NMI - Q2 2024

Transcript

Operator (participant)

Good day, and welcome to the NMI Holdings second quarter 2024 earnings conference call. All participants will be in a listen-only mode. Should you need any assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two. Please note, this call is being recorded. I would now like to turn the conference over to Mr. John Swenson of Management. Please go ahead.

John Swenson (VP of Investor Relations and Treasury)

Thank you, operator. Good afternoon, and welcome to the 2024 second 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, and Aurora Swithenbank, our Chief Financial Officer. 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. 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 other than 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.

Brad Shuster (Executive Chairman)

Thank you, John, and good afternoon, everyone. I'm pleased to report that in the second quarter, National MI again delivered strong operating performance, continued growth in our insured portfolio, and record financial results. We also achieved a notable milestone, closing the second quarter with a record 203.5 billion of high-quality, high-performing insurance in force. It's the first quarter our insured portfolio has surpassed 200 billion, and the size and strength of our portfolio today serves to highlight the consistent and significant success we've been delivering for so long.

National MI was formed with a goal to provide a differentiated commitment and standard of service and a clear vision as to how we should engage in the market to drive value for our borrowers, our lender customers, our employees, and our shareholders.

It's remarkable to reflect on all that we have achieved to date. We've helped over 1.8 million borrowers gain access to a mortgage and opened the door to affordable and sustainable homeownership in communities across the country. We've established a broadly diversified national customer franchise, serving over 1,500 lenders from a foundation of partnership, trust, and innovation. We've attracted a talented, dedicated team who drive our success every day and cultivated a culture of collaboration, integrity, and performance.

We have consistently outperformed, delivering exceptionally strong operating and financial results quarter after quarter. We are leading the private mortgage insurance industry with discipline and distinction, and I am as excited as I've ever been about the opportunity that we have to continue to outperform as we go forward. With that, let me turn it over to Adam.

Adam Pollitzer (President and CEO)

Thank you, Brad, and good afternoon, everyone. I'm delighted to talk to you today as I share Brad's excitement about our milestone success and his confidence in the opportunity we have as we look ahead. I'm also pleased to welcome Aurora Swithenbank as our new CFO. Aurora brings a wealth of experience and proven track record as a senior finance leader to National MI, and you'll have an opportunity to get to know her going forward. Now to discuss the second quarter, where we continued to outperform, delivering significant new business production, strong growth in our insured portfolio, and record financial results. We generated $12.5 billion of NIW volume and ended the period with a record $203.5 billion of high quality, high-performing primary insurance in force. Total revenue in the second quarter was a record $162.1 million.

GAAP net income was a record $92.1 million, or $1.13 per diluted share, and adjusted net income was a record $97.6 million, or $1.20 per diluted share, up 11% compared to the first quarter and 26% compared to the second quarter of 2023. GAAP return on equity was 18.3% for the quarter, and adjusted ROE was 19.4%. Overall, we had an exceptionally strong quarter and are confident as we look ahead. The macro environment and housing market 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 payment 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 strong NIW volume, has helped to drive consistent growth and embedded value gains in our insured book. We continue to manage our expenses and capital position with discipline and efficiency, building a robust balance sheet that's 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 see 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. Looking ahead, we're 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 Aurora.

Aurora Swithenbank (CFO)

Thank you, Adam. I'm excited to join National MI and pleased to report that we achieved record financial results in the second quarter, with significant new business production, strong 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 second quarter was a record $162.1 million. Adjusted net income was a record $97.6 million, or $1.20 per diluted share, and adjusted return on equity was 19.4%. We generated $12.5 billion of NIW, and our primary insurance in force grew to $203.5 billion, up 2.1% from the end of the first quarter and 6.4% compared to the second quarter of 2023.

12-month persistency was 85.4% in the second quarter, compared to 85.8% in the first quarter. Persistency remains well above historical trend and continues to serve as an important driver of growth and embedded value in our insured portfolio. Net premiums earned in the second quarter were a record $141.2 million, compared to $136.7 million in the first quarter and $126 million in the second quarter of 2023. Net yield for the quarter was 28 basis points, up from 27.6 basis points in the first quarter. Core yield, which excludes the cost of our reinsurance coverage and the contribution from cancellation earnings, was 34.3 basis points, up from 34.1 basis points in the first quarter.

Investment income was $20.7 million in the second quarter, compared to $19.4 million in the first quarter. We saw continued growth in investment income during the period as we deployed new cash flows and reinvested rolling maturities at favorable new money rates. Total revenue was a record $162.1 million in the second quarter, up 3.8% compared to the first quarter and 13.6% compared to the second quarter of 2023. Underwriting and operating expenses were $28.3 million in the second quarter, compared to $29.8 million in the first quarter. Our expense ratio was a record low, 20.1% in the quarter, highlighting the significant operating leverage embedded in our business and the success we've achieved in efficiently managing our cost base.

We have long signaled our expectation to achieve and sustain a low- to mid-20s expense ratio and are proud to be delivering on this goal. We have a uniquely high-quality insured portfolio, and our credit performance continues to stand ahead. We had 4,904 defaults at June thirtieth, compared to 5,109 at March thirty-first, and our default rate declined to 76 basis points at quarter end. Claims expense in the second quarter was $276,000, compared to $3.7 million in the first quarter. Interest expense was $14.7 million, compared to $8 million in the first quarter. Interest expense in the second quarter included $7 million of non-recurring costs incurred in connection with the successful refinancing of our senior notes and revolving credit facility.

GAAP net income was a record $92.1 million, or $1.13 per diluted share. Adjusted net income, which excludes costs incurred in connection with our debt refinancing, was a record $97.6 million, or $1.20 per diluted share. That's up 10.7% compared to the first quarter and 25.9% compared to the second quarter of 2023. Total cash and investments were $2.6 billion at quarter end, including $149 million of cash and investments at the holding company. In May, we completed the refinancing of our outstanding debt, issuing $425 million of five-year senior unsecured notes and renewing our $250 million five-year revolving credit facility on incrementally favorable terms.

We're pleased with the success this is, that we've achieved in the market. Our refinancing was leverage neutral, and we lowered our cost of debt capital from 7 3/8% on the notes we redeemed to 6% with this issuance. We expect to save approximately $3.5 million in interest expense annually with the success of this deal. Shareholders' equity as of June thirtieth was $2 billion, and book value per share was $25.65. Book value per share, excluding the impact of net unrealized gains and losses in the investment portfolio, was $27.54. That's up 4.2% compared to the first quarter, and 17.1% compared to the second quarter of last year.

In the second quarter, we repurchased $26.8 million of common stock, retiring 844,000 shares at an average price of $31.79. As of June 30, we had $124.9 million of repurchase 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 $1.7 billion. Excess available assets were $1.2 billion. Overall, we delivered standout financial results during the quarter, with strong 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 (President and CEO)

Thank you, Aurora. We had a terrific quarter, once again, delivering significant new business production, strong growth in our insured portfolio, and record financial performance. Looking ahead, we're confident. We have 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. We are leading the MI market with discipline and distinction, and are well-positioned to continue delivering differentiated growth, returns, and value for our shareholders. Before closing, I also want to note how proud I am that for the ninth consecutive year, National MI has been recognized as a Great Place to Work.

Great Place to Work is a global authority on workplace culture, employee experience, and leadership, and partners with Fortune magazine to produce the annual Fortune 100 Best Companies to Work For list. We believe that the quality of our team and the culture that we've established are key competitive advantages, and it's gratifying to again be recognized for these strengths. With that, I'll ask the operator to come back on so we can take your questions.

Operator (participant)

Thank you. We will now begin the question-and-answer session. To ask a question, you may press star, then one on your telephone keypad. If you're using a speakerphone, please pick up the handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. Your first question comes from Doug Harter with UBS. Please go ahead.

Doug Harter (Equity Research Analyst)

Thanks. You've now seen the core yield kind of trend up for the past couple of quarters. Can you just talk about your expectations for that going forward and kind of how the new premiums you're writing kind of compare to the in-force yield, core yield?

Aurora Swithenbank (CFO)

Sure. Our premium yield has been trending higher for several consecutive quarters, and we saw continued strength in this quarter. In terms of drivers, it's really two things. It's the continued strength of our persistency experience, and it's the cumulative gains that we've achieved in the new business pricing over the past year plus. Our net yield, I'm not sure if that was part of your question, reflects this core strength and further benefited from the credit performance during the quarter, since we had lower losses, driving an increase in our profit commission and a decline in reinsurance costs.

Adam Pollitzer (President and CEO)

Yeah. And, Doug, just to layer onto that, I'd say, broadly speaking, what we're achieving now from a new business standpoint is generally accretive to the overall yield profile of the portfolio. It's a constructive environment for us.

Doug Harter (Equity Research Analyst)

Great. Thank you both.

Operator (participant)

Your next question comes from Mihir Bhatia with Bank of America. Please go ahead.

Mihir Bhatia (Equity Research Analyst)

Good afternoon. Thank you for taking my question. Firstly, Aurora, congratulations on the role, and welcome. Look forward to working with you. In terms of the cure activity, obviously, now the... I just want to check, is there anything unusual to call out? I mean, the cures were higher than new defaults this quarter. We've seen cure activity be particularly strong in the last few quarters. How are you guys thinking of the trend in cure activity here? And like, really, the default rate is what I'm trying to get at. Like, do you think it increases as more of the 2021, 2022 portfolio enters its peak loss years? Do you think this is the like, the current rate is stable in these-...

In this market backdrop, in these conditions, just your outlook on default rate and what's driving the cure activity to be so strong?

Adam Pollitzer (President and CEO)

Sure. Well, why don't we parse it in terms of, one, what are we seeing actually develop in the quarter, and is there anything specific underlying the performance that we saw? And then, two, we could talk about the go-forward and how we think about what I'll call broadly a normalization. Maybe I'll ask Aurora to touch on the cure experience that we saw in the quarter, and then I can talk about the go forward.

Mihir Bhatia (Equity Research Analyst)

Okay. Thank you.

Aurora Swithenbank (CFO)

Sure. We're really encouraged by the credit performance, obviously, of the overall portfolio, including the trends in our default population. In terms of specific ins and outs of the quarters, everything was pretty constructive in the quarter. Our new notice rate declined, our cure rate improved to the highest level in the past two years, and overall, the default population declined. Now, we do generally expect to see some quarter-on-quarter improvements in Q1 and Q2. So we typically see worse performance in the fourth quarter around the holidays. People start to catch up in the first quarter around tax refund season, and you do see some of those seasonal benefits bleeding into the second quarter. So we do see that seasonal impact in the quarter that we've just discussed.

Overall, borrowers remain well situated with strong credit profiles. They're in loans that were originated under very rigorous underwriting review, and used to fund the purchase of primary residences. Many, as you indicated, continue to benefit from significant substantial equity positions.

Adam Pollitzer (President and CEO)

Yeah, so in terms of the go forward, right, it's a really strong quarter for us. Borrowers are performing. When they run into issues, they've generally been able to recover and cure their defaults before we see claims develop. Looking ahead, and Mihir, you touched on this, we talked about it for quite some time now, we do expect that our default count will increase over time, both with the natural growth and seasoning of our portfolio, and that seasoning, really, as some of the more recent vintages begin to migrate into sort of typical loss incurrence periods. And with that, we do expect that over time, we'll see a broader normalization of our credit experience, after what's really been an extended record run. But overall, our performance continues to be quite strong.

We're really encouraged by, obviously, what happened and what we saw developed in the portfolio so far. And we're optimistic as we look forward, just really given the strength of our underlying portfolio quality and how well-positioned borrowers are today across the board.

Mihir Bhatia (Equity Research Analyst)

Got it. Okay, in terms of the expense outlook, just your, I think your guidance that was reiterated in the prepared remarks was for low- to mid-20s expense ratio. But, like, you're basically at the bottom of that range already. Presumably, you're still getting more scale. So I'm just trying to, Like, is there something that's going to push the expense ratio higher the next couple of quarters? Like, why, why, why would it go below the range you guided to?

Adam Pollitzer (President and CEO)

Yeah. Mihir, so let me also just draw a distinction, and it's an important one. What Aurora referred to is that our goals, and we've shared that our goals over the long term are to be delivering low- to mid-20s expense ratio. We're really proud to be achieving that. It's specifically not guidance, right?

Don't take it, please, as guidance either for this year or for the longer term. It's really a goal that we have in how we wanna manage our business, the discipline that we want to maintain from an expense efficiency standpoint, but it's not specific guidance. As to the go forward, we'll also not give you guidance, but Aurora will give you some context, at least.

Aurora Swithenbank (CFO)

So we've always been focused on managing the business with discipline and trying to be efficient, and we're really proud of the record low 20.1% expense ratio in the quarter. But as we look out, we do expect to see some growth in net operating expenses, and we continue to want to invest in our people, systems, risk management strategies, and overall growth throughout the year.

Mihir Bhatia (Equity Research Analyst)

Okay. Thank you for taking my question.

Operator (participant)

The next question comes from Rick Shane with JPMorgan. Please go ahead.

Rick Shane (Analyst)

Hey, everybody. Thanks for taking my questions, and Aurora, welcome. Just two things. One is, sort of a big picture. If we look at the portfolio now from an insurance in force or risk in force perspective, about 29% of the portfolio is now 2023, 2024 vintage loans. They are very different from an affordability perspective than the core of the portfolio. Is one of the things that we need to think about over time, sort of a bifurcation of this portfolio in terms of credit performance?

Adam Pollitzer (President and CEO)

Yeah, Rick, it's a good question. Look, I'd say that's certainly the case to a certain extent, but let me parse it, right? So, our most recent vintages, and let's put 2022 into the mix there, because the note rate underlying our 2022 book, really the back end of it, is also meaningfully higher than that sort of the historical lows that we saw in the 2020 and 2021 books. But regardless of the vintage, the approach that we've taken to underwriting, to risk selection, to managing our mix, has been the same. And so whether it's a first half 2024, full year 2023, or 2019/2020 vintage, they're all high quality, right? We've applied that same rigor in risk selection, as we always have. We've sourced comprehensive reinsurance protection on all of those vintages.

And so there's really no notable difference in the underlying borrower, loan level, geographic or product risk attributes that underpin, you know, different vintage years of production. And so the real difference is, one, are the note rate, and two, are the amounts of embedded equity. Now, the note rate, actually, which I think is what you were focused on, we don't necessarily expect that that will be a core driver of differences in credit performance, because remember, everything is going through a rigorous underwriting process.

And so, yes, the profile of the loan and the headline affordability on, say, a early 2024 loan versus a 2020 or 2021 mortgage is different, but the borrower who qualified for that loan in 2024 is equally a well-qualified with whatever the headline credit statistics are for that particular loan, that particular purchase, as they were in 2020 or 2021. There is, I'd say, an intangible benefit, right? And there may be an extra motivation for a borrower in 2020 or 2021 to try to stay current on their loan because the intangible value of having a 3% or sub 3% note rate, and we'll have to see how that plays out. But the much bigger difference, driver of differences that we expect to emerge over time is simply the amount of embedded equity, right?

The borrowers who took out loans in 2020, 2021, and purchased a home have seen record amounts of home price appreciation, significant equitization of that risk, and that provides them with both incentive to stay current and options to cure their default if they ultimately fall behind that may not be available for more recent borrowers. So we do expect that over time, we'll see differences in the performance of different vintages, but it's not because of the underlying credit profile of the borrower or the underlying note rate. It's really because of the HPA path from origination.

Rick Shane (Analyst)

Got it. It's a really helpful distinction, Adam. Thank you. And then just a small, weird question. In general, persistency seemed pretty consistent across the vintages. We did for some reason, at least within our model, it's showing the 2020 persistency ticked down more severely than any of the other cohorts. I'm curious if that's something you guys observed. Is it just structural due to the passage of time, or is it something we need to think about as we build our models out?

Adam Pollitzer (President and CEO)

Yeah, it's a good question. I can't give you a specific guidance from a modeling standpoint. We'll share with you what we're observing. So remember, the lower the underlying note rate, the more of the monthly payment that goes towards principal paydown. So there is a dynamic where you'll even though you have this, you know, remarkably low underlying note rate, and that's obviously, you know, largely eliminated refinancing activity, you do have this just natural paydown dynamic on the loans that factors through, and it does feed into the persistency calculation itself. The other one, though, is like the lock-in effect for existing homeowners because of the intangible value, right? The huge benefit of having a 3% or sub-3% note rate. At the same time, families do have needs, right?

Over time, you may need more space, you may have, you know, a different financial situation, want a different living experience. And a lot of that, we think, is going towards refinancing, remodeling, perhaps—sorry, not refinancing, remodeling, which could be funded with a HELOC or some other type of, you know, additional leverage on the home. When that happens, we, we do see that there's a, an appraisal, that source, and that appraisal may give rise to some degree of cancellation activity on, on some of those vintages that still have really, low underlying note rates. And so there's a degree of that coming through.

Rick Shane (Analyst)

Got it. Really interesting. Thank you, guys.

Operator (participant)

Your next question comes from Bose George with KBW. Please go ahead.

Bose George (Managing Director)

Hey, everyone. Good afternoon. Actually, one more on losses. Can you just remind us, in terms of, is there a normalized loss ratio that you, you know, you're underwriting to for your current books of business?

Adam Pollitzer (President and CEO)

No. So there's no target loss ratio per se, right? Our goal, ultimately, when we're pricing business, we want to price on, I'd say, a return neutral basis across the entirety of the risk spectrum. And that return that we target is a 15% unlevered return on PMIERs assets across the risk spectrum. Obviously, you know, that's what we hope to achieve. That's our priced expectation. Different risk cohorts have meaningfully different loss expectations embedded in that pricing framework. But there's no, say, normalized loss ratio that we either price to or that we would necessarily expect on a particular pool of business.

Bose George (Managing Director)

Okay, great. Thank you. And then could you just help me with the math on the reserve for the new notices in the quarter? I think you do it net of releases in IBNR. Is there sort of a gross number that you can give?

Adam Pollitzer (President and CEO)

Yeah. So it's a little... The other item that just always gets a little bit interesting is the reserve table, the current year. It's current year, not current period. So embedded in the number that you see, which I believe is around $17 million or so, are actually also releases on the loans that had first emerged in default in the first quarter. That's cured out. And so the number to focus on, though, is if you took away all of the favorable prior period development, what we established for new notices in the quarter was $27 million.

Bose George (Managing Director)

Okay, perfect. Great. Thank you.

Operator (participant)

Your next question comes from Soham Bhonsle with BTIG. Please go ahead.

Soham Bhonsle (Housing Services Analyst ad VP)

Hey, good afternoon, everyone, and Aurora, welcome to the fold. I guess first one, you know, Adam, it looks like purchase NIW was up nicely this quarter for both you and your peer that just reported. But, you know, if I sort of look at the industry forecast, you know, the range is sort of between negative to up modestly. So I guess any sense for whether the MI product is sort of being able to penetrate the market more at this point, given the stretched affordability? Or is it just a function of where folks are choosing to sort of pick up business in the quarter?

Adam Pollitzer (President and CEO)

Yeah, you know, so, good question. I honestly, you know, we've only had one other peer report, so we'll see how everything develops through the course of this week. And I can't necessarily speak to where, you know, where they're focused. But I'd say in terms of our broad expectations for MI market size through, you know, for the full year, we still expect that 2024 overall will be very similar to the volume that the industry, you know, delivered in 2023. We still see those long-term underlying secular drivers of demand and activity come through. We see, you know, resiliency in house prices obviously supports larger loan sizes, even if origination activity by count is lower. To a degree, I think you're right.

Some of the affordability constraints that prevail more broadly across the market, you know, do mean that an increasing number of borrowers need MI support for, you know, for their down payment. But last year, industry NIW in 2023 was around $285 billion, and we expect that we'll have a similarly attractive environment when all is said and done, this year. You know, a little bit of movement up or down through the back half, depending on how interest rates trend and, you know, where the macro goes. But the $285 billion market up or down is a really constructive environment, new business environment for us.

Soham Bhonsle (Housing Services Analyst ad VP)

Yep, makes sense. I guess on HPA, you know, we've seen a fair bit of inventory growth in some of the large housing markets, Texas, Florida. But, you know, home prices still seem to be sort of holding in these states. I think, you know, it's just a function of, you know, where, I guess, inventory, the pricing is. But, you know, list prices have gone down, and price cuts have gone up. So I'm just wondering, how are you assessing sort of the risk to HPA in some of these core markets?

Adam Pollitzer (President and CEO)

Yeah. Look, it's something we need to monitor at all times. Broadly speaking, we've been really encouraged, obviously, by the resiliency that we've seen on a national basis. I think, you know, the June data that came out shows, broadly speaking, we're still setting new record highs, and that's encouraging. But you, you've touched on it exactly, right? We are seeing, I'd say, differences emerge in certain local markets. And, you know, we would identify really at the top of the list, parts of Florida and Texas, right? Areas that saw some of the most significant price increases during the pandemic rally, but that are now facing, I'd say, more pronounced supply, demand, and affordability constraints. And as a result, we do see that house prices are under pressure in certain local markets.

And one of the keys for us is that RateGPS provides us with the ability to price differently in different geographies to account for risk. And so we have in RateGPS the ability to price differently across 950 different MSAs. And we have taken actions in markets where we see some of those indications, really rising inventories, a bit of pressure already emerging from a house price standpoint. We want to make sure that we're pricing for that risk appropriately when it's coming into our book, and that we're managing the overall flow of that risk onto our balance sheet as well.

Soham Bhonsle (Housing Services Analyst ad VP)

Okay, great. And then just a quick one, Aurora, on the buyback. I didn't hear a number for the quarter. If you could just provide that. And then just more broadly, you know, with shares sort of trading at 1.5x book, you know, just wondering how sensitive you are to valuation going forward. And, you know, is there a more systematic way to sort of return, you know, control your E, essentially, to drive the ultimate return profile that you'd like? Thank you.

Aurora Swithenbank (CFO)

Sure. So the number was $26.8 million in the quarter, and that's a 31.79 average share price. Maybe I'll let Adam address the second piece of your question.

Adam Pollitzer (President and CEO)

Yeah. Thanks, Aurora. Look, in terms of how we think about valuation impacting you know, impacting repurchase activity. Look, I think the core goal of our repurchase program is really to rightsize our funding profile, optimize our capital position, and support our strong mid-teen return goals over time. We would obviously like to buy low and see our shares outperform. It's what we've been doing with great success for the last two years. I think we've repurchased now a little over $200 million of stock at an average price of $24.59. And so that goal of buying low and seeing our stock perform, we've certainly met.

But we don't have, I'd say, bright line valuation thresholds that really will sharply dictate how we, you know, how we proceed from where we are. As we look ahead, we expect that we'll continue to be in the market executing under our program. Although it's also likely that we'll naturally see the pace of our execution activity fluctuate either up or down, depending on where our stock price moves period to period. And, you know, with recent rally in our stock price, I wouldn't be surprised if, you know, we have a modestly slower pace of repurchase activity in Q3 as we see how valuation develops.

Soham Bhonsle (Housing Services Analyst ad VP)

Okay, great. Thanks a lot for the thoughts.

Operator (participant)

Once again, if you wish to ask a question, please press star then one. The next question comes from Mark Hughes with Truist. Please go ahead.

Mark Hughes (Analyst)

Yeah, thank you. Good afternoon.

Adam Pollitzer (President and CEO)

Hi.

Mark Hughes (Analyst)

Aurora, what was the new money yield in the quarter?

Aurora Swithenbank (CFO)

So it's come off a little bit quarter-over-quarter. It's what I'd characterize as the high fours, so between 4.75%-5%. I'm sorry, was the question about the quarter or our current new money yield?

Mark Hughes (Analyst)

I'll take both. It sounds like.

Aurora Swithenbank (CFO)

The number I just gave [crosstalk]

Mark Hughes (Analyst)

4.75%-5% was the quarter. How are you thinking now?

Aurora Swithenbank (CFO)

Is really our current new money yield, where we're putting money to work. Where we put money to work in the quarter was a little bit north of 5%. So, I think on our last quarterly call, we said we were putting new money to work at 5%-5.5%. It came down a little bit during the second quarter. Again, still averaging above 5%, and now we're putting money to work in what I'd characterize as the high fours.

Adam Pollitzer (President and CEO)

And Mark all of which is still valuable for us. Obviously, the overall book yield on the current portfolio is 3%, so it still provides a nice uplift.

Mark Hughes (Analyst)

Yeah, exactly. Adam, you've touched on, I think, a lot of the issues that go into this question, but the new pricing being accretive to the yield, even as your loss experience continues to be quite good. You talked about a balanced and constructive competitive environment. One might think, under the circumstances, the yield would be perhaps neutral or maybe even dilutive to the overall premium yield. What is kind of shifting the balance to make it more accretive in your opinion?

Adam Pollitzer (President and CEO)

Yeah, I mean, so look, also, the, the March quarter, right, we're talking about, fractions of a basis point of movement, right? So you know, it's not as though we went from 34.1 basis points of core yield last quarter to 37 now. I think we went from 34.1 to 34.3. So to put it into context there, look, and I'll touch on both, a little bit more on yield and also just a little more on the pricing environment. I'd say from a pricing standpoint, what's most important, right, what's most important is that we find that right point of balance where we can fully and fairly support our customers and their borrowers, but at the same time, through all markets.

But at the same time, make sure that we're charging a price in any given market that is appropriate to protect our balance sheet and our ability to deliver the returns and value that we think are necessary and appropriate for shareholders. And right now, we believe that the market and what we're achieving in the market is at that point of balance, which is really constructive. As we look forward from a yield standpoint, we've had a nice bit of tailwind over the last several quarters, right? As Aurora mentioned, sort of our yield inflecting higher. In terms of our outlook, I'd say broadly speaking, I'm gonna use 34.1-34.3 as generally stable, as opposed to necessarily marching dramatically higher.

We do expect that our core yield is gonna remain generally stable through the remainder of the year, and it's gonna be supported by the strong persistency that we see and also the current pricing environment. Our net yield, though, it's gonna benefit to a degree from that core stability, but it's also gonna be impacted by two things. It's gonna be impacted by anything that happens from a reinsurance standpoint, but much more importantly, it's gonna be impacted by our loss experience. Because you'll recall that our profit commission and ceded losses actually run through to a degree through our premium revenue. If losses increase and our ceded losses increase, it weighs down our profit commission, even though economically we get the same reimbursement coming through as a claims benefit.

And so that could cause some fluctuation up or down further in our net yield. So that's where we see things. It's a really constructive environment and really at a point of balance for what we're doing and leaning in to support borrowers and our customers, and also what it allows us to deliver from a return standpoint.

Mark Hughes (Analyst)

I appreciate that detail. Thank you.

Operator (participant)

Your next question comes from Scott Heleniak with RBC Capital Markets. Please go ahead.

Scott Heleniak (Insurance Analyst)

Yes, good evening. Just a question on NIW for the quarter. Wondering if you had any sense and you could share on what percent you think of NIW is first-time homebuyers, and how that might compare with what we're seeing in the marketplace, which is still, you know, still a low number of first-time homebuyers. But just wondering how your book might compare with

Adam Pollitzer (President and CEO)

Yeah, great.

Scott Heleniak (Insurance Analyst)

Kind of what's out there.

Adam Pollitzer (President and CEO)

Look, broadly speaking, I think our product is, is primarily geared towards first-time homebuyers, right? They're the ones who typically need down payment support the most. They're starting out, they don't have the savings, and they haven't benefited from, you know, equity appreciation on the home that they're selling to get to that 20% down payment. I don't have the stats off the top of my head, though, as to what portion of the $12.5 billion we wrote in the second quarter was for first-time homebuyers, but we're happy to follow up and share that with you.

Scott Heleniak (Insurance Analyst)

Okay, great. Yeah, the second question I had was just on the footnote you had about related to the reinsurance, the termination and committing previously outstanding excess-of-loss reinsurance agreement with Oaktown Re, July 25, 2023 and July 25, 2024. Is there gonna be an impact in Q3 then, that we should be aware of related to that?

Aurora Swithenbank (CFO)

Yeah, we're gonna save about $700,000 per quarter in terms of just expense associated with that deal. There's no impact to our PMIERs available assets. So we're constantly looking at the portfolio we have of outstanding ILNs and quota shares and XOLs, and thinking about ways to optimize them and make them more efficient.

Scott Heleniak (Insurance Analyst)

Okay. Thanks a lot.

Adam Pollitzer (President and CEO)

Oh, and just, the team around the table has given me the stats we could share with you. Of the $12.5 billion, 52% was volume in support of first-time homebuyers.

Scott Heleniak (Insurance Analyst)

Okay, that's great. That's well above the number I keep seeing, which is somewhere around a third, 30%-40%, so that seems like it's above that. Appreciate it.

Adam Pollitzer (President and CEO)

Yes.

Operator (participant)

This concludes our question and answer session. I would now like to turn the conference back over to management for any closing remarks.

Adam Pollitzer (President and CEO)

Well, thank you again for joining us. We'll be participating in the JPMorgan Future of Financials forum virtually on August thirteenth and fourteenth, and the Barclays Financial Services Conference in New York on September 9th. We look forward to speaking with you again soon.

Operator (participant)

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