Essent Group Ltd (ESNT) 2024 Q2 法說會逐字稿

Thank you for standing by. My name is Amy and I'll be your conference operator for today. I would like to welcome everyone to the Essent Group second-quarter 2024 earnings call. (Operator Instructions)

謝謝你的支持。我叫艾米，我將擔任今天的會議操作員。我歡迎大家參加 Essent Group 2024 年第二季財報電話會議。（操作員說明）

It is now my pleasure to turn the call over to Phil Stefano, Investor Relations. You may begin your conference.

現在我很高興將電話轉給投資人關係部門的 Phil Stefano。您可以開始您的會議了。

Thank you, Amy. Good morning, everyone, and welcome to our call. Joining me today are Mark Casale, Chairman and CEO; and David Weinstock, Chief Financial Officer. Also on hand for the Q&A portion of the call is Chris Curran, President of Essent Guaranty.

謝謝你，艾米。大家早上好，歡迎打電話給我們。今天與我一起出席的還有董事長兼執行長馬克‧卡薩萊 (Mark Casale)；財務長大衛溫斯托克 (David Weinstock)。Essent Guaranty 總裁 Chris Curran 也出席了電話會議的問答部分。

Our press release, which contains Essent's financial results for the second quarter of 2024 was issued earlier today and is available on our website at essentgroup.com. Our press release includes non-GAAP financial measures that may be discussed during today's call. A complete description of these measures and the reconciliation to GAAP may be found in Exhibit O of our press release.

我們的新聞稿今天稍早發布，其中包含 Essent 2024 年第二季的財務業績，可在我們的網站 essentgroup.com 上取得。我們的新聞稿包括可能在今天的電話會議中討論的非公認會計準則財務指標。這些措施的完整描述以及與 GAAP 的協調可以在我們新聞稿的附件 O 中找到。

Prior to getting started, I would like to remind participants that today's discussions are being recorded and will include the use of 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.

在開始之前，我想提醒與會者，今天的討論正在記錄中，並將包括前瞻性陳述的使用。這些陳述基於目前的預期、估計、預測和假設，存在風險和不確定性，可能導致實際結果有重大差異。

For a discussion of these risks and uncertainties, please review the cautionary language regarding forward-looking statements in today's press release, the risk factors included in our Form 10-K filed with the SEC on February 16, 2024, and any other reports and registration statements filed with the SEC, which are also available on our website.

有關這些風險和不確定性的討論，請查看今天新聞稿中有關前瞻性陳述的警示性語言、我們於2024 年2 月16 日向SEC 提交的10-K 表格中包含的風險因素，以及任何其他報告和註冊向 SEC 提交的聲明，也可在我們的網站上取得。

Now, let me turn the call over to Mark.

現在，讓我把電話轉給馬克。

Thanks, Phil, and good morning, everyone. Earlier today, we released our second quarter 2024 financial results, which continue to benefit from favorable credit performance and the impact of higher interest rates on the persistency of our insured portfolio and investment income. Our results for the quarter continue to demonstrate the strength of our business model and how Essent is uniquely positioned within the current economic environment.

謝謝菲爾，大家早安。今天早些時候，我們發布了 2024 年第二季財務業績，該業績繼續受益於良好的信貸表現以及利率上升對我們保險投資組合和投資收入持久性的影響。我們本季的業績繼續證明了我們業務模式的優勢以及 Essent 在當前經濟環境中的獨特地位。

Our outlook for housing in our business remains constructive. Favorable demographics continue to drive housing demand while supply remains constrained by a lack of inventory and the lock in effect of previously low mortgage rates. We believe that the supply-demand imbalance should continue to support home prices, which is positive for our business.

我們對住房業務的前景仍然具有建設性。有利的人口結構繼續推動住房需求，而供應仍然受到庫存不足和先前低抵押貸款利率鎖定效應的限制。我們認為供需失衡將繼續支撐房價，這對我們的業務有利。

While housing and the labor markets have demonstrated resiliency, we also recognize that affordability remains challenged and that consumers are being impacted by higher rates and higher prices. As a risk management company, we view Essent is well positioned for a range of economic scenarios, given the strength of our balance sheet and our Buy, Manage and Distribute operating model.

儘管住房和勞動力市場表現出彈性，但我們也意​​識到負擔能力仍面臨挑戰，消費者正受到更高利率和更高價格的影響。作為一家風險管理公司，鑑於我們的資產負債表實力以及購買、管理和分銷營運模式，我們認為 Essent 在各種經濟場景中都處於有利地位。

And now for our results. For the second quarter of 2024, we reported net income of $204 million compared to $172 million a year ago. On a diluted per share basis, we earned $1.91 for the second quarter compared to $1.61 a year ago. On an annualized basis, our return on average equity was 15% in the second quarter.

現在我們的結果。2024 年第二季度，我們的淨利潤為 2.04 億美元，而去年同期為 1.72 億美元。以攤薄每股計算，我們第二季的盈餘為 1.91 美元，而去年同期為 1.61 美元。以年化計算，我們第二季的平均股本回報率為 15%。

As of June 30, our US mortgage insurance in force was $241 billion, a 2% increase from a year ago. Our 12-month persistency was approximately 87%, relatively flat compared to last quarter. Over nearly 70% of our in force portfolio has a note rate of 5.5% or lower. We expect that the current level of rates should support elevated persistency for the remainder of 2024.

截至 6 月 30 日，我們有效的美國抵押貸款保險金額為 2,410 億美元，比一年前增加 2%。我們的 12 個月持續率約為 87%，與上季相比相對持平。我們有效投資組合中近 70% 的票據利率為 5.5% 或更低。我們預計目前的利率水準應能支持 2024 年剩餘時間的持續成長。

The credit quality of our insurance in force remains strong, with a weighted average FICO of 746 and a weighted average original LTV of 93%. We continue to be pleased with the quality of the new business given the prudent credit box of the GSEs and the high underwriting standards of our lender partners. In our existing portfolio, home price appreciation should continue to mitigate potential claims and support near-term credit performance.

我們現有保險的信用品質仍然強勁，加權平均 FICO 為 746，加權平均原始 LTV 為 93%。鑑於 GSE 的審慎信用箱和貸款合作夥伴的高承保標準，我們仍然對新業務的品質感到滿意。在我們現有的投資組合中，房價升值應會繼續減輕潛在索賠並支持近期信貸表現。

In our core mortgage insurance business, we remained focused on activating new lenders and continuing to refine and enhance our proprietary credit engine EssentEDGE through additional data sources, and a challenging mortgage origination market. EssentEDGE is an advantage for lenders as their borrowers benefit from receiving our best rates.

在我們的核心抵押貸款保險業務中，我們仍然專注於啟動新的貸方，並透過額外的資料來源和充滿挑戰的抵押貸款發起市場繼續完善和增強我們的專有信貸引擎 EssentEDGE。EssentEDGE 對貸款人來說是一個優勢，因為他們的借款人可以從我們最優惠的利率中受益。

We remain pleased with the progress that we are making in our Title business as we continue to make investments to leverage the operations and technology expertise from our MI business. In building out Title, we have a longer-term view and maintain a Control, Profitability and Growth philosophy. From my standpoint, we are currently in the Control phase and do not expect that Title will have any meaningful impact on earnings over the near term.

我們對產權業務的進展感到滿意，因為我們繼續進行投資，以利用 MI 業務的營運和技術專業知識。在建構 Title 時，我們著眼長遠，堅持控制、獲利和成長的理念。從我的角度來看，我們目前正處於控制階段，預計標題不會對短期內的收益產生任何有意義的影響。

Longer term, however, we believe that Title will generate supplemental earnings for our franchise, similar to what we have demonstrated with Essent Re. As for Essent Re, we continue to be pleased with its strong earnings profile. Essent Re's steady performance is driven by its third-party business, which is primarily related to risk assumed from GSE, CRT and fee-generating MGA services. As of June 30, Essent Re's third-party risk in force was $2.3 billion.

然而，從長遠來看，我們相信 Title 將為我們的特許經營權帶來額外收入，類似於我們在 Essent Re 中所展示的那樣。至於 Essent Re，我們仍然對其強勁的獲利狀況感到滿意。Essent Re 的穩定表現得益於其第三方業務，這主要與 GSE、CRT 和收費 MGA 服務承擔的風險有關。截至 6 月 30 日，Essent Re 的有效第三方風險為 23 億美元。

We continue to operate from a position of strength with $5.4 billion in GAAP equity, access to $1.3 billion in excess of loss reinsurance, and over $1.2 billion of available holding company liquidity. On July 1, we closed on our initial senior notes offering of $500 million and upsized our revolving credit facility to $500 million. These transactions strengthened Essent's capital structure and enhanced our financial flexibility. In total, we secured approximately $1 billion of total debt capacity while continuing to maintain the lowest financial leverage in the mortgage insurance industry.

我們繼續以 54 億美元的 GAAP 股本、 13 億美元的超額損失再保險以及超過 12 億美元的可用控股公司流動性的優勢開展業務。7 月 1 日，我們完成了 5 億美元的首次優先票據發行，並將循環信貸額度擴大至 5 億美元。這些交易增強了 Essent 的資本結構並增強了我們的財務靈活性。總的來說，我們獲得了約 10 億美元的總債務能力，同時繼續保持抵押貸款保險行業最低的財務槓桿。

Effective July 1, we entered into an excess-of-loss transaction with a panel of highly rated reinsurers to cover our 2024 business. We continue to be encouraged by the strong demand from reinsurers for taking mortgage credit risk. Looking forward, we remain committed to a programmatic and diversified reinsurance strategy executed through the quota share, XOL and ILN channels.

自 7 月 1 日起，我們與一組高評級再保險公司達成了超額損失交易，以涵蓋我們 2024 年的業務。再保險公司對承擔抵押信貸風險的強勁需求繼續令我們感到鼓舞。展望未來，我們仍然致力於透過配額份額、XOL 和 ILN 管道執行程序化和多元化的再保險策略。

Cash and investments as of June 30 were $5.9 billion and our new money yield in the second quarter was approximately 5%. The annualized investment yield for the second quarter was 3.8%, up from 3.5% a year ago. New money rates have largely held stable over the past several quarters and remain a tailwind for investment income growth. With a year-to-date mortgage insurance underwriting margin of 79%, our franchise continues to generate solid returns and remains well positioned from an earnings, cash flow and balance sheet perspective.

截至 6 月 30 日，現金和投資為 59 億美元，第二季的新資金收益率約為 5%。第二季年化投資報酬率為3.8%，高於去年同期的3.5%。過去幾季新貨幣利率基本上保持穩定，仍然是投資收入成長的推動力。年初至今，我們的抵押貸款保險承保利潤率為 79%，我們的特許經營業務繼續產生穩健的回報，並且從收益、現金流和資產負債表的角度來看仍然處於有利地位。

Now, let me turn the call over to Dave.

現在，讓我把電話轉給戴夫。

Thanks, Mark, and good morning, everyone. Let me review our results for the quarter in a little more detail. For the second quarter, we earned $1.91 per diluted share compared to $1.70 last quarter and $1.61 in the second quarter a year ago. Our US mortgage insurance portfolio ended June 30, 2024, with insurance in force of $240.7 billion, up $2.2 billion compared to March 31, and 2% higher compared to the second quarter a year ago.

謝謝，馬克，大家早安。讓我更詳細地回顧一下我們本季的業績。第二季度，我們每股攤薄收益為 1.91 美元，而上季為 1.70 美元，去年第二季為 1.61 美元。截至 2024 年 6 月 30 日，我們的美國抵押貸款保險投資組合的有效保險金額為 2,407 億美元，較 3 月 31 日增加 22 億美元，較去年第二季增加 2%。

Persistency at June 30 was 86.7%, largely unchanged from 86.9% last quarter. Net premiums earned for the second quarter were $252 million and included $17.7 million of premiums earned by Essent Re on our third-party business, and $16.6 million of premiums earned by the Title operations. Base average premium rate for the US mortgage insurance portfolio for the second quarter was 41 basis points, and the net average premium rate was 36 basis points for the second quarter, both consistent with last quarter.

截至 6 月 30 日，持久性為 86.7%，與上季的 86.9% 基本持平。第二季淨保費收入為 2.52 億美元，其中包括 Essent Re 在我們的第三方業務中賺取的 1,770 萬美元保費，以及產權業務賺取的 1,660 萬美元保費。第二季美國抵押貸款保險組合基本平均保費率為41個基點，第二季淨平均保費率為36個基點，皆與上季一致。

Net investment income increased $4 million or 8% to $56.1 million in the second quarter of 2024 compared to last quarter, due primarily to higher balances and continuing to invest at higher yields than the book yield of our existing portfolio. Other income in the second quarter was $6.5 million compared to $3.7 million last quarter. The largest component of the increase was the change in fair value of embedded derivatives in certain of our third-party reinsurance agreements. In the second quarter, we recorded a $732,000 increase in the fair value of these embedded derivatives compared to a $1.9 million decrease recorded last quarter.

與上一季相比，2024 年第二季的淨投資收入增加了400 萬美元，即8%，達到5,610 萬美元，這主要是由於餘額增加以及繼續以高於現有投資組合帳面收益率的投資收益所致。第二季其他收入為 650 萬美元，而上季為 370 萬美元。成長的最大組成部分是我們某些第三方再保險協議中嵌入衍生性商品的公允價值變化。第二季度，這些嵌入式衍生性商品的公允價值增加了 732,000 美元，而上個季度則減少了 190 萬美元。

In the second quarter, we recorded a benefit for losses and loss adjustment expenses of $334,000 compared to a provision of $9.9 million in the first quarter of 2024 and a provision of $1.3 million in the second quarter a year ago. At June 30, the default rate on the US mortgage insurance portfolio was 1.71%, down 1 basis point from 1.72% at March 31, 2024.

第二季度，我們記錄的損失和損失調整費用收益為 334,000 美元，而 2024 年第一季的撥備為 990 萬美元，一年前第二季的撥備為 130 萬美元。截至6月30日，美國抵押貸款保險組合違約率為1.71%，較2024年3月31日的1.72%下降1個基點。

Other underwriting and operating expenses in the second quarter were $56 million and included $12.9 million of Title expenses. Expenses for the second quarter also included Title premiums retained by agents of $10.2 million, which are reported separately on our consolidated income statement. Our consolidated expense ratio was 26% this quarter. Our expense ratio excluding Title, which is a non-GAAP measure was 18% this quarter. A description of our expense ratio excluding Title and the reconciliation to GAAP can be found in Exhibit O of our press release.

第二季的其他承保和營運費用為 5,600 萬美元，其中包括 1,290 萬美元的產權費用。第二季的費用還包括代理人保留的 1,020 萬美元的產權保費，這些費用在我們的合併損益表中單獨報告。本季我們的綜合費用率為 26%。本季度，不包括 Title（非 GAAP 衡量標準）的費用率為 18%。有關我們的費用比率（不包括標題）和 GAAP 調整的說明，請參閱我們新聞稿的附件 O。

As Mark noted, our holding company liquidity remains strong. At June 30, included $425 million of term loan outstanding with a weighted average interest rate of 7.07%. At June 30, 2024, our debt-to-capital ratio was 7.3%. On July 1, we closed our first public offering of senior unsecured notes, issuing $500 million of notes with an annual interest rate of 6.25% that mature on July 1, 2029. Approximately $425 million of the proceeds were used to pay off the term loan outstanding as of June 30, with the remainder available for working capital and general corporate purposes.

正如馬克所指出的那樣，我們的控股公司的流動性仍然強勁。截至 6 月 30 日，其中包括 4.25 億美元的未償還定期貸款，加權平均利率為 7.07%。截至2024年6月30日，我們的負債與資本比率為7.3%。7 月 1 日，我們完成了首次公開發行優先無抵押票據，發行了 5 億美元的票據，年利率為 6.25%，將於 2029 年 7 月 1 日到期。其中約 4.25 億美元的收益用於償還截至 6 月 30 日未償還的定期貸款，其餘部分可用於營運資金和一般公司用途。

After giving effect to the senior note issuance and term loan repayment, on July 1, our debt-to-capital ratio was approximately 8.5%. Additionally, effective July 1, we entered into a five-year $500 million unsecured revolving credit facility, amending and replacing our previous $400 million secured revolving credit facility. Combined, these transactions provide Essent with access to approximately $1 billion in capital.

優先票據發行及定期貸款償還生效後，7月1日，我們的債務與資本比率約為8.5%。此外，自 7 月 1 日起，我們簽訂了一項為期五年的 5 億美元無擔保循環信貸安排，修改並取代了先前 4 億美元的有擔保循環信貸安排。這些交易合計為 Essent 提供了約 10 億美元的資本。

At June 30, Essent Guaranty's PMIERs efficiency ratio, excluding the 0.3 COVID factor, remained strong at 169%, with $1.4 billion in excess available assets. During the second quarter, Essent Guaranty paid a dividend of $62.5 million to its US holding company.

截至 6 月 30 日，Essent Guaranty 的 PMIER 效率（不包括 0.3 新冠病毒因素）仍維持在 169% 的強勁水平，可用資產超額達 14 億美元。第二季度，Essent Guaranty 向其美國控股公司支付了 6,250 萬美元的股息。

Based on unassigned surplus at June 30, the US mortgage insurance companies can pay additional ordinary dividends of $329 million in 2024. At quarter end, the combined US mortgage insurance business statutory capital was $3.5 billion with a risk-to-capital ratio of 9.9 to 1. Note that statutory capital includes $2.4 billion of contingency reserves at June 30.

根據6月30日的未分配盈餘，美國抵押貸款保險公司可以在2024年額外支付3.29億美元的普通股利。截至季末，美國抵押貸款保險業務法定資本總額為 35 億美元，風險資本比為 9.9 比 1。請注意，截至 6 月 30 日，法定資本包括 24 億美元的緊急準備金。

Over the last 12 months, the US mortgage insurance business has grown statutory capital by $287 million, while at the same time paying $222.5 million of dividends to our US holding company. During the second quarter, Essent Re paid a dividend of $87.5 million to Essent Group. Also in the quarter, Essent Group paid cash dividends totaling $29.6 million to shareholders, and we repurchased 396,000 shares for $22 million under the authorization approved by our Board in October 2023.

在過去 12 個月中，美國抵押貸款保險業務的法定資本增加了 2.87 億美元，同時向我們的美國控股公司支付了 2.225 億美元的股息。第二季度，Essent Re 向 Essent Group 支付了 8,750 萬美元的股息。同樣在本季度，Essent Group 向股東支付了總計 2,960 萬美元的現金股息，並根據董事會 2023 年 10 月批准的授權，以 2,200 萬美元回購了 396,000 股股票。

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

現在，讓我把電話轉回給馬克。

Thanks, Dave. In closing, we are pleased with our second quarter performance. Our results continue to benefit from strong credit performance and the positive impacts of higher interest rates on persistency and investment income. Our balance sheet capital and liquidity remains strong and will further strengthen through our successful $500 million senior debt issuance.

謝謝，戴夫。最後，我們對第二季的業績感到滿意。我們的業績持續受益於強勁的信貸表現以及更高的利率對持久性和投資收益的正面影響。我們的資產負債表資本和流動性依然強勁，並將透過成功發行 5 億美元的優先債務進一步增強。

When combined with an amended and extended revolving credit facility, we secured approximately $1 billion in total debt capacity and remain well positioned. Looking forward, we remain confident in our Buy, Manage and Distribute operating model and believe that Essent is well positioned in the current economic environment to generate high-quality earnings and attractive operating returns.

與修訂和延長的循環信貸安排相結合，我們獲得了約 10 億美元的總債務能力，並保持了良好的地位。展望未來，我們對我們的購買、管理和分銷營運模式仍然充滿信心，並相信 Essent 在當前的經濟環境中處於有利位置，能夠產生高品質的收益和有吸引力的營運回報。

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

現在，讓我們回答您的問題。操作員？

Thank you, the floor is now open for questions. (Operator Instructions)

謝謝，現在可以提問。（操作員說明）

Terry Ma, Barclays.

馬特里，巴克萊銀行。

Hey. Thank you. Good morning. If I look at your cumulative cure rates by quarter of default going back to 2021, it's been pretty consistent. It looks like about 90% of your defaults on any given quarter, cure within about a year. So I'm just curious, as we kind of look forward and take into account the macro backdrop and the vintage seasoning math that's occurring and maybe the various amounts of embedded home equity across the different vintages, like does that cumulative cure rate performance change going forward?

嘿。謝謝。早安.如果我看看自 2021 年以來按季度違約的累積治癒率，就會發現這是相當一致的。看起來任何特定季度大約 90% 的違約都會在大約一年內解決。所以我只是好奇，因為我們有點期待並考慮到宏觀背景和正在發生的年份調味數學，也許不同年份的嵌入式房屋淨值的不同數量，就像累積治愈率性能變化一樣向前？

Hey, Terry. Thanks for the question. It's Dave Weinstock. It will be something that in the current environment and with what is in our default inventory right now, I would not expect significant changes from that 90% cure rate after about a year. There are a couple of things that are clearly favorably impacting our credit performance. It's been a very favorable credit environment with a high level of cures from the default inventory.

嘿，特里。謝謝你的提問。我是戴夫·溫斯托克。在當前環境下以及我們目前預設庫存中的情況下，我預計大約一年後 90% 的治癒率不會發生重大變化。有幾件事顯然對我們的信用表現產生有利影響。這是一個非常有利的信貸環境，違約庫存的修復水準很高。

The other thing that's still playing through the default is forbearance. I mean, forbearance ended at the end of November last year, but we still have a handful of defaults that are in forbearance. And we still have not seen the return of pre-COVID normal default patterns even at this point in time. And so, we think it may take a little bit of time to play through. But that said, that should support the roughly 90% cure rate that we're seeing about a year out.

預設仍在發揮作用的另一件事是寬容。我的意思是，延期付款已於去年 11 月底結束，但我們仍有少數違約處於延期付款狀態。即使在這個時候，我們仍然沒有看到新冠疫情之前的正常預設模式的回歸。因此，我們認為可能需要一點時間才能玩完。但話雖如此，這應該可以支持我們在一年左右看到的大約 90% 的治癒率。

Got it. That's helpful. And is there a similar stat that you can share for maybe kind of pre-COVID vintages? Or like a normalized stat for lack of a better term?

知道了。這很有幫助。對於新冠疫情之前的年份，是否有類似的統計數據可以分享？或者像標準化統計數據一樣缺乏更好的術語？

Yes, I'm not sure I had that necessarily at my fingertips, Terry, but I would say because our credit was really very solid prior to COVID, that it will probably be pretty similar.

是的，我不確定我是否已經掌握了這一點，特里，但我想說，因為我們的信用在新冠疫情之前確實非常可靠，所以它可能會非常相似。

Got it. Okay. That's helpful. Thank you.

知道了。好的。這很有幫助。謝謝。

Soham Bhonsle, BTIG

索漢姆‧邦斯勒 (Soham Bhonsle)，BTIG

Hey guys. Good morning. So Mark, I think historically the MIs have priced to sort of a 20% through-cycle loss ratio. And obviously, we're well below that today. But is your sense that as an industry, we've sort of moved away from that sort of framework given the sort of tools that every MI has to react to these changes and just the advent of reinsurance or better manufacturing quality?

嘿夥計們。早安.馬克，我認為歷史上 MI 的定價為 20% 的整個週期損失率。顯然，我們今天的水平遠低於這個水平。但是，您是否認為，作為一個行業，考慮到每個 MI 都必須提供應對這些變化的工具以及再保險或更好的製造品質的出現，我們已經擺脫了這種框架？

I'm just trying to get a sense for what's embedded in industry pricing today because, look, losses could go up, but as long as we're all sort of pricing for them, the expected returns shouldn't really be that different from what you underwrote them at.

我只是想了解當今行業定價中包含的內容，因為看起來，損失可能會上升，但只要我們為它們進行各種定價，預期回報就不應該與實際回報有太大不同。 。

Yes. It's a good question, Soham. And I agree with you. I think in terms of if we think about losses longer-term or just through the cycle, I would really equate it to claim rate. We've always kind of priced it at 2% to 3% cumulative claim rate. It's clearly running below that now. But that's where we price and that's kind of how we look for when we -- where our pricing is today kind of within that 12% to 15% range.

是的。這是一個很好的問題，索漢姆。我同意你的觀點。我認為，如果我們考慮長期損失或僅考慮整個週期的損失，我真的會將其等同於索賠率。我們一直將其定價為 2% 至 3% 的累積索賠率。現在顯然正在低於該水平。但這就是我們定價的地方，也是我們尋找的方式——今天我們的定價在 12% 到 15% 的範圍內。

Given where the rates or the losses are coming in, clearly, we're at the high end of that range, but nothing lasts forever. So we would expect as we get into a softening economy, whether that's this year, next year, it doesn't really matter. The provision will go up for sure, but we do have the ability with the engines to change pricing relatively quickly, which should, to your point, maintain probably more consistent loss ratios, and more importantly, more consistent returns.

顯然，考慮到利率或損失的情況，我們處於該範圍的高端，但沒有什麼是永遠持續的。因此，我們預計，當我們進入經濟疲軟狀態時，無論是今年還是明年，這並不重要。準備金肯定會增加，但我們確實有能力透過引擎相對較快地改變定價，就您而言，這應該可以保持更一致的損失率，更重要的是，更一致的回報。

And that's a big change, right. We've talked about all the different changes in the business over the years, and you touched on one, right, with the qualified -- the regulatory change with the qualified mortgage, it's just a cleaner book that we're seeing with the GSEs, right. Better credit quality, enhanced performance with DU and LP, good quality control, all those sort of things through the GSEs is bringing a better quality, 746 FICO, which you didn't see kind of pre-crisis.

這是一個很大的變化，對吧。我們已經討論了多年來業務中的所有不同變化，您談到了一個，對吧，合格抵押貸款的監管變化，這只是我們在 GSE 中看到的一本更乾淨的書， 正確的。更好的信用品質、增強的 DU 和 LP 績效、良好的品質控制，所有這些透過 GSE 實現的事情都帶來了更好的質量，746 FICO，這是危機前你看不到的。

And then the engines, clearly we think we have a bit of an advantage with our credit engine, but the pricing engines with all the MIs do give us the ability to price and change price relatively quickly. We did it during COVID, we did it a lot in 2022 and 2023 when we started to really look for ability to kind of -- we saw more normalized credit rates coming or loss rates coming, so we're able to move pricing.

然後是引擎，顯然我們認為我們的信用引擎有一點優勢，但是所有 MI 的定價引擎確實使我們能夠相對快速地定價和更改價格。我們在新冠疫情期間就這樣做了，在2022 年和2023 年我們做了很多次，當時我們開始真正尋找某種能力——我們看到更加正常化的信貸利率即將到來或損失率即將到來，因此我們能夠調整定價。

And I would expect given -- I mean, when you think about different pockets in the country, whether it's Texas or Florida some softening month supply starting to extend both with existing home and new homes. The engine allows us to react to that fairly quickly.

我預計，我的意思是，當你考慮到該國的不同地區時，無論是德克薩斯州還是佛羅裡達州，現有房屋和新房的供應量開始出現疲軟的月份。該引擎使我們能夠相當快地對此做出反應。

So again, I think with that tool, and I do think it helps us. And as we think about the economy, potentially beginning to show what does that really mean? It could mean lower mortgage rates, which I think is actually helps, right. It's starting to lighten up affordability, which will be good.

再說一次，我認為使用這個工具，我確實認為它對我們有幫助。當我們思考經濟時，可能會開始表明這真正意味著什麼？這可能意味著較低的抵押貸款利率，我認為這實際上是有幫助的，對吧。它開始減輕負擔能力，這將是一件好事。

So you'll see more buyers come into the market now, which I think will help keep quality standards really well. Lenders will start to see more production, which I think is a good thing. And I think it will also start to show the Balance business model that we've had, right.

所以你現在會看到更多的買家進入市場，我認為這將有助於維持良好的品質標準。貸款人將開始看到更多的產量，我認為這是一件好事。我認為它也將開始展示我們擁有的平衡商業模式，對吧。

We've always been kind of more in a lower rate environment, we performed well. Rates switched they got really high, really fast in 2022. Our originations went down, but we saw kind of the upside with persistency and investment income growth.

我們一直在較低利率的環境中表現良好。2022 年，利率變化得非常高、非常快。我們的起源下降了，但我們看到了堅持和投資收入成長的好處。

So if rates start to move the other way, what does that mean? Well, NIW is going to go up, persistency will go down, obviously a bit. Investment yields, that they should tend to go down, Soham, but they're not going to go to the level they were in 2021.

那麼，如果利率開始向相反方向移動，這意味著什麼？嗯，NIW 會上升，持久性會下降，顯然是一點點。Soham，投資收益率應該會下降，但不會達到 2021 年的水準。

Our investment yields in 2021 were less than 2% and they clocked in at 3.8% in the past quarter. And as we lengthen duration at these rates, we should see kind of a -- continue to see tailwinds on the investment income growth. So that's when we take a step back. We feel like we're really well positioned. Again, what's the bottom line? Continuing to grow book value per share. And I think we feel pretty good about that.

我們 2021 年的投資報酬率不到 2%，上一季的投資報酬率為 3.8%。隨著我們以這些利率延長存續期，我們應該會看到投資收入成長持續出現順風。所以這就是我們退一步的時候。我們覺得我們的定位非常好。再說一遍，底線是什麼？每股帳面價值持續成長。我認為我們對此感覺很好。

I guess just piggybacking off of that, can you just remind us where you'd expect, how you'd expect the book to perform, or your claims and things like that in an environment that, where say, unemployment goes to, call it, 5%, right? I'm sure you guys have done sort of sensitivity. So any color there would be helpful. Thank you.

我想順便說一句，你能提醒我們你的期望是什麼，你期望這本書如何表現，或者你的主張以及類似的事情，在一個環境中，比如失業，稱之為它，5%，對嗎？我相信你們已經做到了某種敏感性。所以任何顏色都會有幫助。謝謝。

Yes. I mean, I know I got to quote like it's not like 5% losses equal X, but I think we can point you back to COVID, right, when losses went, I mean, default rates went to 5%, unemployment was in the double digits, and we still performed pretty well. So I would say at a 5% unemployment rate, yes, the default rate will kick up a little bit.

是的。我的意思是，我知道我必須引用，就像5% 的損失不等於X，但我認為我們可以讓你回到新冠疫情，對，當損失發生時，我的意思是，違約率上升到5 %，失業率處於兩位數，我們仍然表現得很好。所以我想說，在失業率為 5% 的情況下，是的，違約率會略有上升。

You may see it, the provision go up a little bit just because of, as Dave mentioned forbearance. The old forbearance went away in November, but forbearance is still available to borrowers and that's a little bit of a free put for certain borrowers if they're able to do it. So you see a little bit, you might see still a little bit noise in the provision.

你可能會看到，條款的增加只是因為戴夫提到的寬容。舊的寬限期已於 11 月取消，但藉款人仍然可以享受寬限期，對於某些有能力的借款人來說，這可以說是一種免費的看跌期權。所以你看到了一點，你可能會在條款中看到一點噪音。

But when you just think about 75%, 80% margins that we have now, I'm not particularly concerned if losses go up a little bit. So I think we'll perform quite well through it. I mean, again, I don't have the exact stat for you, but you can model it out pretty easily. I mean, if you look at, kind of increase the loss ratio or increase depending on how your model works with claim rates, you can run through.

但當你考慮我們現在 75%、80% 的利潤率時，我並不特別擔心損失是否會增加一點。所以我認為我們會透過它表現得很好。我的意思是，我沒有給你確切的統計數據，但你可以輕鬆地對其進行建模。我的意思是，如果您考慮增加損失率或根據您的模型如何處理索賠率來增加損失率，您就可以完成。

We run through it a lot. And we're not particularly concerned about that. So we're more concerned about the cat risk, right. At the end of the day, we own the first loss piece, and the rest of the industry have done a really good job of kind of hedging out the mezz piece. The ultimate risk in the business is when we come back at the cat level, right.

我們經常經歷它。我們對此並不特別關心。所以我們更關心貓的風險，對吧。最終，我們擁有了第一個虧損部分，而行業的其他公司在對沖中間部分方面做得非常好。業務中的最終風險是當我們回到貓的層面時，對吧。

I mean, at the end of the day, we're a cat business. Our cat happens to be a severe economic recession. And so that's when we think about that, we don't think about the moderate losses, we're well prepared for that from a capital balance sheet liquidity. It's those significant stress that we want to make sure that we're well prepared for.

我的意思是，歸根結底，我們是一家貓公司。我們的貓恰好經歷了嚴重的經濟衰退。因此，當我們考慮這一點時，我們不會考慮適度的損失，我們已經從資本資產負債表的流動性中做好了充分的準備。我們希望確保我們做好充分準備應對這些巨大的壓力。

And as Essent we are, right. And we run the S4 stress, we run the GSE stress every month, and we look at it from a number of different -- we look at it from a P&L perspective, we look at it from a capital perspective. When we look at it from a PMIERs perspective, which again that's really the liquidity trigger for the MI industry.

身為 Essent，我們就是這樣，對吧。我們運行 S4 壓力，我們每月運行 GSE 壓力，我們從許多不同的角度來看待它——我們從損益角度看待它，我們從資本角度看待它。當我們從 PMIER 的角度來看時，這又是 MI 產業的流動性觸發因素。

And so, when we think about capital in general, people always ask us about excess capital, and PMIERs excess. I mean, a lot of that excess for PMIERs is really necessary given the pro-cyclical nature of how the calculation works. So when we think about capital, we think about potentially growth, right. That's the offensive piece of it.

因此，當我們考慮一般資本時，人們總是問我們關於過剩資本和 PMIER 過剩的問題。我的意思是，考慮到計算方式的順週期性質，PMIER 的大量超額確實是必要的。因此，當我們考慮資本時，我們會考慮潛在的成長，對吧。這就是其中令人反感的部分。

And I think we started to execute upon that with Title. We continue with ventures and continue to look at ways to grow the business. Essent Re is a way to grow the business. We would expect the existing mortgage insurance portfolio to actually reignite growth in certain.

我認為我們開始透過 Title 來執行這一點。我們繼續進行風險投資，並繼續尋找發展業務的方法。Essent Re 是發展業務的一種方式。我們預計現有的抵押貸款保險組合實際上會重新點燃某些領域的成長。

And so, we're kind of in a pause on growth on the insurance portfolio now given where rates are, but we would expect given demographics, both existing demographics and potential upside with immigration, we would expect the industry is $1.5 trillion today. We would expect that to grow to $2 trillion over the next X number of years, and potentially a little bit higher.

因此，鑑於目前的利率水平，我們保險投資組合的增長有點暫停，但我們預計鑑於人口統計數據，包括現有人口統計數據和移民的潛在上行空間，我們預計該行業今天的規模將達到1.5 兆美元。我們預計這一數字將在未來 X 年內成長至 2 兆美元，甚至可能更高一些。

We think about capital distribution, right, that's dividends and that's buying back our shares at attractive prices. And then we think about defense. And so when we think about or explain kind of capital management and we talk about a measured approach. I think right there is kind of an example of how we think through it.

我們考慮資本分配，對吧，這就是股息，就是以有吸引力的價格回購我們的股票。然後我們考慮防守。因此，當我們思考或解釋資本管理類型時，我們會談論一種謹慎的方法。我認為有一個例子可以說明我們如何思考它。

Perfect. Thanks a lot for the thoughts.

完美的。非常感謝您的想法。

Bose George, KBW.

博斯·喬治，KBW。

Hello. Good morning. In terms of your provision for new notices, it looked like it went down a little bit. Is that right? And can you just talk about assumptions in there?

你好。早安.就您對新通知的準備金而言，看起來有所下降。是這樣嗎？您能談談其中的假設嗎？

Yeah, hey, Bose. It's Dave. What I would actually say is that, we really haven't made any changes on how we're providing for defaults. I think what you're seeing is just a higher level of cure activity for our 2024 defaults. So if you were to look at Exhibit K this year compared to last year and you looked at the first quarter of 2024's cure rate versus the first quarter of 2023, what you'll see is a little bit higher cures from the first quarter of 2024 at this point. And the same thing is really true a little bit even for the defaults that came in in the second quarter. So I think that's what's playing through the numbers.

是的，嘿，博斯。是戴夫。我實際上想說的是，我們確實沒有對提供預設值的方式做出任何改變。我認為您所看到的只是針對 2024 年違約的更高水平的修復活動。因此，如果您查看今年與去年相比的圖表 K，並查看 2024 年第一季的治癒率與 2023 年第一季的比較，您會發現自 2024 年第一季以來治癒率略高在此刻。即使對於第二季度出現的違約情況來說，同樣的情況也確實存在一點。所以我認為這就是數字所體現的意義。

Okay. Okay. So those are sort of intra-quarter cures that essentially get netted out of them?

好的。好的。那麼，這些都是季度內的治療方法，基本上可以從中獲利嗎？

That's right.

這是正確的。

Okay, great. That's helpful. Thanks. And then can you remind us what your guidance is for OpEx for this year? And just any thoughts on sort of the cadence when you think about 2025 for growth?

好的，太好了。這很有幫助。謝謝。那麼您能否提醒我們今年營運支出的指導是什麼？當您考慮 2025 年的成長時，您對節奏有什麼想法嗎？

Yeah, sure. So our OpEx guidance was $185 million for non-Title expenses excluding Title is the best way to say it. And right now if you look at the results, we've talked about this a lot, our team is clearly focused on managing expenses. And so, through the first half of the year, we're in really good shape for that clearly could beat that guidance.

是的，當然。因此，我們的營運支出指引值為 1.85 億美元，用於非產權支出（不包括產權），這是最好的說法。現在，如果你看看結果，我們已經討論了很多，我們的團隊顯然專注於管理費用。因此，今年上半年，我們的狀況非常好，顯然可以超越這項指導。

Okay, great. Thank you.

好的，太好了。謝謝。

Doug Harter, UBS.

道格·哈特，瑞銀集團。

Thanks. Mark, I know you don't manage to market share, but if you look, the market share, the gap between the high and the low kind of seems the tightest it's been in a while. What do you think that tells us about kind of the competitiveness in the market, and kind of how we should think about kind of market dynamics going forward?

謝謝。馬克，我知道你無法獲得市場份額，但如果你看一下，市場份額、高低之間的差距似乎是一段時間以來最緊張的。您認為這告訴我們什麼是市場競爭力，以及我們應該如何思考未來的市場動態？

Yes. It's a good question. And I would say it's very balanced. We've talked about per dollar MIs but it really is kind of a pretty prudent market, very constructive in terms of pricing. I think that's for a number of reasons. Again, it's the pricing engines, the ability to make changes quickly.

是的。這是一個好問題。我想說這是非常平衡的。我們已經討論過每美元的 MI，但這確實是一個相當謹慎的市場，在定價方面非常有建設性。我認為這有很多原因。再說一遍，這是定價引擎，是快速做出改變的能力。

Also with some of these pricing services we can see kind of win rates and where everyone's at. And so there's that discipline there that's and just our ability, Doug, to make those changes has really kind of shifted some of that power from the lenders to the MIs and/or flexibility maybe is a better way to say it.

此外，透過其中一些定價服務，我們可以看到獲勝率以及每個人的情況。因此，道格，我們有能力做出這些改變，這實際上已經將部分權力從貸方轉移到了 MI，和/或靈活性也許是更好的說法。

But with the old rate cards, you really were allocated business, and it was kind of done at the highest level or it was done by the secondary marketing manager or the head of underwriting or the head of sales, but there was that relationship part of it, and we fought for business, competed for business, really with service and relationships, soft dollar contract underwriting, training, all those sort of things.

但是，使用舊的價目表時，您確實被分配了業務，並且是在最高級別完成的，或者是由二級營銷經理或承保主管或銷售主管完成的，但是存在這種關係的一部分我們為業務而戰，為業務而競爭，實際上是透過服務和關係、軟美元合約承保、培訓等等。

And now it's just a fee business. And so someone who may have allocated MI six, seven years ago, I don't even know what their MI -- they look at the MI reports, but they can't really dictate it. It's really being driven by the LOs, and that really allows DMIs. So there's not that difficult conversation where you have to go in and talk to the president, and you tell them why you're pricing so high and you're not his partner anymore, which is the furthest thing from the truth.

現在這只是一項收費業務。因此，那些可能在六、七年前分配了 MI 的人，我甚至不知道他們的 MI 是什麼——他們查看 MI 報告，但他們無法真正決定它。它確實是由 LO 驅動的，這確實允許 DMI。因此，並沒有那麼困難的對話，你必須進去與總統交談，然後告訴他們為什麼你的定價如此之高，並且你不再是他的合作夥伴，這與事實相去甚遠。

I think our view is when we talk to lenders today, we say, hey, you should have all six MIs in there, and every different MI has different pockets. Certain MIs like different geographies, different parts of the structure, whether it's higher FICO, lower FICO, the different credit appetites, I should say, and that's great for the borrower, right. It's great for the lender.

我認為我們的觀點是，當我們今天與貸方交談時，我們會說，嘿，你應該把所有六個 MI 都放在那裡，每個不同的 MI 都有不同的口袋。我應該說，某些多邊機構喜歡不同的地理位置、結構的不同部分，無論是較高的 FICO 還是較低的 FICO，以及不同的信貸偏好，這對借款人來說很好，對吧。這對貸方來說是件好事。

And we said it in the script, we give every single borrower our best price. That doesn't mean it's the lowest price, it's the best price that we feel for the borrower and we think about in terms of unit economics and all those sort of things. And when we say we're 106 we're fine being in that middle range, even at the lower end of the range if we're getting our price, right.

我們在劇本中說過，我們為每位借款人提供最優惠的價格。這並不意味著這是最低的價格，而是我們對借款人感覺最好的價格，我們從單位經濟效益和所有這些方面來考慮。當我們說我們是 106 時，我們可以處於中間範圍，即使在該範圍的下端，如果我們得到我們的價格，對吧。

I mean, it's all about for us about returns. But I do think the dynamics in the industry have changed for the good. And I don't think they're going back. And here's the example, right, it's a slow market, right, for -- or a low origination market from an NIW perspective, this is the time when you would expect to see competition and you're not, right. So if rates start to go down and more volume comes in, I don't necessarily see it changing.

我的意思是，對我們來說，一切都與回報有關。但我確實認為該行業的動態已經發生了積極的變化。我不認為他們會回去。這是一個例子，對吧，這是一個緩慢的市場，對吧，或者從國家利益豁免的角度來看，這是一個低起源市場，這是你期望看到競爭的時候，但事實並非如此，對吧。因此，如果利率開始下降並且交易量增加，我不一定認為它會改變。

And one kind of -- one interesting (inaudible), Doug, is just look at all of the MI press releases over the last week, you have to hunt for the NIW for the quarter. Like before, it used to be fronting record NIW, and you almost have to hunt for it. It took me five minutes to find it on some of the reports, which I think that's a sign. That's a sign that the MI industry, in general, was focused on returns, growth in book value per share, managing their balance sheet, and that's because this is a risk business. It's not a market share business, it never was. And I think that bodes well for the industry.

道格，一種有趣的（聽不清楚）就是看看上週所有的 MI 新聞稿，你必須尋找本季的 NIW。和以前一樣，它曾經創下 NIW 紀錄，你幾乎必須尋找它。我花了五分鐘才在一些報告上找到它，我認為這是一個跡象。這表明 MI 行業總體上關注回報、每股帳面價值的成長、管理資產負債表，因為這是一項風險業務。這不是一個市場佔有率業務，從來都不是。我認為這對該行業來說是個好兆頭。

Great. Appreciate that answer, Mark. Thanks.

偉大的。感謝這個答案，馬克。謝謝。

Rick Shane, JPMorgan.

里克·肖恩，摩根大通。

Good morning. I'm hoping you could touch briefly on how you're thinking about the risk in the 2023 and 2024 vintages in particular, given sort of the affordability challenges right now. It would seem like there would be elevated risk, but I'm wondering with the prospect of potentially lower mortgage rates, do you view that as sort of prime for being disruptive, prime for being repay, and sort of derisking the portfolio that way, should we see lower mortgage rates in the months and quarters ahead?

早安.考慮到目前的負擔能力挑戰，我希望您能簡要地談談您如何看待 2023 年和 2024 年年份的風險。看起來風險會升高，但我想知道，考慮到抵押貸款利率可能降低的前景，您是否認為這是破壞性的主要因素，償還的主要因素，以及以這種方式降低投資組合風險的主要因素，我們是否應該在未來幾個月和幾季看到抵押貸款利率下降？

Hi Melissa, it's Mark. It's a good question. We said it before, there's kind of the books are really broken into two parts. I would call it the pre-June 2022 book, which is before rates really rose, and then there's the post book, post 2022 book when it's at much higher rates, higher HPA.

嗨，梅麗莎，我是馬克。這是一個好問題。我們之前說過，有些書其實分成兩個部分。我將其稱為 2022 年 6 月前的書籍，即利率真正上漲之前的書籍，然後是 2022 年 6 月後的書籍，即利率更高、HPA 更高的書籍。

I would say, to your point, it's definitely impacted affordability. I think our response though is and I think it's been the industry response is we've raised rates, right. So from a unit economic standpoint, Melissa, we feel like the unit economics of the business are actually quite strong.

我想說，就你的觀點而言，這肯定會影響負擔能力。我認為我們的反應是，而且我認為行業的反應是我們提高了利率，對吧。因此，從單位經濟效益的角度來看，梅麗莎，我們覺得該業務的單位經濟效益實際上相當強勁。

I think the pricing when you compare kind of earlier books to where we are in the last 18, 24 months, we feel pretty comfortable with the return. So yes, you can see it, you may see higher losses come through. But again, I think we're pricing for it.

我認為，當你將早期書籍的定價與過去 18、24 個月的定價進行比較時，我們對回報感到非常滿意。所以是的，你可以看到它，你可能會看到更高的損失。但同樣，我認為我們正在為其定價。

In terms of lower rates, I think it's a really good point. I touched on it within my response to Soham. If rates come down, clearly, that book will have increased refinance activity. I would expect it to be there versus that 2020 and 2021 book where the average rate is 3%, 3.1%, 3.2%, that's really that lock in effect isn't going anywhere, even if rates go, let's call it, into the mid-5s. But I think it's actually really beneficial for the borrower, right. They bought a home, they stretched either on DTI, but they're making the payments for sure as we can see it.

就較低的利率而言，我認為這是一個非常好的觀點。我在給索漢姆的回覆中談到了這一點。顯然，如果利率下降，那本書的再融資活動將會增加。我預計它會出現在 2020 年和 2021 年的書中，其中平均利率為 3%、3.1%、3.2%，這實際上鎖定效果不會消失，即使利率上升（我們稱之為）大約 5 秒。但我認為這實際上對借款人來說確實有利，對吧。他們買了一棟房子，他們在 DTI 上延長了時間，但正如我們所看到的，他們肯定會付款。

But if all of a sudden, you get 100 basis-point drop or 150 basis-point drop, that really does help the borrower refinance. And I would say they're going to refinance at kind of lower rates, and really help them on the payment and affordability. That's probably a good thing for the industry.

但如果突然降息 100 個基點或 150 個基點，這確實有助於借款人再融資。我想說他們將以較低的利率進行再融資，並在付款和負擔能力方面真正幫助他們。這對行業來說可能是一件好事。

Thanks, Mark. And I guess as a follow-up question there, would you expect the sort of normal continued home price appreciation in a lower rate environment? We've seen it sort of stabilize, but on really low volumes right now, with a pickup in volume, would you expect to see sort of continued stabilization, but just better affordability, or would you expect to see home prices just generally migrate higher? And again, knowing that's dependent on the MSA?

謝謝，馬克。我想作為一個後續問題，您是否預期在較低利率環境下房價會出現正常的持續上漲？我們已經看到它有所穩定，但目前成交量非常低，隨著成交量的回升，您是否期望看到某種程度的持續穩定，但只是更好的負擔能力，或者您是否期望看到房價普遍走高？再說一次，知道這取決於 MSA 嗎？

I think it depends on what the demand is right. I know it's hard to gauge right now given the lock in effect if some of those folks do want to move into larger homes. So right now, I think month supply, and I think it's still four months nationally, right. So it's still low and six months is kind of normal.

我認為這取決於需求是正確的。我知道，鑑於封鎖的實施，現在很難判斷其中一些人是否確實想搬進更大的房子。所以現在，我認為一個月的供應量，我認為全國仍然是四個月，對吧。所以它仍然很低，六個月是正常的。

A lot more new homes are coming on board. I think the month supply for new homes is closer to 9 months. So there's a lot of new homes coming on board. So I would say lower rates. I think it gets absorbed. I think I would say more flattish HPA growth. Maybe it's a little bit, picks up 1% or 2%, but I wouldn't see a sudden rise unless the demand is overwhelming again.

更多新房即將加入。我認為新房的月供應量接近9個月。因此，有許多新房子即將進駐。所以我會說較低的利率。我認為它會被吸收。我想我會說 HPA 成長更加平緩。也許有一點點，上漲1%或2%，但除非需求再次壓倒性的，否則我不會看到突然上漲。

And that would have to be a real jolt to rates. And we don't see that coming. I think we definitely see rates coming down, but I think it will be in a more orderly fashion, which again, I think it will help the borrowers because it will -- to your point earlier, if rates go down and HPA goes up, that necessarily help affordability. But I don't know if I see that in the cards.

這必定會對利率產生真正的衝擊。我們不認為這種情況會發生。我認為我們肯定會看到利率下降，但我認為這將以一種更有序的方式進行，我認為這將再次幫助借款人，因為正如您之前所說，如果利率下降而 HPA 上升，這必然有助於負擔能力。但我不知道我是否在卡片上看到了這一點。

Thanks, Mark.

謝謝，馬克。

(Operator Instructions)

（操作員說明）

Mihir Bhatia, Bank of America.

米希爾·巴蒂亞，美國銀行。

Hi Mark. Good morning. Thank you for taking my question. I wanted to start just very quickly on Title. I think you mentioned in your script that you view it as currently in the Control phase. And I was wondering if you could expand on that a little bit. Is that driven by just the market conditions or is it more about, hey, we just bought this, we need to make some investments and we need to improve stuff. Like what's driving the -- like, I guess, what's going on with Title right now?

嗨馬克。早安.感謝您回答我的問題。我想很快地開始製作標題。我認為您在腳本中提到您將其視為當前處於控制階段。我想知道你是否可以對此進行一些擴展。這只是由市場狀況驅動的還是更多的是，嘿，我們剛買了這個，我們需要進行一些投資，我們需要改進東西。就像是什麼推動了——我猜，Title 現在發生了什麼？

I think the market gives us -- affords us some time, right. I mean given on the lender services side, it's really our refinance-driven model, and there's not really a lot of refinances. So we'll kind of afford at the time. And we're just going back to the playbook that we used with MI, right.

我認為市場給了我們一些時間，對吧。我的意思是，從貸款人服務來看，這實際上是我們的再融資驅動模式，而且並沒有很多再融資。所以我們當時會負擔得起。我們只是回到了 MI 所使用的劇本，對吧。

I mean, we build MI. I mean, from the time I started raising dollars until we did our first loan, was like 27 months or something. It was a pretty long period of time. So we're used -- like patients, we do have patients. So I think with us, we're using this to our advantage. So I think our guidance to the team.

我的意思是，我們建造 MI。我的意思是，從我開始籌集資金到我們發放第一筆貸款，大約有 27 個月的時間。那是一段相當長的時間。所以我們被利用了──就像病人一樣，我們確實有病人。所以我認為我們正在利用這一點來發揮我們的優勢。所以我認為我們對團隊的指導。

And we're bringing folks over from MI, we're bringing in new folks. We have a really strong core team that we inherited, both on the lender services and the agency services side. And I think our instructions is, let's build out the infrastructure. So we use a third-party transaction management system. We want to bring that in house along with the rest of IT. I mean, they outsourced all of IT in here, and we clearly don't do that.

我們正在從軍事情報局引進人員，我們正在引進新人員。我們繼承了一支非常強大的核心團隊，無論是在貸方服務還是代理服務方面。我認為我們的指示是，讓我們建造基礎設施。所以我們使用第三方交易管理系統。我們希望將其與 IT 的其他部分一起引入內部。我的意思是，他們將這裡的所有 IT 外包，而我們顯然不會這樣做。

We like to control it because especially when you think about the future with the new technologies owning, managing your own system allows you to plug in things a lot quicker as opposed to you've kind of outsourced it, and have, I would say, less control over that. So that's not really how we operate.

我們喜歡控制它，因為特別是當你考慮擁有新技術的未來時，管理自己的系統可以讓你更快地插入東西，而不是外包它，我會說，對此的控制較少。所以這並不是我們真正的運作方式。

So we're spending the time doing that. Is it going to take longer? Is it going to cost a few dollars to do it? Absolutely. But we also look and say, where do we want to be in five years in Title, right. And we've talked about this before. Our goal in Title is to position ourselves to take advantage when the market does come back. And if it comes back a little quicker and we don't take advantage of as much as we could have, that's fine.

所以我們花時間做這件事。會需要更長的時間嗎？做這件事需要花費幾美元嗎？絕對地。但我們也會審視並說，五年後我們希望在 Title 方面達到什麼水平，對吧。我們之前已經討論過這一點。我們在 Title 中的目標是讓自己在市場回歸時佔優勢。如果它回來得快一點，而我們沒有充分利用，那也沒關係。

Going we're in this for the long haul. So I think it's, again, it's making sure we have the technology, building out the infrastructure, making sure we can become more efficient around the whole process. So I would look at it there. And we remain pleased with it. I mean, I think we said probably 12 months to 18 months to stand it up. We're 12 months in. It may take a little bit longer, but again, time is on our side given where we ultimately think the business is. Essent Re, we started hiring there in 2009, and we didn't write our first policy till 2014.

我們將長期致力於此。所以我認為，再次確保我們擁有技術，建立基礎設施，確保我們能夠在整個過程中變得更有效率。所以我會在那裡看看。我們仍然對此感到滿意。我的意思是，我認為我們說過可能需要 12 個月到 18 個月才能維持下去。我們已經12個月了。這可能需要更長的時間，但考慮到我們最終認為業務的發展方向，時間是站在我們這一邊的。Essent Re，我們從 2009 年開始在那裡招聘，直到 2014 年我們才制定了第一份政策。

So I don't think it's going to take that long with Title because we have an existing business. And we started the process even with leveraging our relationships on the MI side. I think we've signed up 50 new lenders on the mortgage insurance side this year. Like we said earlier, we continue to try to activate clients.

所以我認為 Title 不會花那麼長時間，因為我們有現有的業務。我們甚至利用我們在 MI 方面的關係開始了這個過程。我認為今年我們在抵押貸款保險方面已經與 50 家新的貸款機構簽約。正如我們之前所說，我們將繼續嘗試啟動客戶端。

For the Title side, it's I think 15 clients that we've been able to activate, and it's really kind of working well. We have, I would say, a core kind of SWAT team on the Title side, like senior account managers that have put really, really, really sharp individuals, and they're really working closely with the MI BD team.

對於 Title 方面，我認為我們已經能夠啟動 15 個客戶端，而且效果確實不錯。我想說，我們在 Title 方面有一個核心的 SWAT 團隊，例如高級客戶經理，他們配備了非常非常敏銳的個人，他們確實與 MI BD 團隊密切合作。

So it's not like they're going out on their own, they're really getting the benefit of being part of Essent, which I think helps them. And for the MI guys, it's actually helping them a lot. They're learning a different aspect of their clients' business. Just makes you smarter at the top of the house, right. It's always, it's the old saying, you want to know your customer, and for the ability for Chris or for some of the other senior folks on the BD team to go in and have that conversation in Title.

所以他們不是自己出去，他們確實從成為 Essent 的一部分中受益，我認為這對他們有幫助。對於 MI 的人來說，這實際上幫助了他們很多。他們正在學習客戶業務的不同方面。只會讓你在房子的頂層變得更聰明，對吧。老話說得好，你想了解你的客戶，並希望 Chris 或 BD 團隊中的其他一些高級人員能夠進入並在 Title 中進行對話。

And we're learning a lot. I mean, I was out with, I would say, out of the top five lenders in the country, I interacted with three of them over the past few months, just understanding how they think about Title, what are their pain points, and then you try to build for that.

我們學到了很多。我的意思是，我想說的是，在全國排名前五的貸方中，我在過去幾個月與其中三個進行了互動，只是了解他們對 Title 的看法，他們的痛點是什麼，然後你嘗試為此構建。

So again, we're in this for the long haul. And again, I still think we're I guess from an investor standpoint, we kind of call to the call option, but I think it's beyond that now. I think we're into the operating part of it, but we're still really in that investment phase, and I'm more willing to invest dollars today to be able to recoup larger returns down the road.

再說一遍，我們將長期致力於此。再說一次，我仍然認為，從投資者的角度來看，我們有點看漲期權，但我認為現在已經超出了這個範圍。我認為我們已經進入了營運部分，但我們仍然處於投資階段，我更願意今天投資美元，以便能夠在未來獲得更大的回報。

Okay. That makes sense. Thank you up. Maybe just couple over the MI side. First, the coverage ratio, it's been picking up for a few quarters. I think it's at 27% currently. Is that just a function of you all are writing higher LTV loans, and where do you think that settled out?

好的。這是有道理的。謝謝你了。也許只是在 MI 方面進行耦合。首先，覆蓋率幾個季度以來一直在上升。我認為目前是27%。這是否只是你們都在發放更高 LTV 貸款的結果？

Yes, hey, Mihir, it's Chris. Yeah, the higher coverage ratio is really just a function of certainly the production coming in today as far as the higher LTVs, right. And that's just based on the home prices and some of the, I'll call it, the affordability challenges relative to the higher loan prices and not putting down as much. So I don't know as far as where that goes. I don't expect it to go much higher from where it is today, but certainly, it's just more of a function of what's being originated in the marketplace?

是的，嘿，米希爾，我是克里斯。是的，較高的覆蓋率實際上只是當今產量的函數，就較高的生命週期價值而言，對吧。這只是基於房價以及一些（我稱之為）相對於較高貸款價格的負擔能力挑戰，並且沒有那麼多的首付。所以我不知道它會發展到哪裡。我不認為它會比現在的水平更高，但當然，它更多地是市場起源的函數？

Okay. And is that also a function of the fact that I think you've talked before about EssentEDGE working best, maybe a little bit lower down closer to the low end of the credit spectrum versus the top end? Is that also influencing it or not really?

好的。這是否也是因為我認為您之前曾談到 EssentEDGE 效果最好，也許比高端更接近信用譜的低端？這是否也確實影響了它？

No, I think it's more. Again, EssentEDGE does operate obviously across the entire credit spectrum as far as how we try to optimize our unit economics and returns. But again, I think the bigger driver is more along the lines of kind of where the market is today with regards to home prices and certainly the LTVs being higher.

不，我認為還有更多。再次強調，就我們如何優化我們的單位經濟效益和回報而言，EssentEDGE 確實在整個信貸範圍內運作。但我再次認為，更大的推動因素更多的是與當今市場的房價以及生命週期價值更高有關。

Yes. And this is Mark. And there is a function of that, which we spoke to last quarter. If we do see, we think with EDGE, if there is a higher DTI or higher LTV, we're able to select out of say 10 of them, the two or three that we think are going to perform better, right. So they have a higher EDGE score, and they're able to given where the market is and so forth and we believe it will sign them a higher EDGE score or they'll get a higher EDGE core, which means kind of a lower --

是的。這是馬克。我們上個季度談到它的一個功能。如果我們確實看到，我們認為透過 EDGE，如果有更高的 DTI 或更高的 LTV，我們就能夠從其中的 10 個中選擇，我們認為性能會更好的兩到三個，對吧。因此，他們有更高的EDGE 分數，他們能夠給出市場的位置等等，我們相信這會為他們帶來更高的EDGE 分數，或者他們將獲得更高的EDGE 核心，這意味著更低的EDGE 核心。--

So we're a little bit more comfortable versus one-size fits-all, which again, if you have a more static pricing and you don't like the tails, you're probably going to stay away from all the tails. And I think our view is we're going to try to get a couple -- two or three of them that we think will outperform, and there's little value there.

因此，與一刀切相比，我們更舒服一些，同樣，如果您有更靜態的定價並且您不喜歡尾部，您可能會遠離所有尾部。我認為我們的觀點是，我們將嘗試獲得幾個——其中兩三個我們認為會跑贏大盤的公司，但它們沒有什麼價值。

And you can see it in our yield, right. Our yield is still in that kind of 40 basis points, 41 basis points, which I think is back to again to an earlier question, we believe with EDGE, we're able to kind of price for that risk.

你可以在我們的產量中看到它，對吧。我們的收益率仍然在 40 個基點、41 個基點，我認為這又回到了先前的問題，我們相信透過 EDGE，我們能夠為這種風險定價。

Okay. Thank you for taking my questions.

好的。感謝您回答我的問題。

You're welcome.

不客氣。

Thank you for the questions. There are no further questions at this time, so I would like to turn it back over to the management team for closing remarks.

謝謝你的提問。目前沒有其他問題，因此我想將其轉回管理團隊進行結束語。

I'd like to thank everyone today for their attendance today and questions, and have a great week.

我要感謝今天大家的出席和提問，祝您有個愉快的一週。

Thank you. This concludes today's conference call. You may now disconnect.

謝謝。今天的電話會議到此結束。您現在可以斷開連線。