Q1 2024 NMI Holdings Inc Earnings Call

Participants

John Swenson; Vice President of Investor Relations and Treasury; NMI Holdings Inc

Bradley Shuster; Executive Chairman of the Board; NMI Holdings Inc

Adam Pollitzer; President, Chief Executive Officer, Director; NMI Holdings Inc

Ravi Mallela; Chief Financial Officer, Executive Vice President; NMI Holdings Inc

Mark Hughes; Analyst; Truist

Mihir Bhatia; Analyst; Bank of America

Soham Bhonsle; Analyst; BTIG

Rick Shane; Analyst; JP Morgan

Doug Harter; Analyst; UBS

Scott Heleniak; Analyst; RBC Capital markets

Presentation

Operator

Good day and welcome to the MMI Holdings first quarter 2024 earnings conference call. (Operator Instructions) Please note this event is being recorded.
I would now like to turn the conference over to Mr. John Swenson. Please go ahead. Thank you.

John Swenson

Good afternoon, and welcome to the 2024 first quarter conference call for National MI. I'm John Swenson, Vice President of Investor Relations and Treasury. Joining us on the call today are Brad Shuster, Executive Chairman; Adam Pollitzer, President and Chief Executive Officer; Ravi Mallela, Chief Financial Officer; Andrew Greenberg, our Senior Vice President of Finance; and Nick Realmuto, our Controller.
Financial results for the quarter were released after the close today. The press release may be accessed on NMI's website located at nationalmi.com under the Investors tab during the course of this call, we may make comments about our expectations for the future. Actual results could differ materially from those contained in these forward-looking statements and additional information about the factors that could cause actual results or trends to differ materially from those discussed on the call can be found on our website or through our regulatory filings with the SEC. If and to the extent the company makes forward-looking statements, we do not undertake any obligation to update those statements in the future in light of subsequent developments. Further, no one should rely on the fact that the guidance of such statements is current at any time of the time of this call. Also note that on this call, we may refer to certain non-GAAP measures in today's press release and on our website. We've provided a reconciliation of these measures to the most comparable measures under GAAP.
Now I'll turn the call over to Brad.

Bradley Shuster

Thank you, John, and good afternoon, everyone. As we talk today, I'm greatly encouraged both by the continued resilience that we see in the broader macro environment and housing market. And by the significant and consistent success we're achieving across our business.
In the first quarter, National MI again delivered standout operating performance, continued growth in our insured portfolio and record financial results. Our lenders and their borrowers continue to turn to us for critical downpayments support. And in the first quarter, we generated $9.4 billion of NIW volume, ending the period with a record $199.4 billion of high-quality, high-performing primary insurance-in-force. In Washington, our conversations remain active and constructive policymakers regulators. The FHFA and the GSEs remain keenly focused on promoting broader access and affordability to the housing market for all borrowers. And we believe there is broad recognition of the unique and valuable role. The private mortgage insurance industry plays in this regard. At National MI, we recognized the need to provide borrowers with a fair and equitable opportunity to access the housing market and establish a community identity and build long-term wealth through homeownership. We are actively engaged and committed to equally supporting borrowers from all communities and are proud to have held nearly 1.8 million borrowers to date realize their homeownership goals. Overall, we had a terrific first quarter and are well positioned to continue to lead with impact and drive value for our people, our customers and their borrowers and our shareholders going forward.
With that, let me turn it over to Adam.

Adam Pollitzer

Thank you, Brent, and good afternoon. Everyone. National MI continued to outperform in the first quarter, delivering significant new business production, consistent growth in our insured portfolio and record financial results. We generated $9.4 billion of NIW volume and ended the period with a record $199.4 billion of high-quality, high-performing primary insurance in force. Total revenue in the first quarter was a record $156.3 million, and we delivered record GAAP net income of $89 million. EPS was a record $1.08 per diluted share, up 8% compared to the fourth quarter and 24% compared to the first quarter of 2023, and we generated an 18.2% return on equity.
Overall, we had an exceptionally strong quarter and are confident as we look ahead, the macro environment and housing market in particular have remained resilient in the face of elevated interest rates. Our lender customers and their borrowers continue to rely on us in size for critical down-payments support, and we see an attractive and sustained new business opportunity fueled by long-term secular trends. We have an exceptionally high quality insured portfolio and our credit performance continues to stand ahead. Our persistency remains well above historical trend and when paired with our current NIW volume has helped to drive consistent growth and embedded value gains in our insured book. And we continue to manage our expenses and capital position with discipline and efficiency, building a robust balance sheet that is supported by the significant earnings power of our platform, notwithstanding these strong positives. However, macro risks do remain and we've maintained a proactive stance with respect to our pricing, risk selection and reinsurance decisioning. It's an approach that has served us well and continues to be the prudent and appropriate course, more broadly, we've been encouraged by the continued discipline that we've seen across the private MI market. Underwriting standards remain rigorous and the pricing environment remains balanced and constructive. Overall, we had a terrific quarter, delivering strong operating performance, continued growth in our insured portfolio and record financial results. We started the year with significant momentum. And looking ahead, we are well positioned to continue to serve our customers and their borrowers, invest in our employees and their success drive growth in our high-quality insured portfolio and deliver through the cycle growth, returns and value for our shareholders.
With that, I'll turn it over to Ravi.

Ravi Mallela

Thank you, Adam. We delivered record financial results in the first quarter with significant new business production, consistent growth in our high-quality insured portfolio, record top line performance, favorable credit experience, continued expense efficiency and record net income and earnings per share.
Total revenue in the first quarter was a record $156.3 million. GAAP net income was a record $89 million. EPS was a record $1.08 per diluted share and our return on equity was 18.2%.
We generated $9.4 billion of NIW, and our primary insurance in force grew to $199.4 billion, up 1.2% from the end of the fourth quarter and 6.8% compared to the first quarter of 2023. 12-month persistency was 85.8% in the first quarter compared to 86.1% in the fourth quarter. Persistency remains well above historical trend and continues to serve as an important driver of the growth and embedded value of our insured portfolio.
Net premiums earned in the first quarter were a record $136.7 million compared to $132.9 million in the fourth quarter. We earned $586,000 from the cancellation of single premium policies in the first quarter compared to $983,000 in the fourth quarter. Net yield for the quarter was 27.6 basis points, up from 27.1 basis points in the fourth quarter. Core yield, which excludes the cost of our reinsurance coverage and the contribution from cancellation earnings, was 34.1 basis points, up from 33.8 basis points in the fourth quarter.
Investment income was $19.4 million in the first quarter compared to $18.2 million in the fourth quarter. We saw continued growth in investment income during the quarter as we deployed new cash flows and reinvested rolling maturities at favorable new money rates. Total revenue was a record $156.3 million in the first quarter, up 3.2% compared to the fourth quarter and 14.2% compared to the first quarter of 2023.
Underwriting and operating expenses were $29.8 million in the first quarter compared to $29.7 million in the fourth quarter. Our expense ratio was 21.8% compared to 22.4% in the fourth quarter. We had 5,109 defaults at March 31, compared to 5,099 at December 31, and our default rate declined to 80 basis points at quarter end.
Claims expense in the first quarter was $3.7 million compared to $8.2 million in the fourth quarter. We have a uniquely high quality insured portfolio, and our claims experience continues to benefit from the discipline with which we've shaped our book and the strong position of our existing borrowers as well as the broad resiliency we've seen in the housing market.
Interest expense in the quarter was $8 million. Net income was a record $89 million, up 6.8% compared to the fourth quarter and 19.6% compared to the first quarter of 2023. Diluted EPS was a record $1.08 per share, up 7.5% compared to the fourth quarter and 23.5% compared to the first quarter of 2023.
Total cash and investments were $2.5 billion at quarter end, including $92 million of cash and investments at the holding company. Shareholders' equity as of March 31, was $2 billion and book value per share was $24.56. Book value per share, excluding the impact of net unrealized gains and losses in the investment portfolio was $26.42, up 3.4% compared to the fourth quarter and 17.1% compared to the first quarter of last year.
In the first quarter, we repurchased $25.2 million of common stock, retiring 840,000 shares at an average price of $29.98. As of March 31, we had $152 million of repurchased capacity remaining under our existing program. At quarter end, we reported total available assets under PMIERs of $2.8 billion and risk-based required assets of $1.6 billion. Excess available assets were $1.3 billion.
Overall, we delivered standout financial results during the quarter with consistent growth in our high-quality insured portfolio and record top line performance, favorable credit experience and continued expense efficiency driving record bottom line profitability and strong returns.
With that, let me turn it back to Adam.

Adam Pollitzer

Thank you, Ravi. We had a terrific quarter once again delivering significant new business production continued growth in our insured portfolio and record financial performance. Looking forward, we're encouraged by the continued resiliency that we see in the macro environment and housing market, and we are well positioned to continue delivering differentiated growth, returns and value for our shareholders. We are leading the market with discipline and distinction. Sustainable secular trends are fueling the long-term private MI industry opportunity and we are well positioned with a strong customer franchise, a talented team that's driving us forward every day, an exceptionally high quality book covered by a comprehensive set of risk transfer solutions, a robust balance sheet and the significant earnings power of our platform. Taken together, we're confident as we look forward.
Before closing, I also want to take a moment to acknowledge Ravi, and thank him for the important contributions he's made to National MI success over the past 2.5 years really has brought a valuable strategic perspective to our management team and he has been an important business partner for me under his leadership as CFO, we've delivered standout operating performance and record financial results quarter after quarter. We've continued to lead with innovation in the risk transfer markets has successfully introduced our share repurchase program and have made the right investments to position National MI for continued long-term success. So thank you, Ravi. Our new CFO, of course, within Bank will be joining us in May, and we're excited to welcome her at a time when we have such significant momentum across our business.
With that I'll ask the operator to come back on so we can take your questions.

Question and Answer Session

Operator

(Operator Instructions) Bose George, KBW.

Hey, good afternoon, everyone. This is actually Alex on for Bose. To start out, it looks like your 95% plus LTV bucket increased on a year on a year-over-year basis to 11% of total NIW from 4% in last year's first quarter, and it looks like that bucket has been in the low double digits over the last couple of quarters as well on. Could you just talk through some of the drivers of that increase. Is that just a reflection of some of the affordability challenges we're seeing in the market currently? Or is there anything else you'd highlight there?

Adam Pollitzer

Yeah, sure. I'll if I had to guide you to go back and look at some of our transcripts from earlier calls. Last year, we made a conscious decision in late 2022 and early 2023 as house prices were declining and the outlook was a little bit less certain for the path going forward to curtail the flow of 97 LTV volume coming into the portfolio. It's one of the benefits that we have with Rate GPS, where we can very actively and precisely manage the flow of risk coming into our portfolio at any point in time. Beginning on our first quarter call last year, we talked about though, as things have stabilized as the market had really digested and recalibrated to elevated interest rates at house prices again began to resume their climb toward record highs that we were going to be comfortable accepting a modest amount of incremental 97 LTV volume into the portfolio. And that's really what you see. We've been at this. I think we're 11% this quarter at roughly that level for the last several quarters.
The other item that I would note though, is that even though our volume has increased for that risk cohort year on year, very deliberately, we feel good about having curtailed in late 22 and early 23, and we feel good about having taken an incremental amount of volume over the last several quarters. We still meaningfully under index the broader MI market for 97 LTV concentrations. The rest of the market last quarter was at around 15% compared to our 11% this quarter.

Okay, great.

John Swenson

Thanks for that, that that all makes sense and then maybe just one more quick one on. So you and your peers, both are all the peers have kind of meaningful level of PMIERs excess capital currently, I believe on NMI. is now around 80% of the minimum required level at or 80% above the minimum required level at quarter end. When we think about excess capital moving forward as PMIERs is still the best metric to consider? Or do you think the industry will continue to run with meaningful excess levels for the time being?

Adam Pollitzer

Yes, I'd say, I think there's a yes to both of those impacts. So I think premier still sets the binding capital constraint for us and others in the industry to a significant extent on almost every policy that we ensure premier sets the binding capital constraint. There may be a few policies where our internal view of economic capital put in the main it is Premier's that tries our needs and its peers that we manage against.
Broadly speaking, though, in terms of the excess that we're carrying relative to the PMIERs minimum requirements, if capital is key for us, and we're obviously in a terrific position today. We've got a strong liquidity and funding position. We benefit from the broad protection of our comprehensive reinsurance program, which not only provides us with risk transfer benefits, but also with real capital efficiency and benefit. We've got a conservative investment portfolio and we have ready access to capital across the funding spectrum and when we look at it today, even though the macro environment has proven to be remarkably resilient in the face of it, elevated interest rates, risks certainly remain. I think the market volatility over the last few months serves to highlight that into as we think about our excess capital position, we want to make sure that we're being balanced, right? We want to make sure that on the one hand, we recognize that there's value and conservatism that we're prudently managing our needs and building that access and that access in an appropriate way but there's obviously a cost associated with that that we need to be mindful of and carrying too much excess what we really think about as an excessive amount of capital at any given point in time can serve as a tax and our return potential. We think we're really striking that right balance.
Now, we've just delivered record financial results. We posted an 18.2% ROE. And we've also been able to return a significant amount of capital to shareholders under our repurchase program as we look going forward, the sizing of that excess capital position, the line between a prudent amount of excess and something beyond that, that we would think of as excessive will naturally move depending on the risk environment that we're in.

Operator

Mark Hughes, Truist.

Mark Hughes

Good afternoon. Adam, I wonder if you could just expand a little bit on what you saw, what transpired during the quarter that gave you confidence to release those the accident year reserves? What are the housing market?
The aging of the of the book? What are the key factors?

Adam Pollitzer

Sure. It's a good question, Mark. At the end of the day, really it is really it's first and foremost about how the defaults that we had on the balance sheet or in our portfolio at the end of the prior quarter, how they performed. We actually saw our cure rates during the quarter up move up to their highest levels in the last two years. Not a dramatic degree, wasn't a seismic shift, but cure rates in the first quarter of 24 are the highest level they've been in the last two years. So we came into the quarter with 5,099 defaults. We had over 35% of those defaults short out and for borrowers to resume timely payment of principal and interest on their loans. And so that allows us to obviously release the reserves that we held against that population of defaults. We've also talked about in prior quarters that our general bias when we're establishing our reserves is to anchor more towards downside scenarios. And so we continue to do that at each quarter-end as you roll forward then with another quarter of actual macro development, actual development in the housing market, while we're not necessarily changing that anchoring to downside scenarios, the actual experience over the last quarter ended up coming in better than what our embedded assumptions had been at the time we established reserves at year end, and it's both of those items that drove the release. It's the really strong cure activity that we saw within the default population and its continued strength and resiliency in the macro environment and housing market relative to the assumptions that we had embedded in our year-end reserve position.

Mark Hughes

Could you tell us in that context, the severity was up a bit? I know you spoken to the idea that the you thought the claims, but you did get might have more more merit. I wonder if if you could just discuss the increase in severity.

Adam Pollitzer

Yes. So from I'd say it's been really, really modest a couple of items. One, when we establish our reserves, we're going through and individually modeling in this case, each of the 5,109 loans that are in default in the portfolio and based on our review and set of assumptions around macro, but also the individual characteristics of the loan, the borrower, our estimation of a current mark-to-market equity position for the loan were on applying individual default-to-claim rate assumptions and individual severity assumptions for each of those loans. We're not applying a broad homogeneous peanut butter spread assumption across the entire default population. And so every loan has its own individual risk characteristics and things didn't actually move in a consequential way from year end through March 31st, the weighted average severity assumptions underpinning underpinning our reserves at the end of the first quarter was 65%, and that compares to 66% at year end. So it is evaluated on a real-time basis for the new population at any given point in time, but it actually didn't move in a consequential way from year end.

Operator

(Operator Instructions) Mihir Bhatia, Bank of America.

Mihir Bhatia

Hi, thanks for taking my questions and good afternoon. I wanted to maybe start with just a little quick to go back to your comments on pricing. I think you described it as constructive in your prepared remarks, and I was curious about that, is this does that does that is that meaning to suggest that you guys are still taking price from the industry still taking price? Or is it just for discipline and staying steady?

Adam Pollitzer

Yes, it's much more stability with the industry pricing. We'd use the phrase through sort of the second half of 2022 and into the earlier part of 2023 on our call that pricing was laddering higher in view of emerging risks in the market, and that was necessary at the time. And we were pleased to see that the industry was able to achieve that for the last several quarters. So we've noted that the industry pricing is at it point of balance and stability. And that's what we see today. It's stable, it's rational. We continue to be encouraged by the broad discipline that we see across the sector. And I think most importantly, we're where we should be right. What a point of balance means is that we're fully and fairly supporting our customers and their borrowers. But at the same time, we're using rate among other tools to appropriately protect our balance sheet, our returns and our ability to deliver long-term value for shareholders.
So today, the rate environment, we would say we would say is constructive because it's stable. And also price allows us to strike that right balance between making sure that we first and foremost, keep our customers and their borrowers in mind and prioritize them, but also don't lose sight of the need for us to deliver value balance sheet stability and returns for shareholders.

Mihir Bhatia

Got it. Thanks. And then maybe just switching gears for a second. I wanted to follow-up on the cure rate discussion from a couple of answers ago. What is driving I mean, I'm sorry, you said it's a little bit higher than past, but it is still a pretty high rate.
And I just wanted to understand what is driving the churn rate higher? Is it the new GSE broke programs post pandemic is that changed in any way you're thinking about the default of your assumptions? Is it too early to tell on that? Just trying to understand if higher CR rate is not yet here.

Adam Pollitzer

It's a great question is that we would view there as being perhaps opportunity going forward. We really don't have a rich historical data set to understand how some of the new programs, the new modification waterfall, the codification of the payment deferral program will ultimately impact long-term credit performance. We're optimistic, but that's not explicitly factored in or even implicitly factored into our reserving and what we're seeing. But I think generally speaking, our existing borrowers remain incredibly well situated makeup, strong credit profiles there in loans that were originated under a rigorous underwriting review. Those loans were used to fund the purchase of a primary residence and many borrowers, including those in default benefit from having some significant embedded equity positions out there in homes that on a relative basis have really manageable debt service obligations because they've got historically low 30-year fixed rates. And there I would say there's some there's real value in them churning out, right, because curing out of their default allows them to retain that historically low 30-year fixed rate and to obviously stay in a house today with significant embedded equity and so we're seeing borrowers even when they run into challenges there, they've generally been able to recover and cure their defaults before we see we see claims develop them. And that's obviously a real positive because anything that keeps the borrower in their homes we think is valuable for the borrower. Certainly, we think it's valuable as a social matter. We think it's valuable from an economic standpoint. And ultimately, it's beneficial for us as a claim cost matter.
And I'm also wondering wanted to me here.
I'd just add one additional thing. You know, we've talked about it in the previous quarter that there's a degree of seasonality that tends to come through. And so in Q1, we typically see a bit of an improvement. And so what we saw in this quarter as we got through the end of the quarter was a little bit of that seasonality coming through and boosting our cure rates as a result.

Mihir Bhatia

Got it. Have you disclosed how much embedded equity is in like the default population? Our in-force population?

Adam Pollitzer

Yes, it means also we don't disclose it for the in-force population. We obviously do a mark to market ourselves. We have shared what the default the equity position of our default population is on earnings calls in the past, and we're happy to do so at March 31, 91% of our default population had at least 10% equity, 77% had at least 15% equity, and 65% had at least 20% equity underpinning their mortgages. And obviously, equity provides both a significant incentive for them to cure out of their default head and also provides them the ability to sell their way out of a default without ultimately progressing to a foreclosure and claim.

Mihir Bhatia

Thank you. And then my last question and then I'll get a give someone else a chance I just wanted to ask about you mentioned seasonality, obviously seasonally entering, I guess, moving season of the seasonally stronger housing season. What are you hearing from your partners customers originators or as you call, Ron, are you hearing more optimism this year? Just curious on what you're hearing if that's particularly in markets where you are more excited, less excited last year of our thinking?

Adam Pollitzer

Yes, look to and certainly there was, I think, increasing optimism earlier in the year and we saw a degree of increases in activity. I think that was for a few reasons. One, obviously, rates came from their highs late last year and that brought some new activity to the market. A big part of it, though, is, I think also prospective buyers have recalibrated, right? This is the new reality higher for longer is the new reality. And at some point, they're not saying pause with the need for them to happen. But the decision to buy a house is really driven by life events. First and foremost, there's obviously a heavy financial aspect to it, but it's life events that drive the borrowers and the buyers decisioning. And those life events don't pause simply because interest rates have moved higher. And so we saw a large part of the market we think really recalibrate, we'll need to see what's happening now. It's actually rates have shifted higher over the last few few months. But broadly speaking, we honestly delivered strong NIW production growth in the insured portfolio and has the heavy growth in NIW production in the first quarter. And so we're still optimistic when we had our call last quarter, we shared some perspective on our outlook for market size, MI market size this year, and we shared that we expect the MI market size. The NIW opportunity will be roughly the same size this year at as it was last year Last year was about [$285 billion] of NIW volume. And we still have we still believe that and still expect that that will be where the industry lands roughly this year.

Operator

Soham Bhonsle, BTIG.

Soham Bhonsle

Hey, guys. Good afternoon. Hope you're all doing well.
And I guess first one, just on ROE., Adam, it looks like you've been putting up sort of high teens over the last few quarters and 18.2% again this quarter. Can you just maybe talk about the sustainability of that ROE over the next year or so? And how should we be thinking about upside downside ranges going forward from here?

Adam Pollitzer

Look, I think it's some it's a good question. So I'm wondering if it's nice to have you back on our calls. We always appreciate the time with you. And we understand the question. We understand the focus on we say, return and earnings development patterns. What I would instead focus you on, though, is the fact that we have a large, high-quality insured portfolio with massive embedded value. We've got a terrific team that's helping us to lead with discipline, innovation and efficiency and most importantly, we see tremendous long-term need from our customers and their borrowers for continued down support. We just delivered record profitability, another quarter of 18.2% ROE and we're growing book value and book value per share on an accelerated pace.
As we look out over the next year where things trend, as you noted, we'll see natural fluctuations period to period that's normal, right or volume pricing, persistency, claims, expenses, capital, all of these items are never going to be static. But over the long term, we expect that we'll be able to continue to grow book value at an accelerated pace and that we'll be having this conversation one, two and three years forward from where we are now from a successively higher stronger and more valuable purge regardless of how our lead develops, you know, say over a 12-month period.

Soham Bhonsle

Got it. And Adam, I know you mentioned sort of this secular trend in the industry a few times now. And so I'm just wondering, you know, it seems like low housing affordability continues to be an issue in the US, right? And obviously that's great for homeownership, but it could be an interesting opportunity for Am I right where you could just continue to penetrate the market even further if fewer folks you put 20% down.
So just curious if you tried to sort of size that opportunity like incremental opportunity as we think long term.

Adam Pollitzer

Yes. So again, it's a good question. And in fact, it is one of the secular drivers. And so if we tally those, but we expect that the housing market broadly will expand and origination volume overall will rebound. We've got the underlying drivers rate of population growth serving as a demographic tailwind. There's also the practical and emotional pull towards homeownership right to hedge. If rates are increasing this supply demand imbalance that we see across almost all markets nationally is driving long-term house price appreciation and for our industry and for us because ratable exposure is not based on the number of homes. The number of loans that we insure, rather, it's based on the dollar value and size of those loans. Rising house prices, which track loan sizes higher also provide a tailwind to growth and then as you noted, we do think that we will see an increasing number of borrowers going forward who need downpayment support and who will find success and value and turning to the private MI industry. And so we have highlighted this for some time. We candidly think it's a bit underappreciated, but the long term growth opportunity and let's put it into very real practical terms, right, 2023 was a year in which the private MI industry deliver $284 billion of NIW volume. Almost all of that was purchased activity, obviously with rates moving where they had, there was very, very little refinancing volume that $284 billion of NIW volume. If you scope out the peak pandemic years represents the second or third largest private MI market ever. And at the same time, the origination environment right was quite stressed and it was the smallest number of loans originated in the US since sometime in the mid 90s. The data gets a little bit and at a hazy earlier than 2000, but sometime between 1995 and 1997 is the last time that we had that you number of transactions, number of loans originated in the US. And if you pair those together, what we had is one of the largest MI markets ever while at the same time, we had one of the smallest origination markets ever. And from our vantage point, we think that that sets a very high floor for where MI industry NIW volume will go rolling forward.

Operator

Rick Shane, JP Morgan.

Rick Shane

Hey, guys, thanks for taking my questions this afternoon, Tom, look, when you look at the reserve coverage is a function of default, our risk in force, it's actually been very steady quarter over quarter that suggests that as you are experiencing cures within the portfolio that they're sort of relatively evenly distributed in terms of aging because otherwise, you would sort of some seasoning, you might see an increase or decrease in on the reserve rate. Otherwise, is that the right way to think about it?
And the other part of that question is are there certain cohorts, our vintages where you were seeing some underperformance in terms of roll rates?

Adam Pollitzer

Rick, it's a great question and you're spot on and simply put some numbers to it. In the first quarter, the average reserve net reserves to take into account reinsurance, the average net reserve that we established against each of our new notices that came through in the period, it was $15,200. In the fourth quarter, it was $15,500. These are inconsequential marginal difference between the two. We are seeing a lot of consistency quarter to quarter in terms of the profile of borrowers that are emerging and default status and also those that are occurring now. And so it's not just as you note it's not just that the size of the default population is staying roughly constant as the 20 count move from year end through the end of the first quarter. But also the underlying profile and characteristics of the borrowers and the loans, the properties are all staying very consistent in terms of a particular vintage where we might be seeing worse performance at no I think though what we are seeing is as as the newer production years age, our 2022 and 2023 books age and those borrowers naturally some subset of them, unfortunately, progress into default status in march towards claim those book years. And the borrowers who are in default are different in their profile or their performance other than the fact that they have less embedded equity than borrowers who purchase their homes in 2020, 2020 2021 and obviously benefited from the significant rally in home prices that we saw through the course of the pandemic. That's the real item that we watch for that is factored in now into our reserves because we're establishing reserves based on the mark to market and assessment for each loan individually.

Rick Shane

Got it. Okay. And it's funny, I had the number of defaults of 10 loans and I sort of had this mental picture. You guys waiting around on the last day of the quarter, hoping that 11 would come in. So it would be down sequentially.

Adam Pollitzer

And Rick, you help me there, I think I said 20 but you're right, it's 10 different accounting fees broken.

Operator

Doug Harter, UBS.

Doug Harter

Thanks and good afternoon. Can you talk about kind of how you're thinking about the pace of capital return for the course of the year? And just any updates around the thoughts around introducing a dividend?

Adam Pollitzer

Sure. Why don't I cover those two, then I'll cover the dividend first. But right now, we're focused on our repurchase program and deploying the remaining $152 million of capacity that we have, we see repurchases away for shareholders to directly participate in the value that we're creating. And it also is really helpful for us to maintain the right funding balance optimizing between our equity debt and reinsurance usage. And also it's obviously supportive of future EPS and ROE outcomes. We're really pleased with the execution that we've achieved to date. We've repurchased to date, $174 million of stock and 7.3 million shares at a weighted average price-to-book multiple of roughly one times. And so that really is our focus today. We don't have any other plans right now. But over time, as we continue to perform and grow the dividend stream that's available to the holding company from our primary operating subsidiary, we may have an ability to introduce a common dividend. But for right now, repurchase is our it's our primary focus in terms of the from the pace of activity I'd expect that we'll continue to execute on a roughly similar pace as we have been. We've talked about how the existing program runs through year end 2025, and there's no hard and fast rule. We execute according to a pricing grid that we established and shared with the banks that assist us with the repurchase activity. And so in periods where stock price is higher. We may buy back a little bit less in periods where stock price dips, we may be more active. But generally speaking, we guided to assume that we'll be roughly ratable in our execution through the remaining time and the remaining dollars on the program. And that continues to be the case.

Doug Harter

Appreciate that. And then just one more how are you thinking about some kind of going back into the Ireland market to kind of as another form of reinsurance?

Adam Pollitzer

Yes. Look, we had some significant success in the Ireland market in the past. And but I'd also say we found real success in the traditional reinsurance market with our XOL execution and we value the credit risk transfer benefits and the Premier's efficiency in funding, can we achieve anytime we have been skewed more towards the XOL market more recently.
I think we've done six deals since the beginning of 2022. And those deals in the traditional markets really help us compress the cycle time between transactions, we're able to secure forward flow coverage that we have for Flow XOL coverage in place for all production that we generate this year from the traditional market. That's not something that's available in the Ireland market. And so there's a lot of value I'd say in both from. We do expect that at some point in the future, we'll be back in the island markets for right now. We're finding a lot of success in the XOL market.

Operator

Mark Hughes, Truist.

Mark Hughes

Last quarter, you had talked about the premium yield. I think your outlook was for relative stability. You're obviously up a little bit when you look at the current pricing on the business that you're writing on? How do you give an update on that and stable from here or maybe a little bit more improvement?

Adam Pollitzer

Yeah. A good question, but I really we reiterate the general perspective that we had shared last quarter, which is we've obviously enjoyed some degree of Flex premium yield inflecting higher for a few quarters running now, which is a real positive for us. But as we model it going forward, we do expect that our core yield, which strips away and the impact of movements of our reinsurance costs and the cancellation earnings will remain generally stable through through the remainder of the year. We'll see benefit from strong persistency and the pricing gains that we've achieved over the past year. Those will provide us with the real support for that stability in our net yield is more difficult to us to forecast, obviously, because it's also going to be impacted by two things by any decisions that we make with respect to further reinsurance execution through the year and more importantly, by our loss experience as the profit commission on our quota shares fluctuates with changes in our ceded claims expense. And so obviously, that will really depend on how the default population develops, how the macro environment develops for core yield. We expect continued stability as we roll forward.

Mark Hughes

And then on the investment portfolio, what was the yield on the portfolio overall? Then? Can you share new money yields yet?

Ravi Mallela

The investment portfolio yield overall for Q1 was 2.9%. And from a new investment perspective, we're seeing, you know, rates new money rates around 5% to 5.5%. Obviously, that will depend on the duration the bond type ratings and just demand in the market. Some nothing's really changed about the profile of of our investment portfolio or the new purchases we're making, but that's what we're seeing.

Operator

Scott Heleniak, RBC.

Scott Heleniak

Yes, the the NIW showed a year-over-year growth of one of your competitors of that had reported, it showed a decline. I'm just curious if you can talk about I know it's too early to talk about market share, but do you feel like you're kind of increasing that wallet share with the existing customers that you had talked about and maybe some of those new accounts. But just talk about what's driving that in the quarter? It seemed like it accelerated.

Adam Pollitzer

Yeah, absolutely. But also, as you know, it's difficult to measure because there's only us and one other company that are out. So we don't know that you know until we get through earnings season, how things will ultimately land?
I think first and foremost, we're delighted with the results that we achieved in the quarter. We wrote $9.4 billion of high quality, high return new business. We're working hard to support our customers and their borrowers, and we're driving continued growth quarter on quarter in our short portfolio as for share and what's driving it?
I'll give the standard disclaimer, which is we've said many times, we do not manage to market share. We are focused on serving our customers deploying capital in a risk responsible manner. We want to make sure that we're writing as large a volume of high quality, high return and high value business that we can. And ultimately do so in a way that allows us to drive profitable growth in our short portfolio.
The success that we had in the quarter really traces to the same reasons that we've been successful for quite some time. It's really about on the ground execution. We're adding more customers. We're providing value added INPUT away from price through our existing accounts so that we can win an increasing share of their wallet for proactively managing our mix, our mix of business, our NIW flow by borrower by geography, by product risk dimensions, and we're just generally showing up in the market for lenders and borrowers with consistency every day and all. And it's really that basic building blocks of on-the-ground execution that are driving our success.

Scott Heleniak

All right. That's helpful. And then just another question to you on just risk in force. When you look at the table in the top 10 states and it looked like you had a lower share of the top 10 states year over year.
And is there any are there any states that you want to call out? You're growing as a percent of the book year over year that are kind of becoming more significant, but anything to call out there?

Adam Pollitzer

No, we've got a at this point. We've been at this for quite some time our customer France, our sales team does a phenomenal job of, obviously adding customers, making sure that we maintain strong and active dialogue and access to existing accounts that we've worked hard to penetrate in the past. And we have access at this point to basically the entire addressable MI. and IW. opportunity. So we have a broadly diversified national customer franchise which helps us obviously achieve a broadly diversified our geographic or a portfolio that is broadly diversified by geography.

Scott Heleniak

Okay, great. And then just the last one on persistency. It's kind of held stable. Is there any expectation in changed or expect it to kind of be around that similar range for the rest of the year?

Adam Pollitzer

Yes. Well, in terms of AM, we will most likely continue to see, I would say some natural trending off of peaks, right? I think we were a little north of 86% late last year were 85.8% this year. We do expect that certainly with rates where they are relative to the embedded note rates in the portfolio, that persistency will remain well above historical trend as we progress through 2024. Even if we see a little bit of movement, it will be up or down by degrees.

Operator

This concludes our question and answer session. I would like to turn the conference back to Mr. Swanson for closing remarks.

John Swenson

So thank you again for joining us. We'll be participating in the BTIG. Housing Finance Conference on May seventh, and the Truist Financial Services Conference on May 22nd. We look forward to speaking with you again soon.

Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.