Chris Curran - IR Mark Casale - CEO Larry McAlee - CFO.

Bose George - KBW Mark DeVries - Barclays Doug Harter - Credit Suisse Jack Micenko - SIG Vic Agarwal - Wells Fargo Mackenzie Aron - Zelman & Associates Rick Shane - JPMorgan Mihir Bhatia - Bank of America.

Good morning. My name is Kelly, and I will be your conference operator today. At this time, I would like to welcome everyone to the Essent Group Limited Fourth Quarter 2016 Conference Call. All participants are in a listen-only mode. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Thank you.

I’ll now turn the call over to Chris Curran, Senior Vice President of Investor Relations. Mr. Curran, you may begin your conference..

Thank you, Kelly. Good morning, everyone, and welcome to our call. Joining me today are Mark Casale, Chairman and CEO; and Larry McAlee, Chief Financial Officer.

Our press release, which contains Essent's financial results for the fourth quarter of 2016 was issued earlier today and is available on our Web site at essentgroup.com in the Investor section. Our press release also includes non-GAAP financial measures that may be discussed during today's call.

The complete description of these measures and the reconciliations to GAAP may be found in an Exhibit L in our press releases. Prior to getting started, I would like to remind participants that today's discussions are being recorded and will include the use of forward-looking statements.

These statements are based on current expectations, estimates, projections, and assumptions that are subject to risks and uncertainties, which may cause actual results to differ materially.

For a discussion of these risks, please review the cautionary language regarding forward-looking statements in today's press release, the risk factors included in our Form 10-K filed with the SEC on February 29, 2016, and any other reports and registration statements filed with the SEC, which are also available on our Web site.

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

Thanks Chris. Good morning everyone and thank you for joining us today. I am pleased to report that Essent had a very successful 2016 as well as another quarter of strong financial performance.

In fact, our fourth quarter results represent our 17th consecutive quarter of profitable, portfolio growth, strong credit performance and a leverageable expense base continue to drive our earnings growth and generates strong return for our shareholders.

As we have stated before Essent's long term goal is simple, and that is to build a high credit quality and profitable mortgage insurance portfolio. We remained optimistic about our business heading into 2017 as the underlying fundamentals of housing are positive and the real estate cycle remains in extension mode.

Strong demographics such as the millennial entering their peak buying years and demand outpacing supply in many markets continued to drive purchase mortgage demand. Given these factors along with builders increasing supply for first time home buyers, we believe that housing will continue to be strong for the next several years.

Additionally, the environment for our industry remains positive and we are estimating the industry NIW in 2017 will be comparable to the robust levels in 2016. Now, let me touch on our results.

For the full year 2016, we increased net income 41% to $223 million from a $157 million in 2015, while also generating an 18% return on average equity for the full year. On a per diluted share basis in 2016, we earned $2.41 compared to $1.72 in 2015.

Our increase in net income continues to be driven by the increase in our insurance and force which grew 28% to $83 billion as of yearend compared to $65 billion at the end of 2015. Additionally, our combined ratio declined to 34.5% in 2016 as a result of further expense leverage and strong credit performance.

As of yearend, our insurance portfolio had a weighted average FICO of 749 and a default ratio of 47 basis points. Our balance sheet remains strong with $1.9 billion of assets and $1.3 billion of equity at yearend. Also, we grew adjusted book value per share 21% to $14.49 compared to $12.01 at the end of 2015.

As a remainder, senior management's long term incentive compensation is driven by annual growth rates in book value per share. We believe that book value per share growth is a key metric in demonstrating value to our shareholders.

In Bermuda, we remain pleased with Essent Re's growth as it continues to reinsure Essent Guaranty through the affiliate quota share and participating in GSE risk share. Essent Re’s growth during 2016 was stronger than expected, primarily as a result of strong NIW levels in the core business.

To support this growth we drew an additional $50 million under our $200 million credit facility during the fourth quarter and contributed this amount to Essent Re.

As of yearend 2016, we remain comfortable to our capital position which includes approximately $50 million of cash and investments at HoldCo and $100 million of capacity under the credit facility. Turning our attention to Washington, we continue to monitor activity that may have implications on housing finance and our business.

Early indications are trending in a direction of less government support versus more as evidenced by the recent reversal of the FHA price decrease. We continue to believe that our industry can be further leveraged within the housing finance system where more product capital can be deployed to support housing while also lowering tax payer risk.

Now let me turn the call over to Larry..

Thanks Mark and good morning everyone. I’ll now discuss the results for the quarter in more detail. For the fourth quarter, we reported net income was $62.7 million or $0.68 per diluted share. Net income for the quarter is up 5% over the third quarter of $59.7 million and 41% over the fourth quarter a year ago or $44.5 million.

Note that our third quarter results included a favorable valuation adjustment of $2 million or approximately $0.02 per diluted share associated with the amendment, of certain GSE risk share reinsurance contracts that resulted in the change from derivative to insurance accounting.

Earned premium for the fourth quarter was $170 million, an increase from $111 million or 5% over the third quarter, and an increase from $89 million or 31% over the fourth quarter of 2015.

The average premium rate for the fourth quarter was 56 basis points, down slightly compared to 58 basis points for the third quarter and relatively flat compared to 55 basis points for the fourth quarter a year ago.

We continue to be pleased with the credit performance of our insured portfolio ending the quarter with the default ratio of 47 basis points. Our provision for the quarter was $3.9 million compared to $5 million for the third quarter and $4.2 million for the fourth quarter a year ago.

The reduction in our provision this quarter compared to last quarter is primarily driven by an improvement in our reserve factors on our default portfolio, as a result of higher cure rates and lower claims severities.

Other underwriting and operating expenses were $35.2 million for the fourth quarter, and our expense ratio was 29.8%, compared to 29.6% in the third quarter and 33.1% for the fourth quarter of 2015.

For the full year 2017, we estimate that total underwriting and operating expenses will be approximately 5% higher than our fourth quarter annualized run rate. Our effective tax rate for the fourth quarter was 28.2% and for the full year 2016, was 28.6%.

I should note here that effective January 1, 2017, we adopted a new accounting standards update issue by the FASB, related to employee share-based compensation awards. This update requires that excess tax benefits or deficiencies be recorded as a discreet item in the tax provision in the income statement, in the quarter the share were best.

And excess tax benefit or deficiency represents the tax effect of the difference between the fair value of the share award on the date of vesting versus the date of grant. We expect to record a discreet excess tax benefit of approximately $0.03 per diluted share in the first quarter of 2017 based on the current stock price.

For 2017, excluding the impact to the excess tax benefit to be recorded in the first quarter, we estimate that our full year effective tax rate will be in the range of 26.5% to 27%, not incorporating any impacts or possible Federal Tax Reform. The consolidated balance of cash and investments at December 31, 2016, was $1.6 billion.

The cash and investment balance at the holding company was $47 million, compared to $45 million as of September 30, 2016. As Mark touched on earlier during the fourth quarter we drew an additional $50 million under our revolving credit facility and used the proceeds to make a capital contribution to Essent Re.

As of year-end we now have $100 million outstanding on this facility with a $100 million of undrawn capacity. The interest rate on the amount drawn under the credit facility at December 31, 2016 was 2.73%. As of December 31, 2016 the combined [audio gap] $1.1 billion with a risk-to-capital ratio of 14.7:1, compared to 14.8:1 as of September 30, 2016.

Finally, Essent Re had GAAP equity of $401 million supporting $4.2 billion of net risk in force as of December 31, 2016. Now, let me turn the call back over to Mark..

Thanks Larry. In closing, Essent had another successful year of financial performance as we've continued growing our high-quality earnings and generating strong returns for our shareholders. As discussed, we remained positive on housing and believe that the real estate cycle remains in expansion mode.

The Essent franchise is strong and we are well positioned to continue to grow in both the States and Bermuda. We remain optimistic about Essent's prospects and the role of private mortgage insurance in U.S. housing finance. Now, let’s turn the call over to your questions.

Operator?.

[Operator Instructions] Your first question comes from Bose George from KBW. Your line is open..

First, just wanted to ask about losses incurred.

You know that the drivers are the lower number in this quarter, and when we think about the outlook there is 4Q kind of a good run rate now for how you reserve for your notices?.

That wouldn’t necessary look at fourth quarter as the run rate goes, I mean if so again, the number of defaults is still relatively small, the claims paid is relatively small.

I think longer term we really got to take a step back and I would point you to our supplemental information, where we talk about incurred loss ratios by vintage, and I think as you look at that, that’s probably a better indicator of longer term where losses could potential go again the newer vintages you can't tell, but some of the older vintages are really becoming seasoned enough where you can start to really make a call on what the ultimate loss ratio is..

And in terms of the changes that you saw this quarter on the losses incurred can you just talk about that a little bit?.

That’s kind of typical with how we do. We review our loss factors as part of our reserve methodology every quarter. So this quarter we continue to see improvement those were factored in. And as you saw our severities this year continue to trend very favorably, so those were reflected in there..

Great, and then actually one on market share. I know you don’t usually like to discuss market share, but look, I mean your singles are down quite a bit, your NIW relative to peers seem to be a lot better quarter-over-quarter.

Do you think you took some share this quarter?.

Tough for us to tell those again, a few of the participants haven’t even reported yet. We're usually kind of last one. So we don’t focus too much on that in terms of where we stand. I think we continue to grow insurance and force, I think that’s what we're really focused on. NIW levels were healthy, but I do think the market continues to be healthy.

And in terms of share, again we are comfortable, we said before in that 12% to 14% range. I think given the merger with Arch and UG, you could probably look at it, probably more about 13% to 15% range going forward.

Again, I don’t know if that’s going to happen on a quarter-by-quarter basis, but again longer term with six participants versus seven, I think you’re going to see in natural share shift. So again, we’ve always talked about 12% to 14%, and I think we have since the IPO.

I think given that there is one last competitor extending that range is probably prudent..

Okay. Great. That’s helpful. Thank you. .

Sure..

Your next question comes from the line of Mark DeVries from Barclays. Your line is open..

Yeah. I just had a follow up question on that. Without focusing specifically on whether you gain share or not, your NIW was up 75% year-over-year, which is pretty impressive and certainly more than what we’ve seen from the market.

Could you just give us some color on where the greatest areas of strength where?.

I think it's something that its -- we’re going into our eighth year of business, so we continue to add clients, we added a nice amount in 2016. We kind of talk about always activation and utilization. I think utilization across some of the newer clients is up.

So again, I think it’s just the natural part of the story that we continue to kind of grow that there is natural share growth and natural just client growth and overtime that does result in more kind of more NIW.

So, again we’re just we’re really -- I think that the ultimate gauge is still insurance and force, and I think that, to me that’s the thing that we were the most pleased with, is growing insurance and force 28% in 2016. We grew it 29% in 2015. So, and I think that’s really a function also of the bigger market.

And remember when the market is bigger, market share is not as important of a metric. And it just isn’t, and think of it, last in 2016 the market was bigger than it was in 2009, '10 and '11 combined. And overall, high tide lifts all boats, so an overall market really helps us. I think it helps the industry in total.

I think it helps around stability of pricing and all those sort of things. So, the market was higher than its long-term average in 2016, and one we see comparable for 2017. That’s a really good thing. I mean these are high levels of NIW, and again for us to get our fair share of it and like I said maybe now that’s in the 13% to 15% range.

I think that bodes well for future growth within insurance and force..

Okay. Got it. And one of your strength I did observer is, in your NIW, is the 95% plus LTV was up pretty material year-over-year. Is that attributable mainly to the GSEs [ph] new 97% LTV program.

And if so, how much more room runway do you have? Is this kind of similar to some of the years back when the FHA raised pricing, you kind of had to retrain loan officers to think of private MI as an alternative to the FHA in these situations?.

Yeah. I mean that I still think that growth is on the margin, but you’re right now with the GSEs that kind of roll their 97 program, we’re seeing on a more and more, specially the larger lenders kind of start to develop programs around that. We started seeing that tick up kind of in the second quarter last year.

We would expect it to continue to increase, but you’re right, it is really along training the loan officer and showing kind of MI as a good alternative to FHA, and we think that will continue. .

Okay. Great. Thanks..

Your next question comes from Doug Harter of Credit Suisse. Your line is open. .

Mark, I was just wondering if you could give a little follow up on, now that you’ve drawn on the credit facility for another $50 million, at what point do you think about doing sort of a more permanent financing there and how are you thinking about your options?.

Dough, it’s a good question. I think as we've said in the script, we remain pretty comfortable with our capital position given where we are at the end of the year.

Future capital needs really at this point are depending upon growth and Essent Re and remember Essent Re has two forms of growth, the affiliate quota share and also has the third-party business. So given kind of our current forecast, we remain pretty comfortable.

Remember Essent Guaranty is self-generating capital at this point and Essent Re is not too far away from that. I think that -- and I think that really, that give us the confidence to remain comfortable with capital. But again, we always think about capital.

So should the opportunity come up the strength in the capital position, increase our financial flexibility by replacing the line with more permanent financing. It's certainly something we would evaluate.

We always say capital begets opportunities and I think we've shown in the past, new capital, our ability, the line's [ph] a good example to drove down new capital and able to put it to work at pretty good returns. And I think that’s something we'll continue to evacuate. And I think we have a pretty good track record there..

And then I guess how are you thinking about the quota share and sizing that, is that something you would consider changing or do you kind of wait and see how tax reform plays out in the U.S.

before making that decision?.

As we've said in the past, I think the increasing the quota shares or something that we will continue to evaluate. Again it's more of a capital optimization play versus a tax play.

If you remember, just as I said earlier Essent Re is a little bit capital consumptive, so the quota share at this point is still a little bit -- from a capital standpoint, it's not as efficient as it is with an Essent Guaranty.

But also with tax reform on the table, I think we're going to -- it's prudent for us to kind of see how that plays out in terms of where it is. I mean tax reform, it's a once in a generation type of thing, I think it could take longer than people think. But I've been surprised before.

So I think we're going to sit back, see how it goes and then we'll obviously monitor it and then proceed accordingly..

Great thank you Mark..

Your next question comes from Jack Micenko of SIG. Your line is open..

Looking at the supplemental, the 2014 vintage has the 3:9 loss ratio and from the table it looks like the big change there is FICO.

Is that 3:9, Mark, kind of what you were referring to Bose's question, when you think about the vintages after that kind of looked more like the '14 from a composition standpoint, thinking about 3:9 as sort of that three-year seasoning kind of number, is that what you were talking about?.

Yes, it is. I means I was probably pointing more towards 13, it's a little bit more in 12 or probably there is only 30 something percent left in the 12 vintage. So I feel like that’s -- we have a pretty good sense of it. I think '14, 60% of the balance left, Jack, so it's hard to, you don’t want to make a call on that.

But again, really that is, to follow up, they're all kind of in that range. That kind of a low single digit type range. And I think right now early indications, and I think the whole book is probably 3%. So early indications, and again what we're still seeing on the front end, and it's obviously contingent on where the economy goes.

But again, the quality of a 750 FICO book is pretty good. I mean you've said me say there is some in the past, that’s the big difference in the portfolio versus the pre-crisis.

Pre-crisis, the Freddie Mac high LKV portfolio and our average spike there was 705, and the industry was far build, I mean the industry probably from most of the participants back and let's call it 2006, 40% of their business was below 680. Today were right around 5% below 680.

So it's not a barbell portfolio, so when you get a borrower with an average FICO set at 750, most likely they have better reserves, they probably have a lower DTI, in fact in our portfolio they do have a lower DTI.

So if something were to happen to them on the employment side and they have more resources at their disposal to make payments, that's a big deal. And I think -- and this is where we're different than some of the other consumer finances, because folks compare us to different consumer finance and we just have a different make-up for the portfolio.

And I think that's something, it's not well appreciated yet by the investor community, but I do think it bodes well. There is a little bit of a secular shift in credit. And if you think about kind of quadrants, we're kind of in that right upper hand quadrant of secured high credit, and I think we see that trend continuing..

Jack, it's Chris. Just to be clear though, certainly you have the older vintages and which maybe you can really get a feel for what's left as far as the burn-out, but in no way were we referring that, we think that the entire book is going to be at a 3% or 4%, incurred loss rate..

Fair enough, so splitting hair between 3:3 and 3:9 [ph], so it's kind of the broader picture. Larry, with the stock price impact on the tax rate. Can you, one, give us a little more sensitivity so maybe we can model what that could look like and then help us understand the cadence of the stock.

I think you said it was due, the reflected in the quarter the awards you're given.

Is that a normal even impact over the years, or is it frontend weighted? How do we think -- can you give us little more color to maybe try to model some of that?.

Yes, Jack good question. The accounting for these excess tax benefits or deficiencies has changed. In previous years, the excess tax benefit or deficiency went to the equity section, so it didn’t affect earnings. Beginning this year, it will be recorded in the quarter the share awards vest.

For us, essentially all of our share awards vest in the first quarter of each year. So when you're thinking about this going forward we'll have this impact in the first quarter.

The $0.03 per diluted share that we estimated, we feel pretty comfortable with that estimate for the first quarter of this year, but the stock price will have more of an impact in future years as other shares vest -- as other grants vest. So we can take it offline and talk about it in a little bit more detail, we will be happy to do that..

Okay, great. Thank you. .

Your next question comes from Vic Agarwal of Wells Fargo. Your line is open..

You talked about the shift of credit of the portfolio, so should we assume that severity is obviously was lower in 2016 than it was the several years prior to that, should we expect 2016 as sort of what you are thinking as oppose to 80% to 90% severities that you saw over the last several years?.

No. Hey Vic, its Larry. I would not make that assumption. This year we still have a relatively small number of claims being paid, so it's still kind of the law of small numbers. So we would think going forward that severities would be probably closer to the 2015 level of about 93% than they were to this year.

So again, at the small levels we had very favorable severity experience this year, but we think that's probably not a good assumption going forward and closer to the 2015 annual severity would probably, would be more realistic..

Okay, thank you. And then Mark I think you talked about the first-time home buyer.

Can you give us some more color on what activity you've seen with the back-up in rates and sort of your thoughts for the remainder of the year?.

I think the rates are higher, so we saw close to 4.5 of post-election, but they've backed down 30 years something the long the lines of 4 1/8 now, which is higher than it was last year but not materially.

So again, its early in the year, Vic, I've been out on the road a couple of times, actually more than a couple of times, so the traffic I've seen in the southeastern part of the country is, what I heard was as strong as last year.

So you're seeing that activity, I think the story within home building, within this part of the industry is clear, supply is still low, so builders are still really ramping up supply. I think the important part is, that they're really starting to target the first-time home owner.

I mean one of the large home builders in the country now, I think its 50% starter homes and the average typically something along the lines of 250,000 and our average loan size is 229,000. So it's kind of ripe in our wheel house, and then you've heard me talk before about the impact on the millennia's.

And I was just looking at a core logic study the other day that shows the millennial generation, which is really that call it 1980 to 2000, 80 million individuals the largest cohorts of that population are between 23 and 25 years old. And the average to the first-time home owner is 31.

So there is a wavy, I think from a demographic standpoint that will continue to come online. But these are secular three to five year trends. It's hard to predict that in a quarter or even a yearly basis and rates obviously could pause things there.

We don’t necessarily see it this year, but I think longer term that gives us the confidence to think longer term, to think housing has kind of still in that, the early stages of the expansion mode. So again, tough to predict quarter-over-quarter, but we continue to see the next several years being pretty good..

And Mark I think -- I know that you like to spend a lot time with your customers, and you mentioned the Southeast.

Are you seeing similar trends in other parts of the country? Can you maybe come on that as well?.

I think that the trends are fairly consistent across the rest of the county. Again, it’s a little early, I got to be in touch with some of the parts of the southeast. So check in on the second quarter call and I'll be able to give you some more color based on my travels..

Your next question comes from the line of Mackenzie Aron of Zelman & Associates. Your line is open..

Mark, is there any update on just the risk sharing conversations that have been had with the GSEs over the last few months? Any update there or any expectations for going into '17 as to how that conversation might continue to develop?.

I think in terms of particular transactions, I think the forward deal that we were on in the fourth quarter is still in process. We would expect that to come up for renewal.

So we think the GSE, the risk share is still on the table, continues to grow as the GSEs continue to grow as originations continue to grow, but there is nothing new precisely on the table. I think it's just around gross.

The other factor obviously is the new administration and I think I mentioned in the script with FHA, the pricing rollback, there just seems to be more of -- and you read about it here regarding and we when you're talking to Washington there is more talk towards more private capitals.

So again, what that means in the next quarter of this year, Mackenzie it's tough to tell. But again, longer term we think that bodes well. And again, we think as an industry we're very well positioned.

We’re connected to thousands of lenders across the industry with the capital position of the MIs which continues to build both at Essent and with our competitors. It’s a just a pragmatic way to continue to -- and an easy way I think for product capital to take on more of the burden versus the tax payers.

So again, early in the stages, the new administration just started, but I think the tone of what we’re hearing early on is I think its favorable for the industry..

Okay. Great. I guess just on that same topic some of the conversation that's come out of DC about Dodd-Frank into the FBV [ph] and potentially rolling back some of the regulation, you’ve talked a lot in the past about the guardrails that those new regulations have established.

Do you see that changing over the next few years if that really comes to fruition and how does that impact the business?.

Yes. So, it’s a good question. I think what we’re hearing really around Dodd-Frank has to do with more the bank regulations. And certain parts of it being that the pendulum shifted a little too far. So, the idea is to kind of push it back a little bit towards the middle.

I think when it comes to mortgage, I think we haven't heard much and nor do we expect to. I think we’re very pleased with QM, I think our lender partners are, I think the GSEs are, I think these guardrails are important, to have DCI limits and rules around underwriting, that’s how the business should be operated.

So, there was a lot of at Dodd-Frank that was good and I think they are trying to roll back some of the stuff that maybe is a little excessive, but I think in the mortgage market it's worked well.

I mean look at the results of the quality of underwriting that you’re seeing from the lending community, you’re seeing in the GSE portfolio and you’re obviously seeing it in the MI portfolio. So, I think those guardrails are good and we would expect them to stay. .

Okay. Great. Thanks, Mark..

Your next question comes from Rick Shane of JPMorgan. Your line is open..

Thanks, guys for taking my question. Really related topics, Mark, when you look into 2017, is there anything we should be thinking about from the operating expense structure strategically. And particularly as the portfolio starts to season.

And then the second and related question is, is there a virtuous relationship between the low loss rate, the low credit expenses and the low operating expenses that we should be considering as well?.

Yeah. Rick, in terms of virtuous relationship, I don’t think they are connected at all, I think they are more around, our view always is the best risk managers and the cost managers. So, I think we’re careful about those. To answer your question on expenses, again, we focus as we said in the past really on the nominal expenses.

And I think they’re growing albeit at a relatively small -- much slower rate than our revenues. And part of that is I’d say a chunk of it is, as Larry mentioned chunk of it is some of the stock, but the other is just more variable cost more underwriters to handle the increased volume is probably the biggest piece of it. So, that’s money well spent.

In my opinion we continue to do more kind of non-delegated underwriting, that percentage continues to tick up, which means more underwriters, but again maybe that does -- that’s probably a little bit lower losses down the road, because you are looking at it, so there is a there is a little bit a linkage there.

I think you’re correct, but longer-term I think we’ve always kind of guided to that 40% combine ratio is the way to kind of have it come out in the wash. We’re obviously doing a little bit better than that now.

And we would expect the losses to season and the loss rate to go up and the expense rate to continue to kind of go down over the next few years..

Okay, great. Thank you, Mark..

Your next question comes from Mihir Bhatia from Bank of America. Your line is open..

I just had a couple of really quick questions.

First on your single premiums, it was down a fair amount again quarter-over-quarter and I am just wondering what is driving that? Is this a decision you all are making or is it just a function of the market just being smaller for that business?.

I think it's a little bit of both. I would say probably more with the market. Our view is since the borrower paid pricing change that got reconfigured this time, last year you saw better pricing and at the higher FICOs, and I think that really pushed from an execution standpoint, pushed borrowers more to borrower paid.

So I would say at its height we saw singles probably in that 30% perhaps even 35% range, tough to engage because not everyone reported it. I would say it's probably closer to 20% to 25%. So if you are kind of in the 20% range, you are probably at markets, if you're higher probably above the market.

We've always kind of been below the market and I think our portfolio is still 80:20. So I wouldn’t read too much in the one quarter and it's not like we targeted per say, but clearly an 88:12 mix is a better kind of return dynamic than someone, another competitor that's at 75:25. And your math is relatively straight forward.

And again, since we're return driven, that always tends us to shoot for the monthly. But again, it comes down to the borrower and where the pricing is. I think it's probably more market driven and we're always going to be a little bit below the market to kind of sum it up..

Great.

And then on the average premium rate, was there any benefit this quarter, I saw the refis were up a fair amount, so just maybe a single premium amortization or something? Or was it pretty clean number and we can take this number was we move forward, obviously understanding that newer business is being written at a slightly lower rate?.

Yes, I wouldn’t necessarily bake it in. I think we've been kind of saying there is always a component that single cancellation in every quarter, because if the single cancel, I think it's a little heighten, both in the second and third and even the fourth quarter given some of the refi activity.

So we still think mid-50s is a pretty good gauge for the foreseeable future and then we'll obviously update a cash back. But I think still mid-50s is a good gauge for you..

Okay, great.

And then just one other question, just any comments just in terms of -- can you provide any more detail on your prior year reserve leases? Pretty consistently I think this year you had between around $1.5 million to $2 million in prior year reserve releases, so just any comments on that and what --?.

This is Larry. I think you hit the nail on the head. It's pretty consistent year-over-year. We saw some of the favorable severity experienced that we saw this year in terms of severity rate going down from low-90s to low-70s.

But nothing other than that, and again as we talked about earlier we guide severity rates, closer to the prior year level of that 92%-93%, as a longer-term amount that we would expect to see..

Okay great thank you so much..

And there are no further questions at this time. I’ll turn the call back over to management for closing remarks..

Thank you, operator. We like to thank everyone for participating in today's call. And enjoy your weekend..

This concludes today’s conference call. You may now disconnect..