Q3 2024 Radian Group Inc Earnings Call
Good day and thank you for standing by welcome to the third quarter 2020 for Radian Group earnings Conference call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question during this.
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Speaker Change: Please be advised that this conference is being recorded I would now like to hand, the conference covered your speaker today, Dan Codell head of Investor Relations and capital management. Please go ahead.
Yeah.
Dan Codell: Thank you and welcome to Radians third quarter 2024 conference call. Our press release, which contains radians financial results for the quarter was issued yesterday evening and is posted to the investors section of our website at Radian Dot com.
Dan Codell: And our ongoing strategic focus on managing expenses for.
Dan Codell: For the quarter, we increased book value per share by 18% year over year to $31 37 sets we grew.
Speaker Change: Revenues to $334 million during the quarter generating net income of $152 million.
Speaker Change: Our annualized return on equity in the third quarter was 13, 2% and our adjusted.
Speaker Change: Adjusted net operating return on equity was 13, 7%, which reflects our strong financial results, including positive credit performance.
Speaker Change: We continue to leverage our proprietary analytics and radar rates platform to identify and capture economic value in the mortgage insurance market, which resulted in $13 5 billion.
Speaker Change: Of high quality, new insurance written in the third quarter.
Speaker Change: Our primary mortgage insurance in force, which is the main driver of future earnings for our company grew to 275 billion.
Speaker Change: We continue to focus on managing the operational efficiency and expenses, which resulted in a decrease in other operating expenses in the third quarter.
Speaker Change: Our primary operating subsidiary Radian Guaranty paid a quarterly dividend of Radian group and the amount of $185 million in the third quarter for a total of $485 million paid year to date.
Speaker Change: At the end of the quarter, we paid off $450 million of our senior debt, reducing our leverage ratio to 18, 5%.
Speaker Change: Our overall capital and liquidity positions remain strong with our Pmiers cushion for radian guarantee of $2 1 billion.
Speaker Change: At our available holding company liquidity was $844 million at the end of the third quarter after paying off the debt.
Speaker Change: was $844 million at the end of the third quarter after paying off the debt.
Speaker Change: We are pleased that our strong financial position and capital flexibility allow us to deliver excellent financial results grow our business and help our customers transform risk and opportunity while also returning value to our stockholders.
Speaker Change: We are pleased that our strong financial position and capital flexibility allow us to deliver excellent financial results, grow our business, and help our customers transform risk into opportunity, while also returning value to our stockholders.
Speaker Change: In terms of the housing and mortgage market.
In terms of the housing and mortgage market,
Speaker Change: The supply of existing homes remains constrained, which we expect will continue to provide support for home values from an HPA perspective.
Speaker Change: The supply of existing homes remains constrained, which we expect will continue to provide support for home values from an HPA perspective.
Speaker Change: And based on the originations thus far in the forecast for the remainder of 2024, we continue to estimate that the private mortgage insurance market will be approximately $300 billion. This year consistent with 2023.
Speaker Change: and based on the originations thus far in the forecast for the remainder of 2024, we continue to estimate that the private mortgage insurance market will be approximately $300 billion this year, consistent with 2023.
Speaker Change: Looking ahead based on current market projections for 2025, we expect the market to be approximately 10% larger in 2025, then in 2024.
Speaker Change: Looking ahead, based on current market projections for 2025, we expect the MI market to be approximately 10% larger in 2025 than in 2024.
Speaker Change: I believe it's also worth noting the continuing positive impact that we are experiencing from the current interest rate environment in terms of increasing our investment portfolio returns and maintaining strong persistency benefiting our insurance in force.
Speaker Change: Overall, our outlook for the housing market and our.
Speaker Change: Our mortgage insurance business remains positive.
Speaker Change: I also wanted to highlight the radian continues to be a catalyst for homeownership in the market leveraging decades of experience and relationships.
Speaker Change: Most recently, our mortgage kind of a business radian mortgage capital is focused on providing secondary market liquidity to our lender customers as sponsoring mortgage credit to investors. We believe this business is a natural extension of our business model and have been encouraged by the customer interest in the business.
Speaker Change: Submit that will now cover the details of our financial and capital positions.
Speaker Change: Thank you Rick and good morning to you all.
Speaker Change: Pleased to provide additional details about our third quarter results, which reflect another strong quarter up the comments producing net income of $152 million. The 99 cents per diluted share in line with the prior quarter.
Speaker Change: Adjusted diluted net operating income per share was slightly higher than the GAAP metric at $1 <unk> for the third quarter compared to <unk> 99 for the previous quarter.
Speaker Change: Annualized return on equity in the third quarter was 13, 2% adjusted net operating return on equity was 13, 7% an increase from the second quarter.
Speaker Change: Book value per share grew to $31 37, an increase of 18% year over year. This book value per share of growth is in addition to our regular stockholder dividends, which were $37 million during the quarter, reflecting a quarterly dividend of $24.05 per share.
Speaker Change: We also repurchased $49 million of shares during the third quarter.
Speaker Change: Turning now to the retail diversified does that.
Speaker Change: Our revenues continued to be strong in the third quarter.
Speaker Change: <unk> hundred $34 million of total revenues during the quarter, an increase compared to $221 million in the second quarter and $313 million in the third quarter of last year.
Speaker Change: Slides 10 through 12 in our presentation includes details on our mortgage insurance in force portfolio as well as other key factors impacting our net premium site.
Speaker Change: Our primary mortgage insurance in force continued to grow reaching $275 billion as of the end of the third quarter and generating $235 million and net premiums earned in the quarter.
Speaker Change: Contributing to the growth of our insurance in force of $39 5 billion.
Speaker Change: Of new insurance written in the third quarter of 2004 compared to $13 $9 billion it than in the prior quarter.
Speaker Change: Persistency rate of our existing insurance in force also remained high at 84, 4% in the third quarter based on the trailing 12 months.
Speaker Change: On page 282, 6% a year ago.
Speaker Change: As of the end of the third quarter, 70% of our insurance in force had a mortgage rate of 6% or less give.
Speaker Change: Given current market interest rates. These policies are less likely to cancel due to refinancing in the near term and we therefore continue to expect up us since the rate to remain strong.
Speaker Change: As shown on slide 12, the inputs premium each for our mortgage insurance portfolio remained stable in the quarter at $38 two basis points with strong persistency rates in the current industry pricing environment. We expect our in force portfolio premium is to continue to remain stable.
Speaker Change: As shown on slide 13, our investment portfolio of $6 6 billion consists of well diversified highly rated securities. Our portfolio has continued to increase over the past year in both size and averaging generating a net investment income of $78 million.
Speaker Change: Headquarter.
Speaker Change: This includes $8 million of income in the third quarter related to mortgage loans held for sale within radian mortgage catheter, excluding that impact net investment income grew 7% year over year.
Speaker Change: We have continued to reinvest cash flows in the current rate environment benefiting on investment portfolio, which was four 3% in the third quarter.
Speaker Change: Our unrealized net loss on investments reflected in stockholders equity was $233 million at quarter end, an improvement of $144 million from the prior quarter, driven primarily by a decline in market interest rates.
Speaker Change: We continue to expect that our strong liquidity and cash flow position will provide us with the ability to hold these securities to recovery of the remaining unrealized losses, which would equate to $1 56 that is expected to accrete back into our book value per share over time.
Speaker Change: I will now move on to our provision for losses and related credit trends, which continue to be positive with continued strong cure activity and very low claim levels.
Speaker Change: On slide 16, we provide trends for our primary default inventory total default increased to approximately 22000 loans at quarter end, resulting in a portfolio default rate up to two 5% compared to two 4% in the previous quarter.
Speaker Change: As expected the number of new defaults reported to us by services increased in the third quarter to approximately 13700 from 11100 reported in the second quarter.
Speaker Change: This increase in new defaults, which impacts our mortgage insurance results reflect normal seasonal trends and the expected continued seasoning of a large insurance in force portfolio a.
Speaker Change: New default also continued to contain significant embedded home equity with approximately 76% of new default this quarter, having at least 20% equity using an index based approach.
Speaker Change: This equity profile, which has been a key driver of recent favorable credit trends is largely unchanged from prior quarters.
Speaker Change: Looking ahead, we expect the impact of Hurricanes maintain annually to impact the number of new defaults reported in the third quarter.
Speaker Change: Within the third quarter, we estimate that approximately 200 incremental new defaults were reported in FEMA designated areas impacted by Hurricane better.
Speaker Change: Historically defaults associated with storms and other natural disasters have killed at higher rates.
Speaker Change: This posco provinces also recognized with <unk>, which provides for a lower capital requirement for deepwater loans in FEMA designated areas.
Speaker Change: Our loss ratio remained low this quarter with a net expense of $6 million and our mortgage insurance provision for losses in the third quarter compared to a net benefit of $2 million reported in the second quarter.
Speaker Change: We continue to maintain our default to claim roll rate assumptions for new defaults at 8%, which resulted in $57 million of loss provision for new defaults reported during the quarter.
Speaker Change: Positive reserve development on prior Peter default of $51 million, mostly offset this provision for new defaults.
Speaker Change: Defaults continue to cure at rates greater than our previous expectations, resulting in releases of prior period reserves that in recent years have significantly offset reserves established for new defaults.
Speaker Change: As shown on slide 17, <unk> trends have been very consistent and positive in recent periods with approximately 90% of defaults getting within four quarters, and 96% gearing within eight quarters meaningfully exceeding our initial expectations.
Speaker Change: <unk> in the third quarter exhibited typical seasonal trends and compared favorably to similar paid some past years.
Speaker Change: As noted above our favorable loss experience continues to be driven primarily by the significant embedded homeowner equity, resulting from the strong home price appreciation experienced in recent periods using an index based approach approximately 78% of our total default inventory has estimated embedded.
Speaker Change: Home equity of 20% or more.
Speaker Change: Moving to our other business lines total revenues in our all other category, which include investments held at the agent growth as well as revenues from other lines of business that $40 million in the third quarter in line with the second quarter.
Speaker Change: Adjusted pretax operating loss for all other was $5 million in the third quarter compared to $6 million operating loss in the second quarter.
Speaker Change: Within our all other category the avian mortgage capital closed its inaugural private label Prime Jumbo securitization transaction during the third quarter.
Speaker Change: This securitization involved the issuance of $349 million of certificates collateralized by residential mortgage loans of which we retained certificates valued at $6 million.
Speaker Change: These certificates issued by our newly created securitization trust, which is considered to be a variable interest entity.
Speaker Change: E.
Speaker Change: As a result of the economic exposure that we retained and the corresponding rights that are retained interests have we are considered the primary beneficiary of the VA and in accordance with accounting guidance. The avian will consolidate <unk> in our financial statements. Therefore.
Speaker Change: Therefore, you will see new line items this quarter, reflecting the va's assets liabilities and results in our financial statements.
Speaker Change: It is important to note that adm's economic exposure is limited to a retail certificates with a net impact from this exposure, including changes in fair value reflected in the line item income loss on consolidated via <unk> and now <unk>.
Speaker Change: Income statement each beat it now.
Speaker Change: Now turning to our other expenses.
Speaker Change: For the third quarter, our other operating expenses totaled $86 million, a decrease compared to $92 million recognized in the second quarter.
Speaker Change: The lower expenses in this quarter were consistent with our expectations and reflect the benefit from our expense savings actions to date.
Speaker Change: This decrease was partially offset by a $10 million nonoperating impairment on internal use software recognized in the quarter.
Speaker Change: As noted previously we expect a significant reduction in other operating expenses on a full year basis in comparison to 2023 with an estimated run rate reduction of $20 million to $25 million beginning in 2025.
Speaker Change: Moving to our capital available liquidity and related strategic action.
Speaker Change: Damian guarantees financial position remains strong we paid $185 million ordinary dividend to Radian group in the third quarter, while maintaining a stable P. Myers cushion of $2 1 billion.
Speaker Change: As highlighted on slide 21, Radian, guaranty and $191 million of unassigned funds at the end of the third quarter, providing the capacity to distribute approximately $190 million.
Speaker Change: Additional funds to Radian group in the fourth quarter.
Speaker Change: As a reminder, we had provided guidance at the beginning of the debt, we expect radian guaranty to be $400 million to $500 million of dividends for the full year 2025.
Speaker Change: We are pleased that we are in a position to meaningfully exceed this guidance with $485 million of dividends already paid year to date and another $190 million expected to be paid in the fourth quarter.
Speaker Change: Moving to our holding company Radian group.
Speaker Change: In September we executed on the planned redemption of our 2024 senior notes in the amount of $250 million, which reduced our holding company debt to capital ratio to 89, 5%.
Speaker Change: This action is expected to reduce our ongoing interest expense by approximately $20 million annually and Radian has no senior debt maturities due until 2027.
Speaker Change: Within the quarter, we repurchased one 5 million shares of our common stock at a total cost of $49 million for an average price of $33 61 per share and returned $37 million in shareholder dividends for a total of $86 million of capital returned in the quarter.
Speaker Change: We have $618 million remaining on our current share repurchase authorization, which expires on June 32026.
Speaker Change: Over the past four quarters, we've returned approximately $360 million in the form of share repurchases and dividends to shareholders.
Speaker Change: As demonstrated by this past quarter's repurchase activity and our track record in recent years, we believe that share repurchase provides an attractive option to deploy our excess capital.
Speaker Change: Following the redemption of our 2024 senior notes our available holding company liquidity was $844 million at the end of the third quarter.
Speaker Change: We also have an undrawn credit facility with borrowing capacity of $275 million.
Speaker Change: Providing us with significant financial flexibility.
Speaker Change: I will now turn the call back over to Rick.
Rick: Thank you Samantha.
Speaker Change: Before we open the call to your questions I want to highlight that our results for the third quarter continued to reflect the balance and resiliency of our company as well as the strength and flexibility of our capital and liquidity positions.
Speaker Change: We expect the earnings and cash flows generated from our large enforced mortgage insurance and investment portfolios to allow us to continue operating from a position of strength and delivering value to our customers policyholders and stockholders.
Speaker Change: We increased book value per share by 18% year over year, we returned $86 million of capital to stockholders during the third quarter at approximately $360 million over the past 12 months in the form of share repurchases and dividends.
Speaker Change: As you've heard me say before our business model is well established and proven significantly strengthened by the P. Myers capital framework dynamic risk based pricing and the distribution of risk into the capital and reinsurance markets.
Speaker Change: We believe this is recognized on Capitol Hill and.
Speaker Change: And we are well positioned to fulfill our important role in the housing finance system, and finally, I want to recognize and thank our dedicated and experienced team at radian for their outstanding work.
Speaker Change: They do everyday and now operator, we would be happy to take questions.
Speaker Change: As a reminder to ask a question. Please press star one one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, please standby, while we compile the Q&A roster.
Speaker Change: And our first question comes from Bose George of <unk>. Your line is open.
Speaker Change: Hey, good morning, everyone. This is actually Alex bond on for Bose.
Speaker Change: Maybe just starting with Radian mortgage capital would you be able to give a little more color there relating to maybe what you expect the cadence the cadence of tissue and so we'll be there moving forward.
Rick: Yes. Thanks for the question this is Rick.
Rick: I think we will give any kind of forward guidance on that but I think as we've.
Rick: We did our first deal in the third quarter, we actually did our second deal.
Rick: In the fourth quarter, just recently, we expect to be a regular issuer in the market as the business scales and so we would expect next year to be a continuing issuer.
Rick: But haven't really given forward guidance, but I think youll continue to see that.
Speaker Change: The frequency.
Rick: Irregularity of issuance into the market to be driven by as we scale the business going forward.
Speaker Change: Okay, great. Thanks, Thanks for that and then maybe just one more.
Speaker Change: Relating to the $10 million software impairment in the quarter, what was that related to the mortgage services or the other segment and then maybe just through all the deeper there would you be able to.
Rick: Give any color relating to some of the strategic the strategic actions you're taking in that segment in terms of.
Rick: The footprint there.
Speaker Change: Yes. Thanks for the question I think yes, the 10 million impairment that we took was on some software that we felt we.
Speaker Change: Needed to embed given the current use of the software and it was related to our.
Speaker Change: Businesses that sit in our all other category and we think that it's a one time item.
Speaker Change: I think in terms of like for our all other business you've given some more disclosure on what our expected revenues are going to be I think for the last two quarters. We've been at about $40 million. We do expect that some of our investment income and all other may come down as we've repaid.
Speaker Change: Debt and therefore $50 million of liquidity has gone out from our holding company. So we expect that all of the number to come down a little bit by about $5 million, but 35 to 40 million of revenues is still a good estimate for rollout and that captures all of our businesses in the all other.
Speaker Change: Segment, yes.
Speaker Change: This is Rick also I think in the context with a strategic update on those businesses I think you also.
Speaker Change: Asked about.
Speaker Change: That particular category includes our conduit business, our title business, our real estate services business.
Speaker Change: Our <unk> platform as well as the interest income kind of the investment portfolio at Radian group.
Speaker Change: A number of things in there that kind of a business as I said, we continue to kind of focus on scaling that business. The results are not really material today to the overall business.
Speaker Change: The title business is.
Speaker Change: Navigated a difficult cycle over the last few years I think the title business is well positioned with kind of a growing customer list.
Speaker Change: Look forward to kind of continuing to see the prospects for that as we go forward momentum.
Speaker Change: Our real estate services business, which is our so far Oreo.
Speaker Change: <unk> business been profitable little bit less profitable through the cycle, but continues to be a market leader.
Speaker Change: Across those different categories of products and services and we continue to expect to see a profitable contribution from that business and then the last one which is our home genius kind of our real estate Tech platform as I've mentioned in previous quarters, where.
Speaker Change: We're focused on.
Speaker Change: Significantly reduce the expense run rate of our business.
Speaker Change: Team is really continuing to make great progress around the data and analytics and computers.
Speaker Change: <unk> vision and AI tools that are embedded within that platform and we're having active dialogue with partners across a variety of different interested parties.
Speaker Change: As we have more to update we'll update on that but thats really kind of the update across a particular all other category.
Speaker Change: Great. Thanks, Thanks for the color there and I appreciate you taking the questions.
Speaker Change: Yes, my pleasure.
Speaker Change: Thank you.
Speaker Change: Our next question comes from Mihir Bhatia of Bank of America. Your line is open.
Mihir Bhatia: Hi, Thank you for taking my questions I wanted to ask just first about the pricing backdrop.
Mihir Bhatia: Obviously I appreciate that the in force yield was steady in your comments about that's your expectation from here should.
Mihir Bhatia: Should we take from that that the pricing environment remains quite stable or is that more a function of your individual pricing like I'm trying to understand what's going on in the market just from a competitive dynamics perspective, maybe even away from you all.
Mihir Bhatia: But just any comments on that just a competitive environment and pricing in the market.
Mihir Bhatia: Hi, I'm here. This is Derek in terms of the pricing environment. Overall, I think it's been pretty consistent really for probably the last year and a half to two years and so as I would characterize the pricing environment continues to be rational and disciplined you do see some movements here and there kind of around the edges in terms of pricing from quarter to quarter and you can see that.
Mihir Bhatia: <unk> kind of end market share movements. When you look at kind of a top line, but overall I would say the pricing environment continues to be stable and environment that we like because it allows us to leverage our analytics to really pick our spots and find value in the market. So we really find value kind of across the risk spectrum and thats been pretty consistent for quite some time.
Speaker Change: Thank you and then turning to before and so it really kills more than defaults.
Mihir Bhatia: Many quarters now you'll have had.
Speaker Change: Jewelry it's.
Speaker Change: Been releasing significant number of reserves and I guess the question I have is when does that become like part of your history, where you start actually lowering the claim rate and taking less reserves upfront.
Speaker Change: Or.
Speaker Change: Is the thought process that it's better to be conservative take the reserves upfront and then just release would make you whole.
Speaker Change: Yes, I think it's a good question and then I would say that you know when we think about our reserve assumptions.
Speaker Change: <unk> always tried to be prudent and we always try to look at it through the cycle. So clearly like the claim rates. We see today. They are very low and we are obviously focused on making sure that the accounting assumption, Steve make longer term and through the cycle. So I think that's the reason why we have kept our 8% default to claim rate unchanged.
Speaker Change: Even though as you rightly pointed out.
Speaker Change: Actual claim experience is very very benign.
Speaker Change: So we don't see.
Speaker Change: That environmental wouldn't necessarily change, our accounting assumptions and we would like to continue to be prudent.
Speaker Change: Can I ask when was the last time, you all hit the 8% claim rate.
Speaker Change: Like any reduced that has hit that.
Speaker Change: No none of the none of our current vintages and I would say it's been a while.
Speaker Change: Thank you.
Speaker Change: The answer to that would be sometime prior to Covid I don't remember the exact timeline, but.
Speaker Change: If you remember back.
Speaker Change: I got here in 2017, we were actually coming down off the great financial crisis from a default to claim assumption.
Speaker Change: So I think to your point we're here it's.
Speaker Change: It's one of those things where we are.
Speaker Change: Submit the sudden we're really looking forward versus like a point in time and then we monitor the default portfolio performance, So and as you look at our schedule in the materials that we provide we call. It the triangle schedule you can see how consistent that cure rate has been for a period of time.
Speaker Change: I'd say pre Covid, we were coming down off the great financial crisis, and so as we look at kind of the modeled losses going forward.
Speaker Change: We try to anticipate that in the reserve because remember we reserved when loans go to times delinquency and default.
Speaker Change: The other thing I would just highlight which is just more good news.
Speaker Change: As when we price with Eric and the team price, we price through an anticipated kind of loss assumption kind of going forward and so all of the business that we've been writing that is going through that default cycle is far outperforming our pricing, which as you know.
Speaker Change: Our resulting in greater than expected returns on the business, we wrote in previous periods.
Speaker Change: So when that turns here going back to submit those combo.
Speaker Change: We try to we try to have a through the cycle view, we will continue to try to think through.
Speaker Change: Sustainable trends.
Speaker Change: Could influence.
Speaker Change: We do however believe that the housing cycle today.
Speaker Change: <unk> generally positive with a supply demand imbalance.
Speaker Change: That's giving consumers more opportunities to solve their own default and retain their equity so.
Speaker Change: We're going to continue to monitor it closely but.
Speaker Change: It's been an extremely favorable trend that.
Speaker Change: All we can do is.
Speaker Change: Continue to evaluate monitor as we go forward from an accounting point of view.
Speaker Change: Got it and I appreciate that and particularly the slide 17 disclosure I'm really that's why we're looking at and just you.
Speaker Change: As you mentioned you just see really consistent activity in that kind of almost.
Speaker Change: Almost breaks.
Speaker Change: Thank you.
Speaker Change: Yes, I mean here if you look at four quarters.
Speaker Change: 90%, yes.
Speaker Change: Very consistent.
Speaker Change: Continues to improve.
Speaker Change: We appreciate the question because it's something we internally are highly focused on and have pretty robust discussions each quarter as we go through and think through it.
Speaker Change: But thank you for the question.
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: Our next question comes from Scott <unk> of RBC capital markets. Your line is open.
Speaker Change: Yes, thanks, good morning.
Speaker Change: Just wondering if you could expand on the comment Rick you made expected private insurance mortgage insurance market to grow at 10%.
Speaker Change: Can you talk about some of the drivers you expect there it sounds like you're pretty positive on that for 2025, and how how do you expect radio and to participate in that.
Speaker Change: And our debut growth as that happens.
Speaker Change: Yes again, thank you for the question, but I think we are when you look at the current industry forecast and we look across the <unk> and the MBA and other sources that we kind of look to you can see there is an implied growth in the purchase market.
Speaker Change: A bit of refinances, which may or may not materialize, depending upon interest rates, but we continue to see.
Speaker Change: Growth in the purchase market is going to have a strong participation in that growth and so that really is what drives the comments I made in my prepared comments is really just looking at the industry forecast so those.
Speaker Change: Those can.
Speaker Change: You have some degree of volatility as we go through the year, either plus or minus depending upon where interest rates, but I think we're largely fueled by a purchase market growth and we know historically that market has been.
Speaker Change: Okay.
Speaker Change: Kind of slowed by the lack of inventory and the lack of churn in the existing homes and kind of.
Speaker Change: Yes.
Speaker Change: From a new home new home sales perspective, even we'd like to see faster growth there, but I think as we look to next year that purchase market continues to expand would be our view in mortgage insurance is going to participate in that growth as well.
Speaker Change: The other part of your question about how we participate in it.
Speaker Change: <unk>.
Speaker Change: Our mortgage insurance team Derek and the team.
Speaker Change: In that market.
Speaker Change: Is there explain them one of the earlier questions, we have the opportunity to leverage our our data and analytics, our proprietary tools, our radar rates to really select the risk profile and the risk return and driving.
Speaker Change: Economic value across that selection to really pick and choose across that universe of purchase volume. So I think we're well positioned to kind of.
Speaker Change: The target the economic value.
Speaker Change: Alongside that growth.
Speaker Change: As we've said before we're not really focused on market share we tend to kind of range and it out we're focused on really optimizing the selection of economic value across our tools across the broader market. So I think we're well positioned for that.
Speaker Change: I'd like to see that that growth materialize.
Speaker Change: Okay. That's helpful detail just on the persistency that ticked up a little bit sequentially, others have kind of seen flattish.
Speaker Change: Persistence or even down a little bit.
Speaker Change: Just wondering if you could comment on.
Speaker Change: Whether you think you can see further improvement there, it's obviously closer to peak levels, but you have a lot of customers a lot of embedded home equity in there.
Speaker Change: So just curious what your thoughts are on persistency.
Speaker Change: Yes, I think on a 12 month basis, I would say I'll persistency has been in and around that 84% level. So I do think that you know what youre seeing is a small uptick as small fluctuations in the quarterly measure.
Speaker Change: We don't expect persistency to go up as such we think that we are pretty much at stable levels.
Speaker Change: Now it is possible that we see some pockets of refinance activity.
Speaker Change: Rates decline and in which case, we will see an impact in our persistency, but I will just remind you that 70% of our in force book It.
Speaker Change: Has been written at less than 6% now trades. So we expect persistency to more or less remained high in the in the low eighties and feel pretty good about that.
Speaker Change: Okay, Great and then just the last question was just on use of excess capital now it sounds like buybacks as the number one use but.
Speaker Change: Can you talk about dividends, either just increases in regular dividends special dividends.
Speaker Change: Reinvestments in the business.
Speaker Change: M&A or anything else like that it sounds like your your debt is the debt to cap spend at the lowest level it's been.
Speaker Change: Probably ever or at least talk a long time, but just any thoughts on the excess capital and uses over the next 12 months.
Speaker Change: Yes, I'll start and Dave jump in with other thoughts on some of the strategic users I would say as you pointed out like we've been pretty consistent about our capital return. This quarter. We returned about 87 million lost one year $360 million Lastly, as one 2 billion last five years $1 9 billion. So I think.
Speaker Change: You'll see that we have been consistently returning capital back to shareholders and we are also the highest yielding dividend stock in the industry.
Speaker Change: I would say from a forward view I think in our prepared remarks, we mentioned that we used some of our successful core liquidity to pay down our debt and brought down our leverage ratio to $18, 5% debated that $844 million liquidity back up to about $1 billion pretty quickly by year end, just given our expectation of dividends from <unk>.
Speaker Change: Current data group. So I think that we will continue to buy back shares. We believe that we are still reasonably undervalued I think one $5 as just an idea OCI and if you just think about.
Speaker Change: And our last Investor David given some estimates of our expectation of future discounted earnings from our existing book that was about $13 $5. A share. So we still think that we are trading reasonably below our intrinsic value and we will continue to buyback shares and we have the liquidity to do that Nick do you want to comment on some of our M&A.
Speaker Change: Yes.
Speaker Change: I think for US obviously, we're going to invest.
Speaker Change: Our businesses are kind of an organic growth phases continue to invest in our mortgage insurance business, where we see opportunity. So those are kind of one form of strategic capital.
Speaker Change: You mentioned M&A, we obviously give a lot of looks at a lot of different M&A opportunities. We haven't done one for a while because we haven't really seen the value, but I would say like our normal capital allocation waterfall solithromycin.
Speaker Change: Our team we go through we prioritize return of capital to shareholders and be very disciplined and focused on that and then thinking about how we invest either organically or inorganically to improve returns and long term value for shareholders. So I think we have a pretty disciplined track record of how we manage capital the good.
Speaker Change: News is today, we're in a situation, where we have significant holdco liquidity.
Speaker Change: <unk>, we just paid off our debt and we're going to still have near.
Speaker Change: Somewhere in that $1 billion category at year and tremendous.
Speaker Change: Tremendous pmiers excess capital I think $2 1 billion at the end of the third quarter. So we've got a lot of flexibility around.
Speaker Change: Our franchise to think about.
Speaker Change: Allocating capital effectively to improve returns for shareholders. So we always talk in hindsight, so not much forward to talk about there, but the best forward view is what we've done in the past. So I think sometimes it's trying to remain very disciplined and thoughtful on behalf of our shareholders.
Speaker Change: Great. Thanks for all the detail.
Speaker Change: Thank you.
Speaker Change: I'm showing no further questions I would like to turn it back to Rick Thornberry for closing remarks.
Rick Thornberry: Well I appreciate everybody joining us today, it's been an eventful week I know, we're probably all exhausted from watching all the political activities over the last several months and they're coming to a conclusion.
Rick Thornberry: But I appreciate your interest in Radian and look forward to crossing paths in the near future and continuing to answer your questions and share our insights about our business. So thank you very much.
Rick Thornberry: Have a very happy holiday season should we cross paths before the take care.
Speaker Change: This concludes today's conference call. Thank you for participating and you may now disconnect.
Speaker Change: Okay.
Speaker Change: Okay.
Rick Thornberry: Okay.
Rick Thornberry: Yes.
Rick Thornberry: Yes.
Rick Thornberry: Okay.
Rick Thornberry: Okay.
Rick Thornberry: Okay.
Rick Thornberry: Okay.
Rick Thornberry: Okay.
Rick Thornberry: Yes.
Rick Thornberry: Yes.