Enact (ACT) 2 Aug 222022 Q2 Earnings call transcript

Good morning, and welcome to the Enact Second Quarter 2022 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference over to Daniel Kohl. ahead. go Please

good call. and to second our Thank morning. earnings quarter you, Welcome

Joining expectations the and website discuss results. will Rohit the Gupta, and Rohit issued strategy. our remarks, me are The today before against Rohit based section contain of financial results progress for statements. set of President of Investor overview estimates, recorded to projections, After is as which of and We Relations our forward-looking at result Chief materially cause such and of actual our as marked our statements Officer we performance and prepared an update to revise quarterly earnings yesterday will Dean under the These questions. closing statements that Financial and risks new operational any company’s the a Chief Today’s section undertake today’s your uncertainties, call different. or the back we details and and market are call provide Treasurer. then be use will turning Dean take and of obligation business, the Enact’s quarter Mitchell, results to being are Officer; on Executive of include metrics for a results quarter to will closed the may comprehensive current after assumptions, materials www.ir.enactmi.com, subject available no information. of on date remarks. are financial second second XXXX

filings measures remarks keep materials mind, turn that, statement on in Also, well upcoming release press over include please on which cautionary these uncertainties, regarding the review as Reconciliations with and presentation forward-looking found to can Rohit. metrics non-GAAP website. in discussion our be please are today With these I’ll SEC, as release, of website. our the available a our For SEC earnings in press of filing the the our the the management risks certain relevant to in most earnings our GAAP measures. prepared and today’s and call language

Thank us. you, for Daniel. thank you morning, and Good joining everyone,

quarter of for performance strong was second The Enact. another period

Continued execution of and million activity year, income have last elevated up $X.XX continued on work. same of per to in releases period cure operating resulted and reserve return net XX% navigate combined for great their like of how of from team this to due record proud equity adjusted strategy to or thank our I’m XX%. a would our with environment $XXX all we share, the

to During levels while risk Enact’s the we returns. attractive differentiation quarter, continue enhance competitive maintaining and capital adjusted strong delivering

in purchase correlated refinance recent with an interest and industry upgrade financial sudden flexibility and the received record to is affected The increased On significant BaaX rise our market however, performance results, housing from Moody’s have highly as compete ability customers. the our to our additional quarter solutions to quarter, continue we persistency our of additional activity. and in and success. rates a upgrade win of to mortgage and by opportunities IPO The have This written $XX not reflects has creating market, since the customer support of technology portfolio our needs expand balance tools execution, business we recent that evidence our we sheet. this marks in production thus Beyond meaningfully insurance it believe and the volumes, origination the been the innovative, We meet new the during designed XX%. overall to while impacted of unique Enact the of time second we decision strength by delivering BaaX Moody’s our relationships our in driven and our billion continued to our front, goals. in for new market the engagement slowing wrote to upgrade decline enhances

which has from affected increased by the benefit also been We same positively persistency, rates. rise in

points The rates record the XX% spoken our pursuing during to have market below positive that current pricing this Importantly, least basis growth drive another at has past expect sequential right which moving constructive. our impact quarter remain insurance model. competitive the right of to $XXX though These I’ve rates in business price XX combined of our our the billion, for and demonstrating business targets quality commitment the we portfolio resiliency a mortgage high forward. on in the reached about at risk. persistency environment to in-force, factors

while economic aligned increased risk. is with attractive growth engine kept rate to our economic discipline changes targeted our pursuing the also uncertainty, delivers across scenarios. to manage that returns Given our of and we goal This remain stated write ability in approach stable shareholders we making overall pricing our value new confident relatively for and business our creates

and trends, as the XX%. thinking was experienced dynamic both quarter, weighted support of record decrease the we quality our XX% large written that XXXX at the The and a was evident have of saw least that average risk persistency portfolio FICO And of our equity in our market equity strong. realized remains manage books we and This in score was quarter of portfolio risk. have forward, second risk XXX going result to note as average strong prudently in that would to ratio value credit and continue mark about increases to the XXXX We loan home XX%. appreciation increased policies a a substantial price I should

X.X% sequentially risk from layered our decreased expected, as and to X.X% in-force. addition of risk In concentration

and on eighth second forbearance in favorable to a and a leading was plan. continue cures in healthy decline delinquencies. Total a quarter risk and loss year-over-year XX% appreciation, our reserve loss management negative improved the $XX consumers mitigation new release result quarter was home resolution to strong efforts, our price basis to the outpaced of of quarter ratio Our consecutive and million long-term which delinquencies

quarter our risk with of delinquencies We the improved in in-force or New second sufficiency. XX% credit XXX% of by covered ratio sufficiency PMIERs line transfers sequentially and also $X ended risk with seasonal trends. billion of

a strength facility at financial flexibility our $XXX enhanced by credit entering further we and revolving quarter, the attractive terms. million During

strong robust and position regulatory in capital levels, sheet flexibility. puts capital us balance enhanced excellent with an access Our to financial

execution approach another our PMIERs to of strategy, balance while key performance aspect allocation. also support capital speaks maintaining policyholders, against our to balanced existing our Our a pursuing strong a sheet to

dividend in the and our business During subject the market paid dividend expected be economic we and quarter, to paid quarterly with requisite September to approvals, conditions inaugural next performance.

dynamics. and of dynamics economic to capital to addition and In dividend, conditions, on additional return to of requisite the by based business our assessment market approvals to expect end we shareholders XXXX quarterly will subject believe a supportive in to the be I’ll now our continues to few Dean take market more this performance. discuss moment recent industry. detail market a discuss for in We minutes.

along and been will strength. in above of volatility. robust. and home However, rates where are potential we also labor is inflation that, market strong economic appreciation. we increase uncertainty that equity up the homeowner recognize sudden the drive The near-term see levels, price areas there has pre-pandemic significant and impact remains with continued through the built Household Having said there savings

this a major driver market cycle that of recall housing during supply. addition, has dynamics housing been the In current

from to to have affordability an we in that the the have some in seen rates remain is pressure. low higher demand levels, they areas, improve reduction at started inventories there and evidence offset While providing

haven’t trends driving changed. Finally, the demographic demand

and First time capacity we our homeowners and significant will long-term and our utilize program tailwind number dynamics reduced continue other sheet remain drive home buyers significantly for a scenarios. as we production to continue a of complex to home our markets potential risk in-force. also the age peak continue to portfolio initiatives, additional Through prudent our our affecting balance plan over while for we provide multiple growth new to embedded will transfer a The will in in risk credit reach all have insurance providing with that buying.

have in For to certain factors. certain risk geographies, for believe prices loans we more are weaker with should develop. stacked potentially vulnerable increased conditions example, And they economic we

of of And long-term to markets is are continue successfully favorable turn to under that we ensure all near-term be entering continue with our these we that drivers dynamics capital. in position part from are balance are for and year not to strong focus because execute future business, the that, monitoring allows our I’ll stakeholders. and responsible operating a creating create metrics, our well-positioned them scenarios. resilient, and because The Dean. clear, As our taking second will are consumer ongoing committed we evaluate actions of actions. operating access remain of Enact multiple a to growth, substantial With To despite performance. it value housing us to potential sheet for half confidence strategy, a to Overall, over we at the framework right to a are of of the of we the

period income Good operating GAAP share net share of the the on equity in morning, strong $XXX share compared diluted and We diluted XXXX. $X.XX financial delivered the income results diluted everyone. as per period of in share per per a to was very in share million $X.XX second or $X.XX same the last Rohit. year quarter per was approximately per the as return and Thanks, last quarter Adjusted Adjusted $XXX $X.XX or XXXX. diluted the million quarter in was $X.XX same per share in of quarter in to XXXX. diluted compared operating also diluted year first $X.XX XX%. first

revenue Turning to drivers. key

quarter, down and $XX interest by recent insurance rates. second sequentially of New quarter billion first driven from increase XXXX was originations the billion quarter from billion down written for the $XX given in the the $XX in in lower

in XXXX, the it insurance new levels and while referenced, levels Rohit is As and pre-pandemic coming historically remains XXXX quarter. off high robust written for above

of last in transactions written insurance from made purchase quarter. NIW for XX% the total quarter up our up XX% New

to made interest policies from during up XX% XXXX. quarter XX% the quarterly persistency addition, and In With last in last payment rates the insurance of written up from second quarter. of XX%, rising monthly XX% quarter quarter second our increased XX% up new again

increase above policies to in current market decline addition the in mortgage a with in-force rates rates. persistency our mortgage of In continued percentage rates, was driven the rising by

would new billion, insurance in the second to second quarter of XX% a embedded value the improve positive which of X% Given combination comprised year policies. record the of new written from a for persistency. and which quarter, by rise insurance $XXX prospectively, the X% interest driven throughout of portfolio was the we our persistency and of ago Insurance rates is monthly in-force increase Year-over-year increased sequentially. expect in-force up reached up a is

XX.X on year-over-year. our of base X.X XX earnings and sequentially of points down up presentation, premium Page basis reflected As rate basis points X.X was our points basis

before, changes mix, refi purchase in credit deviate from in any As base the refund driven trend we’ve quarter, and persistency, new mix changes given rate estimates. the long-term written the noted premium by can insurance premium

sustained a of of quarter were of in results for change this and second are indicative the Our with the rate remainder premium the consistent year. trajectory not base

we our the such, As revise rate and basis maintaining point full base to continue XXXX, are a will X year for decline monitor guidance guidance we necessary. as this premium and of

during addition growth seated year-over-year. net increase in-force in premiums was The higher also policies current higher written, credit $X the to in new cancellations changes from was single income In in year-over-year, earned rate, our sequential million, and risk up of price in insurance million, a of seated rate, quarter use our the X% quarter larger $XXX premium transfer $XX higher X% rising compared single in million of the and as offset sequential rate by lower down premium X% of expanded earned our Net X% premiums older and the our to in by second earned the portfolio our by was in of base Investment premium the base premiums partially offset sequentially quarter lapsing reflected premiums environment. lower program. primarily as calls primarily were improvement lower premium and in up $XX quarter. insurance million bond and rate quarter the cancellations the net interest current current driven sequentially

approximately for the money to X.X% environment. we the rate rise our in new quarter yield invest increased the Given in as higher rates,

four increase trend to is these realize investment values unrealized losses value. hold do In expect addition, to losses average these than to portfolio. securities the ability in to duration continued our market our we not less however The portfolio investment the have rise in the par to rates as on years. maturity has We or

progression of to value period short relatively occurs a the over So time. par

benefit Turning the quarter last of million of to were as of benefit the a million a $XX quarter XXXX. second to in Losses quarter in credit. $XX million $XX compared and

benefit in resulted which X% in favorable for and favorable quarter. XX% through ratio Cures and our second the to primarily was forbearance XXXX. prior million our losses Our in home cure the negative release XXXX loss quarter rates efforts. delinquencies been on reserve ratio and as have have quarter expectations aided quarter as performance, of a by COVID-related was and appreciation, XX% $XX increase delinquencies, cumulative the on above cure The the driven a and result, in compared a price last quarter And loss of negative by was mitigation time. COVID-related programs, resolutions continued to loss a

is X,XXX, New decreased delinquencies ago through but loss The aging decrease quarter new books in line higher normal going are with by new seasonality levels delinquencies to their sequentially from from that levels. in pattern. that pre-pandemic recent from the and approximately increase delinquencies driven year prior have – large the development

the X.X% positive with the reflects for quarter continuation In levels pre-pandemic addition, of delinquency rate our trends. and was credit new consistent

new estimate for the rate delinquencies quarter X%. was approximately claim on Our

Second delinquency of represent outpacing Cures ratio rate compared continuation the XX,XXX improvement the measures, new the ongoing XX,XXX represented X.X% delinquencies. quarter quarter prior quarter a of cure total the in delinquencies driven associated slightly to of as and of and both of approximately decreased by in approximately XXX%. cures

equity assessment. house under an as activity remain million using $X claims embedded of estimated with of our mark-to-market approximately a claims totaling position XX% end equity low based in XX% second approximately quarter. the paid index policies remained of delinquencies more Additionally, having delinquent the the substantial of with or quarter price an our XXX The

both serve additional to progressed As ultimately this during saw the I’ve and for of frequency to as mitigant potential past, that the we this and of future can loss the claims noted a potential the delinquencies in claim quarter. trend evidence

in $XX quarter was the expense with Turning and and XXXX quarter expenses million as respectively $XXX the in million $XX in XX% We XX% to to of guidance of year compared expenses. a were ratio for and second quarter for million still total the the first respectively Operating and expenses XXXX. million comfortable of XXXX. $XX feel XX%

Moving and to liquidity. capital

at approximately $X in remain capital XX% our had loss by PMIERs PMIERs coverage quarter This of $XXX very Insurance and quarter second in-force approximately program of Corporation billion the end, $X.X XXX% sufficiency to at Our or approximately $X.X or reflects in to our compared XXX% the made Enact requirements, flagship Approximately billion million quarter billion our program. holding published Mortgage quarter billion the the of XXXX. quarter PMIERs strong our in transfer $X.X above company. At first risk of insurance the by is subsidiary we approximately insurance by end. our credit credit, transfer provided covered credit risk distribution

credit During flexibility. into financial the senior quarter, facility, $XXX which five-year entered unsecured revolving our enhances million a we further

close, structure incremental our don’t change quarter we received addition, borrowing conservative Moody’s we capital to Post In upgrade our provides BaaX. BaaX of though, to meaningful capacity, ratio an foresee debt XX% meaningful from capital this in from point. at

our the of enhance taken continue position to marketplace. to in our financial and be strength the that the pleased recognized performance we’ve We’re actions

we committed which million. full quarterly basis, quarterly to which approvals. On of payment mentioned, capital Rohit capital quarter, we returning dividends of subject excess return requisite $XXX year a was dividend to our includes and shareholders, million inaugural to $XX the remain As both during made

in So environment. to strong results generated recap we quarter, dynamic the a macroeconomic very

market believe our conditions the to year, flexibility goals enter and remain the second we necessary. adapt half we the changes focused we to on remain as achieving overall, As maintaining of supportive while

continue position to and for our With financial combined it balance shareholders. flexibility, with turn strength I’ll value strategy Our our us sheet to Rohit. position, back creating that, competitive and

to not set qualify qualify living help important people’s we affordability payment on down of and of homebuyers price private for save increasing first We becomes otherwise home, pressuring sustainability to held mortgage. a a an mortgage months time remain homebuyers a industry-leading tool in XXXX, who for purchase the appreciation solutions XXX,XXX important to At for have. this a accessibility, of six when Dean. of in to ability have might an Thanks, a cost the goal. and mortgage role In more and insurance an to increases home play achieve even for providing homeownership consumers the committed seeking

very industry housing an half many and insurance our opportunities beyond. of seek strong to and the our been stakeholders the uncertain into for playing confident business are time, of like a Enact the believe and enter to we’ll to in we families a the other to of in year, We contributions the I’d in thank vital strong supporting our sector. half all, are ability achieve is All continue contribute to As soundness and in team for sheet, we role our and And a has the industry. first safety record With it XXXX the second again in-force we to performance. positioned well goals. balance their and our in

take ready now to are questions. We your Operator?

[Operator you. Thank Instructions].

comes Our from from Mihir ahead. Please go America. Bank first question of Bhatia

is you that? take in outlook? finance in it maybe my changes to have seeing economy? that – or really to for everyone understand some Good take in downturn I mentioned slowdown like the Maybe affect How trying that main taken housing? there? the you what it of thank Is has the generally, the What there recently. trying more to just just – you that changed – using you. prepare Rohit, for a lever understand just you’re is actions what focused those you morning, recession? how you’re for questions. – Just very I wanted a will to start pricing taking Thank guess, seeing you So obviously, in with that and to just which some on will actions, are consumer be a prompting HPA? led you to Is consumer changes your outlook, that’s

morning, Good Mihir. Yes.

question. good very So

are homebuyer start in as that at are same we and the facing our But pressure acknowledging in rates, sudden to that facing, kind inflation. seeing market a mortgage up home increase industry. balance we by a prices same a that brought that sharp time, market have constructive is the is the still of from Let the we the time, I go saying, my and is for consumer me in housing continued good at stated remarks, and –

big labor are side, very months, other continue savings We which see the consumers XX be and a been has having housing market that a months than of months On shortage pre-pandemic strong supply, the country. see in higher we last levels. X.X XX continues to a still at driver across the to

So, say world how that’s see right same would uncertainty that is as I at environment we time, country and housing of that now. forward. factors, the in it the the kind believe we given the has macroeconomic the we are that an the risk But facing, geopolitical moving stands market more

just here, the this we bringing have the concerns. think of terms environment through that Mihir. vulnerable navigating pricing you is our the This very And sure essentially, we variety certain of that pricing clear, risk-based To pricing a in flat core to could are and that certain be in one beginning mentioned, So quarter that about kind and the the factors by was fact areas in action, that geographies our our portfolio deteriorates. driven making in by our not keeping driven risk in scenarios. be tool is of more performance as then as portfolio, those we closer engine both increase by is generally stack to event driven

written largest good look front of a in-force mentioned, have think environment, in XXXX environment, in portfolio, mentioned policy and credit very and at I equity our broader in them. XXXX you books meaningful good built home if and as our very was underwriting Dean insurance I our

portfolio XX% our portfolio equity, XX% has XX% our XX% equity. So of of has

For pricing newer the books, I actions. about talked

and We We by transactions our balance lastly, the driven And our program. continue which also forget Mihir, taking covered use want sheet ratings. CRT the our actions at to of being our insurance to terms, credit did XX% are attractive first we program. bolster in our to risk transfer I don’t two in-force, half has

IPO. So, we upgrade from a our second Moody’s got since

the We put financial to us leverage, flexibility with we gives additional in That need event facility additional credit recently. continue it. place also us and we in a a low operate which flexibility, gives

not business factors from think think whatever seeing perspective, for that anything that’s I So, are position how about our we But scenario we to our on in a how through. plays performance. different consumer it’s

XXXX about at we levels, level. actual we being are pre-pandemic think of I kind talked the rates is than our writing delinquency books higher

So environment. the that’s how look at we

Got of very That it. maybe, your is flexibility adding more sheet, Thank course, you the balance some helpful. ratings then And just mentioned upgrade. and you. bolstering

overall, the all return? buyback MI? my you capital are you So Is special dividends, or beyond And thinking dividend maybe about questions. things? around growth thoughts maybe investing Just still have allocation those capital changed? about by Thank bolstered just priorities How it those other thinking how are you. in are share

start just the that our about me business let by actions Mihir, much long more saying So we think we are how on taken term. have

IPO. So of journey putting credit post that in our was place the was something facility part

put we we we low in keeping leverage about business. about think So, our our talked had place. that also as And financial

priorities. that the to So past. we’ve capital ask just our those saying capital would allocation me the shared that we were about not I’ll I allocation priorities in talk start let changing And are Dean by priorities. And long-term

Yes.

special shareholders. about think a believe to available I us take, buybacks dividends forms future a return We Rohit that our capital on excess and of call priorities capital share we with might the well remains risk this are as us and growing million conditions mentioned key to key to that, performance. to returning capital, Mihir, economic returning drive approvals, look the business As shareholder both shareholders, that $XXX value If shareholders mentioned, priority the our think to as includes dividends that quarterly of means that through management committed balanced framework, we business and to capital subject year. we’re the excess time. – as to for in to to obviously return as kind That capital we requisite of continue

have to constraint. limited we we a float acknowledge think do that have I

to of that’s facts we tool would but program buyback what call, speak. toolbox, a our I share that circumstances, any tailored so So need to possibility our to and a be, kind in certainly believe

So thing last in buybacks, the that. in say about looked that. And to like how obviously, the and on needs of a potentially that’s of I context current – effectively the value we’re share the the price I considered intrinsic share nature as should benefits thinking and that guess be we program of implementing assess

about that that’s it, we So at how gets Mihir, and think hopefully, your question.

Yes. Thank you. Thanks for taking my questions.

The Suisse. from from Doug next ahead. comes question Harter Credit Please go

John Doug. This for on is Kilichowski,

First kind the your of we’ve seen? just to given around cures rest the activity want favorable thoughts I question, and reserve of HPA for get XXXX, COVID

Yes.

forbearance driven of of forbearance. the question. We’ve in – That original if loss to driver million you expectations. into expectations Those cure see coming think, and in favorable delinquencies, rates, our cumulative underpinning, COVID-related largely current mitigant. efforts. to those we a So said, especially are will, – cure things of the that the resolution quarter. like release on is I much continue the been loans price performance exceed was has appreciation, quarter, cure our the relative – Again, the by good Home quarter. primary that XXXX you $XX we’ve the reserve then seen mitigation elevated also the activity And

our delinquencies. existing underlie we performance activities. the that of to terms quarter perspective, of That continue see expectations our said, reserves go-forward any favorable In at if point, reserves relative we will about ultimate represent on like to our think reserve future our best much consider as that the claims estimate

the of I that reserving is think to one post one really back to a in reserve taking just any by from the tried go and maybe reserves necessity quarter unwound measured, of of ensure in the approach forward. having discussion. being of the perspective get The trying to being elevating future stepping take we’re one we don’t on actions prudent,

overarching approach to we’re taking kind So expect to and forward. that’s take the going the continue us I one of

you. Thank Great.

Please comes next McJoynt KBW. go from from ahead. Tommy The question

taking my guys. morning for questions Thanks Hi good here.

you those pricing Any frame might that or some the applied to geographies might correction changes magnitude So just to increased have mentioned susceptible geographies that be certain to? in prices. even of more in perhaps way percentage the pricing

very Yes, Tommy, good question.

So I commercial that would of is – our part strategy. say

So in how talk call. we just an risk something kind vulnerable public a where we look are unfavorable actions, as would idea economic I that frame if that about you a of are that stack that’s as a not an going can attributes on to geographic I well both risk environment, factors give it’s took you from perspective. more at from

on would a small housing very had trend year our that high the market. appreciation be that a Idaho. area very – an so the turn, has in event and the last example was in-force, can make small the local supported It’s to it’s in or an that in be in So terms of of basically insurance geography, easy that area Boise, but portion dynamics that

would in say moving able actions pricing taken you our be have supplement, right around. Those places. I are terms you’ll moving disclosures quarterly at to we in financial concentrations our if driven So look of the in by see

on full you the Or the full year Or thinking that we’re maybe gave? that price Okay. either impact factored an there some those with were those base about? guide premium guide already wouldn’t is And of be year not why into last increases, there quarter? kind offset

Yes.

of So size right think just our portfolio. and the we the insurance about NIW in-force Tommy, I would

billion. most So insurance entire in $XX.X the given an was quarter, the wrote on is NIW we premium and guidance in-force premium rate example, we the as recent our have

or in the $XX.X just on So a $XXX accumulated billion of the impact NIW about year think the portfolio billion. that was

an impact plays through have over but not impact, it that of that a So time. it’s won’t period

we guidance still of of rate point kind the quarter to gave XXXX with fourth four comfortable premium are the from basis we quarter XXXX. So on fourth walk base

Thank sense. you. makes That

Dowling Partners. [Operator question & go comes Instructions]. Please Geoffrey The next Dunn from from ahead.

morning. good Thanks,

have see going eventually First maybe gradual to a thought going we’re we in forbearance see acceleration that just successful would it a question, what claims as where go paid to the ever truly versus just material are we ago? plans been a Or climb year has away?

Yes, obviously, $X quarter, Geoff, XX Yes, paid. for million the very Thanks in question. good current claims, activity de of minimis, claims so claim it.

probably from could for think the bear they maybe the XXXX requirements at foreclosure to develop likely what And the is activity I more up need more in bring our they think is of working the beginning claims at extent this heard I still of that, out CFPB they to fourth think when more – in servicers, adjusting we’ve to the of with the when to expectation moratorium, are through period. for year, prior the this do foreclosure. they’re solutions are elimination assistance of of – discussions to start and but least that of pick earliest the to – to types COVID XXXX, homeowners quarter develop likely likely beginning servicers

And to was but political Obviously, into. proactive wanted reserving, the COVID on picture Great to I reaction seen answering their bigger et efforts, keep Okay. a more is its particularly what question a feeds front people we’ve ask forbearance plans, and with which your that in the in lot a of then on part, homes, kind Recession, to cetera.

of contract I’m think that How this about seen encounter historical for. a have rates into do It’s trends credit how business going not something when sure eventually book, not you wave have assumptions you factors pressure? those on feed reserving into we’re buildup. a your majority of if the we next before, big book you addition, recession, equity the of we’ve X% ever In

over how years? next three So reserve that how incrementally into two, the do you translate you

Yes.

the years, two, okay. over So three – next

now Let and pivot real me two to answer in years. next here to quick, three the then it the I’ll

reserves. said, to to aren’t we’re think approach we’re believe prospectively. repost what actions that making a prudent having I operate by we with a reserve do which contemplates in Geoff, the macroeconomic that to we’re that on we earlier both operating approach be on sure question, So and unwound taking And the performance I that expect measured towards to environment as as an later that in trends eye much any like well reserving, seeing the

that’s in you see which pace come through of reserving So I we’re – think maybe actions the today. that taking some at

for for pretty potential as and to we well going described, for laid much scenario us some high-quality I it been kind potentially economy large, pressured, on that affecting of but as begins competing macroeconomic produce I stands a HPA, a dynamics underwritten now prospectively, to now environment. he less embedded forward, taking scenarios portfolio question your scenario pipe. where put focus portfolio kind does and the think whatever of come credit position meaningful multiple out, least position our think and actions see paths, And the more down through I performance discrete has about strength us and multiple really think at could of complex, the credit age performance we Rohit could with very And that a both overall. in as predicting have, the

flexibility more through is So increasing about referenced and price, buffers, to think mean raising things our going that all are of through programmatic we’re come what that pipe. those I credit for, the financial the the and kind use, through focused again, on, comes readiness. about Rohit exactly whatever prepared down being I less revolver prescriptive performance what actions cash scenario and additional through CRT operational

there’s that prudent road, stronger like reserving Okay. dynamics would model all prudent like a more has surprise... a here, maybe changing these development approach property but possibility upfront, down into a if we a consistent move create It where sounds for reserving casualty-type almost might the

to environment that’s about look COVID not rely that but scenario reserving Obviously, think to then good many both relies I good which way where we Geoff, think, the unique actually What terms out on is a have book And the in this in book our point, are mitigants unique depending it. And through. think and I experience. front playbook of XX% do, actual in a your our in there look them. to so of performing then crisis, to a we what previous of our might delinquent at even credit because embedded on XX% on similar going methodology plays delinquencies our was equity and are downturns underwriting equity. have

approach marry So for to what’s right approaches I here reserving think we’ll the us. figure to have some out

would and both judgment And on we’ve relied Jeff, always say and reserves. I experience establishing

I maybe on to and how don’t facts applied, going circumstances. think any different So that’s different, be based that’s

Okay. Thank you.

you. Thank

Shane go Please from comes Rick ahead. question next from JPMorgan. The

that your between taking high have Look, guys. questions. portfolio think likely my interesting in Hey for vintages to about vintages. you’re incredibly going bifurcation an are to Thanks see XXXX XXXX, We and for embedded all going an there’s where versus likelihood and lot persistency XXXX of opportunity appreciation ultimately price a be obviously, shorter durations the home in vintages to refinance so HPA. less the

environment about a or of becomes that a policies sense, that you knowing gonna approaches, programs, Does little in knowing, single but with tactical for those becomes attractive strategic a of think lot sort that make I’m where talked this to bit about do economically do your more lot a barbelled possibility but when that. it duration. example, not other more of portfolio the – to there it in terms be shorter, You’ve premium curious some tightening are if are

Yes. Rick. Good morning,

I below well very the on current still terms market half between are when XXXX, quality then would of embedded and between lower kind all of say book. equity similarities lag well of terms loan more on of them books, rates even and XXXX embedded are a And bifurcation of just closes underwritten they book, So while very that both the question, relatively as having by I of for rates, new because would there’s between are there market book equity. rates start books first XXXX as and interest in good that that credit. our rates, there’s XXXX, saying being interest that in more obviously lands

we find different about for returns those returns, a look our under as we economic and get think all we do those as places right being expected on value, we points in and the of think we above as which your And the scenarios the just at business some kind out. I to we cases cases volume those most those about both value? of we strategy, of So, new that without point, maximize can do where So they value capital scenario our representation where where would is well find and I our talking And buckets. we about which books, think different say performing can commercial can factors our cost alternate of look play books at that as develop.

all buying as alternate whether in off coverage have with that sure one transfer that loss that, to they balance actually are we the program out, we if coverage make on in what also sheet. is addition scenarios talking books, they plays have are or about. approach embedded to equity also risk concert is that then we And of don’t exactly makes credit we sure the books, onboard So our then programmatic

Got it.

that Okay. difference ILN you how potentially And persistency? with terms there that, in mind, about of any or the is lower like in anything think given

credit really we Rick, our program about think I as programmatic. risk think Yes, transfer

So life I to about relates losers not having potentially it average it coverage, the variation getting stress to as winners and to getting policy as simply relates the think weighted and programmatic on if probably more a or less and emerges. book potential coverage, when years pick

the we’re right end at I more side, side, where little that’s price. commercial differs probably take, a maybe the which approach think CRT front right for the So looking bit on of the kind the we risk on

Got it.

Okay. you, Very helpful. Thank guys.

you, Thank Rick.

comes question Please next from Gilbert BTIG. from Ryan go Our Instructions] [Operator ahead.

production around there hoping your market performance, was about Dean, color could or be supportive the are talking conditions would volume on you’re Good you any coming I credit expand that through comment like you helpful? overall, remaining additional Thanks. morning. Hi. seeing

I’ll Yes. take morning, Good Ryan. This one. that is Rohit,

production billion that we same be just time, in perspective, and the But for $XX levels in-line entire billion at we the written our new elevated XXXX quarter continues our a to production. market, of period obviously say $XX written in higher same in pre-pandemic in being than historically rates $XX.X just new compare would with from production off second time housing XXXX or as But insurance half, NIW so current in the I in slowing written with a an billion have So originations market. XXXX, wrote we and interest of we example, wrote their mortgage insurance low. as the first levels

In we pre-pandemic mortgage see they end a the market high a on of dependent rates. from buying on of trend the have other factors direct pretty certain factors. consumer are index. June. last these in rates returning are actually weeks, homes, X.X%, few to impact affordability We up So levels which dependent well to other as saw mortgage a levels The degree, perspective, production towards terms has sentiment like as down navigated volumes go to on the

much have trending what normal to volume think monitoring are fundamental couldn’t all factors, and think is trends are that So expect. XXXX sustained and levels that’s focused pre-pandemic And is more XXXX those we levels and forever. I in we the do the the We to we on in XXXX long-term.

buying gives But I dependent benefit tell decade, the four that point about have new And the Americans home just in years, written, be then So our there strong. the have if is from buyer we which a have in perspective, we less last is describe. think those about a tough to premiums. have home I monthly within age benefit force, buying early next getting of or longer, talked trust related our a first-time the XXXX, been on taking in out which factors next the quarter us first-time to factors to you is is policies seen think we to are the in consumers trends rates because macro lot and more persistency one that’s a average stability whether fundamental home for next our insurance majority being to around very the higher more industry going insurance month,

full add have half? Thanks. versus additional reinsurance would to update where us that year seeing just Okay, for great. you the in is of markets? we helpful. Thanks. you do execution was year, traditional second like And you’re or the reinsurance ILN in best reinsurance maybe could you reinsurance place, between into like you move on feel My half the need That on second the you question second as the

question. good Ryan, Yeah,

much a programmatic answer, and like risk that reference transfer credit I prior back So we’re the user-sourcer come of just would projection.

traditional reinsurance I so the continue or access us market expect to And either would capital to markets. the

the execution prevailing us given sources, I gapped the have out think, best benefits of kind engine previously market towards one do CRT is diversification the point The have dynamics. our a allow we capital design which bit. that of little of markets of to capital

capital markets the when the in market, recent that reinsurance a little history probably a competitive markets. But variation markets, think into enter little it traditional stable. we are out from wide as remain a any pretty is market, there or historical my capital the and gap-out how they disruption stay reinsurance and I the expectation we’ll early volatility disruption in more on or bit the with wider to still is is just relative find traditional

some here you of to our and the point a give sense that’ll we’ll of be So focused, at programmatic we’re user risk transfer credit program. the continue in now. And bigger probably is where least

Okay. Thanks much. very That’s helpful.

you. Thank

session. question-and-answer for back closing like our I concludes conference over to turn to any the This would Gupta remarks. Rohit

and Perfect. forward Thank the good in a you. We look year. to you Enact Thank day. you your interest speaking with Have throughout appreciate all.

Conference has for you concluded. attending presentation. today’s now Thank

now may You disconnect.