MGIC Investment (US:MTG)2023-05-04 17:17Financial Data and Key Metrics Changes - The company reported a net income of $155 million, or $0.53 per share, with an annualized return on equity of 13.3% [10] - Total revenues for the quarter were $284 million, down from $295 million in the same period last year [16] - Net premiums earned decreased to $242 million from $255 million year-over-year, primarily due to a decrease in accelerated single premium cancellations and an increase in ceded premiums [16] - Book value per share increased by 4.7% during the quarter to $16.57, and more than 12% compared to a year ago [17] Business Line Data and Key Metrics Changes - Insurance in force grew by 5.4% year-over-year, ending the quarter at $292 billion, despite lower volumes of new insurance written [5][10] - The company wrote $8 billion of new insurance written (NIW) in the quarter, reflecting a smaller NI origination market [36] - The loss ratio was reported at 3%, with net losses incurred of $6 million compared to negative $19 million in the same quarter last year [15][38] Market Data and Key Metrics Changes - The annual persistency rate increased to 82% from 67% a year ago, indicating improved retention of insurance policies [36] - The company expects its insurance in force portfolio to remain relatively flat this year due to affordability issues and high interest rates affecting home prices [6] Company Strategy and Development Direction - The company is focused on maintaining financial strength and flexibility while executing its business strategies for long-term success [35] - A comprehensive reinsurance program is in place to reduce volatility in losses and provide diversification of capital sources [14] - The company plans to continue advocating for the increased use of private mortgage insurance in housing finance [22] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the normalization of home prices, which is seen as healthy for the housing market and overall economy [6] - The company remains comfortable with its market position and believes it is well-situated to navigate current uncertainties [48] - Management noted that credit performance remains strong, with delinquency rates at historic lows [12] Other Important Information - The company repurchased 5.8 million shares for $78 million and paid a quarterly dividend of $0.10 per share [13] - A $300 million dividend was paid to the holding company to enhance liquidity and financial flexibility [14] - The company expects operating expenses to be down modestly in 2023, with a full-year guidance range of $235 million to $245 million [44] Q&A Session Summary Question: Does the expense guidance include the $8 million for this year? - Yes, the full-year guidance will include the settlement charges incurred in the first quarter [50] Question: What is the target debt to capital ratio? - The target debt to capital ratio is in the low to mid-teens, currently approximately 12% [52] Question: What changed last year regarding expenses? - Significant pension-related costs and continued investments in infrastructure and analytics contributed to increased expenses [66] Question: Are there specific concerns on the credit side? - Management feels comfortable with the current credit dynamics and borrower characteristics, despite some enhanced risks noted previously [69] Question: How does the company view the reinsurance market? - The reinsurance market remains active, and the company is comfortable transacting within a range of cost bands [94]