Q3 2026 Enact Earnings Conference Call - ENACT HOLDINGS INC

Hello, and welcome to ENAC's third quarter earnings call. Please be advised that today's conference is being recorded. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1-1 on your telephone. You'll then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. I would now like to hand the conference over to your first speaker, Daniel Cole, Vice President of Finance. You may begin. Thank you and good morning. Welcome to our third quarter earnings call. Joining me today are Rohit Gupta, President and Chief Executive Officer, and Dean Mitchell, Chief Financial Officer and Treasurer. Rohit will provide an overview of our business performance and progress against our strategy. Dean will then discuss the details of our quarterly results before turning the call back to Rohit for closing remarks. We will then take your questions. The earnings materials we issued after market closed yesterday contain our financial results for the quarter, along with a comprehensive set of financial and operational metrics. These are available on the Investor Relations section of our website. Today's call is being recorded and will include the use of forward-looking statements. These statements are based on current assumptions, estimates, expectations, and projections as of today's date. Additionally, they are subject to risks and uncertainties which may cause actual results to be materially different and we undertake no obligation to update or revise such statements as a result of new information for a discussion of these risks and uncertainties please review the cautionary language regarding forward-looking statements in today's press release as well as in our filings with the FCC which will be available on our website please keep in mind the earnings materials and management's prepared remarks today includes certain non gap measures reconciliations of these measures to the most relevant gap metrics can be found in the press release, our earnings presentation, and our upcoming SEC filing on our website. With that, I'll turn the call over to Rohit. Thank you, Daniel. Good morning, everyone. Before I cover Enact's results, I would like to take a moment to recognize Tom McInerney, who recently announced his intention to retire as President and CEO of Genworth and step down from the Enact board at the end of the year. Tom has played an important role in Enact's journey, from his support through our IPO in 2021 to his valued partnership as a member of our board. On a personal level, Tom has been a trusted mentor to me for many years, and I've benefited enormously from his counsel. I know I speak for our board and our entire team in thanking him for his commitment to Enact and wishing him all the best in his retirement. We look forward to continuing our strong relationship with Genworth and working with Jerome Upton as he steps into his new role. Turning to the business, I'm pleased to be with you today to discuss our performance. Our third quarter results build on a solid first half and demonstrate the resilience of ANAC's business model as we approach year-end. Our strong results, favorable credit performance, and strong balance sheet support an increase in our capital return guidance. We now expect 2026 capital returns to be approximately $600 million. For the third quarter, we reported adjusted operating income of $164 million, or $1.19 per diluted share. Adjusted return on equity was 12%, and we generated new insurance written of $14 billion, resulting in total insurance in force of $275 billion, up 1% year-over-year. Turning to the operating environment, mortgage rates moved higher during the quarter, putting additional pressure on housing activity and mortgage demand. At the same time, housing supply continued to normalize and home prices continued to appreciate nationwide, supporting borrower equity and mortgage credit performance. Labor market conditions remain generally healthy, although affordability continues to be a headwind for prospective homebuyers, despite strong demographic demand. Looking ahead, we believe the long-term drivers of housing demand remain intact and continue to reinforce the important role private mortgage insurance plays in responsibly expanding access to sustainable homeownership. Against this backdrop, our insurance-enforced portfolio continues to demonstrate resilience, supported by prudent underwriting standards, strong borrower credit characteristics, and meaningful embedded home equity. Persistency remained elevated in the quarter at 81% and continues to be supported by the rate environment, with approximately 89% of loans in our portfolio carrying mortgage rates below 7%. At quarter end, the risk-weighted average credit score of our portfolio was 747, while the risk weighted average loan to value ratio was 93%. Layered risk remained 1.1% of risk in force. As in the past, pricing in the mortgage insurance market remains competitive, and we remain focused on maintaining prudent underwriting standards and generating attractive risk-adjusted returns for our shareholders. We continue to leverage our dynamic pricing engine, Rate360, to assess risk at a granular level incorporating borrower characteristics, loan attributes, and our prospective view of housing market conditions. This capability is particularly important in an environment where economic and housing trends vary meaningfully by geography. Our focus remains selecting the right risk at the right price as market conditions evolve. We continue to participate in the rollout of Vantage Score 4.0. During the quarter, Vantage Core volume remained concentrated among a few originators, with broader implementation still in the early stages. We will continue to fully support our customers as adoption progresses. From a credit perspective, our portfolio is performing well, with recent books performing in line with our expectations. Consistent with seasonal trends, new delinquencies were up 17% and cures were down 1% sequentially, and total delinquency has increased 7%. Our strong cure performance was driven by favorable credit trends and effective loss mitigation efforts. drove a reserve release of 37 million in the quarter resulting in a loss ratio of 20 percent overall credit performance remains strong and we believe we are well reserved across a range of scenarios we delivered another quarter of prudent expense management with operating expenses down year over year despite the inflationary environment as a result we now expect to end the year at the low end of our expense expectations. Dean will discuss the key drivers of our expenses performance and provide more details shortly. Turning to capital, we continue to execute against our priorities, maintaining a strong and resilient balance sheet to support existing policyholders, investing to drive organic growth and operating efficiencies, funding attractive new business opportunities and returning excess capital to shareholders at the end of the quarter our pmire sufficiency ratio was 158 percent and our credit and investment portfolios were in excellent shape our strong capital position is further reinforced by our crt program and the backing of our ungrown credit facility during the quarter we entered into new quota share agreement that will cover approximately 35 percent of expected 2028 new insurance written further advancing our programmatic approach to crt and our ability to secure cost efficient capital and balance sheet protection during the quarter ambest upgraded emic and emic nc's financial strength rating to a from a miners and enact holding inks issuer credit rating to triple b from triple b minus all with stable outlooks we are also making progress against our strategic growth and diversification priority an act we delivered another quarter of strong performance generating attractive risk adjusted returns while remaining both capital and expense efficient we are pleased with the progress of this business and continue to view it as a long-term growth and diversification opportunity finally our strong performance supports continued returns to shareholders during the quarter we returned 151 million through sherry purchases and dividends as i mentioned earlier we have increased our 2026 capital return expectations to approximately 600 million before wrapping up i'd like to comment on the recent presidential executive order on decreasing housing costs for the American people. We support the administration's focus on lowering the cost of homeownership and look forward to helping advance that goal. We are committed to expanding access to affordable homeownership while protecting taxpayers and supporting the safety and soundness of the housing finance system. We look forward to working constructively with the GSEs, the FHFA, and our lending partners. Overall, we are pleased with our performance this quarter and year-to-date. The strength of our portfolio, disciplined capital management, and continued focus on execution leave us well-positioned to navigate the current environment, support sustainable growth, and deliver long-term shareholder value. With that, I will now hand the call over to Dean. Thanks, Rohit, and good morning, everyone. We delivered another strong quarter of performance. Adjusted operating income was $164 million, or $1.19 per diluted share, compared to $112 per diluted shared in the same period last year and $126 per diluded share in the second quarter of 2026. Adjusted Operating Return on Equity was 12.4%. A detailed reconciliation of GAAP net income to adjusted operating income can be found in our earnings release turning to revenue drivers new insurance written was 14 billion in the quarter down seven percent sequentially as higher mortgage rates reduced refinance activity and flat year over year persistency was 81 percent in the corner up one point sequentially on higher prevailing mortgage rates that exited the quarter or above 7%, and down two points year-over-year. Persistency remains elevated relative to our long-term historical average of 78%, supported in part by 89% of our loans in our insured portfolio having rates below 7%. Primary insurance in force was $275 billion in the quarter, up $1 billion from the second quarter of 2026, and up $3 billion, or approximately 1%, year- over-year, Total net premiums earned were $242 million, down $3 million sequentially and year-over-year. The sequential decrease is primarily driven by higher seeded premiums from reduced profit commissions on our quota share reinsurance transactions. This reduction was partially offset by premium growth from attractive adjacencies and growth in primary insurance in force. Our base premium rate of 38.9 basis points was down 0.2 basis points sequentially. As a reminder, our base premium is impacted by several factors, including new insurance written, persistency, credit mix, and premium refund estimates that fluctuate quarter-to-quarter. Our net earned premium rate was 33.4 basis points down 07 basis points, sequentially, primarily driven by the impact of higher seeded premiums from reduced profit commissions on our quota share reinsurance transactions. Investment income in the quarter was $74 million, up $1 million or 2% sequentially and up $5 million or 9% year over year. Our new money investment yield was over 5.5% and contributed to a 10 basis point increase in the average portfolio book yield to 4.7% for the quarter. As of quarter end, unrealized losses in our investment portfolio increased by $248 million to $345 million, driven by interest rate increases. Although we generally hold these investments to maturity, we may selectively realize losses to pursue income enhancement opportunities. During the quarter, we sold certain assets that will allow us to recoup realized losses through future higher net investment income. We'll continue to evaluate similar opportunities to maximize the value of our portfolio, but this does not change our view that our investment portfolio's unrealized loss position is materially non-economic. Turning to credit, we continue to see strong loss performance across our portfolio. New delinquencies increased sequentially and year-over-year to $14,400 in the quarter, from 12,300 in the second quarter of 2026 and from 13,000 in the prior year quarter. The sequential increase was aligned with seasonal trends and the year-over-year increase was primarily driven by newer books progressing along their normal loss development curve. Our cure rate was flat sequentially at 50%, in line with seasonal trend, and remains elevated. We maintained our claim rate on new delinquencies at 8%. Total delinquency in the third quarter increased sequentially to 26,100 from 24,300 and the delinquence rate increased 20 basis points sequentially, to 2.8%. Losses in the 3rd quarter of 2026 were 47 million and the loss ratio was 20% compared compared to 33 million and 14% in the second quarter of 2026, driven primarily by higher new delinquencies, and 36 million and 15% in third quarter of 2025, driven by differences in new delinquencies and reserve releases, offset partially by a lower claim rate in the current quarter. The current quarter reserve release of 37 million from favorable cure performance and loss mitigation activities compares to a reserve release of $37 million in the second quarter of 2026 and $45 million in third quarter of 2025. Overall, we remain pleased with the credit performance of the portfolio and continue to believe our reserves appropriately reflect both current credit performance and the uncertainty in the broader macroeconomic environment. expenses in the third quarter of 2026 were $50 million, and the expense ratio was 21%, compared to $52 million and 21% in the second quarter of 2020, and $53 million and 22% in the 3rd quarter of 2025, as we continue to manage expenses prudently in the current originations market. To that end, we currently operate at our lowest headcount in over a decade. As part of the second quarter 2026 reorganization, we incurred a $1 million charge that is excluded from adjusted operating income. Based on our year-to-date performance and full-year 2026 outlook, we now forecast 2026 expenses excluding reorganization costs to be at the lower end of the the $205 to $210 million range we provided last quarter. We continue to operate from a strong capital and liquidity position, underpinned by our robust PMIRES sufficiency and the successful execution of our diversified CRT program. Our PMIRE sufficiency was 158% or $1.8 billion above PMIREs requirements at the end of the third quarter. During the quarter, we entered into a new Forward Quota Share Reinsurance Agreement, which will cede approximately 35% of our 2028 new insurance written to a broad panel of highly rated reinsurers. This transaction demonstrates our commitment to disciplined risk management while providing certainty of coverage at favorable market terms. Our third-party CRT program provides $2 billion of PMIRES Capital Credit at the end of the quarter. now to capital allocation. During the quarter, we paid out approximately $33 million, or $0.24 per share, through our quarterly dividend and bought back 2.4 million shares at an average share price of $48.19, or a hundred and eighteen million dollars. As Rohit mentioned earlier, we are increasing our 2026 total capital return guidance to approximately $600 million, reflecting our continued strong business results and confidence in our business. As in the past, the final amount and form of capital return to shareholders will ultimately depend on business performance, market conditions, and regulatory approvals. Overall, we are pleased with our performance through the first nine months of 2026. Our improved expense outlook and increased capital return expectations reflect disciplined execution, continued financial strength, and confidence in the underlying performance of our business. As we look ahead, we remain focused on prudently managing risk, maintaining a strong balance sheet, and delivering attractive returns for our shareholders. With that, let me turn the call back to Rohit. Thanks, Dean. Looking ahead to the remainder of 2026 and beyond, our priorities are unchanged. Support our customers, maintain a strong balance sheet and execute with discipline. The consistency of that approach, combined with the strength of our portfolio, gives us confidence in our ability to continue to deliver attractive returns for shareholders over time. Operator, we are now ready for Q&A. Thank you. As mentioned, at this time, we'll conduct the question and answer session. As a reminder, to ask a question, you'll need to press star 11 on your telephone and wait for your name to be announced. To withdraw the question, please press star 1-1 again. Please stand by while we compile our Q&A roster. Your first question comes to the line of Doug Carter with BTIG. Your line is now open. Thanks, and good morning. Rohit, I know you spoke a little bit about kind of persistency in your prepared remarks, But hoping we could just talk more, you know, and whether you see, you know, kind of given increased focus on this by the FHFA, maybe some more media attention to it. What do you think you will see any change in cancellation activity, you know due to home price appreciation? Good morning, Doug, and thank you for the question. So as I said in my prepared remarks, we support the administration's focus on lowering the cost of homeownership and looking forward to helping advance that goal we are also committed to expanding access to affordable homeownership while protecting the taxpayers and supporting safety and soundness that being said i would say when you think about the executive order it essentially directs fhfa to set up a pilot focused on mortgage originations going forward after the establishment of the pilot so as of right now that's what we are focused on from a consumer behavior perspective that is tough to predict from a social media activity perspective or policy discussion perspective those topics typically do not get reflected in consumer behavior but too early to tell great and then just sticking on persistency if you could just remind us, you know, kind of where we are in the 2020-2021 vintages as far as kind of hitting the contractual termination points? Sure, Doug. I'm going to pass that question to Dean or Daniel. Hey, Doug, this is Daniel. Happy to take it. Thanks for the question. Yeah, in terms of the 2020 and 2021 book years, as you know very large books, you, know, when they were written collectively about $200 billion in NIW. And actually, you know, there's only about, you can see this in the QFS, there is only about 30% of that remaining of those two books. And so, we've actually seen those start, you now, rolling off our portfolio for some time now. And I think you need to take that into consideration when you think about where our persistency has been. And as Dean mentioned, you know, we consider anything over 78% to be what we call elevated. And this actually marks the 18th straight quarter of persistency actually being over 80%. And so despite the fact those books being very large, have high refi, thus a little bit lower LTV, you know, running off through our portfolio and through our financials, you're still seeing elevated persistency throughout this time period. Great. I appreciate the answer. Thank you. Thank you, your next question comes to the line of both George with KBW. Your line is now open. Hey guys. Good morning. If you only ask on buybacks, the you guys obviously done well in terms of performance or the stocks done well, and it's trading, it looks like, 126 of book value. Does that play into how you view capital return, just for the breakout between dividends and buybacks? And also, when you look at book value on buybacks, you look at the number X AFCI, or how do you kind of treat that piece? Yeah, Boze. Good morning. It's Dean. Thanks for the question. You know, as you made reference to, we do have several ways to return capital to shareholders, and we think about them kind of in this waterfall type mindset, start with quarterly dividends. Those are obviously the most certain. When we set our quarterly dividend, we focus on making sure that those are durable across various scenarios, including, you know, meaningful stress scenarios. I think, you know, getting more to your point around share repurchases, they're more opportunistic based on market conditions. It's an ongoing assessment looking at current share price vis-a-vis book value. We look at it both on a book value with an X AOCI. We obviously also compare that to intrinsic value, what we think the company's long-term potential value is. And just to complete the story in terms of ways to return capital, we also can return capital via special dividends. That's kind of the plug. It's the means to return capital when those other options aren't available. You know, kind of getting a little bit to your point on share buybacks and in light of current valuation, you know, we still believe share repurchases are a compelling use of capital at current valuations. It is a dynamic assessment based on our day-to-day assessment and share buyback activity varies based on price fluctuations. But, you know, just speaking at a high level, we still believe that repurchasing shares at current valuation creates long-term shareholder value. And so, that's been our assessment, and you've seen that in our practices, including the share repurchases through October and the beginning of November. Okay, great. That's helpful. Thanks. And then in terms of the AOCI in the portfolio now, is there a way, like what's the average sort of duration or the timeline where that AOCI kind of rolls back into earnings, you know, all else equal? Yeah, so AOCI really fluctuated by about, well, $250 on a pre-tax basis, $200 million on an after-taxe basis, almost all of that. is driven by change in interest rates and the mark-to-market change in our investment portfolio. So I think that's more rate-driven than anything else. Obviously, our effective duration on the portfolio is five years. So, you know, those, the weighted average life's probably a little bit longer than that effective duration. So it might have to a five to six-year life, but I think, you know, the change in interest rates between now and the next reporting period will be a major driver, probably more so than our holding those investments to maturity. Okay, great. That's helpful. Thanks. Thank you. Thanks, Buzz. Thank you, your next question comes from the line of Roland Mayer with RBC Capital Markets. Your line is now open. Hi. Good morning, and thank you for taking my questions. I wanted to kind of go at the regulatory item from a different angle. Could you help me understand how much capital you have to hold against kind of the high HPA loan books from 2022 or prior? I assume if there was some mass unlock event, there'd be significant amount of capital you guys are able to release. Yeah, good morning, Roland. Thank you for the question. So as I said in my prepared remarks, we are very supportive the executive order which specifically focuses on a prospective implementation for loans originated after the pilot is established so from a disclosure perspective I do not believe that we disclose our capital allocated by book here but if you go into our financial supplement you can find disclosures on our risk and force insurance and force policies by book here and then an aggregate we also disclose home price appreciation by book years so embedded equity kind of concepts so I would say there are disclosures out there but given the fact that the executive order is focused primarily on prospective loans that's what we are focused on right now thank you and then I wanted some help understanding the pace of capital return you moved the guidance up through the year and the pace accelerated. It was kind of similar last year. What drives that? Is it credit, dividend approvals, or something else? Yeah, Roland, thanks for the question. This is Dean. So what we look at to evaluate return of capital throughout the year is really how the business is performing. And as you've seen, the business continues to perform very, very well. But embedded in that business performance is also, you know, what are the market opportunities to deploy capital for new insurance written. We're obviously operating in a smaller originations market that has the effect of reallocating capital that we might otherwise deploy to production, to other means, including potentially returning capital to shareholders. Beyond that, we look at the macroeconomic environment, the prevailing in perspective? How do we think that's going to impact both business performance today and in the future? And then lastly, we think about the regulatory environment that's been pretty stable from a P. Myers perspective, from a state regulatory perspective. So, you know, really it's been business performance that has driven the increased confidence to increase our return of capital both last quarter to the range and now this quarter to the top of that range to $600 million. Thank you. And then if I could just ask one more, how long is the typical cycle time from a new default to a cure, and is that cycle time changing? Yeah, that's a good question, Roland. I don't have a particularly great answer. We'll go back and take a look at that offline and see if we can give you some some insights into how quickly delinquencies are curing and and and whether that's changing I think from I think really one way to think about it and I don't think we have a number handy to give you in aggregate and even if we had I would say it would be constructed of very different dynamics so if you just think about first-time news first- time news cure at a different pace than repeat delinquencies and Dean has talked about this in the past that repeat delinquency is which sometimes we refer to in the business as chronic delinquents ease or cash managers who go in and out of delinquent season have higher cure rates and then on top of it given the difference in embedded equity by vintage that could heavily impact cure rates because consumers have different options in terms of getting out of a delinquency so i think there are a lot of factors that probably create a range around it but let us come back to you offline to maybe just give you the factors that impact it yeah and roland maybe maybe just to get you started um if you look at our earnings presentation on page 11 you can see intra period cures inter quarter cures those typically range between 25 and 30ish percent you see this quarter in that range as well and then as you progress through time you can see those cumulative cures continue to increase typically we've been seeing around at the fifth quarter mark cumulative curs in the high 80s maybe low 90 90 percent you're continuing to see cure patterns continue at that similar pace so the more I think about your question I think that disclosure and piecing that disclosure through time can give you a sense of the velocity of cures and whether that's changing and I guess as I think about that it's there might be some modest moderation but staying you know But like we've talked about, pure performance remains elevated and elevated to our expectations, which is driving the reserve releases that we've had through time. Thank you. That's super helpful. Thanks, Roland. Okay. Thank you! Your next question comes to the line of Rick Shane with JP Morgan. Your line is now open. Good morning, guys, and thanks for taking my question. You know, interesting to see the quota share agreement for 2028, and I'm sitting here kind of trying to wrap my mind around 2028 and that far out, but appreciate you guys are working that far ahead. Look, we saw during the third quarter companies that make and sell loans across different verticals, experience some disruption and pricing dislocations. Obviously, you guys aren't going to work that far ahead and take an adverse market, but I am curious what quota share partners are looking at right now and if there was any discussion about sort of the uncertainty that we experienced in the third quarter impacting terms of those agreements or anything that we should be thinking about? Yeah, Rick. Thanks, Dean. It's a good question. You know, I would describe the demand for mortgage credit default risk across the reinsurance market as very strong. It's one of the reasons why we continue to pursue two-year forward transactions on what we believe to be attractive terms. I think if you go back several years, maybe three, four years ago, that type of two-year forward demand didn't exist in the market, or if it existed, it existed at prices that were less appealing. So we continue to be able to source all of our reinsurance needs through the traditional reinsurance market, and we're doing so at a track of the terms. We've talked about those terms through time, being in the low to mid single digits cost of capital. If you look at today's transactions, just in general over the last, you know, 12 to 24 months, it's on the low end of that range. And, you Know, I think that's indicative of ongoing strong demand in the market. Yeah, Rick, Dean covered it very nicely. just to add to dean's point from reinsurance markets and our credibility and relationship with reinsurance players we have been a programmatic player in this market consistently since 2015 and we have proven with our risk selection and pricing to our reinsurance partners that as different markets go through different conditions we adjust our pricing and risk appetite through that so when you think about credit risk different geographies going through to different unemployment or economic events or home price paths which are different from each other, we adjust our pricing pretty regularly for that. And when we back test it, we are able to show our reinsurance partners that we have an ability to navigate those markets differently based on market conditions. So we have strong track record and I think that gives us good credibility with our partners for them to rely on our underwriting and pricing discipline. The last point I'll make on this, Rick, is we do have STIPs in our reinsurance contracts that kind of provide guardrails for the reinsurers, you know, minimum FICOs, maximum LTBs and concentrations in those things, DTI maxes as well. So, there is some boundary conditions that we collaborate on and give the reinsurer's confidence in providing immediate coverage or coverage on a two-year forward basis got it okay very helpful guys thank you so much thank you thank you thank you your last question come to line up me here about you with Bank of America your line is now open hi thank you for taking my question I wanted to start with actually credit, credit performance. I think you've talked about, I think everyone has seen credit performance has been quite exceptional for a few years. But I was wondering, you know, 2022, 2023, some of those vintages are moving up to like 3.4, 3.5% delinquency rates. Are those the levels that you typically would expect at this point in their life cycle? Well, how are they performing versus, like, how is vintage performance versus what you had planned for at pricing, let's say? And then just related to that, I'm just thinking about starting to think about next year and as the loan season, your reserve releases have started to fade a little bit. I think you're down to $37 million versus, maybe, $40 million, mid-40s last year. And I understand loss ratio is an outcome, but, you know, as you're thinking about 2027 and planning for 2027, what's the right underwriting ratio we should be thinking about? Does it start drifting higher towards the mid-20s, or is 20%-ish the right way to think about it? Thanks. Yeah, Mahir. Thanks for the question. This is Dean. So as it relates to bookier performance, you know, we're not really seeing anything different than what we talked about in the past. And I would, just starting off at the highest levels, I would agree with your characterization of credit. Overall, credit performance remains really strong across the portfolio through Q3. You know, if we disaggregate and get down into the vintage level, and this really applies, quite honestly, any type of borrower attribute, loan attribute, and even geography, we're really not seeing anything different than what we expected. These newer books are purchase-heavy books, so they have modestly higher risk attributes. So think higher LTVs, higher DTIs. They're also aging through a much more moderate home price appreciation path. And when we think about the performance, those are things that we price for. And when мы evaluate how those book years are doing relative to how we price, we're seeing performance very much in line with our pricing expectations. I think that's what we talked about in the past. That's continuing, that type of performance is continuing through the third quarter. You know, if we think about, you know, what that means for credit performance, for delinquencies, for delinquency rates on a kind of prospective basis, I think, you know, as we head into the fourth quarter, much like we had in the third quarter, we have some unfavorable seasonality. So as I'm thinking about, you know kind of Delcra for Q4, I think you can see that just simply tick up based on normal seasonality. I think beyond that, I think it's certainly possible that we continue to see an increase. Let's just talk in Delcrate terms for a second. We continue to See those gradually increase in the 2027 as those recent book years continue to season up their normal loss development curve. And again, anything I say as it relates to forward loss development is going to be predicated on the macroeconomic environment. I'm giving you kind of the lens into more of a stable macroeconomic environment. If that trajectory were to change, obviously, the trajectory of delinquencies dealt great. Loss ratio changes as well. Just a few things to add to Dean's point. So, completely agree that the kind of summary of that is, from a book year perspective, performance of recent vintages, including 22-23, that had higher purchase origination, so higher risk attributes from loan-to-value, debt-to income perspective, they're performing in line with or better than pricing expectations. And that also is driven by strong cure rates that Dean referred to. I think one thing to just also think about this environment, given the persistency in some of the books, loans are staying around longer in aggregate. The books are staying longer than original expectations. And when that happens, those repeat delinquencies that go in and out of delinquency status do impact your rate calculation. So we are very mindful of that, that when you think about delinquents rate, it might look like delinquent is trending up. But then we do look at cure ratios, which to Dean's previous point, continue to hold up nicely. And I think you asked a question about loss ratio and how to think about it. You don't provide guidance on loss ratio from a pricing perspective. I would say your question on reserve releases versus prior year and future years, I think part of it is when we have made a change in our assumptions on roll rate, that does reduce the opportunity set. So what that means is our losses on news will be lower because we have reduced the rate like last year by a point. And that means our losses in news on a dollar basis would be lower compared to last year if the count was same and on the flip side your reserve release will be lower because there's less opportunity everything else being held constant so some of that is more geography uh that as we see more evidence of performance we take those things into consideration as we think about uh what our roll rate assumptions are yeah and here i i thought i I heard you say $27 million of reserve release. It was actually $37 million of reserve release? $37, yeah. Totally agree with what Rohit said about the opportunity for future reserve releases being tied to the roll rate assumption. Go ahead. And then just going to the housing yield, and I appreciate you don't want, like, you know, it's forward looking on new policies. Maybe just talk about some of the guardrails that you would be encouraging the FHA to consider putting in, even as it pertains to newer policies and how to go about doing it, and your response or your, like, I mean, I assume you're going to still want to earn the return, the mid-teens return that you have been pricing for. So to the extent that, this gets automated or they're using AVM and automatic cancellation, does that then get reflected in just price up front uh i don't know if there's anything more you can say on it but maybe just talk just prospectively about what are your what what is in act's position and what are you advocating for or what is the industry you know going to the fha and explaining to them yeah so i would say mayor just from a process and timing perspective it's too early to tell uh we have not received guidance from fhfa or gscs at this point of time on the parameters but But I would say we've been pretty explicit on in the past that key factors, as you think about prospective cancellations on new loans, include mark-to-market LTV. It includes seasoning requirements. Many of these factors are already factored into the existing criteria. When you think about GSE guidelines, there are requirements on how a consumer can actually cancel loans based on appraisals and then obviously evaluation methods buffers how much risk is being transferred to taxpayers versus us putting that private capital in front of taxpayer risk so those are typical considerations but we look forward to engaging with the fhfa and gse's as and when those conversations start all right thank you thank you for taking my question thank you Thank you. You have a question from Jeffrey Dunn with Dowling and Partners. Your line is now open. Thanks. Good morning. I'm not sure these details are available yet, but I had a couple questions on this pilot. Because obviously the ability to cancel has been there for decades, and the borrower could always go out and pay for an appraisal. Who's bearing the cost of the AVMs under this pilot? Are the GSEs just assuming that cost, or are they going to put it on to the borrower? And secondly, what is the incentive of a servicer to reach out to a borrauer to try to cancel? Yeah, Jeff, good morning. Thank you for the question. So very good questions. Unfortunately, at this point of time, we don't have a lot of information beyond what you have seen in the executive order. We have seen the same thing. We have not received guidance from GSEs or FHFA on what the scope of the pilot would be, what the parameters would be, and whether it's an automated valuation model or it's an FHF price index. So governance, transparency of whatever the methodology would be is very important in setting up the criteria, and its resilience through cycles would be definitely part of the discussion. So all those questions are still open, including who bears the cost of pulling these appraisals for pulling these AVMs. So that's answer to your first question. On second question, I think servicers are very much aligned with borrower motivation, so if a consumer is looking for a cancellation, the consumer reaches out and applies for a cancelation based on an appraisal or whatever GFC conditions there are. So at this point of time, services will comply with the scope of the pilot and then operationalize it using their own SOPs. Do you have any data on historically the percent of borrowers that are smart enough and educated enough to realize it could cancel and reach out to get an appraisal and cancel? Yeah, so Jeff, we can think about offline on what that data might look like, but I would just point to our appraisals-based cancellation data, which is embedded in our labs already. So when you think about our last performance through different interest rate cycles, different home price appreciation cycles, that factor is already included in it. And I would say it's very parallel to what happens in refinance market, that when rates drop, even if there's a portion of consumer population that is in the money from a refinance ability perspective, not every single consumer goes and refinances. I don't know if we have a breakdown of our laps our disclosures, but I'll ask Daniel. We don't have a disclosure, but we do have, we've talked about, Jeff, in the past, having, you know, about $1.5 billion of borrower-initiated cancellations per quarter. That's about 5,000 policies, if you think, you know that our average loan size across the portfolio is about $300,000, are canceled every quarter so that you know that represents about two percent of our annualized lapse on the portfolio on an annualized basis so from from our perspective there is you know these borrower initiated cancellations is working for many borrows borrowers every quarter under the current design that's awful thank you yeah thanks Jeff thank you I'm showing no further questions at this time and would now like to turn it back to Rohit Gupta for closing remarks thank you Kathy and thank you everyone we appreciate your interest in an act and I would like to wrap up the call by thanking over all of our employees for their hard work and dedication in fulfilling our mission to help people buy and keep their homes thank you thank you for your participation in today's conference. This does conclude the program and you may now disconnect.