MGIC Investment Corporation

I will now turn the conference over to Diana Higgins, Head of Investor Relations. Please go ahead.

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.

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.