Sumita Pandit : Yeah. I think maybe just some context. If you just think about 2023, right, we had said we’ll pay $300 million to $400 million of dividends, we returned $279 million of that. So $279 million of that $400 million went out as dividends and share repurchases last year. In fact, just in the fourth quarter, we bought back about $63 million of share. So I would say that we want to continue to be disciplined about it. But yes, a big part of that would probably go back to shareholders, a portion of that could be used towards debt. And I would say we would also evaluate other strategic opportunities. And maybe, Rick, do you want to add a few comments here.
Rick Thornberry : Yeah. I mean, I would say just our history and our track record speaks for itself in terms of how disciplined we are about thinking about return to shareholders along with just kind of capital return in general. So I just kind of look at our track record of $1.9 billion over the last several years, returned through dividends and share buybacks. And I think we have the luxury of capital. Today, it’s a good problem to have. And we have excess capital, when you look at PMIERs cushion within Radian Guaranty, you look at the capital flow of the Radian Group from Radian Guaranty and excess capital sits there. So Mihir, to your question, we’re going to continue to be good stewards of capital. We’re going to focus on opportunities to return capital to shareholders.
We always talk about it in hindsight. We’re always aware and alert to other strategic opportunities and thinking through a waterfall of capital allocation. And I think we’ve been really very disciplined about evaluating those opportunities. Sumita and I and John see dozens of them throughout the year, and we’re really very quick to kill. But there are opportunities that could arise. And we’re in a great situation with our excess capital situation to consider those, should they warrant consideration. So that’s what I would say.
Mihir Bhatia : Okay. And then just my last question, just to touch base with regulatory developments. Is there anything that you’re seeing that’s coming down the pipeline that can maybe have a larger impact on your business, something that investors should be aware of? I know that the regulations are always changing, but I’m talking more like big things that could be coming down that investors probably worth paying attention to it. Just seems like the regulatory discussion around MI has been a little bit quiet for the last few quarters. So I just wanted to touch base to see where we are at on that. Thank you.
Rick Thornberry : Yeah, Mihir, Derek, and I can kind of tag team on this one a little bit. But I would say, look, the good news is, as you say, it has been relatively quiet, I think, in terms of many different respects as it directly impacts us. But it’s not been quiet as it relates to the kind of the broader mortgage market and you think about things like Basel III and the impact on banks from a participation in mortgage and all the discussion around that, other capital rules for independent mortgage banks. And there’s a number of regulatory matters that are out there that don’t directly impact us. In fact, the Basel III changes have actually created an opportunity for us from a conduit perspective that we just continue to kind of evaluate and kind of watch and participate in where appropriate.
But I would say we’re very close to it. There was a lot of chatter around FHA and different activities around that. I would say right now, we are in a little bit of a quiet period as it directly relates to MI. Would you agree, Derek?
Derek Brummer : Yeah, I would just add on the policy side is just the strength of the industry. And I think that’s well recognized in terms of the financial strength, which you’ve seen kind of on the most recent rating upgrade and just how the industry has transformed from an industry that’s really about aggregating and distributing risk. So much more resilient through the cycle. Also, when you look at it, I mean, we are private capital that helps an affordable and first-time home buyer segment. So from that perspective, we’re in a really good spot kind of looking on both sides of the political aisle. So if you have changes kind of in terms of regulatory leadership, I think the industry is well placed.
Mihir Bhatia : Yeah. Thank you for taking my questions.
Rick Thornberry : Yeah. Thank you, Mihir.
Operator: One moment for the next question. The next question comes from Scott Heleniak with RBC Capital Markets. Your line is open.
Scott Heleniak : Yes. Well. First question I had was just on the expense ratio. You’ve made good progress on bringing that down for the year. And so you did — you took a lot of costs out, you rightsized. Is the expectation that you could see further improvement in 2024? Or is it — or the expense run rate kind of going to be stable from the run rate where you are right now?
Sumita Pandit : Yeah. Thanks, Scott for that question. So I think as you saw in 2023, we had given initial guidance of $60 million to $80 million of cost savings, and we were able to achieve $77 million of cost savings in ’23, which is about a 17% reduction in our cost of services and other operating expenses. You also heard us talk about the — some of the cleanup activity that we completed in Q4, including writing of acquired intangibles. So I think from a balance sheet perspective, we really feel good about where we are starting this year from. I think the fourth quarter is a good indicator of the run rate going forward, excluding some of those onetime items. We are not giving specific expense guidance this year yet. I think we’re still early in the year, and we took out about 17% of our expenses last year.
So I would say that we’re not giving a specific dollar guidance yet. But we’re always looking to make sure that we are continuing to remain efficient. And we are looking at our expenses across our business lines. So I think that’s an ongoing initiative, but we are not giving a specific dollar guidance of what that may look like for this year.
Scott Heleniak : Okay. That’s fair. And just switching gears to pricing. Can you just talk a little bit about what you’ve been seeing in the last few months, whether you’re seeing any kind of major shifts at all in third quarter versus fourth quarter and into the year? And any thoughts on how you see that playing out in 2024?
Derek Brummer : Hi, Scott. This is Derek. Yeah, in terms of pricing, pretty quiet, which is a positive. So when we look at pricing in the industry, I would say, fairly flat really since our last call, which we view as a positive in the sense that I think the macroeconomic outlook has significantly improved. You’re seeing home prices go up. I think there’s a decreased probability of a soft landing. So to see price stay flat is very positive. The other thing I’d point out is that when you look at pricing, it’s substantially above where it was in 2022. So when you go back year and half years to two years, our pricing is at higher levels, which we think is appropriate, looking at the risk through the cycle. So overall, I would say, pretty quiet quarter-over-quarter in terms of development.
Scott Heleniak : Okay. Great. And then the last one, just on — the average investment yield was 4.15 was similar to Q3. Is there any opportunity to get some higher yield and you expect to get that in the coming quarters? Or is it kind of — do you feel like it’s kind of stabilized where it is right now, the yield?
Sumita Pandit : Yeah. I think we mentioned, Scott, in our quarterly call last quarter that we do see new money reinvestment rates are higher than our current yield. I think it takes a little while for it to actually come into our portfolio just given the size of our overall portfolio. So I would say maybe some upside but not a meaningful one from our current levels, given the overall interest rate backdrop that we have for 2024.
Scott Heleniak : Okay, appreciate it.
Operator: One moment for our next question. The next question comes from Eric Hagen with BTIG. Your line is now open.
Eric Hagen : Hi, how are you guys? Within your outlook for — I think I heard you say $300 billion to $350 billion of NIW this year for the market. Do you feel like there’s any catalyst other than maybe lower interest rates, which could take it above that level?
Rick Thornberry : So this is Rick. Thanks for your question, Eric. I think that range is based upon kind of an increase in purchase, the purchase origination market that’s expected with kind of declining rates, obviously, with refinance is picking up a little bit. But I think the catalyst is demand being met by supply. And that’s — so I think right now, to the extent we saw supply become available because people began to list their home and start to retrade homes. You could see that purchase market expand. And because MI, especially for first time homebuyers, second, third time homebuyers, MI is more likely to be part of that transaction. That would be the other catalyst. So interest rates are going to provide a little bit. But right now, we’re supply limited. And so to the extent supply could expand based on a variety of different factors, catalysts, construction, building. Those would be things that I think would enable the MI market to expand kind of similarly.
