Q1 2025 Essent Group Ltd Earnings Call
Hello, and thank you for standing by my name is Regina and I will be your conference operator today at this time I would like to welcome everyone to the Essent Group Limited first quarter earnings Conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you'd like to ask a question. During this time.
Simply press Star then the number one on your telephone keypad to withdraw your question Press Star One again I would now like to turn the conference over to Philip Toronto Investor Relations. Please go ahead.
Philip Toronto: Thank you Regina good morning, everyone and welcome to our call.
Philip Toronto: Joining me today are Mark <unk>, Chairman and CEO and David Weinstock, Chief Financial Officer also on hand for the Q&A portion of the call is Chris Karen President of Essent Guaranty, a press release, which contains essence financial results for the first quarter of 2025 was issued earlier today and is available on our website at Essent group Dot com.
Philip Toronto: Prior to getting started I would like to remind participants that today's discussions are being recorded and will include the use of forward looking statements. These statements are based on current expectations estimates projections and assumptions that are subject to risks and uncertainties, which may cause actual results to differ materially for.
Philip Toronto: For a discussion of these risks and uncertainties. Please review the cautionary language regarding forward looking statements in today's press release the risk factors included in our Form 10-K filed with the SEC on February 18th 2025.
Philip Toronto: And any other reports and registration statements filed with the SEC, which are also available on our website now let me turn the call over to Mark Thanks, Phil and good morning, everyone earlier today, we released our first quarter 2025 financial results, which continue to benefit from the impact of higher interest rates on the persistency of our insured portfolio and investment yields.
Philip Toronto: We believe that our buy manage and distribute operating model uniquely positions us to operate in a variety of economic environments to generate attractive returns for our shareholders.
Philip Toronto: Our outlook over the long term remains constructive as we believe that favorable demographic trends along with current affordability issues are resulting in pent up demand for housing.
Philip Toronto: Even though we anticipate some headwinds to consumer spending and economic growth over the near term given the high credit quality of our insured portfolio and the strength of our operating model as soon as positioned to navigate this environment and now for our results for the firm.
Philip Toronto: First quarter of 2025, we reported net income of $175 million compared to $182 million a year ago on.
Philip Toronto: On a diluted per share basis, we earned $1 69 tenths of the first quarter compared to $1 70, a year ago.
Philip Toronto: On an annualized basis, our return on average equity was 12% in the quarter.
Philip Toronto: On the mortgage insurance front lenders continue to be challenged by lower originations due to the impacts of higher rates affordability overall lack of supply. This in turn also impacts the amount of new insurance written that our industry generates while our industry is competitive in this environment systematic credit card rails established by the Gse's continue to mitigate credit.
<unk> expansion as such we remain satisfied with the credit quality and unit economics of our new business.
Philip Toronto: As of March 31, our U S mortgage insurance in force was $245 billion at 3% increase versus a year ago.
Philip Toronto: Credit quality of our insurance in force remained strong with a weighted average FICO of 746 and a weighted average original LTV of 93%. Our 12 month persistency on March 31 was 86% flat from last quarter, while half of our enforced portfolio has a note rate of 5% or lower.
Philip Toronto: We continue to expect that the current level of mortgage rates will support elevated persistency in the near term.
Philip Toronto: Our consolidated cash and investments as of March 31 were $6 4 billion and our new money yield in the first quarter remained over 5%.
Philip Toronto: The annualized investment yield for the first quarter, a three 8%, while new money rates have largely held stable over the past several quarters and remain a tailwind for investment income.
Philip Toronto: We continue to operate from a position of strength was $5 $7 billion in GAAP equity access to $1 $5 billion in excess of loss reinsurance at Pmiers sufficiency ratio of 172% with a trailing 12 month operating cash flow of $866 million, our franchise remains well positioned from an earnings.
Philip Toronto: Cash flow and balance sheet perspective, our capital strategy seeks to balance a conservative balance sheet preserving optionality for strategic growth opportunities and optimizing shareholder returns over the long term.
Philip Toronto: With that in mind I am pleased to announce that our board has approved a common dividend of <unk> 31 for the second quarter of 2025.
Philip Toronto: At the same time, we recognize that our excess capital position and stock valuation present us with an opportunity to be proactive in returning capital to shareholders.
Dave: Previously discussed where valuation sensitive when it comes to buying back shares, leaving this strategy will support our long term goal of compounding book value per share growth year to date through April 30, we repurchased nearly 4 million shares for over $200 million now, let me turn the call over to Dave.
Dave: Thanks, Mark and good morning, everyone. Let me review our results for the quarter and a little more detail.
Dave: For the first quarter, we earned $1 69 per diluted share compared to $1, 58% last quarter and $1 70 in the first quarter a year ago.
Dave: In connection with accounting guidance effective as of year end 2020 for public companies with a single reportable segment are required to disclose results by segment.
Dave: We have one reportable segment mortgage insurance, which aggregates, our U S mortgage insurance business, and our GSA and other mortgage reinsurance business at our subsidiary asset rate.
Dave: My comments today are going to focus primarily on the mortgage insurance segment results.
Dave: There is additional information on corporate and other results in the financial supplement in exhibit L.
Dave: Our U S mortgage insurance portfolio ended the first quarter with insurance in force of $244 7 billion.
Dave: An increase of $1 billion from December 31.
Dave: And an increase of $6 $2 billion or two 6% compared to $238 5 billion at March 31 2024.
Dave: Persistency at March 31, 2025 was 85, 7% unchanged from the fourth quarter.
Dave: Mortgage insurance net premiums earned for the first quarter of 2025 was $234 million and included $15 $5 million of premiums earned by Essent re on our third party business.
Dave: The average base premium rate for the U S mortgage insurance portfolio for the first quarter was 41 basis points consistent with last quarter.
Dave: And the average net premium rate was 36 basis points for the first quarter of 2025, increasing one basis point from last quarter.
Dave: Our mortgage insurance provision for losses and loss adjustment expenses was $30 7 million in the first quarter of 2025.
Dave: Compared to $37 $3 million in the fourth quarter 2024.
Dave: As a reminder, our fourth quarter provision included $8 million for defaults that we identified as related to Hurricanes Helene and Milton.
Dave: While we observed a decline in the number of hurricane related defaults in the first quarter due to care activity. We made no changes in the reserve for Hurricane related defaults as this amount continues to be our best estimate at the ultimate losses to be incurred for claims associated with those defaults.
Dave: In March 31, the default rate on the U S mortgage insurance portfolio was $2, one 9% down.
Dave: Down eight basis points from 2% to 7% at December 31, 2024.
Dave: Where mortgage insurance operating expenses in the first quarter were $43 $6 million.
Dave: And expense ratio was 18, 7% compared to $39 9 million and 17, 5% in the fourth quarter.
Dave: For the full year 2020 for operating expenses for the mortgage insurance segment totaled $160 million.
Dave: We estimate that other underwriting and operating expenses for the mortgage insurance segment will be between $160 million and $165 million for the full year 2025.
Dave: In April we entered into two excess of loss transactions effective July one of each year with panels of highly rated reinsurers to cover our 2025 and 2026 new insurance written.
Dave: These transactions complement the two quota share transactions closed in the first quarter and we continue to be encouraged by the strong demand from reinsurers for taking mortgage credit risk.
Dave: In addition in April we decided to increase the percentage of our affiliate quota share from 35% to 50% to further leverage our Bermuda platform.
Dave: This increased session to Essent re will be effective in the second quarter and will be retroactive to <unk> starting from January one 2025.
Dave: At March 31st Essent, Guaranty's Premier Sufficiency ratio was strong at 172% with $1 5 billion in excess available assets.
Dave: Consolidated net investment income increased $1 7 million or 3% to $58 $2 million in the first quarter of 2025 compared to last quarter due primarily to a modest increase in overall portfolio yield.
Dave: As Mark noted our holding company liquidity remains strong and includes $500 million of Undrawn revolver capacity under our committed credit facility.
Dave: At March 31, we had $500 million of senior unsecured notes outstanding with a debt to capital ratio of 8%.
Dave: During the first quarter Essent guaranty paid a dividend of <unk> $65 million to its U S holding company.
Dave: Based on unassigned surplus at March 31st Essent Guaranty can pay additional ordinary dividends of $405 million in 2025.
Dave: At quarter end Essent Guaranty statutory capital was $3 6 billion with a risk to capital ratio of $9 six to one.
Dave: Note that statutory capital includes $2 $5 billion of contingency reserves at March 31.
Dave: During the first quarter Essent re had a dividend of $100 million staffing group.
Dave: Also in the quarter Essent group paid cash dividends totaling $31 $7 million to shareholders and we repurchased two 8 million shares for $157 million.
In April 2025, we repurchased one 1 million shares for $61 million.
Dave: Now, let me turn the call back over to Mark. Thanks, Dave in closing we are pleased with our first quarter financial results as Essent continues to generate high quality earnings while our balance sheet and liquidity remains strong our outlook for housing remains constructive over the long term and we believe that essent is well positioned to navigate the current environment given the strength of our buy manage and distribute.
Dave: <unk> operating model, our strong earnings and cash flow continue to provide us with an opportunity to balance investing in our business and returning capital to shareholders. We believe this approach is in the best long term interest at Essent and our stakeholders. While Essent continues to play an integral role in supporting affordable and sustainable Homeownership now, let's get to your questions operator.
Dave: Sure.
Speaker Change: At this time I would like to remind everyone in order to ask a question simply press star followed by the number one on your telephone keypad. Our first question will come from the line of Rick Shane with J P. Morgan. Please go ahead.
Rick Shane: Hey, guys. Thanks for taking my questions. This morning.
Dave: Look.
Dave: March April has been.
Dave: The unprecedented.
Dave: It ends in months in terms of volatility in terms of some of the behaviors we've seen.
Dave: When you think about where we are in the affordability cycle for homeownership, particularly for.
Dave: First time homebuyers do you think we are potentially reaching an inflection point.
Dave: Where things will start to come the way of the consumer a little bit more or do you remain a little bit more cautious and then.
Dave: Delving, a little bit more deeply into that are there certain geographies, where you are particularly optimistic or particularly cautious.
Dave: And how do you adjust for that within your right.
Dave: Right.
Dave: Within your rate cards.
Dave: Yeah, Hey, Rick good morning, and thanks for the questions I think the first one on affordability.
Dave: I'm not sure where we are in the cycle and remember just in context. We've had this anomaly, where we had the COVID-19 anomaly with.
Dave: Super low rates.
Dave: And everyone is buying stuff houses those cars bicycles that drove up HPA.
40% in some markets, 60% and others and then boom in the middle of 2022 rates shot up in our wages froze people they call the Golden handcuffs people with 3% mortgage rates.
Dave: And they stayed elevated rates went up and so this has really resulted in affordability because incomes and really grow and now you have higher home prices and higher rates. It really has created the second anomaly that we are still in.
Dave: Fortunately for Sn.
Dave: We're well positioned for this environment and we saw <unk> in investment yields and we've seen unprecedented.
Dave: Persistency in addition to driving business and uniquely Rick.
Dave: The quality of borrower, we're getting in this environment is actually quite good because of the affordability issues only the best kind of qualify I do think and I've said this before it's so when you think about our insurance in force, it's relatively flattish, which drives a lot of what I'll call free cash flow to the bottom line. So.
Dave: Again, we're well positioned but this next cycle will really play out and when incomes catch up.
Dave: And I think when incomes catch up I don't really see rates going anywhere I could see pockets of HPA declining.
Dave: Which I think is relatively healthy, but the consumer really is going to have to catch up and then youre going to have life events right youre going to have.
Dave: People are getting married more homeownership formation.
Dave: Having more children death divorce, all those sort of things that will unlock unlock some supply, but here's a great metric for where I think the market is a little bit stock. The average age of first time homeowners 38 that tells me there's a lot of pent up demand for housing so growth in our portfolio will renew and <unk>.
Dave: Longer term, Rick for Essent and for the other mortgage insurers, we're going to grow the warehousing grows in this country and as always Brian It doesn't always grow in a straight line.
Dave: That's why when we say longer term, we're constructive that we've been able to kind of wait this period out and continue to generate strong returns.
Dave: The only problem I have is I'm not sure when thats going to happen I don't think its going to happen this year, but I think we're getting closer to it.
Dave: I think on your location standpoint, I would say, we and with our pricing model and remember we have two parts to it there's the engine the credit engine part of it <unk> and then we just have the ability to electronically deliver pricing that allows us to.
Dave: Kind of make numerous pricing changes, we've actually raised pricing in certain markets.
Dave: During the first part of the year really trying to test pricing elasticity, where we may have a larger share in certain markets generally were more concentrated in areas, where there is a lot more population growth.
Dave: If you look at our segment, we tend to like places where people are moving to and jobs are moving to and so were more I would say, we're a little bit more invested there that being said youre always trying to get more price in certain areas and in other places youre back and also we look at it that way and again like I said in the earlier part pockets of HPA decline.
Dave: <unk>.
Dave: I do think longer term are healthy for the market.
Dave: Got it now.
Dave: It's been such an interesting cycle and one of the things that we always talk about on our team is that not every cycle can be unprecedented.
Dave: I'm, hoping that eventually we're going to be right on that it's been.
Dave: From unprecedented to unprecedented unprecedented it's almost exhausted thank.
Dave: Thank you for your answers.
Dave: Youre welcome.
Dave: Hang in there.
Dave: Yeah.
Speaker Change: Our next question will come from the line of Terry MA with Barclays. Please go ahead.
Terry MA: Hey, Thank you good morning.
Speaker Change: Mark I'm, just curious just given all the uncertainty around macro and the headlines around tariffs I'm just curious to think to get how you're thinking about managing risk overall and.
Speaker Change: Like have you done anything on the pricing underwriting side and at what point will you do so to kind of adjust for that.
Mark: It's a good question Terry I would say we have like I said earlier, we have raised pricing in the first quarter in certain markets, but that was more micro oriented so to speak around pricing elasticity I think on a macro standpoint, we're in a little bit of a wait and see what the impact of tariffs so to give you.
Mark: Some kind of background in terms of our pricing, we generally price through the cycle right, which could mean good environments in bad environments, We don't particularly look and say well. We think the next three months could be challenging. Therefore, we are going to change our pricing just like we don't look and say well the market is going to be great for the next six months. So it's lower our pricing. So you have to kind of think it through the <unk>.
Mark: Michael I think there's going to need to be a catalyst.
Mark: Right tariffs could be an event COVID-19 wasn't event and when cobalt wasn't event, we could see that the economy was going to go slow considerably and that our pricing through the cycle was going to have to change and we along with all of the mortgage insurers were able to change our pricing very quickly again another advantage.
Mark: For the engine, but right now we're not seeing it.
Speaker Change: You can have to wait to see how it plays out right. I mean, there is obviously a lot of puts and takes but right now there's no real changes on the pricing front.
Speaker Change: Got it that's helpful. And then just more broadly speaking how are you thinking about credit loss expectations. I think you pointed toward a 2% to 3% default rate is still being within expectations last quarter is that still the case.
Speaker Change: Yes, very much so right I mean, I think we're in a lower end of that right now and we may not hit hit three depending on where where defaults come into the back half of the year. They tend to increase a little bit more in the back half of the year and Terry It's a little bit of just math right I mean, roughly 800000 loans and close to 18000 defaults.
Speaker Change: You can kind of do the math and see where the percentages as I would look.
Speaker Change: Two things to note there one.
Speaker Change: Big picture.
Speaker Change: We really are we own that first loss piece, we hedge out the mezz and we kind of re attached at the cat. So we don't get too.
Speaker Change: Kind of.
Speaker Change: Upset or flux around this kind of between two and three and second.
Speaker Change: We provide their provision when they miss they missed two payments, but depending on the vintage and the build in kind of HPA. They may not necessarily result in a claim I mean.
Speaker Change: We provide for that because that's our expectations within our model.
Speaker Change: As you've seen in the past people the severity or they end up selling the house and we don't pay claims I wouldn't necessarily jump to a default rate necessarily leading to cash out the door for us that's really rule. It comes down to is do we write a check.
Speaker Change: And pay a claim and to date, we haven't really done much of that.
Speaker Change: Yeah got it makes sense. Thank you.
Speaker Change: Yes.
Speaker Change: Our next question comes from the line of Bose George with <unk>. Please go ahead.
Bose George: Hey, guys good morning.
Bose George: In terms of buybacks as you maybe I missed this but how much of the buybacks occurred in the first quarter versus April.
Bose George: Hey, Bill just save line stock $157 million of the buybacks were in the first quarter and then we purchased about 1 million shares.
Bose George: Four.
Bose George: Actually we purchased.
Bose George: One 1 million shares for $61 million.
Bose George: So it's $2 8 million shares for $157 million in the first quarter at $1 1 million shares for $61 million in April.
Bose George: Okay, great. Thanks, a lot.
Bose George: Then just with the comments you made about the 50% <unk>.
Bose George: Turning to <unk> in terms of the tax rate. So I assumed the tax rate on the incremental piece goes down over the next few years and then and can you just remind us in 2030 does everything just bounce back to the to the domestic rate or is there some sort of phasing at that point as well.
Bose George: Yes no.
Bose George: <unk> you are right that the.
Bose George: The incremental will be tag, we currently or as we had talked about in prior calls we have this limited.
Bose George: International presence exemption, where we're not paying taxes in Bermuda until 2030, but then once that exemption expires in beginning in 2030, we would expect to pay the 15% tax on earnings in Bermuda.
Bose George: And the other thing.
Bose George: Just on.
Bose George: The change in the affiliate has a little bit of it makes it more efficient to move cash from guarantees at a holdco given given given that where the holdco sits in Bermuda. So that was another part of the thinking wasn't necessarily.
Bose George: To drive a lower tax rate that can be a little bit lower but it really the efficiency of cash and capital management was a driver there and just add all embark status because we're talking about really just the incremental piece on the current years and IW is not going to really have any dramatic impact on this year's effective tax rate.
Speaker Change: Yeah makes sense, okay, great. Thanks, a lot.
Bose George: Yeah.
Speaker Change: And as a reminder to ask a question press star followed by the number one on your telephone keypad. Our next question will come from the line of Mihir Bhatia with Bank of America. Please go ahead.
Mihir Bhatia: Hi, Good morning, Thank you for taking my question.
Bose George: I wanted to start actually going back to that.
Bose George: To comment on pricing in this unit economics in General I think Mark you mentioned, you're still happy with New unit Economics Niwa.
Speaker Change: But maybe just taking a step back big picture, Paul have unit economics on new business changed in call. It the last two or three years, obviously interest rates are up.
Speaker Change: It sounds like you've done some micro movements around pricing, but overall the gross premium rate has been in this fall before the one bps range for 10 quarters.
Speaker Change: I think.
Speaker Change: Think about how unit economics have changed if at all in the last two three years between interest rates and credit expectations or your view on forward credit. Thanks.
Speaker Change: No. It's a good it's a good question I would say pricing in general have been to the unit economics have been pretty steady I would say they've probably.
Speaker Change: Probably increased in the back half of 'twenty two.
Speaker Change: When when there was a movement I think we've raised pricing and our engines across different.
Speaker Change: Different Msas 12, plus times in 'twenty two.
Speaker Change: So the.
Speaker Change: You don't necessarily see it on a yield on the book as it moves slower, but I would say in the engine itself. We properly raised pricing 30 ish percent if not more so that so the overall pricing on <unk> increased.
Speaker Change: Pretty significantly and again, there was a little bit more risk right because you had higher ltvs.
Speaker Change: Higher DTI is on some of that 'twenty two business given some of the affordability issues, but I would say in general the unit economics have been strongly kind of target that 12 to 14 ish range.
Speaker Change: And I would say that's probably on the high end.
Speaker Change: The range for me here and I think that's it's important for investors to think through that there is a difference between because if you write good unit economics that eventually will show up in your P&L and Conversely, as you're right poor unit economics that will show up but for investors had asked and it's important to differentiate between the unit economics that.
Speaker Change: We're writing in kind of the core.
Speaker Change: ROE that's on the balance sheet the ROE in the balance sheet.
Speaker Change: The GAAP ROE there.
Speaker Change: As drivers to that its equity and excess capital and certain things you almost want to say, what's that you want to create what's the difference between the unit economics and the ROE on the balance sheet of course, the ROE that you print and the gap is the real Roe.
Speaker Change: But.
Speaker Change: There is some optionality for us in retaining that capital and it's a very powerful optionality and yet again take a context from a longer term invested not quarter to quarter. We operate in a cat business, our catastrophe happens to be a severe economic recession we.
Speaker Change: Do a lot of things, we manage that expected loss very well to the extent, we can we hedge out a lot of the mezz, but we could re attach and that's why we run all of these different stresses and we as just as a management team and you saw we bought back I would say we bought back more shares in the last four months than we have in the history of <unk>.
Speaker Change: And part of that was we just more valuation sensitive we saw an opportunity. We think the market kind of is overreacts to certain things and that's fine having capital allows us to.
Speaker Change: To kind of lean in a little bit when we saw some value and again, we are riding unit economics at 12% to 14%.
Speaker Change: When your stocks trading at book or even below book.
Speaker Change: Pretty easy easy decision, but again longer term, it's important we like the optionality of capital because I think it gives us both.
Speaker Change: Opportunities defensive here right is something bad happens and I was on a call with all of our investors in February of 'twenty when people were questioning our growth.
Speaker Change: Then a month later everyones wondering if we're going to run out of capital So and I've seen the movie before I've managed a mortgage insurer during the great financial crisis I've been around through the subprime crisis in late nineties I have a lot of scars and I've seen a lot of this so I have a longer term perspective with it and I just believe capital having.
Speaker Change: That in times of stress will allow us it'll be a big advantage for us and we will be able to take advantage of an opportunity versus being defensive and if that if that.
Speaker Change: If that doesn't ever happened okay.
Speaker Change: Not the worst thing.
Speaker Change: And then Conversely.
Speaker Change: There are strategic opportunities on the growth side and again you haven't heard me say this in a while but with six mortgage insurers and two large.
Speaker Change: <unk> companies consolidating in a slow market you guys can kind of think through that consolidation isn't the worst answer for investors alright, if youre thinking of uses of excess capital putting two large mortgage insurers together is not not the worst answer for investors. So we kind of think through a lot of that Optionality and again I know you asked the pricing question.
Speaker Change: But that's so when you see what's the gaps like Geez Mark you guys have 14 ish percent unit economics in your printing 12, whats the difference it's that optionality of holding the capital.
Speaker Change: Right now the success that that makes sense.
Speaker Change: Youre talking about capital allocation I did want to touch on the title business.
Speaker Change: You won't be for a little bit now any changes on your view of the opportunity there.
Speaker Change: Give us an update on what just what's going on with that business and how youre thinking about it as interest rates stayed higher for longer. Thank you. Yeah. It's interesting right I think when you take a step back at Sn.
Speaker Change: The issue. We have is we're in this pause for growth and we're very well positioned towards titles a transaction business.
Speaker Change: One of the reasons, we were able to purchase it is such a good price right.
Speaker Change: Did it win rates were already up and you could see on the horizon that it was going to be pretty slow. So I don't want to say, it's relatively expected again, when we think about the business longer term. We do believe it's going to perform a lot like essent re which is supplemental.
Speaker Change: Earnings the difference between Essent re and title is there's real no capital against title. So it's it's relatively ROE accretive that being said, we had a lot to do in terms of.
Speaker Change: Bringing the unit into us and I believe now we're in a good position with good management team. We are a strong leader, which we didn't have before.
Speaker Change: And I think I think we're relatively.
Speaker Change: Position and we want to be positioned so when rates come down and that means activating more lenders a lot of things that we did on the semi side and quite frankly, we have work to do we have to be.
Speaker Change: We continue to have work to do to.
Speaker Change: And to sign up lenders and they continue to sign up agents, but I would say with the title again, that's the building business. It takes time and I think I look at this more almost like an investor and I feel like we're well.
Speaker Change: We're doing the right things entitled at this time.
Speaker Change: And then in terms of just the management team here and this is for investors I don't I have not spent much time on title.
Speaker Change: Way in the past six to nine months, it's really been that team is in place.
Speaker Change: I think that's why I have some comfort and how theyre going to perform.
Speaker Change: Understood. Thank you.
Speaker Change: Thanks for taking my questions.
Speaker Change: Our next question comes from the line of Geoffrey Dunn with Dowling and partners. Please go ahead.
Speaker Change: Thanks, Good morning.
Speaker Change: Given what you mentioned about the efficiency of the <unk>.
Speaker Change: Piracy. The Bermuda can you provide any guidance in terms, how we think about dividend flows from the underwriting companies up to the Holdco or is it something where you have been regular with the guarantee dividends is that something where quality drops below 50 on a quarterly cadence. So we see more recurring higher dividends out of Essent Lee anything you can.
Speaker Change: Provide us to give us a little framework around that.
Speaker Change: Hey, Jeff it's stabilized stock.
Speaker Change: Yes, I don't know that I would think about the tradeoffs between necessarily Essent guaranty and Essent re I think we look at both entities.
Speaker Change: We try to think about the capital positions for both and the needs of the holding companies. So I think we will continue to.
Speaker Change: See dividends from both entities.
Speaker Change: This year.
Speaker Change: Two obviously what happens in the environment right. So.
Speaker Change: Now with where credit is and things like that you can see the.
Speaker Change: The continued kind of pattern that we've.
Speaker Change: You can always see a little bit of what we did in the first quarter you are playing out.
Speaker Change: Subject to the year, playing out based on our expectations and credit kind of staying relatively stable.
Speaker Change: Jeff the way to look at it is we're going to continue to maximize the dividends out of both entities right. I think you can see whatever where ordinary dividends. We can get out of guarantee we're getting that and guarantee we're kind of pushing as much. The holdco as we can to differences when it goes to the U S holdings, we have to run it through.
Speaker Change: Different entities from a tax rate to get it to the group So think of it the more we can just do the.
Speaker Change: The reinsurance it just gets it right the rate and then it's a little bit more frictionless getting it to the group. So I don't know how you can model it much differently I think youll see it a little bit over time, it's a little bit of again as you get to be a larger company and some of these things a little bit of a sweeping the corners and trying to be more efficient that way, but it's really not going to change. The bigger decision is are we going to do.
Speaker Change: Special dividend out of guarantee and Thats really the only other way to get capital at this point, it's not really in the cards, but it is certainly a lever that we could pull if we had the opportunity we would really need the opportunity to put that capital to work to do that.
Speaker Change: Alright.
Speaker Change: I don't want to try to take it too literally but if youre maximizing dividends does that mean youre aiming to take another 405 million out of guarantee this year.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: With what we have left there are some.
Speaker Change: Assuming credit stays relatively benign alright, yes, I think thats, a reasonable way to look at it.
Speaker Change: To Mark's comment, we would think over the balance of the year with credit stain benign that we would try to maximize that yet.
Speaker Change: Okay. Thanks.
Speaker Change: That will conclude our question and answer session I'll turn the call back over to management for any closing comments.
Speaker Change: Thanks, everyone for participating today and have a great weekend.
Speaker Change: Thank you all for joining today's call you may now disconnect.
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