MGIC Investment Corporation

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Q4 2024 MGIC Investment Corporation Earnings Conference 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 at that time, you will need to press star 1-1 on your telephone keypad. As a reminder, this conference call is being recorded. I would now like to turn the conference over to Ms. Diana Higgins, Head of Investor Relations. Ma'am, please begin.

Thank you, Howard. Good morning and welcome, everyone. Thank you for your interest in MGIC. Joining me on the call today to discuss our results for the fourth quarter are Tim Mackey, Chief Executive Officer, and Nathan Colson, Chief Financial Officer and Chief Risk Officer. Our press release, which contains MGIC's fourth 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 the 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 form 8K that was 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. With that, I now have the pleasure to turn the call over to Tim.

Thank you, Diana, and good morning, everyone. We ended the year on a high note with solid fourth quarter financial results capping another successful year. We consistently generated mid-teen returns on equity while returning meaningful capital to our shareholders. Our business strategies and the strength of our business model allows us to be successful in varying economic environments. Consistent with the last few years, our 2024 financial results benefited from favorable credit trends and a disciplined approach to risk and capital management. Now a few financial highlights. In the quarter, we earned net income of $185 million and produced an annualized 14% return on equity. For the full year, we earned net income of $763 million compared to $713 million in the prior year. Insurance at force at the end of the quarter stood at more than $295 billion, up slightly from the prior quarter. The overall credit quality of our insurance portfolio remained solid, with an average FICO of 747 at origination. Annual persistence at the end of the quarter at 85%, remaining relatively flat during the year, consistent with what we had expected at the start of the year. We wrote $16 billion of new insurance in the fourth quarter and $56 billion of new insurance for the full year, up 21% from the prior year. We remain focused on maintaining a strong and balanced insurance portfolio. To date, we have not seen a material change in the credit performance of our portfolio, and early payment defaults remain at very low level, which we believe is a good indicator of near-term credit performance. The strength and flexibility of our capital position during the year supported $750 million in dividends from MGIC to the holding company. We also returned meaningful capital to our shareholders through a combination of repurchasing common stock and paying common stock dividends for a total of approximately $700 million. This represents a 92% payout ratio of this year's net income. We expect share repurchases will remain our primary means of returning capital to shareholders, while at the same time continuing to pay a quarterly common stock dividend. As discussed through the year, our approach to capital management remains dynamic, with financial strength and flexibility as the cornerstones of our strategy. As part of our capital management, we regularly assess capital levels at both the operating company and holding company, considering the current and expected environment to position ourselves for success across varying scenarios. An approach that has consistently served our stakeholders well. While we prioritize prudent growth over capital return, Opportunities for growing our insurance in force over the last two years has been constrained due to the size of the market. During that same time, operating results and credit performance have been strong, leading to higher payout ratios. If credit performance remains strong and our risk profile is stable or improving, I would expect capital levels at MGIC and the holding company to remain above target and payout ratios to remain elevated. Our well-established reinsurance program, which includes the use of forward commitment quota share agreements and excess of loss agreements executed in either the traditional or ILN market, remain a key component of our risk and capital management strategies. In addition to reducing the volatility of losses and stress scenarios, our reinsurance agreements provide capital diversification and flexibility at attractive costs and reduced our PMIRES required assets by $2.2 million, or approximately 40% at the end of the fourth quarter. Shifting more broadly to the housing market, despite some lingering uncertainty, it remains resilient, supported by favorable supply-demand dynamics and a generally positive economic outlook. Consensus forecasts projecting the EMI market in 2025 will be relatively similar in size to 2024, and mortgage rates remaining elevated, which leads us to expect another year of high persistency. Additionally, recent forecasts indicate moderating growth in home prices, improving housing inventory, and continued pent-up demand along with favorable demographics, which I believe points to the continued resiliency of the housing market and the MI industry. With that, let me turn it over to Nathan to get into more details on our financial results and capital management activities for the quarter.