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Good day, ladies and gentlemen, and thank you for standing by. Welcome to the MGIC Investment Corporation Fourth Quarter 2025 earnings call. At this time, all lines have been placed on mute to prevent any background noise. At the end of today's presentation, we will have a question and answer session. Anyone who requires to ask a question at this time, please press 11 on your telephone keypad. At this time, I would like to turn the conference over to Dianna Higgins, Head of Investor Relations. Please go ahead. Thank you, Howard.

Good morning, and welcome, everyone. Thank you for your interest in MGIC Investment Corporation. Joining me on today's call to discuss our results for the fourth quarter are Timothy James Mattke, Chief Executive Officer, and Nathaniel Howe Colson, Chief Financial Officer and Chief Risk Officer. Our press release, which contains MGIC Investment Corporation's fourth quarter financial results, was issued yesterday and is available on our website at mtg.mgic.com under Newsroom. It includes information about our quarterly results that we will reference during today's call as well as a reconciliation of non-GAAP financial measures to their most comparable GAAP measures. In addition, we posted a quarterly supplement on our website that provides details about our primary risk in force and other information you may find valuable. As a reminder, from time to time, we may post updates to our underwriting guidelines, additional presentations, or corrections to past materials on our website. Before we get started today, I want to remind everyone that during today's call, we may make forward-looking statements regarding our expectations for the future. Actual results could differ materially from those expressed in these forward-looking statements. Additional information about the factors that could cause actual results to differ materially from those discussed in today's call is included in our 8-Ks filed yesterday. If we make any forward-looking statements, we are not undertaking an obligation to update those statements in the future in light of subsequent events. No one should rely on the fact that such guidance or forward-looking statements are current at any time other than the time of this call or the issuance of our 8-K. With that, I now have the pleasure of turning the call over to Timothy James Mattke. Thank you, Dianna, and good morning, everyone.

We delivered another quarter of solid financial results, closing 2025 strong, and entering the new year from a position of strength. This performance is a continuation of the sustained momentum we have built over the past several years. Our performance stems from being grounded in decades of experience across a wide range of market cycles, disciplined risk management, and a thoughtful, measured approach to the market. We pair our expertise with a customer-centric mindset, continually evolving to meet the changing needs of our customers and the broader market. Turning to a few financial highlights, in the quarter, we earned net income of $169 million, producing an annualized 13% return on equity. For the full year, we earned net income of $738 million, and a full-year return on equity was 14.3%. Our strong operating performance and robust balance sheet enabled us to grow book value per share to $23.47, 13% higher year over year. As I mentioned on last quarter's call, we are proud to have achieved a significant milestone in our company's history and the industry first during the year, surpassing $300 billion of insurance in force. We continue to grow insurance in force in the fourth quarter, ending the year with more than $303 billion, up 3% from a year ago. Annual persistency remained elevated and stable throughout 2025, ending the quarter at 85%, in line with our expectations at the start of the year. We wrote $17 billion of high-quality new insurance in the fourth quarter and $60 billion for the full year, an increase of 8% from the prior year. Consensus mortgage origination forecasts project the size of the MI market in 2026 will be relatively similar to 2025, with mortgage rates remaining elevated. Overall, we expect insurance in force to remain relatively flat in 2026. If mortgage rates were to decrease more in 2026 than currently predicted, we expect the size of the MI market would benefit due to increased refinance volume, but growth in insurance in force would be offset by lower persistency. Our focus remains on building and maintaining a strong, well-diversified insurance portfolio. The credit quality of our insurance portfolio remains solid, with an average credit score at origination of 748. Today, we have not seen a material change in the credit performance of our portfolio, and early payment defaults remain low, which we believe is a good indicator of near-term credit trends. As discussed throughout the year, financial strength and are the cornerstones of our capital management strategy, positioning us to perform well across a range of economic environments. As part of our strategy, we regularly evaluate capital levels of both the operating company and holding company, taking into account current and potential future environments to position ourselves for success. This approach has consistently served our stakeholders well. As part of this, we continue to bolster our reinsurance program through the use of forward commitment quota share agreements and excess of loss agreements executed in either the traditional reinsurance or capital markets. In addition to reducing loss volatility in stress scenarios, these agreements provide capital diversification and flexibility at attractive costs. We remained active in the reinsurance market in the fourth quarter and in January. In the fourth quarter, as previously announced, we further strengthened our reinsurance program with a $250 million excess of loss transaction covering our 2021 NIW and a 40% quota share transaction that covers most of our 2027 NIW. We also amended the terms of our quota share treaties covering our 2022 NIW, with most participants from the existing reinsurance panel, reducing the ongoing cost by approximately 40% beginning in 2026. In addition, in January, we completed our eighth insurance-linked note transaction, which provides $324 million of loss protection and covers certain policies written between January 2022 and March 2025. These reinsurance activities are aligned with our long-term strategy and reflect our consistent, disciplined approach to managing risk and capital. At the end of the fourth quarter, our reinsurance program reduced our PMIERs required by $2.8 billion, or approximately 47%. With that, let me turn it over to Nathaniel Howe Colson to provide more details on our financial results and capital management activities for the quarter. Thanks, Tim, and good morning.

As Tim mentioned, we had another quarter of solid financial results. We earned net income of 75¢ per diluted share, compared to 72¢ during the fourth quarter last year. For the full year, we earned net income of $3.14 per diluted share compared to $2.89 per diluted share last year. Our estimation of ultimate losses on prior delinquencies resulted in $31 million of favorable loss reserve development in the quarter. The favorable development was primarily driven by delinquency notices we received in 2024 and in 2025, as cure rates on recent new notices continue to exceed our expectations. New delinquency notices received in the quarter, we continue to apply the initial claim rate assumption of 7.5% consistent with recent periods. Our account-based delinquency rate increased three basis points from the prior year and 11 basis points in the quarter. The sequential increase was in line with our expectations and reflects normal seasonal patterns as well as the continued aging of our 2021 and 2022 book years as we have discussed on prior calls. The three basis point year-over-year increase was the slowest rate of increase since 2024, and we believe reflects the continued normalization of credit conditions that we have discussed throughout the year. Turning to our revenue, the in-force premium yield was 38 basis points in the quarter and remained relatively flat during the year, consistent with what we expected at the start of the year. Given expectations of a similar MI market to 2025, we expect the in-force premium yield to remain near 38 basis points again in 2026. Investment income totaled $62 million in the fourth quarter and again contributed meaningfully to revenue. The book yield on our investment portfolio was 4% at the end of the quarter. Investment income remained relatively flat sequentially and year over year, as both the book yield and the size of the investment portfolio have also remained relatively flat. During the quarter, reinvestment rates on the fixed income portfolio continued to exceed our book yield and remain relatively flat for the year. The unrealized loss position on our portfolio narrowed again this quarter by $16 million, primarily driven by lower interest rates. Underwriting and other expenses in the quarter were $46 million, down from $49 million in the fourth quarter last year. For the full year, expenses were $201 million, down $17 million from 2024 and within the $195 to $205 million range we shared throughout the year. We remain committed to disciplined expense management and ongoing operational efficiency across the organization. For 2026, we expect operating expenses to decline further to a range of $190 to $200 million due primarily to higher expected ceding commissions as we have recently renegotiated several ceding quota share reinsurance treaties instead of canceling those treaties. Turning to our capital management activities, consistent with our approach over the past several years, we prioritize prudent insurance in force growth over capital return. Over the past several years, market conditions have supported the growth of our insurance in force. Against that backdrop, our capital return activity reflects our robust capital position, continued strong credit performance, and financial results, and share price levels that we believe are attractive to generate long-term value for our shareholders. In the fourth quarter, we paid a quarterly common stock dividend of $33 million and repurchased 6.8 million shares of common stock for $189 million. For the full year, we returned $915 million to our shareholders through a combination of share repurchases and dividends, and reduced shares outstanding by 12%. This represents a 124% payout ratio of the year's net income, and our quarterly dividend increased by 15% in the third quarter, marking five consecutive years of dividend growth. In January, we repurchased an additional 2.7 million shares of common stock for a total of $73 million. In addition, in January, as previously announced, the board approved the quarterly common stock dividend of $0.15 per share payable on March 6. All of these actions were taken while continuing to strengthen our balance sheet and enhance flexibility during the year. We paid $800 million in dividends from MGIC to the holding company during the year, ending the year with $1 billion of liquidity at the holding company and an excess to PMIERs of $2.5 billion at the operating company. With that, let me turn it back over to Timothy James Mattke.

Thanks, Nathan. As the founder of modern private mortgage insurance nearly seventy years ago, we strive to be the most trusted partner in the MI industry. We are proud of the critical role private MI plays in the housing finance system. We look forward to continuing to work with industry stakeholders, including the FHFA and the GSEs, to responsibly serve low down payment borrowers, expand the use of private MI, protect the taxpayers from mortgage credit risk, and help shape the future of the housing finance system. With that said, housing affordability remains a challenge for many prospective homebuyers. We continue to actively participate in industry discussions and support responsible policy changes that improve affordability. Passage of the working families tax cut restored the tax deductibility of MI premiums, providing meaningful tax relief to homeowners without increasing risk to the housing finance system. In addition, the cost of private mortgage insurance premiums represents a temporary expense, unlike other ongoing homeownership costs such as homeowners insurance and property taxes, which have risen significantly. Private mortgage insurance plays an important role in enabling low down payment borrowers to enter the market and achieve the American dream of homeownership sooner. In closing, we had a strong year, successfully executing our business strategies and returning meaningful capital to our shareholders. I am confident in our talented team, our position in the market, as well as our ability to continue executing and delivering on our business strategies in 2026 and beyond to create long-term value for all of our stakeholders. With that, Howard, let's take questions.

At this time, please press 11 on your telephone keypad. If your question has been answered or you wish to remove yourself from the queue, simply press 11 again. Again, if you have a question or comment at this time, please press 11 on your telephone keypad. The first question or comment comes from the line of Bose Thomas George from KBW. Mr. George, your line is open.

Hey, guys. Good morning. Actually, first, I wanted to ask about any price competition or changes you are seeing in the industry. I mean, based on your comments, it sounds like, you know, premiums are very stable, but just wanted to confirm that.

Yeah. I think, Bose, I mean, I think you know, we do not like to comment too much on industry pricing generally, but I think from our perspective, you know, we were able to sort of find the value where we wanted it this quarter, similar to what we have been seeing for the majority of the year. Without having, you know, major sort of adjustments in our premium, you know, in the quarter. So I think we feel good about that. Again, we focus on the returns ultimately and what we can get but felt pretty good stability there, you know, back looking back last quarter.

Okay. Great. Thanks. And then switching over to sort of stuff, you know, the market seems quite, you know, worked up about a potential reduction in FHA premiums. Have you seen anything from the FHA itself or from, you know, from the administration that suggests that that is a possibility?

You know, I always view when it comes to affordability and sort of looking at different levers, I always view it as a possibility. I do not get the sense that it is viewed as any more possible or any more work being done specifically on it right now than sort of making sure they understand sort of the different levers that can be pulled. So again, it is really tough to sort of try to put odds on it other than I would say that I do not get the sense that there is any, you know, increasing sort of discussion of people we have talked with about it other than I think whenever you look at affordability, you know that certain constituencies will advocate for reducing the FHA premium. And that always creates external pressure, but have not seen anything just to believe that that is imminent, but that can change quickly in this world. Right?

Okay. Great. Thanks.

Thank you.

Our next question or comment comes from the line of Terry Ma from Barclays. Mr. Ma, your line is open.

Hey. Yes. Sorry. I was muted. Good morning. Thank you. Hey. I was interested to see if you could provide kind of any color on kind of credit trends that you are seeing kind of by region or state.

Terry, it is Nathan. I will take that one. You know, we do look at the mix of new delinquencies that we are seeing on a monthly basis and really have not seen much in the way of movement on a geographic basis, whether it be state or even at the market level. You know, I think when we look at the mix of new notices from, you know, the first quarter, the second quarter, the third quarter compared to the fourth. You know, not seeing states that are really standing out one way or the other. I think there is always some noise, especially with the relatively low level of new notices that we have. You know, some of the jurisdictions have relatively small numbers, so it can be a little bit noisier. But as a kind of percent of the total, I am really not seeing areas that are standing out or areas of concern for us right now.

Got it. That is helpful. And then on the reserve release, Nicole, I appreciate the color and kind of makeup. Can you maybe just kind of remind us how that compares to the makeup or the drivers that are released? That you had in the last, you know, few quarters. I know not a great way to look at it, but at least the magnitude of the release was noticeably lower than what you saw last few quarters.

Yeah. Terry, it is Nathan again. I think the way that we have approached reserving and the way that then the reserve releases have kind of mechanically worked is unchanged. You know, we are always comparing our initial estimates to, you know, what we now think is our best estimate. You know, in our business, cures come earlier than claims. So early cures do not give you as much new information about ultimate losses. So, you know, from what we are seeing, a couple quarters ago, we would have seen reserve development coming out of notices that we had received two, three, four, five quarters before, and it kind of keeps moving forward as time advances. So I would say, you know, the quarters where development is coming from are different, but mostly because, you know, we are just further in time. So we had development say, on the notices from 2025, we would not have had that, you know, say, in Q2. But it would have been from the '24. You know, those notices that had been aged for two or three quarters. So and that is not a kind of a rule or anything for us. It is really looking at how many are curing, what is the monthly pace and quarterly pace at which they are curing? How closely are they following previously identified trends in cure activity? And really, where do we think it will ultimately play out and continue to be re-estimating down new notice quarters from our initial estimates of 7.5% you know, down into the lower single digits.

Got it. That is helpful. Thank you.

Thank you.

Thank you. Our next question or comment comes from the line of Douglas Michael Harter from UBS. Mr. Harter, your line is now open.

Thanks. I guess along those lines of the last question, can you just talk about the composition of the NODs kind of what vintages those are coming from? And you know, kind of as we get to the newer vintages with less HPA, how you think that might impact yours?

Yeah, Doug. It is Nathan. I think on the cure side, you know, really have not seen a lot of divergence in cure activity based on vintage. I think, you know, perhaps the 2022 vintage is at the lower end of the range, as we would look at cure rates by vintage for delinquent loans, but still all within a, I would say, a pretty tight band, and much better than pre-COVID level. You know, the long-term cure rates are really what are driving the ultimate reduction and our ultimate loss expectations. So yeah, I think not seeing much on the cure rate side. On the delinquency emergence, you know, we have got a couple of tables and charts in the supplement. You know, one of them does look at delinquency rates over time by vintage. And you can see, you know, 2022 is running modestly higher than '21. Or twenty or even twenty nineteen, but the recent vintages are all tracking very close to that or inside of that. So again, I think this is all consistent in our mind with the normalization in credit conditions coming off of, you know, kind of early post-COVID conditions that just led to, you know, very, very low losses for those vintages.

Right. Appreciate that, Adam. Thank you.

Our next question or comment comes from the line of Geoffrey Dunn from Compass. Mr. Dunn, your line is open.

Hey. How is your congrats on you. Execution and especially on the expense management side. When I look forward to next year, obviously, you know, you put out the $190 to $200 range. For underwriting and operating expenses. I would be curious, you know, especially looking at this environment, you know, are there any other levers that you could pull to kind of improve, you know, returns on capital at least in the near term? The environment is relatively tough when insurance enforces, you know, is barely growing or expected to be roughly flat. I am curious what are the levers you might have, you know, that you can pull to, you know, push some big rental margin at this point.

Yeah. It is Nathan. I will get started on the I think the biggest thing that we have done this year really, in anticipation of a normalization in credit conditions and the movement away from, you know, what has been close to zero losses for the last couple of years, is really getting the reinsurance program, you know, really bolstered with really attractive costs on our in-force book. But increasingly covering our future new business. You know, 2026 and 2027 NIW is now covered. And you know, when you think about return on capital, we often think about that as return on PMIERs capital. And, you know, the reinsurance at the cost that we are able to procure, it does provide us better returns on equity than we earn on a return on capital basis. And that is why I think capital management for us is so important, and it is not just the capital return side of it. It is also how we are constructing, you know, our capital balance sheet for our regulatory capital measures, our risk-based capital measures, rating agencies, and the like, and increasingly, you know, that has taken on, you know, an even heavier reinsurance lien partly because of the attractiveness of that market. And the tail risk protection that it provides. But, you know, partly because we do think that that is the best way to earn continued continue to earn kind of good risk-adjusted returns on equity.

That is very helpful. And then, yeah, maybe just partially addressed it. You know, obviously, during, you know, during the pickup in refinancing activity and kind of the expected continuation of that, you know, it is somewhat disproportionately impacting, you know, or should disproportionately impact your high WAC coupons that you have out there. I am curious, is there any is there a big divergence in the premium rates between you know, some of your lower WAC? Insurance in force versus you know, some of the more recent vintages that seem to be they are being more much more exposed to, you know, refinance activity at the moment. And, you know, should that impact your average premium rate? Throughout the year?

Yeah. It is an interesting question. I do not premium rates on average have been relatively flat for the last, you know, five or six years. You know? And you can see that in our in-force premium yields. The really low coupon books that we wrote in 2020 and 2021 had the much lower credit risk at origination characteristics, so all else equal, they would have had lower premium rates. There is a lot of refinance activity in those books. Whereas the more recent higher coupon books have been purchase dominated, you know, higher LTV. Still really good credit profile, especially from a credit score perspective, but I do not think that I think you know, it is less about maybe the vintage effect and more if we are already insuring a loan, if that refis into something that has a lower capital charge and lower kind of at origination credit characteristics, you know, all will get lower premium for that loan in a risk-based pricing market.

That is very helpful. I appreciate that, and I will jump back in queue.

Thank you.

Thank you. Our next question or comment comes from the line of Mihir Bhatia from Bank of America. Your line is now open.

Good morning. Thank you for taking my questions. The first one I wanted to ask was just about in-force premium yield. It declined a touch this quarter after being steady for most of '25. What drove that?

Yeah. Mihir, it is Nathan. You know, it was down a couple tenths of a basis point, and I think you know, that is just I think for us, you know, within the margin of flat, it does fluctuate a little bit. You know, we wrote more business in Q4 than we would have otherwise anticipated due to refinance activities that increases the ending in force, but it does not add to premium because we do not collect premium in the, you know, often in the first month. It is really, you know, starts in the second month. So I think you are dealing with, you know, some situations like that versus there being, you know, any substantive change in the mix of the in-force or the, you know, premium dollars on a direct basis were up. So I think it probably has more to do with the insurance in force dollars going up at the end such that the average is a little bit higher in the yield lower. But, again, those things often it will normalize over more than a quarter.

Got it. And then the I guess, related, but in your prepared remarks, you talked about insurance in force staying flat even if the market ends up being a little bigger because you think you will have a maybe a giveback, if you will, on persistency. That did not happen this quarter. So I guess, just talk a little bit about that. Why do you think it would happen at least early on? In the early stages of, you know, a rate cut potentially or a larger market, like, just given that did not happen in the fourth quarter where you wrote more NIW, but persistency stayed pretty high?

Yeah. I think, Mihir, it is Tim. I think it is all within sort of a range of outcomes. I think what we want to make sure that we are clear about is that when refi activity normally, it is normally going to be time. Refi that happens from MI into MI, and that there is going to be downward pressure on persistency. And so it just if there is more NIW volume, it does not just in order to sort of a total increase in insurance in force. Yeah, we did have a slight increase this quarter. Good call with an increase in sort of refi activity, pretty substantial increase for refi activity. There is a very, I would say, marginal sort of increase in our insurance in force, and so I think just trying to make sure they temper the expectations appropriate that even if interest rates fall and the majority of the pickup in volume is from refi activity, that that has downward pressure on persistency.

Got it. And then maybe just I will just wrap with this one. Just in terms of credit trends from here, anything we should be keeping in mind as we think about default rate we look at twenty-six and twenty-seven? Just from an even from a vintage size perspective, are we through the peak years for the last vintages? Does vintage size maybe become a bit of a good guy for DQ rate from here given persistency is staying elevated? Just any thoughts there on this default rate? Thanks.

Yeah. Mihir, it is Nathan. I think that is possible. You know, our expectations now are for a pretty similarly sized market. And with, you know, home price appreciation being relatively modest, the dollar growth that we have enjoyed in certain years, even if the units were not growing as much. We do not think will be as strong. So it does feel like we are off of the lows, though, in terms of the new business that we wrote, say, in '23 or '24. And it also feels like there is maybe more upside risk to NIW than downside at this point given the refi volume we saw when rates, you know, went directionally lower but not, you know, that much lower just into the low sixes generated a lot of refi activity. So that could become that could definitely become something that is a benefit to the in-force delinquency rate. But I think as we are seeing it today, you know, the next couple of vintages are maybe modestly higher. So any impact like that would be relatively modest.

Okay. Thank you for taking my questions.

Thank you. I am showing no additional questions in the queue at this time. I am sorry. We do have a follow-up question from Mr. Bose Thomas George from KBW. Mr. George, your line is open.

Hey, guys. Thanks for the follow-up. Actually, for modeling the ceded premium number going forward, like, what is a good run rate for that? Just the impact on the premium.

I think many of the lines receive their premium, and we have this in our earnings release in the supplement. I think the challenging one to model is the profit commission on the quota share deals because as we have higher losses, we are seeding those losses to the quota share deals, but then earning less profit commission. So the answer to that question is quite a bit dependent on your expectations around future losses. And that is something that we have not given guidance on, and do not intend to going forward just because of the nature of our business and the potential variability there. But if it would be helpful to work through the mechanics of the profit commission, happy to follow-up offline too.

Okay. And just to understand, so the increase in the ceded premiums this quarter was a reflection of that was a chain reflection of a change in the profit commission? Is that right?

That is largely the case. You know, the profit commission was down $4 million sequentially. And that is really because we seeded additional losses under the quota share agreement. You know, from a net cost perspective, it does not have an impact. We are getting it back on the loss line. Okay. But it does impact the premium line. So and we do have the profit commission broken out separately. For each quarter, so you can see that. But it was down, like I said, about $4 million in the quarter.

Okay. Okay. Great. Thanks.

Thank you. I am showing no additional questions in the queue at this time. I would like to turn the conference back over to management for any closing remarks.

Thank you, Howard. I want to thank everyone for your interest in MGIC Investment Corporation. We will be participating in the UBS and BofA financial services conferences next week. I look forward to talking to all of you in the near future. Have a great rest of your week.