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DATE

Thursday, July 30, 2026 at 5 p.m. ET

CALL PARTICIPANTS

  • Vice President of Investor Relations and Treasury - John Swenson
  • Executive Chairman - Brad Shuster
  • President and Chief Executive Officer - Adam Pollitzer
  • Chief Financial Officer - Aurora Swithenbank

TAKEAWAYS

  • New Insurance Written (NIW) -- $16 billion in the second quarter, representing high return new business volume according to management.
  • Insurance in Force (IIF) -- $227.1 billion, a record level reflecting a 49% increase over the last four years compared to 13% growth for the broader industry.
  • Total Revenue -- $187.9 million, up 2.4% from the first quarter and 8.1% year over year, driven by growth in the insured portfolio.
  • Adjusted Net Income -- $106 million, representing a 7% sequential increase and a 10% increase from the second quarter of 2025.
  • Adjusted Diluted EPS -- $1.38, reflecting 8% growth from the first quarter and 14% growth year over year.
  • Return on Equity -- 15.9%, supported by earnings power and expense discipline during the quarter.
  • 12-Month Persistency -- 81.4%, compared to 82.2% in the first quarter of 2026.
  • Net Premiums Earned -- $157.5 million, up from $154.8 million in the first quarter of 2026 and $149.1 million in the second quarter of 2025.
  • Core Yield -- 34 basis points, remaining unchanged from the first quarter of 2026.
  • Investment Income -- $30.3 million, compared to $28.6 million in the first quarter and $24.9 million in the prior year period.
  • Underwriting and Operating Expenses -- $30.5 million, reflecting a slight decrease from $30.6 million in the first quarter.
  • Expense Ratio -- 19.4%, down from 19.8% in the first quarter, reflecting continued operational efficiency.
  • Default Inventory -- 8,020 loans as of June 30, 2026, compared to 8,044 at the end of the first quarter.
  • Default Rate -- 1.16% at quarter end, as the portfolio continues to season and normalize.
  • Claims Expense -- $13.1 million, a decrease from $20.7 million in the first quarter and $13.4 million in the second quarter of 2025.
  • Book Value Per Share -- $36.88 (excluding net unrealized gains and losses), representing a 4% increase from the first quarter and a 15% increase year over year.
  • Share Repurchases -- $31.4 million in the second quarter, with 827,000 shares retired at an average price of $37.99.
  • Remaining Repurchase Capacity -- $167 million under the existing buyback program as of June 30, 2026.
  • PMIERs Available Assets -- $3.7 billion, resulting in excess available assets of $1.6 billion over the $2.1 billion risk-based required assets.
  • Market Expansion -- 1,700 lenders currently served, with the company reaching a milestone of over $500 billion in total insurance ever written.

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RISKS

  • Pollitzer stated, "We'd expect our default population to trend a bit higher from here," noting that seasonal tailwinds from the first half of the year typically become headwinds in the third and fourth quarters.
  • Pollitzer noted that "macro risks do remain" and indicated that degrees of pressure are emerging in local housing markets including "Florida, Texas, parts of the rest of the Sun Belt, Mountain West, and a little bit on the West Coast."

SUMMARY

Management reported record financial results for the second quarter, highlighted by growth in the primary insurance-in-force portfolio and a higher return on equity. The company is benefiting from a "pull to par" effect where its share of new business production remains significantly higher than its share of industry insurance in force. The company maintains a disciplined approach to pricing and risk selection while utilizing a combination of traditional reinsurance and capital market solutions to manage its balance sheet. Management indicated that credit performance remains strong due to a resilient labor market and embedded home equity, though they anticipate a seasonal normalization of default rates in the second half of the year.

  • CEO Pollitzer highlighted the company's growth trajectory, noting that National MI has grown insurance in force by 49% over the last four years compared to 13% for the rest of the industry.
  • The company is prioritizing traditional reinsurance over insurance-linked notes (ILN) because it offers "forward flow coverage" that allows them to lock in pricing for up to three years.
  • CFO Swithenbank stated, "We've been getting excellent execution" in the reinsurance market, partly because new reinsurers have entered the mortgage space, increasing available capacity.
  • Management observed that while house prices are setting records nationally, they see inventory building and pressure on prices in specific regions like the Sun Belt and West Coast.
  • Regarding the 21st Century ROAD to Housing Act, Pollitzer stated, "we don't expect that it's going to have a significant impact on the private MI market or our business, certainly not in the near term," as it is a long-term supply-focused initiative.
  • The company reported that its core yield remains stable at 34 basis points, though it can be influenced by refinancing activity which typically involves higher FICO score borrowers and lower premiums.
  • Management attributed favorable prior-year reserve development to borrowers being able to "catch up and cure out a default at admittedly a faster and more successful pace than what we'd anticipated."

INDUSTRY GLOSSARY

  • Core Yield: A measure of premium yield that excludes the impact of reinsurance costs and cancellation earnings.
  • Default Rate: The percentage of policies in force that have missed two or more consecutive monthly payments.
  • FICO: A credit score created by the Fair Isaac Corporation that lenders use to assess a borrower's credit risk.
  • GSE (Government-Sponsored Enterprise): Private corporations created by the U.S. government, such as Fannie Mae and Freddie Mac, to enhance the flow of credit in the housing market.
  • ILN (Insurance-Linked Notes): A type of debt instrument used by insurers to transfer specific insurance risks to the capital markets.
  • Insurance in Force (IIF): The total current principal balance of all mortgage loans covered by primary insurance.
  • New Insurance Written (NIW): The total amount of new mortgage insurance coverage added to the portfolio during a specific period.
  • PMIERs (Private Mortgage Insurer Eligibility Requirements): Financial and operational standards set by the GSEs that private mortgage insurers must meet to remain eligible to provide coverage.
  • Risk in Force (RIF): The maximum potential claim amount that an insurer is responsible for under its policies.

Full Conference Call Transcript

Operator: Good day. Welcome to the NMI Holdings Inc. 2026 second quarter earnings conference call. All participants will be in listen-only mode. Should you need 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 event is being recorded. I would now like to turn the conference over to John Swenson, Vice President of Investor Relations and Treasury. Please go ahead.

John Swenson: Thank you, operator. Good afternoon. Welcome to the 2026 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, 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 filings with the SEC. If, 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. 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. 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.

I'll turn the call over to Brad.

Brad Shuster: Thank you, John. Good afternoon, everyone. I'm pleased to report that in the second quarter, National MI again delivered standout operating performance, continued growth in our insured portfolio, and record financial results. Our lenders and their borrowers continued to turn to us for critical down payment support. In the second quarter, we generated $16 billion of NIW volume, ending the period with a record $227.1 billion of high-quality, high-performing primary insurance in force. We also surpassed $500 billion of insurance ever written during the quarter—a notable milestone that 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 nearly 2.2 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 1,700 lenders from a foundation of partnership, trust, and innovation.

We've attracted a talented, dedicated team who drive our success every day and have built a culture of collaboration, integrity, and performance. We have consistently outperformed, delivering exceptionally strong operating and financial results quarter after quarter. The long-term private MI market opportunity is compelling, and I'm as excited as I've ever been about how we're positioned to continue to outperform as we go forward. With that, let me turn it over to Adam.

Adam Pollitzer: Thank you, Brad. 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. National MI continued to outperform in the second quarter, delivering significant new business production, consistent growth in our insured portfolio, and record financial results. We generated $16 billion of NIW volume and ended the period with a record $227.1 billion of high-quality, high-performing primary insurance in force. Total revenue in the second quarter was a record $187.9 million, and we delivered record adjusted net income of $106 million or $1.38 per diluted share and a 15.9% return on equity.

Overall, we had a terrific quarter and are confident as we look ahead. The macro environment and housing market have remained resilient. Our lender customers and their borrowers continue to rely on us in size for critical down payment support. We see an attractive and sustained new business opportunity fueled by long-term secular trends. We have an exceptionally high-quality insured portfolio covered by a comprehensive set of risk transfer solutions. Our credit performance continues to stand ahead. We're delivering 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.

Taken together, we see a clear opportunity for continued outperformance. Notwithstanding these strong positives, however, macro risks do remain. 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. Overall, we had a terrific quarter, delivering strong operating performance, consistent growth in our insured portfolio, and record financial results.

We're in the market every day with a clear mandate and purpose, offering a low-cost, high-value solution that makes homeownership more affordable and achievable for millions of deserving Americans in communities across the country, with coverage that serves to insulate the GSEs and taxpayers from risk and loss in a downturn. 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: Thank you, Adam. We delivered record financial results in the second quarter. Total revenue was a record $187.9 million. Adjusted net income was a record $106 million, or $1.38 per diluted share, and return on equity was 15.9%. We generated $16 billion of NIW, and our primary insurance in force grew to $227.1 billion. 12-month persistency was 81.4% in the second quarter, compared to 82.2% in the first quarter. net premiums earned in the second quarter were a record $157.5 million, compared to $154.8 million in the first quarter and $149.1 million in the second quarter of 2025.

Net yield for the quarter was 28 basis points, consistent with the first quarter. core yield, which excludes the cost of our reinsurance coverage and the contribution from cancellation earnings, was 34 basis points, also unchanged from the first quarter. Investment income was $30.3 million in the second quarter, compared to $28.6 million in the first quarter and $24.9 million in the second quarter of 2025. Total revenue was a record $187.9 million in the second quarter, up 2.4% compared to the first quarter and 8.1% compared to the second quarter of 2025. Underwriting and operating expenses were $30.5 million in the second quarter, compared to $30.6 million in the first quarter.

Our expense ratio was 19.4% in the quarter, compared to 19.8% in the first quarter. We had 8,020 defaults at June 30th, compared to 8,044 at March 31st, and our default rate was 1.16% at quarter end. Claims expense in the second quarter was $13.1 million, compared to $20.7 million in the first quarter and $13.4 million in the second quarter of 2025. Adjusted net income was a record $106 million, up 7% compared to $99.4 million in the first quarter and 10% compared to $96.5 million in the second quarter of 2025.

Adjusted diluted earnings per share was a record $1.38, up 8% compared to $1.28 in the first quarter and 14% compared to $1.22 in the second quarter of 2025. Shareholders' equity as of June 30th was $2.7 billion, and book value per share was $35.89. Book value per share, excluding the impact of our net unrealized gains and losses in the investment portfolio, was $36.88, up 4% compared to the first quarter and 15% compared to the second quarter of last year. In the second quarter, we repurchased $31.4 million of common stock, retiring 827,000 shares at an average price of $37.99.

Since starting our buyback program in 2022, we've repurchased a total of $408 million of common stock, retiring 13.6 million shares at an average price of $29.95. We have $167 million of repurchase capacity remaining under our existing program. At quarter end, we reported $3.7 billion of total available assets under PMIERs and $2.1 billion of risk-based required assets. Excess available assets were $1.6 billion. Overall, we achieved record financial results during the quarter, delivering consistent growth in our high-quality insured portfolio, record top-line performance, standout credit experience, continued expense efficiency, and record bottom-line profitability. With that, let me turn it back to Adam.

Adam Pollitzer: Thank you, Aurora. We had a terrific quarter, once again delivering significant new business production, continued growth in our high-quality insured portfolio, and record financial results. We have a strong customer franchise, a talented team driving us forward every day, an exceptionally high-quality book covered by a comprehensive set of risk transfer solutions, and a robust balance sheet supported by the significant earnings power of our platform. Taken together, 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. Thank you for joining us today.

I'll now ask the operator to come back on so we can take your questions.

Operator: We will now begin the question-and-answer session. To ask a question, you may press star one on your telephone keypad. If you're using a speakerphone, please pick up your 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 two. The first question comes from Bose George with KBW. Please go ahead.

Bose George: Hey, everyone. Good afternoon. Starting with credit, can you discuss home price trends in your various markets? Are there areas where you're seeing things being better or worse than your expectations coming into the year?

Adam Pollitzer: Yeah, no. I'd say in terms of the path of house prices, broadly speaking, nationally, we continue to be encouraged month after month on a national basis. House prices are setting records, obviously that's supportive for us in terms of need for our product. As house prices move higher, the need for affordability support increases. It obviously bolsters credit performance. It's a big positive. In terms of geo-by-geo local markets, nothing new is really developing. We continue to see the strongest markets in the Northeast and the Midwest. There continues to be degrees of pressure that are emerging in Florida, Texas, parts of the rest of the Sun Belt, Mountain West, and a little bit on the West Coast.

From an encouraging standpoint, what we're seeing in some of those markets, and those markets are the same where we've seen inventories building a little bit of pressure on house prices for a while now. The most recent readings are showing that, in fact, some of the MSAs within that sort of broad regional footprint are actually bottoming and beginning to move off of their lows. Overall, nothing surprising or dramatic. Generally consistent with what we've been seeing for a while now.

Bose George: Okay, great. Thanks. Actually from a capital return standpoint, in, I guess, a couple of years, your pull to par, as you call it, will be done. Your growth will look more similar to the others. In that scenario, it looks like some peers returned a lot of capital, others look outside the industry. Early thoughts on which camp you might fall into?

Adam Pollitzer: Yeah, look, I guess, one, I would say thus far, we're really delighted with the consistency and success that we've achieved with our repurchase program. Like Aurora mentioned it, we've retired $408 million of stock, and that represents 16% of our total outstanding. As we roll forward pace of NIW, the organic opportunity, that will certainly factor into how we size our excess capital position. That pull to par that we've talked about, which is really just as a reminder for everybody, that's the fact that our share of new business production is still meaningfully higher than our share of industry insurance in force. We've got this embedded growth engine. It's a powerful one.

Over the last four years since we launched our repurchase program, we've grown our insurance in force by 49% compared to 13% growth for the rest of the industry. We'll make decisions and evaluate what the right allocation of capital is at all times. It's one of the most critical roles that we have. We still see a lot of tailwind from that embedded growth engine as we look forward.

Bose George: Okay, great. Thanks.

Operator: The next question comes from Rich Shane with JPMorgan. Please go ahead.

Rich Shane: Thanks, guys. I probably need to get in the queue just a little bit faster. I thought Bose asked the right questions. I will follow up just briefly. When you think about we're now halfway through 2026, it does feel like you guys picked up a little bit of market share in the second quarter. I'm curious what you guys are seeing in the market, how aggressive you want to be. I'm also curious to sort of benchmark how you feel about the 2026 vintage from a credit perspective versus the 2025 vintage which actually is showing hallmarks are performing pretty well.

Adam Pollitzer: Yeah. Well, maybe I'll break them into three pieces. What we're seeing broadly in the market in terms of competitive dynamics. You guys said, how competitive do we want to be? What we're observing about the success we're having day-to-day with customers. Then we can talk about the credit environment and what we're seeing. I'd say broadly speaking, from a competitive standpoint, our view of what we observe in the market is that it looks like the industry is really at a point of balance in a very constructive way. I think we continue to be highly encouraged by the unit economics that we are achieving on new business.

I think when we say we're where we should be, what we really mean is I think the industry overall, and certainly our approach and where we are, is that we want to make sure we are at a point where we could fully and fairly support our customers and their borrowers, but at the same time use rate among all the other tools that we have to appropriately protect our balance sheet, our returns, and our ability to deliver long-term value for shareholders. That's always going to be our focus, is making sure we're at a point of balance. Nothing has really changed.

In terms of relative growth in NIW this quarter, I think we're the third out of six to report, so it's difficult to draw too many conclusions. I think we've had a little more growth in our NIW volume than the others who've reported. We're delighted with the result that we've achieved in the quarter, right? We wrote $16 billion of High return new business. We're working hard to support everybody who's turning to us in the market. As for a specific market share read-through, I think this is all just sort of in the normal plus/minus, right? There's always going to be fluctuations up or down that happen at any point in time.

It could be because volume may have moved from one originator to another, where we happen to have greater wallet share. MI relationships aren't even across the board. There's really, I'd say, nothing of note that I would point out, and there's really nothing we do to manage the market share. What we do is to manage how we engage and show up for our customers every day. Rich, I'll pause and see if you had any follow-up there before I talk about the 2026 credit environment.

Rich Shane: No, that's very helpful. Yes, I realized my question was pretty long, go ahead please. Sorry.

Adam Pollitzer: No problem. I'd say, in terms of 2026 credit, most important, the underlying characteristics of the production that we're bringing onto the portfolio now are still incredibly high quality. We're still using all the tools that we've invested to develop individual risk underwriting, Rate GPS, the broad use of reinsurance on the back end to shape the profile of our portfolio. I'd say, as we're doing that, what we've really been most encouraged by is the resiliency that we're seeing in the economy and housing market as a backdrop. That sets the stage for a constructive environment today and hopefully strong performance as we carry through here.

It's obviously very early, but we're not seeing anything in our portfolio experience on the early payment default side or other markers of underwriting strain that are emerging. We think it's another high-quality, productive year.

Rich Shane: Okay. Appreciate that. Thank you.

Operator: The next question comes from Mihir Bhatia with Bank of America. Please go ahead.

Mihir Bhatia: Hi. Good afternoon. Thanks for taking my question. Adam, I was wondering if we could just follow up on the last point on credit and just in terms of the production you're seeing. I think you talked about your portfolio and not seeing any signs, but maybe just talk a little bit about competition and just pricing activity in the market. Are there any markets or pockets of the market where you feel things have gotten a little irrational, or you've had to move away from or pull back in?

Adam Pollitzer: Mihir, it's a good question. Look, I'd reiterate—I'd say, broadly speaking, we think the industry is at a point of constructive balance right now. We've not seen any notable moves. I think the industry overall—and certainly when we're bringing volume into our books—is where we should be in providing that sort of balanced support for customers and borrowers and making sure, obviously, that we're building a high-quality portfolio that can generate adequate returns and meet our thresholds. That's still broadly the case in the market. The areas I would say where we see a little more pressure are nothing new. It's in some of the larger transactionally-oriented business, but that's not a new development in the market.

That's been the case for going on 10 years at this point.

Mihir Bhatia: All right. Great. Then maybe just on the default inventory, the loans in default this quarter ticked a little bit lower, I guess just marginally. Was that just seasonality and tax refunds, or should we read more into it? I guess anything to call out in terms of cures that have changed in the last few months that we should just keep an eye on? If you could even just comment on where you think default rates head from here. Thanks.

Aurora Swithenbank: In terms of the activity in the quarter, I think you're right that there is a seasonal component to that. Just as a reminder, we tend to see—with tax refunds, year-end bonuses, and getting through the holidays in the first half of the year—there tends to be more positive credit experience. Then the tide tends to turn on that in the back half of the year. There was certainly some component of that. Some of that falls in the first quarter, some of that falls into the second quarter. There's also just broader macroeconomic environment, and the macro data, notwithstanding some headlines, continues to be very strong. The employment data is very strong.

HPA continues to perform as Adam just spoke about. I think that's all very supportive of the default performance. In terms of outlook going forward, as you know, we don't provide any guidance. What I'd say is just point to the fact that some of those seasonal tailwinds that we have in the first part of the year become seasonal headwinds as we head into the back part of the year. We're keenly, as I know everyone is, watching the macroeconomic environment since I think that will be a key determinant of outcomes.

Adam Pollitzer: We'd expect our default population to trend a bit higher from here. One, we saw for a while that we were seeing just a natural normalization of our credit experience given the growth and seasoning of the portfolio. As Aurora pointed to—seasonal dynamics—we always see a trend higher first in the third quarter and then again as we get into the back end of the year in the fourth quarter.

Mihir Bhatia: Got it. Thank you. Thanks for taking my question.

Operator: The next question comes from Mark Hughes with Truist. Please go ahead.

Mark Hughes: Yeah, thank you. Good afternoon. The core yield of 34 basis points, given what you're seeing with pricing and the new business you're bringing on, is that sustainable at that level?

Aurora Swithenbank: As you're aware, we don't provide any forward-looking guidance. Obviously the yield will be supported by the persistency of the in-force book; that tends to be a pretty stable number. It is influenced by the persistency of the in-force and the premium that we're bringing on in the new business. I'd expect that to be reasonably stable—plus minus—but it can be influenced by things like rate movements, which might cause a greater cohort of, say, refinancing activity to come through. Refinancing activity tends to be a little bit higher quality and therefore lower premium because you have borrowers who have higher FICO scores. They've been making payments on their mortgage. They may have embedded equity in those transactions.

There's a number of things that can influence it, but given the large and stable in-force that we have and the strong persistency in the book, we would expect that to be broadly stable.

Mark Hughes: Very good. The prior year reserve gains continue to be strong. Adam, is there anything structurally—when we think back at the timing of the different vintages: COVID, post-COVID, you name it—anything that you would call out as potentially influencing the trajectory of those prior year gains? I know they're obviously influenced by underlying credit trends, but anything else structurally or timing-wise that we ought to think about?

Adam Pollitzer: No. It's a good question, and we always probe on this as we're doing our own internal analysis, but there really isn't anything. It's the fact that we're still in quite a constructive environment in terms of macro and housing market dynamics, and our existing borrowers remain really well-situated—even those that are falling behind—because of the strength in the labor market, because of the embedded equity in their homes. A lot of them are able to catch up and cure out a default at admittedly a faster and more successful pace than what we'd anticipated when we established the initial reserves; which is why we then have favorable development. Nothing that's structural or tied to a specific vintage.

What we're seeing is really a constructive credit environment.

Mark Hughes: Very good. Then maybe just one more, if I could: the net expense ratio continues to show nice improvement. Anything around timing on that could change that trajectory?

Aurora Swithenbank: I think there's always seasonal fluctuations to expenses. We've talked about in the first quarter there's the FICA reset and 401 contributions. Depending on the trajectory of earnings—when that's strong—you have some accruals associated with share-based compensation. Those are things that kind of come year in, year out. There's no particular large expenditures that we are planning or that we have on the horizon which would impact the broad trajectory of expenses.

Mark Hughes: Perfect. Thank you.

Operator: Once again, if you have a question, please press star then one. The next question comes from Riley Sandham with RBC. Please go ahead.

Riley Sandham: Good afternoon. I'm on for Rowland Mayor this evening. Can you walk through how you're thinking about traditional versus non-traditional reinsurance, and are you seeing any appetite change from reinsurers as P&C markets have softened?

Adam Pollitzer: I'll just make one comment, and then Aurora will share more. The idea of traditional versus non-traditional—for us, it's all traditional because the ultimate structure that we face off against, it's excess of loss or it's quota share. We may source that capacity from a traditional slate of reinsurers, or we may source it from the capital markets in the form of ILN, but the transactions that we have are all quota share or excess of loss. I'll let Aurora speak to how we think about the balance between those two sources.

Aurora Swithenbank: We like diversity in our sources of reinsurance. Recently, we've been more focused on traditional forms of reinsurance—to use your vocabulary. Honestly, that's on a couple of different vectors. One is we've been getting excellent execution; and I can go through reinsurer appetite and sort of what's driving that. We're able to get a little bit more flexible terms. In the capital markets, you need to warehouse risk either on your own balance sheet or through a warehouse facility in order to get the volume you need to do a securitization and place that into the capital markets. That's an extra complexity.

Whereas in the reinsurance market, we have forward flow coverage, so we can lock in at a price certain today—coverage going out as far as three years in the future. That's pretty terrific in terms of the capital runway that it gives us and the certainty of execution for a complete planning horizon. Just the overall speed of execution in the reinsurance market—it tends to be very quick, and we can do it in smaller size. Debt capital markets transactions or securitization transactions, you need a minimum bulk in order to cover the fixed costs associated with those transactions. They tend to be a little bit less flexible, and we can't be quite as nimble in that market.

Now that said, we like the ILN market. We would like to be back to the ILN market. I'll pivot back to what I said at the beginning, which is we like having a diversity of different outlets for our risk transfer. You'll expect to see us at certain points in the cycle come back to that market. I said I'd come back to why are reinsurers providing capital on such attractive terms. I think it's a couple of things. One, we've had a number of new reinsurers start writing mortgage reinsurance risk. I think they've seen the success of the early participants in that market, there is additional capacity as additional reinsurers join the market, hire teams, build analytics.

There's the competitive dynamic. The GSEs have been laying off less risk into the reinsurance market over the past several years; that has left the private mortgage insurers as the primary source of that risk, and that's certainly been an important supply-demand dynamic in terms of the pricing. I'd point to those things, as you said, there's the broader softness in certain other lines of business. Broadly, this has been a line of business that's been very profitable for the reinsurers and is diversifying and non-correlated with some of their other businesses. I think that remains true today.

Riley Sandham: Very helpful. If I could squeeze one more in here: the 21st Century ROAD to Housing Act went into effect earlier this month, I was wondering if you believe any of those provisions or any other legislative proposals are able to help unfreeze this market.

Adam Pollitzer: I'd say overall, we've been encouraged by what I would term a renewed focus that we've seen from the administration, from Congress, and others in D.C. on the housing market and housing finance issues. As for the 21st Century ROAD to Housing Act, I think it is great to see a coordinated bipartisan effort aimed at increasing housing supply, streamlining the development process, and ultimately improving affordability. We have a supply shortage of single-family homes in the U.S.—a broad, coordinated, bipartisan effort that brings focus and hopefully solutions to that issue is terrific. We're hugely supportive. What I would say, though, I'll focus more on us, right? In our market.

I think while it's important overall, it's also noteworthy because it's really the first major piece of housing legislation that we've had in the U.S. since the 1990s. While we expect that it will be valuable for housing supply for affordability over the long term, it's not going to happen immediately. Because it's a supply-focused initiative, we don't expect that it's going to have a significant impact on the private MI market or our business, certainly not in the near term.

Riley Sandham: That's great. Thank you very much.

Operator: This concludes our question and answer session. I would like to turn the conference back over to Adam Pollitzer for any closing remarks. Please go ahead.

Adam Pollitzer: Thank you all again for joining us. We'll be participating in the Barclays Financial Services Conference in New York on September 15th. We look forward to speaking with you again soon.

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