ESNT Essent

Chris Curran Senior Vice President-Investor Relations
Mark Casale Chairman and Chief Executive Officer
Larry McAlee Chief Financial Officer
Mark DeVries Barclays
Doug Harter Credit Suisse
Rick Shane JPMorgan
Bose George KBW
Mihir Bhatia Bank of America
Ryan Gilbert BTIG
Phil Stefano Deutsche Bank
Call transcript
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Good day and thank you for standing by. Welcome to the Essent Group Ltd First Quarter 2021 Earnings Conference Call. At this time all participants are in a listen-only mode. [Operator Instructions] I would now like to hand the conference over to your host Chris Curran, Senior Vice President of Investor Relations. Thank you. sir. ahead, go Please

Chris Curran

Good and Katrina. call. to morning you, welcome everyone our Thank

me Chairman Officer. Chief Casale, are CEO, Joining Mark McAlee, and today and Larry Financial

press and I available on the website results today’s at was and statements. Essent’s to which current to results our earlier quarter being recorded getting remind Prior may started, will that that projections These expectations, issued are are is use which forward-looking of XXXX include like Our for to and discussions today of to subject on release, statements based estimates, would uncertainties risks assumptions are contains the first financial participants differ and materially. actual cause

language factors and statements The filed February regarding press SEC, release. discussion SEC in with any included today’s other forward-looking reports registration on our uncertainties, a For these cautionary risks in risk of Form XXXX website. and on and which the available statements XX-K our XX, are filed also the the please with review

the me let to Mark. call Now, over turn

Mark Casale

return that as first results good normalize. out and our we the reported and pleased results We financial and Earlier default are year. trends believe today continue Chris, morning with a starting profitability everyone. demonstrate our Thanks, to quarter pre-COVID-XX performance these to

is As the of outlook coming positive. strong our momentum the out pandemic economy already gains environment combined with housing an

bust as a well better use it transformational ours. pricing a of been last or our selection, of allows operating navigating Over has by boom in the months it historical for has XX like served economic distributed as reinsurance the and and removes deployment and environment. nature managing stressed EssentEDGE franchise engine of risk The model

It our pandemic dividend one demonstrates in this our Our a is initiating catalyst of the confidence confidence in business. our strength environment. deepens maintaining through XXXX of performance the the was that primary economic during the engine in and model COVID and

results. touch let me our Now, on

XXXX, XXXX. of million $XXX quarter of of For we to the reported in as $XXX first compared quarter income million fourth net the

were item the associated with by Our in we $X.X on average $X.XX to compared and share our $X.XX quarter quarter On XXXX impacted quarter, basis, million of results earn a was first first fourth negatively in state taxes. equity diluted XX%. the annualized a deferred return discrete tax

During a the quarter, of in with insurance insured of XXX billion to NIW March force and ago. FICO our and quality credit our XX%. quarter we XX% year was weighted $XXX were to average compared of performance. portfolios our pleased increase billion first strong the with XX, loan a The was $XXX At value

XX continue As mentioned at X.X%. our default March rate our default trends was as normalize to

techniques with On the specifically out business through the machine increased data. our learning business and managing an front, analyzes traditional The of applying in data, across iteration sophisticated success are machine resulting rolled the our of models cycles. next should amounts us portfolio algorithms give edge learning we with leverage have platform EssentEDGE approaches. This we more cloud outperforming

at billion X.X EssentEDGE with our will sheet artificial unit for We and balance our were in that us key over consumer risk optimizing continue forward, and we intelligence capital returns. be will data. and with Looking believe blending XX, March GAAP adjusted and and in by monoline by a strong At positioned. more of differentiator rate equity access AX $X.X economics in remains the of Also of AM the well over company Guaranty $XXX loss reinsurance our industry Essent to $X are and in billion S&P, BBB+ respectively. liquidity Best Moody’s we million at holding excess in available A highest

operating our taken model managing we the last in levels. our to the distributed due is by of XX had bolstering March year measures capital at position financial with strong along Our benefits that

now have on we levels unemployment to optimizing reopens, management. economy capital U.S. the more and As visibility normalize, begin improve, defaults

million primary a businesses, approve support our to reinsurance continue stock to MI secondarily, growth Our to plan repurchase of be our to and we that has in continues end capital to core XXXX business pleased $XXX Today, share excess dividend or I’m the deploying into pay back and by focus in to a announce the to executed $X.XX. $X.XX be increase quarterly board authorized per our dividend.

effective XX% Overtime, under reduce Finally, we our change is the the effective our our is this share to expected XXX of rate January points affiliate points. basis percentage from of to new XXX leverage code NIW ceded basis to further XXXX, XX%. increase that platform to to tax by X, year

let over to turn Now, Larry. the me call

Larry McAlee

for and now I Mark, detail. in more everyone. good the will Thanks, results morning, discuss quarter the

For per of to quarter May of rate quarter, from in XXXX and was Income expense share, quarter using first diluted of the quarter of $X.XX equity XX.X% average the and estimated $XX year offering $X.XX tax impact compared diluted million the outstanding last was first XXXX quarter for ago. consideration first our first before the effective tax the million quarter for The fourth first discrete in to we shares annualized quarter up in due of weighted of shares earned shares a of tax $X.XX XXXX. XXXX calculated the an items. $XXX

income in include income provide results or premium Essent tax. million tax a As to to $X.X taxes addition our a discrete states expense deferred to Mark tax noted, first for an pays quarter charge

billion by March first of XXXX of Net mortgage compared tax $XXX income. decline the first average X% for quarter XX quarter million billion, in increase premium was insurance from premium decrease $XXX the tax of and XX points, principally XXXX. to Re the earned For rate the Essent cancellation our This in third insurance ended compared points to premiums first the U.S. $XXX and the basis down of million XXXX, basis billion at includes quarter due XXXX. for of was The a the XX% in in quarter balance business. was $XXX premium earned estimate $XX.X December We expense premium at party compared single to XX, to rate. just XX the currently to fourth a using decrease a quarter rate force with effective business we income XX.X% the on net in record

For estimating are a the million last of compared XXXX, higher notices to points the reported XX earned from to provision The favorable in the for quarter quarter in the we was rate in that million, level first adjustment full be XXXX. new prior defaults first year basis net losses our benefited $XX range. of and fourth quarter. for year losses The quarter in of provision decline development premium will compared the loss expenses $XX and

end year, X.X% X,XXX reserved rate of million the first down reporting is million to discontinue the favorable that for with the fourth compared trends, decided April last at at also the fourth of our update we December the default initiated the of default first received new our XXXX. with pre-COVID-XX was default quarterly have $XX the quarter. continued quarter XX. of we’ll Consistent of methodology. X,XXX During cadence. which to trends we we’ve development quarter as XXXX quarter favorable X.XX% in in XXXX, normalizing Note quarter the year markets notices, XX, COVID-XX we quarter, Prior $X versus post of first XX% in onset regular reserve in March default our default fourth using from and X.X% At the that new rate our to was part XXXX the decreased of defaults reported as had monthly default reported

programs using lower claim provided in third reserves was historical and forbearance a our quarters As resulting than a X% as such rates XXXX, stimulus, of second mortgage reminder, the expectations timelines we traditional federal for default claim the This foreclosure assumption may on assumption. extend the defaults and to claim rate reported and moratoriums, based experience.

adjusted level to of in of the recorded our as and reserves these in not were the compared due in with $XX fees these ultimate a payroll have costs. increase in in the incentive operating policy quarter, quarter the payments, of increase increase The million in reduction first which $XX and fourth with of first deferred estimate associated associated third acquisition professional second defaults. represent expenses primarily We taxes Other vesting over losses occurs to and continue quarter. is and our an XXXX million in quarter they shares the underwriting in previously the quarters expenses best to an historically the fourth

to expenses decline the to quarter in expect the of We XXXX compared second quarter. first

for We X.X is factor $XXX excess to operating after range for continue and with assets. expenses sufficiency year PMIERs $XXX $XXX to full PMIERs Guaranty’s that available XXXX. million of COVID-XX the underwriting will estimate From strong $X.X the defaults, other the XXX% million million Essent ratio applying at in perspective, be billion – of a

XXX% with at ratio Excluding available factor, our sufficiency billion the PMIERs remained excess strong X.X of $X assets.

to me back turn call the let over Now, Mark.

Mark Casale

strong outlook were positive. we generated excess with improving our Thanks, housing engine an on closing, environment the is our post-COVID Combined all Larry. we first our in operating high. or and on for a quarter economic produce confidence pleased earnings performance models by distribute and strong In with is managing cylinders capital, as business economy our

capital we Over on profitable, additional our a stressed display and raise of maintain quarterly the last were as our environment. XX months, from remain dividends operating strengths model the

and of repurchasing generating we we tangible profitability, share as shares redistribution the a to capital balance shareholders. with and dividends buyback to are in augment program. to strong capital. It of strategy a also Now, our further deploying business capital benefits the return between pleased demonstration model excess our to Similar provides is

evaluating the and and to Finally, credit that making we in with EssentEDGE are risk. changer potential its price excited about we a were X.X be game a progress

forefront early large While the data deployment, of to the quantities we’re moving where at AI world is be and Essent this. its want in we the is of with stages combining of

to Now, let’s Operator? get your questions.


Mark question, [Operator First DeVries we have Barclays. from Instructions]

is open. line Your

Mark DeVries

lot know to think on Thanks. know all. this what shifts, focus at I There’s But do you think and I just quarter? would might impacted share be this get guys just share a your helpful share of you market Mark, it been on quarter on investor have color focus

Mark Casale

share first we’ve again, quarter, last from was first I insurance focus in flat what would couple We prior on say the force, in Mark, and the about days. talked last which until continue Hey, relatively the Essent relatively flat really to in quarters. an standpoint, know this quarter. didn’t year our was that we was in

and May forced grew don’t think to In insurance of I year. last we fact,

the we at I first in year, expect what to force write quarter. for a given we grow and $XX in to clip. insurance we the what think healthy expect with the And new we’ll close right we So wrote of billion think rest the insurance,

be we So, that. focused continue to on

there’s things all the the flows the it some been the goal premium to of around into get market that term share one XX% chance had EssentEDGE not, we’re But few optimize is we’re time. to XX% to X.X a reasons right. about, our shifts it that So share, again, really excited share that We’ve quarterly us them. around gives And mark. really the around longer

to that – to We’re rather be car factors, to a in be engine. need such now, or you or factors more always wins, than, information. years XX% iteration to price be its swings that’s want our and if EDGE the the or business, four price to X.X, and you environment, development going It’s more to view to with you’re our Enhance XX six, whether see of driven type engine, the the of large lowest rate started three a is first it’s why if XX armed you share than going price. that, or couple the getting you’re of card the we the with ago

XXX over analyzing loan factors, to the back in We’re learning using deploying we’re machine and officer and three we’re seconds. that

ways basis a competitive That’s better we’re board if to able economic or be standpoint. to a big from environment three We two are premium a the environment we that seeing by can premiums, win unit it’s or again, and going premium optimize across low be points.

again, that’s So we it. how at look

Capital things. chatter of sure That’s And we kind as making get our really Credit going again, – that business to spending important caught in time just we winning to scheme up a going share? grand we’re be separate selection, look the move run. all, it’s share? building GEICO, going the winners So, the as winners. are forward, in it’s the more credit it’s the going key One, said, the differentiator the losing card as be is going quarter the and the is of of Progressive like to losers analytics, not I – to to that don’t or moves, they’re Who’s long it’s towards we’re of a who be providers in

lower a can that’s I price the believe in management they’re engine, our tool. And today. we is think where that’s the that. strength to your yes, risk still the cards you putting So what And term but investment of longer engine, we’re dollars. Mark And

Mark DeVries

Okay, that’s helpful.

guys you’re use kind position you you are about to new of you’re note separate talk And then a and in seeing the expect that? highlighted, your opportunities that you Could repurchase deploy On to authorization what business? might for capital very just implications the strong into how here. the

Mark Casale

Yes, with the million capital was strong $XXX have of of HoldCo line position with I it credit. cash. the mean, we again, And, of right course, over

fact, amount are couple weeks. of in out also we significant of in We pulled $XXX dividend generating last of with million a guarantee over cash guarantee, the

will So start again process that to.

is to repurchase look redistribution, really dividend, we the from that So, have we the end and quarter. continue XXXX. we’ll of increased through each I think a terms The obviously, at which in standpoint, cash of

So, and of kind ROEs. of business, it it’s way Mark is if the really about we that necessary. increase cash plan for maintain repurchases term, generation given it’s and obviously to and terms in for a But us, that’s could now, think now us new which dividends the the longer

certain maybe we if it use good through like distribution is this maintaining see business, ROEs when economics, a don’t capital. unit So, of we a

opportunities terms could the the we’ve of Essent Guaranty XXXX. business if terms always quarter It’s just we’ve last in as generation good around, terms the XXXX, as the outsized well not as of call, written meaningful cash leverage feel we is the business, In early the use And of leverage pretty last analyze there. capital of core Re. business, diversified guarantee, but in of I opportunities, given to and would in but we like things And obviously half see seen it’s on MI, to we kind mentioned, pretty, that certainly of that, of over some plan. of management outside But capital the your think in continue meeting Essent it’s the look constructed capital, study still the a a actually real we’ll I capital. we’re is well, use say have do story but ways of I the and we and first or

Mark DeVries

Thanks great. Okay, the comments. for


Suisse. Next question, we have Credit Doug Harter from

Your line is open.

Doug Harter


the you [ph]. how process wanted the follow-up on talk pull you million about just guarantee about being $XXX kind thoughts Just about able guarantee. and to Mark made comment to just of from on Can out future of dividend approval of in kind

Mark Casale

remember, mean, the positions. some I given haircut capital approval point and free approval, processes GSE of the which, Yes, the we begin our from or just multiplier, we require again, received,

We’re pretty with just, our reflect multiplier, and also with balance sheet. strong on PMIERs the and without

not We’re that lever.

leverage is our below So XX%.

a reflective I in think which again, position, GSE capital the strong and we’re recognized. it’s ratings, So our which, pretty is in

to do a folks about, we’re we’re regular So of in insurance force, not speak a when occurrence, just you good terms in think really forward, going in NIW can being or but going to math and terms position. of in a the

we required assets think does, a grow growing. force. And sudden insurance out. assets will of we’ll to day all we But the the in our keep don’t available continue flattened So,

available actually it shareholders. increases for So kind cash of

a – it’s So in good very position. we’re

road. We’re going down allocate to into grow have increase increased leg distributions to I again, to provide growth and opportunities shareholders, businesses noted, the it opportunities capital to of as or the redistribute another will to that as to

believe pleased the generation there’s cash first just cash really business, flow operating we’re $XXX So, flow. of quarter again, in the the with I million

from think more things I come. good So, that I think there’s to standpoint,

Doug Harter

passed earnings? that the – that million $XXX Great. you clarify with add that have And to XXX that would would HoldCo just recorded that to be

Mark Casale

to Guaranty U.S. – quarter. And upstream done it be second not matter we really a of it’s remember going whether several in the not or it to of Essent was remember, It’s holdings.

may at we holdings. So U.S. just keep it

Larry McAlee

But Doug, holding companies. two have we

will cash earlier, the companies. now have Mark companies U.S. We companies. we we have that holding the referenced holding add top two tier between This the also and to two report the that holding that at we and

Doug Harter

Understood. Thank you.


Rick JPMorgan. we from have question Shane Next

Your is open. line

Rick Shane

that this thanks over appreciation paid, million look will And our and price throw off Hey, currently I you I this that there. fundamental over questions see since how But story reserve. think a And think model, I guys, strong. back when terms, you and that’s is between choose think in results economic my When tailwind, taking for really I you claims I home that number XXXX, Mark, continue. have a $XXX is will The Do a outlook? time? realistic you think $XX there it suspect both morning. divergence through now million fundamentally a do that reserves out I of

Mark Casale

And it’s We reserves, we point which was kind the say to event, feel the to a really last because made divergence. strength. million the just plus balance got say reserves or Again, $XXX gets the of where sheet pretty was to in XXXX hard year, we that it it adds just which one it good our took we there’s provision. about would reflected an earnings in event,

center going remember, is quarter normal of forward cohorts, fourth in the Looking to to really reserves. the the third the now first we’re back and quarter, second ultimate quarter because and around performance the

cure. second isolate, we XX% if quarter, XX,XXX cohort accurate of look defaults already, in them and let’s quarter a just in So at you that the assume with just XX% would however,

going for So extended loans few three two, also going and it forbearance on remember forbearance, I new back They with let’s to the quarters give still you eligible got quarters, what’s Rick, a think fall are plus forbearance. right? into more take it’s to just going

hard which time, is So provision. a of borrowers remove the it going period up, in to stay could kind to us cleans see you until it make of for from longer that for forbearance

going think think time upside. take out. play for levered to again, this But it’s I the to we’re I to So,

Rick Shane

it. I Look, Got that. on hear Yes. you

I I’m that things but one robust, at seen auto reserves, that that severity historical been really of forbearance assuming as the in that finance, you so think the have opportunity are well, that’s perhaps create of analogue, is price given what home between versus that’s when been the it? guys looking clear we is the we’ve appreciation law, extended, some way values an draw collateral with where

Mark Casale

right. Well, we the that’s reserve, we set when mean, what I did

XX% So, to claim right in now default. we assumed basically would are still them X% sitting go of

yes, be a they without end having So up, the upon. foreclosed overtime, we to could them expect as lot of up ever house clean selling

favorably get I yes, wait. but will to Rick, lever to think So again, that again, we paid

So, sitting to we to need sheet aggressively from an We’ll originally overtime. it kind the play we balance it thought. on we do feel kind the standpoint. forecast it’s be we better of strength, that it’s sure don’t accounting Not quite out of than let even could going

Larry McAlee

Rick one, just points good the X% assumption clarify and rate seems severity. you Yes, to a XXX% claim

it XXX%, the to the to severity So than more is that give us claims. would extent capacity lower pay

Rick Shane

it. Got

Okay, very you much. guys thank

Mark Casale



is next George from KBW. Your question from Bose

Your line is open

Bose George

morning. Hi I you premium XX% possibility Bermuda, more the XX% Can talk to peers see, the into set of level? how about went think your guys now over you they the is see your decision that the that good Bermuda factors time. to base as

Mark Casale

was year, we it but Well something was kind be Bose a backseat. honest, took had COVID a contemplated first given again, we to last it that

So a do we’d step, increments. think in to good we it’s it’s like things first again,

think NIW, of cash XX% some to normalize company. the it XX% on from focusing throughout going I the just So and helps flows

possibly time, but XX% I very say right could, over we and would at While XX% comfortable NIW. with now on we we’re just look

the down more forward, we would anything think in. that’s and road. did at But going if be backlog the I looking moving it

into back And that’s made it business. as points, time, about right frankly, I over to now basis XXX an think around it unit kind We lot quite I again, a plays we whole unit points gets economics. right. XXX those to point, said, of very economics, think earlier basis comfortable. the we’re And

can economics, unit when or in no and another doubt managing both given, on the of time things probably whether economics, tax help I helps you our becoming tax pretty and losses, it, us front the business be spent we’re see other move help, on, lot price And you again, needle, premium, how darn and optimize it’s So the that if lever. clearly when yield, yield the more premium unit and already of it’s the iteration can driver engine it it of in of have so lot a thing. new of another of terms think at credit rates than and good so better business commodity which a at some a we managing investment end, we can about to you put that’s little expenses. a investment, look together, commodity And there’s the

being us. So, again, unit that’s once economics I the loan comes and think optimize manage in door, that able returns up what to to down differentiates

Bose George

actually Okay, the sense. one you’re in impacts in that arrangements then, structure? the the taxes, And that reinsurance makes on tax more Bermuda Thanks. Biden just seeing plan with the

Mark Casale

Obama a Again, they’ve during that a seen been But of is rules. lot I game. this see It’s approach a that’s after on. mean, been the We’ve was to too. lot a going and wait that, newer proposed administration, it.

it’s there. So comment that’s on of But watching. tough a rule out we’ll just kind be something got again, certainly floated to

Bose George

Thanks. great. Okay,


of Mihir from next from Bhatia Your question Bank America. is

open. is line Your

Mihir Bhatia

Hi, thanks questions. my taking for

ask was on two any And rate. we I’m trying on color of like, to you the premium I about basis XX talking wanted comments more actually XX? for or exit is end in below year, where to the below decline, what XX will are I fourth just a question be we full sort is, get up points exit quarter? about being paying the can if So understand the are so just really, the we the clarify you first cadence. see The based talked know on

Mark Casale

very comfortable bit for the important roost parts, the why that iteration NIW we the leave shows here. that in we premium do But, also I the That around we’re I looking how, there’s top-line understand we we shift year to the XXX right? in to that. purchase, come much XX to believe I a fourth away new up at with and difference we’re level. get mean, level, as we a the in give investors the there far. refinance. the think to it’s so book. to of it’s the can optimize it’s that the XXX, so that about premium, different engine months. making think give terms moving That’s easy sure for been the going quarter, loans and of on can players. that’s and And in and it’s clearly there’s now our revenue definitely again, persistency talked something in what? little But and always however, XXX. and premium to an home can so forbearance And depend And nine many premium out amongst focused on with I that’s I however, there’s of end think ways you a up mean, it to the in rewrite engine, where have guess for And between half is But second going I how of right premium we’ll yields optimize when so example,

than spectrum, a we a with pattern of And off we XXX? the off representative felt perform mortgage We score sorts the FICO then is end, price you go XXX. XXX custom going don’t and developed, they’re model we’d But we the to [ph] other that tested pick not better going last think over the would Remember, think more very data. again, a credit we’ve can that give, price it’s probably of the give different payment to them it’s histories, down that stable years proprietary. we’re price same several they not that off XXX. something we we’ve that as on Our Well, have when anymore.

below that going a better. XXX, can little however, we bit that’s on the perform market, to price So

and about done. get business premium get you when a remember share the an we five going. I done out ago, market years you again, to this into the NIW again, the business of a been edges. and the as in to again, we’re in where again, it’s mean, to talking business it this term three I obviously, all get can I or for been always this but since levels two drivers give next you is again, to on, quarters. the bit rent So from think It’s little better, just relative you is away the where can around the But and California really is about we And couple flows, have Mihir, years, two this ebbs started, longer be we’re it has quarter of trying focused yield. a

Mihir Bhatia

That makes sense. Really appreciate those comments.

other one quick one for me. Just

a update Just into $XXX have check you I like, any NIW? it? update given any at if – wanted to the quarter is it’s, the billion-ish view, Any year, market there think on last quarter. update that to

Mark Casale

quarter strong. first the I pretty I Yes, was mean think

year, of could its half more billion-ish? I in certainly yes the rates up. second if going to mean, be Yes, the a market, strong a certainly, kind it of be in go on dependent the they $XXX So, lot of

is Now, strong. incredibly as know, all the push down. But refinancings purchase we market, that’ll

I in market. But average is So, strong very NIW again, like $XXX the billion. perspective, it’s a just keeping strong, year think XX

So this of market, nice is but couple last over much has a previously. it and been the years, higher certainly than

Mihir Bhatia

Thank it. you. Got


Gilbert question next is from Your BTIG. from Ryan

Your line is open.

Ryan Gilbert

Good everyone. thanks morning. Hi,

that the the good that $X one development the quarter is in Is thinking XXXX. quarter how on be was quarter, in think fourth up there million about? to time in should $XX rate the million going $XX the a in favorable of million forward? run a question was stepping anything it incurred losses Or nature First I in

Larry McAlee

to $XX on contributed the to both assume strong can don’t And bit Yes, activity good lumpy. year decline to that to you so activity in Ryan prior were had more first the saw was, also due periods, we when the I cohorts. continued in quarter pre-COVID on first in its to XXXX tends we and favorable addition, fourth in period. million cure little the relates that strong and COVID of little also default quarter so And then defaults as observing reserve had those methodology. But our defaults reported cohorts. factors quarter been so credit prior activity question, think Larry, a favorable in the quarter be respond to back to prior run a the environment, fourth of what that we rate defaults performance, reserve the have development some prior pre-COVID-XX housing cure reserve we recorded we’re that the And move factors bit then and the

Ryan Gilbert

for April Thanks that. default into X.X. then rate And it. drop got Okay, the X.X,

I what think in really there’s that’s couple interactivity that drop being noticed the would by you is driven both or defaults of case peers years. a been in from it lower rate also in new and the default for being that’s, is a pickup April, say you nice is we’ve

Larry McAlee

It’s at back defaults number look month a you reporting going the as that reported. of released in, in early as last basis. quarterly both saw we on really the We’ll the uptick the April, But default that we reduction monthly well in reporting in both. And forward. activity activity we be X-K we’re be new that’ll just if an which our cure

reasonably in and would see April. and I point good favorable nice though, of decline activity, area. kind did terms activity in default in we pickup to cure cure So also, trends but April continue a default be that tends a that to out see and month in of

Ryan Gilbert

great, thank you. Okay,


from next Your question [indiscernible]. is

is Your line open.

Unidentified Analyst

a Thanks. I morning. questions. few got Good

adverse this versus period the quarter, the methodology, quarter? development that have First and Did on early you million of bucket. historical some have solar current same you pre-COVID you to your Larry, shifted $XX because inclusion of development when stage last cures trend adverse

Larry McAlee

No, the COVID-XX to really not claim rate adverse fourth from principally defaults model. the of due methodology new that in we versus sort the the did development quarter ingest to shift was picked reserve back that on going X%

really current we a So methodology in the any the see was the of quarter, for fact, anomaly – we of we reserve significant that kind different the during saw some quarter. didn’t went development fourth but to favorable in

Unidentified Analyst

side, debt help or something believe I example can from advantages keeping avoiding get there getting but to $XXX can are is opportunities options in for do outside other Then, to the up tax you other of moving have Okay. or other excise what of it M&A? there you you other that terms what than where the do do U.S. the acquisitions Bermuda the million that HoldCo, on

Mark Casale

around You on holdings us keep of flexibility got it a lot gives to investments.

So it’s tax, at wholesale. the not the cash we’re really with mean, excise about to avoiding speak, flush sort I

So Pay do of kind to there’s again. taxes have no it downstream need the to that.

of investments looking flexibility, to us gives what we’re forward to it So do, lot around really want basis. go and a the

Unidentified Analyst


can obviously you’re the or Re, streaming capital, Is plan quarter Essent more use a two? the increasing increasing the or cede down always two capital cede? have there next Sorry, in of

Mark Casale

from good yes, good pretty back the that that’s would we do that there capital there to like too. just with we’re have No, pretty of has, there, But book the we’re we’re capital actually have pretty we needed and the kind actually capital of measured – idea some of approach. a didn’t we standpoint in around kind doing and,

Unidentified Analyst

very And refi were Ireland Okay. quickly down, risk tapped how as as that see of flow cash very benefit Obviously, of is But decline? is under do rise, points amortize disappear as market slow the the last you is the effective peers. clear is possibly question. and you your the things benefit that one the PMIERs currently can pace then the erosion

Mark Casale

certainly, matching, something have question. you basis. regular It’s certain to NIW there’s generally get. look maintain in a that look we expect we – We it we the benefit. the it’s on kind certainly benefit that of market at we the so to it to at But on it’s, a a stay do in Yes, good

issue. I to we’re good long think it’s as but continuing a you’re point, So

that you in shape. is You when It’s should stop when, saw we created year, and issue good really for last offer some. be we’re an

Unidentified Analyst

Okay, thanks.

Mark Casale

just And terms look of also to don’t it’s point you are Ireland of capital just around we I the nature lot we become to Jeff reliant in Ireland, without on that your finalized a management. just over where with want at, and so


Stefano Your Deutsche next Bank. question is Phil from from

is line open. Your

Phil Stefano

could capital sensitivity and returns? Yes, about, is both, about seeing based and talk you as could your repurchases and return I repurchases about excess maintain to is to around right of hoping dividends capital thanks. valuation mix was as philosophy And good to morning thinking talk so valve the us and the a you the new, Mark, way dividends maybe repurchases ease

Mark Casale

I bit right? question, little of it a is a mix, a back, to, pricing, to is back obviously want good Yes, little cash we kind the certainly to around get step tax maybe and You really cash effective. a investors, and more a Phil it’s mean, take dividends different is mixing think hand, repurchases way in to

given type of cost it’ll as So program, of terms and like it we’d averaging be in to, $X think program. almost our

shares in So, volatility are But, the stock the down, a on are buying buying our when than and basis. market and be when price. we’ll we’ll the we’ll less shares up, day-to-day more given be the be continuous

we terms probably poor, management a of bets, down. I and teams think valuations good up So, mean, are not very make probably predicting going we’ll it’s we’re I think in plan, right?

execute XXbX we’ll days. plan. XX a would at expect it So every off we it’ll That, a be will more of to, matrix look and

accelerate certain we could So certain in we instances. and always add could it it to in instances,

I be to the capital again, a dividend – I going it’s around use of think So much. will dynamic management, don’t too would

obviously and in fund the kind we’ve investment continue going is And to the the and then be to our business, estimate toggle. just core critical repurchases in slow, investments we outside continue years. of to started the develop more the the to right, mass, several next core. continued there’s a the with investment over again, because that’s then opportunities, So build opportunities we’ll something get and which there’s of Once

Phil Stefano

but feel of through be the the to right from parsing end the mean, it’s in mind of the we’re in, I way. I by this. some do affirmation to says XXXX. an going Okay, that release maybe I’m that’s that like is ways words reading executed seat least finally at

Mark Casale

days, going XX in days we’re the to be actually in over this we’re of next the XXXX. signal, the market basis the not, probably in continuous to a Phil, market, is be a going this through end isn’t XX Yes, repurchasing on shares

to into figure next, of can year, why a the that and many too stop you’re building very that’s that end it, a out se, to we’re specific per to we’re if going repurchase how can – that be on So, problem we’re you high going to have. would over a it, it’s next buy the model, would good to going prices signal, not be walk shares get your it’s happen, not you actually a day, almost

will we a you that the every with So And like say, but be change continue to it’s signal. the market, excess oh god, lot this want that. capital. quarter to announce guys, it a my have think of that toggle, we not will is, increase we we’ll more And

So very, it’s to approach execute it’s we of like it’s intend our with we kind appropriate do to actually steady. slow that consistent Again, where upon. and

aspect we going – So didn’t announcing the dividends we’re it. it, was and we’re this, then we of and and to we announced one did do it, it, now

Phil Stefano

of companies. not switching think Okay. dig platform. I tend mentioned And insurance as you then more, that a had as bit proprietary a to into gears, to I was X.X wanted EssentEDGE little this tech companies

provider? by this you five? external real maybe this differentiator What’s to in the the can’t being replicated So that be is house? Are other us you could leveraging, an here developed talk about

Mark Casale

And MI be they No, MIs , machine of it I we the pricing time. be It and another into just XXXX, borrower prior Blue SN had officer further better, banks of at which with is using deciding allocation MI wow, decision. of Optimal they’re two used officer takes sure that, MI loan. all they definitely this I lot decide our we came at to and had loan we best the at they’re like, more were conviction think green. get of And is it gets would would who the to the meeting loan started two it mean, were solidified, not the pricing in not pretty delivered soon replicated. a down going pick, the to the focused as certainly ago, and three, going Blue MI with MIs and have when, a one to time new that XXXX, it, we old loan method. going just four price, back six, they’re your system can or and a right, takes out believe, to taken they green. end So, kind the provider, officer then it And I the be started to larger are this as all rep difficult two where were change business making their pick needed to information big favorite also it prices started make highlighted a industry, to right years they going. in MI or starting, the say, on the in mean, hired saw run to to we’re Right? we That that and folks Optimal of with our I generally, a

every our So, price. lender best not we’re necessarily lowest giving the price,

we we LP, hired folks in-house works in way have one the developing, the have got again, experience we model other had in that GSEs. sources. data yes, of the is and So And industry. folks from credit card that And the

raw only the use which data, we credit use data who again, raw So, folks the GSEs.

done run back it’s now. the we and then to use of deliver factors deliver the that’s around the officer seconds. we So, and interesting, development the really And over now that I actually XXX deployment that the through, in-house, part can model of was loan model right believe three that to is

So the again, that of it’s cloud. think AWS all on

take last years of the first quarter market and fourth again, in out a available we so going of time, done And and is and through we’ve It’s the So actually again, been seriously year and half, over it’s year to the to half, a year. the development quarter last rolled to going this Mae. it and in a Ellie in year.. it year this today, we half, probably tested has the two development

– we’re not cards, use market Mae if integrations they’re when into are Ellie kind access to couple banks. And it’s So we for a just continue what bid this And say folks right. using have going we’ll with officers hard them direct through loan to pricing of can the incompetence, market. difficult some to to of a I roll It’s larger that engine, do, mean price. an the a they

Blue. what So, into few morph probably XX to a users, our using months. use over will some Mae, we Ellie is is XX% ones, Blue officers EssentEDGE more we’ll loan those simple next industry I There’s and if really not XX have the way that’s Ellie eventually Optimal of of – work into again, bigger Mae our the through or Optimal think some production to that so XX% we, of price to X.X engines the months but it’s

So, we’re about excited it.

can be everything’s, everything yes, replicated. So

years, the so that, and over we fund. and heard and clients, the last again, out do three and the the build Coast do three proprietary, companies So three we Phil, Midwest didn’t funds, hire in of out like say investments I’m you’ve We lot it’s Coast when have an it within XX a fund we’ve years, me it. consultant skills also A think the give for I’ll East made, of is some clue a visiting to here, you go it’s house. here, mean, phones. visiting And say funds, an West I but over different funds, example, I these I’m –

this to through across it. that it and that meeting just be was kind XXXX. the had do you it know So, industry we this of or there kudos couple in this technology at provider walked never company and ago, And exists, XXXX XXXX But to saying XX evidence – engine existed could first than we one on looked market can XX rate was out – that. pricing better in for we factors. the an that them cards, exponentially years get the clear a company it four, Remember, being do how of probably using, had And I to company like with that we going, a think or vectors. came were And was before. I

existed. So we knew the technology

it’s FICO it it’s of So not in essence back spending not ability develop risk on again, their improved. person’s And to developed score, Phil, it’s as a mortgage. pay it’s score. time lot FICO of score just the indicator a an a a was XXXX, just never proprietary this to been continuing great so that a

on all like probably this. industry’s the expect would working I again, So things

think we’ve So we I gotten have again, know, leverageable. we’re think on focused we and the their it already all this it’s maybe mean, we for something but thing. do, models And I is can and that’s what

never ability We’re the there’s learning consumers Essent. around But opportunities down now and you if stuff we’re to pay focused within know for right on now things. it deploying road other

Phil Stefano

Mark. forward Okay, Look those you. Thank great. things, to


There no questions are this further time. at

to over management. back call the turn I’ll Now,

Mark Casale

thanks, Well, have us everyone I for joining a today, weekend. you and hope great


a This your today’s wonderful Thank and have you participation for day. conference. concludes

You may all disconnect.