Colson: Both of these actions are consistent with our reinsurance strategy and follow the same approach we have taken in recent years to managing our overall risk and capital positions.
Nathan Colson: One further comment before turning it back over to Tim.
Nathan Colson: At quarter end, MGIC's available assets exceeded PMIR's required assets by $2.5 billion.
Nathan Colson: Our PMIRES excess level will fluctuate with the timing of dividend payments and reinsurance transactions, and we expect the $400 million dividend from MJIC, the holding company, and the cancellation of the 2021 quarter share will result in a decrease in our PMIRES excess level at year-end.
Speaker Change: And with that, let me turn it back over to Tim.
Tim Mattke: Thanks, Nathan. In closing, we continue to successfully execute our business strategies and deliver meaningful return on equity as demonstrated by our third quarter results.
Tim Mattke: While some uncertainties persist, housing fundamentals and underwriting standards remain solid, and the near-term economic outlook is generally positive.
Speaker Change: We are confident in our leadership and position in the market and remain committed to delivering best-in-class solutions and service to our customers and creating long-term value for our stakeholders.
Speaker Change: With that, Gerald, let's take questions.
Gerald: Our first question comes from Terry Ma from Barclays. The floor is yours.
Terry MA: Hey, thank you. Good morning.
Terry MA: Maybe just a housekeeping question to start off with.
Terry MA: Was there a change to how you guys kind of report static pooled delinquency curves? If I look at slide 12 in your deck, the curves you put out, the vintage curves you put out this quarter look kind of different than the ones you put out in the slide last quarter.
Terry MA: Terry, it's Nathan. We did update just how frequently the data points behind those curves are. So previously we were really reporting it on a full year like an annual basis and now we're doing it, you know, each of the data points on the curve is each quarter. So the full year amounts are the same but there's, you know, more data points so the curves might look a little bit different there.
Terry: Got it, okay.
Terry: And then maybe any color you're seeing on just performance of the 2022 and 2023 vintages, you already kind of mentioned that the cure rates are coming in better than your expectations. Maybe you can just talk about entry into default, it looks like.
Terry: you know, the 22 and 23 curves are kind of performing worse than 21. So as we kind of look forward and those season more, should we kind of expect the total default rate to kind of start exceeding the kind of pre-pandemic levels? Thank you.
Speaker Change: Mattke.
Speaker Change: Terry, it's Nathan again. I mean, I certainly think over time that's possible. I mean, excluding, you know, potentially any impact from the hurricanes. I don't think that's likely to happen in the near term. I mean, like we said in the prepared remarks.
Speaker Change: seasonally our business has typically we've seen increases in the delinquency rate in the back half of the year and then decreases in that rate certainly in the first quarter and oftentimes in the first half of the year and you know we saw that last year
Speaker Change: The delinquency rate increased 16 or 17 basis points in the first half of the year, I'm sorry, that's right, and then decreased in the, sorry, rather increased in the second half of the year.
Speaker Change: We saw the same decrease in the first half of this year, the increase in Q3 here, 15 basis points versus I think it was 10 basis points.
Speaker Change: in the third quarter last year, you know, is in line with what we expect as you can see on those.
Speaker Change: delinquency curves. I do think that the 2022 vintage looks like it is performing kind of marginally worse from a new delinquency perspective than the other books around it, either 21 or 23.
Speaker Change: But these are still very, very good levels.
Speaker Change: The other thing that we track is looking at how different cohorts are curing. You know, what is the cumulative cure rates at various points in time? And if we look at that by vintage, we really don't see much difference right now. So, while it's something that we'll continue to monitor and if there is.
Speaker Change: something of note to report. We certainly will. I think right now, you know, think that all the books, vintages are performing quite well, both from a new delinquency perspective and, you know, once loans are delinquent, how are they curing? I think the kind of cumulative cure rates continue to be quite strong, which again has led to significant favorable development for us this quarter.
Speaker Change: Got it. Thank you.
Speaker Change: Thank you for watching.
Speaker Change: Thank you for your question. One moment, please.
Speaker Change: Our next question comes from the line of Bose George from KBW. The floor is yours. Hey guys, good morning. Your new insurance written grew far more meaningfully than a couple of the other companies that reported so far. Is that really just noise or anything different in terms of how you were positioning this quarter?
Speaker Change: Yeah, Boaz, I think, you know, I think we think that the market overall probably grew a little bit, but I think it's also fair to say that we think we probably grew some market share this quarter.
Speaker Change: higher market share overall. You know, ultimately, we're focused more on the long term of versus quarter over quarter market share, more on what sort of returns can we get for the capital we deployed, but...
Speaker Change: I think it's fair to say we probably grew some market share this quarter, probably more in line with, you know, us being probably more in line on price in the risk-based realm than we were, especially, say, first quarter this year.
Speaker Change: Okay, thanks. And then going back to credit, what was the mark-to-market loan-to-value on the 22, 23 vintage delinquencies compared to some of the older stuff?
Speaker Change: Yeah, both of us, Nathan. You know, we haven't, we haven't talked as much about the mark to market.
Speaker Change: Thank you very much.
Speaker Change: on various cohorts, especially on delinquent loans, just because our view is, you know, well, we see similar numbers to what you'll see more broadly reported.
Speaker Change: The situations that we're most concerned about are the situations that aren't experiencing average home price appreciation. So...
Speaker Change: Certainly, the 2021 and prior vintages have experienced, on a pro forma basis, a tremendous amount of home price appreciation.
Speaker Change: a little bit less for, you know, the 22 vintage and then, you know, for 23 and 24, partly due to home price appreciation being more modest, but maybe most importantly, just those are such recent vintages.
Speaker Change: You know, not as much on those, but...
Speaker Change: Even in rising home price environments where the average mark-to-market is quite low, we still see losses, we still see claim events, so I think it matters from maybe stress testing and overall position, how we feel about capital, but I think try to emphasize it a little bit less on the length of loans.
Speaker Change: Okay, great. Thank you.
Speaker Change: Thank you.
Speaker Change: Thank you for your question.
Speaker Change: Our next question comes from Miha Fajita from Bank of America. The floor is yours.
Speaker Change: Thank you for your time. Thank you.
Miha Fajita: Hey, good morning and thank you for taking my question. Maybe I'll just start with the premium rate and like, you know, your market share gain this quarter. It looks like the premium rate stabilized here. I think the direct premium rate actually ticked that. Can you just comment on what drove that? Was it pricing actions you took? Just more a function of portfolio turnover? Also, maybe just take the opportunity to comment on pricing and the competitive environment. What are you seeing right now?
Speaker Change: Yeah, I can start here, and Nathan wants to chime in on anything. You know, I think when you look at the average premium rate on the portfolio, right, it's not just what you're bringing on, it's also what's falling off. And so I think it's...
Speaker Change: While we're happy that it moved up a little bit this quarter, I think as Nathan said in the prepared remarks, we view that as relatively stable, which we thought it would be over the course of the year. You know, from a competitive dynamic standpoint, again, it's a competitive market. I think it is good that the average premium rate is staying relatively stable. You know, I think as I alluded to in my last response for Boaz, you know, when we're priced sort of more on par with the market and the risk-based world, we're probably going to get a little bit outside share. That's not a goal we have by itself, but it is something that's sort of more of an output. And I think early this year, we probably were a little bit off. But the reality is pricing sort of goes up and goes down in different spots, right? We make adjustments.
Speaker Change: on a regular basis, depending upon different risk factors. And so it's tough to say if pricing's up or down specifically, because we're making adjustments that are sometimes up, sometimes down. And that can mean the difference between sort of winning business or not in some regards. And for other customers, that doesn't make as much of a difference. So again, I think it's been something that we've been very comfortable with sort of the capital we've been able to deploy. We're getting really solid returns on that business. And that's been true for a long time now.
Speaker Change: Okay. Maybe just turning to persistency, can you just talk about your expectations around persistency? And I was particularly curious if you saw any change intra-quarter. We had a little bit of a blurb with rates coming down. Did you see persistency tick lower when that happened? Just any comments on persistency, maybe talk about the LTV on your, or not LTV, the note rate on your portfolio, any additional stats you can give us. Thank you.
Speaker Change: Yeah, I'm here. It's Nathan. You know, I think persistency for us in this cycle has, you know, we think it's probably peaked.
Speaker Change: did close to 86%, but the declines that we're seeing are more...
Speaker Change: and I think we're down to about tenths of a percentage point. So I mean down into the low 85s now. If rates do decline, like we saw for maybe 30 or 45 days there, that will certainly pressure persistence. But I think on the order of...
Speaker Change: you know tens of basis or tens of percentage points or you know a couple percentage points not the the level that we saw.
Speaker Change: in, you know, certainly in 2021-2022. And a lot of that has to do with
Speaker Change: Like you're calling out, the nature of the book that we have now is still a significant portion of the book is 4% note rates and below, and really it's only the business that we've written over the last, say, 18 to 24 months.
Speaker Change: that would be kind of in the money or even close to it if rates were down 50 or 75 or 100 basis points from here. So, I don't know that in any of our supplemental materials
Speaker Change: You know, we have, you know, note rate by vintage or things like that, but that's certainly, I think, a good add and something that we can provide, you know, additional information on. But, you know, our largest books continue to be those 2020, 2021, 2022 vintages and, you know, written at very low note rates. So, we expect those to have high persistency for some time, even if rates were to come down, you know, pretty significantly from current levels.
Speaker Change: Got it. And then just my last question, just the expense outlook for the year. Any update there? It looks like you're coming in below. I guess there's some additional expense related to the reinsurance deal you mentioned, just the early term mission, but just anything you can comment on expense outlook. Beth, thank you.
Speaker Change: Yeah, I'm here with Nathan again. I think just to clarify on the reinsurance, the termination fee will run through the seeded premium line, not the expense line for Q4, but we said in the prepared remarks that we expected
Speaker Change: expenses to still be in the range that we initially gave in January and have kind of given consistently now throughout the year of
Speaker Change: to $215 to $225 million.
Speaker Change: So, I think, Phil.
Speaker Change: you know good about the the actions that we've taken to be in a you know in a good spot going into 2025 and beyond.
Speaker Change: We'll have, you know, the expectation is that we'll update guidance for 2025 expenses, you know, at our Q4 call, but, you know, directionally expect expenses to be lower in 2025 than they were in 2024.
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: Our next question comes from the line of Jeffrey Dunn from Dowling and Partners. The floor is yours.
Jeffrey Dunn: Thank you. Good morning.
Jeffrey Dunn: Can you comment on the profit commission threshold for the new QSR?
Speaker Change: Yeah, Jeff, it's it's one of the book years is sixty three percent and the other is sixty two percent.
Jeffrey Dunn: So, you know, the kind of or.
Jeffrey Dunn: I was going to say, what was the process of going 40% out of the gate? In the past, you guys have typically come out at 20% and then added 20% a year later or something like that. Why the change in process here?
Jeffrey Dunn: and I'm here to talk about the news and the news is a new news is a new news is a new news is a new news is a new news is a new
Speaker Change: Yeah, you know, it's really a reaction to the market. Our approach has always been, you know, what is the reinsurance market?
Speaker Change: kind of telling us they want, where's the capacity? Where's the right execution for us? Our preference has always been to do, you know, longer forward term commitments. Our first quarter share deal covered almost three years. The one that we did in 2013, you know, over time, the capacity to go out more than one year got narrower. So we shifted to doing some on a two-year basis, some on a one-year basis. I would say the kind of demand and capacity in the space right now in the reinsurance market is.
Jeffrey Dunn: quite attractive from our perspective.
Jeffrey Dunn: So that's, you know, hence the upsizing a little bit from what we've done recently at the 30% quarter share level.
Jeffrey Dunn: to the 40% level, and then, you know, felt like we got what is, you know, very, very attractive pricing, good cost of capital for us.
Jeffrey Dunn: and most importantly,
Jeffrey Dunn: just know having that capital commitment and kind of risk management overlay for the next two years of NIW in our business.
Jeffrey Dunn: is something that we always value.
Jeffrey Dunn: But, you know, if the market doesn't have enough capacity for that multi-year, you know, we've found other ways to, you know, to transact, but I think very, very happy with the execution that we have here right now. And I think it's a testament to the reinsurance market in this space getting broader.
Jeffrey Dunn: but also performance in this space has been quite good for some time. And, you know, similar to the primary market here, it's not growing as much as it was
Jeffrey Dunn: the reinsurance market for mortgage credit risk isn't growing as much as it was a couple of years ago, which is, I think, helping with demand as well. So our preference, like I said, is to place on a forward basis.
Jeffrey Dunn: multi-year and you know this is really the market telling us that there's capacity at attractive pricing for us to really accomplish your multi-year goals right now.
Jeffrey Dunn: [inaudible]
Speaker Change: That sounds good. I appreciate the comments.
Speaker Change: Thank you.
Speaker Change: Thanks, Jeff.
Speaker Change: Our last question comes from Scott Heleniaket from RBC Capital Markets. The floor is yours.
Scott Heleniaket: Yeah, thanks. Good morning. Just wondering if you could, I know it's early still, but could you touch on any impact that you think the hurricanes might have on delinquencies, you know, in the fourth quarter, maybe the first quarter next year? Are you seeing any impacts yet? And would you anticipate seeing very high cure rates like we have in past storms?
Scott Heleniaket: anything you can share on kind of what you're thinking about that at this point.
Scott Heleniaket: Thank you.
Jeffrey Dunn: Yes, Tim, and I'll start off. Appreciate the question, Scott. It is too early again. Normally for us, it's got to be two months to Lincoln before we'd sort of see it come through. And so really haven't seen anything yet. We would expect to see some some activity in the fourth quarter though. But as you alluded to for us.
Jeffrey Dunn: We've had these horrible events like hurricanes happen historically. They've had higher cure rates than our average delinquency, significantly higher cure rates.
Jeffrey Dunn: And so it'll be something if we do get, you know, delinquencies coming into the fourth quarter, it's something we'll have to look at from a reserving standpoint of
Jeffrey Dunn: of how do we reserve for those that we believe are sort of the influx related to hurricanes that have a higher propensity to cure over time based upon sort of federal funds that come in for relief.
Jeffrey Dunn: And it's sort of, you know, it's a life event, but it's a hopefully a temporary one that ultimately they get back on their feet versus sort of our average delinquency that is maybe more related to a life event that could be more permanent in nature with job loss, things like that, that still has a high propensity to cure, but just not the rate that we've seen sort of for natural disasters like hurricanes.
Speaker Change: That makes sense, that's helpful. And then the other question I had was just on the... What is your new money yield versus expiring yield and any floating rate debt exposure that you can point out? Just trying to get the sensitivity to interest rates as they continue to probably go down.
Speaker Change: In terms of new money rates recently, I think kind of low fives, maybe to mid-five range against close to 4% book yield on the long portfolio.
Speaker Change: And then, you know, exposure to floating right there is a little bit, you know, we have a
Jeffrey Dunn: kind of a mid-single-digit sized CLO portfolio that's floating rate and some other things but
Jeffrey Dunn: You know, generally, you know,
Jeffrey Dunn: Duration on the portfolio is around four years, so, you know, I think our biggest exposure to shorter term rates would just be in the cash and cash equivalents portfolio where, you know, we've benefited somewhat.
Jeffrey Dunn: from having, you know, 5 plus percent rates there. So if the Fed continues to cut rates, you know, that will be a headwind. But in terms of, you know, exposure and the longer and kind of true investment portfolio, it's relatively modest.
Speaker Change: Okay, got it. Appreciate the answers.
Speaker Change: Thanks, Scott.
Speaker Change: Thank you for your question.
Speaker Change: Thank you all. Bye.
Speaker Change: and Dianna Higgins.
Speaker Change: Ladies and gentlemen, this concludes the question and answer session. I would now like to turn it back to management for closing remarks.
Speaker Change: Thank you, Gerald. I want to thank everyone for your interest in MGIC. Today's election day. I hope everyone finds time to get out and vote if you haven't done so already. Have a great rest of your week.