MGIC Investment - Q4 2023
February 1, 2024
Transcript
Operator (participant)
Ladies and gentlemen and thank you for standing by. Welcome to the MGIC Investment Corporation fourth quarter 2023 earnings call. At this time, all lines have been placed on mute to prevent any background noise. At the end of today's presentation, we'll have a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. I will now turn the conference over to Dianna Higgins, Head of Investor Relations. Please go ahead.
Dianna Higgins (Head of Investor Relations)
Good morning. Welcome, everyone. Thank you for joining us today and for your interest in MGIC. Joining me on the call to discuss our results for the fourth quarter are Tim Mattke, Chief Executive Officer, and Nathan Colson, Chief Financial Officer. Our press release, which contains MGIC's fourth quarter financial results, was issued yesterday and is available on our website at mtg.mgic.com under Newsroom. It includes additional information about our quarterly results that we will refer to during the call today. It also includes a reconciliation of non-GAAP financial measures to their most comparable GAAP measures. In addition, we posted on our website a quarterly supplement that contains information pertaining to our primary risk in force and other information you may find valuable. As a reminder, from time to time, we may post information about our underwriting guidelines and other presentations or corrections to past presentations on our website.
Before getting started today, I want to remind everybody that during the course of this call, we may make comments about our expectations of the future. Actual results could differ materially from those contained in these forward-looking statements. Additional information about the factors that could cause actual results to differ materially from those discussed on the call are contained in our 8-K that was also filed yesterday. If we make any forward-looking statements, we are not undertaking an obligation to update those statements in the future in light of subsequent developments. No one should rely on the fact that such guidance or forward-looking statements are current at any time other than the time of this call or the issuance of our 8-K. So with that, let's get started. I now have the pleasure to turn the call over to Tim.
Tim Mattke (CEO)
Thanks, Dianna, and good morning, everyone. I'm happy to report we again delivered a solid quarter, capping another year of excellent financial results while returning meaningful capital to our shareholders. Our performance is a testament to the dedication and hard work of each member of our team. Their ability to adapt to market dynamics has been instrumental in our success. During the year, we continued to benefit from favorable credit trends, prudent risk management strategies, a disciplined approach to the market, and a focus on through-the-cycle performance. We remain committed to delivering long-term value for our shareholders as we begin the new year. Turning to a few highlights, in the fourth quarter, we earned $185 million of net income and produced an annualized 15.2% return on equity. For the full year, we earned $713 million.
At the end of the quarter, insurance in force, the main driver of future revenue, stood strong at $294 billion. The overall credit quality of our insurance portfolio remains solid, with an average FICO at origination of 746 and an average original LTV of 93%. We wrote $11 billion of NIW in the fourth quarter and $46 billion of NIW for the full year. The level of NIW in the year is primarily a reflection of the smaller MI origination market. Underwriting standards remain strong, and our NIW continues to have strong credit characteristics. We continue to experience the headwinds of smaller origination market, driven by current interest rates and affordability challenges. The supply of homes for sale remains limited due to the lock-in effect for homeowners with mortgages that have interest rates well below the current market rate.
These same borrowers are also significantly out of the money to refinance, which has led to historically low refinance volumes across the mortgage origination industry, including the MI market. Those headwinds are offset by the tailwinds that higher interest rates have on persistency on our insurance in force. Annual persistency ended the fourth quarter at 86%, up from 82% a year ago and 66% at the end of 2021. The net results of lower NIW and increased persistency is that our insurance in force has remained relatively flat during the year, consistent with what we expected at the start of the year. Home prices continue to be resilient despite affordability challenges and high interest rates. Although the current supply-demand dynamic creates challenges for first-time homebuyers, this dynamic continues to support home prices and helps mitigate the downside risk of home prices.
Many economic forecasts indicate home prices being relatively flat in 2024, which we believe would be a long-term positive for our industry. While there is still some uncertainty, the housing market remains resilient, and the outlook for it and the economy is generally positive. Although the supply of homes available for sale is low, there is pent-up demand, and demographic trends suggest meaningful long-term MI opportunities as the Millennial and Gen Z populations continue to demonstrate a strong desire for homeownership. Given the crosscurrents I just discussed, we expect the MI market to be roughly the same size in 2024 as it was in 2023. Taking a look at the credit performance of our insurance portfolio, our delinquency inventory and rate continue to be at historic lows.
To date, we have not seen a material change in the credit performance of our portfolio overall, and early payment defaults remain at very low levels, which we believe is a good indicator of near-term credit performance. As a result of the strength and flexibility of our capital position during the year, we paid $600 million in dividends from MGIC to the holding company, including a previously announced $300 million dividend in the fourth quarter. We also returned approximately $460 million of capital to our shareholders through a combination of repurchasing common stock and paying a quarterly common stock dividend, which was increased by 15% in the third quarter.
As I mentioned on our last call, with our debt-to-capital ratio in our target range and with debentures being fully retired, we have completed our planned delevering activities, and we expect our capital return payout to increase from a low level in quarters. That was the case in the fourth quarter, as we repurchased 7 million shares of common stock for $123 million and paid a quarterly $0.115 per share dividend to our shareholders for a total of $32 million. We continue to expect share repurchases will remain a primary means of returning capital to shareholders. In 2024, through January 26th, we repurchased an additional 1.8 million shares of common stock for a total of $34 million.
Our recent share repurchase activity reflects the capital strength and financial results previously highlighted and share price levels that we believe are attractive to generate long-term value for remaining shareholders. As of January 26th, we had $240 million remaining on our current share repurchase authorization. The board authorized $0.115 per common stock dividend to be paid on March 5th. We were very active across our reinsurance program during the fourth quarter, and Nathan will share details on our reinsurance activities. Before turning it over to Nathan, I'd like to share a few more comments. I'm happy to report that in January, S&P upgraded MGIC's financial strength and credit ratings to A- and upgraded the credit rating of the holding company to BBB-, and the holding company is now fully investment grade. The outlook for the ratings is stable.
S&P's rationale for the upgrades include an improved view of MGIC's capital adequacy, resulting from the implementation of S&P's revised capital adequacy methodology, MGIC's risk management, disciplined approach to underwriting, resulting in strong portfolio quality, and prudent use of reinsurance. Lastly, as many of you know, Steve Thompson, our Chief Risk Officer, will be embarking on a well-earned retirement in March after serving the company for more than 25 years. I am proud to have Steve serve as my first CRO in my tenure as CEO. Thank you, Steve, for your passion and the dedication and leadership that you demonstrated every day. Nathan will assume the responsibility for overseeing the risk management department in addition to the finance department upon Steve's retirement. With that, let me turn it over to Nathan.
Nathan Colson (CFO)
Thanks, Tim, and good morning. Before getting into the details on the financial results, I also wanted to thank Tim for the opportunity and thank Steve for his dedication and leadership. Steve was one of the first people I met when I joined MGIC in the Risk Management Department almost 10 years ago, and he has been a friend and mentor for me. We will miss Steve's wisdom and experience, his personality and wit, but mostly, we will miss Steve because he's a great guy that people wanted to be around. I feel very fortunate for the opportunity to oversee the risk team that Steve has developed. I'm excited to lead such a talented group. Turning back to the financial results, as Tim mentioned, we had another quarter of solid financial results.
We earned net income of $0.66 per diluted share, compared to $0.64 during the fourth quarter last year. For the full year, we earned net income of $2.49 per diluted share, compared to $2.79 per diluted share last year. The results for the fourth quarter were reflective of continued exceptional credit performance we have been experiencing. This has again led to favorable loss reserve development and resulted in a -4% loss ratio this quarter. Our review and reestimation of ultimate losses on prior delinquencies resulted in $60 million of favorable loss reserve development in the quarter. The favorable development this quarter primarily came from delinquency notices received in the second half of 2021 and in 2022.
In the quarter, our delinquency inventory increased by 4% to 25,700 loans, which continues to be low by historical standards. In the quarter, we received 12,700 new delinquency notices, compared to 12,300 last quarter and 11,900 in the fourth quarter last year. While new notices were higher year-over-year, they were 7% below the pre-pandemic levels seen in the fourth quarter of 2019. We continue to expect that the level of new delinquency notices may increase due to the large 2020 and 2021 book years being in what are historically higher loss emergence years. During the quarter, total revenues were $284 million, compared to $292 million in the fourth quarter last year.
Net premiums earned were $226 million in the quarter, compared to $244 million last year. The decrease in net premiums earned was primarily due to an increase in ceded premium in the quarter, resulting from previously announced transactions that included canceling the quota share agreements covering our 2020 NIW and a tender offer for certain tranches of the Home Re insurance-linked notes. Combined, these transactions resulted in an additional $13 million in ceded premium in the fourth quarter. The in-force premium yield was 38.6 basis points in the quarter, flat quarter-over-quarter, consistent with our expectations. Given our expectations for another year with higher persistency in a smaller MI market, we expect the in-force premium yield to remain relatively flat in 2024 as well.
Book value per share at the end of the fourth quarter was $18.61, up 17% compared to a year ago. The increase in book value per share was due to our strong results and accretive share repurchases, offset somewhat by our quarterly shareholder dividend. While higher interest rates continue to be a headwind for book value per share, higher interest rates are a positive for the earnings potential of the investment portfolio, and that continues to come through in our results. The book yield on the investment portfolio ended the quarter at 3.7%, up 20 basis points in the fourth quarter and up 70 basis points from a year ago. Net investment income was $58 million in the quarter, up $3 million sequentially and up $12 million from the fourth quarter last year.
During the fourth quarter, our reinvestment rates were above the book yield, and assuming a similar interest rate environment, we expect the book yield to continue to increase, but at a slower rate, as the increase in book yield in the last year has narrowed the difference between our book yield and reinvestment rates. Operating expenses in the quarter were $55 million, down from $74 million in the fourth quarter last year. For the full year, expenses were $237 million, down $12 million from 2022, and toward the lower end of the $235 million-$245 million range we provided a year ago and reiterated throughout the year.
For 2024, we expect operating expenses will be lower again to a range of $215 million-$225 million, a reduction of $20 million from the range we provided last year. Our reinsurance program, which includes the use of forward commitment quota share reinsurance agreements and excess of loss reinsurance agreements executed in either the traditional or ILN market, is an important component of our risk management and capital management strategies. These agreements reduce the volatility of losses in adverse macroeconomic environments and provide diversification and flexibility to our sources of capital. Our overall strategy is to focus on and prioritize the most recent book year vintages or future NIW, and to recapture seasoned book year vintages if the reinsurance no longer offers significant loss protection in stress scenarios.
As Tim mentioned, we were very active across our reinsurance program in the fourth quarter. As previously announced, in the fourth quarter, we completed our seventh ILN transaction, which provides $330 million of loss protection and covers nearly all of our policies written from June 2022 through August of 2023. We executed a 30% quota share agreement with a panel of diverse and highly rated reinsurers that will cover most of our policies written in 2024. We also elected to cancel the quota share treaties covering our 2020 NIW and conducted a tender offer for certain tranches of seasoned ILN deals. These actions are all consistent with our strategy to concentrate our reinsurance program and coverage on our most recent book years or future NIW.
Our reinsurance strategy is well established, and we have been consistent buyers in both the traditional and ILN markets. We have consistently placed quota share reinsurance covering our future NIW since 2013, and have had at least one Home Re ILN transaction in each of the last six years. This approach has served us well, and we appreciate and value the relationships and trusted partnerships we have developed over the years and look forward to continuing to build our relationships in the reinsurance markets in 2024 and beyond. With that, let me turn it back over to Tim.
Tim Mattke (CEO)
Thanks, Nathan. As we celebrate another successful year, I'd like to acknowledge the collective efforts of our talented and passionate team. Each team member played a role in making 2023 a success. I want to express my appreciation and gratitude for their hard work, dedication, and commitment to excellence. As we begin the new year, we continue to be encouraged by the resiliency of the housing market and optimistic about the opportunities that lie before us. With our solid foundation, talented team, financial strength, and capital flexibility, we are well positioned to continue to execute on our business strategies to achieve success for all of our stakeholders. With that, operator, let's take questions.
Operator (participant)
Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes on the line of Bose George from KBW.
Bose George (Managing Director)
Hey, guys. Good morning. Actually, first, on the expenses, obviously, that's very good guidance on the reduction. You know, just curious, like, as this in 2023, you guys had the pension expense. Apart from that, can you just talk about other drivers of the reduction? And then does this kind of suggest the expense ratio now can be like in that 23% range, you know, down from kind of the mid-20s?
Nathan Colson (CFO)
Bose, this is Nathan. Thanks for the question. Yeah, I think from an expense ratio standpoint, I think you're, you're kind of in the range that, that we're thinking for 2024 as well. In terms of reductions, I mean, we did have some, you know, unique items in the fourth quarter of 2022 and the first quarter of 2023. But really, the range that we're providing for next year is consistent with the run rate that you've seen over the last couple of quarters, really just kind of the full year of that run rate that, that we've kind of run at for the third and fourth quarters of this year.
Bose George (Managing Director)
Okay, great. Thanks. And then actually, in terms of share buybacks, you know, in the supplement, you show that there's going to be a sharp increase in the contingency reserve starting in 2025. You know, will that have an impact on capital return? Or, I mean, is it, obviously, you guys are returning it at a pretty robust level already. So just, yeah, curious if that changes anything.
Nathan Colson (CFO)
Well, this is Nathan. You know, I don't know that it changes things necessarily, but, you know, it certainly, you know, helps alleviate something that could have been a constraint. You know, if you look at that supplement page, we've been kind of drawing down statutory surplus over time. This year, we're in 2024, we are going to get some 10-year releases on contingency reserves. But really, in 2025, we start to get kind of those full years with $500 million+ of contingency reserve releases. So, you know, that would allow us flexibility to continue to pay dividends without, you know, kind of running out of, you know, without surplus getting too low.
Because I think that could have become a constraint, but with contingency reserves now kind of approaching release, I think that's something that may not be a practical constraint for us.
Bose George (Managing Director)
Okay, great. Thank you.
Operator (participant)
Thank you. One moment for our next question. Our next question comes from the line of Terry Ma from Barclays.
Terry Ma (Senior Equity Research Analyst)
Hi, thanks. Good morning. I think you mentioned you expect the in-force premium yield to be flat in 2024. So how should we think about the net yield? Should that kind of just track the Q4 levels?
Nathan Colson (CFO)
Terry, it's Nathan. You know, I think it's a lot easier for us to feel confident providing some guidance on the in-force yield. I think the net yield, particularly with the profit commission on our quota share agreements, becomes somewhat loss sensitive, so it's harder to provide, I think, harder for us to provide a confident level of what the net yield will be in any one quarter. But I would say, you know, we did have some unique items in the fourth quarter, about 1.9 basis points impact due to the ILN tenders and the quota share cancellation. You know, that quota share cancellation will reduce the amount of ceded premium that we have, you know, that we would have had in 2024 and beyond.
But I think if you look over time with our program, you know, pretty consistent over time, we've been in that kind of, you know, maybe 5.5-6.5 basis point range in terms of ceded premium. And then, you know, the accelerated earnings on single premiums, which is another volatile component, it really hasn't been that way in the last couple of years because rates have been high. There hasn't been a lot of refinance or cancellation activity. So I think there are some sources of variability there in the net yield, but I think we feel good about the in-force yield, I think, remaining flat again for 2024, as we said.
Terry Ma (Senior Equity Research Analyst)
Got it. Thanks. That's helpful. And then, any, any color you can provide on NIW for the quarter was quite a bit lower quarter-over-quarter and year-over-year. Was there any, I guess, underwriting changes or pricing actions?
Tim Mattke (CEO)
No, nothing really there. This is Tim. You know, I think it's somewhat representative of the size of the market. You know, we're the first to report. I think might have lost a little bit of share, but I don't think much, and I think we're really happy with the quality of the book that we wrote. But nothing from us as far as approach to the market, anything like that. Really happy with the quality of the $11 billion that we wrote.
Terry Ma (Senior Equity Research Analyst)
Okay, great. Thank you.
Tim Mattke (CEO)
Sure.
Operator (participant)
Thank you. One moment for our next question. Our next question comes from the line of Geoffrey Dunn from Dowling & Partners.
Geoffrey Dunn (Equity Analyst and Partner)
Thanks. Good morning, guys.
Nathan Colson (CFO)
Good morning.
Geoffrey Dunn (Equity Analyst and Partner)
First question: As you look at future underwriter dividends, how do you and the regulator think about minimum surplus levels?
Nathan Colson (CFO)
You know, I'd say that's not a conversation we've had directly, partly because I don't think we've approached that level yet. You know, I think we've noted other, you know, Wisconsin domicile companies that have, you know, much less than the $600 million in surplus that MGIC had at the end of 2023. So I think we still have some, you know, flexibility to continue to pay dividends, if, you know, our capital levels are above our target level, as they have been for some time.
So, you know, with the Contingency Reserve releases coming in as well, starting in 2024 and then in 2025, you know, we, we may not get to the point where we're talking about, you know, how little surplus, we may have to continue to support dividends at the level that, that we, you know, had in 2023.
Geoffrey Dunn (Equity Analyst and Partner)
Are you able to give some guidance with respect to your expectations on dividends? I mean, something similar to 2023 going forward.
Nathan Colson (CFO)
Yeah, I mean, I think if you look at what we did in 2022 and 2023, you know, you saw dividend levels that were, you know, kind of somewhat in line with the income that we earned as a company. So you know, I think if we continue to generate the financial results that we have, you know, continue to have the capital position that we have, that will continue to support, you know, dividends that have been, you know, fairly large over the last couple of years. But for us, the starting point is always making sure that we have sufficient capital above our target levels or at our target levels at the operating company. You know, once that's satisfied, then I think we can start the dividend discussion.
But, with credit performance, the way that it's been over the last two years, you know, it's supported, I think, you know, at one point, $4 billion over the last two years in dividends from the OpCo, you know, plus another $200 million in intercompany tax settlements. So there's a lot of cash going to the holding company over the last two years.
Geoffrey Dunn (Equity Analyst and Partner)
Right. Okay, and then my other question is: When you, when you look at the reserve development, we continue to see... I think you noted it was second half 2021, 2022. Can you maybe parse that out a little bit more? Is, is the majority of the development we saw this quarter from 2021 because I'm assuming as you get into 2022, the, the equity benefits on claim rates, experience probably gets a lot thinner. Can you add any more color there?
Nathan Colson (CFO)
Yeah, no, happy to. I think it's actually more from 2022. And I think it's less about the, you know, kind of our estimates of, say, embedded equity on those items. And again, these are notices received in that period, not necessarily loans, you know, from that book year vintage. But really, it's the strength of the cure activity that we've seen. You know, our initial ultimate loss expectations have been around 7.5% ultimate claim rate for some time. But actual experience on, you know, kind of closer to fully developed notice quarters from 2021 and early 2022 is just much less than that.
Really, it's that cure activity that is driving the reserve development in those periods versus, you know, I think, a view of home price appreciation or other factors like that.
Geoffrey Dunn (Equity Analyst and Partner)
Okay, all right. So just to clarify, these are loans that have been in portfolio then for, you know, 9, 12+ months, not 2022 vintage that you're referring to?
Nathan Colson (CFO)
Exactly. When we say that the reserve-
Geoffrey Dunn (Equity Analyst and Partner)
Okay
Nathan Colson (CFO)
-development came from, it's really new notices received in 2022, not from the 2022 vintage. I mean, there's relatively-
Geoffrey Dunn (Equity Analyst and Partner)
Got it
Nathan Colson (CFO)
Few notices that we have from 2022 or 2023 vintages at this point.
Geoffrey Dunn (Equity Analyst and Partner)
Okay, thank you.
Nathan Colson (CFO)
Thank you.
Operator (participant)
Thank you. One moment for our next question. Our next question comes from the line of Eric Hagen from BTIG.
Eric Hagen (Managing Director)
Hey, thanks. Good morning. I actually wanted to follow up on that last point you were just making about the cure rate for the portfolio and what you feel like has actually kept that so stable. You know, are borrowers actually receiving modifications, and what's the nature of that modification or the cure? And what do you feel like would catalyze the cure rate to maybe change from here?
Nathan Colson (CFO)
Yeah, Eric, it's Nathan. I mean, it's—that's a—it's a really good question. I think it's a tough one to know, with, with any specificity just because, you know, there's a, there's a whole host of reasons. They all, I think, have been, have been pulling in the direction of more favorable credit performance over the last several years. You know, the, the kind of forbearance and modification programs, that are in the market certainly helped. The employment rate staying very, very high, you know, unemployment being very low helped. The value of, of kind of homeownership and the utility of a house, in a kind of a work remote or, or hybrid kind of world, I think has gone up.
And home price appreciation, you know, even in, in our part of the market, you know, which is more like the FHFA purchase-only index than maybe the, you know, Case-Shiller 20-City Index, has continued to rise in 2022 and 2023 as well. So that - I think that combination of factors is really all pulling towards, you know, kind of good outcomes for borrowers and, and ultimately, you know, kind of better than expected credit performance for us.
Eric Hagen (Managing Director)
Yep. Yep, that's definitely helpful. Hey, on the policy towards stock buybacks and capital return in general, I mean, how sensitive would you say it is toward, you know, nationwide unemployment rates and other economic conditions? Or is it really just sensitive to the unemployment rate or, you know, conditions in your own portfolio?
Nathan Colson (CFO)
Eric, I may need you to clarify. Were you, were you trying to draw a link between our, our share repurchase appetite and the unemployment rate?
Eric Hagen (Managing Director)
Pretty much, yeah. And whether you see that being-
Nathan Colson (CFO)
Okay
Eric Hagen (Managing Director)
... sensitive to, you know, nationwide unemployment rates, or does it really just need to appear and start appearing in your own portfolio before you maybe change that policy?
Nathan Colson (CFO)
Yeah, you know, I'd probably just reiterate, you know, ultimately, you know, our ability to return capital to shareholders via dividends and share repurchases is about getting, you know, the money to the holding company where those activities happen. You know, we already have, at the end of the year, we had about $900 million at the holding company, so we have a lot of flexibility, you know, even today. But over time, it will be about getting dividends out of the underwriting company. And, you know, again, that's about capital levels being above our target levels. Our targets are built on, you know, a number of things, but one of them is, you know, what's our expectation of future performance?
Do we need that capital to support, you know, increased risk, either in the loans that we're insuring or increased risk in the market that we're operating in? So, you know, we've had periods, post-COVID, where we didn't pay dividends for, you know, about a year and a half from MGIC to the holding company because it felt like the right thing to do was to retain that capital at MGIC because of the increased uncertainty in the environment there. So, you know, as long as we still feel like we have capital above our target levels at MGIC, you know, that will fund dividends to the Holdco.
And as Tim said, with our debt to capital at our target range right now, the primary purpose of the holding company money above our target level is there for liquidity and kind of risk purposes is really to return.
Eric Hagen (Managing Director)
Yep, that's all really helpful. Thank you, guys.
Nathan Colson (CFO)
Thank you.
Operator (participant)
Thank you. One moment for our next question. Our next question comes from the line of Mihir Bhatia from Bank of America.
Mihir Bhatia (Senior Equity Research Analyst)
Hey, good morning. Thank you for taking my questions. The first question I had was just on the NIW outlook. I think you mentioned a similar size NIW market in 2024 or 2023. And, like, is that for MTG in particular, or, were you, was that industry or both, I guess?
Tim Mattke (CEO)
So I think we're talking mostly about sort of MI originations overall. You know, I think we'd expect that, you know, the size of the overall origination market totally, and then you think about penetration of you know, those that are insured and then private mortgage insurance, that's probably pretty similar, this coming year in 2024 to what it was in 2023.
Mihir Bhatia (Senior Equity Research Analyst)
So I guess I am a little curious about that. Like, you know, we look at industry forecasts. They generally have originations up, including purchase originations, up a little bit year over year. But, you know, you also have some refi coming back. And, like, I guess I'm curious as to why you think -- like, why would it be NIW, and particularly if you get rate cuts, as everyone seems to expect now. Do you, like, will the penetration go down? Is there something about the market that's making you feel like MI penetration is going down? Because I would have thought it'd be going up given affordability challenges, but, I mean, you tell me.
Tim Mattke (CEO)
Yeah, obviously, you know, when you think about mix and purchase and refi, you know, if we get a little bit more refi the back half of the year, we don't expect that's really gonna help. It's probably gonna hurt the penetration rate, right? There'd be more overall originations, but I think ultimately it hurts the penetration for us. So I don't think there's a lot of pickup from MI origination of refi the back half of this year, of just what would be available to refi and what would ultimately refi. Again, I wouldn't paint it as a negative view of this year. I think we just think that 2024 is shaping up to look pretty similar to 2023 overall. Hopefully, there's upside to that.
But I think overall, you know, I think that's sort of our view. From our perspective, you know, we were a little bit lower on share on average during the course of 2023 than we have been historically. So I think we might pick up a little bit there if the returns are appropriate. But from an overall MI origination standpoint, you know, we think it's relatively flat.
Mihir Bhatia (Senior Equity Research Analyst)
Got it. Thank you. And then just switching gears a little bit, maybe to the returns point, right? You had a 15% ROE this quarter, pretty similar, you know, last quarter, too. And I, and I was wondering, is this as good as it gets? I mean, you're guiding to losses going up or... Sorry, not losses, but delinquency notices going up, which will obviously have an effect on provisions, and presumably, you don't assume reserve releases in the future. That would suggest ROE would go down prospectively. And I was curious, I did want to get your thoughts on that. Is like the MI business a low double-digit ROE business from here? Is that, like, kind of your view, or do you have any comments there?
Tim Mattke (CEO)
Yeah, I think it's a really valid question, right? Because we've benefited from exceptional credit quality, both in the terms of low new notices, as well as a good amount of reserve releases, as Nathan talked in detail about some of those. And I think we've been saying for actually a number of years that credit is as good as it can get to a large extent, right? And so if you think about normalized through the cycle and how we price the business and think about it, we've priced assuming that losses are higher than what we've been experiencing, and that's gonna continue to be our view on it. So I think that there's been tremendous amount of tailwinds from a credit standpoint. We've continued to be wrong as far as that credit could get a little bit worse.
When we say get a little bit worse, we still view it as, as likely better than what people would think sort of historical averages are. So still feel really good about the credit box, but again, I think we just, we wanna be cautious about how good it's been from a credit standpoint versus what we would view as still a really good credit, quality market that would show, you know, some losses in it, right? It's not, it's not usual to have negative incurred losses, quite frankly. With that, you know, I think, again, we talked a little bit at the beginning as far as originations. You know, we, we think from a premium standpoint, we said relatively flat as far as the average premium this year.
So I think there is a little challenge from an ROE this next year if you don't have the same level of reserve releases, which is, quite frankly, difficult when you have less raw material and loss reserves. But we think that's still really good return business, high quality, exceptional, and I think appropriate returns for the risk that we're ultimately taking.
Mihir Bhatia (Senior Equity Research Analyst)
Right. No, that's fair. Okay. Thank you for taking my questions.
Tim Mattke (CEO)
Thank you.
Operator (participant)
Thank you. One moment for our next question. Our next question comes from the line of Geoffrey Dunn from Dowling & Partners.
Geoffrey Dunn (Equity Analyst and Partner)
Thanks. Good morning. Sorry, just a quick follow-up. Can you just review the specifics of your targeted minimum holding company liquidity?
Nathan Colson (CFO)
Geoff, it's Nathan. I mean, what we've talked about is, you know, holding back a couple of years for the dividend to protect that for, you know, periods where we're not able to pay or don't wanna pay dividends from MGIC to the holding company. And then also, you know, a few years for interest on outstanding debt, and as that debt comes closer to being due, you know, some amount of principal there. But, you know, with the debt not coming due now for, you know, about, I think it's 4.5 years, August 2028, that's not really something that we're thinking much about right now.
Geoffrey Dunn (Equity Analyst and Partner)
Okay, great. Thank you.
Nathan Colson (CFO)
Thank you.
Operator (participant)
Thank you. At this time, there are no further questions. I will now turn the call back over to management for closing remarks.
Tim Mattke (CEO)
Thank you, Gigi. I wanna thank everyone for your interest in MGIC and remind you that we'll be participating in the BofA and UBS Financial Services conferences later this month. Have a great rest of your week, everyone. Thanks.
Operator (participant)
Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.