Rohit Gupta: Yes, so Caroline, in this quarter, in our earnings presentation, we did actually had that back on Page 13 of the presentation. So you can see on delinquent policies, which are around 2% of our portfolio, 94% of those policies actually had mark-to-market equity of greater than 10%. And that’s based on home prices at the end of 2023 for policies at the end of first quarter. And then, 81% of our delinquent policies actually had mark-to-market equity of more than 20% using the same methodology, which is using home prices for end of year ’23 and on our portfolio at the end of first quarter.
Operator: And our next question is going to come from the line of Bose George with KBW. Your line is open. Please go ahead.
Bose George: Actually, I wanted to ask your default to claim rate at 10% remains a couple of points above the peers have reported. I know it all kind of nets out through the recoveries, but what would you need to see to take that down probably closer to the 7% to 8% that some of the others are using?
Dean Mitchell: Yes, Bose, thanks for the question. And just as a reminder, maybe to set the table for this, our reserves and our roll rates that you just referenced on new delinquencies, they’re always our best estimate of ultimate claims. But as we determine the best estimate, we consider various economic outcomes to ensure that we’re appropriately reserved, even if economic pressures emerge. If we pivot now to the 10% claim rate on new delinquencies, we set that really not in line with anything we had seen from a performance perspective, performance remains very strong. What we really did was, took into account the fact that there was some heightened macroeconomic uncertainty. And we believe that it was really prudent to contemplate that in the establishment of that 10% roll rate.
Over time, to your point, we’ve seen economic resiliency. And as a result, we’ve seen elevated cures on prior accident year delinquencies. So that heightened view of uncertainty hasn’t materialized. If we just kind of lift up, we still believe it’s prudent and measured, approach is appropriate at this point in time. What would change that approach? I think if we saw the possibility or the probability of economic pressures decrease materially on a go-forward basis and/or if we gave more reliance on the more recent performance and a little bit less reliance on that judgment that’s based on the macroeconomic uncertainty. I think if either one of those happened, we have to take a hard look at the appropriateness of the current 10% claim rate.
Bose George: Okay. Great. That’s helpful. Thanks. And then just switching over to capital return. Dean, you noted the $300 million will be similar to last year. Is the mix between buybacks and dividends also going to be the same, just given the strong start on buybacks? Just curious if there’s any change there?
Dean Mitchell: Yes, Bose, that’s a great question. Again, as we’ve discussed in the past, we really have three ways to return capital to shareholders, ordinary dividends, share repurchases, and special dividends. We really think about those kind of in a waterfall approach. At the top of the waterfall, it’s quarterly dividends. We sized those to be both competitive and durable, even under stress. So the 16% increase in the quarterly dividend this quarter, I think, reflects our confidence in our ability to maintain that $0.185 dividend per share through time and through economic cycles. It’s really at the top of the waterfall because it increases the certainty of capital return to shareholders. Share repurchases in contrast are a little bit more opportunistic.
They’re based on, obviously, the prevailing market conditions and when I say that, it’s especially related to our share price and our liquidity, given our limited float. And then lastly, special dividends are kind of that more blunt instrument that allows us to return the planned capital to shareholders in excess of quarterly dividends and share repurchases. We typically do that at the end of the year. I think last quarter, as we emphasize the potential increased reliance on share repurchases, given the opportunities we were seeing at the end of last year and at the beginning of this year related to our share price, in addition to the improved liquidity in our stock. If you look at our first quarter results, I think they show execution against that expectation, where we repurchased almost $50 million in the quarter.
And for comparison purposes, we repurchased about $87 million across all of 2023. So I think you do see us relying more heavily on share repurchases. I think go forward, the pace of share repurchases is going to be largely dictated by market opportunities. If we see and continue to see accretive market opportunities, I think you’ll see us continue to execute the share repurchase program at that elevated pace, if that doesn’t occur, we’ll rely more heavily on special dividends at year-end as a way to distribute our planned capital for the full year.
Operator: And our next question is going to come from the line of Rick Shane with JPMorgan. Your line is open. Please go ahead.
Rick Shane: And Bose really touched upon what I want to focus on too, which is obviously, the cadence of capital return in the first quarter, given the strength of the buyback plus increasing the dividend starting in the second suggests that you are above the run rate of capital returns roughly comparable to 2023 levels, and you, I think, talked about the dynamics. And I think the clear takeaway is that as you approach the end of the year, the special dividend is sort of the flex to get you there depending upon opportunities on buyback and regular dividend. I am curious given the strength of earnings and what I think everybody is going to take away is a pretty favorable outlook, what it would take for you to actually potentially raise the total capital return, whether it’s 5% or 10%. Is that something that you could envision as the year unfolds if the trajectory remains as strong?
