MGIC Investment Corporation

Ladies and gentlemen, thank you for standing by. Welcome to the MGIC Investment Corporation third 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 one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Diana Higgins, Head of Investor Relations. Please go ahead.

Thank you, Gerald. Good morning and welcome, everyone. Thank you for your interest in MGIC. Joining me on the call today to discuss our results for the third quarter are Tim Mackey, Chief Executive Officer, and Nathan Colson, Chief Financial Officer. Our press release, which contains MGIC's third 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 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 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 development. 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 now have the pleasure to turn the call over to Tim.

Thank you, Diana. Good morning, everyone. We are very pleased with our third quarter financial results, which continue to demonstrate the strength of our business model in response to changing market conditions. Our disciplined approach to risk management, improving capital management strategies, together with our leadership in the market and focus on serving our customers with quality offerings and best-in-class service continue to drive value for our stakeholders. Let's get started with a few financial highlights. In the quarter, we earned net income of $200 million and generated an annualized return on equity of 15.6%. Insurance in force ended the quarter at $293 billion, up slightly quarter over quarter, with annual persistency ending the quarter at 85%, flat compared to the last quarter. We wrote $17.2 billion of new insurance in the quarter, up 27% from the prior quarter. Underwriting standards remain high, and we are focused on maintaining a strong and balanced insurance portfolio. We continue to be pleased with the overall credit quality and performance of our portfolio, and our financial results have benefited from the favorable credit performance we have been experiencing. Turning to our capital activities, the strength and flexibility of our capital position in the quarter supported the repurchase of 5.2 million shares of common stock for $123 million and the payment of a quarterly common stock dividend of $34 million. Combined, these represent a 79% payout ratio of the quarter's net income. In addition, in October, we repurchased an additional 2.9 million shares of common stock for a total of $72 million. When determining our repurchase activity, we consider and evaluate a variety of internal and external factors and metrics, including share price. The repurchase activity I just discussed was reflective of continued strong credit performance and financial results. and also higher market valuation levels than we have experienced in recent years. We expect share repurchases will remain our primary means of returning capital to shareholders. As previously announced, the Board authorized a $0.13 per share quarterly common stock dividend payable on November 21st, and last week MGIC paid a $400 million dividend to the holding company. The dividend from MGIC to the holding company reflected capital levels at MGIC that continue to be above our target. Our approach to capital management continues to be dynamic and maintaining both financial strength and flexibility are the cornerstones of our strategy. This approach enables us to position ourselves to achieve our objectives in varying macroeconomic environments and it serves our stakeholders well. MGIC's capital structure includes $6 billion of PMIR's available assets. Our well-established reinsurance program 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 reduced our PMIRES required assets by $2.2 billion, or 40%, at the end of the third quarter. PMIRES operational and risk-based capital requirements provide a strong foundation to serve low down payment borrowers while protecting the GFCs and taxpayers from undue mortgage credit risk. In August, the GSEs issued updates to the risk-based requirements relating to the calculation of available assets, which will be implemented over a 24-month phased-in period, with a fully effective date of September 30, 2026. We don't expect these updates will have a material impact on MGSEs' available assets or our investment strategy. Turning more broadly to the market conditions, the housing market remains constrained by a limited supply of homes for sale and affordability challenges compounded by high mortgage rates. However, there may be signs of easing. The recent Fed interest rate cut and generally lower mortgage rates in the third quarter led to the first year-over-year increase in mortgage applications in three years. In addition, the rate of home price appreciation continues to slow from the highs we saw in 2022, and the inventory of homes for sale is increasing. Pent-up demand for homeownership and demographics suggesting that the millennial and Gen Z populations will continue to add to housing demand are reasons to be optimistic about the resiliency of our business. Lastly, I'm happy to report that in September, AMBEST upgraded MGIC's financial strength and credit ratings to A from A-minus and revised the outlook to the credit ratings to stable. AMBEST stated the ratings reflect MGIC's balance sheet strength, which AMBEST assesses as strongest, as well as MGIC's operating performance and robust enterprise risk management framework. With that, let me turn it over to Nathan to get into more details on financial results for the quarter.