Radian Group Inc (RDN) 2005 Q1 法說會逐字稿

Good morning. My name is Bonnie and I will be your conference facilitator today. At this time I would like to welcome everyone to the Radian Group first quarter conference call. All lines have been placed on mute to prevent any background noise. [Operator instructions] At this time, I would like to turn the call over to Mona Zeehandelaar., Senior Vice President of Investor Relations. Please go ahead, ma'am.

Thank you. Thank you for joining us today. With me on the call are Frank Filipps, Bob Quint, Roy Kasmar and Tino Kamarck. As I do every quarter, let me remind you that today's conference call will contain statements that are forward looking. I do know these statements are based on current expectations that are subject to risks and uncertainty. Radian's results may differ materially from those expressed or indicated by forward-looking statements. Factors that can affect Radian's performance are described in our 10k and other filings with the FCC.

Also for those logged on to the web cast, the slides are provided as background and should complement our remarks today, although we may not follow them immediately. Reconciliation of certain non-GAAP measures that may be discussed on today's call also provided on our web cast slides. Let me now turn the phone over to Frank Filipps, Chairman and CEO of Radian.

Thank you, Mona. Good morning everyone. Thank you for joining us. I would like to begin as usual with a few comments on the quarter then turn it over to Bob for details on financials and then open the conference to questions. Net income for the quarter was flat -- basically flat at 115.6 million. However, on a per share basis, net income was up $0.02 from $1.22 per share last year to $1.24 per share this year. You should also take into account that, in the first quarter of 2004, there were significant gains from the sale of investments and from the change in fair market value of derivatives.

That -- those accounts were not significant in the first quarter of 2005. In the first quarter of 2004, the gain on sale of investments and change in fair value of derivatives accounted for $31.3 million of pretax revenue, or $0.21 per share, versus $2.6 million of pretax, or $0.02 per share in the first quarter of '05. So, that's a significant reason for the decline of the reported net income. Positive was the increase in book value. Book value per share at 331 05 was $39.89, up 12% over last year. As you can see, this has been a challenging quarter due to the continued low interest rate and tight credit spread environments that we have been in.

But, our results continue to demonstrate our strategy to diversify our sources of revenue of income around our core competencies and to expand our business franchise in a very disciplined and focused manner. In the mortgage insurance business, net insurance written in insurance in force, both were below our plan for the quarter as we felt the impact of the continuing refinance activity, as well as the continuing indirect competition from the 80/10/10 loans in the primary flow market, and the unsecured senior subordinated executions in the mortgage-backed securities area, or in what we call our structured finance area.

On the positive side, we were pleased to see that defaults were down in the quarter, and that paid claims declined for the third quarter in a row. Our mortgage insurance reserves of $571 million increased again, and are strong by any of the measures that we looked at internally. That includes reserves as a percentage of risk in force, the number of quarters of claims paid coverage, and reserves for default at $12,353. Bob will give more detail on that in a minute. Persistency, again, it was flat for the quarter at 58.4%. That's on the annualized basis. In the first quarter, our persistency was little over 61%.

And, while we had been anticipating persistency to increase more than that and we do continue to expect persistency will continue to improve over the year, it will probably not get to the levels that we had previously expected, which would have been somewhere around 70% by the end of 2005. With the ten-year still well below 450, it's going to be very difficult to get persistency back up to that 70 % level. Turning to the financial guaranty business, there again, credit spreads have remained very tight across the board for the whole first quarter. And it's not, at this time, looking as if credit spreads -- there's anything that's going to widen those credit spreads.

The entire industry is experiencing a slowdown from the record production that we all had over the last three years. We at Radian built a solid first quarter in direct public finance, and we were also able to write a pretty good level of structured finance business in the financial guaranty market place. The quarter also included the impact of the Ambac clawback which was $0.04 per share. At this time, in our current ratings, we should have no further clawback exposure. On the risk management front, our quarterly watch and reserve committee, which reviews all deals that are subject to intensified surveillance, has not surfaced any new material case-specific issues.

In both the mortgage insurance and the financial guaranty businesses, we expect to continue to be fluctuations in premium writings as we concentrate on finding opportunities that generate appropriate returns and profitability for the risks that we will be underwriting. When we look at C-BASS and Sherman in our financial services sector, we continue to see strong contributions to our earnings, and we also see the continued synergies that we have been developing with both C-BASS and Sherman continuing.

This quarter, net revenue at Sherman was $149 million. That was 50% higher than a year ago. And their total net income was $55.9 million for the first quarter. At C-BASS, revenues were $147.3 million for the first quarter, up 41% over last year. Of note, their servicing portfolio grew 83% year over year to 32.9 billion.

Net income for the quarter at C-BASS was 60.6 million, and recurring servicing revenues and net interest income at C-BASS represented 69% of the total revenues in the first quarter. Speaking of C-BASS and Sherman, we received $60.4 million from those companies in the first quarter of 2005. Those dividends provided us with significant supplemental cash flow that allowed us to continue funding of our share repurchase program.

As we have said any number of times, we believe the business opportunities are good. However, right now at Radian, we are very well capitalized and our view is that, when we cannot deploy our excess capital, we will repurchase shares. During the first quarter of 2005, we completed our $5 million share repurchase program that was authorized last year. Our board authorized an additional 5 million share purchase program on February 8 of 2005. In total in the first quarter, we repurchased 6.1 million shares at an average price of $48.55 and a total cost of $298 million. To date, we have repurchased 3.4 million of the 5 million shares authorized in February, and we expect we will continue to repurchase shares throughout 2005 if we cannot reinvest and redeploy all of our capital in the businesses, at the returns we find to be acceptable.

On the international areas, our expansion continues as we carefully assess new products and new markets to determine where our risk management expertise can be best and most profitably applied. On the mortgage side, we announced during the quarter our partnership with Standard Charter Bank to be their exclusive provider of first-loss mortgage insurance in Hong Kong, and have booked over $200 million of new insurance written in the first two months of that partnership.

In the financial guarantee business, with Radian Asset Assurance, Limited and RFPL, Radian Financial Products, our licensed broker dealer in the UK, we're making steady progress to continue to build a structured products business throughout the UK and the EU.

Let me say a couple words now about the CEO succession. As you know, last November, I announced that I would be retiring on or before June 30th of 2005. At this time, we expect that we will be making an announcement about my successor in the very near term. And I would expect that I would be leaving Radian shortly thereafter. With that, let me turn it over to Bob for further details.

Thank you, Frank, and good morning. As usual, I'm going to be providing some detail around the financial results for the first quarter. Clearly, the MI top line has been a challenge, as significant runoff was coupled this quarter with pretty low production. We've been very clear about quarter to quarter fluctuations in the bulk or structured market, and the first quarter we had less opportunities and very little success in our bids on the structured side.

We do expect the second quarter structured business to increase significantly based on the business we have already written in the second quarter and based on additional opportunities that we are currently seeing. In the flow market, we were definitely hurt by some price increases made to specific products in the fourth quarter, including investor loans. Targeting such products for increases clearly impacted overall market share.

While the over all FICO trend in our book has been consistent and LTVs have generally been rising a little bit, Radian has consciously improved the characteristics of our all-paid portfolio, even at the cost of some new insurance written. You will notice that the all day FICOSs have gone up and the LTVs have gone down pretty noticeably compared to 2004. On the MI side, we do think this quarter's premiums earned is a low point which will grow from here, as both flow and structured new insurance written pick up in the second quarter and beyond and persistency slowly continues to rise. Insurance in force should grow from this point in the mid-single digit range over the rest of the year.

You will also notice that other risk in force is up significantly, while premiums from this other risk in force are down due to runoff in the NIMs and second. The majority of the risk increase is from a single transaction that is a triple-a wrap on a large portfolio Therefore, the real risk to us is extremely minimal, but the nominal exposure is high and the premiums are pretty low. Investment income was down sequentially due to the cash used for share repurchase and for the clawback. Despite excellent credit trends in the MI business during the first quarter, you'll notice that we still added the MI loss reserve.

There are two primary reasons for this. First, aging of our delinquencies has gotten more concentrated in the older buckets which are closer to foreclosure and, hence, carry a higher reserve in our loss-reserve model. Second, while we are thrilled to see this loss reserve development, or this delinquency development, it is our view that some of this movement was seasonal and, therefore, we think it's prudent to be at a stronger point in our reserve range compared to where we were at year end.

Our reserve is always within the range that the model presents, but the point within that range is dictated by certain things, like our view on possible seasonality. Claims paid came in a little better than we expected, and we currently hold our claims paid guidance in the $360 million range for the year, although there could be a small improvement to that projection over the course of the year.

While new insurance written for the first quarter was pretty low, the in-force book is predominantly made up of 2003 and 2004 origination, which should have benefited very nicely from the last eight quarters of significant home price appreciation. MI expenses are within expectations and predictably down from last year. We expect these expenses to be up a little bit throughout the year, mostly coming from IT-related expenditures.

On to the financial guaranty results, which were impacted by the Ambac clawback, as were the first quarter '04 results impacted by the MBIA claw back. Please note, as Frank mentioned, that there is no more reinsurance on our books currently eligible to be clawed back. The first quarter impacts, which we have quantified line by line for you, is $0.04 a share. And we have approximately another $0.04 impact spread over the remaining three quarters of 2005, primarily consisting of loss premiums. As Frank mentioned, the highlight of financial guaranty production for the first quarter was very, very strong quarter from public finance direct. We expect that to continue throughout the year.

Premiums earned will benefit very slowly from this production and, with the combination of the claw back, cancellations in the book and the reduction in trade credit ratings, it will be difficult for us to grow premiums earned from the first quarter figure in 2005.

If you look at premiums earned for the rest of the year, we believe that the average earned premium for the rest of the year will be in between the pre-clawback first quarter premiums earned and the post-clawback net premiums earned.

Losses continue to behave as expected. We did have some claim payments for fully reserved deals in the first quarter. That leaves our current loss reserve position very strong, not only as a percentage of risk, but in that nonspecific reserves are nearly three times specific case reserves. Nonspecific reserves are both allocated reserves and deals that are expected to go into default in the future sometime, and unallocated reserve for general portfolio deterioration that occurs over time.

I would encourage all of you to read our disclosure regarding financial guaranty loss provisions in order to more fully understand exactly how we reserve in that business. Expenses in the financial guaranty segment for both the first quarter '05 and '04 were impacted by the clawback, but, excluding this impact, expenses are up a little bit and we expect that to continue in the current range for the rest of the year.

Financial services continues to outperform, again, for some of the same reasons that made the current environment very tough for MI and financial guaranty. C-BASS has realized value in its mortgage portfolio from low interest rate and tight credit spread and they continue to focus on building recurring revenue and income. Sherman has seen some portfolio growth in this difficult purchase environment and continues to take advantage of portfolio sales when it makes sense.

We expect strong second quarters from both C-BASS and Sherman, with the second half of the year declining from these extraordinary first half levels. Share repurchase activity was very, very strong in the first quarter, as you saw, due to our excess capital particularly in the MI segment. We would expect that to continue for the rest of the year, albeit not nearly at the first quarter pace.

We currently have between 100 million and 200 million of dividend capacity in the insurance businesses, which provides a reasonable [proxy] range for the rest of the year's share repurchase. Anything beyond that will depend on the level of growth in these businesses, especially MI. We will still likely refinance our convertible debt sometime this year, but have no specific timetable to do that at this point. Despite the diluted impact from the accounting change in contingently convertible debt, the economics of this debt continue to be very attractive to Radian. We would now like to turn the call over for questions.

[OPERATOR INSTRUCTIONS] Your first question comes from Paul Miller.

Thank you very much. One quick question on the clawbacks. You're saying you have no other reinsurance business as eligible for clawbacks, so we can expect no other clawbacks going forward from here? I just want to be clear.

At the current ratings, Paul.

What's that?

At the current ratings. So, it would require a ratings downgrade to trigger that.

Oh, the current -- So, if you guys don't get a downgrade, they can't clawback this business?

That's correct.

Okay. Okay. And then on the buy backs, I mean, you guys -- I mean, I commend you tremendously for buying back stock. I think that's what the street's been waiting for is for you guys to be more aggressive on the buy backs. Now, you said -- your last comment, is that you have got $100 to $200 million of dividends that you can use for buy backs, and the rest will depend on the growth of other part of the businesses. So, if we continue to have weak growth, like we had in the first quarter, can we see you be more aggressive on the buy backs in the $100 to $200 million?

It's conceivable if the insurance in force doesn't start to grow. We do expect it to continue to -- not to continue, but to start to grow again. But if it doesn't, clearly, that's an option for us and we would expect to take advantage of it.

And, what is having the bigger impact? Is it the 80/10/10 loans or the tight credit spreads? I know, you know, the deep seeds. I mean, what is the primary reason why insurance in force is not growing right now for you guys?

Bob, do you want me to take that?

Go ahead.

I think it is a couple different things. One, we did implement some price increases relevant to certain products over the last couple of quarters, on the flow side, so that's having an impact there. Clearly the 80/10/10s are out there. I would tell you, on the 80/10/10s, that we are seeing some anecdotal evidence that the growth in that product is beginning to abate, so we'll see what happens there. And on the structured side, it's just a lumpy business. We didn't see deals we liked in the first half of the first quarter and, as Bob said, we're seeing a much stronger second quarter in the pipeline. We think it looks pretty good. So it's sort of a combination of things, Paul.

And, can you go back real quick on the 80/10/10s. You're saying you're seeing some evidence of this backing off. What type of evidence?

I guess, two or three things. One, we see some banks getting regulatory pressure on the HELOCs and second mortgages they're holding in their portfolio. Secondly, we think that some of the HELOCs are beginning to adjust, and therefore the interest rate and changes are affecting the consumer's perspective on them. And thirdly, certain lenders actually review the generation, or the growth, of piggy backs in their originations and their feedback seems to show that the growth in those piggy backs is slowing. That doesn't mean they're going down. It means it's sort of plateaued. So, now, the question is, will it go down or will it continue? So, I guess those are the answers, Paul.

And then, of the lender-paid type of MI insurance, can you guys give me a rough estimate on the new insurance written, how much that was -- are you being somewhat successful in that lender [period]?

Yes. High teens to low 20s is the percentage of business. We are introducing a number of LPMI versions out there. We've had them out there for a number of years. So,we are having reasonably good success, as we have for a long time, in that product.

Okay. Thank you very much.

Yes.

Your next question comes from A.J. Grewal.

Just a follow-up. The LPI, is that of the flow business of the bulk or the entire new insurance written?

The percentages I quoted?

Yes.

I believe those are for all of the business. Bob, you may have another -- I believe that percentage is including both bulk and flow.

Okay. And it looks like your claims paid were up about 10 million sequentially in the financial guaranty business. Could you give us an idea, or just give us some color, of what's going on there and what we can expect there.

Yes. It was really just two specific deals. These have been fully reserved for -- actually the one that made up the bulk of that -- was reserved for several years, and it happened to be the time to pay it. So, it was nothing that impacted anything. We knew about this transaction a long time ago. It just impacted paids. That shouldn't recur for the rest of the year.

And how much? Could you tell us how much that was?

The one payment, I believe, was 7 or 8 million. Yes.

And, again, that was a very old deal. It's been on the reserves for -- since before we acquired [ it ].

And, if I may, one other question. Looks like your tax rate moved down quite a bit. Could you give us an idea of what's driving that and what to expect going forward?

Yes. It's really just the component of our net income that's made up of tax advantage versus operating. So, you know, that -- nothing really changed in our calculations that the net income component is a greater component of tax advantage, it will be a little bit lower. And the net income this quarter was a little bit lower.

Thank you.

Sure.

Your next question comes from Geoffrey Dunn.

Thanks. Good morning. Bob, shifting back to your comments about expecting growth in the [PiIS] in the remainder of the year. Can you break that down between the flow and bulk books? I think the trends are significantly different, and, specifically, can you address the runoff of the bulk book from your '02, '03 books and how that's impacting the near term versus maybe '06?

Yes. The -- , a lot of the bulk business or structured business consists of the loans that are hybrid ARM and they're going to run off pretty much regardless of the interest rate environment. The runoff in the bulk has been maybe a little bit higher than the flow, but not too much different. So, you know, we have that -- I think we know what that is and we have that projected out pretty well.

You know, it's always tough to project insurance, in force growth because of the -- you know, the difficulty in projecting structured business that we're going to do. But, you know, the second quarter is pretty visible at this point, and it's going to be -- can be a strong second quarter for those kinds of writings, and I think a lot of that is the reason we're confident we can grow insurance in force the rest of the year.

Flow growth is going to be very difficult, and I think the primary reason for that is that persistency is not picking up as fast as we thought it would, even last quarter. So, we said we could get to 70 by the end of the year on a run rate. I think that is in doubt at this point. Directionally, we think it's going to go up, but it's going to be really slow. So, flow growth will be very difficult. It might pick up a little bit, but it's going to be very difficult. So, I think the growth we're talking about will likely come from the structure.

So, by that, the cancellation level is almost 49% in bulk this quarter. That, I guess, is an abnormality and you're expected to be more down toward the 40, 45%? I mean, bulk supporting the growth suggests that the cancellation of the levels this quarter are far off from where you expect for the remainder of the year?

Yes, I think that's right. I think, directionally, that's right. The cancellations and the bulk will -- won't be at the level that they were.

Okay. And then, you mentioned that there was some price increases in the flow book in the fourth quarter. Can you provide some color and detail on what actions you took and in what products?

Bob, I'll take it, if you want me to.

Yes.

They predominantly were around investor loans, some segments of a-minus, and, along with that, some [alt-day] guideline changes relative to FICO scores, and other sort of details. So, certain adjustments around that, that would be the general area. It was relatively blunt, I would say, pricing adjustments and we are working with lenders to digest that new pricing. We're also assessing whether or not there's any need around the edges to make any further adjustments. So, we'll just continue to assess certain segments and adjust as the market dynamics change.

Okay. Thank you.

Your next question comes from Rob Ryan.

Good morning.

Hi.

I was wondering if you could address the mix shift within the default inventory towards more nonprime, and what the implications are for overall claimed-rate assumption, as well as average claim amount assumptions.

Okay. Clearly the defaults are a little more concentrated in the nonprime. And our loss reserve model does penalize, or put a higher reserve, on a nonprime loan, simply because history has shown that nonprime defaults are going to go to claim, or more likely to go to claim.

So that is -- that's going to impact the [loss] number for sure. Now overall, we're still very happy with how all of the delinquencies have performed. But if you see shifts in delinquencies between products, that will impact the reserves. So, that's the case.

The -- on the severity side or the average claim paid, I think, second, it's very, very hard to project. That's going to jump around. because we get recoveries on seconds which we don't record until we actually receive them. So that's going to be pretty lumpy.

And that will impact -- we don't sort of push that back to the claim that was paid. We record it all in the period that we get it, and that impacts the average claim paid. So, that's going to jump around. There's no -- except for just looking at a longer term trend on that, it's not going to be real meaningful. And then, we don't think that the average claim on the rest of the business, on the primary business, will change dramatically over time.

Thank you.

You're welcome.

Your next question comes from A.J. Grewal.

Yeah, hi. I just am trying to -- maybe I'm missing something. I'm trying to figure out the change in your book value, sequentially from the fourth quarter to the first quarter. It looks like you bought back about 6.5% in shares outstanding and your equity book -- equity account went down about the same. And yet you had $1.24 reported in reported EPS. Didn't seem like a major move in the reported book value. What am I missing there?

Other comprehensive went down by 70 million, and that's a result of just the --going through the change in value of investments going through equity.

Right. but if I look at total equity, it was down about 6.5%. You bought -- your share account looks like it went down 6.5%. But yet, your book value was putting much -- and you had $1.24 in earnings.

Yes. We're buying back shares at a higher price than book value, obviously.

Okay. Thank you.

That's going to impact book value.

Your next question comes from Geoffrey Dunn.

Hey, Bob, just a follow-up on your IO exposure. What is your total IO exposure in terms of the entire book? And, in the specific segments of bulk and flow, what's the typical reset duration for the business that you're writing?

Roy, are you going to take that?

I'm not sure I have the first one, the number. But, let's talk about the reset, Geoff. It ranges from probably 3 to 7 years with over 50% being about 5 years. So the majority of it being at the longer end, which I will tell you we're comfortable with. So I would say, not all IOs are created equal, and certain components -- the fact that it's an IO loan doesn't necessarily make it a bad loan. It's a question of layering of risks. So, we think a very large percentage of our IO book will perform much like just a fixed-rate loan.

As just a rough guess, what would you guess the percentage of your IO exposure is, that's three year or less reset?

Oh, it's teens. That is a guess.

Okay. Great. Thank you.

Your next question comes from Richard Diamond.

Yes. I just wanted to start by commending you on aggressively buying back stock when the business is valued below its adjusted book value and, quite frankly, its liquidation value. There is talk of the Radian agencies changing their models for mortgage insurers that would ultimately free up capital, and could you dimension this opportunity for us and whether you would deploy additional capital towards further share buy backs.

I think what you're talking about, Richard, is the move that some of the mortgage insurers are making with their respective insurance departments to try to get some of the contingency reserve -- which is a restriction of dividend -- some of that released. That's not their rating agencies. We're not aware that the rating agencies are going to lessen the capital requirements for MIs. Now, we do have excess capital, in looking at the business. We do have excess capital.

As we generate more excess capital, we'll continue to take that out to repurchase shares if there aren't opportunities. This is relatively new. The business has grown for many, many years, and it's only the last couple of years that the growth for a number of reasons, has been changing. But clearly, I think, we've demonstrated that this is something that we are not only willing to do. We think it's the right thing to do in the case where we can't get growth at acceptable returns in the businesses.

Thank you very much.

Sure.

Your next question comes from Erin Archer.

Good morning. I had two questions on the captive situation. As a percentage of your insurance in force continues to increase, how do you see that impacting the way you reserve, and any changes in your paid loss assumptions going forward? And, as a follow-up to that, if you could talk a little bit about any regulatory investigations or pressures on how captives are set up. Thanks.

Sure. I'll take the first part and then I'm going to turn it over to Howard Yaruss, our General Counsel. Right now, the captives becoming a bigger percentage of our business won't directly impact the reserves as long as the losses are low enough that we don't expect the captives to attach.

Clearly, if losses got to the point where they were expected to attach, then that would reduce the reserves dollar for dollar, and we would essentially be booking seated loss reserves and it would reduce the liability. So, it clearly has the ability to reduce reserves. It hasn't or, for the most part, generally speaking, it hasn't. We do have a couple of quota shares where the reserves are reduced based on that. But generally, it hasn't.

What we're getting now from the captives is significant capital relief which is part of the reason we have excess capital, which allows us to take dividends. So the capital relief is real, regardless of the loss situation. A reduction in losses paid or loss reserves would only happen significantly if material loss development occurred and the captives were expected to attach.

With regard to the regulatory issues, we understand that there are a few states, notably California, that are beginning to look into this. And we've taken a --- we are taking a very pro-active approach to explain why we engage in these practices and how they work. Other than that, I'm not aware of any formal investigations or any kind of other specific activity, like the kind of activity that are currently taking place in the title industry.

Okay. Thank you very much. Congratulations on your quarter.

Your next question comes from Jim Shanahan.

Good morning, everyone. Miss Archer just asked my question, but as kind of a follow-up, on the financial guaranty side, from a regulatory perspective, do you -- what are your thoughts on what's happening here with MBNA , in particular, and what sort of risks do you see in your business model from a regulatory perspective? And I'm talking about the financial guaranty side of the house.

Jim, there's nothing we see that resembles anything that Radian has done. I guess, the only one issue which is industry wide is the loss reservings, and I think that all of that disclosure has been made very clear, that the FASB will likely be looking at loss reserve in the financial guaranty industry and giving -- ultimately giving specific guidance to the industry. But any of those other issues that have been raised are not relevant to Radian.

And, if it's determined that, say, Radian could only hold case reserves, how would that work? All portfolio reserves would just be released back through income and then, going forward, we would just expect to see a more lumpy earnings out of the financial guarantys business?

Yes. I guess we wouldn't even speculate on what would happen. If that does occur, you're probably right. But, I think we have to give the FASB a chance to look at the industry and look at the way we reserve and others reserve, which we feel is absolutely the right way to do it and make a determination. But, there could be several outcomes to what they do.

Thank you.

Sure.

Your next question comes from A.J. Grewal.

Sorry. I think I missed your guidance on the financial guaranty quarterly premiums earned. Could you go over that again? Thanks.

We -- in the financial guaranty disclosure -- we give you the product-by-product premiums earned for the quarter, and then we come to a subtotal that's pre-clawback. And then, there's a net number after the clawback. And what I said was, the average for the rest of the year will be in between those two numbers. You know, in that range.

Thank you.

Sure.

Your next question comes from [Ken Eliska].

Thank you. My questions have been answered.

At this time, there are no further questions. Mr. Filipps, are there any closing remarks?

I would just like to say that this is likely to be my last conference call addressing you all. That it has been my pleasure, and my honor, to have worked with this great group of people and to have led this company for the last ten years, to have worked with you all as analysts and investors. And I look forward to doing it again in my next life and my next career. So, thank you all and we'll talk to you again soon.

This concludes [phase]Radian Group first quarter conference call. You may now disconnect.