MGIC Investment Corporation

Ladies and gentlemen, thank you for standing by and welcome to the MGIC Investment Corporation first quarter 2024 earnings call. At this time, all lines have been placed on mute to prevent any background noise. At the end of today's presentation, we will have a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone keypad. You will then hear an automatic message advising your hand is raised. To withdraw a question, please press star 11 again. Please be advised that today's conference is being recorded. I will now turn the conference over to Diana Higgins, Head of Investor Relations. Please go ahead.

Thank you, Nadia. Good morning and welcome, everyone. Thank you for your interest in MGIC. 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 and Chief Risk 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 today. 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 we get started today, I want to remind everyone that 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 results 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 events. No one 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 our 8K and 10Q. Now, with that, I have the pleasure to turn the call over to Tim.

Thank you, Diana, and good morning, everyone. The company reported net income of $174 million in the first quarter, resulting in an annualized return on equity of 13.7%. These results are the continuation of another quarter of exceptional financial results and highlight the strength of our business model. Our focus on through-the-cycle performance, as demonstrated in the way we acquire, manage, and distribute risk, reflects a balanced approach to the market. Reinsurance programs address both risk of loss and capital efficiency and capital allocation for the benefit of stakeholders. The execution of our business model is responsive to market conditions and has consistently generated attractive returns. During the quarter, we wrote $9 billion in new insurance. And insurance in force, the main driver of our revenue, was $291 billion, down 0.5% from a year ago. There's been very little change recently in underwriting standards, and the new insurance we write continues to have strong credit characteristics. We are pleased with the overall credit quality and performance of our insurance portfolio. The mortgage origination industry continues to experience the headwinds of a smaller origination market as we transition away from record volumes of the recent past years, driven by elevated interest rates and affordability challenges. The supply of homes for sale is still limited due to the lock-in effect from homeowners with mortgages that have interest rates well below the current market rate. While the current supply and demand dynamics create challenges for first-time homebuyers, it continues to support home prices. As I mentioned on prior calls, the headwinds to mortgage originations has largely been offset by the tailwinds that higher interest rates have on the persistency of our insurance and force. Annual persistency ended the first quarter at 86%, flat quarter over quarter. The net result of lower NAW and high persistency is that our insurance and force has remained relatively flat over the past several quarters, consistent with what we expected. We continue to believe that the MI market is shaping up to look pretty similar to last year. Hence, up demand and the strong desire of the millennial and Gen Z population to own homes are reasons to be optimistic about MI opportunities in the long term. Shifting to our capital activities, in the quarter we purchased 4.7 million shares of common stock for $93 million and paid a quarterly common stock dividend for a total of $32 million, representing a 72% payout ratio of this quarter's net income. In addition, in April, we purchased an additional 2.7 million shares of common stock for a total of $55 million. Last week, we announced the board authorized an additional $750 million share repurchase program. And in our earnings release, we announced that earlier this week, MGIC paid a $350 million dividend to the holding company. Both of these announcements were supported by capital levels, which were above our targets of both MGIC and the holding company. Our approach to capital management has been and will continue to be dynamic so that we can maintain financial strength and remain well positioned to achieve our objectives in varying macroeconomic environments. MGIC's capital structure includes $6 billion of balance sheet capital and our well-established reinsurance program, which remains integral to our risk and capital management strategies. In addition to reducing the volatility of losses and stress scenarios, Our reinsurance agreements provide diversification and flexibility to our sources of capital at attractive costs and reduce our PMIRES required assets by $2.2 billion at the end of the first quarter. We continually monitor the level of capital of both MGIC and the holding company, considering the level of capital to retain versus return to shareholders. As part of this, we assess current and expected future operating environments, and we continually evaluate the best options to deploy capital to maximize long-term shareholder value. With a strong credit performance, financial results, and capital generation we are experiencing, combined with a smaller origination market, which is challenging the growth of our insurance in force and the related required capital, we continue to expect share repurchase to remain our primary means of returning capital to shareholders. With that, let me turn it over to Nathan to get into more details on our financial results.