Curt Culver – Chairman and Chief Executive Officer Timothy Mattke – Senior Vice President and Chief Financial Officer Lawrence J. Pierzchalski – Executive Vice President of Risk Management Patrick Sinks – President and Chief Operating Officer Michael J. Zimmerman – Investor Relations.

Bose George - Keefe, Bruyette & Woods Eric Beardsley - Goldman Sachs Chris Gamaitoni - Autonomous Research Geoffrey Dunn - Dowling & Partners Securities Jason Stewart - Compass Point Research & Trading Jack Micenko - Susquehanna Financial Group Seth Glasser – Decade Capital Douglas Harter - Credit Suisse Matt Howlettt – UBS Mark Devries – Barclays Capital.

Good day, ladies and gentlemen, and welcome to the MGIC Investment Corporation Third Quarter Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions) As a reminder, this conference call is being recorded.

I’d now like to introduce your host for today’s presentation, Mike Zimmerman, Senior Vice President Investor Relations. Please go ahead..

Thanks, Kate. 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 third quarter of 2014 are Chairman and CEO, Curt Culver; President and COO, Pat Sinks; Executive Vice President and CFO, Tim Mattke; and, Executive Vice President of Risk Management, Larry Pierzchalski.

I want to remind all participants that our earnings release of this morning, which may be accessed on our website, which is located at mtg.mgic.com under Investor Information, includes additional information about the Company’s quarterly results that we will refer to during the call and includes certain non-GAAP financial measures.

As we have indicated in this morning’s press release, we have posted on our website the supplemental information containing characteristics of our primary risk in force and new insurance written, which we think you’ll find valuable.

During the course of this call, we may make comments about our expectations of the future, which may include statements regarding the potential impact of the draft GSE mortgage insurance eligibility requirements, or alternatives MGIC could pursue, or these draft mortgage insurance eligibility requirements implemented in their current form.

Actual results could differ materially from those contained in these forward-looking statements. Additional information about those factors that could cause actual results to differ materially from those discussed on the call are contained in the Form 8-K that was filed earlier this morning.

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 parties 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 the Form 8-K. Now with that, let me turn the call over to Curt..

Thanks Mike. Good morning. I’m pleased to report that in the third quarter we reported net income of $72 million, or $0.18 a share versus net income of $12 million or $0.04 a share from the same period last year.

The improvement in quarterly financial results was driven primarily by a lower level of incurred losses, which totaled $115 million compared to $180 million last year. There were multiple influences on the incurred losses. First we received 17% fewer delinquency notices than the same period last year.

Second, we continued to see improved cure rates on these notices. And finally, we experienced positive development on previously received notices. We believe the positive development and improvement in our cure rate assumptions are attributable to the slow, but steady improvement in housing and employment.

Further contributing to the positive credit performance is the fact that the books written after 2008 and the loans that took advantage of HARP, which in total now account for more than 64% of our insurance in force, continued to generate extremely low levels of delinquencies.

The delinquent inventory ended the quarter down 26% year over year and down 2.6% sequentially, ending at 83,154 loans. We expect to see the inventory continue to decline for the remainder of 2014. In the quarter, we wrote $10.4 billion of new business which was up 25% from the second quarter and up 21% when compared to the third quarter of 2013.

Our year-to-date new business is up 3% over last year despite the overall origination volume being lower. Our 30-year mortgage rates remain affordable and as a result the purchase market remains reasonably strong.

Since purchase transaction which accounted for nearly 90% of our new writings during the quarter tend to use mortgage insurance more than refinance transactions, our purchase application volume remained strong. Year-to-date when compared to last year, our purchase application volume is approximately 27% higher while total applications are 4% higher.

Given the volume we have written to date and the applications and process, we expect to write approximately the same, but slightly higher volume of business in 2014 than we did last year.

While third quarter numbers are not yet available, we estimate that our industry’s market share for the third quarter was approximately 14% to 15% as more business shifts to the private market and away from the FHA given the value proposition we offer.

Within the industry, our industry, we believe that we maintain the market share gains we realized over the last year, and estimate that our quarterly market share is approximately 20%. As a result of the increased levels of new insurance written and higher persistency, insurance in force increased 2% in the quarter to end at 162.4 billion.

At quarter and approximately 59% of our insurance in force was covered by reinsurance transactions which had the effect of reducing that income by approximately $11 million. Paid claims in the third quarter were $263 million, down 36% from the same period last year and down 12% from the last quarter.

Claims received in the quarter continued to decline and were down 35% from the same period last year and down 7% quarter to quarter. Given the claim filings patterns we experienced, we continue to expect paid losses to trend modestly lower for the balance of the year.

At quarter end, cash and investments totaled $4.9 billion, including $517 million of cash and investments at the holding company. Our total annual interest expense is approximately $66 million and our next scheduled debt maturity is $62 million due in November 2015.

During the quarter we received the deficiency letter from the IRS that we have been waiting on since last year regarding the tax dispute we have with the IRS. In 2007, we paid and reflected in our financial statements $65 million related to the assessment.

As we have previously disclosed, our plan is to take this matter to litigation in tax court which could take several years to resolve. Importantly, receiving this letter or commencing litigation does not impact our view of capital needs for the company, the amount of cash available at the holding company or our ability to comply with PMIERs.

Speaking of PMIERs, the common period for the draft private mortgage insurance eligibility requirement closed September 8th. We current expect these rules to be finalized and published by the end of the year.

As we discussed last quarter, MGIC embraces robust risk adjusted capital requirements and supports the goals of modernizing the GSE’s mortgage insurance eligibility requirements, although we believe this modernization should result in a system that reduces tax payer risk and provides incentives for private capital to play a larger role in ensuring that credit worthy borrowers have access to mortgage credit at a reasonable cost.

The main theme of our comment letter was balance.

By that I mean it's important that the capital rules provide the GSE’s with strong counterparties and apply a risk based methodology, but they should also be established in a manner that will help achieve the public policy goals of expanding access to credit and for credit worthy borrowers, decreasing the government’s footprint in housing and reducing taxpayer exposure by encouraging private capital to take a first watch position on residential mortgage credit.

We believe that the adjustments we’re recommending, specifically the inclusion of future premiums in the calculation of available assets with appropriate limitations, the inclusion of a seasoning factor and determining the level of available assets required to be held for insured loans and the improved transparency around the administration of the PMIERs, can be achieved within the timeframe currently being considered.

So there should be no worries that there would be a needless delay with implementing the strength in counterparty financial requirements.

In addition to the counter letter from MGIC and the other MIs, the FHFA also received comment letters from many other groups that participate in housing finance, including the MBA, the builders, the realtors, community groups, lenders, market research firms and investors.

With varying degrees of detail and reference, I would say all of the comments were supportive of private mortgage insurance and reiterated that balance is important.

If implemented as drafted, that is without consideration for the balance MGIC and others recommend and despite MGIC’s risk to capital ratio of 15:1, a return to annual profitability and assuming full credit for the current re-insurance agreement, we estimated earlier this year and reported this out that MGIC would have a shortfall in required assets of approximately $600 million at yearend 2014, falling to $300 million by the end of 2016.

This is of course before we take any proactive steps to address this issue. However, we believe that the combination of internal resources, additional re-insurance and if needed, non-dilutive capital would enable MGIC to mitigate this estimated shortfall and comply fully with the PMIERs requirements.

If there is no modification to the proposed PMIERs, then the amount of capital required will increase. However, it’s important to note that after considering re-insurance, we still will be able to maintain mid-teens returns on the current mix of business we’re writing given the underwriting quality and pricing terms being offered.

Further, we would hope that as a of the increase in counterparty strength, post PMIERs of GSEs would lower the loan level price adjustments they charge and begin to seriously consider transferring more risk to the MIs either in the form of deeper coverage on above 80% LTVs, or seeking insurance on loans below 80% LTV, all of which our company and industry would benefit from.

On a related topic, the review and updating of state capital standards by the NAIC, which the Wisconsin insurance regulator is leading, continues to move forward, although we are not aware of a timeframe for implementation. We do not expect to revise state capital standards to be more restrictive than the financial requirement of the draft PMIERs.

The debate over housing policy market structure, including the role the FHA and GSEs play continues with seemingly no end in sight. So the current market framework is what we‘ll be dealing with as I have no reason to believe there will be any definitive action by Congress for a considerable period of time.

In closing, during the quarter we continued to make progress on the path towards sustained profitability. We wrote $10.4 billion of high quality business. The in force portfolio is once again growing. The level of delinquencies and claim payments continues to fall, MGIC’s risk to capital ratio improved to 15:1.

Our industry market share is improving, MGIC’s market share continues strong within our industry and we maintained our traditional low expense ratio.

So as a result I feel our company is in an excellent position to take advantage of the opportunity being created today, but more importantly is positioned for future growth as the economy improves and household formations return to historic levels. With that, Operator let’s take questions.

(Operator instruction) our first question comes from the line of Bose George with KBW. Your line is open.

Good morning. I noted that positive development helped the losses incurred line item.

Could you just quantify the impact?.

Sure. This is Tim speaking. The positive impact from the reserve development was about $30 million in the quarter. So for the new notices, we continued to see the decrease in the new notice activity. We continue to see improvements, especially year over year on the cure rate of those due notices were probably just slightly better than 15%.

I expect a claim rate on those new notes for these points and then the development like I said about $30 million of favorable development in the quarter..

Okay, perfect. Thanks. And then just looks like your single premium percentage increased by 2.5% quarter to quarter.

Was that just a blip or is anything there more compelling than it was last quarter?.

We had a lender of ours increase our share of lender paid mortgage insurance. It's a result of a relationship with a lender during the quarter..

Okay, great. And then just one on PMIERs. I think you guys noted at a recent presentation that in terms of the PMIERs shortfall, about two thirds of that can be met through capital in-house, assume like the 100 million affiliated plus the whole core capital.

Can you just go over how much you would need externally versus in-house if the 300 million is a shortfall?.

I think -- Tim speaking again. 300, the shortfall I think we’ve talked about, as you said $100 million probably internally from subsidiary SPs where we think there’s available, at least a good amount of available cash that could be dividended to MGIC that would then counter the PMIERs. So that would leave you with a $200 million shortfall.

As we said before, we’ve got cash at the holding company, obviously have a debt maturity in the $60 millions coming up in November 15 that we have to deal with.

So we have ability to do it in-house from the holding company, but obviously we want to keep an appropriate balance of cash at the holding company, along with meeting the PMIERs requirements..

Our next question comes from the line of Eric Beardsley with Goldman Sachs. Your line is open..

Just to follow up on I guess your comment letter and how the industry might react if the PMIERs went into place as is. I think you and some others in the industry had suggested that price increases would be necessary.

I guess would you be willing to lead the industry upwards on price if they were to actually go into place as is?.

Well, let’s see how things play out before. I mean if you look at our history, we certainly have done that and as a leader in the industry, that is the position you take. We did that on captives many years ago and also other price increases.

But I'm still very optimistic relative to the PMIERs being adjusted relative to the items that I discussed relative to our own comment letter.

They make a great deal of sense and I think a lot of the industry, not only say our industry, but the MBA, the builders, the realtors, et cetera, rallied around the same course regarding its impact on housings. So I really I’m optimist relative to the PMIERs being softened. Back to the pricing issue, again that’s hypothetical.

We’d have to see the situation at the time, but this company has no reluctance relative to pricing increases if it's the right thing to do..

Got it.

And then just on a potential softening of PMIERs, do you have a sense of which areas will be most likely changed at this point?.

I think the area of relative to the premiums is an area that has gotten more discussion than any others. Now how many years of premiums or whatever the limitations on that, we don’t know. But I think that as an area that just makes a great deal of common sense for inclusion relative to the mortgage insurers.

I think that’s if you will number one on the hit list. The seasoning probably also is being discussed. So I would say the areas that we were more forceful relative to your response, are probably getting -- and others are getting the most attention and also have the most impacts relative to the mortgage insurers and their capital levels..

Our next question comes from the line of Chris Gamaitoni with Autonomous. Your line is open. .

Good morning guys. Thanks for taking my call.

Could you -- what dockets were the positive developments mostly felt in by delinquency seasoning?.

It would be the under 12 months. We didn’t really see positive developments that we reported on the over 12 bucket. So it's going to be in that intermediate bucket, the four to 12. ..

Is me improvement in cure rates the main driver of that?.

Yes..

Okay.

with the,-- how do you think about holdco cash in terms of maybe a very long term, but maybe at some point in the future, tax charge from the [inaudible] issue?.

Chris, you broke up there a little bit.

Can you re state it?.

I thought he said tax issue..

Yeah.

How do you think about how much holdco cash you have to retain in case the tax issue doesn't go your way?.

Well I guess, there‘s something from a contingency standpoint that we have to think about, but quite honestly based upon the history of the tax case I obviously feel pretty comfort. As we’ve discussed we paid amounts related to the assessment back in ‘07.

We reached a tentative settlement with the IRS that was basically in that ballpark and very hopeful that we can finally reach an agreement with them in that area. We don’t have a large concern that we have to use a large amount of that cash at the holding company for the IRS issue..

Our next question comes from the line of Jeffrey Dunn with Dowling and Partners. Your line is open..

Good morning. First quarter, yourselves and some of your peers had indicated that, while incidence rates were improving on a year-over-year basis, you expected sequentially that they could get pressured just from normal seasonality. Obviously we are not seeing that happen. I think it actually now is getting better sequentially.

What specifically is happening? Is it really just like the cure rate on the 4-to-11 bucket that is outpacing your expectations? Or is there something else that is moving that factor in a different direction sequentially than you expected just a couple quarters ago?.

When you look at the four to 12 bucket, again you have to think about it’s partially where we put it out in the prior quarters that could move us so that we continue to see improvement going downwards, even in the younger buckets. So that would cause some development potentially to improve on the four to 12 bucket.

But I think it’s safe to say that even though there hasn’t been -- it hasn't been leaps and bounds increase, there continues to be steady improvement on the cure ratio of the under 12 buckets and totals, even down to the new notice that’s coming in the door. And we are trying to reflect that in our estimates..

And then just on the optics of the DTA, obviously several quarters of profitability now.

Any updated thoughts on when that valuation allowance could be considered to be reversed? And just specifically, just because I think there's a difference here between the cash and the GAAP tax implications, does this IRS thing have anything to do with the DTA and the valuation allowances we're looking at over the next 18 months?.

I wouldn’t I guess we relate the tax issue to the DTA. Us being able to bring the DTA back on the books is really related to sustained profitability and our forecast for sustained profitability in the future.

And obviously as we’ve discussed in the past, there’s discussions that we have with our auditors as to when the appropriate time to be able to bring the full asset back on is. And so with us having profitability this year obviously it makes the likelihood of it being sooner rather than later more likely.

But again I wouldn’t necessarily expect it to be a this year event. When you think about the tax contingencies, I wouldn’t of anything going on with that as being an issue with us being able to bring that, deferred tax asset back on again..

Our next question comes from the line of Jason Stewart with Compass Point. Your line is open..

Are you sensing any change in the political landscape at HUD under Castro? Perhaps they are more focused on opening credit to first-time home buyers rather than pulling in private capital?.

This is Pat. Not yet. It’s still too early. Carol Galante has announced that she’s leaving and they’ve got a temporary replacement in place, but they haven’t named a permanent one yet. We don’t have any sense of that. We know that the FHA is under a lot of pressure to reduce their premiums.

Thus far they have stuck to their guns saying they’re adequately priced. They are going to have a new actuary report that will come out here in November and that may show. I don’t know if it will get to the 2% minimum capital, but if it shows better, then they well be under even more pressure in 2015 to reduce premiums.

That said, we the private mortgage insurers continue to be a better execution to the borrowers in just about every sell in the high LTV space..

Have you quantified how much the premiums would have to come down for it to really have any impact on what you’re doing today in terms of NAW?.

Jason, this is Mike. No, we can’t. We can do that math, but we haven’t that. But it would have to be a fairly considerable amount given the way the structure of how much the upfront is on the ongoing..

As an example, they want to introduce this HAWK pilot program which ties borrower counseling to a reduction in premiums. And I think they were talking about 10 or 15 debt reductions. As I said earlier we are a better execution. That would make us, we would still be a better execution if they were to drop premiums in that range. .

We have a tremendous price advantage at the higher FICOs in particular. And so it would have to be an unwarranted I think price reduction FHA that they be competitive in that space.

I’m also very hopeful as I mentioned earlier that as these counterparty PMIERs go into effect relative to the GSEs and the protection our industry provides that there is a serious look at the loan level price adjustments the GSEs charge and make our product if you will a conventional mortgage even more competitive.

I’m very optimistic relative to that also. .

Okay. That's helpful. Thank you. And then on the -- I missed part of the answer on the lender-paid market share. It sounded like you said that you had gotten more share from a single lender in the single space.

Was there any price change associated with that, or was that just somebody shifting market share around?.

It was a customized right card for our lender that wanted pricing a little different than our standard rate card. So I won’t say it was a price reduction. It was just a change in pricing relative to a multiple of different FICOs, some going up, some going down. .

Our next question comes from the line of Jack Micenko with SFG. Your line is open. .

Your NIW trends on a percentage basis were pretty strong in the third quarter relative to the other MIs we track.

Was that all attributable to this single-pay relationship, or did you add incremental customers? Is there anything else you can point to there that drove some of your above-average growth?.

This is Pat. We weren’t adding customers per se because we do business with just about everybody. I think it’s just a better execution. We got a pretty fired up sales organization. We’ve grown our share more than three points since the second quarter of last year. It wasn’t a one particular event that drove share.

In addition to that as we’ve seen changes in movements within the top 20 or so originators in the country, we do pretty well at a lot of those customers. We might not do the best at the very top three of four or five, but as others, mid-sized players become bigger we do pretty well there. We gain share, the point being as they do better we do better. .

This is Curt. I’d just like to reiterate on that point also that as Pat mentioned. I know some of our competitors keep track of customers as they add them. We are already doing business with all of them. The reality is just how much more business can we get from them.

And I think like you’ve seen in the quarter was the smaller or the community banks and others other than the top 10 lenders getting more market share. And MGIC frankly does much better with the smaller lending institutions.

And as a result of that I think our customer base if you will the mortgage lenders customer base, the ones that do more business with MGIC improved their share in the quarter which was very helpful relative to our own market share. .

Okay, that makes sense, I guess particularly with Wells' share coming in a little bit yesterday. I guess, asking Jason's question a different way, in our math over like a five-year period on current 747-60 FICO it looks like, correct me if I'm wrong, maybe 20%, 25% cheaper than FHA, all in.

Am I in the right neighborhood on that, or am I missing something there? Can you just opine on that differential?.

Jack, this is Mike. No, I think that’s in the right area. You are looking at about $100 a month differential. We’re better than the FHA. Then if you look at it from a fire order all-in payment or just the insurance versus the insurance, I think you are in the right area. .

Okay. And then just one last thing. I don't know if you have talked to the FHFA PMIERs. There's a little bit of chatter that we might get the final draft pushed into January.

I don't think it would be surprising to anybody, but have you heard anything specific on that front?.

We have not. .

Our next question comes from the line of Seth Glasser with Decade Capital, your line is open..

Seth, are you there?.

Seth, your line might be muted..

Maybe this is something I should already know, but I wanted to actually ask you about the statutory DTA.

What do you think the timing is for the process of this to start being readmitted? And then am I correct to assume that readmitting that would not actually impact the liquid asset calculation because it would be non-cash? Would that be a correct way to think about it?.

On your second point yes, it will not be from a PMIER credit perspective. We do not get any credit for a deferred tax asset. To your point as far as readmitting it, we actually do have some portion of our deferred tax asset on our statutory books. But in the statutory accounting it’s limited right now to 10% of our surplus.

It’s not the full DTA that’s on our books at this point. But as our surplus increases we’ll also get I guess a 10% extra benefit because we get to admit that much more of a deferred tax asset, but to your last point that will not get us any additional credit on the PMIERs. .

Right. So it's sort of become almost issue that doesn't really matter a whole lot because under a non-risk-to-capital type calculation it's not really going to create any or provide any benefit..

It won’t provide benefit for a PMIER calculation from a statutory capital. Under state regulation it still provides benefits. .

Our next question comes from the line of Douglas Harter with Credit Suisse, your line is open. .

Thanks. I was just hoping you could provide me a little history as to why the initial settlement you had with the IRS broke down.

And along those lines, I guess what gives you the confidence that you will be able to reach a settlement like you indicated?.

As I mentioned, we thought we reached an agreement that went to joint committee on tax..

We actually did reach an agreement..

We did reach an agreement there with the IRS themselves that went to the joint committee on taxation and that was not recommended to be approved at that level. Our understanding is that at that point the IRS did not go through with the deal. But we have no reason to believe that their view would be any different at this point.

And so that’s why we still remain confident that we will be able to resolve the issue for the area of where we settle it within the first time..

I guess would it need that level of approval again? And could the deal -- if you reached another deal with the IRS, could that break down again? I guess just trying to understand why it would be -- or how or why it would be different. .

That is a possibility, but again we have conversations with the IRS. It does not move quickly obviously. We said we’ve been waiting a year for the letter as possibility if we reached another deal to go back to the joint committee. There’s no guarantee that that would be approved there.

But again based upon our starting position, we still think that we are in an appropriate position from our accrual standpoint and that’s where we all end up with the dispute. .

And obviously we feel the arguments are on our side.

So I think both sides are motivated more so than they were, what year was that, 2007 or 2006?.

2010 was the settlement arrangement..

Yes. I think there’s more of an incentive to get it done on their part, so we’ll see what happens. .

Our next question comes from the line of Matt Howlettt with UBS. Your line is open. .

Is there a way you could just elaborate on some of the deeper MI coverage potential, the below 80 LTV, maybe even possible could we see pool insurance come back? Is this all in conjunction with the GSEs and their mandate to offload risk? We’ve seen the staggered transactions really triple in size over the last year.

Is there talk with the mortgage insurance industry in terms of offloading credit risk via insurance contracts?.

This is Pat. There’s a lot of discussion around deeper cover MI that being, particularly being advocated by the MBA and the MI industry as a way to bring more private capital into the equation and reduce the size of the GSE footprint and thus tax payer exposure. So, a lot of talk about that.

I think the resolution of PMIERs will go a long way towards bringing greater credence to that argument. The MIs just introduced a new master policy effective October 1. So we’ve got greater clarity around the coverage we provide.

I think the new capital or the new PMIERs will provide greater clarity around capital and thus we’ll be able to make that argument in a more forceful way. The other part of the discussion is providing private mortgage insurance on LTVs below 80s. And we are also having those kind of discussions and I would expect to have those well into 2015. .

Would it be along the way of pool insurance wrapping -- sort of the old modified pool?.

It may be. A lot of that will depend on capital requirements. In the past pools, the capital requirements on pool have been quite punitive. But you could see if you want to use the word pool, I would substitute maybe structured, you could see some structured transactions. You could perhaps see some re-insurance.

I think all of those are possibilities and greater possibilities once PMIERs gets resolved..

Yes. I think you would see it more in the line of individual loan coverage down to 60 rather than 80 or whatever the case maybe.

That works very well and I think will go a long way from the lender’s stand point and justifying reduced guarantee fees or again back to this loan level price adjustments of their deeper MI and that would be a better execution of what they do with the GSEs paying those fees.

I think there are strong incentives both from the GSE standpoint and getting deeper coverage from a taxpayer’s standpoint and limiting risk to the government. And from a borrower standpoint lowering their cost. So I think again back to the arguments are on our side. It’s just a matter of getting an audience to buy into those..

Yes, exactly, And then just, I guess, a bigger question in terms of the overall balance sheet, how you look at long term where you want to direct that towards. There’s a lot of work you could do clearly with some of the convertibles.

What could you – are you waiting for the state cap rules to get finalized or the PMIERs before tackling that issue?.

We definitely want to get the PMIERs finalized. It would be nice to have a sense of where the state rules are going to be. But I think it’s safe to say that we think that those requirements would be inside of at least where the PMIERs are right now.

So I don’t think we’d have to wait until the state rules are fully finalized because there’s no timetable set on that at this point.

But the PMIERs being finalized is a long way towards understanding what we need to have as a writing company and what we might be able to do as a holding company in relation to our convertibles and our outstanding debts..

Has there been any conversation with rating agencies? Do they even come into play at this point?.

We continuously talk with the rating agencies. I think they’re also waiting to see where the PMIER requirements are. And obviously they are focused on our profitability on a GAAP basis as well. And once we get I think past those issues, then it starts to become more about holding company structure. .

The rating agencies will have more impact as private securitizations whenever they may come about again relative to the debt because dealing with the GSEs, it’s not relevant because they do their own work. But as private securitizations start to blossom in the marketplace, I think the rating agency discussions will be more relevant for our industry..

Or there’s something that possibly you guys could go back to over time? Certainly we look forward to hearing about the -- certainly the work that can be done on the balance sheet. Thanks guys..

(Operator instructions). Our next question comes from line of Mark Devries with Barclays, your line is open..

Sorry if you covered this already, but could you give us a rough sense of what the impact may be on the estimated $300 million shortfall, if you see some modifications to the areas in PMIERs where you are more optimistic around premiums and seasoning?.

Mark, this is Mike. Since we don’t really have a feel, our sense is that there’s going to be some softening of the rules, but exactly how and what channels and what elements we don’t know exactly what it will be. So it’s hard to say. We can speculate and do some hypotheticals, but I don’t know if that’s more good to do.

Clearly the inclusion of premium on when we looked at our proxies, last year we broke out, last year were two thirds of -- $600 million was from the 2008 and prior and $300 million plus was from 2009 forward. So they include forward premium that’s at minimum, that $300 million that would be one year if you will.

But again there is so many moving parts and we mentioned the three big ones, but there is also a lot of technical things that are included in premium receivable, investment income, receivable things that could be counted as well that currently aren’t. So it’s difficult to say..

Any movement, Mark is very positive for us. So rather than try and quantify here, soon enough we will be able to do that for you..

Okay, That’s helpful. Next question.

Do you have a sense for what percentages of the new notices that are coming now are still from the older books of let’s say 2006 to 2009?.

96% of them are from the 2008 and prior and I think it’s of that, 70% of them are from the ’05 to ’08 quarter..

Okay.

I guess you are not getting a lot of data points on the newer books, but do you have a sense for how the cure rates on the newer books are trending relative to your 15% blended rate right now?.

Yes. I’d say they are in line. Again it’s not a big part of the inventory, but I’d say that they are not an outlier from that perspective..

Okay.

So in the past when you've had really good years with very low loss ratios, is that driven more just by the default rate than it is by cure rates? Or is it a combination of both?.

I think it’s a combination of both, having lower level of new notices but also those new notices curing out at a greater rate.

As we’ve said before in historical norms out of all the new notices we get in, 90% of them will cure, 10% of them will ultimately go to claim and then the level of those notices being depressed obviously helps from the curve perspective as well. .

So that 90-10 relationship that Tim mentioned in more normal times compares to the 85-15 split now. It doesn’t sound like much, but it’s a third reduction incurred just because the cure rates at 10, the claims rates at 10 versus 15. .

And I’m not showing any further questions at this time. I’d like to turn the conference back over to management for closing remarks. .

Okay. Thank you all for your interest in the company. It was a good quarter for the company, just by the fact on this call we are talking about an old IRS transaction. The fact that that’s headlining things says a lot about what’s going on behind the scenes running the company. Thank you all for your interest and have a great day. .

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude the program and you may all disconnect. Everyone have a good day..