Enact (ACT) 7 Feb 242023 Q4 Earnings call transcript

Hello, and welcome to Enact's Fourth Quarter Earnings Call. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker Daniel Kohl, Vice President of Investor Relations.

You may begin.

Thank you, and good morning. Quarter Fourth our to earnings call. Welcome

performance today Officer; back Rohit and me Rohit then provide our discuss remarks. are Dean of for our Officer before Rohit Executive Chief will turning business of overview quarterly and the President an progress Dean will to Treasurer. against strategy. Gupta, and Joining and our Mitchell, results details Financial Chief call the closing

questions. your take then will We

expectations the quarter, earnings These of we will projections date. today's for our after www.ir.enactmi.com. include the financial These of close set as market are the Investor Today's and of metrics. contain use with being estimates, materials forward-looking statements. Relations recorded yesterday on at along financial section and company's the The based statements of issued on call operational website comprehensive are a is results and available assumptions, current

Additionally, undertake or they results of risks materially actual to a as be different, new uncertainties obligation cause may result information. no and which are such statements subject and to we to revise update

review a please risks available filings as the as our of cautionary language in these press and well in uncertainties, forward-looking on release will which our discussion be SEC, with today's regarding website. For statements the

materials turn our presentation can With website. the be in found earnings mind the filing today keep non-GAAP I'll metrics GAAP our of management's certain SEC to measures. release, and include in Please call Reconciliations the Rohit. on and earnings that, relevant remarks prepared press to these most upcoming measures over our the

Driving strong performance, also and solid XXXX results, efficiency expense Fourth strong delivered increasing focus their a to the employees. possible them shareholders. our another year investment execution year. for deliver morning, to talent returning profitability risk performance including insured helping full for Good strategy, income, work growth this in Daniel. Thanks, We capital our commitment and hard while thank our and and I'd and very everyone. high-quality substantial cycle-tested returns credit growth Enact portfolio, and of by like continued management successful our continued and Quarter was made of

for ended of Net or and We XX% insurance Fourth record million full $X.XX insurance XXXX XX%. return persistently year billion per billion, share and with equity written reached on $XXX driven by the was that for in-force income full diluted $XX $XXX of the in Quarter. new year the was

cycles. In over addition to that we financial strong to our us XXXX market term several performance, help the strategic perform during position achieved long across milestones and will

important technology we platforms. customer enhancements to and First, delivered our

customer These deliver of experience of seamless number and enhancements improved to efficient add us customers in caliber, demonstrative the market over XXXX in lender XXX that new have the saw helped a experience and contract. are our a partners to our have lenders and commitment high

in significant made platform our compelling extending also adjacencies. We into progress

pleased During to mortgage X participated in Re opportunities the GSE Enact risk I'm international the have market. come since with Australian our Enact mortgage market GSE its today, announce leading attractive business, have Quarter, Second we continues And has to in of the pursue first provider in write into entered reinsurance deals launched and to a that insurance to Enact we deal the that launch. all share Re high-quality and Re market. reinsurance

Enact view strong with and our since launch. to our mortgage we in the market launched insurance Re, are scaled its discussed I of previous We the for opportunities have pleased returns, and familiar, and When be we risk-adjusted be excited returns we underwriting participating attractive experience. to mature we seen leverage where compelling a continue can

business, Re growth long-term EMICO capital the Re opportunity. additional Enact contributed million see expense this and Enact will to in-force with consisting from transfer. quarter, $XXX Going our X.X% an view quota up GSE new to of support forward, opportunities we well and announced credit new of quota previously business Aligned a written as primarily insurance efficient of share continue as during which a risk as XX.X% share

believe funded growth current for infusion, Enact keep Based time. we with view, support that continue future its sufficiently the apprised to have of we Re this the will and market progress on through our to foreseeable

Importantly, capital very topics on and to the we have with will for strategic to expenses our year pleased say these Both in operating executed we returns shareholders. our and target and our driving I Dean target XXXX. on shortly. these the while I'm opportunities below our more progress achieved performance exceeding for

efficiencies XXXX, our I'm for also business will turn continued balance will The now strong After our I the we value that results. success confident market a disciplined we to maximize in In while enter we and growth. core pursuing MI environment and continue are positioned supported operating and strong XXXX, economy a by household to sheet. remains XXXX. labor resilient, healthy well as

rates for consistent potential continued rates uncertainty manufacturing and delinquency While our post to mortgage continues pre-pandemic geopolitical and strong. as interest higher be borrowers prime macro economic risks, levels factors quality such are with conflicts,

slowed amongst long-term borrowing housing will for and by outlook mortgage. insurance we inventory for homebuyers, the and help are to private demand low an the attractive insurance market. first-time prices have costs, in mortgage by as a we the tool Even amid originations the opportunity encouraged to mortgage and Home higher pent-up housing continue remain see important qualify supported buyers be strong demand

growth. has higher While elevated support persistency rates in-force to originations, have insurance interest continued mortgage affected

come an mortgage our XX, uptick a into has in housing in recent As selling spring XX the to pointed rates may market than in only points heading a data prevailing more provide down which peak at basis rates activity, of of Fourth December following Quarter, the Also, X% above the least mortgages tailwind at of have X% season. portfolio the rate. as

average on and market weighted and FICO based our a X.X%. overall of information XXX to XXXX. current score to in certain our be the our NIW remains rigorous. on in constructed of in and strong, credit in potential a Pricing to loan-to-value response was Our geographies The underwriting for average is portfolio in risk MI overall similar portfolio the ratio that remain We and XX% expectations XXXX was risks. cohorts size with price quality standards during macroeconomic insured layered quarter fourth increased of quarter, weighted

us mix pricing in to our rate targeting ensuring engine to dynamic we expected managing returns returns. business Our price time, best enables real prudent while risk-adjusted deliver customers onboard while a appropriate of

cure relatively fourth was flat the efforts credit and up pre-pandemic our loss in rate quarter delinquency during and and strong continued quarter with Strong XX year-over-year our mitigation points the consistent helped basis Our sequentially, levels. expectations X.X%, performance activity. drive

of We believe loss ratio the $XX reserved of XX%. remain for well we range was result, released reserves a million scenarios. and we As a

principles operate transfers. and Since We was and subject approximately XX% of and providing strength At was that risk completed from loss our of reinsurance PMIER strong volatility sufficiency balance loss liquidity. with financial Dean ILN, credit to continue have strong quarter, last an risk share to will excess capital quota transaction, sheet year-end of in-force a a our detail we protection efficiency an XXX% or and XXXX, a of $X.X sufficiency position billion later.

financial point to grade strength to minus received XXXX. previously also. our EMICO financial our announced, and A As different X insurer investment upgrades a X minus upgraded liquidity, its And or in rating to holding equivalent EMICO agencies multiple proof agencies different strength S&P is as across rating EMICO January. rating different and by X A in rated rated rating With company upgrade, across is that agencies continued

investment upgrades rating debt in XXXX to the Additionally, grade. drove Enact senior

meeting to XX% deploy allowed flexibility us XXXX, the quarter including dividend, a during in shareholders. quarterly and position to our over our commitment share our grow in capital in and In the and million dividends shareholders business capital while and return dividend increase form capital special also $XXX the of $XXX to we fourth strength in-force, returned of second to the The new support quarter. to our of beginning million repurchases, a insurance

our we and $XXX second authorized of share of Additionally, million program buyback completed a million. first program $XX

maximizing value we capital balanced through forward, approach shareholder to remain Going allocation. to committed our

opportunities to see will invest the As our shareholders. levels we while return to the liquidity our maintaining prudently for business also growth and commitment to we continue XXXX, capital strong enter in we

our quarter, opportunity for On strong total the customers we to through I'm share I in late seen to and XXXX, our we on value look increase in borrowers valuation XXXX the have stock We XXXX. And serve will we to Dean. XXXX. We and early a given very our that will repurchase turn compelling performance continuing drive we pleased With forward return over delivering now what and to call had similar to our capital delivered in be and expect that, shareholders. our expect front, activity. their for XXXX, with our to

was the to per diluted share in strong million equity third the results delivered net morning, quarter diluted Thanks, share $X.XX Quarter quarter was third million per operating $XXX We $X.XX XXXX. period per share share XX%. equity period XXXX. or $X.XX operating the $X.XX the diluted for was same and $X.XX $XXX share per of XXXX, the Rohit. in again same Quarter or $X.XX of GAAP and compared XX%. as compared was last on return income per income diluted of Good the last everyone. year, for in Fourth Fourth diluted share diluted Adjusted as on per to return Adjusted year in

diluted $XXX $XXX GAAP or compared million or million $XXX per year, or per $X.XX million in share XXXX. to Adjusted $XXX diluted was or For to $X.XX million XXXX. per for diluted the operating full $X.XX net per share compared $X.XX income in totaled XXXX income share share diluted

the billion new of sequentially insurance drivers. up in in-force $XX $XXX X% year-over-year. or Turning billion, and Fourth to a $X Primary revenue Quarter increased billion to record up

and a fourth $X percentage insurance Persistency billion fourth sequentially of the and year-over-year. X These driven market or in estimated quarter, declines flat up billion insurance quarter. XX% was billion lower XX% New sequentially was points the were $X primarily in written by $XX or year-over-year. XX% private down down mortgage

basis mentioned, the Rohit had XX portfolio X% mortgages prevailing at the just As rates least in rate. market above of points our

impact remain which rates. from help elevated we anticipate elevated, persistency, higher While mortgage lower will production rates offset the of

by earned down growth. insurance ceded higher-priced older, CRT The decrease by driven premiums or policies. and were million policies increase and in-force premiums year-over-year. higher-priced offset driven the growth, primarily and older, year-over-year The million of premiums in higher driven was of Net up by program, premiums higher by by $X X% or lapse the or million ceded partially X% our sequentially in-force sequentially partially earned lapse $X was successful net insurance offset the and of execution $XXX

to Our was factors, and basis basis is down points year-to-date. rate and yields from X.X impacted premium fluctuate line XX.X expect Remember in variety current the base Premium yields XXXX. continue modestly with stabilize basis that points were for around to X.X of to our points in XXXX tends rate quarter-to-quarter. base and our expectations, of a premium levels year sequentially full we by

primarily earned net points, premium basis sequentially, premiums quarter. rate current Our X.X the basis was reflecting in ceded higher down XX.X points

Investment quarter to lifted turn have million yields income our $XX in and over the book up higher-yielding Higher our mix. assets year-over-year. overall increase we to become proportion X% fourth million $X sequentially rates or increasing and an yield overall the or and expect continue portfolio XX% as up interest our $XX in continues investment of million, will was portfolio

yield X.X% for quarter. yield money portfolio to our over new Our and increased was X% book the

were losses and million $XX $XX last the in quarter $XX the Turning quarter compared to million in million fourth of quarter as to XXXX. credit,

last quarter was XXXX. quarter quarter the XX% compared for ratio and X% X% fourth of in to loss the Our

by Our of primarily from remained favorable ratio resulting new books. XXXX sequentially the the current by million release quarter. primarily our in quarter higher were to offset that driven losses This cure and $XX delinquencies loss trends normal earlier expectations, by was delinquencies, addition reserve seasonal performance and development in driven a loss in above partially

to sequentially increased delinquencies XX,XXX. New XX,XXX from

rate delinquency quarter normal and X.X% large quarter ongoing the to new primarily seasonality positive the development for of X.X% reflective loss credit was in of compared driven the new Our historical books. of trends and fourth XXXX, by

to to approach at macroeconomic quarter pre-pandemic to sequentially book claim primary increased the new fourth a in our reserving delinquency increased XX,XXX rate reflecting our rate to continue consistent approximate delinquencies points in dynamic levels. XX% We with XX,XXX. line environment. The in expectations Total from with X.X%, delinquencies prudent and XX an sequentially basis

recognition of XXXX, X and sequentially be by premium down expense discipline Operating XXXX. $XXX compensation of the expenses $XXX towards by of remain We to expense million points the year-over-year. timing our for sequentially the year excellence the for the year expense cost expenses year-over-year. $XXX X%, XXXX were year-over-year. million, up operational X to percentage continued to full compared X% for deliver on end expenses by and million focused lower million XXXX, tax driven full up disciplined expect the million fourth incentive-based for was percentage we and reduction flat expense driven Operating quarter initiatives. $XX The We were throughout points for and $XXX ratio quarter and range X% or down that in management to to approximately XX%, commitment

capital. to Moving

operate and position. We capital a base with strong continue to liquidity

or Our PMIERs sufficiency requirements of at end $X.X was the above fourth XXX% billion the quarter. PMIERs

third-party Additionally, our in-force of CRT credit XX% risk our PMIERs risk program to credit. billion capital provides of subject $X.X transfers is and

excess a with access new quota to interest our loss capital and both which During provide markets. protection XXXX of the issuance, quarter, of rated the quarter our we new from to closed ILN forward our highly saw strong panels business. sixth and subsequent transaction, we share ability completed And for a investors to reinsurance reinforced end, reinsurers

quarter, during rated added share approximately to increasing cede we partner approximately to XXXX the reinsurer Lastly, strongly percentage XX% a quota transaction, XX%. our our from

this losses. our business enhanced our model, reflects, transfer driving protection risk of unexpected As credit program and remains efficiency component activity volatility critical for a of capital level

allocation, maintaining returned returning and in over capital committed in investing remain we business to We to just capital strong and repurchases. million the XXXX shareholders. sheet, share balances prioritization balance which dividends our of to to Turning framework, $XXX in form shareholders our capital a

and our back dividend million shares we share XXX,XXX cash our During of $XX through quarterly a through for we million the total bought repurchase paid $XXX dividend, quarter, million through special out program. $XX our and

During for of XXX,XXX shares additional million. January, we $X repurchased an a total

share our As XXXX, current on of was there authorization. January $XX XX, remaining approximately repurchase million

to head will with we continue business into capital our investing we shareholders. to As return commitment in across to balance the opportunities XXXX, growth

be what We XXXX approximately in delivered capital to return we to $XXX expect similar total million XXXX.

business the and will ultimately conditions shareholders past, the depend and performance, of form in As regulatory approvals. amount on final to returned capital market

Shifting Enact Re. to

mentioned, Rohit to solid As launch. Enact results has Re produce continued since its

EMICO percentage contribution risk quarter, quota business capital Re's quota opportunities, to increased will an of will This million fourth provide contributed to to share $XXX Re runway the for consisting the GSE from Enact end, increased foreseeable credit support and subsequent share During X.X% future, primarily new affiliate additional of XX.X%. and quarter for capital the cede transfer. Enact the

and to solid employees well XXXX for all Rohit. I like back our turn thank and outstanding remain with call this all we Thank pleased now very We're We driving of on accomplished in we to performance. driving XXXX, you. I would believe over returns. will into are positioned focused the heading

Thanks, Dean.

and insurance encouraged look flexibility and for significant all for ahead, and we As believe to our are by opportunities strength stakeholders. continue the our long-term mortgage us execute value position we to deliver that

been homeowners, commitment Our stronger. help has for never motivates Q&A. and to more Operator, become responsibly we people are everything now ready we do

Bose with of from line And the KBW. George our coming question [Operator Instructions] first

for Can ratings more discuss whole? then This wanted these touch benefit upgrades impact you just first. to of for go to business? recent the a as is just could little upgrades industry I And what MI higher actually the Bose. on Alex maybe the potentially both the rates and a detail, Enact the how is into bit on

add get started, Alex, Rohit. I'll and I'll to Dean that. color this have is

are received upgrade. the we perspective, XXXX. both from think ratings business very I and upgrades Ratings we a have So happy XXXX with in

all January, an company minus in Best an insurance to also our at in agencies for at received upgrades addition upgrade and to us As got in the that, ratings level for we AM early XXXX, rating part of And A year. A that in investment-grade a company. reminder, we at from S&P received rating from holding level minus upgraded our we company. insurance then And

institutions think as Re, that's business we GSEs, parties for having do I it's Enact or front depository third strongly in companies our us minus whether said So whether my with. all I very that positions for that's remarks, prepared ratings in of A insurance whether counterparties,

investment-grade And all terms across agencies. a well company in also rated being of from rating positions company holding it then holding perspective, us

think period same our and both it So the that's time, hopefully, cost an capital upside over in time. of helps playing I the from a at participation of market,

when to the investment-grade ultimately sets Yes. coupled I outstanding Rohit I'll the that I Alex, and pick August mature better investment-grade, notes point spreads access for with ultimately, table that in refinance that being with last tighter the holding have made, XXXX, on of XXXX we that the to now up just fully really think think company do the we fact of market million notes. $XXX

meaningful think economic refinance it go a as towards forward we will that impact activity. have So we

sense. higher-ceded rate -- quarter. Is just one moving Great. premiums then will that forward? run the this in is XQ the makes And something on more That maybe level the

Alex, question. Yes, that. good Appreciate

we were recently about the our talked very the ILN start in so think We I execution XXXX. active market, first CRT since transaction of with that.

also from our quota the a then forward share year-end, share in transaction transaction, a XX%. XX% our the NIW. We both XXXX post cede highly-rated commission to increased quota added which on reinsurer added to And XOL XXXX we

So activity QX run baked fully rate. into that isn't our

we right probably say into head not QX. million rate So as I would the the $XX is run

When taking in I to addition XOL the into that, ILN, just baking quarter we transactions. in in closer in shares, to the entering those full $XX run account you're million rate start and bake to think a of going $XX forward forward see million, fully quota a QX,

on transactions, XXXX with important it's those transactions remember X NIW. to those latter I think are our forward

There lapse of our lapse has experienced persistency is that the in continue program continues given So rate. that been year to some, slow current incredibly over the NIW we've in CRT high degree But more the in continue the obviously, we run course quarter. expand. increase produce of offset will for the potential as to to those coverage and

you just the 'XX remainder QX the that and hopefully, I then $XX coverages those So run increase over into think, million will the the consider of of increase million, to course $XX heading a protection gives and ceded rate year. premiums continue

X add So to to things Alex, X just or Dean's point.

thing, from our are mid-XXs, First want that. in operating and to we operating overall have an leverage up that before be we messaged to leverage building perspective, we

share higher level part has important our this quota the in an group the where you of of of that where percentage build. quota upfront. participation is actually And peer see a higher So premium aspect share transactions is our of probably transactions

see in part commission and in premium, increase back an your premium you but So ratio. that your ceded ceding of expense comes offsets

So for us. that's new

is This transaction. share quota our second

remarks. So say quota share it's on would just forward And perspective, those written, up important is, wrap last about gives done point talked the that to just confidence balance of then a transactions out P&L. of to capital Dean ceded kind insurance new having I thing our XXXX loss premium in a prepared new this us in originations, in return that excess from

So that early being to the activity fourth quarter that based able in guidance on year, CRT give is in capital space. also return

next JPMorgan. with from Shane Rick And the our line of coming question

do environment and disproportionately market? is where may -- taking you owning we're on I'm that differences do? purchase volumes in a you that purchase about that it in between of there also the where be Is that as different quelled are for are Look, how short-term you And X lack tactically But there refi activity unique and both years, things that think purchase how when refi environment risk risk think then well? you slightly and approach about curious driven strategically, strategically, by we're an supply. versus driven.

and add Rick, on get can I started Yes. this. Dean color so will

in a of on purchase then we in higher very above and MI factors weather we XXXX, more effect And and went result, market. have an events, as a months, even size, QX had too. market rates definitely, and In have I in that on dynamic in play think also So I second but seasonality in some we originations between the think impact of recent X%. mortgage has actually complex play been half that volume seen combined have operating

into account is market MI volume the size a in kind market terms are playing from we what of those perspective, the factors in. of think we I are take and

and with view once data risk as up we models us have are of deep XX perspective, that very confidence with of last is our lot kind that own that stated a us come for a From the we based that the gives past, years. of pivot granular the market, our the we very to strategy have of attributes on on And from and and to case, that based base to and risk an choose we outcomes allow a any attributes based our to. categories, down level actually range around deploy our risk-based us MSA then that engines participation down pricing risk can risk that on geography perspective then in we

think you more about cycles. So hopefully, it I But our tools risk how our are for about and risk the few think to our kind talk that strategy delivered and play over that's It's broadly. us. deploy see commercial that attributes mindset terms different have last of results our I has years tough pricing that and at management would in the in to that that we of you disposal in gives mindset

management. we're that with expense always sure -- cover aspects business but think, small footprint we're Obviously, Rohit is frankly, up or to X focused quite market in much, market, management. whether pick that market market to and a be on I'll change the making into is you. the prudent our big realities, size honest on on, expense across I a probably don't One relation that as The the didn't economic focused

with much that get there, CRT know PMIERs our loss but business context, that then source. as protection. And about we think scrutiny efficient a capital traditionally, more it expense maybe on does is not and anything changes our highlight the driving a and think management in And capital I objectives then We smaller don't our again, focus. here, market. CRT volatility I change So in

programmatic of quantum CRT the of the out and I amount think and CRT the the for are might business go X purposes. change secure still new use So Obviously, objectives in to the of we CRT and but want remain place. given those

And existing more than of huge probably ask time underlying follow-up. if HPA, of are benefiting have I industry you from barbell incredibly may in a where low the cohorts couple rates. the The book history any is one that at

And the quality is be so to there high. going extremely

cohorts, recent presumably higher risk. look the coupon, Yes, to When more will more modestly look favorable Is to those drive Fed, we persistency some that derisk opportunity opportunity HPA, more HPA less but ahead? Is presumably, go Your credit in things? borrowers rates. on a is dovish cohorts, down book? the opportunity step and the will recent should that more how at we down to that

I would think and starting of Yes. maybe say how books onboarding with construction we about risk. back the

in point was your So book when we we originated if subsequent our that going to come years. construction not of I'm think in the knew sure 'XX I 'XX, and that is HPA right terms

point. So book environment our our at view on by composition view pricing that our view and and risk driven was

mind. with price basically in we those pricing significant books So

significantly. You might price We COVID pretty XXXX, remember, X started. we did of increases as May our increasing started price weeks X in

it there some pricing XXXX that benefited low from interest and and on was So HPA book good rates.

of a in. equity So good amount built

But price, our third we we point in this of were we pretty that in would and than middle XXXX, XXXX, stabilizing increasing of started started we and say our quarter I calls, in vocal on others price approached earlier as our also actually 'XX.

that's books. in right of we HPA they November kind prior the HPA the overall have embedded than 'XX books, 'XX now market, the because just And lower constructed about HPA still returns at still thinking while So current and how have construct in -- is good X.X%. books

but building those depending growth. still the HPA in slower embedded even So positive environment, there you books, this country, in still on is are HPA are where growth good

to decline, that has year. higher book shows coming and in higher rates, our of 'XX interest a of part most presentation the earnings your it, that in late we by Now question, and rate book interest have of mortgage schedule rates in terms 'XX agree last rates with your I point

environment have for. credit business. those we books refinance. that our rates is will good say, Higher is persistency interest perspective, for to actually propensity if environment drop, yes, would the So good persistency look something economic from do in I our good higher and

to of we was is basis, say the most on relative kind are wouldn't I interest there of late 'XX. a looking if portion of book. of yes, 'XX in it the that So gets a refinanced book that refinance rate that But part that and environment,

And Bank America. the of Mihir coming line question from our Bhatia next with of

start claim I for if the on wanted a to rate second, that's okay.

to the sure claim to Is mentioned, assumption. that wanted I that guess, Just -- make you not Like XX%, I'm XX% right? rate understanding initial this claim misunderstanding I'm default gross claim the to, that's right?

can you Yes, think as about it a frequency.

You about can claim, roll a of delinquency [ rate for it claim probability to the as any to ]. think going

Got it.

that on I mean, guess, right? about like, the So XX%, talked I of you've the strength book.

making know credit having a right? some performance pricing, you've that like I it's historical in the that but price -- of there the is in actual XX% know I to -- macro had driving peers, what the what that's because ago. trying than like that couple years I you is strong, quite little that. put guess trying from? seeing understand I I just it underwriting, has mean, a been -- you XX% a -- Is like I little decent-sized of right? higher it's above you reserve coming you're releases. think And something like pretty Is XX% like hesitant is us? been also Rohit was can where just So -- just your growing like it's about I for bit the context talking I'm But mean, is mean

claim the probability deterioration seen going that hadn't that any assumption. talked And heading place, XXXX, fact out we thought rate we economic of and delinquencies XX% of the It we heightened into performance more claim. we born increasing presence put in ultimately about we those was was the was when Mihir, of Yes. that started uncertainty. driving the that to

quarter, Now out have was And year a what's XXXX XXXX in of accident year performance happened of of reserves to present. we view any since of that is reserve $XX the some then uncertainty is there and million that those release delinquencies. still deterioration, majority releases, delinquencies. this in We that started uncertainty macroeconomic on on hasn't fact, accident materialized a

landing will narrative And the our macroeconomic I line claim really credit consensus comes about and conditions continues view view our XX% probability rate us those the with be seen from born in and/or perform with anything out thinking not reevaluating landing soft elimination claim to more that really But aligned whether the triggers and in that macroeconomic line perspective just we've that market. experience think the a just prudent it of philosophy the the an we down experience our belief on And economic heightened continued presence the mean, forward a evolve. And to really of that Obviously, has view. to we with of XX% I of truly measured there's uncertainty approach become well, for is rate. that our a and continued soft reserving. in of to it's the -- more the and uncertainty

of point, everything just say to add to and Dean's I Dean in just uncertain said. agree operating environment. are we different with Mihir, would kind And I an

both that reported all that COVID claim of bureaus. there's And and was presence by onwards XXXX not credit influence consumers not about is a our in timing, our If to roll you where normal. that in rate data think from significant forbearances to the something were program delinquent delinquencies

roll take us last rate extrapolate and for difficult few that. of it's So years to just

make I determination prudent that norms, at will to point think of more it's that's that us a and assumptions. and better how correct that we some be actually for the to historical time, those made in environment, this we recognize

from to February non-COVID transition COVID forbearance I our delinquency data. data in start finally a believe we'll seeing it's January, forbearance when

on actually more get we rate, we confidence, to point, environment, assess that as addition normalized we as our So build roll Dean's use economic in will data, to has that assumption. actually

it's Okay. understand gears to a base little That makes just Look, transaction. Maybe Australia proof I on I bit. sense. small. a just it's the understand point. touch I wanted switching

complexity on depending it there. obviously a there experience it I -- Why little Are time? I the credit mortgage amount size was I right? your it could leveraging at, why the that markets Australia? fair of But this to other business. mean gets add add You're to you're mean looking does at curious

just So that thoughts transaction. your on

Absolutely, Mihir, thank question. for the you and

a that our start launched Enact So I'll Enact GSE space our to I opportunities. time. core Enact competencies, of mortgage to disciplined off in shown approach did leveraging risk that we we new CRT while access and as Re is adjacent period reminder by watched to kind of in to a mind obviously, business our say, for just which expertise, knowledge Re of credit Re. management an would have market technical And We means expand that long the and by our keeping just going operate

perspective. from In from capital addition that, ratings a efficient Enact to we efficient perspective, Re and from very up in efficient setting efficient a expense way, a were an perspective

up, Re then to CRT So XXXX. my think have I'll set said Enact and and up the performance remarks, the GSE in start GSE when find good. basis, transaction. journey, since the monitored set Enact CRT we participate those attractive in back monitored the underwriting risk-adjusted we We you about transfers. participated constructs the I Re's transactions off in primarily guidelines the credit very and We did market risk with GSE and And underwriting in every find some entity transactions, returns was transaction on prepared a as we of

a familiar similar for to reinsure that a it's time, while a this story. but us, point used is point Australia business think We of proof At with. business we are a it's actually ago. Australian I very

in have market. have time, At employee Australian and same experience our we management we experience the data, some our also the with entity. So in

for good. to The these basically it. say market market is familiar have It's and mature, used available a we in that a scaled, point the risk-adjusted for of and well remote. kind where we'll experience it's that transactions small use proof the to make we the that for time, call been So for period getting value returns in very of we're us, shareholder paid are we it's and accretive a market monitoring risk use the is

approach grow CRT. think going and intent will, be use And how how about is those actually to we Re the be GSE if that's So opportunities construct but we is opportunity way give the Re for you in think to I screens, you. limited they're to Enact here. terms actually opportunities, will those in I kind how that Enact that of construct we to qualify use measured the to going primarily, that's of of focus and our adjacent But

then said, Maybe And just That offset by been a have of credit but has maybe on a NIW, unique exceptionally picture little be seems business. persistency. my weakness like last real little MI of that a time for big nicely you mentioned good. a question, just to taking step getting the you bit bit back,

gets? question So anything you good like it are is is, What the Like as big from as you even about? key worried like macro it risks most some like that is are -- risk specific just are away to? maybe trying gets? just of to my that Enact like from focused What you on to is this good a can what to you as But the understand, point perspective? as this

good But can Yes, gets. point, has Mihir, I'll performance start It not and strong. as as definitely add. certainly, very credit to may it been Rohit recent be your

think that. which we availability think stress, strong in has market, market for have results. the quality. And and price a that lots financial Obviously, We've QA validate for significant. when published had reasons about of low got our that, been quality underwrite, about And strong a through I presentation. credit It's our been labor risk, layered that even we some in has home loss we this meaningful. earnings a we consumer, options through think then mitigation appreciation of borrowers that strong there's

the significant question cure backdrop strong and we've in your X and reserves to provides that of the whatever, sustainable. seen credit not Probably implied that the all I over is activity last, So seen really of release we've elevated for guess, a quarters. that X

through we some think I time. would expect reversion

mentioned, as offsets that. potential in are some you there However,

about earlier your You we consider I about are questions, pre-pandemic, the the market. sufficiency that capital the has of go to versus also smaller talked on maybe XXXX. would levels uncertainty a mortgage industry elevated one held PMIERs be we back would talk if from given mentioned perspective, originations you what we to holding what

that it as is gets. as So good

like think net a basis. said, in on there reversion there's I I probably some much

of with I you that Those Mihir, the business model, possibly mature QM, to risk-based what's price decade with missed the that to has derisked ability of programs introduction is the which really changes think last risk. that market well like quickly the Enact the mortgage plus. are changes though, CRT have the as in that the couple align capital industry. into things insurance course, rest we've of the standards, pricing and to PMIERs, introduced question we've made got the that industry very And as over the the

All of of the volatility positively profile impacted that's the business.

and as significant pullback across So Enact we've even the still really returns, good as time. model there's MI derisk industry the value it this business to overall, is and we believe changes gets in if some the through given in there's made relative

some in I only everything size. definitely about market And Yes. if think is add think thing Dean with I agree said. is you upside I'll there The NIW,

our The first-time pent-up about supportive We in the are demand have homebuyer demographics very industry. of the market. talked that's

into homes. use insurance get First-time mortgage XX% private to time of homebuyers the

proof kind in way So the getting in old, have give of wave about big we this to terms serious started us efficiency of folks from how business, years the are points home up we And showing cost age market. XXXX, think think NIW. and I some to of can the on first-time to CRT expense the actually XX an buying of all as upside perspective, the we of giving market which are that

by reduced our X%. expenses we year-over-year So

that's We have given relatively guidance flat. XXXX, expense for

that in we the I And line then think business. revenues, a up, from XXXX, PMIERs perspective, pre-COVID, back revenue of increasing kind than in the slower a margin and starts can was ratio. the if to expenses So pace closer XXX% keep goes capital at industry creating more

Given the of capital. operated uncertainty the market, industry kind with higher in has

an better So there agree class, as some whether of as risk-based that pricing ratio, think which with a that be could new much strong could very kind about against well at significantly master but level, Dodd-Frank, of at when think settle stable some and been I point much mortgage, return, returns. of you and as industry it's has a that normalizing capital, more mortgage definition asset industry with time, different derisked Dean and risk risk-based after that CRT a completely in policies, qualified it's

with And Geoffrey our line & next Dunn question Partners. the coming Dowling from

Just X questions.

a cede coverage do limit that your the minus kind to rate quarterly And XOLs. out into kind have if anticipates quarter, First, limit? rate on going on a or or at limit Do true-up, question your mechanical the forward set those? you a that fourth plus true-down max of hitting you the is of

Yes.

excuse reason, the So me. -- go the view limit line comes in Geoff, and So reinsurers original the into we work our that to lighter, in and in mind. forward it We our then with production back intent, with set for agreement our definitely modify gets our bring production -- transaction back with George, of if, heavier. whatever And production absorbed we

So heavier It's into in that said not differently. maybe comes if contract, amendment than is the -- exercise it's a expectations. more mechanical built production or type

running the in for the lot lower billion want surplus return. precedents bit seem about talking capital than doesn't lot more you're and capital I point to stated little and $X million would about. domicile, of $XXX-or-so of that a bigger to With regardless be the expectation your a alone of ask for industry opportunity over to the a that return restriction a

So more is you're your is where that PMIERs the the trying constraining to read-through target here ratio? factor

Yes.

over year. of performance, in early the obviously the There's right course things take of think have now, the that I terms macroeconomic in to we're business lot in place terms of of year. performance a

in this time. and I we on will the predicated market progress forward, of book, the And our CRT said, is guidance covering the only the be driven and with performs how on we've what return the It gives much back Rohit to that think said, opportunity, XXXX on made the more return success and not over gives as a like table. it's in had the environment program, going the by come the talked the assess look and XOL. part XXXX, that sets capital we've be influenced the of is effectively share course at we'll we'll ultimate take under just emerges, full to advisement confidence ultimate -- quota able about continue macroeconomic capital $XXX the to forward the by books time. us to That we million then I us back provide inform through but extent that year to and of business there basis. be that that -- And

Yes.

think Dean it I just -- it back well. capital to think, tie about. framework laid talked out prioritization have I Geoff, we I just would the kind would I of

adjacent the return. watching support written is So to an by business existing priority followed any the for last the seen finally would economy, opportunity, have impact and new opportunities then I Fed's over how on view other say perspective, economic that insurance just changed actions new an policyholders, and capital our first finally, years. we several X times have capital from

for support as to that we that presents to uncertainty. the itself, have confidence certainty need And on give need mindful capital much existing our just So more we amount us that capital being how right will of economic that book.

do gave I the equation, the of a I size some previously there's perspective, in we market. market demand bigger time with think a lot At answer written point affordability pent-up rate the the that opportunity. mortgage market, insurance new a right actually of from then get right And in

target just And the then we consideration add would So that mind. also that. other in constituents we keep a would I

of agencies their rating target So you have views started. is for the right kind which on where PMIERs,

return of have year, we our view then as revisit So we the years. guidance will of that gave. as done point, current are through kind current considerations the to all PMIERs evolve prior those give Dean's targeting capital continues to the level we we But in and us

question coming next with our BTIG. of from Hagen line Eric the And

Jake on is This for Eric.

vintages yield pandemic earlier the in one, First the the to yield how share and compares XXXX premium premium you can vintages? the XXXX in

shared So we by have vintage. historically not premium our yield

risk-based in terms As can is our for we selection and are opaque pricing deploy differentiator our engines risk opaque competitive a to strategy and the the us. market, peers of imagine, you pricing to

given simply our pricing have of generally and we in our back of in made actions. talked prior you middle I XXXX. actions to earnings provide point to XXXX about stabilizing So third price the quarter starting almost I on then have updates increase would then on in we since where pricing pricing price quarter. every part calls, we disclosures color And the

in providing tough So specific that outside changes, provide it's of the any between qualitative price guidance vintages. to comparison of I direction would say

you. to my you receive that you place credit how much I appreciate for talk Got CRT have expect your XXXX PMIERs color. about that in production? And the then you one, second can from transactions X

Yes.

the question. for thanks Jake, So

was our I share to NIW. XX% XOL, but approximately Geoff's it predicated. think on then on I million, think quota the a earlier, $XXX $XXX the It's be And will identified of we've little credit. session that bit million as a earlier Geoff's PMIERs XXXX -- point -- question

we produce to that on So levels NIW coming going the the course be year. of over it's predicated the

number time, be course harder in firmed up crystallize our So of will as XXXX. a this point NIW over numbers you the that discrete or levels at give to

line coming Cyganovich Citi. of And our Arren next question with the from

year. for I if the about growth bit expectations could the was a wondering in-force for insurance talk you little

your production year while the of in-force with be pretty flattish but kind even industry mentioned that or production -- You your production insurance slowed. growth nice year-over-year, some this might saw you

you'll the if given wondering Just persistency. high see similar kind dynamics of

that. at So I will attempt an take

are existing what our obviously, the so -- seen to XXXX amount of think lapse book. I add NIW the in in can and parts be we piece

based guidance size known full for MI QX, I but obviously, only market size, our MI is -- X on narrow we that's range. you a yet market XXXX not And because companies our XXXX can think Given for number. that new written actually insurance bound have reported on range

So idea NIW. an driven in-force growth on that insurance gives you by

lapse and big question market. the in on interest the think I rates becomes is lapse on highly dependent

gives X% only exposure. mentioned within the our you XX in Dean X% the have that we refinance think and they're this our basis confidence idea lapse our book, a incentive basis I on threshold prepared for that the threshold, as about of point points XX remarks, a now refinance of book, policies or in fact the talk we have right an

XX-year the interest driven that by change yield spread, the But number. market, change rates treasury a think which I as can and both in is that

So factor But an see that I'm the of that to itself. not is in-force but kind can we size answer, those dynamics. if insurance based in market on you kind say a small, would going growth our of I subdued straight by growth increase giving be is

the follow-up mortgage and be at that you of the XXXX the it's laid which helpful. for And of in-force XX% mortgage That's that is the vintage, currently out persistency. about looked Okay. to And only insurance the rates. Got have risk on rates. it. with at really, the current the that's kind would I book,

basis points you would notable to rates in persistency? or see see the So fall kind more have a really to mortgage XX by decline of

Yes.

I think that's right.

and you mortgage So of year earnings prevailing XX% the interest only rate of about presentation, we is XX on really if that is book you're is lay average cohort XXXX correct, near on give Page insurance our mortgage the portfolio. in-force out that really current associated by and average, rate, and exactly overall our the that that

to it meaningful rate earlier a takes change incent to a quite vintages, the borrowers rates the emerge. for And see economic in in to XXXX to incentive change need frankly, bigger economically mortgage that refinance. much You

Rohit the we for I Mr. Gupta for over to session. all the back will that's And have remarks. closing turn Q&A now time the call any

you forward the you. Florida everyone. seeing your and interest appreciate in in I you, Thank at Conference. Bank some Financial Livia. Services to America Thanks, Thank We Enact, of of look

you participation. that our Thank and for your Ladies for conference does conclude today. gentlemen,

You may now disconnect.