Ladies and gentlemen, thank you for standing by and welcome to the Radian Third Quarter 2017 Earnings Call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session; instructions will be given at that time. [Operator Instructions] And as a reminder the call is being recorded. I’d now like to turn the conference over to Emily Riley, Senior Vice President of Investor Relations and Corporate Communications. Please go ahead.

Thank you and welcome to Radian’s third quarter 2017 conference call. Our press release, which contains Radian’s financial results for the quarter was issued earlier this morning and is posted to the investor section of our website at www.radian.biz. This press release includes certain non-GAAP measures, which will be discussed during today’s call, including adjusted pre-tax operating income, adjusted diluted net operating income per share, tangible book value per share, and services adjusted EBITDA. A complete description of these measures and a reconciliation to GAAP may be found in press release Exhibits F and G and on the investors section of our website. During today’s call, you will hear from Rick Thornberry, Radian’s Chief Executive Officer and Frank Hall, Chief Financial Officer. Also on hand for the Q&A portion of the call are Derek Brummer, Executive Vice President and Chief Risk Officer of Radian Group and Cathy Jackson, Corporate Controller. Before we begin, I would like to remind you that comments made during this call will include forward-looking statements. These statements are based on current expectations, estimates, projections, and assumptions that are subject to risks and uncertainties, which may cause actual results to differ materially. For a discussion of these risks, please review the cautionary statements regarding forward-looking statements included in our earnings release and the risk factors included in our 2016 Form 10-K and subsequent reports filed with the SEC. These are also available on our website. Now, I would like to turn the call over to Rick.

Thank you Emily, and good morning. I'd like to thank each of you for joining us today and for your interest in Radian. Before I turn the call over to Frank to review the details of our financial results let me provide a few highlights. Today we reported another quarter of excellent operating results for Radian. There is a strong customer demand for the core products in both our business segments and we continue to benefit from positive trends in the credit market. As you have seen we took several actions during the third quarter to strengthen Radian’s financial position and capital structure. I look forward to updating you on our progress this morning. But first let's turn to a few financial highlights for the quarter. Earlier today we reported net income of 65 million or $0.30 per diluted share for the quarter on 103 million of pretax income. This includes 46 million of pretax loss related to our third quarter capital enhancement actions as well as 12 million of pretax restructuring costs related to our services segment. While these two items have a negative impact on our GAAP results, our capital actions strengthened Radian’s financial position and improved the maturity profile of our debt, and our restructuring efforts positioned us to grow sustainable profitability in our services business. Therefore, on an operating basis, adjusted pretax operating income was 156 million in the third quarter, an increase of 11% compared to the same period last year. Our adjusted diluted net operating income per share was $0.46, an increase of 12% over last year. Book value per share grew by 3% year over year to $13.88 and over the same period tangible book value per share grew by 12% to $13.57. [indiscernible] highlights related to our mortgage Insurance segment. We wrote…

Thank you Rick and good morning. I'll start with the key drivers of our revenue. Our new insurance written was $15.1 billion during the quarter, which is up 5% compared to $14.3 billion last quarter and down 3% over the $15.7 billion produced in the third quarter of 2016. The new business we are writing today continues to consist of loans that produce excellent risk adjusted returns. Our 12-month persistency increased from 78.5% in the second quarter of 2017 to 80% in the third quarter of 2017 as noted on Exhibit L. Our quarterly annualized persistency decreased from 82.8% in the second quarter of 2017 to 80.4% this quarter. The persistency calculation was impacted by the scheduled termination of a commutation transaction executed with Freddie Mac in 2013. Absent the impact of that transaction, persistency would have been 80.5% on an annualized basis and 82% on a quarterly basis. We continue to expect normalized persistency in the low-to-mid 80s. However, timing is difficult to predict. Primary insurance in force increased to $196.5 billion at the end of the quarter, an 8% increase over the same period last year. Based on current trends including an expanded purchase market and increased persistency, we expect insurance in force to grow accordingly enhancing our strong foundation for future earnings. Premium yields on our portfolio are dependent on several factors including the mix of new production and policy cancellations coupled with the composition of the existing portfolio. Our enhanced portfolio yield disclosures on webcast Slide 12 show the composition of our net premium yields over the most recent five quarters. Single premium cancellations resulted in $15.4 million of direct earned premiums this quarter compared to $13.3 million in the prior quarter. As a result, both our gross and net portfolio yields this quarter remained relatively…

Thank you, Frank. Before we open the call to your questions, let me remind you that we had another quarter of strong operating results with year-over-year growth of 12% for adjusted diluted net operating income per share, 3% for book value per share and 12% for tangible book value per share. NIW grew 5% over last quarter and mortgage insurance in force increased 8% year-over-year which is the primary driver of earnings. We are committed to our services business and have made progress in repositioning the segment for sustained profitability. We took actions in the third quarter to increase our financial flexibility with a 225 million credit facility and improve our debt maturity profile, further positioning Radian Group for a return to investment grade ratings in the future. Now operator we’d like to open the call to questions.

[Operator Instructions] And we will begin with the line of Mark DeVries with Barclays. Please go ahead.

My first question has to do with your capital plans going forward and how that ties in with your efforts to get back to an investment grade rating. Could you just give us an update on where you are in that process with the rating? If the agencies have been explicit on what you need to do to get there whether that’s for the reduced leverage. And should we assume that any kind of plans to potentially return more capital to equity holders either through buybacks or dividends would have to remain on hold until you make more progress on that front.

Good morning Mark, this is Frank. A couple of questions in there that I'll speak to. First, on the returns in investment grade, I think what you saw is complete in the third quarter was another step on the path to returning to investment grade. We pushed out our maturities out even further and on very favorable terms we knocked down some of the existing maturities in the upcoming years. And I think we balance it out in such a way that we would not necessarily need to access the capital markets to redeem any of those upcoming maturities. So all of those things factor into the rating agency calculus as they look at whether or not we're positioned to return to investment grade. Certainly leverage, overall leverage is one of the items that they look at as well. We're currently at 25.6% debt to total capitalization. If that number comes down organically over time, I'm sure that will also bode well for Radian in their analysis of our rating overall. And then on the capital plans as it relates to dividends capacity and getting back to an ordinary dividend paying capacity. We've said previously that that is several years away just due to the negative unassigned surplus that we currently have and the organic path out of that is many years in the future. What we've also said is that we expect to grow our P Myers cushion over time organically and that may happen on a much faster path than that negative unassigned surplus reduction. And so what that means is that we may be at a point sometime in the future, where we are holding such [Technical Difficulty] P Myers that we may contemplate approaching the state of Pennsylvania for a special dividend. And at that time, we would certainly want to have a plan for what the intended use of that dividend, that special dividend to the parent company would be, but it's premature at this point to speak about any details there.

Okay. And then on any potential stock buybacks, I mean, I guess the 300 million of cash you have at the holding company, is that a level you feel you need to sustain for, I know you don't have a lot of debt maturities, but for debt service and for I guess like longer term debt maturities, some of that cash available, but in the buyback stock?

There certainly is and we do have an authorization currently in place for a share repurchase and I believe I mentioned last quarter that the terms and the conditions of that share repurchase plan under the 10b5-1 metrics that we have there is similar to what we had in our last year repurchase plan. And if we recall, we repurchased less than 1000 shares under that plan. It’s intended to be a value based repurchase plan that takes advantage of temporary market dislocations and really intended to be more opportunistic in that regard.

And then just one other question, sorry if I missed this in your prepared comments, but why the decision to -- on your new single premium quota share agreement to seed 65% of the risk versus 35% on the previous agreement?

Sure. This is Derek. Really, the decision is driven by a couple of things. One is just the effective cost to capital is very low on that particular execution, also just continuing efforts to manage really our mix of business from a single versus monthly perspective. So when you factor that in, if you factored in 65% kind of on our current run rate of singles and put kind of a net rate really at kind of that 8% range, so really continued efforts there.

Should we think of that as potentially pushing up your share, at least in NIW in the singles knowing that a larger share of that risk will end up going elsewhere anyway?

I don't think you’d necessarily come to that conclusion.

Yeah. I think just to add to Derek’s comments, I mean, it’s not a change in strategy by any means. It's really more of a capital transaction as they’re going through and really just trying to optimize our returns and the value we create for shareholders.

Next, we’ll go to the line of Doug Harter with Credit Suisse.

Thanks. Just wanted to touch on the single premium quota share again. Just, I understand that it's an attractive cost of capital, but I guess how do you think of that in the context of the capital that's building up, the excess P Myers capital that's building up, just kind of how you think about that without sort of immediate plans to kind of return capital to shareholders?

Yeah. Good morning. This is Frank. So as we look at our capital plan going forward, we certainly do take into account the impact of reinsurance, but as Derek and Rick both mentioned, it's more an optimization exercise on several fronts. It is an attractive cost of capital and it does help enhance the returns that we have on that capital, but it is certainly contemplated when we look at our capital planning going forward.

And I guess what are your thoughts about using a quota share for the monthly product going forward, given that that’s probably a relative attractive cost of capital as well?

Yes. This is Derek again. I mean, when we look at that, we're really looking at any points of execution on a few dimensions. So one is the cost the capital piece of execution and certainly the capital relief through time. I think another thing we’ll factor in is when we have a better sense in terms of P Myers 2.0, what our needs would be with respect to that and also what the capital requirements would be. It might be more optimal than to do a monthly execution versus the singles. So that’s the other thing we'll have to keep a look out for. And in addition to that, also this reinsurance does have an impact potentially on our credit ratings and so also the reaction from the rating agency is another factor when we think about what portion to transfer from a reinsurance -- also an insurance linked perspective.

And I think one -- just from a strategic perspective too, again, it gives us a great deal of financial flexibility to kind of manage our capital and how we think about it going forward. So, we have a number of tools and really we're building those lever points today as we go through these structures, but reinsurance is just another tool for us to leverage our financial flexibility across our business.

Next, we will go to the line of Randy Binner with FBR.

Just as a policy question around commentary from Carson recently at HUD, regarding False Claims Act and how the Justice Department is going to pursue enforcing that and just more broadly, kind of an update on how involved FHA has been in the mortgage insurance market from your perspective and any expectations of how that might change going forward.

Yeah. Thank you. Appreciate the question and it's one that’s very timely as we've been here and in Denver with the kind of all the news flying. So I think, what we've seen just historically and currently is that we continue to write business where FHA has a pricing advantage, certain lenders prefer the ease and efficiency of loans insured with private MI. And borrowers are attracted to the cancellation features of private MI. So, as you see this policy, I think it's kind of too early to tell, there's still a little bit of a cloud around how this will get executed, given kind of the coordination between HUD and the Department of Justice and how that all plays out. But I think we feel that it's still business as usual today. We haven't seen any significant shifts. I think it's a policy change, but there's still merits to the mortgage insurance product that we've seen kind of historically play out and we expect to see those continue to play out as we go forward. I think, FHA, mortgage insurance covers the entire loan amount versus the first loss coverage of our private mortgage insurance. So there are different products that have different features and we think the borrower attributes are meaningful at an origination level, although FHA has a strong market share for a particular set of borrowers. I think they continue to capture market share at the higher LTV and the lower credit score and I think the MI industry is performing very well at the core first time home buyer marketplace across a broader credit spectrum.

So I guess I can take that as, it's business as usual for FHA, but I guess a follow-up would be, one of the critiques of FHA is that they had gotten in to kind of higher FICA score, borrowers, which might be outside of their mandate, have you seen any change on how they're kind of performing or competing in that part of the market or is it kind of business as usual across the board for FHA?

Yeah. No change. I think it's still business as usual. So the announcements of this week don't really change any of that at all. It's really more of trying to bring comfort to lenders that participate in the FHA program around False Claims Act. So I think we see it as business as usual, the merits of the two products stand on their own and we think the merits of a loan product with mortgage insurance compares very favorably to the FHA product, where we do see higher FICAs being done through FHA, there is certainly not necessarily always in the borrowers’ best interest from a pricing perspective. So I think just continuing to create awareness about our products and the benefits are what our focus is, so business as usual.

Next, we’ll go to the line of Phil Stefano with Deutsche Bank.

I was hoping you could touch base on the quota share again and I guess I'm just curious how the conversations went with the reinsurers on the panel. Part of the concern at least from my perspective is that with the third quarter catastrophe losses that we experienced, the reinsurers might have less of an appetite for mortgage insurance business or at least less capital to put to use there, so maybe you can talk about, did the conversations change at all this year versus in years past and any color you can provide there.

Derek again. No, I didn’t see any significant changes really in terms of the conversation. I think in terms of the reinsurers looking at the market, the production continues to be very solid production from a risk return perspective. I think the current quota share transaction has performed very well for the reinsurers. So I think when they look at that and they look at kind of their options in deploying their capital and after taking certain catastrophic losses, there might be some repricing there, but I still think on a relative basis, the mortgage market presents a significant opportunity. So I would say from really an interest and kind of demand perspective, didn't see any significant changes this time versus on the first transaction.

Okay. And Derek, you had mentioned, at least quickly, in response to another question an ILN [ph], and I guess I'm curious why hasn’t an ILN made sense and we saw [indiscernible] why doesn’t it make sense for Radian, how do you think about and maybe what might change in the calculus moving forward that would get it to make sense?

Sure. So, the way we look at it again is first and foremost really from a cost of capital perspective. So when we look at an ILN structure versus reinsurance on our single premium business, the cost of capital is lower on the reinsurance side, reinsurance side, also in terms of kind of a timing, ease of execution and also kind of that capital certainty -- treatment from a capital perspective through time also provides a lot of certainty around that. So I would say in terms of form of execution, I think we're pretty agnostic as to whether we use an ILN structure or reinsurance. We're just really going to look at it on kind of those three or four dimensions and compare the forms of execution. If the form of execution makes sense from an ILN perspective, it might make more sense on a different portion of the portfolio, whether that be legacy or the monthly business. We would certainly execute in that format, just haven't made as much sense today.

Okay. Makes sense. One last quick one hopefully. The guidance essentially reaffirmed for NIW to be relatively flat year over year. I'm getting something like a 20%, 25% decline in the fourth quarter to get there and I was hoping you could just speak qualitatively around, are you seeing anything in the business fundamentals or the trajectory of certain relationships that would cause that or we're just about through October, how does October ‘17 feel versus October ’16 and maybe you can just give us some thoughts around whether the business trajectory around NIW might be so much slower in the upcoming quarter.

This is Rick, Phil. So let me take that one and will kind of address a few parts of that, which is where I think more seasonality of fourth quarter than anything else as we kind of look for a forecast for the rest of the year, I think, the market is going through a pretty, the origination market if you kind of go through the different industry forecasts, see somewhat of a kind of a seasonal slowdown for the fourth quarter. I think we pretty well parallel that from a volume perspective. So I think we're holding to our guidance of approximately 50 billion of NIW, mostly just related to what we would expect to occur naturally in the fourth quarter. So no changes from a competitive point of view and we'll wait to see kind of where our market share came out in the third quarter, but I think we're holding our position extremely well at the customer level and the market doing business that we want to do with the right customers and the right return profile. So I think nothing's changed from that, it's probably more driven by seasonality and I would say, as we're looking at the fourth quarter now, we see it being consistent with our expectations.

Next, we’ll go to the line of Bose George with KBW.

So I had one on the services segment, just what should we think about in terms of the normalized profitability of that segment, once sort of the dust clears like, what should the pretax operating margins be.

This is Frank. We're looking at -- for the EBITDA margin, is really that 10% to 15% EBITDA margin and next year, we're looking at revenues anywhere from $150 million to $175 million. So that translates into a range of $15 million to $25 million and I would call it optimized run rate EBITDA.

And just, yeah, the timeline to getting there, I mean is everything done so we can kind of hit that in the fourth quarter, or is there a little more of a timeline?

I would expect a, I wouldn't call it a slow ramp, but a gradual ramp to that level. As you look at the restructuring charge that we mentioned, we recognized $12 million out of the $20 million in the third quarter, so we still have some ye to go and we've articulated those among the various categories in the coming quarters. But, call it mid-year, I think next year is probably a reasonable timeframe to get us on that normalized run rate, thereabouts, but we'll certainly keep you updated as to the status of the restructuring plan.

Yeah. And I’ll just add to Frank's comments from a business point of view and I want to thank our team for all the hard work they've done this quarter on all the things that you hear we're moving through from a transactional and restructuring point of view. But as it relates to the services business, we are -- we have been very, very focused on really refining our products and our approach to the market. Rolling out this enterprise sales organization really consolidating our sales organization and taking our products to market as one company has been received extremely well. So we're at the front end of really kind of executing our game plan of, we're moving on multiple paths, one of which is, put our sales organization together, create a messaging and branding and positioning for delivering that message to our customer have been received very well. Going through the operational assessment and really understanding the right structure to go forward and as you know we've been making pretty strong changes in that regard to really think through the organization and think through how we align different products and service from an operational point of view. So we're largely on the way there. We saw a few charges that will flow through in future quarters as Frank mentioned. So really, we're positioning today and through this conference this last week at the MBA conference, we've been going full speed at kind of repositioning our company in the marketplace and assessing kind of customer feedback and I'm pleased to report that feedback has been well received by our customers in terms of the opportunity to do business with Radian on a broader basis and we'll share a little bit more about this at Investor Day in a couple of weeks in terms of kind of how we’re evolving the business, but we think we're much stronger as a company with a diversified set of products. We've become increasingly relevant to our, not only our MI customer base, but other players in the market. So we feel good about where we are and the changes we've made and the speed at which we're moving.

And actually switching over to the impact of the hurricanes, I don’t know if you guys mentioned it, but was there any impact on -- did you notice in 3Q from the hurricanes?

This is Derek again. We’re starting to see some effects. So we saw a bit of an increase in September and seeing a bit more in October, really as expected. So that's starting to come in to the portfolio a bit.

And then just one more on the default to claim, the commentary that it could go below 10%, can just talk about some of the factors there? I mean, clearly the types of loans are obviously a lot better than in the past, but other variables, how this price appreciation play into that, just any thoughts there would be great.

And this is Derek again. I mean, really, what we're going to look at is what we always look at, which is really looking at the default inventory, what percentage are going to claim, what percentage is curing and we've seen pretty steady improvement really over the last several years and that continues. So what we’ll look to really in the future is those continued kind of performance trends. Home price appreciation plays a part and if you look at it really after home prices kind of hit the bottom, they've increased about 6% per year. And if you look at historical -- on a historical basis, when you see kind of the lowest rates, we've seen they tend to be pretty heavily correlated with home price appreciation. The other thing to factor in is what portion of our default inventory is comprised of the post 2008 book of business. Again, as Frank indicated, that’s still only about 22% of the portfolio. As that flips over to newer books of business, I think you also could see kind of some downward pressure on that, because those properties are -- have benefited from home price appreciation and also there's more of an infrastructure from a servicing perspective to help borrowers keep them in their homes and to try to stave off foreclosure, which is a positive for us since we don't pay a claim unless it actually goes into foreclosure.

Next, we’ll go the line of Jack Micenko with Susquehanna.

The upsides to us are in 2018 and ’19, is that going to have any meaningful impact on premium yields looking forward?

Yeah. This is Frank. I wouldn't expect it to differ so materially from what we have seen in the past. And as you look at the basis point impact, it's roughly 4% -- or excuse me roughly 2.8 basis points now, probably something similar.

And on the service expense run rate, how should we think about the quarterly, once everything sort of settles out. And then how much of that run rate is fixed versus variable, some component I'm assuming flexes up with business volume, correct?

It does and the breakdown of the efficiencies that we’re gaining there, as I said in my prepared remarks, really twofold. One was in just the cost of services, which will improve the absolute operating margins of each of those businesses and then also some of the fixed administrative costs as well. So we expect there to be a benefit and the split is roughly 50:50 as it relates to the cost saves and the expected improvements. So when you think about what those expense saves look like, if they flow through the P&L, not all of that will be reflected in other operating income.

So for like a dollar level, is 30 kind of the right number to start with or is it going to be something inside of that?

I'm sorry, 30 as far as the –

No, the real estate, the expense dollars, sorry.

Yes. So I think you can sort of back into the margins. I mean, we're targeting that 10% to 15% EBITDA margin. We’re expecting enhanced gross margins on that business. We want to try to give you some general sense of what the EBITDA contribution there is, but it really will depend upon the business mix of what generates that. So, those gross margins can vary, but the point of the exercise is to see that there's an enhancement in those margins on a post restructuring basis.

Okay. Just one last one on the buffer. Is it safe to interpret your comments as 7% maybe a little watermark, you've got financial flexibility, so you need to, but that will grow over time back to a healthier 10-ish kind of number?

I wouldn’t want to put a target on it, but your general observation about the organic growth is correct.

Next, we’ll go to the line of Mihir Bhatia with Bank of America.

I just want to start off with maybe just going back to your default inventory, was there anything unusual or anything specific this quarter that -- it seems like the first quarter that the default inventory didn't improve on a quarter-over-quarter basis and I just had – just wondering if was it just because of the hurricane or was there something else in there and what we should expect just going forward with default inventory?

This is Derek again. Pretty typical of what you're going to see in the third and fourth quarter, typically, when you look on a quarter over quarter basis, when you go from really the second to the third quarter, you wouldn’t expect to see really a decrease, you tend to see the decrease as much more on a quarter basis in the first and second quarters of the year. So I would say that was probably the bigger driver and kind of as expected. I would say the trends remain pretty similar to what we've seen over the last several years, which is continued improvement on a year over year, kind of seasonally adjusted basis.

Right. And you expect that the year over year improvement just go to continue on, so it is not like really a slowdown in that rate would you say or I mean I guess there is a little bit of, but you still have 20% pretty healthy year over year improvements?

I think we've been kind of bouncing around really, I would say, that 18% to 20% range I think. So I don't see that necessarily changing trajectory anytime soon. Obviously, at some point, it's going to slow down just because the default inventory continues to decrease, but I would say that’s kind of a pretty good rate that we've experienced and I don't see really a shift on the horizon in the immediate term.

And then just going back to your services -- to the services business and the restructuring. And I understand you would probably give us more details in a few days at the Investor Day, but are there any -- is there anything specific in terms of lines of business or things that you do now that you are probably -- that you just feel isn't as attractive, so you're not going to -- like you know services that you might be doing that you don't think are as attractive on a go forward basis? Is that those types of changes in restructuring happening or is it more just as you've talked about just realigning some of the sales force and things like that.

This is Rick and thank you for your questions. We have gone through an extensive review of our products and I think as these businesses have been acquired and aggregated and are simulated over the years, we've accumulated quite a broad set of products across each of our businesses. So what we've done is, obviously through the restructuring and organizational changes, we've done some facility shutdowns, we've done realignments of different operating groups or product, kind of focused perspective. But the other thing that we've done is we've literally gone through all of our products to really assess what is core, what do we do, what do we do very well versus what have we added to the list to kind of add some level of additional services, if you will, for the benefit of our customers. So we've done a pretty thorough assessment of each product across our transaction management business and surveillance business, which is really the historical Clayton business, our Green River capital, which is our REO management business, our Red Bell, which is really our, I would call it, our real estate data, kind of the data business if you will and valuation business and title. And so we’ve focused around those four things with our core products. So today, our sales team is talking to customers about a very shorter list of products that are very highly focused on things that we can deliver with excellence and also achieve our return thresholds. So I think it's a much more focused product list. There are things on the peripheral that we've discontinued, either investments and new products or other activities. We’ve really narrowed down the focus and put the team on the field with a very clear set of products across those four product groups, if you will. So I think it's a different approach. The market is receiving it well. They can understand our message better and so far so good.

And just last question, just wanted to make sure I didn’t miss it, but do you have a target for your P Myers cushion and on your debt to capital ratio? I mean I understand what the current numbers are, but just wondering if you have a target that you’re kind of aiming towards.

On the P Myers cushion, if you think about it, I mean, we really look at it in total. We certainly maintain the cushion at the operating entity, which is the 7% that we mentioned, but on an aggregated basis, we have the ability to take it up to 23%. So we really view it in that holistic consolidated view and we certainly want to make sure that we maintain sufficient cushion to continue to write good new profitable business and maintain some cushion. But as far as what we hold at the operating company, there really is no target there, just because we do have a financial flexibility to add when we need to. As it relates to the debt to total cap, again, our goal is to return to investment grade and if that means a gradual inorganic shift from 25.6 down into the low-20s, we feel like that's the right level.

Next, we’ll go to the line of Geoffrey Dunn with Dowling and Partners.

I just want to clarify with respect to the 10% to 15% margin target on MS, is that the way it's presented in the supplement, meaning that that excludes corporate allocation?

Yes. That's correct, Geoff.

Next, we’ll go to the line of Chris Gamaitoni with Compass Point.

First, when did the services sales force realignment occur? I'm sorry if I missed the timing of when you went to an enterprise sales approach.

Yeah. We did that during the third quarter and this has really been in process over that quarter and continues to evolve in strength and so we did that as part of our restructuring plan, as part of the strategic review of how we realign this business. So it's all occurred in the last -- over the course of the last 60, 90 days.

Okay. As far as hurricanes, do you have any sensitivity of the potential transitory increase in P Myers capital related to new delinquencies from Hurricanes that may occur. You see the books much better than us, so it’s hard for us to see any, to gauge that level from the outside?

This is Frank. As we said, there will be some volatility there. It really is hard to predict. I think we can use a rough proxy of previous storms, but to apply it sort of universally over the most recent storms I think would be -- wouldn't be a good approach there. So it really is hard to gauge and we'll certainly be sure to try to call those out in future quarters.

And then lastly, singles as a percentage of NIW is still around 23%. Historically, we thought of that as being more reliant for refinanced product, but that's down to 9%. So given the expanded singles reinsurance deal, can you just talk about the competition dynamics, or the client dynamics of why your singles percentage is running so high, despite declining refinances.

Yes. Chris, thank you. I think over -- we've seen that singles percentage come down over the course of time, over the last couple of years and even through the course of this year and we're, we monitored very carefully. I think, there's -- all that's based upon kind of a mix of business from our current customers and how they will choose the product versus singles versus monthly. And so we monitor it very carefully and we watch our clients in terms of the mix and the returns we get from each individual client customer. And so I think we have seen it come down. There's been no change in strategy, other than just to let you know that we monitor it very carefully at a customer level, looking to our overall returns on a risk adjusted basis and we feel very comfortable with the mix we get today. But I think, a slightly higher percentage of a gross basis is largely driven by some of the -- of our clients and the mix of our clients. But again, we manage it from an overall risk adjusted return. Keep in mind, as I think Derek and Frank both set out, on that basis, through 2017, I think that equates to around 15% or 16%. And going forward, after reinsurance, it'll be closer to 8% in terms of, kind of, our singles mix, not of reinsurance. So we feel comfortable with that from an overall return on capital. We continue to refine it at a customer level, based on mix and returns and try to drive -- optimize risk adjusted returns for shareholders.

Our last question will come from the line of Mackenzie Aron with Zelman and Associates. Please go ahead.

Just one quick one from me to clarify, so reduction in the available assets this quarter, was that entirely due to the reinsurer affiliation or was there anything else there?

It was largely due to the commutation. That's correct. So something, I'm sorry.

Actually the shift.

Thank you. I'm sorry. Yes. The shift was due to $600 million being transferred from Radian Guaranty to Radian Reinsurance.

Thank you. I'll now turn the call back over to CEO, Rick Thornberry.

Thank you all for joining us today. For those interested in learning more about Radian, we’ll be holding an Investor Day on Monday, November 6 in New York City. You can visit our website or contact our Investor Relations Department for more information. We appreciate your questions today and we hope to see you on November 6. Thank you.

Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation. You may now disconnect.