Thanks you. Good afternoon and welcome to the 2017 second quarter conference call for National MI. I am John Swenson, Vice President of Investor Relations and Treasury. Joining us on the call today are Brad Shuster, Chairman and CEO; Adam Pollitzer, our Chief Financial Officer; and Julie Norbert [ph], our Controller. Financial results for the first quarter were released after the close of the market today. The press release maybe accessed on NMI’s website located at www.nationalmi.com under the Investors tab. During the course of this call, we may make comments about our expectations for the future. Actual results could differ materially from those contained in these forward-looking statements. Additional information about the factors that could cause actual results or trends to differ materially from those discussed on the call can be found on our website or through our regulatory filings with the SEC. If and to the extent the company makes forward-looking statements, we do not undertake any obligation to update those statements in the future in light of subsequent developments. Further, no interested party should rely in the fact that the guidance of such statements is current at any time other than the time of this call. Also note that on our website, we have provided a reconciliation of certain non-GAAP measures used on this call to the most comparable measures under GAAP. Now, to our conference call. Brad will open with an update on the state of the business and then Adam will discuss the financial results in detail. After some closing remarks from Brad, we will take your questions. With that, let me the call over to Brad Shuster.

Thank you, John and good afternoon everyone. I am pleased to report that in the second quarter, National MI again delivered solid financial results and continued to advance the key metrics that will drive realization of our mid-teens return objectives. We made significant strides in customer development and continued to build a high quality portfolio of insurance in force at a growth rate that leads our industry. We did this while maintaining our focus on prudently and proactively managing product mix, risk, expenses and capital. We grew insurance in force to $39 billion, up 11% over our first quarter results and up 64% from where we were a year ago. Net premiums earned of $38 million were up 14% compared with the first quarter and up 46% over the second quarter of 2016. Our top line growth is driving significant operating leverage as reflected in our record pre-tax income of $9.5 million, which includes approximately $3.1 million of costs related to our insurance linked notes transaction or ILM. Pre-tax income increased 41% over the prior quarter and was up more than four times over what we achieved in our first profitable quarter just 1 year ago. In the second quarter, we wrote more than $5 billion of new high-quality mortgage insurance, including more than $4 billion of monthly premium product. Our total NIW was up 42% over the prior quarter and we maintained the mix of 81% monthly product consistent with the first quarter and up dramatically from 63% monthly in the second quarter last year. As we look at our progress over the past year, particularly in the monthly product segment, it is clear that our unique value proposition is resonating with customers with an underwriting model that allows us to promise and deliver better master policy terms and…

Thank you, Brad and good afternoon everyone. As Brad mentioned, we had a solid quarter. Pre-tax income was up significantly quarter-on-quarter particularly after adjusting for the ILN transaction costs. Premium yield improved as expected. Losses continued to be modest and expense growth was minimal relative to growth in premium, which drove a further decline in our combined ratio. In addition, we achieved a 5% GAAP return on equity in the second quarter or 6.5% excluding ILN transaction costs driven by the inherent operating leverage in our model and marking continuing traction on this important metric. Now to the detailed results for the quarter. Primary insurance in force was $38.6 billion at quarter end, up nearly $3.9 billion or 11% from $34.8 billion at the end of the first quarter and up 64% compared with the second quarter of 2016. As of quarter end, monthly product represented 64% of our insurance in force, which compares with 62% as of the first quarter and 53% as of the second quarter of 2016. Given our current NIW mix and portfolio runoff, we expect that monthly products will continue to increase as a percentage of insurance in force at the rate of approximately 2 points per quarter. Runoff rate in the quarter was 3.4%, up from 2.9% in the first quarter reflecting the seasonal uptick in housing turnover. 12-month persistency in the primary book was 83.1%, up from 81.3% last quarter. Weighted average FICO of risk-in-force was 749 which compares with 753 as of the end of the first quarter. This reflects a modest migration of our book to a normalized FICO distribution, which correlates with the higher average rates on our monthly NIW over the past several quarters. Total NIW of 5 billion was up 42% compared with the first quarter. The mix…

Thank you, Adam. We are excited about our strong performance in the second quarter both in terms of our success with customers and the results we delivered for shareholders. We also were pleased to receive recognition last week from Standard & Poor’s with affirmation of our investment grade rating for the insurance company and an upgrade in our outlook to positive. S&P side of the continued positive advancement of our business profile and capital strength as key drivers of the outlook upgrade. We like the current market dynamic in the economic backdrop, which continued to be favorable to our industry and to the fulfillment of our near and long-term financial goals. We are well-positioned to continue to win with our customers and drive volume from this embedded growth engine of recently activated accounts. To echo Adam’s comments, we are also generating increasing leverage from the compounding effect of our insurance in force, which is on a trajectory to drive industry leading growth in premiums and profits for many years to come. With that, let’s bring back the operator, so we can take your questions.

[Operator Instructions] Our first question comes from the line of Bose George with KBW. Your line is open.

Hey, guys. Good afternoon. Actually, first one on the new insurance written that was a nice ramp up from last quarter in new insurance written. I know companies are still reporting, but do you think that you have grown market share in monthly new insurance written?

Look, Bose, it’s Brad. As you know, we don’t focus on market share we focus on the actual quantum of new insurance. We need to write in order to reach our financial objectives. So, not everybody’s reported, so I won’t really hazard a guess on share there, but we are really – as I said in my remarks, we are very excited by the new customer activations we have had so far this year and how those are going to ramp up nicely and add to our future NIW generating capabilities going forward.

Okay, fair enough. And then actually just on the insurance in force expectation, can you just remind us do you guys have the mid-teens exit ROE target for next year, what range of insurance in force do you need to get to hit that?

Bose, obviously, it will depend on a range of factors including premium yields and obviously some other items that flow through the income statement, but roughly we need to get to about $60 billion of insurance in force to see that mid-teens exit ROE.

Okay, thanks. And actually just one more, I think Adam, you had mentioned earlier in your prepared remarks, the expectation for expenses for this year. Can you just repeat that?

It was $108 million – approximately $108 million.

Okay and that includes that $3.1 million of one-time the quarter as well?

That’s correct.

Okay, good. Thanks.

Thanks, Bose.

Our next question comes from the line of Randy Binner with FBR. Your line is open.

Yes, hi, good evening. So, just Adam, could you repeat the PMIER buffer, I just – I didn’t get that figure. How far over your minimum PMIER level are you for capital?

Randy, so at quarter end, our PMIERs available assets were 485 and our required assets were $298 millions, so it translates to $187 million of cushion.

Okay. And then the comments I think from Brad in the call was that you sign any policy development would be constructive. I guess, I would be just curious what leads you to believe that. And this would be specifically around PMIERs 2.0 that this seems to be kind of the big question and I think as your affiliated companies and the other companies you compete have pushed back timing and see an exposure draft there to late 2017 and then there would be 180-day written notice period we think, so just kind of curious on your thoughts on how that PMIERs 2.0 process might develop and what gives you optimism that it should be constructive?

So specifically when I was referring to possible changes in terms of the regulatory environment I was – I had in mind of GSE reform and tax reform both of which I think hold potential for some real positive developments for us, but very hard to pin down as to any details or timing. And I will say the same one on PMIERs we have the same expectation about timing as the rest of the industry does that we will see some type of draft around the end of this year and the new rules won’t be effective till the end of next year. So as far as I know nobody has seen any details, so impossible to say whether it’s positive or negative or neutral, because there simply hasn’t been anything exposed.

Given any update on how FHA is competing in the market or if that’s changed all since we last spoke last quarter?

Well, I think that that also goes back to part what I said possible reforms will be constructive, because I think based on my meetings I have had recently in Washington, I think there is a real willingness on the part of policymakers to take a look at the role of the FHA and ensure that it’s appropriate in light of the programs that they offer on loan side and that type of thing. So I know that a number of people who will be heavily involved in GSE reform when that gets taken up have indicated the thinking that it makes sense to consider the role of the FHA, at the same time we are considering new rules for Fannie Mae and Freddie Mac and that they will be looking at the entirety of the government involvement in the mortgage market and the fact that we as an important source of permanent private capital there we think were very well positioned in any kind of reform discussions that may take place.

Alright, that’s great. Thank you.

Thank you.

Our next question comes from the line of Mackenzie Aron with Zelman & Associates. Your line is open.

Thanks. Good afternoon and congrats on the quarter. I guess sort of follow-up on the capital and to make sure that the comments last quarter are still consistent, is the expectation that reinsurance will still be used sometime in 2018 to bridge the growth and assuming that’s the case what’s the approximate impact assuming at the similar cost of capital and the net yield?

Yes. Mackenzie that is still the expectation, I think more broadly speaking before we get into the anticipated impact. Look, it’s our goal to ensure that we always have enough capital to satisfy regulatory needs and that we are always in a position to be a strong counterparty for our customers. In terms of the timing and which market within the reinsurance world which use to tap into obviously that will depend upon the development of our portfolio and the success that we are having translating activations into NIW flow. But we have had great success so far in translating activations through the NIW flow and also in terms of establishing access to both the quota share market and the ILN market. We would expect that if and when we do choose to go back to either of those markets and it may be both, it may be one or the other that cost will be somewhat in line with our most recent deals.

Okay, that’s great. And then I guess it’s a bigger picture one Brad for you, just interested in what you are seeing from a demand side in terms of the mix of business you are seeing the 95% LTVs continuing to take share, what are you seeing from a customer demand perspective, do you think that FHA is giving up some of that volume or is it really growing the pie?

So Mackenzie, we are seeing some migration to some of the higher LTV loans and as you can see we saw a modest migration in our average FICO during the quarter. So I view those as really healthy things, because I think it indicates that the conventional market is less constrained than it has been recently. And I haven’t really analyzed to the extent to determine whether that’s actually been caused by a pullback of the FHA, but my sense is it’s not, it’s just some of the natural migration and the preferences developing on the part of our customers to do more conventional lending relative to the amount of government lending they do.

Okay, great. Thanks again.

Thank you.

Our next question comes from the line of Geoffrey Dunn with Dowling & Partners. Your line is open.

Thanks. Good evening guys.

Hey Geoff.

Adam, I just want to make sure, on your reinsurance disclosure when you are citing $11.5 million of seeded premium earned, is that gross or net of the profit commission?

That is gross of the profit commission. In the Q we disclosed the profit commission which was just to the touch about $6.5 million.

Right, okay. And can you segregate the QSR versus the ILS premium running through the $11.2 million.

Yes. So in fact the $11.5, it’s entirely the quota share. The ILN is a separate amount of just to touch under $1.4 million for the quarter.

Okay. So the scores are in the press release is just the QSR and then we have would you say 1.5 on top of that?

It’s just to touch under 1.4.

1.4, okay. Alright. And then with respect to the tax rate what’s got it settling down closer to 37%?

I am sorry Geoff can you repeat that?

The tax rate, what’s driving it closer to 37% for you?

Yes. So this is just a corp to a new accounting standard that’s rolled out for the treatment of restricted stock. When we award restricted stock in the first and we are on a year end bonus cycle, so the majority of our restricted shares get awarded and also vest in the first quarter that drives down the effective tax rate in the first quarter significantly below 35%, what you then see through the remainder of the year is effective tax rate that is north of 35% such that on an overall full year basis we are at 35%. And so the 37% this quarter and the 37% that we expect to see roughly through year end it’s simply to bring the overall effective tax rate for 2017 to 35%. We would expect a similar rhythm to happen in 2018 and going forward.

Okay, alright, perfect. Thanks.

Thanks Geoff.

Our next question comes from the line of Phil Stefano with Deutsche Bank. Your line is open.

Yes. Thanks and good afternoon. I am thinking about the new insurance rates and maybe it’s a market share question asked a little bit differently, but I am not trying to bridge that term, when we think about the pressure from the singles business shrinking does the overall NIW outlook look better in the second half as we lap the actions on taking down singles that started to happen in the second half ‘16?

Yes. As we said in the prepared remarks, we are very excited about where we are and how we are positioned for the second half of this year with significant number of new customer activations in the first half, many of those are just starting to produce significant amounts of NIW. And as they are given some time to see them, our track record has been that those relationships grow into very meaningful shares of our customers business. So I think that’s going to be a real strong growth driver for the second half and beyond.

Brad, is there anything you – or anyway you can help us qualitatively think about what the growth from new business starting to slow to meaningful looks like, I mean presumably it’s expected to slowly opens with time, any thoughts around will be helpful?

So maybe Adam will give you some more specific, but I think of it when we look back at we look back 1 year or 2 years at customer activations and how we started and how we have ramped up, over time that is producing as into that. I know we don’t talk about share but its double-digit share usually after giving some time for the relationship to mature. And so every customer is different, everyone will ramp up at a different rate, so it’s very difficult to generalize as. But I do know that once you get that first NIW with a given customer there is a lot more to be have in the future. And it depends on doing a great job for them. And so far we have been able to do that.

Yes. Phil, I would echo that which is we have a strong track record of converting activations and new opportunities into real NIW flow over a pretty short timeframe. But as Brad said every customer is different about how we win their business and by extension the pace of that ramp up, we do track internally it’s not something that we disclose, but rest assured we do monitor how activations in prior period are translating into NIW flow in subsequent periods. And one other things we stay confident is that we have a – we do have a track record that as those new accounts are activated and then as you roll forward several quarters, several years they materialize into significant share. And so we would expect that over time those new activations that we have today will grow to represent what we will call a representative share for us relative to the broader market that we currently access. Thinking about it simplistic terms, although we don’t talk about share today overall, pick the number that you want to assume, do we have a 7% or north market share, but what is that actually mean in terms of the market that we are tapping into today, it’s something significantly in excess of that 7% or so percent share. When we layer on new activated accounts, we would expect to achieve the same penetration rate with those accounts and that translates to growth in our overall market presence.

Understood and looking forward and seeing that growth coming through and it [Technical Difficulty] and it feels like the guidance for of the years largely reiteration of the last guidance we got, but I think the commentary at the time was that we shouldn’t expect to see any significant growth going forward, anything you can point us to from the operating expenses and thinking about that as we go to ‘17, ‘18 and ‘19 and start to get these efficiencies from scale, do operating expenses grow in par with inflation, is there some investments that maybe drive ahead of that, anything you can help us through that perspective?

Sure, Okay. It’s too early to provide you with an indication, what we would expect is to see our combined ratio continue to trend down in a significant way. We are expecting the loss ratio as I said terming quite modest for the foreseeable future and the efficiencies that we will see from a fixed expense base and the inherent operating leverage will translate through. That said, we do expect to be making some investments in our people and systems to support the continued development of our franchise. And in that context, we are always mindful about maximizing our operating leverage and we do expect that you will see revenue growth that far outpaces our expense growth next year and that will drive the combined ratio. In terms of a bit of a steer for next year, we don’t – it’s just too early to give you any indication of a hard and fast number or range, but it’s probably useful to note a few items. One normal expense inflation will tend to run about 2% to 3% per year. We are growing our business, right, that’s our key focus is to grow our NIW and grow our insurance in force in a high quality way. And although the majority, the large majority of our expenses are fixed we do have certain variable costs. So as our NIW grows in 2018 we would expect to see a modest uptick in those production related variable costs. In that context we will see modest growth, we would expect in 2018. But importantly the statements that both Brad and I have made about ROE targets, achieving combined ratio targets and the timing as to how those will develop already contemplate all of that from an expense dynamic standpoint.

Understood. Thanks and I appreciate it.

Great. Thanks Phil.

I am showing no further questions at this time. I would now like to turn the call back over to management for any further remarks.

So we thank you for joining us on the call today. We will be participating in the Susquehanna Conference in New York on August 10 and we hope to see you there.

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude the program. You may now disconnect and have a wonderful day.