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spk03: I will now turn the conference over to Diana Higgins, Head of Investor Relations. Please go ahead.
spk00: Thank you, Jules. Good morning and welcome, everyone. Thank you for your interest in MGIC Investment Corporation. Joining me on the call today to discuss our results for the first quarter are Tim Mackey, Chief Executive Officer, and Nathan Colson, Chief Financial Officer. Our press release which contains MGIC's first quarter financial results was issued yesterday and is available on our website at mtg.mgic.com under newsroom includes additional information about our quarterly results that we will refer to during the call. It also includes a reconciliation of non-GAAP financial measures to their most comparable GAAP measures. In addition, we posted on our website a quarterly supplement that contains information pertaining to our primary risk and force and other information you may find valuable. As a reminder, from time to time, we may post information about our underwriting guidelines and other presentations or corrections to past presentations on our website. Before getting started today, I want to remind everyone that during the course of this call, we may make comments about expectations of the future. our actual results could differ materially from those contained in these forward-looking statements. Additional information about the factors that could cause actual results to differ materially from those discussed on the call today are contained in our 8K and 10Q that were also filed yesterday. If we make any forward-looking statements, we are not undertaking an obligation to update those statements in the future in light of subsequent developments. No one should rely on the fact that such guidance or forward-looking statements are current at any other time than the time of this call or the issuance of our 8K and 10Q. With that, I will now turn the call over to Tim.
spk02: Thanks, Diana, and good morning, everyone. We had a good start to 2023, delivering solid financial results for the first quarter. We remain focused on executing our business strategies, our financial strength and flexibility, and strong risk management in furtherance of our long-term success with the company. We're in an excellent position to serve our customers with quality offerings and solutions while creating shareholder value. In the quarter, we earned $155 million of net income, or 53 cents per share, and produced an annualized 13.3% return on equity. The main driver of our revenue, our insurance in force, grew by 5.4% year-over-year, ending the quarter at $292 billion. The year-over-year growth in insurance and force, despite lower volumes of new insurance written, reflects an increased persistency rate as the level of refinance activity in the market remains very low. Annual persistency increased 82% at the end of the quarter, up from 67% a year ago. In the quarter, we wrote $8 billion of NIW. We expect our level of NIW in the first quarter as a reflection of a smaller MI origination market, but also reflective of our market position as we took actions in the third and fourth quarters last year intended to address our views of the risks and uncertainties that I discussed during last quarter's call. Specifically, last quarter we explained that we expected our Q4 market share to likely decrease by a couple percentage points from the prior quarter. When the industry reported last quarter, that was indeed the case. We also mentioned in our last call that our Q1 2023 market share would likely see a larger relative decline from Q4 2022. We continue to believe this is the case. We recognize that the loss of market share would be the potential trade-off to achieve the returns we believed were reflective of the risk and the environment, where interest rates had spiked, affordability was stretched, and home prices were expected to fall from their peak. As a reminder, the time between taking action and the resulting NIW is not immediate, as pricing leads NIW by a month or two on average. So what you see in Q1 NIW is primarily a reflection of our views of risk return from late last year. While we won't comment on our current market position given competitive considerations, in recent months our view of the market's risk return began to gradually improve. As a result, we expect our reported market share in the second quarter will be higher, reflecting this gradual improvement. Consensus mortgage origination forecasts have been revised lower, interest rates remaining elevated, and continued affordability challenges. Although the overall MI origination market opportunity is smaller this year, We expect that with our new business we write, combined with higher persistency, our insurance-enforced portfolio will remain relatively flat this year. While the affordability issues and high interest rates have put downward pressure on home prices, the home price declines seen in the last six months or so have been more modest than many had forecasted. I'm cautiously optimistic that home price trends will continue normalizing and believe that a gradual normalization of home prices is healthy for the housing market and overall economy. Taking a look at the credit performance on our insurance portfolio, our inventory of delinquency notices and our delinquency rate continue to be at a historic lows. The credit performance of the 2020 and later books, which makes up approximately 81% of our risk and force, remains strong. We continue to be encouraged by the positive credit trends we are experiencing on our existing insurance portfolio. Our loss ratio was 3% in the quarter. This reflects reserves established on the new delinquencies reported to us in the quarter, offset by a re-estimation of ultimate losses on delinquencies reported to us in prior quarters, which resulted in a favorable loss reserve development again this quarter. In the quarter, we deployed capital to support new business and continued to return meaningful capital to our shareholders through stock repurchases and common stock dividends. During the quarter, we repurchased 5.8 million shares of common stock for $78 million, We paid a quarterly $0.10 per common stock dividend share for $30 million. In April, we repurchased an additional 1.7 million shares of common stock for a total of $24 million. And the board authorized an additional $500 million share repurchase program and a $0.10 per share common stock dividend to be paid on May 25th. For the last couple of years, we've been discussing our capital management strategy, which centers on maintaining financial strength and flexibility at both the holding company to create long-term value for shareholders and at the operating company to protect our policyholders. We routinely assess and evaluate the level of capital at both companies, including the level of capital that we retain for future deployment versus return to shareholders, to position both companies to achieve success in varying environments, both in the near term and the long term. To that end, earlier this week, MGIC paid a $300 million dividend to the holding company. The dividend enhances the liquidity position of the holding company and enhances the financial flexibility of the company overall. Our capital management strategy also includes a comprehensive reinsurance program, which reduces the volatility of losses in changing economic environments and provides diversification and flexibility of sources of capital. At the end of the first quarter, approximately 85% of our risk and force was covered to some extent by reinsurance transactions, And approximately 98% of the risk and force relating to the 2020 through 2022 books was covered to some extent by reinsurance transactions. With that, let me turn it over to Nathan.
spk12: Thanks, Tim, and good morning. As Tim mentioned, we had another strong quarter. We earned $155 million of net income, or 53 cents per diluted share, compared to 54 cents per diluted share during the first quarter last year. Adjusted net operating income was 54 cents per diluted share compared to 60 cents last year. A detailed reconciliation of GAAP net income to adjusted net operating income can be found in our earnings release. The results for the first quarter were reflective of continued strong credit performance, which has led to favorable loss reserve development and resulted in a 3% loss ratio this quarter. Net losses incurred were $6 million in the first quarter compared to negative $19 million in the first quarter last year. Our review and re-estimation of ultimate losses on prior delinquencies resulted in $41 million of favorable loss reserve development compared to $56 million of favorable loss reserve development during the first quarter last year. The favorable development in the quarter was related to new delinquencies from 2021 and prior. As cure rates on those delinquency groups continue to exceed our expectations, we have continued to make favorable adjustments to our ultimate loss expectations. In the quarter, our delinquency inventory decreased by 6% to 24,800 loans compared to an increase of 2% last quarter. In the quarter, we received 11,300 new delinquency notices compared to 11,900 last quarter and 10,700 in the first quarter last year. Historically, the first quarter was seasonally good for credit performance, so what we saw in the quarter may be a reversion to seasonal trends that were largely disrupted starting in March 2020 with the onset of the COVID-19 pandemic. During the quarter, total revenues were $284 million compared to $295 million for the same period last year. Net premiums earned were $242 million in the quarter, compared to $255 million for the same period last year. The decrease in net premium earned is primarily due to a decrease in accelerated single premium cancellation, an increase in seeded premiums, and a decrease in our premium yield, offset somewhat by growth in our insurance in force. The in force premium yield was 38.7 basis points in the quarter, down two tenths of a basis point from last quarter. The in-force portfolio yield reflects the premium rates in effect on our insurance in force and has been declining for some time, but the pace of decline has been slowing in recent quarters. As I mentioned on the call last quarter, we continue to expect the in-force premium yield to remain relatively flat during 2023. Book value per share increased 4.7% during the quarter to $16.57. The unrealized losses in the investment portfolio narrowed by approximately $100 million, which benefited the growth in book value per share in the quarter. Despite the headwind from increased unrealized losses due to changes in interest rates and paying our quarterly shareholder dividend, book value per share increased more than 12% compared to a year ago due to our strong results and accretive share repurchases. While higher interest rates are a headwind for book value per share in the short term, Higher interest rates are a long-term positive for the earnings potential of the investment portfolio, and that is coming through in the results. The book yield on the investment portfolio ended the quarter at 3.2%, up 20 basis points in the first quarter and up 60 basis points from a year ago. Sequentially, investment income was up $3 million in the quarter and up $11 million from the first quarter last year. Assuming a similar interest rate environment, we expect the book yield on the investment portfolio will continue to increase during the year and approach 3.5% by the end of 2023 as reinvestment rates remain significantly higher than the current book yield. Operating expenses in the quarter were $73 million, down from $74 million last quarter and up from $57 million in the first quarter last year. The increase in operating expenses during the first quarter compared to last year was due in large part to $8 million in pension settlement charges this quarter compared to zero in the first quarter last year. Going forward, we expect to incur settlement charges more often because, as we previously announced, we froze our pension plan effective December 31st, 2022. However, the level of those charges should be significantly lower for the remainder of 2023. We continue to expect full year operating expenses will be down modestly in 2023 to the range of $235 to $245 million, the same range we provided in February. Turning to our capital management activities. During the first quarter, the capital levels at MGIC and liquidity levels at the holding company continued to be above our targets. Consistent with our capital strategy, During the second quarter, we received approval and paid a $300 million dividend from MGIC to the holding company, and our board approved an additional $500 million share repurchase authorization, which expires on June 30th, 2025. The additional share repurchase authorization reflects our strong capital position and outlook for continuing to generate excess capital at the operating company and to pay dividends to the holding company. In the first quarter, we repurchased 5.8 million outstanding shares of common stock for $78 million, and we paid a 10 cent per share quarterly dividend to shareholders. The holding company ended the quarter with cash and investments of $582 million. In April, our board authorized the 10 cent per share quarterly common stock dividend payable on May 25th, and we repurchased an additional 1.7 million shares for $24 million. Our recent share repurchase activity levels reflect both caution towards the increased uncertainty in the current environment, as well as the strong mortgage credit performance and financial results we continue to experience, and recent share price valuation levels that we believe are very attractive to generate long-term value for remaining shareholders. With that, I'll turn it back over to Tim.
spk02: Thanks, Nathan. A few additional comments before we open up for questions. We have been asked about the impact of FHA's 30 basis point decrease in its MI premium rates and the GSE's LLPA pricing adjustments each announced during the first quarter. We operate in a very competitive and dynamic marketplace where several factors drive consumer behaviors and mortgage product preferences, cost being one of the most important of those factors. With multiple moving parts, it's truly to fully understand how these changes will impact our NIW volume. We'll continue to monitor, evaluate, and alter our approach to the market as needed. Lastly, in April, the GSEs published updated equitable housing finance plans. Plans seek to advance equity in housing finance over a three-year period and include potential changes to the GSEs business practices and policies. We welcome the opportunity to engage with the GSEs and other industry stakeholders to responsibly expand access to home ownership. It will continue to advocate for the increased use of private mortgage insurance and housing finance. In closing, we had another successful quarter and a great start to a new year. I'm optimistic that the favorable credit and employment trends we have been experiencing, as well as the resiliency of the housing market, will continue. We are comfortable in our market position and continue to believe that we are well situated to navigate the current environment's uncertainties and deliver on our business strategies. With that, operator, let's take questions.
spk03: Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we wait for our first question.
spk05: Our first question comes from the line of Bose George of KBW.
spk03: Your line is now open.
spk06: Hey, everyone. Good morning. Actually, first question, just on the expense guidance, does that range include the $8 million for this year, or should we sort of add that to that range that you provided?
spk12: I suppose, Nathan, the full-year guidance would be inclusive of the settlement charge that we incurred in the first quarter.
spk06: Okay, great. Thanks. And then just in terms of your, you know, when you think about the leverage going forward, Is the debt-to-capital range where it is now, which is historically fairly low, kind of the run rate that you want to keep it at?
spk12: Yep. This is Nathan again. We've said as we delivered over the last year or two, I mean, we've said that our target debt-to-capital ratio in kind of normal times is in the low to mid-teens. And I think right now we're approximately 12%. So We're in a very comfortable range for us and don't foresee, you know, any meaningful increase in leverage in the near term.
spk06: Okay, great. Thanks a lot.
spk12: Thanks, fellas.
spk03: Thank you.
spk05: Please stand by for our next question.
spk03: Our next question comes from the line of Mark DeVry of Barclays. Your line is now open.
spk08: Yeah, thanks. Had follow-up questions on, Tim, some of your comments around market share. Just kind of wondering, I think you mentioned that the risk-reward has gotten a little more favorable from your perspective. You expect share to kind of increase in 2Q. Just wondering what's changed. You know, has the market, you know, one of your competitors commented on on kind of a harding market and pricing moving up. Has the market kind of come back to you, kind of maybe price increases you made earlier that caused the share to fall off, or are there other kind of changes that have got you more attracted to the risk-reward?
spk02: Well, Mark, it's a good question. I appreciate it. You know, as I said in the comments, we made majority of our changes really in the, you know, late third quarter, early fourth quarter pricing last year, which we thought was reflective of the market. You know, the way I look at things, I don't think much has deteriorated since then. So I think it can be a combination of both of, right, the market maybe moving a little bit more towards us. I've heard the other comments too. I think we've observed some of that. I think us also getting a little bit more comfortable with what's out there right now, and it's been pretty orderly. And I think some of the stresses that we might have been concerned about six months ago, while it's still a possibility, it seems like a pretty orderly sort of falling out of HPA, which feels good as well. So I think, again, we made most of our actions early on. I think that hurt us from a volume standpoint for this quarter in particular. But I think that pricing in the market seems more constructive now, which is a good thing for us to be able to get the returns we want, which we have to stay disciplined on.
spk08: Okay, got it. And my next question has to do with the expense ratio. I mean, I think, unless I'm interpreting it wrong, Nathan, the guidance around total OPEX would still have you probably close to a mid-20s expense ratio, which is still, you know, pretty materially above where it had been for a long time, kind of pre-pandemic. Can you just talk about, you know, one, am I kind of interpreting that correctly, and two, kind of what's changed to make the expense ratio higher?
spk12: Yes, Nathan. You know, I think a couple things. You're, for the 2023 expense ratio, I think you're kind of interpreting that correctly. Um, you know, I think we do end up in the, you know, kind of 24, 25, 26 range, depending on, you know, what happens with. Uh, net premiums, which again is somewhat dependent on losses due to the profit commission dynamics there. So, you know, it's hard to, to peg down specifically from an expense ratio standpoint, but, you know, it has drifted up over time. A lot of that over the last few years, as we've talked about at the time is, you know, making significant investments in our platform. I think we've done a lot of those things that have really helped us understand the market better, helped us, you know, continue to serve customers better. But, you know, clearly expenses continue to be a focus for us and efficiency going forward will be, you know, is and will continue to be a big focus for us. So I don't think, you know, mid-20s where we may land this year, I don't think that's as low as the expense ratio can go. And, you know, that's something that we're obviously focused on every day here.
spk08: Okay, got it. Thank you. Thank you.
spk03: Thank you. Please stand by for our next question.
spk05: Our next question comes from the line of Juliano Bologna from Compass Point.
spk03: Your line is now open.
spk07: Well, thank you. Great quarter, and thanks for taking my questions. Following up on a similar topic on the expense side, if I look at what's implied by reiterating the guidance after being high in the first quarter is 57.5 million per quarter on average, which actually is more of a $230 million run rate for the balance of the year. I'm curious about the right way to think of that, acknowledging that you mentioned there might be some additional pension settlement-related costs that could flow through. Is that kind of where the new base is that you'll be growing from, or how should I think about the cadence of that going forward?
spk12: This is Nathan. I do think we did expect some higher first quarter expenses. We did expect some level of settlement charges. The actual was higher than we were expecting. There's also some other things that just happened in the first quarter that drive kind of Q1 expenses a little bit higher, things like payroll taxes and other things that are just higher in the first quarter. So, you know, I think the full year guidance is probably the right way to think about the full year run rate, but the quarterly numbers will have some variability to them. And I think, you know, this year in particular, but even going forward, you know, maybe a little skewed to Q1 being higher than some of the other quarters.
spk07: That makes sense. And obviously you've been very active on the capital return front. When we kind of look forward, when it comes to the buyback, I'd be curious if you're thinking about, you know, the merits of, you know, increasing your cushion from, you know, an excess of those required assets, or if you, you know, are comfortable with where your current cushion sits at the moment in terms of, you know, thinking about capital levels, the insurance company level.
spk12: Yep. So we ended the first quarter with a $2.4 billion buyback. access to PMIRES, you know, we felt like that was above our targets. That ultimately prompted requesting and receiving approval and paying the $300 million dividend from MGIC to the holding company. You know, the operating company continues to generate significant amounts of capital. So that's something that, you know, we've really had to actively manage. But, you know, where we were post-dividend, which is, you know, on a pro forma basis, 2.1 billion at the end of the first quarter, that's still obviously a very comfortable level for us. So we've been consistently above our target levels and using large dividends from the operating company to the holding company to manage that. But again, that's driven off of the strong financial results and credit performance that we've seen. So we are taking this on a quarter by quarter basis to evaluate what we think the right things to do are capital wise. To date, credit performance has remained very, very strong, and the results have been strong, and that's afforded us opportunities like we have to return capital to shareholders and to continue to pay dividends to the holding company.
spk07: That's great. Thanks for taking my questions, and I will jump back in the queue. Thanks.
spk03: Thank you so much. Please stand by for our next question. Our next question comes from the line of Mihir Bhatia from Bank of America.
spk04: Hi, good morning. Thank you for taking my question. I want to go back to the questions around expenses. And I am a little curious as to, you know, can you remind us of exactly what changed last year? And the reason I ask that is I think you had three, four years of expenses around, you know, call it $190 million up to $200 million. And then last year you jumped up to this 235, 240 range, which it sounds like you'll be again going forward from the comments on last time. So I'm just trying to understand what changed at MTG to cause such a big step up on a go-forward basis?
spk12: Here it's Nathan. You know, I'd kind of point you to probably three things. You know one and and we kind of went through this last quarter and at various times last year But we did incur, you know significant I think if my memory serves me about 25 million dollars to the full year in pension related costs and settlement charges last year, which which increased the expense level last year the other thing, you know in our in our long-term incentive plan is the financial performance in 2021, 2022, particularly on an ROE basis was very, very strong. And that has led to additional expense under our performance-based, long-term performance-based comp plans, which has added to that a little bit versus years like 2020 with COVID and increased losses there where the performance-based compensation expense was much lower as a result of performance that was, while still generating, I believe, 10% ROEs that year, not at the level that we've experienced subsequent to that. And then I think the third is one that we started talking about as early as 2019, which is just making continued investments in our infrastructure, in our data and analytics, and in our ability to you know, kind of perform well and be in the right positions in this market. So I think the combination of those things has led to, you know, an increase in expense last year, a little bit this year. But, you know, I think one of those things is really due to the high performance that we've had from an ROE standpoint. You know, if we do have periods that are more, you know, as expected, some of that would just naturally be less as well.
spk04: Okay. And then maybe just switching gears a little bit to your comments about just the risk reward. Obviously, as you mentioned, you know, the pricing environment has gone better, but maybe on the credit side, just wanted to get your view. Are there any specific pockets or areas or particular issues that you're concerned about on the credit side? Just trying to understand like where you are on the credit side today versus maybe three months ago or six months ago. Thank you.
spk02: I would say nothing really on the credit side when I think about, you know, sort of from an underwriting characteristics standpoint, right? I think other than if you think about the individual borrower, FICO, LTV, where they are, I think we feel comfortable with those dynamics. If you think about the, I think the enhanced risk that we saw sort of Q3, Q4 last year was Likelihood of home prices declining, which creates an environment for higher likelihood of losses, especially if unemployment were to spike up. I think the other thing that you see, and this gets a little bit into credit, but more into the affordability issue, is DTI, right? That DTIs are more stretched than they were before. I think we feel really comfortable with the profile of what we're seeing. Obviously, we have ability to price for DTI as well, so that makes us feel comfortable from a return standpoint. So, yeah, while you'll see a little bit higher DTI, obviously, as a percent of our volume this year compared to, say, a year ago before interest rates rose, I think we feel generally comfortable at the sort of where we're at and especially the risk-return we can achieve being able to price for those characteristics.
spk04: And just my last question, insurance-informed. Do you expect insurance-informed to increase this year, just sitting where you are today and thinking about your NIW versus persistency? Or do you think, like, you know, there's, I guess, one of your expectations on insurance inflows for this year? Thank you.
spk02: Yeah, I think I'd reiterate, I think what we said probably on our last call, which we think it's pretty much going to be flat for the year. So I know a little bit down quarter over quarter this quarter, but I think as we think about just normal seasonality within housing, and I think we believe continued persistency being sort of at a strong level, we'd say we still believe we're going to be flat year over year.
spk04: Thank you. Sure.
spk03: Thank you so much. As a reminder, to ask a question, you will need to press star 11 on your telephone. Please stand by for our next question. Our next question comes from the line of Eric Hagan from BTIG. Your line is now open.
spk11: Hey, thanks. Good morning. A couple questions here. You know, the legacy book isn't huge, but it is a chunk of the delinquency pipeline. Can you talk about how much you're reserving for in the legacy book at this point? Maybe how the mark-to-market LTV compares to some of the newer issue loans and the severities that you're expecting now, whether anything has shifted at all? And the second question is, do you feel like there's any, like a threshold for cost in the reinsurance market at which you'd maybe look to change the risk profile you target or or even how you reserve for credit based on what you see in that market. Thank you.
spk12: Eric, it's Nathan. On the first question relative to the legacy book, you're correct that it's a very small portion of the risk and force at this point, but it does make up a disproportionate amount of the new delinquencies that we receive and the delinquency inventory. I think the one characteristic that that kind of cohort of loans has, particularly in our new delinquencies and in our delinquent inventory, is that most of them have been delinquent six times or more. You know, we disclose in our supplemental information the statistics about new notices received in the quarter and the percent that were previously delinquent. And, you know, on the 08, I'm sorry, 08 and prior, it's about 97% of those delinquencies have been delinquent before. And a lot of those have been delinquent, you know, five, ten, fifteen times over that long period of time. So what we have observed out of groups like that is that they actually have a much lower propensity to ultimately result in a claim and that we see a lot of churn from delinquent back to current back to delinquent out of that group. So, you know, I think we think about reserving factors at a cohort level for notice quarters that were received, so not separate factors for those types of loans. But I would say the key characteristic there is just that we see a lot of those items coming into the delinquency inventory and then coming out a month or two later and then coming back in a month or two after that. But our experience is that that results in a very low likelihood of claim for any one delinquency. So it wouldn't result in a necessarily a higher claim rate expectation on those items just because they are from those vintages.
spk10: That's really helpful. That's really helpful. Yeah, go ahead. Thank you.
spk12: I was going to say, relative to the question on reinsurance costs, I think we have done reinsurance deals where we thought the cost of capital, at least the cost of PMIR's capital, was you know, very, very low, you know, sub 4%. We've done deals where, you know, that cost was somewhat higher. So I think we're comfortable transacting in a range of cost bands there. What's happened, I think, in the ILN market is just, you know, the availability there. You know, we did a deal last year, but subsequent deals, it seems at least observing, were more difficult to transact. The traditional reinsurance market has continued to be very active and I think still provides, you know, pricing that we would find attractive for deals. So that's obviously an area where we placed a 25% quota share covering our 2023 business, you know, and continue to have dialogue with that market around, you know, other risk transfer opportunities there. So, you know, the Brightline level, I'm not sure that I could give you good guidance on that, but, you know, just to say that, levels right now in the reinsurance market, I think, still look pretty attractive.
spk10: Great. Thank you guys very much.
spk12: Thanks, Eric.
spk03: Thank you. Please stand by for our next question.
spk05: Our next question comes from the line of Jeff Dunn of Dowling and Partners.
spk03: Your line is now open.
spk09: Thanks. Good morning. Good morning. Tim, I don't remember when it was exactly, but I think it's been at least a couple of years ago when the company guided that we should expect a couple of years of increased expenses for tech spend. And I'm wondering, based on the conversations we're having now about expenses, is that partly because that program or that effort proved more expensive for longer or yielded higher recurring expense than maybe you thought at the beginning of that effort? Or are we talking about kind of more broadly spread higher expenses across the company?
spk02: Yeah, Tim, it's a good question. I mean, obviously there's some inflation from a biggest part of our costs are our people. And obviously with demand for talent and us making sure that we retain the best and the brightest to be able to serve our customers, that's something that probably has been not a favorable tailwind for us the last few years. From an actual investment standpoint, I think we try to stay disciplined in what we want to have there. I would say it's safe to say that it's nominally, I think, higher than where we thought we might have to be to invest in some of the analytical capabilities to continue to progress and to really feel like we understand the market and to really be able to organize the data the way we think we can fully leverage it. I don't think it's a step function, and I don't view it as something that means that it's going to be in perpetuity. But I do think, you know, compared to the comments maybe a couple years ago, there's continuous investment that you need to make. At the level we're at right now, at the level we were at sort of last coming into the year, not necessarily that. And that's one of the things that as we think about the rest of the year where I think we're going to be ultimately a little bit lower than we were coming into the year. But it is safe to say that there's a tail there to that investment. And I think in this operating environment, we're always going to feel some need to invest in the platform.
spk09: So I think, you know, at least my thought process was we might kind of have a cliff recovery when you first announced that after a couple of years. It sounds like it's kind of a trickle improvement as efficiencies are gained, some of the expenses decline. but not a return to that original relative level.
spk02: I think that's fair. I'll tell you, being in this business myself since 2006 and the company being around since 66 years, I think efficiency is something we always have to be focused on. First and foremost, we have to serve our customers, but we have to do it in the most efficient way. I can tell you that it's something that we talk about as a management team, making sure that we are thoughtful about that. But I don't anticipate a step down, not in the near future here, but it is something that I would say that we're focused on.
spk06: All right. Thanks.
spk02: Thanks.
spk03: All right. Thank you so much. Please stand by while we compile the Q&A roster. And just as a reminder, to ask a question, you will need to press star 11 on your telephone. At this time, I would like to turn it back to Tim Mackey for closing remarks.
spk02: Thank you, Jules. I want to thank everyone for your interest in MGIC. I want to remind you that we'll be participating in a panel discussion at Mortgage Finance at the BTIG Housing Conference on Monday, May 8th. I look forward to talking to all of you in the near future. Hope you have a great rest of your week.
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