Essent Group - Earnings Call - Q4 2024

Executive Summary

• Q4 2024 EPS of $1.58 missed consensus ($1.65*) as loss provision rose on hurricane-related defaults and portfolio seasoning; total revenues were $315.0M, roughly in line with consensus ($315.3M*).
• Management raised the quarterly dividend 11% to $0.31 and approved a $500M buyback through 2026, signaling confidence in cash flows and capital position—key stock catalysts near term.
• Credit remained solid despite seasonal/default aging; default rate rose to 2.27% (ex-hurricanes ~2%), with ~$8M of loss provision tied to Helene/Milton; investment income stayed strong at $56.6M.
• Persistency remained elevated (85.7%), supporting premiums and investment income; 12-month IIF rose to $243.6B, NIW was $12.2B (down slightly q/q).
• Programmatic reinsurance continues: two forward quota shares (25% of eligible 2025–2026 policies) were added in Q1’25 to diversify capital and protect new business.

What Went Well and What Went Wrong

What Went Well

• Elevated persistency and resilient housing/labor markets continued to support credit performance and investment income; net investment income reached $56.6M in Q4 and $222.1M for FY 2024.
• Capital return stepped up: dividend increased to $0.31 and $500M buyback authorization through 2026; ~2M shares repurchased in Q4 and January (~$118M).
• Strategic risk transfer: management entered two forward quota share deals covering 25% of eligible 2025–2026 policies, reinforcing programmatic reinsurance discipline and capital efficiency.
• “We believe Essent is well positioned to continue producing strong returns and growing book value per share” (CEO).
• “Our strong operating performance continues to generate excess capital” (CEO), enabling balanced returns and optionality.

What Went Wrong

• EPS declined y/y and q/q (Q4 diluted $1.58 vs. $1.64 y/y, $1.65 q/q) as loss provision increased on hurricane-related and seasonal/default aging dynamics.
• Default rate rose to 2.27% (from 1.95% in Q3) with 2,119 hurricane-related defaults; $8M of provision reflected higher cure-rate assumptions vs non-hurricane defaults.
• Title operations remain a near-term earnings drag; pretax loss of ~$21M in 2024 (before corp allocations) and management expects “more of the same” in 2025 absent rate relief/refi pickup.

Transcript

Operator (participant)

For standing by. At this time, I would like to welcome everyone to today's Essent Group's quarter earnings call. Online participants are placed on mute because we're hearing background noise. That's just to facilitate the question and answer session. If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you have any questions, simply press star one again. Thank you. Now I'd like to turn the call over to Philip Stefano, with Investor Relations. Phil, please go ahead.

Philip Stefano (VP of Investor Relations)

Thank you, Greg. Good morning, everyone, and welcome to our call. Joining me today are Mark Casale, Chairman and CEO, and David Weinstock, Chief Financial Officer. Also on hand for the Q&A portion of the call is Chris Curran, President of Essent Guaranty. The press release, which contains Essent's financial results for the fourth quarter and full year 2024, was issued earlier today and is available on our website at essentgroup.com. The press release includes non-GAAP financial measures that may be discussed during today's call. A complete description of these measures and the reconciliation to GAAP may be found in Exhibit O of our press release. 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 discussion of these risks and uncertainties, 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 16, 2024, and any other reports and registration statements filed with the SEC, which are also available on our website. Now let's turn the call over to the presenter.

Mark Casale (Chairman and CEO)

Thanks, Phil. And good morning, everyone. Earlier today, we released our fourth quarter and full year 2024 financial results. Strong credit quality and resilience in the housing and labor markets continue to drive credit performance. Higher interest rates remain a tailwind for persistency in investment income.

Although mortgage origination activity remains below historical levels, we anticipate that home buying demand is merely being postponed given the level of rates and affordability. While there is always uncertainty in the economic environment, given the strength of our balance sheets and our buying management distributed operating model, we believe Essent is well-positioned for a range of economic scenarios, and now for our results. For the fourth quarter of 2024, we reported a net income of $168 million compared to $175 million a year ago. On a deliverable share basis, we are in $1.68 for the fourth quarter compared to $1.64 a year ago. For the full year, we are in $729 million or $6.85 for deliverable share, while our return on average equity was 14%. As of December 31st, our value per share was $63.36, an increase of 11% from a year ago. As of December 31st, our U.S.

Mortgage insurance in force was $224 billion, a 2% increase versus a year ago. Our 12-month persistency on December 31st was 86%, down about one point from last quarter, while nearly 60% of our insurance in force was deployed at a note rate of 9.5% or lower. Although persistency has likely peaked, we continue to expect that the current level of mortgage rates will require elevated persistency in the near term. Credit quality for insurance in force remains strong, with a weighted average FICO of 746 and a weighted average original LTV of 93%. Credit performance in the fourth quarter primarily reflects the aging of our portfolio and the typical seasonality of the fourth quarter. Note, however, that U.S. performance in the fourth quarter was impacted by approximately 2,000 defaults in areas affected by Hurricanes Helene and Milton. In addition, we are monitoring the potential impacts of defaults from the California wildfires.

We will discuss defaults and reserves in more detail in a few moments. On the mortgage insurance front, our industry remains competitive, and strong credit guardrails remain in place, driven by the underpinnings established by the GSEs after the global financial crisis. These guardrails, combined with our S&H credit engine, enable us to selectively grow our high-credit quality assurance support while generating strong returns. Please note our position in the marketplace and the unit economics that we are achieving on new business. As a reminder, we price for new business, assuming a combined ratio of roughly 35%-65%. In the first quarter of 2025, we entered into two quarters of our transactions as a panel of highly rated reinsurers for protection for our 2025 and 2026 business.

We have believed that the strong expectation and commitment to our programmatic reinsurance strategies, which helps to diversify our capital resources, while shielding a meaningful portion of our mezzanine credit risk. At year-end 2024, approximately 97% of our portfolio is covered with some form of reinsurance. Essent Group has had another strong year of performance, riding high-quality GSE-dominated business while leveraging its fee-based MDA services. Essent Group ended the year with annual credit quality revenues of approximately $80 million, while our third-party risk reports were $2.2 billion. Since 2016, Essent Group has earned over $450 million of net income from its third-party business, and it's distributed approximately $800 million to Essent Guaranty. The title operations incurred a pre-tax loss of approximately $21 million in the prior year, prior to corporate allocations. We continue to maintain a long-term view for this business.

However, given its leverage rates, we do not expect title to have any material impact on earnings over the near term. Capital investment as of December 31st was $2.3 billion, and our new money yield in the fourth quarter remained over 5%. For the full year 2024, our investment yield was 3.7% compared to 3.5% in 2023. Net investment income was $222 million in 2024, nearly 20% over 2023. As of December 31st, the carrying value of our investments in that class is $304 million, and the accretion has created $81 million of value. As of December 31st, we are in a position of strength with $5.6 billion in GAAP equity, excess of $1.6 billion in overall reinsurance, and a PMIERs efficiency ratio of 178%. Full year 2024 operating income of $852 million. Franchise remains well-positioned from an earnings, cash flow, and balance sheet perspective.

As a result of our strong financial performance and capital position, our board of directors has approved an 11% increase in our quarterly dividend to $0.31 per share. At the same time, our board also approved a $500 million share repurchase authorization that runs through year-end 2026. Now let me turn the call over to David.

David Weinstock (CFO)

Thanks, Mark. Good morning, everyone. Let me review our results for the quarter in a little more detail. For the fourth quarter, we earned $1.58 per deliverable share compared to $1.65 in the last quarter and $1.64 in the fourth quarter a year ago. Our U.S. mortgage insurance portfolio ended 2024 with insurance in force of $243.6 billion, an increase of $6.69 billion since September 30th, and an increase of $4.5 billion or 2%, which is up from $239.1 billion at December 31st, 2023.

Essent Group's December 31st, 2024, decreased to 85.7% compared to 86.6% at the end of the third quarter. Net premium earned for the fourth quarter of 2024 was $244 million and includes $16.2 million of premiums earned by Essent Group on our third-party business and $62.6 million of premiums earned by the title operations. The average GSE premium rate for the U.S. mortgage insurance portfolio for the fourth quarter was 41 basis points. The average net premium rate is 35 basis points in the fourth quarter for 2024, most consistent with last quarter. The average GSE premium rate for the full year 2025 will be largely unchanged from the fourth quarter rate of 31 basis points.

The net investment income for full year 2024 was $222.1 million compared to $186.1 million for the full year 2023, due to growth in the investment portfolio and investing at higher yields than the prior year's portfolio. The net investment yield for the fourth quarter was relatively flat to the prior quarter. Credit performance for the fourth quarter was affected by defaults and areas impacted by Hurricanes Helene and Milton. The provisions for losses and loss adjustment expense for the U.S. mortgage insurance portfolio was $37.2 million in the fourth quarter 2024, compared to $29.8 million in the third quarter of 2024, and $19 million in the fourth quarter a year ago. During the fourth quarter, total defaults increased by 2,533, which includes 2,119 defaults that we identified as Hurricane-related defaults.

Based on prior industry experience, we expect an outright number of Hurricane-related defaults that will result in claims will be less than the average claim experience of non-Hurricane-related defaults. The provision for losses on these Hurricane defaults does reflect a higher churn rate assumption than the estimates used on non-Hurricane defaults. The provision for losses in the fourth quarter includes $8 million pertaining to the Hurricane defaults, representing our best estimate of the outside loss incurred claims associated with these defaults. Looking forward, we will continue to gather information on risk factor rates and defaults and update our reserves as needed. At December 31st, the default rate on the U.S. mortgage insurance portfolio was 22.7%, but it increased this quarter to 1.95% as of December 30, 2024. For the full year 2024, we've accrued a net position on the U.S.

Mortgage insurance portfolio of approximately $75 million, with higher defaults reflecting the aging of the portfolio and the impact of the hurricanes. Other underwriting and operating expenses in the fourth quarter were $71 million and include $22.7 million of total title expenses, of which $8.5 million were payments received by agents. Our consolidated expense ratio was 28.7% this quarter. Expense ratio excluding title using a non-GAAP measure was 19.4% this quarter. The exhibit of our expense ratio excluding title and the reconciliation to GAAP can be found in Exhibit O of our press release. The full-year effective tax rate for full year 2024 was 14.7%, including the impact of $2 million of non-deductible tax items. In 2025, we estimate that the annual effective tax rate is approximately 15.5%, including the impact of any discrete items.

As Mark noted, our holding company liquidity remains strong and includes $500 million of undrawn borrowing capacity under our revolving credit facility. At December 31st, we had $500 million of senior unsecured notes outstanding, and our excess capital ratio was 8%. At December 31st, Essent Guaranty's PMIERs sufficiency ratio was strong at 158%, with $166 million in excess available assets. At quarter-end, Essent Guaranty's excess capital was $366 million, with a risk-to-capital ratio of 981%. This excess capital includes $2.5 million of contingency reserves at December 31st. During the full year 2024, Essent Guaranty paid dividends of $165 million to its U.S. holding company. As of January 1st, Essent Guaranty received quarterly dividends of $397 million in 2025.

quarter-end, Essent Guaranty's TA, which provided reinsurance to Essent Guaranty on certain policies originated prior to April 10, 2019, entered into a commutation or release agreement under which outstanding reinsurance risk in force was immediately releasing the RBC. Essent Guaranty's TA then surrendered its insurance license as of December 31st, 2024, freeing up $93 million of cash and investments at Essent Guaranty's TA as liquidity to the U.S. holding company. As a result, there were no dividends from the insurance subsidiaries to the U.S. holding company during the fourth quarter of 2024. During the fourth quarter, Essent Guaranty paid a dividend of $87.5 million to Essent Group. Also in the quarter, Essent Guaranty paid cash dividends, totaling $29.4 million to shareholders, and we repurchased 1.2 million shares for $66 million under the repurchase agreement approved by our board in October 2023.

In January 2025, we've purchased nearly one million shares for $52 million, taking advantage of the volatility in Essent Guaranty's share price. As we have previously discussed, we are patient and value-sensitive when it comes to buying direct shares. Believing this strategy will support our long-term goal of compounding each value-per-share growth over time. Now let me turn the call back over to Mark.

Mark Casale (Chairman and CEO)

Thanks, David. In closing, we are pleased with our full year 2024 financial results, which continue to reflect the strength of our franchise. Our high-quality portfolio, combined with resilience in housing and employment, continues to translate to strong credit performance, while our business continues to benefit from the impact of rates on persistency and investment income.

Strong operating performance continues to generate excess capital, which we will approach in a balanced manner by maintaining balance sheet strength, preserving optionality for strategic growth opportunities, and optimizing shareholder returns over the longer term. Looking forward, we remain committed to our disciplined management distributed operating model and believe that Essent remains well-positioned to deliver effective returns for our shareholders. Now let's take your questions.

Operator (participant)

Mark, at this time, I would like to remind everyone in order to ask a question, press star one on your telephone keypad. And we will pause just a moment to compile the Q&A. Okay, let's take our first question. It comes from the line of Bose George with KBW. Go ahead.

Bose George (Managing Director)

Hey everyone, good morning. It's just on title. Is your expectation for 2025 that title results should be similar to 2024? Was there anything unusual in title this quarter that you know the provision was roughly optics goes up?

Mark Casale (Chairman and CEO)

Hey, Bose, good morning. I would say with title for 2025, I would expect more of the same. I think we have a cost structure, and we had said earlier, right, it would take 12 to 18 months to stand it up. We're right at 18 months. It's relatively well set up. It's just a matter of, I kind of look at some of that, you know, partial cost, you know, the drag is we kind of had an option cost for lease and ask to come back. And it's just that rates just haven't come back. Like I said in the script, we're leveraged to rates. We did sign up one pretty large lender last year, but we're really carrying capacity for that lender.

And there's a cost to that. So I would expect it to be kind of more of the same. Again, longer term, it's a call option. And we do believe longer term it'll be still momentum with earnings relative to asset rate. And I think we're still, you know, but we continue to make progress there. But again, I think when rates come down, we should see better results. In the fourth quarter, though, it was more around the provisions, you know, those provisions that we've normally had. And that was really just some of the cleanup from the underwriter that we bought into some of the claims team to go a little bit of, you know, some quarter cleanup there.

Bose George (Managing Director)

Okay, of course. And then actually the Hurricane-related defaults have some CJs that come out in 2019. Was that the defaults that in the inventory, those in inventory at quarter-end, or had some of those cured by quarter-end?

Mark Casale (Chairman and CEO)

They were in there at quarter-end. So like we said, it's just I think most of the increases of cures were quite inherent. So if you take out, you know, two and a quarter or 2.27% of the cure rate, you take out the default, it's probably, you know, closer to 2%.

Bose George (Managing Director)

Okay, great. Thanks.

Operator (participant)

All right. Close. And our next speaker f`r`om the line, Larry McAlee. Larry, please go ahead.

Hey, good morning, everyone. Maybe you could fill in on the discount. So I kind of suspect that the 2,000 or so items, you noticed it in the quarter. New notices are actually down significantly, which is diminished on additional questions now. Do you have any color on kind of what's going on there?

David Weinstock (CFO)

Hey, Larry. Yes. Yeah, you know, there are some cures have been close to the default patterns. You're right that in general we do see an uptick in the second half of the year for sure, and somewhat a little bit in the fourth quarter. That wasn't anything that we read into it necessarily. I would say on the whole, as we look at 2024, in general, 2024's default pattern was a little bit favorable, you know, mostly every quarter, because the higher FICO cohorts have grown. So I think what we really saw in the fourth quarter was maybe a little bit more of the same.

Got it. Got it. Okay. And then delinquency to default rate, kind of cure rates, kind of the 2% that you just noted. Doug, your case kind of decelerated compared to the last quarter. I'm just curious, have you kind of reached a point with some of this seasoning where you should start to get more of this heavy pace of increase for the default rate, or is that kind of too early to call right now?

Mark Casale (Chairman and CEO)

Yeah, I think it's too early to call, and you know, I think just to get picked for carry, you know, I think given the seasoning of the book, just for the average age of the book, you're looking at, you know, historically COVID was 18 months, kind of continued to turn over. Because of, you know, kind of post-COVID, it's kind of the second cycle of COVID was the first cycle, right? Slow rates, tons of origination, a lot of refinancing portfolio taken over.

Kind of in the middle of 2022 when rates shot up, we kind of been frozen. And it was really low churn and adding 33 months as of 2023, 33 months. So you're starting to really, you know, we're getting that extra year of premiums, which we've enjoyed over the past couple of years. But I just sort of figured out that, you know, the more borrowers are outstanding for longer periods of time, it's kind of natural that, you know, a few of them that stick around longer will default. So it's pretty much in our expectations. But it wouldn't surprise me if the default rate kind of continues to go up somewhat during 2025. I think it's like, I don't know, I wouldn't be surprised if the default rate increases.

I know maybe we're, you know, maybe we're different, but I think when we see it kind of it's to go up to a 2%-3% range, it wouldn't surprise me at all.

Operator (participant)

Okay. Our next question comes from the line of Rick Shane. Rick, please go ahead.

Thank you for taking my questions this morning. Look, there's been some comments on some severity that we're probably going to get questions next quarter about shares. And obviously there are short-term impacts that come to mind. But I'm curious, Mark, you know, in many of the high-cost regions of the country, insurance is now becoming very expensive or not necessarily even available. Two things. First of all, how do you guys monitor whether or not borrowers are in fact insured? And if insurance really becomes increasingly problematic, how do you think about that in terms of pricing for risk and considering the forecast?

Mark Casale (Chairman and CEO)

Yeah, that's a really good question. It's been tough recently for a while internally. One, I think if they have a mortgage, they're required to have homeowners. So if somehow they're dropped, force place. It's worth twice. So we don't worry about them not having, you know, the insurance if something happens. So I think we're pretty well covered there. And remember, and I think you know this, Rick, and I'm sure a lot of others do, we're not really on the hook obviously until the home is repaired. So there's that layer of protection we have. And that's why historically, a lot of the defaults in the Hurricane region tend to cure at a pretty high rate.

Looking at him, past performance doesn't predict the future, but that's been pretty much the scenario we've had for past hurricanes. In terms of the longer-term impact of homeowners insurance, yeah, I think it's too soon to see an issue in certain parts of the country. Just remember, you know, in some of the real coastal regions or even where the wildfires are, these are high-cost areas, Rick. It's not a lot of mortgage insurance. So we don't really, we're not. I suppose, adding the other ones that are most accessible to these significant increases in homeowners. Even for normal folks, you'll pay from like $600 a year to $1,200. It's significant. But this is from a borrower perspective. If you kind of like raise above it and kind of just secure from an MI perspective, maybe a point in DTI.

So it's like we think about it a lot, but it's trying to put it into perspective for investors that yes, it's an added cost. And I think it's just for those in general, Rick, who kind of are seeing that, you know, with affordability, you know, going up, and maybe squeezing out the amount of disposable income that borrowers are going to have to allocate to mortgages, I just think it's going to increase. I mean, you live in California. It's always been that way in California. For 30 years, borrowers have allocated more of their disposable income to housing. It hasn't really been that way, you know, for the rest of the country. And I just think homeownership rates will continue to stay where they are, kind of in the upper 60s.

I think borrowers are going to allocate more of their disposable income. I don't think it's going to have a good, if they want to be homeowners. So hopefully that's just a little bit of a big picture to contrast. It does. And again, look, I know you see probably the 10-year horizon. Are you concerned that it has a slowing effect on HBA, which doesn't, more broadly doesn't impact you guys? You know, HBA has gone up so much in the past five years that I don't think it's okay for it to pause for a while, to be honest. I think, again, because it's elastic and allows, and this kind of gets to all kinds of details to catch up, which is kind of part of my longer-term theme for this.

I alluded to it earlier, you know, in my response to Terry, but it's kind of like, you know, three cycles, right? If you just think about recently, we had the COVID cycle, super low rates, lots of origination. And it was an anomaly, right? You know, we've never really seen rates come down that quickly and stay that way. Just in that scenario, we saw it kind of in, you know, 2003 was probably the last time we saw such, you know, significant refinance. And then kind of rates shot up in mid-2022. So it's kind of like new growth started, right? So we've got high rates, you know, HPA's is pretty high. So affordability has been an issue. It's clearly been an issue for the past, since we're still into it.

Once that's been an anomaly. We've never seen the housing market, you know. I read last week that, you know, typically four million borrowers, or four million people move every year. Last year was 2.7, so we're kind of in this housing. I guess it goes up is a good way to say it, but we're going to come out of it, and when we do, and I think how we come out of it is, I don't know if rates come down significantly. I think having HBA remain relatively flattish and allow time for income to increase, you're just going to see, you're going to see it happen naturally, right? Families continue to form. They need to move into bigger houses, keep the same jobs. More of that natural activity is going to come.

I think once we enter in that cycle, I think you're going to see renewed growth in our business. I really do. When that's going to happen, you know, I don't know if it happens in 2025. I think it's just wild to play out. But again, when you see the bigger picture of the industry, right, around a trillion and a half of insurance in force, it wouldn't surprise me. And it's really only grown 2% last year, 2% the year before. I think we're going to pause. And then I do think when these factors come together, I think it'll be a bit of a tailwind for the business.

Got it. Hey, Mark, I always appreciate the answers. Thank you so much.

Operator (participant)

That's right. The next question comes from the line of Doug Harter with UBS. Doug, please.

Doug Harter (Equity Research Analyst)

As you can see, it's a dividend ETF, so very fortunate. Given what you just said, I imagine, following the industry insurance in force growth, how are you thinking about pacing future in force in the near term versus opportunity?

Mark Casale (Chairman and CEO)

Yeah, I think it's a good question, Doug. I think we're entering into this year, you see some opportunities for us to return capital and become a little bit more capital efficient, right? When you kind of combine the flows and growth, you go up a path, we continue to build capital over the past few years, or even though it's been high, you know, credits through the nine, consistency seeming good, and we've had this nice tailwind from investment income, and I think it's been the trick, like $850 million of cash coming in the door.

So it's just been a strong operating performance, and we really did love capital level. So add that in and put into the fact we feel pretty confident around credit in the shorter term. And I know, I know it's your job and absolutely have to think through kind of default rates and where they're going. We do think, again, I've alluded to it earlier, for them to continue to move up to 3%. It should get to that level. It doesn't well surprise me, and we won't get super concerned about it. It's kind of well within our expectations. And then add in, you know, kind of our PMIERs cushion, right? And that's something that always, that's our biggest concern, Doug, is kind of a bigger than, right?

We are, you know, and I know a lot of our analysts are specialists and advanced analysts, but at the end of the day, we really are more of an insurance company. I know a specialty is mortgage, but you know, the financial performance in terms of premiums built up, paying claims, much more of an insurance company. They don't have a lot of liquidity risk, but you know, that's what each financial company has. Our liquidity risk, if anything, is kind of in the PMIERs calculation in terms of the percentage of liquidity. A business is really a cat business in a way. Our catastrophe happens to be a macro, a severe macroeconomic recession, right? That's what we, that's the thing that we think about the most.

We don't worry about the kind of ins and outs of a, you don't have a normal recession or a soft landing. It's really that, that big event. They don't happen that often, but when they do, you know, they're significant, right? It happened in the MI business back in the early 1980s, you know, with, you know, some regional events and super high rates that really crumbled a lot of the MIs back then. It clearly happened during the Great Financial Crisis. You got a crisis in COVID that happened to be, you know, happened to be relatively short. And we run, it was just not just before, we run our tests, the stress test through the GSE stress test. The Moody's S4 is becoming more kind of, I would say, commonly looked at amongst those in the industry.

I think when we kind of go, when we run our numbers through that, we're still pretty good. So I feel like, and that's kind of when we think about the right PMIs, capital efficiency ratio, a lot of that is running through the stress and making sure we have it. So we feel good there. And then when you add in kind of the capital that the holds go, and you know, you've heard me before think about raising investment opportunities, we just haven't seen anything that we like in terms of the investment. So when you put all that together, it is, you know, for the current capital, I think it's a time, it's a good time for us to do it, right? We have, and we've talked about the numerator and the denominator, the numerator again given that pause.

And the pause in the closings isn't. It's not just in the core business. It's really, you know, we alluded to the title. It's much smaller, but it's rate sensitive. And we're seeing a little bit of the pause even with an Essent Re, given the kind of a lack of GSE high LTV ones. So when you add all that up for us to, and again, taking advantage really, we're able to repurchase rate sensitive on the repurchases. We just, it's just a fantastic opportunity, you know, kind of post our November call. So we'll continue, you know, again, so we have like a grid that we'll continue to execute. And don't forget that we have the special dividend as a tool. We haven't used it yet, but again, I think that's always out there.

And I think we, our goal is to grow growth rate for sure, but we also want to make sure we have strong ROEs. And you don't want too much capital to create a drag. I mean, I know this is, it's a high-class problem for us to have, but I do think you'll see a little bit more of that activity in 2025.

Operator (participant)

And our next question comes from the line of Geoff Dunn with Dowling & Partners. Geoff, please go ahead.

Geoff Dunn (Equity Analyst and Partner)

Hey, good morning, guys. Dave, can you confirm, you said a 15.5% tax rate this year?

David Weinstock (CFO)

Yes, that was with our investment at 2.5%.

Geoff Dunn (Equity Analyst and Partner)

Yep. Can you, I'm surprised at how low it is with the new minimum tax. Can you walk through the mechanics of that and what kind of credits maybe you're assuming to accept level?

David Weinstock (CFO)

Yeah, so, and so actually, Geoff, you know, backing up a little bit from what our full year was for 2024. You know, you're speaking about the Vita tax. And, you know, I know there's been a lot of, you know, there's been some developments there that are, that are, has been coming. And I know there are those, there's definitely some Bermuda things that have recorded an economic transition adjustment. And I think that's being looked at and how much of that is deductible and the like. As we don't have one of those, which is recorded in economic transition adjustments, we have a very limited international presence. And there is an international presence exemption related to the dividend tax that really exempts us from tax until 2030.

So, you know, when you look at that, that's why, you know, on the whole, we're just saying for 2025, we're going to see around the same 2.4 million in 2024.

Geoff Dunn (Equity Analyst and Partner)

Awesome, okay. And then, do you have accounts for the two- or three-year notices of hurricane-affected notices that came in?

David Weinstock (CFO)

Yeah, you know, Geoff, we didn't actually. The hurricanes hit really late in September and beginning of October. We didn't really see any of those defaults that came in in the third quarter were hurricane-related defaults. Really, really thought everything was really in the fourth quarter.

Geoff Dunn (Equity Analyst and Partner)

And then last, could you repeat the buyback info for the quarter? I didn't miss that.

David Weinstock (CFO)

Yeah, in the quarter, we repurchased. I've got it right here, we repurchased 60.2 million shares for $56 million in the fourth quarter. In January, we repurchased 1 million shares for $52 million.

Operator (participant)

Sure. Just a reminder, folks, again, if you would like to ask a question, you can star one on your telephone keypad once and star one. And that is a question just in line of [Greg with GIG], sir?

Hey, guys, good morning. I appreciate you guys joining this call again. All right, so it feels like non-bank lenders are laser-focused on getting out of origination and curb keep up, reducing their own prepayment risk through a strong recapture. And a lot of that improving costs and scale already seem to be showing up in the recent behavior when rates are dropping. Do you guys have any perspective on how further growth of these non-bank and the lower cost adjustments and prepay behavior, specifically for the high LTV cohort of borrowers out there?

And then how that kind of dynamic maybe traces back to how you'd like to look at it?

Mark Casale (Chairman and CEO)

It's a, yeah, clearly fascinating kind of observation that comes in when we think about it. You know, when we just look on the front end, I think it's an interesting point. Eric and Schmitz have you back on the call. And you're correct in terms of how efficient the larger originators have become on refinancing. And you can imagine maybe even with some of the potential AI tools out there that they become even more efficient and brutally efficient. They happen for a while. And that's the one thing to keep in mind when you have been for a while. And so I think when we think about, I think it's always dependent.

I mean, so if just rates do come down, would we see more kind of MI roll-off growth? Absolutely. And again, my personal view is like the earlier view in place by, you know, rates come down, you know, it's flowing up on MI and sort of risk. It probably brings in that new cycle a little bit quicker. I think it'll unlock a lot of purchase activity too. So I don't know if that, you know, exactly answers your question, but I do think, you know, kind of it really is dependent on these times. I know the residual risk is that they still need rates to kind of come down. So, and we saw that. I think that was the example. I think we might have talked about it before, but there was kind of that refinance flash in October.

And we saw, and I think it even reflected in our numbers, the refinance percentage was 14-ish in the fourth quarter. So it was relatively higher. And we saw a big one on title. We didn't take advantage of it because, you know, this wasn't long enough. So I agree with you when it comes because they did it that very quickly.

Okay, perfect. Thank you for that. Thank you.

Operator (participant)

Thank you, Greg. And it looks like our final question is from Bose George receiving your feedback. Bose, go ahead.

Bose George (Managing Director)

Great, thanks. I'm thinking about some levering, if I could check them. Did you guys issue guidance core expenses for 2025?

Mark Casale (Chairman and CEO)

No, we didn't have those because we're moving to the segment report. And what you guys will see, you know, in the 8-K disclosure, so it's going to be more MI and then kind of other segments. So, we'll be able to kind of, once you see the numbers, we'll be able to potentially give you some MIs and slides. But big picture, if you were to look at last year's numbers, it'll be relatively flat. Like that's where it was. So we didn't, we wanted to wait until the 10-K was out and you guys had a good chance to kind of look through it.

Bose George (Managing Director)

That's okay, great. And then just one more on the investment portfolio. What's the incremental yield versus the current yield? And actually, is it just a defined quarter-over-quarter? It's a little surprising to the 10.1%?

Mark Casale (Chairman and CEO)

Yeah, I know, it's a little surprising, but we really kind of repositioned. We're repositioning the book. So we moved, and we've started that, you know, in the past. I want to say three or four months.

So we're moving out of kind of the shorter-term cash back into kind of more ABS and corporate credit, kind of back to where we were before, kind of moving back to our normal portfolio. So there's a little bit of that rolling off. It was senior treasuries at really high rates kind of rolling off. So I would think just your thoughts in terms of kind of the rate is in that same neighborhood. Longer term, you know, depending if the yield curve stays where it is, it wouldn't surprise us to see it go above four, but I don't think that's going to happen in 2025.

Operator (participant)

Okay. And there are no further questions, so I will now hand it back to management for closing remarks.

Mark Casale (Chairman and CEO)

I'd like to thank everyone for joining us. Again, for the second time in seven years, I'd like to congratulate our Philadelphia Eagles for winning the Super Bowl. Have a great weekend and go Birds.