MGIC Investment Corp

NYSE:MTG

Earnings Call Transcript 2021-Q2

[Operator]

Good day and thank you for standing by. Welcome to MGIC Investment Corporation Second Quarter 2021 Earnings Call. At this time, all participants’ line are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions]

I would now like to hand the call over to your speaker today Mr. Mike Zimmerman, Senior Vice President, Investor Relations. Please go ahead.

[Mike Zimmerman, Senior Vice President, Investor Relations]

Thanks Lena. Good morning and thank you for joining us this morning and for your interest in MGIC Investment Corporation. Joining me on the call today to discuss the results for the second quarter of 2021 are Chief Executive Officer, Tim Mattke; and Chief Financial Officer, Nathan Colson.

I want to remind all participants that our earnings release of last evening, which may be accessed on MGIC’s website, which is located at mtg.mgic.com, under Newsroom, includes additional information about the company’s quarterly results that we will refer to during the call and includes the reconciliation of non-GAAP financial measures to the most comparable GAAP measures. We have also posted on our website a presentation that contains information pertaining to our primary risk in force, new insurance written, reinsurance transactions and other information, which we think you’ll find valuable. I also want to remind listeners that from time-to-time, we may post information about our underwriting guidelines and other presentations or corrections to past presentations on our website that investors and other interested parties would find valuable as well.

During the course of this call, we may make comments about our expectations of the future. Actual results could differ materially from those contained in these forward-looking statements. Additional information about those factors, including COVID-19, that could cause actual results to differ materially from those discussed on the call are contained in the Form 8-K and Form 10-Q that were filed last night. If the company makes any forward-looking statements, we are not undertaking obligation to update those statements in the future in light of subsequent developments. Further, no interested party should rely on the fact that such guidance or forward-looking statements are current any time other than the time of this call or the issuance of the Form 8-K or Form 10-Q.

With that, I'd like to turn the call over to Tim Mattke.

[Tim Mattke, Chief Executive Officer]

Thanks Mike. Good morning, everyone. I'm pleased to report that we produced another quarter of very strong financial results. After my opening remarks, Nathan will provide more detail about our financial results and capital position. Then before we open up the line for questions, I will wrap-up by discussing the current operating environment including activities related to finance housing policies.

During the quarter, we earned GAAP net income of $153.1 million. Our quarterly financial results reflect the solid credit quality of our insurance in force, a strong housing market, a decreasing delinquency rate and improving economic conditions as many local economies return to pre-pandemic levels of activity. We had another busy quarter as we wrote a record $33.6 billion of new business, which more than offset the pressure of lower annual persistency on our existing book of business and resulted in our insurance in force growing to $262 billion, nearly 14% higher than the same period last year.

An increasing percentage of our new insurance written is from purchase transactions, accounting for 79% of our NIW in the second quarter compared to 60% last quarter. Our application pipeline, a leading indicator of NIW indicates this trend has continued with purchase transactions continuing to account for more than 85% of the applications received in recent months.

While NIW in the first half of the year was strong, we expect that NIW will slow in the second half of the year, primarily due to the reduction of refinance activity. While the current supply of housing inventory available for purchase remains low, we still expect robust purchase market condition to persist. Consumer demand for many reasons remains strong and interest rates are attractive especially by historical standards. Home prices have been increasing rapidly given the low housing inventory and the strong demand. We believe that home prices may be increasing for more sound reasons than in 2005-2007 cycle. So while we do not expect broad declines in home prices we do expect that the rate of increase will slow.

These conditions along with increasing annual persistency should allow our insurance in force to continue to grow, although perhaps at a slower annual rate than we have been enjoying in recent quarters.

Taking a look at our insurance and force portfolio our loss ratio was a low 11.6% in the quarter. This result primarily reflects the improving economic conditions, the quality of our existing book of business and the low number of new delinquency notices received. I continue to be encouraged by the positive trends we are seeing in credit performance, which continued through July.

At quarter end, we maintained a $2.3 billion excess over PMIERs minimum required assets and our PMIERs efficiency ratio was 167% at the end of the second quarter. Reflecting our capital position and long-term confidence in our transformed business model, a $150 million dividend from MGIC to our holding company was declared, and paid after the end of the second quarter, and the holding company Board authorized a 33% increase in the quarterly common stock dividend.

Our capital management strategy centers on maintaining financial flexibility at both the holding company and the writing company to protect our policyholders and to create long-term value for shareholders. This value can be created by writing more primary mortgage insurance, pursuing new business opportunities, retiring debt, paying dividends or repurchasing stock.

In summary, we continually look for ways to maximize near-term business opportunities, while remaining focused on the long-term success of the company. I believe the actions we have taken prior to and during the COVID pandemic support the statement. We have a strong and dynamic balance sheet. We are confident in our positioning in this market and we like the risk/reward equation that the current conditions offer.

With that, let me turn it over to Nathan.

[Nathan Colson, Chief Financial Officer]

Thanks, Tim and good morning. As Tim mentioned, we had another strong quarter of financial results. In the second quarter, we earned $153 million of net income or $0.44 per diluted share and generated an annualized 13% return on beginning shareholders' equity. This compares to $14 million of net income or $0.04 per diluted share in the same period last year. Of course, the second quarter of last year was impacted by the material increase in delinquencies, related to COVID-19 and the associated increase in net losses incurred.

During the quarter, total revenues were $298 million compared to $294 million last year, with the increase primarily due to higher net premiums earned. The main driver of the increase in net premiums earned, the higher profit commission earned through our quota share reinsurance transactions in the current quarter compared to the second quarter of last year, mainly due to the lower level of losses ceded in the current period compared to last year.

The net premium yield for the second quarter was 39.1 basis points, which was down 1.8 basis points compared to last quarter. The decrease was primarily a result in the decline in in-force premium yield with the runoff through attrition of the older policies, which generally have higher premium rates. As refinance activity decreased, we also realized less benefit from accelerated premiums earned from single premium policy cancellations. During the quarter, they totaled $20 million compared to $28 million last quarter and $33 million in the second quarter of 2020.

Shifting over to credit. Net losses incurred were $29 million in the second quarter compared to $217 million in the same period last year and $40 million last quarter. In the second quarter, we received approximately 9,000 new delinquency notices, which represents less than 1% of the number of loans insured as of the start of the quarter and is 30% less than the number of notices received last quarter.

We are encouraged by the credit trends we are experiencing, including the low level of early payment defaults and believe they are good indicators of near-term credit performance. The estimated claim rate on new notices received in the second quarter of 2021 was approximately 7.5%, compared to approximately 7% in the second quarter of 2020.

The reserve for incurred but not reported or IBNR increased by $4 million to approximately $24 million compared to an increase of $30 million in the second quarter of 2020. The increase this quarter is primarily due to the recording of a small loss related to some lingering litigation associated with policy disputes from several years ago.

A review of loss reserves on previously received delinquent notices, determined that there was immaterial loss reserve development in the quarter compared to $10 million of unfavorable development in the second quarter of last year. Barring any material economic shocks, it appears that the second quarter of 2020 was the exception rather than the rule, regarding the credit losses related to the pandemic.

While we have seen cure activity from the large cohort of delinquency notices received in the second quarter of 2020, we have not yet seen enough evidence to make any reserve adjustments on these COVID-related delinquencies. Of the approximately 43,000 loans in our delinquency inventory at June 30, approximately 55% or 23,600 loans were reported to us to be in forbearance and we estimate that the substantial majority of those loans in forbearance will reach the end of their forbearance period in the second half of 2021.

The number of claims received in the quarter, remained very low and were down 35% from the same period last year, due to the various foreclosure and eviction moratoriums and primary paid claims in the quarter remained low at $11 million.

Since foreclosure and eviction moratoriums for GSE loans have been extended and the CFPB has introduced additional procedural safeguards, we expect claim payments to remain modest for the next few quarters.

Next, I wanted to spend a couple of minutes talking about our balance sheet and capital position and our approach to capital management. We continue to believe that our balanced approach to maintaining a strong capital position, including the use of forward commitment, quota share treaties by accessing the capital markets for excess of loss reinsurance via ILN transactions, provides the most flexibility to maximize the long-term value of both the writing company and the holding company.

As Tim mentioned, this value can be created by writing more primary mortgage insurance, pursuing new business opportunities, retiring debt, paying dividends or repurchasing stock.

Our goal is to maintain financial flexibility at both the holding company and the writing company. At the holding company, this means maintaining a target level of liquidity well in excess of our near-term needs. At the operating company, it means maintaining a robust level of access to PMIERs, significant enough to enable growth even in times of stress and to be well positioned for any changes to our operating environment. These target levels are dynamic and changes the operating environment changes.

At the end of the second quarter, we had approximately $772 million of holding company liquidity and a $2.3 billion access to the PMIERs minimum requirements at the writing company.

There were two transactions subsequent to quarter end that directly support our goal of having financial flexibility at both the holding company and writing company. First, we completed our fifth excess of loss reinsurance transaction executed through an ILN, the third such transaction in the last 10 months. This most recent transaction provides $400 million of loss protection and increases our PMIERs' excess. Second, we paid a $150 million dividend from MGIC to our holding company.

Taking a deeper dive on the holding company, we have said for some time that we have a target level of liquidity that is designed to maintain funds for multiple years of interest payments on outstanding debt, near-term maturing debt principal, strategic growth opportunities and our quarterly common stock dividend.

The holding company liquidity is above our current target levels, which supported the 33% increase in the common stock dividend. Additionally, in the third quarter we intend to resume our share repurchase program and we expect that we will fully use the remaining $291 million repurchase authorization prior to its expiration at year-end 2021.

Taking a closer look at the writing company. It is a $2.3 billion excess to the PMIERs requirement as of June 30, or 167% PMIERs sufficiency ratio, which was above our current target level and supported the $150 million dividend from MGIC to our holding company. Going forward, we will continue to assess MGIC's capital position and we'll continue discussions with the OCI about additional dividends to our holding company, as appropriate.

As Tim mentioned we feel we are well positioned to capitalize on the market opportunities that a robust housing market should make available to us. Given our strong market presence, a growing in-force book of business that is currently generating a low level of delinquencies, a comprehensive reinsurance program and the quality of the new business being written, we believe that our holding company and writing company capital management strategy will create long-term value for shareholders, while allowing us to continue to be a well-capitalized counterparty for our customers.

With that, let me turn it back to Tim.

[Tim Mattke, Chief Executive Officer]

Thanks, Nathan. Before moving to questions, let me address a few additional topics. The early indications from the Biden administration that it is going to focus its housing policy efforts on access to sustainable and affordable housing for closure and eviction mitigation for homeowners impacted by COVID-19 and ensuring a successful economic recovery, opposed to large-scale changes to the housing finance infrastructure.

Although, it's early in the 10 years of new FHFA acting Director Sandra Thompson, at this time we are not aware of any policy initiatives that will provide new challenges to our company or industry. I'd expect we will see a more coordinated effort from the various housing agencies of the U.S. government over the next several years.

We will continue to advocate for the increased use of private mortgage insurance in the housing finance industry, in order to reduce taxpayer exposure to housing while still maintaining a resilient housing finance system. Long term, I remain encouraged about the future role that our company and industry can play in housing finance and believe that other regulators and policymakers share a similar view.

The COVID-19 pandemic provided all housing finance participants with some options to credit enhancement for high LTV loans can be scarce or unavailable at various points of the economic cycle. However, our company and industry were organized solely to provide credit enhancement solutions to lenders, borrowers and the GSEs in all economic cycles. Not only does private mortgage insurance offer dedicated capital day in and day out to the housing industry, it offers many solutions and a great value proposition for lenders and consumers to overcome the number one barrier to homeownership the down payment. At MGIC, we are focused on providing critical support to the housing market, especially low and moderate income and first-time home buyers.

In summary, we are currently writing high levels of new insurance and are experiencing decreasing levels of delinquencies both newly reported and those already in our delinquency inventory. We have a book of business that has strong underlying credit characteristics, which is supported by a strong and dynamic balance sheet with a low debt-to-capital ratio, an investment portfolio of nearly $7 billion contractual premium flow and a robust reinsurance program. I am confident in our positioning in the market and we like the risk/reward equation that the current conditions offer. We have the right team in place to build off our solid foundation to continue to deliver competitive offerings and best-in-class service to our customers and generate strong returns for our shareholders.

With that, operator, let's take questions.

[Operator]

[Operator Instructions] Your first question is from Mark DeVries. Your line is open.

[Mark DeVries, Barclays]

Yeah. Thanks. I was hoping to drill down a little more on kind of the excess capital position. Nathan, thanks for all the color, it was helpful. But could you elaborate first on what expectation you have for kind of continued dividends up from the writing company? And then maybe help us quantify how to think about the excess liquidity at the holding company, just given kind of some of the maturities that you have dividend obligations and kind of what that leaves for potential buybacks?

[Tim Mattke, Chief Executive Officer]

Sure, Mark. It's Tim. I'll take the first part of the question on debt and capacity and let Nathan answer a little bit on the holding company. From a dividend standpoint, we're really excited to be able to turn that dividend stream back on from MGIC to the holding company. As you know once the pandemic started, we ceased those dividends felt it was the right time. We were happy that our regulator the OCI felt it was the right time. So I think the level of that is -- the $150 million is reflective of a period where we weren't dividending out. But we also view that we're going to have hopefully strong financial results and we'll continue discussions with the OCI about future dividends. But it's too early to say at what level and what the cadence of that might be.

[Nathan Colson, Chief Financial Officer]

Mark, it's Nathan. Just relative to the holding company I think we laid out kind of the list that we think of for what we'd like liquidity to cover. I think also felt comfortable that with the $150 million dividend coming up that we do expect to use the full remaining repurchase authorization. So I think -- clearly felt like we had a little bit above our target levels, but we haven't gotten too specific on exactly what those target levels are I think partly because we do view them as dynamic. We want to be able to react to the current market and current conditions as appropriate. So I think just leave you with we do feel like we had above target levels which supported the actions that we've taken and we'll continue to reassess that going forward.

[Mark DeVries, Barclays]

Okay. Got it. Just a few clarifying points. Tim, do you expect to ultimately get back to kind of a regular cadence of those dividends up from the writing company like you had kind of pre-COVID? And is -- does the $770 million of holdco liquidity that you mentioned Nathan does -- is that already include the $150 million?

[Nathan Colson, Chief Financial Officer]

Mark, this is Nathan. I'll take the last question there first. The $770 million was as of June 30. The $150 million dividend was paid subsequent so that there would be in addition to that something on a pro forma basis slightly above $900 million.

[Mark DeVries, Barclays]

Got it.

[Tim Mattke, Chief Executive Officer]

And Mark to your question about regular cadence. My hope would be we get back to regular cadence. I think what ultimately is most important is us to be able to have the dialogue to get out of the amount that we think we should get out of MGIC and the OCI is comfortable with. So I don't know if that means that we're back on a quarterly cadence right now, but that was how we were operating pre-COVID. And I guess right now and I hope what that expectation would be we would get back to that. But again, we will continue to have those conversations with our regulator.

[Mark DeVries, Barclays]

Okay. Great. Thank you.

[Tim Mattke, Chief Executive Officer]

Thanks.

[Operator]

Your next question is from Bose George. Your line is now open.

[Bose George, KBW]

Hey, guys. Good morning. Actually just one more on the capital. In terms of the access at the holdco to the extent that the next maturity is essentially refinanced I mean, then does that sort of increase the access at that point the way you guys look at it?

[Nathan Colson, Chief Financial Officer]

Bose, this is Nathan. I think right now the liquidity target would include the fact that we've got some debt maturing in the next couple of years. So if that wasn't the case then we would kind of reassess based on those conditions.

[Bose George, KBW]

Okay. Great. Thanks. And then actually just switching over to your default to claim. So that was 8% this quarter. And I guess that was on new notices versus 7% earlier. So, just curious about the drivers of that.

[Nathan Colson, Chief Financial Officer]

Yes. It's Nathan again. I think what -- in the prepared remarks, the new notice claim rate was approximately 7.5%. So that's up a little bit flat quarter-over-quarter, but up a little bit from the second quarter of last year. But the number of forbearance notices in the second quarter last year was off memory I think north of 80% whereas it's more normalized today. So really didn't view much change from our perspective in the new notice claim rate this quarter compared to where we've been trending over the last few quarters.

[Bose George, KBW]

Okay. Great. Thanks. Actually maybe just one more. In terms of the reduction in the premium margin that one basis point was a little over this quarter, could we see that cadence kind of continue for the next few quarters? And when should that bottom?

[Nathan Colson, Chief Financial Officer]

Yes, Nathan, again. I mean, I do think what we've said for some time as we do expect that to continue to trend down. I think the exact pace particularly of the net premium yield is more difficult to judge quarter-over-quarter due to reinsurance transactions and due to accelerated singles, but focusing on that in-force premium yield that has been coming down between one basis point and 1.5 basis point.

I do think -- I think that's a decent run rate for at least the next couple of quarters. But as you get out much beyond that it really starts to become dependent on a lot of other variables and factors. So where that bottoms out or if it I think that's probably a little difficult to say and really subject to a lot of things that haven't happened yet that will happen through the balance of 2021 and into 2022 and beyond.

[Bose George, KBW]

Okay. Great. Thanks.

[Operator]

Your next question is from Geoffrey Dunn. Your line is now open.

[Geoffrey Dunn, Dowling & Partners]

Thanks. I wanted to revisit capital. Entering COVID, your opco dividend strategy had evolved to I think it was $70 million a quarter supplemented with a special. Would that still be the intention going forward? Or are you thinking about trying to increase that quarterly amount to something much more substantial or possibly to shift them to annual specialists?

[Tim Mattke, Chief Executive Officer]

Geoff, it's Tim. It's a good question. I would tell you we continue to dialogue with the OCI in that. Our preference had been the quarterlies, because it's matched up to dividend and interest cash flow at the holding company. So in response to the question earlier that's why I think I hope to get back there. But ultimately I think that combination along with the special, I think that worked well for us.

And my expectation is that we get back there based upon sort of what I know at this point. But I'm more focused I think on the level that we can get out on an annual basis. And so that's why, I guess, I'm hedging a little bit is just I -- until we see that we're back on a quarterly cadence, I don't want to I guess over-promise that quarterly cadence versus continue that dialogue with the OCI.

[Geoffrey Dunn, Dowling & Partners]

Okay. And then as you consider dividends, I mean, I think a lot of people think about it as opportunity, but obviously the excess capital buildup is an ROE drag. So -- and I mean, I don't know no matter what measure you look at it, the industry has way too much capital. Are there any surplus constraints from management's or Board's perspective? Is there a certain level that you'd prefer to hold since it seems like some companies can bring that down as low as just a couple of hundred million?

[Nathan Colson, Chief Financial Officer]

Geoff, it's Nathan. I'd say, our primary operating company MGIC has about $1.4 billion in surplus maybe $1.3 billion. So I don't think we would be at this point particularly close to any floor level. So if that is something that we consider I don't think it would be in the near-term. But I think we've observed the same thing that the regulators have gotten comfortable with companies running with relatively little surplus, but still a lot of capital when you consider contingency reserves.

[Geoffrey Dunn, Dowling & Partners]

Okay. And then last thing is I think you have two pieces of debt in your FHLB notes and then the senior notes coming due in 2023. Is a mid to upper teens debt-to-cap ratio still appropriate in the industry from your perspective? Or is there a desire to run lower than that considering the leverage that ILNs have added?

[Nathan Colson, Chief Financial Officer]

It's Nathan. I think it's a really good question. I mean, the Federal Home Loan Bank debt for us initially was used to provide liquidity for the operating company to repurchase the outstanding junior converts that the holding company had issued.

So I don't think we view that as kind of permanent capital. I've looked at repaying it but don't like the economics of doing that right now. So that's going to I think just kind of run off with really no thought at this point around refinancing that.

In terms of the long-term debt-to-capital ratio I think we're pretty comfortable with where we are today. I don't feel like we need to kind of delever. But at the same time I think we'd be comfortable with the longer-term debt-to-capital ratio that's below where we are today.

And I think Moody's, for instance, has put out there that one of the factors potentially leading to an upgrade will be a debt-to-capital in the 15% range. So I think something in the mid-teens would also be comfortable for us over time.

[Geoffrey Dunn, Dowling & Partners]

Okay. Thank you.

[Operator]

Your next question is from Cullen Johnson. Your line is now open.

[Unidentified Analyst]

Thanks. Good morning. Thanks for taking my question. I know, we've talked a good bit about capital here but just kind of looking at that August excess of loss deal. Is it fair to think of the recent dividend increase and the share repurchase resumption almost as a byproduct of the capital that was freed up there? Or are those decisions kind of already made before that reinsurance was contemplated?

[Nathan Colson, Chief Financial Officer]

Yes. Good question. It's Nathan. I think that's certainly a piece of it. I mean the ILN that we did in August was like I said in the prepared remarks the third transaction in the last 10 months for us. It's certainly continuing to execute on our risk distribution strategy.

So I don't -- I wouldn't tie a one for one. I think it's holistic of the capital that we've organically generated plus the reinsurance treaties that we've done plus and most importantly just how the operating results have improved post the second quarter of last year. But I wouldn't probably make -- draw too tight of a link I guess between the August ILN issuance and these transactions.

[Unidentified Analyst]

Got it. That's helpful. That’s helpful. And then just kind of shifting gears a little bit to home price appreciation. So kind of given the rate of price appreciation we've seen has put borrowers in a position of positive home equity. That should reduce the incentive to kind of go to foreclosure for borrowers that are in the situation. Are you seeing that play out in the data that you have available to you?

[Nathan Colson, Chief Financial Officer]

I think -- this is Nathan again, I mean at this point it's really difficult with the foreclosure moratoriums and the like. We're just not seeing a lot of progress through. But certainly broad-based home price appreciation is a positive for claim incidents and potentially a positive for severity as well. But like we've said over time even in rising home price markets we still pay claims.

We're dealing with averages there and the loans that go to claim aren't average loans. So I do think that it's likely to be a benefit. We've certainly seen that in the, kind of, paid-to-exposure ratios that we put out being below 100 in the last few quarters. I think that's reflective of the current environment. But I still think even in rising home price environments we still expect that we're going to pay claims.

[Unidentified Analyst]

Okay. So we might be able to see a little bit more color on that as does foreclosure moratoria run out. Thank you. Those were my questions.

[Nathan Colson, Chief Financial Officer]

Thanks.

[Operator]

Your next question is from Mihir Bhatia. Your line is now open.

[Mihir Bhatia, Bank of America]

Hi, good morning and thank you for taking my questions. A lot of the capital return questions have been asked already. So, maybe I'll just ask a quick one on -- just on the reserves and delinquencies. Your results for delinquency is up to about 21,400-ish. That's about the level it was in 2018, 2019. So, what I'm -- I guess, my question is how should we how are you thinking about it? Or how should we be thinking about it trending from here?

Just trying to understand given the strong home price appreciation the fact that so many of your delinquencies are still forbearance-related. I'm a little surprised that it would stay that high. And maybe how should we be thinking about that from here like as the situation develops?

[Nathan Colson, Chief Financial Officer]

Sure, it's Nathan. I think it's largely a function of the fact that so few delinquent loans are being resolved via claim at this point. So, until we're comfortable making changes to our initial estimates the kind of way the math works is that the loans that cure they don't really change your estimates, so then the average reserve for the ones that remain continues to go up.

And with forbearance periods being extended to 18 months and with foreclosure moratoria it's not clear whether there's going to be a lot of kind of paid resolution through the balance of this year, maybe not even into early next year. So, I don't think that that is it's not really a change in reserve philosophy or methodology or a belief that those loans are now going to be worse than they were a quarter or two ago. Just the fact that there we're not seeing the resolution so those that remain we've got a lot more in the 12-month kind of delinquent bucket than we had at that time.

So, I think it's largely just kind of an artifact of the current situation and the fact that there's really nothing being resolved right now other than cures. So until we're ready to comfortable and have seen enough data to feel like we want to adjust our initial estimates, I think that same process will continue to play out.

[Mike Zimmerman, Senior Vice President, Investor Relations]

Yes, Mihir, it's Mike. Just to add to that too is the all the things they've said about agent is true but the vintage years too because of the forbearance right there are a lot of newer loans like the 2018, 2019 books those have higher balances than 2013, 2014. So, it's all what they've said plus you have larger loans as it reflects.

[Mihir Bhatia, Bank of America]

Got it. Okay. No, that is very helpful. Thank you. And then just one question more for me on pricing. I just wanted to -- I understand it's difficult to predict the in-force yield if you will but your comments about them trending lower in general. I appreciate that. But maybe talk about just the pricing environment today that you're seeing in the market versus like say two quarters ago or a quarter ago even where it felt like there was a lot more.

Talk about competitive intensity or certain -- some price competition taking a little bit more I guess higher level of price competition taking place. What are you seeing in the market today? Thank you.

[Tim Mattke, Chief Executive Officer]

Yes, it's Tim. Again, we don't like to talk too specific on pricing. I think I look back over the last 12 to 18 months and I think we've talked about it before is onto the pandemic higher risk associated -- perceived risk associated with the loans that we are insuring from our perspective at least. Again I assume others in the industry. So, we saw price increases.

I think that's normalized come down over the period of time as the economies continue to be I guess robust and housing in particular has been not only resilient but actually been really strong. And so I think you saw sort of pricing normalize.

And as we talked I think last quarter I think maybe from a competitive standpoint, we see what we see as far as we're collecting our pricing we don't necessarily know exactly how other people are viewing it. But I think it's safe to assume based upon I think what you can observe and what we've heard other people say that people feel really good with this current market -- current housing market current economy and pricing is reflective of that, but still generating strong returns and we still feel really good about the risk/return equation.

[Mihir Bhatia, Bank of America]

Okay. Thank you.

[Tim Mattke, Chief Executive Officer]

Sure.

[Operator]

And no further questions. I would now like to turn the call back to Mr. Mike Zimmerman. Sir, please go ahead.

[Tim Mattke, Chief Executive Officer]

Sure. This is Tim. I just wanted to thank everyone for their interest in MGIC and we will talk soon. Thanks.

[Operator]

And this concludes today's conference call. Thank you for participating. You may now disconnect.