Q1 2025 MGIC Investment Corp Earnings Call

Operator: Ladies and gentlemen, thank you for standing by.

Ladies and gentlemen, thank you for standing by and welcome to the energy I see investment Corporation first quarter 2025 earnings call.

Operator: And welcome to the MGIC Investment Corporation first quarter 2025 earnings call. At this time, all lines have been placed on mute to prevent any background noise.

At this time all lines have been placed on mute to prevent any background noise at the end of todays presentation. We will have a question and answer session.

Operator: At the end of today's presentation, we'll have a question and answer session.

Dianna Higgins: I will now turn the conference over to Dianna Higgins, Head of Investor Relations. Please go ahead.

I will now turn the conference over to Diana Hogan head of Investor Relations. Please go ahead.

Dianna Higgins: Good morning and welcome everyone. Thank you for your interest in MGIC.

Yeah.

Diana Hogan: Good morning, and welcome everyone.

You for your interest in MGIC, joining me on the call today to discuss our results for the first quarter are Jim Mackey, Chief Executive Officer, and Nathan Colson, Chief Financial Officer, and Chief Risk Officer.

Dianna Higgins: Joining me on the call today to discuss our results for the first quarter are Tim Mattke, Chief Executive Officer, and Nathan Colson, Chief Financial Officer and Chief Risk Officer. Our press release, which contains MGIC's first quarter financial results, was issued yesterday 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. It also includes a reconciliation of non-GAAP financial measures to their most comparable GAAP measures. 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.

Diana Hogan: Our press release, which contains MGIC as of first quarter financial results was issued yesterday and is available on our website that M. T. G Dot MGIC dot com under newsroom includes additional information about our quarterly results.

Diana Hogan: That we will refer to during the call. Today. It also includes a reconciliation of non-GAAP financial measures to their most comparable GAAP measures.

Diana Hogan: In addition, we posted on our website our quarterly supplement that contains information pertaining to our primary risk in 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.

Diana Hogan: 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 getting 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. Additional information about the factors that could cause actual results to differ materially from those discussed on the call today are contained in our Form 8K and 10Q also filed yesterday. If we make any forward-looking statements, we are not undertaking an obligation to update those statements in the future in light of subsequent development. No one should rely on the fact that such guidance or forward-looking statements are current at any time other than the time of this call or the issuance of our 8K or 10Q.

Diana Hogan: Before getting started today I want to remind everyone that during the course of this call. We may make comments about our expectations of the future.

Diana Hogan: Actual results could differ materially from those contained in these forward looking statements additional.

Diana Hogan: Information about the factors that could cause actual results to differ materially from those discussed on the call. Today are contained in our form 8-K, and 10-Q also filed yesterday.

Diana Hogan: If we make any forward looking statements we are not undertaking an obligation to update those statements in the future in light of subsequent development.

Diana Hogan: No one should rely on the fact that such guidance or forward looking statements are current at any time other than the time of this call or the issuance of our 8-K or 10-Q.

Timothy Mattke: With that, I now have the pleasure to turn the call over to Tim. Thank you, Dianna, and good morning, everyone. We are very pleased with our first quarter financial results, a strong start to the year, which builds on the momentum we've sustained over the past few years. For the first quarter, we reported net income of $186 million and generated an annualized 14.3% return on equity. At the same time, we continue to return meaningful capital to our shareholders while creating long-term value for all of our stakeholders. Our performance reflects our position as a market leader and our disciplined and balanced approach to the market.

Tim: With that I now have the pleasure to turn the call over to Tim.

Tim: Thank you Diana and good morning, everyone. We are very pleased with our first quarter financial results, our strong start to the year, which built on the momentum we have sustained over the past few years.

Tim: For the first quarter, we reported net income of $186 million and generated annualized 14, 3% return on equity at.

Tim: At the same time, we continued to return meaningful capital to our shareholders, while creating long term value for all of our stakeholders.

Tim: Our performance reflects our position as a market leader and our disciplined and balanced approach to the market.

Timothy Mattke: We demonstrate our discipline in the way in which we acquire, manage, and distribute risk, enhancing both capital efficiency and risk mitigation, and thoughtfully and brutally allocating capital for the benefit of stakeholders. During the quarter, we were at $10 billion of new insurance. Insurance and Force, the primary driver of our revenue, end the quarter at $294 billion, with annual persistency ending the quarter at 85%. Both have remained relatively flat over the past several quarters, consistent with what we expected. We are pleased with the credit quality and performance of our portfolio. Our underwriting standards remain strong, and the new insurance we write continues to have solid credit characteristics.

Demonstrate our discipline in the way in which we acquire manage and distribute risk enhancing both capital efficiency and risk mitigation and thoughtfully and prudently allocating capital for the benefit of stakeholders.

During the quarter, we were at $10 billion of new insurance.

Tim: Insurance in force the primary driver of our revenue in the quarter at $294 billion with annual persistency ended the quarter at 85%.

Tim: Both have remained relatively flat over the past several quarters consistent with what we expected.

Tim: We are pleased with our credit quality performance of our portfolio, our underwriting standards remain strong and the new insurance. We write continues to have solid credit characteristics. We remain focused on maintaining a high quality well balanced insurance portfolio.

Timothy Mattke: We remain focused on maintaining a high-quality, well-balanced insurance portfolio.

Timothy Mattke: Turning to capital management, the foundation of our strategy is to maintain financial strength and flexibility and position ourselves for success across a wide range of economic environments. Key objectives include maintaining capital to support growth at the operating company and at the holding company, maintaining a low to mid-teens debt-to-capital ratio and liquidity buffer while returning excess capital to shareholders in the form of share repurchases and common stock dividends. We continue to allocate excess capital to share repurchases, which totaled 9.2 million shares for $224 million in the first quarter. We also paid a quarterly common stock dividend of $33 million.

Tim: Turning to capital management, the foundation of our strategy is to maintain financial strength and flexibility and position ourselves for success across a wide range of economic environments.

Tim: Key objectives include maintaining capital to support growth at the operating company at the holding company, maintaining a low to mid teens debt to capital ratio and liquidity buffer, while returning excess capital to shareholders in the form of share repurchases and common stock dividends.

Tim: We continue to allocate excess capital to share repurchases, which totaled $9 2 million shares for $224 million in the first quarter.

Tim: We also paid a quarterly common stock dividend of <unk> $33 million.

Timothy Mattke: Over the prior four quarters, share repurchases totaled $698 million and shareholder dividends totaled $130 million. Combined, they represented a 107 percent payout of the net income we earned over that period. The holding company ended the quarter with $824 million in liquidity. In the second quarter through April 25th, we repurchased an additional 2.8 million shares of common stock for $66 million. The share repurchase activity I just discussed continues to reflect our capital strength, solid finance results and share price levels that we believe are attractive to generate long-term value for our shareholders. We expect share repurchases to remain our primary method of returning capital to shareholders, while at the same time continuing to pay a quarterly common stock dividend.

Tim: Over the prior four quarters share repurchases totaled $698 million in shareholder dividends totaled 130 $130 million combined represented a 107% payout of net income we earned over that period.

Tim: The holding company ended the quarter with $824 million of liquidity in the second quarter through April 25, we repurchased an additional two 8 million shares of common stock for $66 million.

Tim: The share repurchase activity I, just discussed continues to reflect our capital strength solid financial results and share price levels that we believe are attractive to generate long term value for our shareholders.

Tim: We expect share repurchases will remain our primary method of returning capital to shareholders. While at the same time continuing to pay a quarterly common stock dividend.

Timothy Mattke: Also in April, and as previously announced, the board approved an additional $750 million share repurchase program and a $0.13 per share common stock dividend payable on May 21st. Earlier this week, we paid a $400 million dividend from MGIC to the holding company. These actions are consistent with our overall capital management strategy.

Tim: Also in April as previously announced the board approved an additional $750 million share repurchase program and a <unk> 13 per share common stock dividend payable on May 21.

Tim: Earlier this week, we paid a $400 million dividend from MGIC to the holding company.

Tim: These actions are consistent with our overall capital management strategy.

Timothy Mattke: While we prioritize prudent growth over capital return, market conditions have constrained growth on our insurance in force over the last few years, which we expect will persist this year. Therefore, if credit performance stays strong, we'd expect capital levels at both MGIC and the holding company to stay above targets, supporting continued elevated payout ratios.

Tim: While we prioritize prudent growth over capital return market conditions have remained have constrained growth in our insurance in force over the last few years, which we expect will persist this year.

Tim: Therefore, the credit performance stays strong we would expect capital levels at both MGIC and the holding company to stay above targets.

Tim: <unk> continued elevated payout ratios.

Timothy Mattke: Looking more broadly at the macro environment, we recognize that there are uncertainties around the current economic and geopolitical conditions. However, we remain confident in the solid fundamentals of the housing market. Several key trends continue to support its resilience. Demographic tailwinds, particularly from millennials, are driving sustained strong demand and desire for home ownership. Housing inventory is gradually increasing and home price growth is moderating. These factors have contributed to a housing market that has remained stable. Although housing affordability continues to pose challenges for homebuyers, private mortgage insurance enables low down payment borrowers to achieve the American dream of homeownership sooner.

Tim: Looking more broadly at the macro environment, we recognize that there are uncertainties around the current economic and geopolitical conditions.

Tim: However, we remain confident in the solid fundamentals of the housing market.

Tim: Several key trends continue to support its resilience.

Tim: Graphic tailwind, particularly from millennials, alright, driving sustained strong demand and desire for home ownership.

Tim: Inventory is gradually increasing and home price growth is moderating.

Tim: Factors that contributed to the housing market that has remained stable.

Tim: Although housing affordability continues to pose challenges for homebuyers private mortgage insurance enables low down payment borrowers to achieve the American dream of homeownership sooner.

Nathaniel Colson: With that, let me turn it over to Nathan to get into more details on our financial results and capital management activities for the quarter. Thanks, Tim, and good morning. As Tim discussed, we had solid financial results for the first quarter. We earned net income of $0.75 per diluted share compared to $0.64 per diluted share last year. Adjusted net operating income was $0.75 per diluted share compared to $0.65 last year.

Tim: With that let me turn it over to Nathan to get into more details on our financial results and capital management activities for the quarter.

Nathan: Thanks, Tim and good morning.

Nathan: As Tim discussed we had solid financial results for the first quarter.

Nathan: We earned net income of 75 per diluted share compared to <unk> 64 cents per diluted share last year.

Nathan: Adjusted net operating income was <unk> 75 per diluted share compared to <unk> 65 last year.

Nathaniel Colson: A detailed reconciliation of GAF net income to adjusted net operating income can be found in our earnings release. In the quarter, a re-estimation of ultimate losses on prior delinquencies resulted in $50 million of favorable loss reserve development. The favorable development this quarter primarily came from delinquency notices received in 2023 and 2024. Curates on those delinquency notices continue to exceed our expectations. As a result, we adjusted our ultimate loss expectations accordingly. A quick reminder, delinquency notices we receive during a quarter span across various book year vintages. For new delinquency notices, we established an initial claim rate loss assumption of 7.5%, which is consistent with recent quarters, except the fourth quarter, where the initial claim rate assumption was impacted by hurricane-related delinquencies that have historically resolved more favorably than other delinquencies.

Nathan: A detailed reconciliation of GAAP net income to adjusted net operating income can be found in our earnings release.

Nathan: In the quarter, our re estimation of ultimate losses on prior delinquencies resulted in $50 million of favorable loss reserve development.

The favorable development this quarter, primarily came from delinquency notices received in 2023 and 2024.

Nathan: Curious on those delinquency notices continue to exceed our expectations.

Nathan: As a result, we adjusted our ultimate loss expectations Accordingly.

Nathan: A quick reminder, delinquency notices we received during the quarter span across various bulkier vintages.

Nathan: For new delinquency notices we established an initial claim rate loss assumption of seven 5%, which is consistent with recent quarters, except the fourth quarter for the initial claim rate assumption was impacted by hurricane related delinquencies that are historically resolved more favorably than other delinquencies.

Nathaniel Colson: Looking at delinquency trends, our count-based delinquency rate decreased 10 basis points in the quarter to 2.3%, which is consistent with the seasonal trends we have discussed on past calls. Historically, February, March, and April are seasonally the best months for mortgage credit performance. The pandemic significantly disrupted mortgage credit seasonality, but we continue to see evidence that pre-pandemic seasonal trends are returning. As a result, we do not expect a decrease in delinquency rate we had in the first quarter. We'll repeat in subsequent quarters this year. We received 13,000 new delinquency notices this quarter, down from 14,200 last quarter.

Nathan: Looking at delinquency trends are account based delinquency rate decreased 10 basis points in the quarter to two 3%.

Nathan: Which is consistent with the seasonal trends we have discussed on past calls.

Nathan: Historically February March and April are seasonally the best months for mortgage credit performance.

Nathan: Pandemic significantly disrupted mortgage credit seasonality, but we continue to see evidence that pre pandemic seasonal trends are returning.

Nathan: As a result, we do not expect a decrease in delinquency rate we had in the first quarter will repeat in subsequent quarters. This year.

Nathan: We received 13000, new delinquency notices this quarter down from 14200 last quarter.

Nathaniel Colson: Cures outpace new notices in the quarter, reflecting the seasonality I just discussed. Overall, the number of new notices and the delinquency rate remain low by historical standards, while the 2.3% delinquency rate at the end of the first quarter was 15 basis points higher than a year ago. Looking ahead, we expect that the level of new delinquency notices may increase modestly due to the aging of the larger 2021 and 2022 book years being in what are historically higher loss emergence years. The enforced premium yield was 38.4 basis points in the quarter, relatively flat sequentially and with the first quarter last year, consistent with what we expected.

Cures outpaced new notices in the quarter, reflecting the seasonality I just discussed.

Nathan: Overall, the number of new notices and the delinquency rates remained low by historical standards, while the two 3% delinquency rate at the end of the first quarter was 15 basis points higher than a year ago.

Nathan: Looking ahead, we expect that the level of new delinquency notices may increase modestly due to the aging of the larger 2021, and 2022 book years being in what are historically higher loss emergence years.

Nathan: Okay.

Nathan: The enforced premium yield was 38 four basis points in the quarter relatively flat sequentially and with the first quarter last year consistent with what we expected.

Nathaniel Colson: As I mentioned last quarter, with high persistency expected again this year, and MI origination trends similar to last year, we expect the enforced premium yield to remain relatively flat for the year.

Nathan: As I mentioned last quarter with high persistence. He expect that again this year and my origination trends similar to last year, we expect the enforced premium yields remained relatively flat for the year.

Nathaniel Colson: Our solid operating results and strong balance sheet enabled us to grow book value per share to $21.40, up 13% compared to a year ago, while also returning $828 million of capital to shareholders during that same time through share repurchases and quarterly common stock dividends. Investment income continues to contribute meaningfully to our revenue. The book yield on the portfolio was 3.8% at the end of the first quarter, relatively flat quarter over quarter, but up 15 basis points from a year ago. Net investment income was $61 million in the quarter, unchanged in the prior quarter, and up $1 million as compared to the first quarter last year.

Nathan: Our solid operating results and strong balance sheet enabled us to grow book value per share to $21 40.

Nathan: Up 13% compared to a year ago, while also returning $828 million of capital to shareholders. During that same time through share repurchases and quarterly common stock dividends.

Nathan: Okay.

Nathan: Investment income continues to contribute meaningfully to our revenue the book yield on the portfolio was three 8% at the end of the first quarter relatively flat quarter over quarter, but up 15 basis points from a year ago.

Nathan: Net investment income was $61 million in the quarter unchanged from the prior quarter and up $1 million as compared to the first quarter last year.

Nathaniel Colson: Reinvestment rates on our fixed income portfolio during the quarter continue to be above our book yield, but we expect the overall book yield to remain relatively flat the rest of the year due to declines in shorter term interest rates and the recent higher levels of capital return, which are limiting the growth of the investment portfolio. The unrealized loss position in our portfolio decreased by $66 million in the quarter, primarily driven by a decrease in interest rates. We continue to keep a close eye on expenses and operational efficiency. Operating expenses were $53 million this quarter, down from $61 million in the first quarter of last year.

Reinvestment rates on our fixed income portfolio during the quarter continued to be above our book yield, but we expect the overall book yields remained relatively flat the rest of the year due to declines in shorter term interest rates and the recent higher levels of capital return, which are limiting the growth of the investment portfolio.

Nathan: The unrealized loss position of our portfolio decreased by $66 million in the quarter, primarily driven by a decrease in interest rates.

Nathan: We continue to keep a close eye on expenses and operational efficiency.

Nathan: Operating expenses were $53 million this quarter down from $61 million in the first quarter last year.

Nathaniel Colson: We continue to expect operating expenses for the full year will be in the range of $195 million to $205 million as shared in February.

Nathan: We continue to expect operating expenses for the full year will be in the range of 195 million to $205 million the shared in February.

Nathaniel Colson: As Tim mentioned earlier, our capital management strategy is built to maintain flexibility and resilience in different macroeconomic environments. Our capital structure includes $6 billion of balance sheet capital, and our well-established reinsurance program remains a key component of our risk and capital management strategies. in addition to reducing the volatility of losses and stress scenarios. Our reinsurance agreements provide capital diversification and flexibility at attractive costs and reduce our PMIRs required assets by $2.4 billion, or approximately 42% at the end of the first quarter. We further bolstered our reinsurance program in the first quarter with a seasoned excess of loss transaction covering our 2020 NIW with a panel of highly rated reinsurers providing $251 million in tail risk reinsurance coverage.

Speaker Change: As Tim mentioned earlier, our capital management strategy.

Speaker Change: Its built to maintain flexibility and resilience in different macroeconomic environments.

Speaker Change: Our capital structure includes $6 billion of balance sheet capital and our well established reinsurance program remains a key component of our risk and capital management strategies.

Speaker Change: In addition to reducing the volatility of losses in stress scenarios.

Speaker Change: Our reinsurance agreements provide capital diversification and flexibility at attractive costs and reduce our P. Myers required assets by $2 4 billion or approximately 42% at the end of the first quarter.

Speaker Change: We further bolstered our reinsurance program in the first quarter with the season to excess of loss transaction, covering our 2020 and IW with a panel of highly rated reinsurers, providing $251 million in tail risk reinsurance coverage.

Nathaniel Colson: This reinsurance transaction complements our programmatic quota share and excess of loss transactions covering recent or future NIW.

This reinsurance transaction complements our programmatic quota share and excess of loss transactions, covering recent or future and IW.

Timothy Mattke: With that, let me turn it back over to Tim. Thanks Nathan. A few additional comments before we open it up for questions.

Tim: With that let me turn it back over to Tim.

Tim: Thanks Nathan.

Speaker Change: Additional comments before we open it up for questions I recently had the opportunity and pleasure of meeting with a new FHFA director of Bill Pulte were looking forward to building a relationship with a new director and continuing to work with the FHFA and <unk> and the other key industry stakeholders to responsibly serve low down payment borrowers.

Timothy Mattke: I recently had the opportunity and pleasure of meeting with the new FHFA director, Bill Pulte. We're looking forward to building our relationship with the new director and continuing to work with the FHFA, the GSEs, and the other key industry stakeholders to responsibly serve low down payment borrowers while advocating for the use of private mortgage insurance in order to protect the taxpayers from mortgage credit risk. Also, we support the introduction of the Middle Class Mortgage Insurance Premium Act. This bipartisan legislation would restore, make permanent, and expand eligibility for borrowers to deduct mortgage insurance premiums from their taxes.

Tim: The gating for the use of private mortgage insurance in order to protect the taxpayers from mortgage credit risk.

Tim: Also we support the introduction of the Middle class mortgage insurance premium Act. This bipartisan legislation would restore make permanent thanks, Dan eligibility for borrowers deduct mortgage insurance premiums from the taxes. This.

Timothy Mattke: This would be a positive step towards putting money back in the pockets of low- and moderate-income borrowers and helping make homeownership more affordable for families.

Tim: This will be a positive step towards putting money back in the pockets of low and moderate income borrowers and helping make homeownership more affordable for families.

Timothy Mattke: In closing, we are very pleased with the financial results we achieved in the first quarter. As we look ahead, we are confident in our position and leadership in the market, as well as our ability to execute on our business strategies, capitalize on opportunities, and continue building on our momentum.

Tim: In closing we are very pleased with the financial results. We achieved in the first quarter. As we look ahead, we are confident in our position and leadership in the market as well as our ability to execute on our business strategies and capitalize on opportunities and continue building on our momentum.

Operator: With that, Ritka, let's take questions. Thank you. At this time, we will conduct the question and answer session. To ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster.

Tim: With that let's take questions.

Tim: Thank you at this time, we will conduct a question and answer session to ask a question you will need to press star one on your telephone and wait for your name to be announced.

Tim: Withdraw your question. Please press star one again.

Tim: Please standby, while we compile the Q&A roster.

Tim: Okay.

Terry MA: Our first question comes from the line of Terry Ma of Barclays. Your line is now open. Hey, thank you. Good morning. I was curious. Good morning.

Speaker Change: Our first question comes from the line of Terry MA of Barclays. Your line is now open.

Terry MA: Hey, Thank you good morning.

Good morning, just curious.

Timothy Mattke: Just given all the uncertainty around the macro and the headlines we're seeing around tariffs, have you done anything on the pricing or underwriting side to adjust for that? And then maybe just more broadly, how are you thinking about credit loss expectations? Yeah, it's a very timely question. I say, you know, it's tough to know exactly what's specifically going to happen on tariffs and sustain. But I think, you know, when we think about our business and our pricing, we think about a wide range of different sort of scenarios and environments that we can perform under. And so we have to take that into account when we do pricing.

Terry MA: Morning, just given all the uncertainty around the macro and the.

Terry MA: Headlines, we're seeing around tariffs have you done anything on the pricing or underwriting side to adjust for that and then maybe just more broadly how are you thinking about credit loss expectations going forward.

Terry MA: Yes, it's a very timely question I'd say, it's tough to know exactly what specifically is going to happen on tariffs and sustain.

Terry MA: I think when we think about our business and our pricing.

Terry MA: We think about a wide range of different scenarios and environments that we can perform under.

Timothy Mattke: And that's consistent, no matter if it feels like it's a benign environment, or something that feels like it's changing more now. So I think it's fair to say we think about a wide range of potential environments that we could be operating in, probably less specific to tariffs itself, but just more of a broader economic environment. So it's something we're highly mindful of.

And so we have to take that into account when we do pricing.

Terry MA: No matter if it feels like it's a benign environment or if it's something that feels like it's changing more now so I think it's fair to say, we think about a wide range of potential environments that we could be operating in probably less specific to tariffs itself, but just more of a broader economic environment. So it's something we are highly mindful of but.

Terry MA: But I don't think it changes anything that we do from a normal sort of operation standpoint, I would say. Got it.

Terry MA: But I don't think it changes anything that we do from a normal sort of.

Terry MA: Operations standpoint, I would say.

Nathaniel Colson: And then on the new notice, notice claim rate of seven and a half percent. Is there some level of unemployment rate that's contemplated either directly or indirectly? Like, how should we kind of think about that across kind of different economic scenarios? Thank you.

Terry MA: Got it.

Terry MA: And then on the new notices notices claim rate of seven 5% is there some level of unemployment rate, that's contemplated either directly or indirectly like Hudson, we kind of think about that across kind of different economic scenarios.

Nathaniel Colson: Yeah, Terry, it's Nathan. I think the 7.5% new notice claim rate is something that we have used for some time, barring the fourth quarter where we had the hurricane-related notices. And I think for us, it's a good level for a wide range of outcomes. Obviously, with the unemployment rate that we've had and the other macroeconomic variables, we've had consistent favorable reserve development. So we try to set reserves so that they're not just sufficient in a base case or better environment, but sufficient across a wide range of outcomes. But we don't target a specific unemployment rate or home price path when we're setting our loss reserve assumption.

Terry MA: <unk>.

Nathan: Serious Nathan.

Nathan: I think the seven 5% new notice claim rate is something that we have used for some time barring the fourth quarter, where we had the hurricane related notices and thanks for us. It's a good level for a wide range of outcomes, obviously with the unemployment rates that we've had in the other macro.

Nathan: Economic variables, we've had consistent favorable reserve development. So we tried to set reserves so that.

Nathan: Not just sufficient in a base case or better environment, but sufficient across the wide range of outcomes, but we don't target a specific unemployment rate or home price path. When we're when we're setting our loss reserve assumptions. So I think if the economic environment deteriorated.

Nathaniel Colson: So I think if the economic environment deteriorated, the first thing that would happen is we would likely have less favorable development. And at some point, we'd be closer to that level. But at that point, we would consider whether 7.5% is the appropriate number, whether it needs to be increased. So again, don't peg to a specific unemployment rate, but feel like we're establishing reserves, not just for good environments, but for a wide range of potential future environments.

Nathan: The first thing that would happen is we would likely have less favorable developments and at some point, we'd be closer to that level at that point, we would consider whether seven five is the appropriate number whether it needs to be increased so.

Nathan: Again don't pegged to a specific unemployment rate, but feel like we're establishing reserves not just for kind of good environments, but for a wide range of potential future environments.

Nathan: Okay.

Operator: One moment for our next question.

Nathan: One moment for our next question.

Douglas Harter: Our next question comes from the line of Doug Harder of UBS.

Speaker Change: Our next question comes from the line of Doug Harter of UBS. Your line is now open.

Timothy Mattke: Your line is now open. Thanks, hoping you could talk a little bit about, you know, kind of volume. You guys have seen a little bit of volatility in market share over the past couple quarters. You know, just wondering what you were kind of seeing in the market this quarter that that kind of had a little bit more of a pullback in your volume than some of your peers.

Speaker Change: Thanks, I was hoping you could talk a little bit about.

Speaker Change: Kind of volume.

Speaker Change: <unk> seen a little bit of volatility in market share over the past couple of quarters just.

Speaker Change: Wondering what you are kind of seeing in the market.

Speaker Change: This quarter that.

Speaker Change: Had.

Speaker Change: A little bit more of a pull back in your volume than some of your peers.

Timothy Mattke: Yeah, thanks, appreciate the question, Doug. I mean, I again, I probably will sound a little bit like a broken record and market shares a little bit of an output of ultimately what's happened. And we don't necessarily target a specific spot to be at versus making sure we're getting good returns. I think it's safe to say, and I think I'd say probably every call, it's a highly competitive industry. I think you're going to see a little bit of ebbs and flows from quarter to quarter. But I think from a from an overall standpoint, I think we've been in a relatively narrow range.

Doug Harter: Yes. Thanks I appreciate the question, Doug I mean again.

Doug Harter: Probably all saw a little bit like a broken record in market share is a little bit of an output of all.

Doug Harter: Ultimately, what's happened and we don't necessarily target a specific spot to be at versus making sure. We're getting good returns I think it's safe to say and I think I'd say, probably every call. It's a highly competitive industry I think youre going to see a little bit ebbs and flows from quarter to quarter, but I think.

Doug Harter: From a from an overall standpoint, I think we've been in a relatively narrow range.

Timothy Mattke: So I don't think there's anything specific to call out. Again, it can be pricing related, it can be customer related as far as the volume that they're doing. There's a number of different things that can sort of play into it. It's safe to say we monitor that. I don't think it doesn't come as a surprise to us that we did lose some share this quarter. But I don't think it's necessarily a trend. Got it.

Doug Harter: So I don't think Theres anything once things specific to call out again, it can be re price related can be customer related as far as the volume that they're doing there's a number of different things that can sort of play into it it's safe to say we monitor that.

Doug Harter: Thank you.

Doug Harter: It doesn't kind of surprise to us that we did lose some share this quarter.

Doug Harter: But I don't think its necessarily a trend.

Timothy Mattke: Was there, you know, any particular areas that that you kind of saw a bigger pullback, you know, particular customers or types of, you know, types of product? Or any more detail you could provide around that? No, nothing really specific. I mean, after I look at the different sort of, you know, dimensions, you can look at it, and then we just close, I don't think there's any one area that really stands out. I think there can be really, you know, minor changes that ultimately impact sort of that share, which, again, I think shows how, how competitive the industry is.

Speaker Change: Got it was there any particular areas that you kind of saw a bigger pullback particular customers or types of.

Doug Harter: <unk> types of product.

Doug Harter: Or any more details you could provide around that.

Doug Harter: No nothing really specific I mean, if you look at the different sort of.

Doug Harter: Dimensions. They can look at it in that we disclose I don't think theres any one area that really stands out.

Doug Harter: I think there could be really minor changes that ultimately impacts sort of that share, which again I think shows how how competitive the industry is.

Douglas Harter: Great. Appreciate the answers. Thank you. Thanks.

Doug Harter: Great I appreciate the answers thank you.

Operator: One moment for our next question.

Speaker Change: One moment for our next question.

Bose George: Our next question comes from the line of George Bose of KPW. Your line is now open. Good morning guys, this is Bose. Tim, you mentioned that, you know, meeting with Bill Pulte. He's obviously got a lot of things potentially on his plate. Where does sort of mortgage insurance fit? Is that something he feels like there's any need to address or that he's got a lot of other things to focus on? You know, Bose, it's tough to know. I think he was kind enough to meet with us as an industry.

George: Our next question comes from the line of George both of <unk>. Your line is now open.

Speaker Change: Hey, Good morning, guys. This is bose.

Speaker Change: You mentioned that meeting with Bill Pulte, He's obviously got a lot of things potentially on his plate.

Speaker Change: Or does it.

Speaker Change: Where does sort of mortgage insurance is that something Keith it.

Speaker Change: It feels like there is any need to address or.

Speaker Change: We've got a lot of other things to focus on at the moment.

Speaker Change: Tom.

It's tough to know I think he was kind enough to meet with us as an industry I think it's something we want to do it just to establish the relationship and very much more of a meet and greet I would say so.

Timothy Mattke: I think it's something we wanted to do just to establish the relationship and very much more of a meet and greet, I would say. So, I can only go based upon what he said more publicly as far as where his focus is, and I don't think it's MI, nor would I expect it to be for any FHFA director, quite frankly. But we just really wanted to establish a relationship, and it was much more of a meet and greet, and I think we'll have a really productive relationship with him as the director.

Speaker Change: So.

Speaker Change: I can only go based upon what he said more publicly as far as where its focus isn't it.

Speaker Change: Mmm Norwood expected fee for any FHFA director quite frankly.

Speaker Change: But we just really want to establish a relationship and it was much more of a meet and greet.

Speaker Change: And I think we'll have a really productive relationship with him as a director.

Bose George: Okay, great. Thanks.

Timothy Mattke: And then, actually, I don't think there's a read-through, but I'm just curious, the Rocket-Cooper merger, whether you think there's anything there that, you know, potentially impacts the mortgage insurer? Um, I, you know, it's tough to know exactly how they'll operationalize everything, but obviously you've got, you know, Rocket being a substantial player in this market, and Mr. Cooper, and especially from their servicing platform, you know, I've read some of the reports you probably have about, you know, some of the benefits that they might be able to achieve from that. But I don't think there's any direct impact that I think is a read through for us or for the MI industry per se.

Speaker Change: Okay, great. Thanks, and then actually I don't think there is a read through but I'm. Just curious did the rocket Cooper merger, whether you think there is anything there that potentially impacts the mortgage insurers.

Speaker Change: It's tough to know exactly how they'll operationalized everything, but obviously you've got <unk>.

Speaker Change: Rocket being a substantial player in this market, Mr Cooper, and especially from their servicing platform.

Speaker Change: Some of their parts you probably have about some of the benefits that they might be able to achieve from that.

Speaker Change: But I don't think I don't think theres any direct impact that I think is the read through for us or for the semi industry per se.

Timothy Mattke: Although, again, it's something that we obviously follow closely when you have customers that are changing a little bit of how they might do business or coming together. So, okay, great.

Speaker Change: Although again, it's something that we obviously follow closely win when you have customers that are are changing a little bit of how they might do business are coming together.

Speaker Change: Okay, great. Thanks.

Operator: There are no further questions.

Speaker Change: There are no further questions I will now turn the call back over to management for closing remarks.

Timothy Mattke: I will now turn the call back over to management for closing remarks. Thank you, Rebecca. I want to thank everyone for your participation in today's call and interest in MGIC.

Speaker Change: Thank you Erica I want to thank everyone for your participation in today's call and interest in MGIC.

Timothy Mattke: We will be participating in the KBW virtual real estate finance and technology conference on Tuesday, May 20th. I look forward to talking to you all in the near future. Have a great rest of your week.

Speaker Change: Be participating in the <unk> virtual real estate Finance and Technology conference on Tuesday may 20th I look forward to talking to you all in the near future have a great rest of your week.

Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.

Speaker Change: Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.

Speaker Change: Thank you.

Speaker Change: Yes.

Speaker Change: Okay.