Yeah, welcome to the Old Republic International first quarter 2020 earnings conference call. If you'd like to ask a question during today's call, please signal by pressing star one on your telephone keypad. I would like to remind everyone that this conference is being recorded. I would now like to turn the conference over to Marilyn Meek with MWW Group. Please go ahead.
Thank you. Good afternoon, everyone, and thank you for joining us for the Old Republic conference call to discuss first quarter 2020 results. This morning, we distributed a copy of the press release and posted a separate statistical supplement, which we assume you have seen and/or otherwise have access to during the call. Both of the documents are available at Old Republic's website, which is www.oldrepublic.com. Please be advised that this call may involve forward-looking statements as discussed in the press release and statistical supplement dated April 23, 2020. Risks associated with these statements can be found in the company's latest SEC filings. This afternoon's conference call will be led by Craig Smiddy, President and CEO of Old Republic International Corporation, and several other senior executive members as planned for this meeting. At this time, I would like to turn the call over to Craig Smiddy. Please go ahead, sir.
Thank you, Marilyn. Well, good afternoon, everyone, and welcome to Old Republic's first quarter 2020 earnings conference call. With me today, we have Karl Mueller, Old Republic International's CFO, and we have Carolyn Monroe, the President of our Title Insurance Group. In the past, Randy Yaeger, our Title Group Chairman, and Mark Bilbrey, our Title Group CEO, have joined us on the call.
Given that Carolyn was promoted to President of the Title group in January of 2019, and given her close proximity to the ongoing operations within the Title group, we thought it was best that she join us for this call and talk about what's happening in the Title operations, especially in the midst of the COVID-19-related challenges, where Carolyn's been burning the midnight oil, working with all the folks on the front lines and doing a remarkable job of keeping our Title operations executing at a very high level. Welcome, Carolyn. Appreciate having you join us for the discussion today. As we work through the challenges resulting from COVID-19, we certainly want to send all of you, your families, friends, and coworkers our very best wishes.
I'd also like to take a moment to acknowledge all of Old Republic's more than 9,000 associates that have mobilized our remote working capabilities and also all those essential workers in our offices, all of whom are working to ensure that our services and capabilities for our customers, our agents, and brokers continue uninterrupted. Although in most states we're recognized as an essential industry and essential workers, currently more than 95% of our General Insurance Group and approximately 80% of our Title Insurance associates are working remotely. The small number of associates we have in the offices are working to ensure that mail gets processed, checks get mailed, and that our IT infrastructure remains vibrant to support all of those working remotely. I'd also note that we're among the fortunate to be able to say that we have not furloughed any of our associates during this time.
Before handing things over to Karl, I'll offer a few initial comments regarding our first quarter. As you saw in our release, Old Republic posted strong first quarter 2020 operating results relative to the first quarter of 2019, and these results were driven by an exceptionally strong quarter for our Title Insurance segment. As noted in our release, COVID-19 had minimal effect on our first quarter results. However, we also acknowledge that the effects of COVID-19 and the associated governmental responses could have a negative effect on our top-line premium and fee revenues in the second quarter and subsequent quarters of 2020. As such, these declines could also result in higher expense ratios in the short term. Our first quarter operating results again demonstrate that our strategic diversification between Title Insurance and General Insurance worked very well to produce consolidated revenue and earnings growth over time.
At this point, I'll turn matters over to Karl to discuss our overall consolidated financial results. I'll also ask him to address our small RFIG runoff segment, after which he'll turn things back to me to discuss the General Insurance segment. Carolyn will discuss the Title Insurance segment. I'll make a few closing comments, and then finally, we'll open up the discussion to Q&A. With that, Karl, take us away.
Good afternoon, everyone. Before commenting on the first quarter results, I'd like to add to Craig's earlier comments and recognize our accounting and financial reporting associates for their diligence and commitment during this period of turmoil resulting from the COVID-19 pandemic. Despite the fact that most of our employees were working remotely, we were able to complete the financial close without significant disruption, while at the same time retaining the integrity of our internal control process. Job well done by everyone. Turning now to the quarterly results. This morning, we announced first quarter net income, which excludes all investment gains and losses of almost $141 million, which is up nearly 16% from a year ago. On a diluted per share basis, that equates to $0.47, which is an increase of 17.5% from the prior year.
As noted in this morning's release, our operating results were largely unaffected by the COVID-19 pandemic. The resulting disruption to the financial markets led to substantial declines in the fair value of our equity portfolio. The pre-tax fair value decline of approximately $963 million was really the main contributing factor to the first quarter reported net loss and corresponding reduction in book value. Consolidated net premiums and fees earned registered strong growth of a little over 10% to $1.5 billion. The General Insurance Group increased by 2.5%, and our Title Group grew by almost 24%, as Carolyn will address in a few moments. Net investment income grew nearly 2% due to a larger invested asset base and greater dividend income, which arises from the relatively higher-yielding equity portfolio, and that was offset by slightly lower yields on the bond portfolio.
From an underwriting perspective, this quarter's consolidated combined ratio of 94.9% marked about a 1.1 percentage point improvement over 2019. The quarterly claims ratio trended lower, and the expense ratio ticked upwards slightly, primarily due to a mix of business shift. That shift was more towards the Title segment, which as you know, carries a lower loss and a higher expense ratio. Consolidated claim reserves developed slightly favorable in both periods, reducing the reported claim ratio by 0.8 and 1.6 percentage points for the current and prior year quarters, respectively. We experienced favorable prior year development on the reported claim ratios for each of our operating segments to varying degrees during the quarter. This morning's release, along with the financial supplement, provide some additional detail about those historical development trends. Turning now to our financial condition.
Total cash and invested assets decreased to $13.5 billion at the end of March. Driving this change was the combination of strong operating cash flow of $216 million, offset by, as I mentioned earlier, the substantial unrealized market depreciation, in both the equity as well as the fixed income portfolios. As a reminder, the composition of our portfolio is approximately 76% allocated to bonds and short-term investments and 24% to equity securities. Our equity portfolio consists of approximately 100 names that are predominantly large-cap, value-oriented, dividend-paying companies. We manage the portfolio within our risk management framework, which does take into consideration expected price volatility. The value of our equity portfolio declined by approximately 24% during the quarter to an unrealized loss position of roughly $22 million at the end of March. As of yesterday's close, the portfolio had rebounded to $175 million unrealized gain.
Despite this significant downdraft in valuation at the end of March, we are still operating within our risk tolerance thresholds. Consequently, we have not made, nor do we expect to make any material changes to our investment strategy. Old Republic's book value per share decreased from $19.98 at the end of 2019 to $17.29 at the end of March. As previously noted, the most significant contributor to this decline relates to the $2.53 per share reduction in the fair value of the equity portfolio. Operating income of $0.47 was additive to the book value, and we returned capital to our shareholders in the form of the regular cash dividend, and that amounted to $0.21 per share or $0.84 on an annual basis.
This year's annual dividend payout represents about a 5% increase over last year's regular cash dividend rate. This year, 2020, marks the 79th year of paying uninterrupted regular cash dividends, as well as consecutive years of increasing the dividend rate for the past 39 years. We ended the quarter with $6.1 billion of total capitalization, low debt leverage ratios, and adequate liquidity throughout the enterprise. As highlighted in the release, we believe that our strong financial position will enable us to weather these challenging times. As Craig mentioned, let me now just briefly discuss our runoff mortgage insurance segment. From a capital management perspective, we entered this year with the anticipation of beginning to withdraw excess capital from our mortgage guarantee runoff operation. During the quarter, we did in fact obtain regulatory approval and received a $37.5 million extraordinary dividend from our two principal mortgage insurance companies.
Total statutory capital at the end of March continues to remain strong and registered $410 million. The first quarter mortgage insurance results were not significantly affected by the COVID-19 pandemic, as Craig mentioned earlier. The impact on unemployment levels in real estate markets, along with the mitigating effects of the government loan forbearance programs, are areas that we are monitoring closely. By definition, a mortgage in forbearance is not considered to be in default. Let's also keep in mind that this is a mature book of business. We've not written a new policy since 2011. A large percentage of the in-force file was written in 2009 and earlier years. In addition, approximately 60% of the loans that are insured have previously been modified or refinanced under the government's home affordability programs, the HARP and HAMP programs.
These factors, along with the rate at which the U.S. economy recovers, could affect future claims experience and potentially slow the return of capital from the runoff business until there is greater clarity. That said, we continue to pursue all previously mentioned options in the interest of producing the most beneficial long-term outcome for all stakeholders. With that, I'll now turn things back to Craig for discussion of the General Insurance Group.
As the release indicates, and as we show in the financial supplement, compared to first quarter 2019, General Insurance saw quarter-over-quarter operating revenue increase by 2.9%, and quarter-over-quarter operating income was up 1.7%. Net premiums earned in commercial auto rose by 3.6% quarter-over-quarter, attributable to the positive effect of rate increases that we have continued to attain on the commercial auto line. In the first quarter, those rate increases remained in the high teens. On the other hand, premiums were somewhat offset by a decline in the exposure base. As can be seen in the financial supplement, workers' compensation experienced a 9% drop in net premiums earned quarter-over-quarter.
This is attributable to the negative effects of rate decreases that continued in the low single digits for us during the first quarter, and also from a decline in the exposure base. Thus far, the lower rate level that we have in the workers' compensation line continues to correspond with the lower claim frequency trends that we and the industry are seeing on that line. Quarter-over-quarter, the General Insurance overall composite ratio rose slightly to 95.6%, up from 95.3%, and this was attributable to a slightly higher expense ratio. The first quarter expense ratio came in at 25.8% compared to first quarter of 2019 when it stood at 25.5%. Turning to claim ratios, our first quarter commercial auto claim ratio came in at 77% compared with 79.1% in the same period of 2019.
As demonstrated by our continuing level of rate increases for this line, along with our reduction in exposure from our risk selection efforts, we continue to work very hard to bring this claim ratio back into line with our target in the low 70s. Turning to Workers' Compensation, the first quarter claim ratio came in at 71% compared to 70.7% in the first quarter of 2019. We continue to remain very pleased with this result, obviously. For commercial auto, Workers' Comp, and GL combined, given that we typically provide these coverages together to an account, we like to also look at that combined result. The quarter-over-quarter claim ratio for those three combined was flat at 74.1%. Still looking at the financial supplement, you can see that the remainder of our claim ratios are very much in line with our target.
Of course, all of the claim ratios we report are inclusive of favorable and unfavorable prior year claim development. In the latest quarter, we saw favorable development of seven-tenths of one percentage point. For General Insurance, as I mentioned earlier, the remaining quarters of 2020 could prove challenging from a top-line perspective, but we will continue to seek the appropriate price that we need for our products, and we'll continue to focus on the long term when it comes to managing our expense ratios. On that note, I'll now turn the discussion over to Carolyn for her comments on Title Insurance. Carolyn?
Thank you, Craig. While these have really been challenging times, the employees in the title division have embraced this challenge and are working through the chaos in order to continue business and serve our customers. Despite the COVID-19 pandemic, residential and commercial sales and refinances continue to fund, and transactions need to close. Amidst this, we are ever mindful of the safety and well-being of our employees and customers. Access into our offices is generally restricted to employees only, which has really caused us to be very creative in carrying out our business. Our direct operations and our title agents have conducted drive-through closings, set up tents outside of offices, provided single-use pens for signing documents, all while continuing to practice social distancing.
My heartfelt appreciation goes out to all of our employees and our title agents on their creativity, and most importantly, the positive and really collegial attitude that we hear about on our daily calls with the leadership team and the Title group. The COVID-19 disruptions have led to a variety of emergency state orders that impact our business. Many notarization statutes have been amended in order to comply with distancing requirements and to create avenues through which closing transactions may continue. Based on these orders, our title technology company, Pavaso, which was originally designed for electronic closings and RON legislation, was able to pivot and adjust its technology to allow our agents and offices to continue conducting closings through a secure platform, which allows for adherence to social distancing restrictions. This platform provides an essential notary function that allows for the entire notarization of documents to be completed remotely.
Between the ingenuity of our offices and agents and the support of technology like Pavaso, we have been able to keep pace in our current environment. The Title Group kicked off the first quarter of 2020 on a record pace. The market experienced near record lows on mortgage rates. All-time first quarter highs were set in terms of both direct and independent agency revenue and operating profitability. For the first quarter, total premium and fee revenue was $628.1 million, which was an increase of nearly 24% over the first quarter of 2019. Agency premiums were up around 21%, and direct operating revenue approximately 31%. In terms of operating profitability, the Title Group reported pre-tax operating income of $43.3 million for the quarter, compared to $20.5 million in the first quarter of 2019, an increase of 110.6%.
We ended the first quarter with some of the highest open order counts in the history of our company. We continue to adjust to doing business while operating under the various state shelter-in-place orders and social distancing requirements. We are mindful of the challenges ahead for our organization and our nation in general. Our firm belief is that with the continued unwavering commitment of our employees and the support of our Title agents, we will be more than ready for these challenges. We will rely on the same guiding principles of integrity, managing for the long run, financial strength, protection of our policyholders, and the well-being of our employees and customers that have served us well over the last 100+ years. With that, I'll turn it back to Craig.
Thank you, Carolyn. Again, our first quarter operating results indicate that our business continues to perform very well. We continue to focus on underwriting excellence even during these challenging times. Our capital position remains very strong with significant dry powder to weather the macroeconomic disruptions and to be well-positioned when the economy eventually rebounds. I'll also note that our MD&A discussion in our upcoming 10-Q will provide additional, more detailed disclosure around the risk factors associated with COVID-19. With that, we'll conclude our prepared remarks, and we will open up the discussion for Q&A.
Thank you. For analysts and investors who are participating in this call on the interactive line, please signal by pressing the star key followed by the digit one on your telephone keypad to ask a question. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Also, if you pressed star one earlier during today's call, please press star one again to ensure our equipment has captured your signal. We'll pause for just a moment to allow everyone an opportunity to signal for questions. Thank you. Our first question comes from Matt Carletti with JMP. Please go ahead. Your line is open.
Hey, thanks. Good afternoon.
Hello, Matt.
Craig, just had a few questions for you. I thought I'd start with General Insurance, the two major business lines of transportation, commercial auto and workers' compensation. I had a couple of questions on each one. Maybe start with commercial auto. You mentioned in your opening comments about kind of things from exposure fall-off, which makes sense. Following on that, could you comment on what you've seen to date, in both the frequency and severity side of things? I'd imagine, too, that as you dig into that book, that there's parts of it that are maybe even seeing favorable frequency trends and other parts that are seeing or I'm sorry, revenue trends and others that are seeing negative revenue trends. Can you help us dissect it a little bit in what you're seeing?
Sure, Matt, I'd be happy to provide some color around that. I'll talk about auto, although there are a lot of similarities between auto and comp. Certainly, claim counts are down. The majority of our premium is exposure-based, meaning the premium is based upon sales receipts, miles driven. For work comp, it's payroll. We really have to wait and see when we get the exposure reporting from our insureds and through premium audits to see what that denominator looks like. While counts are down, if you have a fixed denominator, you can perhaps declare an early victory around frequency. On the other hand, with a denominator that is somewhat variable depending upon where ultimately the premium settle in, it's really too early to declare that frequency's down.
For instance, if the denominator is miles driven, we have to see what those miles driven were and take those claim counts and divide it by miles driven. It's a little different perhaps than, say, personal auto, where the denominator might be a fixed annual premium, and you can, with pretty high degree of confidence, because the counts are down, say that the frequency is down. With a denominator that is one that does fluctuate depending upon the exposure base, it's a little bit harder to be precise about where ultimately frequency will be. Certainly claim counts are down for auto. Workers' Compensation, very much the same thing. The denominator, when we look at frequency, is payroll for the most part. We look at it a couple different ways.
To the extent that we have to see what payrolls were ultimately reported, what premium audits look like, it's a little hard to tell whether those lower claim counts right now are an absolutely clear indicator that frequency is down. Certainly claim counts are down. I will just add one comment, not specific to what you asked, but also there's the question about, well, how does COVID-19 claims impact things? There I would say that there's some pretty good analysis out there by NCCI and WCIRB in California that talks about their observations and analysis on frequency. To make a long story short, what it really indicates is that there's a lot of things that are driving frequency down, and on the other hand, there's some things that are driving frequency up.
With respect to COVID-19, while there might be some uptick from that, there's arguably a downward pressure on frequency from other things, such as auto accidents, for example. A bit of a moving target, but hopefully that gives you some more color around how we're looking at frequency when it comes to auto and comp
Very helpful. Then maybe just a follow-up on each one of those. On Workers' comp, I'm pretty familiar with how the premium audit process works, but less so on transportation. As we think about your book and then getting that denominator right, how quickly or how often do you get that information from your insureds in terms of what the exposure really is? Is it a short lag or is it more end of policy audit?
Great question. Yeah. Usually, we get the reports within 60 days, in some cases every 30 days. It's perhaps more quickly than you would in a normal premium audit situation, where I think, for example, on workers' comp, where that's a little more elongated as far as the ultimate audit.
Right. All right. Perfect. Then on comp, we just want to ask you a question about if you could help us understand order of magnitude of industry exposures, and the ones in particular being, obviously retail, hospitality, restaurants getting hit hard with kind of revenue side. Then the other pocket being hospitals and first responders with some of the kind of proposed regulatory change and presumption of injury. I'm just curious if you could help us, those couple of buckets, just rough exposures within your workers' comp book.
Sure. We have very little travel leisure exposure. We do have some healthcare-related exposure. I will note, though, where we do have healthcare-related exposure, we don't provide General Liability or Professional Liability, so it is just a Workers' Compensation exposure that we would have there. With respect to the presumptive regulations and the rebuttable presumption regulations that, as you know, are a rapidly evolving dynamic and vary from state to state, we're keeping a very close eye on that, and prepared to handle those claims in accordance with those regulations in those states. What we've seen so far is that more than 50% of the Workers' Compensation claims we have seen don't yet have a confirmed COVID-19 diagnosis.
I know I mentioned NCCI and WCIRB as well, WCIRB in particular, the other thing you have to keep in mind is that 80% of workers' comp claims from COVID-19 don't require hospitalization, mild symptoms. WCIRB has a total indemnity and medical benefit average cost projection of $1,400 in those instances. 15% require hospitalization, where it's about a $50,000 total workers' compensation payment. 4.3% require ICU, where their projection is about $140,000. Less than 0.7% result in a death benefit, which they project at about $333,000. I give you that just because I think it's very important to keep things in perspective here. The other thing that I would give you very specific to our portfolio is that over 90% of the work comp claims that we have reported thus far are loss sensitive, mostly large deductible.
If you take those numbers that I gave you as an example, we would expect the vast majority of those payments to be well within those large deductibles. For us, given that we've made a very concerted strategic effort to move our business more toward loss-sensitive business, I think this is a good indication of why we do that. Therefore, over 90% of these work comp claims we've seen thus far, we would expect to be paid by the insured within their deductible.
Okay, great. That's very helpful. Thank you. There's one last numbers question, and then I'll get out of the way. Just on the little bit of unfavorable prior period development, 70 basis points. As you look at kind of the three major coverage groups or segments, was it all kind of just small movements within those segments, or was there a particularly notable adverse in one, favorable in the other that offset to get to that 70 basis points?
Yeah, Matt, this is Karl. I would say in the current year quarter, there's not significant movement between the three primary lines, workers' comp, commercial auto, and GL. As you might suspect, workers' comp developed slightly favorable for the quarter. Commercial auto was basically neutral, and GL did have a slight bit of unfavorable development. When you wrap it all together, it was not significant.
Okay, great. Thank you very much for the answers, guys, and best of luck going forward.
Thank you, Matt.
Thank you. At this time, we have one question remaining in the queue. Once again, for analysts and investors who are participating in this call on the interactive line, please signal by pressing the star key followed by the digit one on your telephone keypad to ask a question or if you have a follow-up question. We'll take our next question from Greg Peters with Raymond James. Please go ahead.
Good afternoon, everyone. I'd like to kick off my round of questioning with perhaps, Craig, you could comment on the risk management business and specifically, the news in the marketplace about employers furloughing employees, and all of the huge numbers and increase in unemployment seems like the risk for you guys is that revenue will shrink in some fashion over the next several quarters. I know you don't really want to provide guidance on it, but maybe you could talk about how your conversations are going on with your risk management accounts currently and what kind of indications they're giving you about the state of their respective businesses.
Sure, Greg. Well, on the risk management business, the majority of the exposure for that business is retained by the risk management clients. When you look at the premium that we take in, it really is for some excess exposure for the servicing of the business. Therefore, when I think about revenue challenges going forward, risk management business is not the area that is of greatest concern. It's probably of a lesser concern because, again, it's us really charging more of a fee-related kind of premium for the servicing of the business where the client's taking the risk. If there's a decline in exposure or what have you, it mostly would have come out of that portion that they're retaining. The more concerning business is our midsize business.
We're not necessarily a small business provider for Workers' Comp and auto, I would say that we're more of a midsize player. The bigger concern would be those midsize players that are under such financial stress that they have difficulty rebounding when the economy comes around. I'd say we feel pretty comfortable with where we sit with regard to our risk management business.
Okay. I know there's been a couple of really hot topics, and I think it's probably appropriate to have you guys comment on them. First, you do break out a property component within your General Insurance business, and business interruption usually is associated with the property type coverage. I'm not asking you to time on the current chaos around business interruption, but maybe you could give us some color about if you have exposures, if the vast majority of your policies are following the ISO form, et cetera.
That would be helpful.
Sure. I'd be happy to do that, Greg. Just working with the financial supplement, since the majority of you folks I'm sure have that nearby. If you look at our property writings, they make up about 8% of our overall net premiums earned. Of that 8%, three quarters of that is inland marine, which there is no BI component to that. The remaining 2% of that property is property policies that would have a business interruption component. I can tell you that 99.8% of our policies for business interruption include the exclusion for virus and pandemic related events.
We feel very good about first, that we don't have a significant exposure, and second, that we have a very tight box around that because I will opine that to invalidate that virus exclusion and create contract uncertainty and to abrogate the contract that was struck between the insured and the insurer, as you very well know from everything in the industry right now, is viewed by many, including us, as something that would undermine contract law and even be unconstitutional. We feel very strongly that those virus and pandemic exclusions that we have on the vast majority of our policies will ultimately stand.
Okay. Then the other piece which popped up recently would be around force majeure. I'm curious about your portfolio, if you have any force majeure clauses in there, et cetera. Maybe you can speak or opine on that briefly.
Yeah. On our surety business right now, in particular, there is the force majeure clause, and we've done an extensive look into our surety business in particular, and therefore, we think that we do have some protections there. Thus far, we haven't seen any increase in claim activity on our surety policies, and we think that, for the most part, our surety contractors will ultimately be able to conclude the work. As you might also know, the other good thing there is that in most states, contractors have also been deemed to be essential workers. Right now, we don't have any heightened concerns around our surety business.
The surety business within the categories you identify on page four, where does that surety business flow through? Is that the financial indemnity or is that the other coverages component?
Yeah. It's under footnote two, which is financial indemnity.
Okay. I want to pivot ever so briefly, Carolyn. I know you spoke positively about the first quarter results. It certainly seems like order flow has, while you may have ended the quarter on a decent note, it seems like the rhetoric in the marketplace has come to a grinding halt. Can you provide us any sort of color on what we should be thinking about this business over the next several quarters, considering all of the damage that's been done to the economy from this COVID-19 virus?
Well, Greg, right now, when we look at our current orders, they're keeping pace with where we were during the second quarter of last year. While the refinances have certainly grown, we just don't have an indication of a slowdown. Our revenue and our orders are right in line with second quarter of last year.
You would expect the trends of last year to continue beyond the second quarter, or is it just you think there's just a wave of refinancing because of lower rates?
Right. Yeah. We're at an all-time low on mortgage rates. I just think it's too early. A lot of it's just going to depend on how long this pandemic goes, when people are able to get back to work. It's so early in the process to really tell what the full impact will have on us.
Can you just remind us of the percentage of direct versus agency?
85% of our revenue comes from agents, our premium revenue.
Okay, great. I guess the final question I'll have probably goes to Karl. Karl, I know you spoke about the change in the unrealized gain and loss as a result of the fluctuations in the market as of the end of the quarter. You also gave us an indication of where that unrealized loss position, how it recovered since then. Do you have an estimate of what that means in terms of impact to book value per share?
You know, Greg, I do not have that broken down on a book value per share basis. I mean, it should be a simple matter.
So-
Hunter-
is it based on your comment that the unrealized loss that you booked in the first quarter would be reversed in the second quarter if the books were to close as of yesterday? Is that correct? Is that how I read your comments?
Well, the first quarter, the change from year-end was $962 million depreciation.
Right
recovered to $175 million unrealized gain. A swing of almost $200 million. That divided by roughly 3 million shares would get you the answer.
Perfect. All right. Thanks for your answers, everyone.
Thanks, Craig.
Thank you. We currently have no additional callers in the queue at this time. I would like to remind everyone once again, that is star 1 on your telephone keypad to signal for a question at this time. We'll pause for just a brief moment. Thank you. We do have a follow-up question from Greg Peters with Raymond James. Please go ahead. Your line is open.
I couldn't help myself. When I look at the one-off RFIG business, and I look at the dispersion of risk in force by policy year, the majority, 41%, is categorized as 2007. How is it that these mortgages from 2007 are paid up and covered at least the 20% or 25% that you surpassed that threshold for what you're required for to have MI? I don't understand that.
Your question. Well, I think the answer is that there's not a remeasurement unless there's, of the loan-to-value ratio, which would result in dropping the MI coverage. I think it stays in place.
Got it. That would make sense. Okay. Thanks.
Thank you. It does appear we have no further questions at this time. I'd like to turn the conference back over to management for any additional or closing remarks.
Okay. Well, we would just like to thank everyone for participating today, and hopefully when we reconvene in about 90 days from now, we'll be in a situation that is much better for this country and hopefully folks are able to be back at work and the economy is back on track. We wish you all the best during the time between now and then. Again, thank you for your support and your participation on today's call. Thank you very much.
Thank you. Again, ladies and gentlemen, that does conclude today's call. Again, we thank you for your participation. You may now disconnect.