MGIC Investment Corporation

Good day and thank you for standing by and welcome to the MGIC Investment Corporation third quarter 2021 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone keypad. And please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Mr. Mike Zuberman. Sir, please go ahead.

Thanks, Mel. Good morning and thank you for joining us this morning and for your interest in MGIC Investment Corporation. Joining me on the call today to discuss the results for the third quarter of 21 are Chief Executive Officer Tim Mattke and Chief Financial Officer Nathan Colson. I want to remind all participants that our earnings release of last evening, which may be accessed on our website, which is located at mtg.mgic.com under Newsroom, includes certain additional information about the company's quarterly results that we will refer to during the call and includes a reconciliation of the non-GAAP financial measures to the most comparable GAAP measure. We've posted on our website a presentation that contains information pertaining to our primary risk and force, new insurance written, Reinsurance Transactions, and other information which we think you'll find valuable as well. I also want to remind listeners that from time to time, we may post information about our underwriting guidelines and other presentations or corrections to past presentations on our website that investors and other interested parties may find valuable. During the course of this call, we may make comments about our expectations of the future. Actual results could differ materially from those contained in these forward-looking statements. Additional information about those factors, including COVID-19, that could cause actual results to differ materially from those discussed in the call are contained in the Form 8K and Form 10Q that were filed last night. If the company makes any forward-looking statements, we are not undertaking an obligation to update those statements in the future in light of subsequent developments. Further, no interested party should rely on the fact that such guidance or forward-looking statements are current at any time other than the time of this call or the issuance of the Form 8-K or 10-Q. With that, I'd like to introduce Tim Mattke.

Thanks, Mike. Good morning, everyone. I'm pleased to report that we generated another quarter of very strong financial results. After my opening remarks, the nation will provide more detail about our financial results and capital position. Then, before we open the line for questions, I will wrap up by discussing the current operating environment, including activities related to housing finance policy. During the quarter, we earned GAAP net income of $158 million. Quarterly financial results continue to reflect the solid credit quality of our increased insurance in force, a strong housing market, a decreasing delinquency rate, and improving economic conditions as more local economies return to pre-pandemic levels of activity. As we expected, refinance activity has slowed. However, the purchase market remains strong and accounted for nearly 90% of the $28.7 billion of new business we wrote in the third quarter. This level of new business writings combined with a higher annual persistency resulted in our insurance and force increasing 2.4% to $268 billion, nearly 12% higher than last year. Reflecting the continued strength of the housing market, purchase applications in our application pipeline, the leading indicator of NIW, continue to account for more than 85% of applications received in recent months. The last five quarters of NIW were the five biggest in our company's 64-year history, so it should not surprise anyone that we do not expect to continue writing such high levels of new business. As we look out over the next several quarters, we expect the refinance activity will remain low and the purchase activity, while lower than the records of the five prior quarters, will remain robust as consumer demand for homes remains strong and interest rates, despite rising modestly, are still attracted by historical standards. This environment, combined with increasing annual persistency, should allow our insurance in force to continue to grow, although perhaps at a slower annual rate than we have been enjoying in recent quarters. Taking a look at our in-force portfolio, our loss ratio was a low 8.1% in the quarter. This result primarily reflects the current economic conditions, the quality of our existing book of business, and the low number of new delinquency notices received. I continue to be encouraged by the quality of new insurance written and the positive trends in credit performance which continue through October. At quarter end, the excess of our PMIRES available assets over the minimum required assets increased by $300 million to $2.6 billion, and our PMIRES efficiency ratio was 180% at the end of the third quarter. As we discussed last quarter, our capital management strategy centers on maintaining financial flexibility of both the holding company and the writing company to protect our policyholders and to create long-term value for shareholders. This value can be created by writing more primary mortgage insurance Pursuing new business opportunities, retiring debt, paying dividends, and or repurchasing stock. We executed on this strategy during the quarter by writing $28.7 billion of new business and by returning nearly $180 million to shareholders through the repurchase of 10 million shares and paying the increased common stock dividend. In connection with our strategy, maintaining capital flexibility as a holding company means maintaining a target level of liquidity while in excess of our near-term needs. At the operating company, it means maintaining diverse sources of capital in a PMIR sufficiency ratio that will enable us to grow even in times of stress and will position us for changes to our operating environment. Of course, these target levels are dynamic and change as the operating environment changes. We believe that our holding company and writing company capital management strategy will create long-term value for shareholders while allowing us to continue to be a well-capitalized counterparty for our customers. In summary, we continually look for ways to maximize near-term business opportunities while remaining focused on long-term success of the company and value for our shareholders. I believe the actions we have taken this quarter and the announcement of the new share purchase reauthorization that Nathan will discuss demonstrate our commitment to that strategy. We have a strong and dynamic balance sheet, we are confident in our positioning in the market, and we like the risk-reward equation that the current conditions offer. With that, let me turn it over to Nathan.