Good morning and welcome to the Radian Second Quarter 2021 Earnings Call. My name is Anara and I'll be the operator for today's call. At this time, all participants are in a listen-only mode. Later, we'll conduct a question-and-answer session. Please note this conference is being recorded. I will now turn the call over to Mr. John Damian, Senior Vice President of Investor Relations and Corporate Development. John, you may begin.

Thank you and welcome to Radian's second quarter 2021 conference call. Our press release which contains Radian's financial results for the quarter was issued yesterday evening and is posted to the Investors section of our website at www.radian.com. This press release includes certain non-GAAP measures that will be discussed during today's call including adjusted pretax operating income, adjusted diluted net operating income per share, and adjusted net operating return on equity. In addition, specifically for our Homegenius segment, other non-GAAP measures that will be discussed today include adjusted gross profit, adjusted pretax operating income or loss before allocated corporate operating expenses, and the related Homegenius profit margins. A complete description of our non-GAAP measures may be found in press release Exhibit F and reconciliations to GAAP may be found in press release Exhibit G. These exhibits are also available on the Investors section of our website. This morning you will hear from Rick Thornberry, Radian's Chief Executive Officer; and Frank Hall, Chief Financial Officer. Also on hand for the Q&A portion of the call is Derek Brummer, President of Radian Mortgage. Due to the current environment, all of our speakers are remote. I would ask that you please excuse any sound quality or technical issues that may arise during the call. Before we begin, I would like to remind you that comments made during this call will include forward-looking statements. These statements are based on current expectations, estimates, projections, and assumptions that are subject to risks and uncertainties, which may cause actual results to differ materially. For a discussion of these risks, please review the cautionary statements regarding forward-looking statements included in our earnings release and the risk factors included in our 2020 Form 10-K and subsequent reports filed with the SEC. These are also available on our website. Now, I would like to turn the call over to Rick.

Thank you, John, and good morning. Thank you all for joining us today and for your interest in Radian. As a company that offers products and services across the mortgage and real estate spectrum, we are encouraged by the continued positive momentum in the housing market as well as the favorable credit trends within our insured portfolio that increasingly reflect a return to a more certain operating environment. We continue to closely monitor the pandemic and the economic environment and navigate our business accordingly. Frank will discuss the details of our financial position shortly, but let me share a few highlights and insights from the second quarter. We reported net income of $155 million or $0.80 per share for the quarter and adjusted diluted net operating income per share was $0.75. We grew our book value per share by 11% year-over-year. We achieved this growth even after accounting for the $100 million in dividends that we returned to stockholders over the past year. For our mortgage segment, we remain focused on maximizing the economic value and the future earnings of our mortgage insurance portfolio. During the quarter, we wrote $21.7 billion of high-quality, high-value mortgage insurance business and our primary insurance in force was $237.3 billion at June 30. It's important to note that, despite a modest decline in our total mortgage insurance portfolio year-over-year, the composition of the portfolio has gone through a favorable transition with our monthly premium insurance in force growing by 8%, which is the primary driver of our earned premiums. We have seen continued improvement in the credit performance of our portfolio with a 42% year-over-year decline in our total number of defaulted loans. Strong cure activity continues with cures outpacing new defaults each month since June 2020. In addition, more than 70% of our defaulted loans are in forbearance, and approximately 80% of defaults from our peak default months of May and June last year have since been cured. The primary driver of the decrease in our loss provision this quarter was a better-than-expected cure activity we are observing in prior period defaults and a declining number of new defaults. In fact, new notices of default in the second quarter were at or below pre-COVID due default levels. At June 30, Radian Guaranty's PMIERs excess available assets grew to $1.9 billion or a cushion of 58%. Now I'd like to provide some perspective on mortgage insurance pricing and our focus on building economic value. As I mentioned in May, we have seen increased pricing competition over the last few quarters as the economic environment has shown some improvement following the pandemic-related downturn a year ago. During the second quarter, we are seeing signs that the mortgage insurance industry is transitioning to a more normal, less competitive environment. It is important to highlight that at Radian, we have remained disciplined in how we are navigating this environment and continue to focus on generating long-term economic value and maximizing that value for our company and shareholders. We continue to write new business at attractive returns that we believe will add economic value to our portfolio. While we expect some quarter-to-quarter market share volatility across the mortgage insurance industry, we believe our recent business volume is trending back towards a pro rata share of the overall market. In terms of the overall housing market, we saw positive momentum continuing in the second quarter. Overall, the home purchase market remains strong, illustrated by the composition of our new mortgage insurance business, which represented a 77% purchase volume in the second quarter versus only 56% from a year ago. Based on the latest data from our own Radian home price index, over the second quarter of 2021, continued strong housing demand and relatively limited supply in the market led to an annualized 12% increase in home prices across the country. We continue to expect the rate of home price appreciation to moderate this year, and we believe the combination of an improving economy, strong housing dynamics in terms of demand, supply, home values, and mortgage underwriting, relatively low mortgage interest rates, and income growth are well-aligned for a healthy and sustainable housing market. Recent market projections for 2021 now estimate total mortgage originations to be approximately $3.9 trillion while the overall origination market is expected to be less than 2020 due to lower refinance volume. The purchase market continues to grow, which is positive for the mortgage insurance industry, given the higher likelihood that purchase loans will utilize private mortgage insurance as compared to refinance loans. Based on these most recent industry origination projections, we continue to expect the private mortgage insurance market to be approximately $550 billion to $600 billion, which should be slightly lower than the record volume in 2020, but will still represent the second-highest MI volume year in history. Overall, we believe the improving macroeconomic conditions and strong home purchase market fueled by first-time homebuyers provide strong tailwinds for long-term growth in the economic value and projected future earnings of our mortgage insurance portfolio. Turning to our homegenius segment, formerly known as real estate, total revenues for the second quarter were $33.5 million, representing a 30% increase from the first quarter of 2021 and a 48% increase year-over-year. This was primarily driven by an increase in our title revenue, which grew 74% year-over-year, as well as growth in our valuation business. As we discussed during the Real Estate segment Investor Day in June, our products and services are a natural extension of our core mortgage insurance business and support our mission of ensuring affordable sustainable home ownership. We believe homegenius has the potential for significant value creation and financial contribution going forward, and Frank will discuss our progress against the financial projections that we introduced two months ago. In terms of capital strength, at June 30, Radian Group maintained a strong capital position with $1.2 billion of total holding company liquidity. In terms of share buyback activity, we repurchased 3.9 million shares of Radian Group common stock during the second quarter for $90 million and an additional 2.8 million shares for $61.4 million in July. Approximately $39 million remains under our current authorization that expires at the end of this month. And as we mentioned last quarter in May, we increased our quarterly dividend of $0.14, a 12% increase over our prior quarterly dividend. Turning to the regulatory and legislative landscape, we were happy to see the appointment of Sandra Thompson as Acting Director of FHFA. Acting Director Thompson has been a long-serving member of the FHFA team across multiple administrations, and we believe she will bring a balanced view to promoting access affordability while continuing to ensure the safety and solidity of the GSEs. Importantly, she has served with the FHFA during the evolution or reform of the mortgage insurance business model, including the implementation of PMIERs, and therefore is intimately familiar with the strength of our business model and our resilient performance during the most recent COVID pandemic period. We look forward to working with Acting Director Thompson and her team. As to the regulatory environment, we appear to have entered a new phase focused on balancing the wind-down of regulatory relief programs and various restrictions. The GSEs recently lifted their 50 basis point adverse market fee on refinance loans and have also instituted changes in their temporary PMIERs guidelines to allow dividends for mortgage insurers that meet certain available asset thresholds, which are phased down throughout the remainder of the year. The CFPB has also instituted new rules to help ensure that the significant number of borrowers scheduled to come off a COVID relief program this quarter are given every opportunity to remain in their homes. At the same time, the unprecedented level of federal support and coordination of the easing economic burden of the pandemic continues, with ongoing foreclosure-related eviction moratoria and legislative proposals that are intended to benefit homeownership, in particular for first-time homebuyers. We expect this careful balance between a phased return to normality and further federal support to continue for the foreseeable future, which is good for the economy and for homeownership and given our strong alignment with borrower interest for the mortgage insurance industry as well. Now I would like to turn the call over to Frank, for details of our financial position.

Thank you, Rick, and good morning everyone. To recap our financial results issued last evening, we reported GAAP net income of $155.2 million or $0.80 per diluted share for the second quarter of 2021, as compared to net income of $0.64 per diluted share in the first quarter of 2021 and a net loss of $0.15 per diluted share in the second quarter of 2020. Adjusted diluted net operating income was $0.75 per share in the second quarter of 2021, as compared to adjusted diluted net operating income per share of $0.68 in the first quarter of 2021, and adjusted diluted net operating loss per share of $0.36 in the second quarter of 2020. I'll now turn to the key drivers of our revenue. As Rick mentioned earlier, our new insurance written was $21.7 billion during the quarter, compared to $20.2 billion in the first quarter of 2021 and $25.5 billion in the second quarter of 2020. New insurance written for purchase transactions was $16.7 billion, an increase of 16% year-over-year and 40% compared to the first quarter of 2021. Purchase volume accounted for 77% of our total new insurance written for the second quarter, an increase from 59% of volume in the prior quarter and 56% in the second quarter of 2020. Direct monthly and other recurring premium policies were 93% of our new insurance written this quarter, an increase from 90% for the first quarter of 2021 and 85% for the second quarter a year ago. Lender-paid policies accounted for less than 1% of our new insurance written. Primary insurance in force decreased to $237.3 billion at the end of the quarter, as compared to $238.9 billion in the first quarter of 2021 with a total year-over-year insurance in force decline of approximately 2%. Our year-over-year decrease in primary insurance in force was primarily driven by sustained low persistency. It is important to note, however, that monthly premium insurance in force, which drives the majority of our earned premiums, has grown 8% year-over-year, compared to an approximate 28% decline in single premium insurance in force. The decline in single premium insurance in force is a positive outcome for us, as prepayments on our single premium business enhance realized returns, as the life over which the single premium is recognized is shortened. Our 12-month persistency rate of 57.7% increased slightly from 57.2% in the prior quarter and decreased from the 70.2% in the second quarter of 2020. Our quarterly annualized persistency rate was 66.3% this quarter, an increase from 62.5% in the first quarter of 2021 and 63.8% in the second quarter of 2020. The year-over-year increase in quarterly annualized persistency is primarily driven by lower refinance activity in the second quarter of 2021, as compared to the same quarter last year. While persistency is expected to improve during the second half of 2021, we also expect persistency to remain below our expected long-term levels given the current pace of refinance activity. Moving now to our earned premiums. Net premiums earned were $254.8 million in the second quarter of 2021, compared to $271.9 million in the first quarter of 2021 and $249.3 million in the second quarter of 2020. The decrease of 6% on a linked-quarter basis is primarily due to a continued decline in our in-force premium yield. The 2% increase compared to the same quarter prior year is primarily due to the adjustment in the second quarter of 2020 to accrued profit commission due to increased loss provision in that quarter and to the increase in net premiums earned in our title business. Our direct in-force premium yield was 41.1 basis points this quarter compared to 42.7 basis points last quarter and 44.3 basis points in the second quarter of 2020. As noted in previous quarters, we expect our in-force portfolio yield to continue to decline due to the difference in credit profile and associated premium rates of today's new insurance written relative to prior vintages. The timing and magnitude of future portfolio yield changes will depend on several factors including the volume, mix, and pricing of new business relative to volume and mix of cancellations and prepayments in our portfolio. Our direct premium yields driven by single premium cancellations were 5.3 basis points compared to 6.4 basis points in the first quarter of 2021 and 8.2 basis points of yield in the same quarter a year ago. The impact of our insurance-linked notes on our net premium yield was a reduction of 2.6 basis points this quarter, an increase from two basis points in the prior quarter and 1.3 basis points a year ago. The increase this quarter was due to our most recent insurance-linked note transaction, which was executed in April 2021. With regard to pricing on new business, we remain focused on maximizing economic value and generating attractive risk-adjusted returns. Homegenius segment revenues were $33.5 million for the second quarter of 2021, representing a 30% increase compared to $25.8 million for the first quarter of 2021, and a 48% increase compared to $22.5 million from the second quarter of 2020. Our reported homegenius pre-tax operating loss before allocated corporate operating expenses was $4.5 million for the second quarter of 2021, compared to a loss of $6.5 million for the first quarter of 2021 and a loss of $1.1 million for the second quarter of 2020. Our reported homegenius adjusted gross profit for the second quarter of 2021 was $11.7 million compared to $8.5 million for the first quarter of 2021, and $9.4 million for the second quarter of 2020. A reconciliation of these items can be found on Exhibit G. The increase in homegenius revenue in the second quarter of 2021 compared to the second quarter of 2020 was primarily driven by growth within our title business, which saw a 74% increase in total revenue year-over-year. Closed orders in our title business, which are a key driver of revenue, increased approximately 68% year-over-year to approximately 12,000 for the second quarter of 2021. As noted on slide 22 and as discussed in our recent real estate Investor Day, we expect to see continued growth in closed title orders, as well as our total Homegenius segment revenue. We will continue to offer guidance and our progress towards these targets and thus far, we are pleased with our progress. Our investment income this quarter of $36 million was down 5% from the prior quarter and 6% from the same quarter prior year, due to lower investment yields, which were partially offset by additional investment balances from underwriting cash flow. At quarter end, the investment portfolio duration was approximately 4.5 years unchanged from the prior quarter. Moving now to our loss provision and credit quality. As noted on slide 13, the mortgage provision for losses for the second quarter of 2021 was $3.3 million, a decrease compared to $45.9 million in the first quarter of 2021 and $304 million in the second quarter of 2020. We had approximately 8,000 new defaults in the second quarter of 2021, compared to approximately 12,000 in the first quarter of 2021 and approximately 63,000 in the second quarter of 2020. The provision for losses for the second quarter 2021 includes a positive development on prior defaults of $31 million, driven by a 50 basis point reduction in default to claim rate assumptions on our defaults from April 2020 to December 2020, primarily as a result of more favorable trends in cures than originally estimated. We also maintained the default to claim rate assumption on new defaults at 8.0% for the second quarter of 2021. Approximately 58% of new defaults in the second quarter and approximately 71% of all defaults were reported to be in a COVID-related forbearance program as of June 30, 2021. We have continued to share additional information on forbearance program mechanics related to these loans on webcast slide 16. These forbearance programs are positive for our industry and for homeowners, as they are intended to keep people in their homes through what is expected to be a temporary economic disruption. I will also note that over 95% of our defaulted loans are estimated to have at least 10% homeowners' equity and over 65% have at least 20% homeowners' equity, using an indexed-based valuation estimate. This factor, along with improving overall economic indicators such as favorable cure trends, home price appreciation, lower unemployment, governmental support, and ongoing forbearance programs help make us cautiously optimistic about the ultimate claim levels. It contributed to our decision to reduce the default to claim rate assumptions on certain prior period defaults, first reported in 2020, as well as to maintain the default to claim rate at 8% for our new defaults. It is important to remember that our reserve estimate is based upon the best available information we have at the time, which includes both external economic metrics and the outcomes of our own proprietary models. Our loss reserve is an estimate of future claim payments that, under normal circumstances, will not be realized for several years. The broad availability of mortgage forbearance options in 2020, and continuing into 2021, may serve to extend the timeline for claim development. As such, the absolute dollar level of reserves on our balance sheet may continue to grow, despite any current or potentially ongoing improvements in our quarterly new default to claim rate. Claim payments, which would reduce the reserve balance when paid, have been substantially reduced during the current foreclosure moratorium. Approximately 79% of new defaults from the second quarter of 2020 and 75% of new defaults from the third quarter of 2020 had cured as of the end of the second quarter of this year. As of July month end, the second quarter and third quarter 2020 cumulative cure rates for new defaults had further increased to approximately 82% and 77% respectively. Last night's earnings release included an update for July operating statistics that showed a further decline in our primary default inventory. Cure activity continued to exceed new defaults, which resulted in a cure-to-new default ratio of 172% in July. Now turning to expenses. Other operating expenses were $86.5 million in the second quarter compared to $70.3 million in the first quarter of 2021, and $60.6 million in the second quarter of 2020. The increase in other operating expenses in the second quarter of 2021 compared to the first quarter of 2021 was primarily related to an increase in incentive compensation expense, including share-based incentive compensation expense and a $3.9 million increase in non-operating items, primarily due to lease-related impairments. The increase in other operating expenses compared to the prior year is primarily related to the increase in incentive compensation expense and other non-operating items, as well as a decrease in ceding commissions. Moving now to taxes. Our overall effective tax rate for the second quarter of 2021 was 20.6%. Our annualized effective tax rate for 2021 before discrete items remains generally consistent with the statutory rate of 21%. Now moving to capital and available liquidity. Radian Guaranty's excess available assets over minimum required assets was $1.9 billion as of the end of the second quarter, which represents a 58% PMIERs cushion. As of June 30, 2021, we have reduced Radian Guaranty's PMIERs minimum required assets by $1.3 billion by distributing risk through both insurance-linked notes, reinsurance, and other third-party reinsurance arrangements as noted on press release Exhibit L. Our reported PMIERs cushion includes the benefit of the reduction in minimum required assets attributable to the 0.3 multiplier, which reduces the minimum required assets on applicable COVID-19-related delinquencies by 70%. On a net basis, this benefit was approximately $435 million at June 30, 2021. We expect that the application of this multiplier will continue to reduce Radian Guaranty's minimum required assets for COVID-19 defaulted loans. However, the future impact to Radian Guaranty is expected to continue to diminish over time as the population of loans eligible for the multiplier diminishes. As a reminder, this benefit has thus far peaked in the second quarter of 2020, when it resulted in an approximate $1 billion reduction in minimum required assets. For Radian Group as of June 30, 2021, we maintained $923 million of available liquidity. Total liquidity, which includes the company's $267.5 million credit facility, was $1.2 billion as of June 30, 2021. It is important to note that most of the cash flows of the parent company are funded by long-established, regulator-approved expense, interest, and tax sharing agreements with its subsidiaries and not through dividends from subsidiaries. This provides us with an enhanced level of certainty and predictability in parent company cash flows and reduces the impact of any dividend restrictions placed on mortgage insurers by the GSEs. As previously noted, we resumed our $475 million share repurchase program during March of this year, which had been temporarily suspended beginning in March 2020 in response to the COVID-19 pandemic. As of the end of July, we purchased a total of approximately 20.3 million shares, or $436 million under this repurchase authorization, which began in August of 2019 at an average share price of $21.45. During the second quarter of 2021, we repurchased 3.9 million shares, and year-to-date through July 2021 we have purchased 7.1 million shares. As of July 30, we have approximately $39 million of remaining repurchase authorization, which expires on August 31 of this year. Our current 10b5-1 program remains in effect today. We have also continued to pay a dividend to common shareholders throughout the pandemic, including during the second quarter of 2021, as we returned approximately $28 million to shareholders through dividends during the quarter. As a reminder and as previously announced, we increased our quarterly dividend by 12% to $0.14 per share during the second quarter of this year. The combination of dividend payments and share repurchases represent a return of capital of approximately 76% of our after-tax operating income for the quarter. Given the capital strength at Radian Guaranty and the financial flexibility provided by our available liquidity at Radian Group, we believe that we are well-positioned to support our businesses and deliver value to our shareholders. I will now turn the call back over to Rick.

Thank you, Frank. And before we open the call to your questions, let me highlight that we increased book value per share by 11% year-over-year and maintained a strong capital position with $1.2 billion of total holding company liquidity and Radian Guaranty's PMIERs excess available assets grew to $1.9 billion. We have seen continued improvement in the credit performance of our portfolio and are also seeing signs of improvement in the overall economy. We wrote $21.7 billion of high-quality, high-value new mortgage insurance business and increased Homegenius revenue by 48% year-over-year. We repurchased 3.9 million shares during the second quarter and an additional 2.8 million shares in July. Our team continues to demonstrate outstanding resilience and dedication as we work together to support our customers and help ensure our continued success. Now operator, we would be happy to take questions.

Absolutely. Thank you. We will now begin the question-and-answer session. And our first question comes from Doug Harter from Credit Suisse. Please go ahead. Your line is open.

Thanks. I was hoping you could give us a little more insight as to how you're thinking about sizing the buyback both in the second quarter and into the third quarter given your liquidity and capital position?

Sure, Doug. This is Frank. When we consider our buybacks, we've been very careful in managing our capital and good at returning it to shareholders. Since 2015, we have had six repurchase programs, each with varying sizes and repurchase levels. As of the end of July, we have approximately $39 million left under our current repurchase authorization. Typically, we report on this after the fact, but we believe that repurchase programs are an effective way to return capital to our shareholders. Since 2015, the sizes of these authorizations have varied, ranging from $100 million to our most recent one of $475 million, and we will continue to share updates as they happen regarding repurchase programs.

Could you discuss the increased activity in the second quarter and continuing into July, and share your thoughts on how this pace might persist?

Sure. The pace is actually aligned with our value-based repurchase program, which means we don’t repurchase at any price but rather within a price range that we are comfortable with and that we believe reflects value. This approach guides our decisions. It involves setting targets based on market pricing. For instance, in the second quarter, we repurchased shares at an average price of $23.14, while the average repurchase price over the program's lifespan is $21.45.

Great. Thank you.

Thank you. Our next question comes from Cullen Johnson from B. Riley. Please go ahead. Your line is open.

Good morning. Thanks for taking my questions. I think you noted that as defaulted loans age while they're in forbearance they can carry with them higher reserve assumptions. Would there also be some sort of offsetting dynamic maybe that the likelihood of a cure is higher if the borrower has more time to catch up on payments?

Sure, Cullen. This is Frank. Your question is a good one. When we set our reserve levels, we try to incorporate all of those factors. It's challenging in the current landscape because the forbearance programs are specific to the COVID situation, and while we can speculate on borrower behavior, we will wait to see how that unfolds. However, we've included all of those assumptions in our reserve estimates so far.

Thank you for your question. I noticed that the claims paid data from July appeared somewhat higher. Is this due to some forbearance plans starting to expire, or is that effect not yet reflected in the data?

Yes, the cure activity in July and I'm glad you asked the question is really related to one particular event and it's a commutation that we had. So, it was elevated by about 101 because of that particular commutation.

And I think Frank you mean claims versus cures.

Excuse me. Thank you. Claims.

Okay. Great. And then just a last one on just kind of looking at the Homegenius segment, it looks like good revenue growth there this quarter. I think you mentioned much of that being driven by title. Is that mainly just kind of higher user adoption there? And then maybe broadly what kind of message do you have in place to get the platform in front of new potential users?

Yes, that's a great question. We’re pleased with the progress we’re making at Homegenius. We discussed the business back in early June during our Investor Day. We're seeing growth in our title business, as Frank mentioned with some quarterly numbers. Although we're growing from a smaller base, this growth stems from two main factors. First, we’re adding new clients, which reflects the strength of our relationships with our lender customers in our mortgage insurance business and other products. Second, we’re successfully capturing more services. I want to commend our title team for expanding and deepening these relationships. As we acquire blue-chip clients, we’re winning a larger share of their business. I’m very satisfied with the progress, as it involves both new customers and rapid growth in our pipeline of new clients. We’re excited about this development. Additionally, we’re achieving greater penetration with existing customers by providing superior service to consumers during transactions. Overall, we feel confident about our current position and the growth we are witnessing. I'm also happy to report an increase in July orders for our title services compared to June, indicating continued acceleration in that area.

Great. That’s helpful. Those are my questions. Thank you.

Thank you.

Thank you. Our next question comes from Mark DeVries from Barclays. Please go ahead. Your line is open.

I believe this is the second consecutive quarter of declining insurance in force. I was hoping to get your thoughts on when you expect to see a shift back to growth in that area. Additionally, can you expand on Rick's comment about feeling close to returning to a proportional share of the market? If that's the case, where have you been under-indexing regarding the incoming risk? What actions, if any, have you been taking to regain a more proportional share?

Thank you, Mark. Derek and I will collaborate on this question. I’ll cover the insurance in force aspect, and Derek will address the market share and purchasing strategy. Clearly, insurance has seen persistent growth over the last few quarters. Additionally, we’re experiencing a positive transition, with our monthly business growing by 8% year-over-year, which is a key driver for future earnings. This transition, despite being relatively flat, is favorable. On the flip side, our sales book has seen a 28% decline. It's important to note that the product experiencing this decline, particularly lender-paid insurance, has a significant extension risk, having dropped by 43% year-over-year. As we've observed growth in the monthly book and some of the singles paying off, we entered this cycle at a relatively high level of singles, which has worked to our advantage as we shift our portfolio towards a greater number of shared monthly payments and accelerate premium recognition. Overall, these trends are encouraging. The trajectory will depend on how refinancing trends continue; we've noticed a slight uptick in refinances lately. Notably, over 70% of our new insurance written was from purchases, which is a positive sign. As we look ahead, we expect persistency to increase, though not reaching historical norms, and we anticipate a significant decline in refinances moving forward, according to industry forecasts. Our portfolio growth is expected to be driven by this decrease in refinances, higher persistency, and robust activity in the purchase market, where mortgage insurance is likely to play a role. We are optimistic about our long-term growth dynamics and the value that can be created in our portfolio. It's essential to remember that not all insurance in force holds the same value today. Therefore, we are being very strategic and intentional about expanding our business and structuring our portfolio. The recent book of business from 2021 remains high quality, reflecting a period of low mortgage interest rates. I believe our portfolio is well-positioned for future growth and value. Now, I'll hand it over to Derek for insights on market share.

Sure. So in terms of market share, I would say probably Q2 overall would be under pro rata share but what we found throughout Q2 is an increase each month in terms of our estimate in terms of our NIW market share. So when you get kind of to June and July, we think we're roughly back to that kind of pro rata portion. Now, in terms of where we're leaning in, the short answer is always going to be the same for us. We're leaning in where we see the highest relative value. Right. Looking at long-term economic value in terms of, what's out there in the market. Now this quarter where we've leaned in it's certainly been I think in terms of segments where we found more value that offered opportunities to deploy more capital. So if you look at NIW quarter-over-quarter we were up about 7%. But if you look at it from a risk-written perspective, I think we're up about 15% to 16%. And as you think about value in the MI business and future value it's driven much more by capital deployment. So as we think about expected future premium that we were writing in Q2 relative to Q1, we would see an increase of about 25%. So that's kind of telling you where we saw the value. And also I think it's important as you think about companies. Historically, you could look at NIW market share as a bit approximation of value when everyone had the same pricing, when our risk mixes were very similar, where there was transparency and pricing kind of in the current environment, probably a better proxy is going to be capital deployment, if you want to get a sense of kind of future earnings and value.

Got it. Thank you.

Thank you.

Our next question comes from Bose George from KBW. Please go ahead, your line is open.

Hi, good morning. Actually first just on the operating expense expectation. After those unusual items should we expect that number to be back kind of in the mid-50s for the back half of the year?

Yes, when we look at the guidance we've provided previously, it's around $70 million per quarter in operating expenses on a normalized basis, excluding comp-related seasonal adjustments. A range of $70 million to $72 million per quarter is a reasonable expectation, although it could be higher depending on our compensation accruals for the rest of the year. Overall, $70 million to $72 million is a good general range for us on a normalized basis.

Okay. The $70 million to $72 million for the combined is correct.

Yes, that's correct.

Okay. Great. Thanks. Going back to the buyback and capital return discussion, is there a debt-to-capital range that you consider when thinking about the timing of potential capital returns?

Sure. That's a great question, Bose. I would say that we haven't been restricted in any way by the debt-to-capital ratio. When you examine our most recent debt issuance from last year for defensive reasons, it elevated us to a high point we hadn't experienced in a few years. Naturally, the business delevers over time. However, we likely carry some extra leverage due to that defensive issuance. We're aware of it and don't feel limited by our current levels at all, but we do expect to see that number decrease over time.

Okay. Great. Thanks a lot.

Thank you.

Thank you. Our next question is from Mihir Bhatia from BOA. Please go ahead. Your line is open.

Hi. Good morning and thank you for taking my questions. I guess, the first question, I just had was, I just wanted to check the eviction moratorium, which was extended yesterday, does that have any impact on you?

Yes, that would have an impact in terms of for instance if the GSEs have any properties that hold in REO, right? If they're running those out they've extended their moratorium, I think to September 30. But generally, it's going to be kind of forbearance and not the eviction moratorium that's going to have any material impact on us.

Right. And because there's such a low percentage of I guess in – I guess in that homes in the portfolio?

Correct. That's exactly right.

Okay. Got it. And then just I want to go back to the market share question I guess a little bit. I understand you don't like you're not managing the market share you're trying to invest where you see value. But maybe just help us understand where are you seeing the volatility in the market? Is it across the board? Is it in certain segments whether customer specific maybe specific FICO LTV buckets. How should we be thinking about that? Like where is the volatility in the market coming from?

Yes, that's a good question. I don't see significant volatility in the market regarding pricing. As Rick mentioned, the MI industry appears to be shifting towards a more normalized competitive environment following substantial pricing reductions in the black box segment. We discussed market share movements last quarter, explaining that our strategy is not to lead in pricing. When considering a normalized environment, similar to pre-COVID conditions, we were able to adjust our pricing relatively freely, which provided overall stability. This environment is favorable for us as it enhances our analytical strengths in identifying relative value in the market. While we observe signs of returning to a normalized environment, there have been some variations in pricing adjustments across the risk spectrum, but I wouldn't categorize this as significant volatility throughout the credit curve. Notably, current aggregate pricing levels, particularly in the industry black box segment, are below pre-COVID levels. When I refer to market-clearing levels, I mean the lowest pricing available across all MI companies instead of a single company, which is crucial for us to determine value. We analyze over 10 million unique loan types to pinpoint these market-clearing prices by looking at various loan and borrower characteristics across different geographies. In this normalized environment that is emerging, there remains strong economic value in all business being conducted in the market, presenting ample opportunity. It truly is a relative value situation where we see value everywhere, but we're focusing on the highest relative value for our capital deployment. Additionally, we still have a robust housing market coupled with positive demographic trends supporting the market. Overall, we feel well-positioned and believe we are returning to a balanced share while seeking attractive returns across the credit spectrum.

Got it. Thank you for that. I guess, just one last one on maybe on capital. I just want to make sure we understand. Would you be willing to share your internal view of just how much excess capital you have? Maybe accounting for buffers you want to keep in place even on PMIERs and stuff, is there a number you all think about, as we just think about sizing the next buyback, because it seems like this current one will expire relatively soon.

Sure, Mihir. This is Frank. We do not have a clear definition or quantification of what the excess is at the holding company. However, if you consider some of the debt maturities we have and what remains in our current share repurchase authorization, it's evident that we have excess. We don't quantify it specifically because part of the intended or potential use for holding company resources includes support for our businesses, such as the MI Company, which currently has a healthy PMIER cushion, so we don't expect any near-term implications there. Additionally, there are other businesses or the homegenius segment, which we also don't anticipate being material. All of these factors influence how we determine the amount of cash we maintain at the holding company. Nonetheless, we do not specify an excess figure.

Okay. Thank you.

Thanks, Mihir.

Thank you. Our next question comes from Ryan Gilbert from BTIG. Please go ahead. Your line is open.

Hi. Thanks everyone. Just a couple of follow-ups for me, the first on insurance in force, and just thinking about the sequential drop driven by single premium cancellations. It seems like, I guess, looking through the supplement single premiums are still around 19% of your risk in force. So do you think that we're through the bulk of single premium cancellations? And we can see insurance in force start to inflect higher, or do you think that there's still room to run to shift the book further towards monthly business?

Thank you, Ryan, for your questions. This is Rick. Looking ahead to the next quarter or two during this refinance period, we anticipate some volatility related to how persistency behaves with those refinances. While we haven't reached the end of single premium cancellations or accelerations, we are fundamentally growing our monthly book of business with high-quality, low mortgage interest rate policies that are promising for the future. The transition we've undergone has positively impacted our earned premiums, particularly in regards to our single business that faced extension risk in a rising rate environment. We have navigated much of that challenge, which is a positive outcome. Additionally, we've freed up capital from lower return, more capital-intensive products and shifted towards a monthly book of business that took advantage of conditions from 2020 and 2021, which make up a significant portion of our portfolio. As we move forward and refinances and persistency stabilize, we believe the mortgage insurance business will continue to grow in value by incorporating high-quality monthly policies that we see as valuable. We are benefiting from a robust purchase market and a strong underwriting environment, particularly propelled by first-time homebuyers who are more inclined to use mortgage insurance. We are confident in our current position, although some volatility may persist until the refinance wave subsides. However, we are optimistic about the long-term outlook for increasing the value of our portfolio, as this transition has strategically positioned us for future value and earnings growth.

Okay. Great. I appreciate that. And then second question is another one on the buyback. And I ask, because it seems like there's a real disconnect between where the stock is trading below book value and the fundamental trends in your business credits improving in a really strong housing market. And it seems like that disconnect doesn't occur very frequently, especially with over $1 billion of liquidity at the holding company. So, I was hoping you could discuss maybe broadly about how you're thinking about share repurchases as a capital allocation or capital deployment strategy relative just to return to shareholders in the context of where the stock is trading relative to the fundamentals you're seeing in your business?

Yes. Ryan, this is Frank. That's a great question. I apologize, but there's a siren in the background here. Hopefully, you can hear me. But the decision around capital deployment and the decision around returning capital to shareholders, either through repurchase or dividend is something that we actively discuss in our capital planning exercise. And I would agree your observation is right. I think it's reflected in the repurchase activity that we've had here in the most recent quarters relative to where our stock has been trading in the amount of activity that we've seen in the repurchase program. So yes, I would agree with your observation, and that is certainly something that we contemplate when we go through our capital planning.

Yes. I would like to expand on Frank's comments. The fundamental and intrinsic value of our business, particularly in the mortgage insurance sector, remains strong. We have a solid capital structure within our mortgage insurance operations, and the value of our portfolio is robust. Additionally, our Homegenius business is well-positioned for the future. I believe there is significant value in our business today, and we are pleased with its performance. Our mortgage insurance division is achieving high performance levels, and our team has shown exceptional discipline in this competitive environment by focusing on extracting value rather than simply lowering prices for market share. We have maintained a strong emphasis on economic value and have been disciplined in our capital management, including buybacks and dividends. I'm encouraged by the progress of our Homegenius business based on the plan we set out a few months ago. Overall, I believe there is great value in our business right now, and we are committed to being responsible stewards of capital moving forward.

Okay. Thank you. I appreciate it.

Thank you.

We have no further questions at this time. I would like to turn the call over to Mr. Rick Thornberry for final remarks.

Thank you. And thank you all for your questions and your continued interest in Radian. We always enjoy hearing from you and addressing your questions. We look forward to talking to all of you as we go forward here and continuing to keep you up to speed on the progress that we see in Radian. I also want to thank our team, our entire team across Radian for the continued dedication and commitment that they're demonstrating through a continually challenging environment, whether it's the COVID pandemic environment, remote work environment, our team has performed at a very high level. So I thank them, thank our Board for their support, and I look forward to talking to all of you soon. Take care, be well and we'll talk soon. Bye.

Thank you. And thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.