Dean Mitchell: Yes, so Rick, appreciate the questions. I want to start off with the guidance as it relates to capital return for full year 2024 that remains at $300 million. Really, what I think Bose’s question got to is the way in which we’re returning that $300 million and potentially even the timing of how that $300 million gets returned to shareholders. And I do think that timing could increase again if we see opportunistic market opportunities to flex our share repurchase program in an accelerated and bigger way, much like we’ve done in Q1. So much more to do with timing and means than quantum or amount of total capital return for full year 2024. That said, what would cause us to come back and revisit the $300 million? Obviously, business performance is a key driver.
If we see business performance above our expectations. If we see continued improvement in the macroeconomic environment, and/or we see a regulatory environment that is more accommodative. I think those are all things that we consider as we think about the establishment of the appropriate amount of capital return heading into any year and throughout the year as we progress.
Rick Shane: Got it. And look, the other factor here is that NIW for the quarter down, there are certainly some headwinds as well. How much does growth or accelerated growth or decelerating growth of the portfolio impact that decision as well?
Rohit Gupta: Good morning, Rick. That definitely is an input. And as Dean said, that would be captured in business performance. As you heard me answer a previous question, our guidance right now for MI market size for 2024 is to be similar to that of 2023. Overall, in 2023, we wrote a good-sized book. We also printed very good business results in terms of income expression for the entire year. I think in 2024, we look at very similar metrics. How much new business we are writing in our core MI business, how much business are we writing in our Enact Re business. And then in addition to that, how is the core book performing in terms of loss ratios and income. And then that, combined with the regulatory environment as well as our view looking forward in the economy, I think all these things definitely go into our view of do we change our capital guidance.
In the past, when our view has gotten stronger during the year, we had done that in prior years, so we’ll continue to keep the market updated.
Operator: And our next question comes from the line of Soham Bhonsle with BTIG. Your line is open. Please go ahead.
Soham Bhonsle: So I guess first question along the lines of capital return. I was interested in sort of the decision to raise the buyback or increase the buyback to 250 and the 16% increase in the dividend, which is great. But Rohit, could you maybe provide some color on just the framework that maybe you and the Board used as you were sort of setting that range? I’m particularly curious on sort of the macro portfolio assumptions that you maybe consider to just get to that 250. Any insight would be great. Thanks.
Rohit Gupta: Good morning, Soham. Thank you for the question. So both on increased share buyback as well as increased dividend. I think the first thing I would start with is just the performance of our portfolio, performance of our business, combined with our view of the strength of our balance sheet. So I think, as I said in my prepared remarks, we continue to create a stronger balance sheet. You saw that being acknowledged by the external market in terms of rating agency upgrades in 2023, early 2024. And even recently, we saw two outlook changes in addition to that being positive. So all of that is a proof point that the Board and I feel comfortable about the strength of balance sheet and business results. So I would say that just goes into the confidence picture on capital return.
Now within the capital return, as Dean outlined previously, we think about different vehicles of returning capital. From a dividend perspective, we think about the normal considerations that you would expect us to look at, which is earnings, competitive environment, the resiliency of that dividend and having that confidence. So that basically drove the 16% increase to $0.185 per share of dividend increase. And then in addition to that, when we think about share buyback, in addition to the considerations I just outlined, we also think about our liquidity in the market, and Dean talked about it because in our mind for our share buyback program, our first purpose in addition to the normal considerations is do no harm in the market from a liquidity perspective.
Just to give you a perspective, Soham, on our liquidity. From January of 2023 to April of 2024. Our liquidity based on average daily trading volume has increased by 150%. So we always think that if the share prices are trading at the right level and given our view of intrinsic value, we would want to use that vehicle as long as we think the liquidity is good. So the board saw that as constructive and worked with our advisers to put our view together, which gave us confidence to start the next share buyback authorization at a higher side. That being said, we’ll always keep looking at that metric on an ongoing basis. So if we see that we are negatively impacting liquidity in any way, we can change the vehicle and that’s where the third vehicle of capital return, which is a special dividend is always available to us.
So I think we’ve exercised that flexibility in the last 3 years very prudently, and we intend to do that moving forward.