Q3 2025 MGIC Investment Corp Earnings Call

<unk> been placed on mute to prevent any background noise at the end of todays presentation. We will have a question and answer session to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star One again I will now turn the conference over to Diana Higgins head of Investor Relations.

Please go ahead.

Operator: Ladies and gentlemen, thank you for standing by and welcome to the MGIC Investment Corporation third quarter 2025 earnings call. At this time, all lines have been placed on mute to prevent any background noise. At the end of today's presentation, we'll have a question and answer session. To ask a question, please press Star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press Star 11 again. I will now turn the conference over to Dianna Higgins, Head of Investor Relations. Please go ahead.

Speaker #2: Ladies and gentlemen , thank you for standing by and welcome to the MGIC Investment Corporation , third quarter 2020 Earnings Call . At this time , all lines have been placed on mute to prevent any background noise .

Thank you Josh good morning, and welcome everyone. Thank you for your interest in MGIC.

Joining me on the call today to discuss our results for the third quarter, our Tim Mattke, Chief Executive Officer, and Nathan Colson, Chief Financial Officer, and Chief Risk Officer.

Speaker #2: At the end of today's presentation , we'll have a question and answer session . To ask a question , please press star one one on your telephone and wait for your name to be announced .

Our press release, which contains mgic's third quarter financial results was issued yesterday and is available on our website at MTG Dot MGIC Dot com under newsroom includes additional information about our quarterly results that we will refer to during the call today.

Speaker #2: To withdraw your question , please press star one one again . I will now turn the conference over to Dianna Higgins Head of Investor Relations .

Speaker #2: Please go ahead .

Dianna Higgins: Thank you, Josh. Good morning and welcome everyone. Thank you for your interest in MGIC. Joining me on the call today to discuss our results for the third quarter are Tim Mattke, Chief Executive Officer, and Nathan Colson, Chief Financial Officer and Chief Risk Officer. Our press release, which contains MGIC's third quarter financial results, was issued yesterday and is available on our website at mtg.mgic.com under Newsroom. It 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 in force and other information you may find valuable.

Speaker #3: Thank you . Josh . Good morning and welcome everyone . Thank you for your interest in Mgic . Joining me on the call today to discuss our results for the third quarter are Tim McKee , Chief Executive Officer , and Nathan Carlson , Chief Financial Officer and Chief risk officer .

It also includes a reconciliation of non-GAAP financial measures to their most comparable GAAP GAAP measures.

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 as a remember from time to time, we may post information about our underwriting guidelines and other presentations or corrections to past presentations.

Speaker #3: Our press release , which contains mix third quarter financial results , was issued yesterday and is available on our website at . Under newsroom .

Speaker #3: 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 comparable GAAP measures in addition , we posted on our website a quarterly supplement that contains information pertaining to our primary risk in force and other information .

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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 8-K, and 10-Q filed yesterday also.

Speaker #3: You may find valuable . As a reminder , from time to time , we may post information about our underwriting guidelines and other presentations or corrections to pass presentations on our website .

Dianna Higgins: Remember, from time to time we may post information about our underwriting guidelines and other presentations or corrections to past presentations on our website. 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 8-K and 10-Q filed yesterday. Also, if we make any forward-looking statements, we are not undertaking an obligation to update those statements in the future in light of subsequent events. No one should rely on the fact that such guidance or forward-looking statements are current at any other time than the time of this call or the issuance of our 8-K or 10-Q.

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

Speaker #3: 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 .

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

Speaker #3: Actual results could differ materially Before 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 8-K and 10-q filed yesterday .

Now with that I now have the pleasure to turn the call over to Tim. Thanks.

Thanks, Diana and good morning, everyone.

We maintained our strong momentum in the third quarter, delivering solid financial results and meaningful capital returns to our shareholders.

Speaker #3: Also , if we make any forward looking statements , we are not undertaking an obligation to update those statements in the future in light of subsequent events .

For the quarter, we recorded net income of $191 million and annualized return on equity of 14, 8%.

Speaker #3: No one should rely on the fact that such guidance or forward looking statements are current at any other time than the time of this call or the issuance of our 8-K or 10-q .

Once again, demonstrating the durability of our business model and the rigor around our risk management and capital strategies.

Our consistent performance reflects our leadership in the market and the ongoing support and confidence our stakeholders place in us.

Dianna Higgins: Now, with that, I have the pleasure to turn the call over to Tim.

Speaker #3: Now , with that , I now have the pleasure to turn the call over to Tim .

Tim Mattke: Thanks, Dianna. Good morning everyone. We maintain our strong momentum in the third quarter, delivering solid financial results and meaningful capital returns to our shareholders. For the quarter, we recorded net income of $191 million and an annualized return on equity of 14.8%, once again demonstrating the durability of our business model and the rigor around our risk management and capital strategies. Our consistent performance reflects our leadership in the market and the ongoing support and confidence our stakeholders place in us. We remain focused on operational excellence, disciplined execution, and sustainable long term value for our stakeholders. Our solid operating results together with our robust balance sheet enabled us to grow book value per share to $22.87, up 11% compared to a year ago. During that same period, we returned $918 million of capital to shareholders through dividends and share repurchases and reduced outstanding shares by 12%.

Speaker #4: Thanks , Diana . Good morning , everyone . We maintain our strong momentum in the third quarter , delivering solid financial results and meaningful capital returns to our shareholders .

We remain focused on operational excellence disciplined execution and sustainable long term value for our stakeholders.

Our solid operating results together with our robust balance sheet enabled us to grow book value per share to $22 87 up.

Speaker #4: For the quarter , we recorded net income of $191 million in an annualized return on equity of 14.8% . Once again demonstrating the durability of our business model and the rigor around our risk management and capital strategies .

Up 11% compared to a year ago.

During that same period, we returned $980 million of capital to shareholders through dividends and share repurchases.

Speaker #4: Our consistent performance reflects our leadership in the market and the ongoing support and confidence our stakeholders place in us . We remain focused on operational excellence , disciplined execution and sustainable long term value for our stakeholders .

Reduced outstanding shares by 12%.

Yes.

In the third quarter, we achieved another significant milestone in our company's history, and an industry first and in the quarter with more than $300 billion of insurance in force.

This milestone reflects our historical and ongoing leadership in the market.

Speaker #4: Our solid operating results , together with our robust balance sheet , enabled us to grow book value per share to $22.87 , up 11% compared to a year ago .

This achievement also reflects the dedication and excellence of our talented team their integrity adaptability and focus sets us apart from others and propels our success.

Speaker #4: During that same period , we returned $918 million of capital to shareholders through dividends and share repurchases and reduced outstanding shares by 12% in the third quarter , we achieved another significant milestone in our company's history at an industry first .

We continue to be pleased with the credit quality and strong performance of our insurance portfolio, our prudent risk management and underwriting standards remain key drivers and the quality of our portfolio during.

Tim Mattke: In the third quarter, we achieved another significant milestone in our company's history and an industry first in the quarter. With more than $300 billion of insurance in force, this milestone reflects our historical and ongoing leadership in the market. This achievement also reflects the dedication and excellence of our talented team. Their integrity, adaptability, and focus set us apart from others and propel our success. We continue to be pleased with the credit quality and strong performance of our insurance portfolio. Our prudent risk management and underwriting standards remain key drivers in the quality of our portfolio. During the quarter, our NIW was $16.5 billion of high quality business with strong credit characteristics. Shifting to capital management, our strategy remains consistent and grounded in maintaining financial strength and flexibility to support our long term success across economic cycles.

During the quarter, Brian IW was $16 5 billion.

Speaker #4: And in the quarter , with more than $300 billion of insurance in force , this milestone reflects our historical and ongoing leadership in the market .

Of high quality business with strong credit characteristics.

Shifting to capital management, our strategy remains consistent in ground and maintaining financial strength and flexibility to support our long term success across economic cycles.

Speaker #4: This achievement also reflects the dedication and excellence of our talented team , their integrity , adaptability and focus sets us apart from others and propels our success .

Key objectives included supporting prudent growth through strong capital levels at both the operating and holding company.

Speaker #4: We continue to be pleased with the credit quality and strong performance of our insurance portfolio . Our prudent risk management and underwriting standards remain key drivers in the quality of our portfolio .

Turning a low to mid teens debt to capital ratio and maintaining a healthy liquidity buffer.

Our adherence to these strategies has put us in a position to return excess capital to shareholders through share repurchases and common stock dividends.

Speaker #4: During the quarter , our Nyw was $16.5 billion of high quality business with strong credit characteristics shifting to capital management . Our strategy remains consistent and grounded in maintaining financial strength and flexibility to support our long term success across economic cycles .

In the quarter share repurchases totaled 7 million shares for $188 million we.

We also paid a quarterly common stock dividend of <unk> 15 per share totaling $34 million.

Tim Mattke: Key objectives include supporting prudent growth through strong capital levels at both the operating and holding company, maintaining a low to mid teens debt to capital ratio, and maintaining a healthy liquidity buffer. Our adherence to these strategies has put us in a position to return excess capital to shareholders through share repurchases and common stock dividends. In the quarter, share repurchases totaled 7 million shares for $188 million. We also paid a quarterly common stock dividend of $0.15 per share, totaling $34 million. Taking a longer view, over the prior four quarters, share repurchases totaled $786 million and shareholder dividends totaled $132 million. Combined, this represents a 122% payout of the net income we earned in that period. This share repurchase activity reflects both our capital strength and excellent financial results.

Speaker #4: Key objectives include supporting prudent growth through strong capital levels the operating and holding company , maintaining a low to mid teens debt to capital ratio , and maintaining a healthy liquidity buffer .

Taking a longer view over the prior four quarters share repurchases totaled $786 million.

Shareholder dividends totaled $132 million.

Combined this represents a 122% payout of net income we earned in that period.

Speaker #4: Our adherence to these strategies has put us in a position to return excess capital to shareholders through share repurchases and common stock dividends .

This share repurchase activity reflects both our capital strength and excellent financial results.

Speaker #4: In the Combined , this represents a 122% payout of the net income we earned in that period . This year , we activity reflects both our capital strength and excellent financial results .

Speaker #4: quarter , share repurchases totaled 7 million shares for $188 million . We also paid a quarterly common stock dividend of $0.15 per share , totaling $34 million , taking a longer view over the prior four quarters , share repurchases totaled $786 million , and shareholder dividends totaled $132 million .

We continue to 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.

As announced on October 23, the board approved a quarterly common stock dividend of <unk> 15 per share payable on November 20th. Additionally.

Additionally earlier this week MGIC paid of $400 million dividend to the holding company, reflecting capital levels at MGIC at or above our target.

This dividend further enhances our liquidity position and financial flexibility at the holding company.

Tim Mattke: We continue to 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. As announced on October 23, the board approved a quarterly common stock dividend of $0.15 per share payable on November 20. Additionally, earlier this week, MGIC Investment Corporation paid a $400 million dividend to the holding company, reflecting capital levels at MGIC that were above our target. This dividend further enhances our liquidity position and financial flexibility of the holding company. Our capital structure remains robust with $6 billion in balance sheet capital along with our well-established reinsurance program, which remains a core element of our risk and capital management approach. Our reinsurance program reduces loss volatility and stress scenarios while also providing capital diversification and flexibility at attractive costs.

Speaker #4: We continue to 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 , as announced on October 23rd , the board approved a quarterly common stock dividend of $0.15 per share , payable on November 20th .

Our capital structure remains robust with $6 billion in balance sheet capital along with our well established reinsurance program, which remains a core element of our risk and capital management approach.

Our reinsurance program reduces loss volatility in stress scenarios, while also providing capital diversification and flexibility at attractive costs.

Speaker #4: Additionally , earlier this week , Mgic paid a $400 million dividend to the holding company , reflecting capital levels at Mgic that were above our target .

We were active in the reinsurance market in third quarter, and Nathan will provide more detail on that shortly.

Speaker #4: This dividend further enhances our liquidity position and financial flexibility of the holding company . Our capital structure remains robust , with $6 billion in balance sheet capital along with our well-established reinsurance program , which remains a core element of our risk and capital management approach .

At the end of the third quarter, our reinsurance program reduced our P. Myers required assets by $2 5 billion or approximately 43%.

Now, let me turn it over to Nathan to provide more details on our financial results for the quarter.

Thanks, Tim and good morning.

As Tim discussed we had excellent financial results for the third quarter.

Speaker #4: Our reinsurance program reduces loss , volatility and stress scenarios while also providing capital diversification and flexibility at attractive costs . We are active in the reinsurance market .

We earned net income and adjusted net operating income of 83 per diluted share compared to <unk> 77 per diluted share during the same period last year of.

Tim Mattke: We were active in the reinsurance market in the third quarter and Nathan will provide more detail on that shortly. At the end of the third quarter, our reinsurance program reduced our PMIERS required assets by $2.5 billion or approximately 43%. Now let me turn it over to Nathan to provide more details on our financial results for the quarter.

Speaker #4: In the third quarter , and Nathan will provide more detail on that shortly . At the end of the third quarter , our reinsurance program reduced our pmiers required assets by $2.5 billion , or approximately 43% .

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

In the quarter, our re estimation of ultimate losses on prior delinquencies resulted in $47 million of favorable loss reserve development.

Speaker #4: Now , let me turn it over to Nathan to provide more details on our financial results for the quarter . Thanks , Tim , and good morning .

Nathan Colson: Thanks Tim and good morning. As Tim discussed, we had excellent financial results for the third quarter. We earned net income and adjusted net operating income of $0.83 per diluted share compared to $0.77 per diluted share during the same period last year. A detailed reconciliation of GAAP net income to adjusted net operating income can be found in our earnings release. In the quarter, our re-estimation of ultimate losses on prior delinquencies resulted in $47 million of favorable loss reserve development. The favorable development this quarter primarily came from delinquency notices we received in 2024 and early 2025. As cure rates on recent new notices continue to exceed our expectations for new delinquency notices received in the quarter, we continue to use the initial claim rate assumption of 7.5% which is consistent with recent periods.

The favorable development this quarter, primarily came from delinquency notices we received in 2024 and early 2025 is curious on recent new notices continue to exceed our expectations.

Speaker #4: As Tim .

Speaker #5: Discussed , we had excellent financial results for the third quarter . We earned net income and adjusted net operating income of $0.83 per diluted share , compared to $0.77 per diluted share during the same period last year .

For new delinquency notices received in the quarter. We continued to use the initial claim rate assumption of seven 5%, which is consistent with recent periods.

Speaker #5: A detailed reconciliation of GAAP net income to adjusted net operating income can be found in our earnings release in the quarter hour Re-estimation of ultimate losses on prior delinquencies resulted in $47 million of favorable loss reserve development .

Looking at delinquency trends are account based delinquency rate increased 11 basis points in the quarter to 232% in line with what we expected and consistent with the seasonal trends we have discussed on past calls.

Speaker #5: The favorable development this quarter primarily came from delinquency notices . We received in 2024 and early 2025 , as cure rates on recent new notices continue to exceed our expectations for new delinquency notices received in the quarter , we continue to use the initial claim rate assumption of 7.5% , which is consistent with recent periods looking at delinquency trends , our count based delinquency rate increased 11 basis points in the 1:45 .32 percent , in line with what we expected and consistent with the seasonal trends we have discussed on past calls , we received 13,600 new delinquency notices in the third quarter , slightly less than the third quarter last year , and 3% less than the third quarter of 2019 .

We received 13600, new delinquency notices than the third quarter slightly less than the third quarter last year, and 3% less than the third quarter of 2019.

Just prior to the onset of the COVID-19 pandemic.

The delinquency rate at the end of the third quarter was eight basis points higher than a year ago and the number of new notices and delinquency rate continue to remain low by historical standards.

Nathan Colson: Looking at delinquency trends, our count-based delinquency rate increased 11 basis points in the quarter to 2.32%. In line with what we expected and consistent with the seasonal trends we have discussed on past calls, we received 13,600 new delinquency notices in the third quarter, slightly less than the third quarter last year and 3% less than the third quarter of 2019 just prior to the onset of the COVID-19 pandemic. The delinquency rate at the end of the third quarter was 8 basis points higher than a year ago and the number of new notices and delinquency rate continue to remain low by historical standards. As we look ahead, we continue to expect that the combination of seasonality and the aging of our large 2021 and 2022 book years will result in an increase in new delinquency notices received and the delinquency rate.

As we look ahead, we continue to expect that the combination of seasonality and the aging of our large 2021 and 2022 book years will result in an increase in new delinquency notices received and the delinquency rate.

Turning to our revenue.

The in force premium yield was $38 three basis points in the quarter remaining relatively flat during the year consistent with what we expected at the beginning of the year.

Speaker #5: Just prior to the onset of the Covid 19 pandemic . The delinquency rate at the end of the third quarter was eight basis points higher than a year ago , and the number of new notices and delinquency rate continue to remain low by historical standards .

Yes.

Investment income was $62 million in the third quarter contributing meaningfully to our revenue again.

Speaker #5: As we look ahead , we continue to expect that the combination of seasonality and the aging of our large 2021 and 2022 bookings will result in an increase in new delinquency notices received , and delinquency rate .

The book yield on our investment portfolio was 4% at the end of the quarter.

Investment income remained relatively flat sequentially and year over year as both the book yield and the size of the investment portfolio have also remained relatively flat.

Nathan Colson: Turning to our revenue, the in force premium yield was 38.3 basis points in the quarter, remaining relatively flat during the year consistent with what we expected at the beginning of the year. Investment income was $62 million in the third quarter, contributing meaningfully to our revenue. Again, the book yield on our investment portfolio was 4% at the end of the quarter. Investment income remained relatively flat sequentially and year over year as both the book yield and the size of the investment portfolio have also remained relatively flat. During the quarter, reinvestment rates on our fixed income portfolio continued to exceed our book yield. However, we anticipate the overall book yield will remain relatively flat for the remainder of the year. The unrealized loss position on our portfolio narrowed by $57 million in the quarter, primarily driven by a decrease in interest rates.

Speaker #5: Turning to our revenue , the In-force premium yield was 38.3 basis points in the quarter , remaining relatively flat during the year , consistent with what we expected at the beginning of the year .

During the quarter reinvestment rates on our fixed income portfolio continued to exceed our book yield. However, we anticipate the overall book yield will remain relatively flat for the remainder of the year.

Speaker #5: Investment income was $62 million in the third quarter , contributing meaningfully to our revenue . Again , the book yield on our investment portfolio was 4% at the end of the quarter .

The unrealized loss position on our portfolio narrowed by $57 million in the quarter, primarily driven by a decrease in interest rates.

Operating expenses were $50 million this quarter down from $53 million in the third quarter last year.

Speaker #5: Investment income remained relatively flat sequentially and year over year , as both the book yield and the size of the investment portfolio have also remained relatively flat .

Through the first three quarters of 2025 operating expenses decreased eight 5% compared to the same period last year.

Speaker #5: During the quarter , reinvestment rates on our fixed income portfolio continued to exceed our book yield . However , we anticipate the overall book yield will remain relatively flat for the remainder of the year .

We continue to expect the full year operating expenses to fall within our previously communicated range of 195 million to $205 million, but now expect we will be towards the higher end of that range due primarily to the pension settlement charges, we discussed last quarter.

Speaker #5: The unrealized loss position on our portfolio narrowed by $57 million in the quarter , primarily driven by a decrease in interest rates . Operating expenses were $50 million this quarter , down from $53 million in the third quarter last year .

As Tim mentioned, we have been very busy in the reinsurance market.

Nathan Colson: Operating expenses were $50 million this quarter, down from $53 million in the third quarter last year. Through the first three quarters of 2025, operating expenses decreased 8.5% compared to the same period last year. We continue to expect the full year operating expenses to fall within our previously communicated range of $195 million to $205 million, but now expect we will be toward the higher end of that range due primarily to the pension settlement charges we discussed last quarter. As Tim mentioned, we have been very busy in the reinsurance market. We further bolstered our reinsurance program with a $250 million seasoned excess of loss transaction covering our 2021 NIW and a 40% quota share transaction that will cover most of our 2027 NIW. In addition, we amended the terms on our quota share treaties covering our 2022 NIW with most participants from the existing reinsurance panel.

We further bolstered our reinsurance program with a $250 million seasoned excess of loss transaction.

Speaker #5: Through the first three quarters of 2025 , operating expenses decreased 8.5% compared to the same period last year . We continue to expect the full year operating expenses to fall within our previously communicated range of 195 million to $205 million , but now expect we will be toward the higher end of that range , due primarily to the pension settlement charges we discussed last quarter .

During our 2021 <unk>.

And a 40% quota share transaction that will cover most of our 2027 and IW.

In addition, we amended the terms on our quota share treaties covering our 2022 and IW with most participants from the existing reinsurance panel.

The amended terms will reduce the ongoing cost by approximately 40% starting in 2026.

Speaker #5: As Tim mentioned , we have been very busy in the reinsurance market . We further bolstered our reinsurance program with a $250 million seasoned excess of loss transaction covering our 2021 nine and a 40% quarter share transaction that will cover most of our 2027 .

Because they are all effective in the future none of these reinsurance transactions impact our reinsurance program at the end of the third quarter, but all set us up for continued success and are all consistent with our long term reinsurance strategy and follow the same approach we've taken in recent years to managing our overall risk and capital positions.

Speaker #5: N I w . In addition , we amended the terms on our quarter share treaties covering our 2022 and I w with most participants from the existing reinsurance panel .

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

Thanks Nathan.

Nathan Colson: The amended terms will reduce the ongoing costs by approximately 40% starting in 2026 because they are all effective in the future. None of these reinsurance transactions impact our reinsurance program at the end of the third quarter, but all set us up for continued success and are all consistent with our long term reinsurance strategy and follow the same approach we have taken in recent years to managing our overall risk and capital positions. With that, let me turn it back over to Tim.

We are beginning to see some modest improvements in home affordability driven by easing mortgage rates in Florida National home price appreciation housing inventory remains tight but like affordability. It has improved since last year. There has been a slow but steady increase in purchase applications with that said affordability challenges do remain but private mortgage insurance continues to play a critical.

Speaker #5: The amended terms will reduce the ongoing costs by approximately 40% starting in 2026 . Because they are all effective in the future . None of these reinsurance transactions impact our reinsurance program .

Speaker #5: At the end of the third quarter , but all set us up for continued success and are all consistent with our long term reinsurance strategy and follow the same approach we have taken in recent years to managing our overall risk and capital positions .

<unk> role in helping low down payment borrowers access the American dream of homeownership sooner.

Last year private emigh helped more than 800000 borrowers achieve their dream of homeownership.

Speaker #5: With that , let me turn it back over to Tim .

Tim Mattke: Thanks, Nathan. We are beginning to see some modest improvements in home affordability, driven by easing mortgage rates and slower national home price appreciation. Housing inventory remains tight, but like affordability, it has improved since last year, and there's been a slow but steady increase in purchase applications. With that said, affordability challenges do remain, but private mortgage insurance continues to play a critical role in helping low down payment borrowers access the American dream of homeownership sooner. Last year, private mortgage insurance helped more than 800,000 borrowers achieve their dream of homeownership. We are proud of the vital role private mortgage insurance plays in the housing finance system. We remain committed to working with FHFA, the GSEs, and other industry stakeholders to responsibly serve low down payment borrowers and make homeownership more accessible for Americans while also protecting taxpayers from mortgage credit risk.

Speaker #4: Thanks , Nathan . We are beginning to see some modest improvements in home driven by easing mortgage rates and slower national home price appreciation .

We are proud of the vital role of private mortgage insurance plays in the housing finance system, we remain committed to working with FHFA the gse's.

Other industry stakeholders to responsibly serve low down payment borrowers and make homeownership more accessible for Americans, while also protecting taxpayers for mortgage credit risk.

Speaker #4: Housing inventory remains tight , but affordability has improved since last year and there has been a slow but steady increase in purchase applications .

Speaker #4: With that said, affordability challenges do remain. But private mortgage insurance continues to play a critical role in helping low down payment borrowers access the American dream of homeownership sooner.

In closing, we delivered a strong quarter and continue to build on the momentum we've established over the past few years, we are committed to delivering high quality offerings and solutions and best in class service to our customers our.

Speaker #4: Last year , private MI helped more than 800,000 borrowers achieve their dream of homeownership . We are proud of the vital role private mortgage insurance plays in the housing finance system , remain committed to working with Fhfa , the GSEs and other industry stakeholders to responsibly serve low down payment borrowers and make homeownership more accessible for Americans , while also protecting taxpayers from mortgage credit risk .

I remain confident in our talented team leadership and position in the market and the ability to execute and deliver on our business strategies.

With that Josh let's take questions.

Thank you as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, one moment for questions.

Tim Mattke: In closing, we delivered a strong quarter and continue to build on the momentum we have established over the past few years. We are committed to delivering high quality offerings and solutions and best in class service to our customers. I remain confident in our talented team, leadership, and position in the market and the ability to execute and deliver on our business strategies. With that, Josh, let's take questions.

Speaker #4: In closing , we delivered a strong quarter and continue to build on the momentum we have established over the past few years . We are committed to delivering high quality offerings and solutions and best in class service to our customers .

Our first question comes from Graham Bundy with K VW you May proceed.

Hey, guys. This is bose.

Speaker #4: Our confident in our talented team leadership and position in the market , and the ability to execute and deliver on our business strategies .

Okay.

Yes.

In terms of your provision what we see a provision for loan on the new notices and from an accounting standpoint as your provision for new notices for the quarter just net out the new notices that.

Speaker #4: With that , Josh , let's take questions .

Operator: Thank you. 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 one again. One moment for questions. Our first question comes from Graham Bundy with KBW. You may proceed.

Speaker #2: Thank you . As a reminder to ask a question , please press star one . One on your telephone and wait for your name to be announced .

That were <unk> from the year that we're also qunar during the year.

Speaker #2: To withdraw your question , please press star one one again . One moment for questions . Our first question comes from Graham Bundy with KBW .

Yeah.

Yes.

Nathan.

From a new notice perspective, we had a very.

Very similar assumptions for the provision this quarter I mentioned in the prepared remarks.

Speaker #2: You may proceed .

[Analyst]: Hey guys, this is Bose. In terms of your provision, what was your provision per loan on the new notices? From an accounting standpoint, does your provision for new notices for the quarter just net out the new notices that were new notice from the year that were also cured during the year?

Speaker #6: Hey , guys , this is Boz . Hey , does . In terms of your provision , what was your provision per loan on the new notices ?

New notice claim rate was seven 5% and we followed a similar methodology for the severity on new notices really tracking to the exposure.

Speaker #6: And then from an accounting standpoint , does your provision for new notices for the quarter just net out the new notices that were that were new notices from the year that were also cured during the year ?

The total provision is inclusive of the favorable reserve development that we had which was $47 million in the quarter.

And we've got some some details of that in our portfolio a supplement.

Nathan Colson: Yep, close to Stan. You know, from a new notice perspective, we had very similar assumptions for the provision this quarter. I mentioned the prepared remarks. The new notice claim rate was 7.5% and we followed a similar methodology for the severity on new notices, really tracking to the exposure. The total provision is inclusive of the favorable reserve development that we had, which was $47 million in the quarter. We've got some details of that in our portfolio supplement that's on the website as well in terms of the kind of new notice reserving assumptions and the full notice inventory.

Speaker #5: Yes . Nathan , you know , from a new notice perspective , we had a very similar assumptions for the provision this quarter .

On the website as well in terms of the kind of new notice reserving assumptions and full notice inventory.

Speaker #5: I mentioned the prepared remarks . The new notice claim rate was 7.5% , and we followed a similar methodology for the severity on new notices .

Okay, great. Thanks, and then actually I wanted to just ask about the the debate on the credit scores that's going on can.

Can you just talk about how youre looking at it and just in terms of P. Myers as does P. Myers, just used FICO and what happens with vantage score becomes part of the.

Speaker #5: Really tracking to the exposure . You know , the the total provision is inclusive of the favorable reserve development that we had , which was $47 million in the quarter .

And the point of load lenders are starting to use or at some point.

Speaker #5: And , you know , we've got some some details of that in our portfolio supplement that's on the website as well . In terms of the the kind new notice , reserving assumptions and the full notice inventory .

Yeah Bose, it's Tim obviously, we're paying close attention I think it's safe to say that we try to be active in the conversations but we know that we're just one part of the ecosystem.

[Analyst]: Okay, great, thanks. I wanted to just ask about the debate on the credit scores that's going on. You know, can you just talk about how you're looking at it and just in terms of PMIERS, does PMIERS just use FICO, and you know, what happens if VantageScore becomes part of what lenders are starting to use at some point?

And so for us, it's really important to understand.

Speaker #6: Okay . Great . Thanks . And then actually I wanted to just ask about the the debate on the credit scores that's going on .

Ample how the gse's are going to utilize it what they're going to do you referenced team hires right, where they make any changes regards to that we havent heard anything definitive in that regard, but we stand ready to incorporate whatever the industry.

Speaker #6: You know , can you just talk about how you're looking at it and just in terms of pmiers , is does Pmiers just use Fico and what happens if Vantagescore becomes part of the , you know , part of what lenders are starting to use or some point ?

Sort of moves too.

And are very supportive of what makes the industry stronger. So again I don't think we have a lot of a lot of exact answers at this point, we've had a lot of good dialogue.

Tim Mattke: Yeah, Boaz, it's Tim. Obviously we're paying close attention. I think it's safe to say that we try to be active in the conversations, but we know that we're just one part of the ecosystem. For us it's really important to understand, for example, how the GSEs are going to utilize it, what they're going to do. You referenced PMIERS, right? Would they make any changes in regards to that? We haven't heard anything definitive in that regard, but we stand ready to incorporate whatever the industry moves to and are very supportive of what makes the industry. I don't think we have a lot of exact answers at this point, but we've had a lot of good dialogue and I think we're ready to move as the rest of the industry moves.

Speaker #4: Yeah , boss , it's Tim , obviously we're paying close attention . I think it's safe to say that , you know , we try to be active in the conversations , but we know that we're just one part of the ecosystem .

We are ready to sort of move as the rest of the industry moves.

Okay, great. Thanks.

Speaker #4: And so for us , it's really important to understand , you know , example , how the GSEs are going to utilize it , what they're going to do .

Sure.

Thank you.

Speaker #4: You referenced Pmiers , right ? When they make any changes regards to that , we haven't heard anything definitive in that regard , but we stand ready to incorporate whatever the industry sort of moves to and are very supportive of what makes the industry stronger .

Our next question comes from Doug Harter with UBS you May proceed.

Okay.

Thanks. This is actually will NASA on for Doug today.

Just given some recent industry news about potential new entrants into the space.

Speaker #4: So again , I don't think we have a lot of a lot of exact answers at this point , but we've had a lot of good dialogue , and I think , you know , we're ready to to sort of move as , as the industry moves .

I'm just curious your thoughts on how you guys are thinking about potential increased competition in this space and any real impact this could have on magic.

[Analyst]: Okay, great. Thanks.

Yeah.

Speaker #6: Okay, great. Thanks.

We're aware that someone's.

Nathan Colson: Sure.

Speaker #5: Sure .

Speaker #5: Sure

Looking at potentially into the market and we've seen that in the past to varying degrees. The question I'd. Most often get asked is is six too many.

Operator: Thank you. Our next question comes from Doug Harter with UBS. You may proceed.

Speaker #2: Thank you . Our next question comes rest of the from Doug Harter with UBS . You may proceed .

So whether whether another ultimately joins.

[Analyst]: Thanks. This is actually Will Nasta on for Doug today. I guess just given some recent industry news about potential new entrants into the MI space, I was curious your thoughts on how you guys are thinking about potential increased competition in this space and any real impact this could have on MGIC.

Speaker #7: Thanks . This is actually will Nathan for Doug today . And I guess just given some recent industry news about potential new entrants into the MI space , I was curious your thoughts on how you guys are thinking about potential increased competition in the space and any real impact this could have on magic ?

They would have all the PMI requirements things like that and having to raise the capital and have all the operational requirements that we have.

So again.

It's tough to say I think at this point speculation, but we are definitely aware of it.

Assume they would be on the same playing field et cetera.

Nathan Colson: Yeah.

Tim Mattke: We're aware that someone's looking potentially into the market, and we've seen that in the past to varying degrees. The question I most often get asked is, is six too many, so whether another ultimately joins. They'd have all the PMI requirements, things like that, and have to raise the capital and have all the operational requirements that we have. It's tough to say. I think it's at this point speculation, but we're definitely aware of it. Assume they'd be on the same playing field, et cetera. I more often get asked, should there be fewer than, should there be more. I think that's something that they might have to ultimately overcome on top of sort of GSE approval for PMIERS.

Speaker #8: Yeah , you know , we're aware .

Speaker #4: That someone's looking to potentially enter the market , and we've seen that in the past to varying degrees . You know , the question I most often get asked is , is six too many ?

But again.

More often get asked should there be fewer than should there be more.

I think that that's something that they might have to ultimately overcome on top of sort of GSE approval for <unk>.

Speaker #4: So whether whether another ultimately joins , you know , they have all the PMI requirements , things like that . And having to raise the capital and have all the operational requirements that we have .

Got it thanks, and then I guess, just moving to capital return I know you guys mentioned, a 122% payout recently I was just curious about how you guys are thinking about that going forward and then obviously the balance between repurchases and dividends within that payout.

Speaker #4: So again , I it's tough to say . I think it's at this point , speculation , but we're definitely aware of it .

Speaker #4: But , you know , assume they'd be on the same playing field , etc. . But again , I more often get asked , you know , should there be fewer than should there be more ?

Yes, we will.

Nathan Thanks for the question I think our approach has been pretty consistent over time, which is really around maintaining the right financial strength of the operating company once we've achieved that.

Speaker #4: So I think that that's something that they might have to ultimately overcome on top of sort of GSE approval for , for Pmiers .

Operator: Got it.

[Analyst]: Thanks. I guess just moving to capital return, I know you guys mentioned 122% payout recently. I'm just curious about how you guys are thinking about that going forward. Obviously, the balance between repurchases and dividends within that payout.

Speaker #7: Got it . Thanks . And then I guess just moving to capital return . I know you guys mentioned a 122% payout recently .

Capital levels above our targets using that to pay dividends to the holding company and we did that again recently with another $400 million dividend.

Speaker #7: I was just curious about how you guys are thinking about that going forward . Then obviously the balance between repurchases and dividends within that payout .

At the holding company level, we've been targeting payout ratios given the valuation of the stock, which we found to be attractive in recent periods and the strength of the financial results. The payout ratio has been a little bit elevated where the share repurchase level has approximated our net income over the last four quarters and then the dividend.

Nathan Colson: Yeah, Will, it's Nathan. Thanks for the question. I think our approach has been pretty consistent over time, which is really around maintaining the right financial strength at the operating company. Once we've achieved that and have capital levels above our targets, using that to pay dividends to the holding company. We did that again recently with another $400 million dividend at the holding company level. We've been targeting payout ratios. Given the valuation of the stock, which we found to be attractive in recent periods, and the strength of the financial results, the payout ratio has been a little bit elevated where the share repurchase level has approximated our net income over the last four quarters and then the dividend is a little bit above that.

Speaker #6: Yeah .

Speaker #5: Well , it's Nathan , thanks for the question . I think our approach has been pretty consistent over time . You know , which is really around maintaining the right financial strength at the operating company .

It was a little bit above that so I think thats given these market conditions right now with very good credit performance.

Speaker #5: You know , once we've achieved that and have capital levels above our targets , using that to pay dividends to the holding company , and we did that again with another $400 million dividend , at the holding company level .

Not a lot of growth in the in force book really strong capital levels that MGIC. This feels like a comfortable payout ratio given those conditions, but obviously, if those conditions change where we've maintained the flexibility to react to that as well.

Speaker #5: We've been targeting payout ratios given the valuation of the stock , which we found to be attractive in recent periods , and the strength of the financial results , you know , the payout ratio has been a little bit elevated where the share repurchase level has approximated our net income over the last four quarters , and then the dividend is a little bit above that .

Got it thanks.

Thank you.

Our next question comes from Mihir Bhatia with Bank of America You May proceed.

Nathan Colson: I think that's given these market conditions right now with very good credit performance, not a lot of growth in the in force book, really strong capital levels at MGIC, this feels like a comfortable payout ratio given those conditions. Obviously, if those conditions change, we've maintained the flexibility to react to that as well.

And this is Caroline on for me here.

So it looks like persistency was actually modestly up quarter over quarter, despite the rate cut.

Is there anything to call out there and then also with rates coming down perspective, how can we think about persistency moving forward like how fast and how much can it come down.

[Analyst]: Got it. Thanks.

Hey, Caroline it's Nathan.

The in the quarter I would view it more flat than up I mean, I think it was up maybe a couple of tenths of a percentage point, but I think thats, we would view it as pretty flat over the year and really the impact of rates coming down. If you think about our <unk> for the third quarter, and then cancellation activity for the third quarter.

Operator: Thank you. Our next question comes from Mihir Bhatia with Bank of America. You may proceed.

Operator: Hi, this is Caroline on for Mihir. It looks like persistency was actually modestly up quarter over quarter despite the rate cut. Is there anything to call out there? Also, with rates coming down prospectively, how can we think about persistency moving forward? How fast and how much can it come down?

<unk>.

That really would reflect the rate environment say in June and July more than the rate environments in September and October so we.

Nathan Colson: Hey, Caroline, it's Nathan. In the quarter, I would view it more as flat than up. I mean, I think it was up maybe a couple tenths of a % but I think that's, you know, we would view it as pretty flat over the year. Really, the impact of rates coming down, if you think about our NIW for the third quarter and then cancellation activity for the third quarter, that really would reflect the rate environment, say in June and July more than the rate environments in September and October. We have seen a recent uptick in recent weeks in the number of refinance transactions that are coming through from a quote and application standpoint for us. If there is some headwind to persistency, it's likely to be at least somewhat offset by increased NIW or at least increased refinance volume in the third quarter and beyond.

We have seen a recent uptick in recent weeks and the number of refinanced transactions that are coming through from a quote and application standpoint for us. So.

If there is some headwinds of persistency.

Likely to be at least somewhat offset by increased <unk> at least increased refinance volume.

The third quarter and beyond but.

In terms of the magnitude of the persistency change I do think it's obviously very rate dependent and we've had periods, where persistency was much slower we've been in the stable stable range for now, but I think our history shows that in the periods, where persistency trends lower.

Tend to be also the periods, where niwa trends higher.

Okay. That's really helpful. And then just are there any markets youre seeing good opportunity in and you're leaning in on are similar or are there any markets that you're more cautious on and pulling back on.

Nathan Colson: In terms of the magnitude of the persistency change, I do think it's obviously very rate dependent. We've had periods where persistency was much lower. We've been in the stable range for now. I think our history shows that in the periods where persistency trends lower, they tend to be also the periods where NIW trends higher.

It's Nathan again I think this is something that we're doing on a continuous basis. So.

The approach that we have given the strong capital levels is really to try to find the places where we think there is the most economic value and Thats, a combination of risk factors and and kind of the market rate for risk for that for that opportunity. So we don't really have.

Operator: Okay, awesome. That's really helpful. Are there any markets you're seeing good opportunity in and you're leaning in on, or similarly, are there any markets that you're more cautious on and pulling back on?

Our strategy to lean in or out of any one thing it's more like.

What kind of our models, but our views of economic value dictate where we want to go without a lot of say capital overlays on that just given the robust capital position that we've developed over the last few years.

Nathan Colson: It's Nathan again. I think this is something that we're doing on a continuous basis. The approach that we have, given the strong capital levels, is really to try to find the places where we think there's the most economic value. That's a combination of risk factors and the market rate for risk for that opportunity. We don't really have a strategy to lean in or out of any one thing. It's more let our models, let our views of economic value dictate where we want to go without a lot of capital overlays on that, just given the robust capital position that we've developed over the last few years.

Okay, great. Thanks.

Thank you.

Thank you there are no further questions I will now turn the call back over to management for closing remarks.

Yes.

Thanks, Josh.

I. Thank everyone for your participation in today's call and interest in MGIC and have a great rest of your week.

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

Operator: Okay, great. Thanks.

Nathan Colson: Thank you.

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

Tim Mattke: Thanks, Josh. I want to thank everyone for your participation in today's call and interest in MGIC. 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.

Nathan Colson: SA.