NMI Holdings, Inc. Q1 FY2024 Earnings Call

Good day, and welcome to the NMI Holdings First Quarter 2024 Earnings Conference Call. Please note, this event is being recorded. I would now like to turn the conference over to Mr. John Swenson. Please go ahead.

Thank you. Good afternoon, and welcome to the 2024 First Quarter Conference Call for National MI. I'm John Swenson, Vice President of Investor Relations and Treasury. Joining us on the call today are Brad Shuster, Executive Chairman; Adam Pollitzer, President and Chief Executive Officer; Ravi Mallela, Chief Financial Officer; Andrew Greenberg, our Senior Vice President of Finance; and Nick Realmuto, our Controller. Financial results for the quarter were released after the close today. The press release may be accessed on NMI's website located at nationalmi.com under the Investors tab. During the course of this call, we may make comments about our expectations for 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 or trends to differ materially from those discussed on the call can be found on our website or through our regulatory filings with the SEC. If and to the extent the company makes forward-looking statements, we do not undertake any obligation to update those statements in the future in light of subsequent developments. Further, no one should rely on the fact that the guidance of such statements is current at any time other than the time of this call. Also note that on this call, we may refer to certain non-GAAP measures. In today's press release and on our website, we've provided a reconciliation of these measures to the most comparable measures under GAAP. Now I'll turn the call over to Brad.

Thank you, John, and good afternoon, everyone. As we talk today, I'm greatly encouraged both by the continued resilience that we see in the broader macro environment and housing market and by the significant and consistent success we're achieving across our business. In the first quarter, National MI again delivered standout operating performance, continued growth in our insured portfolio and record financial results. Our lenders and their borrowers continue to turn to us for critical down payment support. And in the first quarter, we generated $9.4 billion of NIW volume, ending the period with a record $199.4 billion of high-quality, high-performing primary insurance-in-force. In Washington, our conversations remain active and constructive. Policymakers, regulators, the FHFA and the GSEs remain keenly focused on promoting broader access and affordability to the housing market for all borrowers, and we believe there is broad recognition of the unique and valuable role that the private mortgage insurance industry plays in this regard. At National MI, we recognize the need to provide borrowers with a fair and equitable opportunity to access the housing market, establish a community identity and build long-term wealth through homeownership. We are actively engaged and committed to equally supporting borrowers from all communities and are proud to have helped nearly 1.8 million borrowers to date realize their homeownership goals. Overall, we had a terrific first quarter and are well positioned to continue to lead with impact and drive value for our people, our customers and the borrowers and our shareholders going forward.

Thank you, Brad, and good afternoon, everyone. National MI continued to outperform in the first quarter, delivering significant new business production, consistent growth in our insured portfolio and record financial results. We generated $9.4 billion of NIW volume and ended the period with a record $199.4 billion of high-quality, high-performing primary insurance-in-force. Total revenue in the first quarter was a record $156.3 million, and we delivered record GAAP net income of $89 million. EPS was a record $1.08 per diluted share, up 8% compared to the fourth quarter and 24% compared to the first quarter of 2023, and we generated an 18.2% return on equity. Overall, we had an exceptionally strong quarter and are confident as we look ahead. The macro environment and housing market, in particular, have remained resilient in the face of elevated interest rates. Our lender customers and their borrowers continue to rely on us in size through critical down payment support. And we see an attractive and sustained new business opportunity fueled by long-term secular trends. We have an exceptionally high-quality insured portfolio and our credit performance continues to stand ahead. Our persistency remains well above historical trend. And when paired with our current NIW volume has helped to drive consistent growth and embedded value gains in our insured book. And we continue to manage our expenses and capital position with discipline and efficiency, building a robust balance sheet that is supported by the significant earnings power of our platform. Notwithstanding these strong positives, however, macro risks do remain, and we've maintained a proactive stance with respect to our pricing, risk selection and reinsurance decisioning. It's an approach that has served us well and continues to be the prudent and appropriate course. More broadly, we've been encouraged by the continued discipline that we've seen across the private MI market. Underwriting standards remain rigorous, and the pricing environment remains balanced and constructive. Overall, we had a terrific quarter, delivering strong operating performance, continued growth in our insured portfolio and record financial results. We started the year with significant momentum. And looking ahead, we are well positioned to continue to serve our customers and their borrowers, invest in our employees and their success, drive growth in our high-quality insured portfolio and deliver through the cycle growth, returns and value for our shareholders.

Thank you, Adam. We delivered record financial results in the first quarter with significant new business production, consistent growth in our high-quality insured portfolio, record top line performance, favorable credit experience, continued expense efficiency and record net income and earnings per share. Total revenue in the first quarter was a record $156.3 million. GAAP net income was a record $89 million. EPS was a record $1.08 per diluted share, and our return on equity was 18.2%. We generated $9.4 billion of NIW and our primary insurance in-force grew to $199.4 billion, up 1.2% from the end of the fourth quarter and 6.8% compared to the first quarter of 2023. 12-month persistency was 85.8% in the first quarter, compared to 86.1% in the fourth quarter. Persistency remains well above historical trend and continues to serve as an important driver of the growth and embedded value of our insured portfolio. Net premiums earned in the first quarter were a record $136.7 million, compared to $132.9 million in the fourth quarter. We earned $586,000 from the cancellation of single premium policies in the first quarter compared to $983,000 in the fourth quarter. Net yield for the quarter was 27.6 basis points, up from 27.1 basis points in the fourth quarter. Core yield, which excludes the cost of our reinsurance coverage and the contribution from cancellation earnings, was 34.1 basis points, up from 33.8 basis points in the fourth quarter. Investment income was $19.4 million in the first quarter compared to $18.2 million in the fourth quarter. We saw continued growth in investment income during the quarter as we deployed new cash flows and reinvested rolling maturities at favorable new money rates. Total revenue was a record $156.3 million in the first quarter, up 3.2% compared to the fourth quarter and 14.2% compared to the first quarter of 2023. Underwriting and operating expenses were $29.8 million in the first quarter compared to $29.7 million in the fourth quarter. Our expense ratio was 21.8%, compared to 22.4% in the fourth quarter. We had 5,109 defaults at March 31 compared to 5,099 at December 31, and our default rate declined to 80 basis points at quarter end. Claims expense in the first quarter was $3.7 million compared to $8.2 million in the fourth quarter. We have a uniquely high-quality insured portfolio and our claims experience continues to benefit from the discipline with which we've shaped our book and the strong position of our existing borrowers as well as the broad resiliency we've seen in the housing market. Interest expense in the quarter was $8 million. Net income was a record $89 million, up 6.8% compared to the fourth quarter and 19.6% compared to the first quarter of 2023. Diluted EPS was a record $1.08 per share, up 7.5% compared to the fourth quarter and 23.5% compared to the first quarter of 2023. Total cash and investments were $2.5 billion at quarter end, including $92 million of cash and investments at the holding company. Shareholders' equity as of March 31 was $2 billion, and book value per share was $24.56. Book value per share, excluding the impact of net unrealized gains and losses in the investment portfolio was $26.42, up 3.4% compared to the fourth quarter and 17.1% compared to the first quarter of last year. In the first quarter, we repurchased $25.2 million of common stock, retiring 840,000 shares at an average price of $29.98. As of March 31, we had $152 million of repurchase capacity remaining under our existing program. At quarter end, we reported total available assets under PMIERs of $2.8 billion and risk-based required assets of $1.6 billion. Access available assets were $1.3 billion. Overall, we delivered standout financial results during the quarter with consistent growth in our high-quality insured portfolio and record top line performance, favorable credit experience and continued expense efficiency driving record bottom line profitability and strong returns.

Thank you, Ravi. We had a terrific quarter, once again delivering significant new business production, continued growth in our insured portfolio and record financial performance. Looking forward, we're encouraged by the continued resiliency that we see in the macro environment and housing market and we are well positioned to continue delivering differentiated growth, returns and value for our shareholders. We are leading the market with discipline and distinction. Sustainable secular trends are fueling the long-term private MI industry opportunity, and we are well positioned with a strong customer franchise, a talented team that's driving us forward every day, an exceptionally high-quality book covered by a comprehensive set of risk transfer solutions, a robust balance sheet and the significant earnings power of our platform. Taken together, we're confident as we look forward. Before closing, I also want to take a moment to acknowledge Ravi and thank him for the important contributions he's made to National MI's success over the past 2.5 years. Ravi has brought a valuable strategic perspective to our management team, and he's been an important business partner for me. Under his leadership as CFO, we've delivered standout operating performance and record financial results quarter after quarter. We've continued to lead with innovation in the risk transfer markets, have successfully introduced our share repurchase program and have made the right investments to position National MI for continued long-term success. So thank you, Ravi. Our new CFO, Aurora Swithenbank, will be joining us in May, and we're excited to welcome her at a time when we have such significant momentum across our business. With that, I'll ask the operator to come back on so we can take your questions.

Your first question comes from Bose George with KBW.

This is actually Alex on for Bose. To start out, it looks like your 95%-plus LTV bucket increased on a year-over-year basis to 11% of total NIW from 4% in last year's first quarter. And it looks like that bucket has been in the low double digits over the last couple of quarters as well. Could you just talk through some of the drivers of that increase? Is it just a reflection of some of the affordability challenges we're seeing in the market currently? Or is there anything else you would highlight there?

Sure, Alex. I recommend looking back at our transcripts from earlier calls last year. We made a deliberate choice in late 2022 and early 2023 to limit the influx of 97 LTV volume into our portfolio as house prices were falling and the future outlook was uncertain. This is one of the advantages we have with Rate GPS, which allows us to effectively manage risk exposure in real-time. During our first quarter call last year, we mentioned that as the market adjusted to higher interest rates and house prices began to decline again, we were willing to accept a modest increase in 97 LTV volume. That's reflected in our current position of 11%, which has been steady over the past few quarters. I want to emphasize that while we have increased our volume for this risk category year-over-year, we are confident in our decision to restrict it in late '22 and early '23, and we feel good about the incremental volume we've taken on recently. Even so, we still have a much lower concentration of 97 LTV in our portfolio compared to the broader MI market, which was around 15% last quarter compared to our 11% this quarter.

Okay, that all makes sense. I have one more quick question. I believe you and your peers currently have a significant level of PMIERs excess capital. NMI is now about 80% above the minimum required level at the end of the quarter. As we look ahead at excess capital, is PMIERs still the best metric to consider, or do you think the industry will maintain significant excess levels for the foreseeable future?

Yes. I think there's a yes to both of those impacts. So I think PMIERs still sets the binding capital constraint for us and others in the industry to a significant extent on almost every policy that we ensure PMIER sets the binding capital constraint. There may be a few policies where our internal view of economic capital. But in the main, it is PMIERs that drives our needs and its PMIERs that we manage against. Broadly speaking, though, in terms of the excess that we're carrying relative to the PMIERs minimum requirements, look, capital is key for us, and we're obviously in a terrific position today. We've got a strong liquidity and funding position. We benefit from the broad protection of our comprehensive reinsurance program, which not only provides us with risk transfer benefits but also with real capital efficiency and benefit. We've got a conservative investment portfolio, and we have ready access to capital across the funding spectrum. And when we look at it today, even though the macro environment has proven to be remarkably resilient in the face of elevated interest rates, risks certainly remain. I think market volatility over the last few months serves to highlight that. And so as we think about our excess capital position, we want to make sure that we're being balanced, right? We want to make sure that on the one hand, we recognize that there's value and conservatism that we're prudently managing our needs and building that access and that excess in an appropriate way. But there's obviously a cost associated with that, that we need to be mindful of and carrying too much excess what we really think about as an excessive amount of capital at any given point in time, conserved as a tax on our return potential. We think we're really striking that right balance now. We've just delivered record financial results. We posted an 18.2% ROE, and we've also been able to return a significant amount of capital to shareholders under our repurchase program. As we look going forward, the sizing of that excess capital position, the line between a prudent amount of excess and something beyond that, that we would think of as excessive will naturally move depending on the risk environment that we're in.

Adam, I wonder if you could just expand a little bit on what you saw transpired during the quarter that gave you confidence to release those prior accident year reserves. What in the housing market, the aging of the book, what are the key factors?

Sure, Mark. It's a good question. Ultimately, it comes down to how the defaults on our balance sheet or in our portfolio performed at the end of the previous quarter. We observed that our cure rates during the quarter reached their highest levels in the last two years, although it wasn't a drastic change. The cure rates for the first quarter of '24 are the highest they have been in two years. We started the quarter with 5,099 defaults, and over 35% of those defaults cured, allowing borrowers to resume timely payments of principal and interest on their loans. This enabled us to release the reserves we had set aside for that group of defaults. We have mentioned in previous quarters that when we set our reserves, we tend to lean towards downside scenarios. We continue to do this at the end of each quarter. With another quarter of actual macro developments and housing market changes, even though we aren't changing our approach to downside scenarios, the actual outcomes over the last quarter exceeded the assumptions we had when we initially set reserves at year-end. Both the strong cure activity within the default population and the ongoing strength and resilience in the macro environment and housing market relative to our year-end reserve assumptions contributed to the release.

Can you discuss the context of the increase in severity? I know you mentioned that you believe the claims you received might have more merit. Could you elaborate on the increase in that scenario?

Yes. It's been quite modest. When we establish our reserves, we model each of the 5,109 loans in default individually. Our approach considers macroeconomic factors as well as the specific characteristics of each loan and borrower. We estimate the current market equity position for the loans and apply individual default claim rate assumptions and severity assumptions for each loan. We do not use a broad, uniform assumption across the default population, so each loan reflects its own risk characteristics. From year-end to March 31, there weren't significant changes. The weighted average severity assumption for our reserves at the end of the first quarter was 65%, compared to 66% at year-end. We evaluate this on a real-time basis for the population at any moment, but there were no significant changes from year-end.

Your next question comes from Mihir Bhatia with Bank of America.

I wanted to start by revisiting your comments on pricing. You described it as constructive in your prepared remarks, and I was curious about that. Does this suggest that you are still able to raise prices and that the industry is also doing the same? Or is it more about being disciplined and maintaining stability?

Yes. It's much more stability. But the industry pricing, we've used the phrase through sort of the second half of 2022 and into the earlier part of 2023 on our calls that pricing was laddering higher in view of emerging risks in the market. And that was necessary at the time, and we were pleased to see that the industry was able to achieve that. For the last several quarters, though, we've noted that the industry pricing is at a point of balance and stability and that's what we see today. It's stable, it's rational. We continue to be encouraged by the broad discipline that we see across the sector. And I think most importantly, where we should be, right? What a point of balance means is that we're fully and fairly supporting our customers and their borrowers. But at the same time, we're using rates among other tools to appropriately protect our balance sheet, our returns and our ability to deliver long-term value for shareholders. So today, the rate environment, we would say is constructive because it's stable and also price allows us to strike that right balance between making sure that we, first and foremost, keep our customers and their borrowers in mind and prioritize them, but also don't lose sight of the need for us to deliver value, balance sheet stability and returns for shareholders.

I wanted to follow up on the discussion about the cure rate from earlier. What is contributing to the higher rate? I understand it is a bit above previous levels, but it remains quite elevated. Are the new GSE programs after the pandemic influencing this in any way, or has it altered your perspective on default cure assumptions? Is it still too soon to determine? I'm trying to clarify the factors behind the cure rate.

Yes, Mihir. That's a great question. We see potential opportunities moving forward. However, we lack a robust historical data set to assess how new programs, the modification waterfall, and the payment deferral codification might affect long-term credit performance. While we remain optimistic, that potential is not explicitly or implicitly considered in our reserving. Generally, our existing borrowers are in strong positions thanks to solid credit profiles. Their loans were granted through a thorough underwriting process, primarily to purchase their homes. Many, including those in default, have substantial embedded equity. They have manageable debt obligations due to historically low 30-year fixed rates. Therefore, there's significant value in borrowers curing their defaults, as doing so allows them to keep those low rates and remain in homes with considerable equity. Even when challenges arise, borrowers have typically managed to recover and resolve their defaults before claims materialize. This is positive because keeping borrowers in their homes is beneficial not only for them but also from a societal and economic perspective, and ultimately helps us manage claim costs.

Adam, I'd like to add one additional point. We discussed this in the previous quarter about the seasonality that tends to occur. Typically in Q1, we see some improvement, and this quarter, we experienced a bit of that seasonality, which contributed to an increase in our cure rates as a result.

Got it. Have you disclosed how much embedded equity is in like the default population or in-force population?

Yes. It's meaningful. So we don't disclose it for the in-force population. We obviously do a mark-to-market ourselves. We have shared what the default equity position of our default population is on earnings calls in the past, and we're happy to. So at March 31, 91% of our default population had at least 10% equity, 77% had at least 15% equity and 65% had at least 20% equity underpinning their mortgages. And obviously, equity provides both a significant incentive for them to cure out of their defaults, and it also provides them the ability to sell their way out of a default without ultimately progressing to a foreclosure in claim.

Got it. For my last question, I wanted to ask about seasonality, as we are entering what is typically a stronger housing season. What feedback are you receiving from your partners, customers, and originators? Is there more optimism this year? I'm curious about your insights, particularly regarding specific markets where you feel more or less excited.

Yes. Earlier in the year, there was growing optimism, and we noticed some increases in activity for several reasons. Firstly, rates have fallen from their highs late last year, which stimulated new market activity. Additionally, potential buyers have adjusted to the new reality of sustained higher rates. Ultimately, the decision to purchase a home is primarily influenced by life events, although financial factors are also significant. These life events do not pause because interest rates are high. Consequently, we observed a significant portion of the market recalibrating. Currently, rates have risen again over the past few months. However, we achieved strong net insurance written production, growth in our insured portfolio, and significant net insurance written growth in the first quarter. Therefore, we remain optimistic. During our last call, we provided insights into our market outlook, indicating that we expect this year's net insurance written opportunity to be roughly on par with last year, which was about $285 billion in volume. We still believe and expect that the industry will land around this figure this year.

I guess first one just on ROE, Adam. It looks like you've been putting up sort of high teens over the last few quarters and 18.2% again this quarter. Can you just maybe talk about the sustainability of that ROE over the next year or so? And how should we be thinking about upside downside ranges going forward?

Yes. Look, I think it's a good question. Soham, it's nice to have you back on our calls. We always appreciate you spending time with you. And so look, we understand the question. We understand the focus on, we'd say, return and earnings development patterns. What I would instead focus you on, though, is the fact that we have a large, high-quality insured portfolio with massive embedded value. We've got a terrific team that's helping us to lead with disciplined innovation and efficiency. And most importantly, we see a tremendous long-term need from our customers and their borrowers for continued down payment support. We just delivered record profitability, another quarter of 18.2% ROE, and we're growing book value and book value per share on an accelerated pace. As we look out over the next year, where things trend as you noted, we'll see natural fluctuations period to period. That's normal, right? Our volume, pricing, persistency, claims, expenses capital, all of these items are never going to be static. But over the long term, we expect that we'll be able to continue to grow book value at an accelerated pace and that we'll be having this conversation 1, 2 and 3 years forward from where we are now from a successively higher, stronger and more valuable perch regardless of how ROE develops, say, over a 12-month period.

Got it. And Adam, you mentioned sort of this secular trend in the industry a few times now. And so I'm just wondering, it seems like, look, housing affordability continues to be an issue in the U.S., right? And obviously, that's not great for homeownership, but it could be an interesting opportunity for MI, right, where you could just continue to penetrate the market even further if you were focusing to put 20% down. So just curious if you try to sort of size that opportunity like incremental opportunity as we think long term?

Yes, that's a good question. It is indeed one of the long-term drivers. We anticipate that the housing market will generally grow, and origination volume will recover. The factors contributing to this include population growth, which acts as a demographic tailwind, as well as the practical and emotional desire for homeownership. With interest rates rising, the supply-demand imbalance we’re witnessing in nearly all national markets is leading to long-term house price increases. For our industry, our exposure isn't determined by the number of homes or loans we insure but by the dollar value and size of those loans. Rising house prices, which increase loan sizes, also support growth. Moreover, we believe we'll see more borrowers needing down payment assistance who will benefit from private mortgage insurance. We have pointed this out for a while, and we feel the long-term growth opportunity in this area is somewhat underestimated. To put it in practical terms, in 2023, the private mortgage insurance industry generated $284 billion in new insurance written, mostly from purchase activity, as refinancing activity was minimal due to rate movements. This figure ranks as one of the largest private mortgage insurance markets ever during a time when the origination environment was quite challenging, with the smallest number of loans originated in the U.S. since the mid-90s. The last time we saw this few transactions was between 1995 and 1997. Consequently, we had one of the largest mortgage insurance markets ever while experiencing one of the smallest origination markets ever. From our perspective, this sets a strong foundation for future growth in mortgage insurance industry new insurance written volume.

Look, when we look at the reserve coverage as a function of defaults or risk-in-force, it's actually been very steady quarter-over-quarter. That suggests that as you were experiencing cures within the portfolio, that they're sort of relatively evenly distributed in terms of aging because otherwise, you would sort of see some seasoning. You might see an increase or decrease in the reserve rate otherwise. Is that the right way to think about it? And the other part of that question is, are there certain cohorts or vintages where you were seeing underperformance in terms of roll rates?

It's a great question, and you're spot on. If we put some numbers to it, in the first quarter, the average net reserve we established for each of our new notices was $15,200. In the fourth quarter, it was $15,500. The difference is minimal. We see a lot of consistency from quarter to quarter in the profile of borrowers moving into default status and those who are recovering. The size of the default population remains relatively constant, with only a 20 count change from year-end to the end of the first quarter. The underlying profile and characteristics of the borrowers, loans, and properties are all staying very consistent. In terms of any particular vintage showing worse performance, there isn't one. However, as the newer production years age, specifically 2022 and 2023, some of those borrowers unfortunately progress into default status. The borrowers in default do not differ in their profile or performance, except they have less equity compared to those who bought homes in 2020 and 2021, who benefited from the significant rise in home prices during the pandemic. This aspect is closely monitored and is included in our reserves since we establish reserves based on individual loan assessments.

Your next question comes from Doug Harter with UBS.

Can you talk about kind of how you're thinking about the pace of capital return for the course of the year? And just any updates around the thoughts around introducing a dividend?

Sure. Why don't I cover those 2. I'll cover the dividend first. Look, right now, we're focused on our repurchase program and deploying the remaining $152 million of capacity that we have. We see repurchases as a way for shareholders to directly participate in the value that we're creating. And also it’s really helpful for us to maintain the right funding balance optimizing between our equity debt and reinsurance usage and also it's obviously supportive of future EPS and ROE outcomes. We're really pleased with the execution that we've achieved to date. We've repurchased to date $174 million of stock at 7.3 million shares at a weighted average price to book multiple of roughly 1x. And so that really is our focus today. We don't have any other plans right now. But over time, as we continue to perform and grow the dividend stream that's available to the holding company from our primary operating subsidiary, we may have an ability to introduce a common dividend. But for right now, repurchase is our primary focus. In terms of the pace of activity, I'd expect that we'll continue to execute on a roughly similar case as we have been. We've talked about how the existing program runs through year-end 2025. And there's no hard and fast rule. We execute according to a pricing grid that we establish and share with the banks that assist us with the repurchase activity. And so in periods where stock price is higher, we may buy back a little bit less. In periods where stock price dips we may be more active. But generally speaking, we've guided to assume that we'll be roughly ratable in our execution through the remaining time and the remaining dollars on the program, and that continues to be the case.

Appreciate that. And then just one more. How are you thinking about kind of going back into the ILN market to kind of as another form of reinsurance?

Yes. Look, we have found significant success in the ILN market in the past. But I'd also say we found real success in the traditional reinsurance market with our XOL execution. We value the credit risk transfer benefits and the PMIERs efficiency and funding that we achieve in each. We have been skewed more towards the XOL market more recently. I think we've done 6 deals since the beginning of 2022, and those deals in the traditional markets really help us compress the cycle time between transactions. We're able to secure forward flow coverage. So we have forward flow XOL coverage in place for all production that we generate this year from the traditional market. That's not something that's available in the ILN market. And so there's a lot of value, I'd say, in both. We do expect that at some point in the future, we'll be back in the ILN market. But right now, we're finding a lot of success in the XOL market.

Last quarter, you mentioned the premium yield and anticipated stability. You're slightly up now. Considering the current pricing on the business you're writing, do you have any updates on maintaining that stability or possibly seeing further improvement?

Yes. Good question. Really, we reiterate the general perspective that we had shared last quarter, which is we've obviously enjoyed some degree of premium yield inflecting higher for a few quarters running now, which is a real positive for us. But as we model it going forward, we do expect that our core yield, which strips away the impacted movements of our reinsurance costs and the cancellation earnings will remain generally stable through the remainder of the year. We'll see benefit from strong persistency in the pricing gains that we've achieved over the past year. Those will provide us with the real support for that stability. And our net yield is more difficult to forecast, obviously, because it's also going to be impacted by two things. By any decisions that we make with respect to further reinsurance execution through the year and more importantly, by our loss experience as the profit commission on our quota shares fluctuates with changes in our ceded claims expense. And so obviously, that one will really depend on how the default population develops, how the macro environment develops, but core yield, we expect continued stability as we roll forward.

The investment portfolio yield for the first quarter was 2.9%. From a new investment perspective, we are observing new money rates between 5% and 5.5%. This will depend on factors such as duration, bond type ratings, and market demand. The profile of our investment portfolio and the new purchases we are making have not changed, but that is what we are currently seeing.

Yes, the NIW experienced year-over-year growth. One of your competitors reported a decline. I'm curious if you can discuss whether you feel you're increasing wallet share with existing customers, as well as some of the new accounts. Can you elaborate on what is driving this acceleration in the quarter?

Absolutely. It's challenging to assess since there are only two companies reporting, so we won’t have a clear picture until the earnings season concludes. First and foremost, we are very pleased with our quarterly results. We wrote $9.4 billion of high-quality, high-return new business. We are dedicated to supporting our customers and their borrowers, and we are seeing consistent growth in our insured portfolio quarter over quarter. Regarding market share, I want to clarify that we do not focus on managing for market share. Our priority is to serve our customers and deploy capital responsibly. Our goal is to write a significant volume of high-quality, high-return, and high-value business to ensure profitable growth in our insured portfolio. Our success this quarter stems from the effective on-the-ground execution that has been our strength for a considerable time. We are acquiring more customers and providing valuable services beyond pricing to our existing accounts to increase our share of their business. We are also proactively managing our mix of business and our new insurance written flow by borrower, geography, and product risk factors, and consistently engaging in the market for lenders and borrowers. Overall, it's the fundamental elements of effective execution that are fueling our success.

All right. That's helpful. And then just another question, too, on just risk-in-force. When you look at the table and they're the top 10 states, it looked like you had a lower share of the top 10 states year-over-year. Is there any states that you want to call out that you're growing as a percent of the book year-over-year that are kind of becoming more significant? Anything to call out there?

No, we have been at this for quite some time. Our sales team does an exceptional job of adding customers and ensuring that we maintain strong and active dialogues with existing accounts that we have worked hard to penetrate in the past. At this point, we have access to nearly the entire addressable MI NIW opportunity. Additionally, we have a broadly diversified national customer base, which helps us achieve a geographically diverse portfolio. Yes. We will likely continue to see some natural decline from the peaks. I believe we were just over 86% late last year, and we're at 85.8% this year. We do expect that, given the current rates compared to the embedded note rates in the portfolio, persistency will remain well above historical trends as we move through 2024. Even if there's some fluctuation, it will be slight.

Well, thank you again for joining us. We'll be participating in the BTIG Housing Finance Conference on May 7, and the Truist Financial Services Conference on May 22. We look forward to speaking with you again soon.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.