It caused a little bit during COVID, but it came back. Last year, tons of uncertainty around where rates were in the economy. There is still uncertainty, but I would say it’s not as heightened as it was in that October and November time frame when inflation was kind of running rampant. We still got reinsurance done. So let’s work backwards. So I said we’re here five years from now and now we’re 10 years in the programmatic reinsurance. I think it sends a strong signal and I’ve been saying this for a while that reinsurance has fundamentally changed the mortgage insurance business. It was always a buy and hold kind of model where Essent and others, we had an uncapped liability on our balance sheet and that is no more. 98% of the book is reinsured.
Sure, we pay for it, but we’ve taken that capital volatility away from the business. And I know we’re viewed in the market more like a specialty finance company, kind of boom and bust. But I think over time, I think that’s going to change. I think we’re going to be viewed more like a specialty insurance company where specialty just happens to be mortgage and housing and not having that. And of course, those specialty insurance businesses have ebbs and flows, but they were valued a lot higher than specialty finance companies because of the sustainability of their cash flow. So again, we have to prove it out. We’re five years into it. We’re not going anywhere. We’ll continue to do it. We’ll continue to grow the business and we’ll let the chips fall with MA.
But we feel pretty good around how that’s kind of starting to shape up.
Richard Shane: Got it. Well, it’s a specialty finance analyst who’s enjoyed covering your company, so Mark can do what it wants, but I’m going to still continue to look at you as a specialty finance company. There obviously is a real-time feedback loop with pricing in that market and it’s not just Essent who is participating, and you have alluded to a harder market. Again, I am assuming that you are seeing that that is weaving its way through into the competitive environment in terms of pricing for you and that there is continued pricing power.
Mark Casale: Yeah, I mean I guess if you look at just the reinsurance side, just to put it in context, right? In general, we pay 4 to 5 basis points of our premium for reinsurance. So in the last year, it’s gone up 1 point, maybe a little bit more, right? We’ve raised pricing on the front end more than that. So, again, if you think about, again, just the sustainability of the reinsurance and put it in context of the premium we charge, we still think it’s a pretty good value.
Richard Shane: Got it. Thank you very much.
Mark Casale: Sure.
Operator: Your next question comes from the line of Mihir Bhatia from Bank of America. Your line is open.
Mihir Bhatia: Good morning and thank you for taking my questions. I wanted to start on the insurance side, first, right? Just, I understand your net premium rate guidance is flat. But I did want to ask about the in-force yield or the base premium rates that you report on Slide 16. This needs to be a real stabilization there. Some of your competitors have talked about increasing premiums on new business. So should we expect that base premium rate to maybe start blending higher and then it’s like really insurance costs that are driving the net premium rate to be flat?
