Question-and-Answer Session
Operator
(Operator Instructions) We’ll take our first question from David Lewis – Raymond James.
David Lewis – Raymond James & Associates
Thank you for your comments and thoughts on the outlook. It was very helpful. I want to make sure I’m clear. If you’re going to pull back in the MI new business does that mean that we may actually see the premiums start to shrink on a year-over-year basis? Would that be your expectation or more of a flattening out?
Aldo C. Zucaro
No. I think the implication of what I said, or tried to say, was that one, the business inherently has slowed down for all of the mortgage guarantee companies, including ourselves. I mean you have differences among the companies but still the production of new business has been on a downtrend for the last nine months I would say as I recall of 2008.
And perhaps the other thing you’re referring to, David is the fact that I indicated that one of the instruments we have at our disposal is to not accentuate as much on production in order to better control risk enforce and, therefore, the capital allocations we have to the business.
David Lewis – Raymond James & Associates
I guess I’m surprised given your low debt to capital ratio that you wouldn’t look to maybe take down some debt to continue to produce the more favorably underwritten mortgage guarantee business.
Aldo C. Zucaro
We still have that in mind. I’m just suggesting that’s just one of the alternatives we have and certainly not the only alternative.
David Lewis – Raymond James and Associates
Couple of questions from a clarification standpoint there’s been a lot of talk within the bankruptcy judges on the cram-downs and I guess I am curious if a cram-down occurs does that come back to you in the form of a claim or do you share some of that with the financial institution or how does that impact you?
Aldo C. Zucaro
Yes. I’m going to ask Chris to answer that question.
Christopher S. Nard
Sure. Hey, David. The way that works is if in fact you had a change in the system whereby bankruptcy judges could cram-down a loan amount that does not generate a claimable event for us. So if the judge were to write a loan down from 250 to 225 you can’t file a claim for the $25,000.
- To read the full transcript on Seeking Alpha, click here »
