Question-and-Answer Session
Operator
Thank you. (Operator Instructions). And our first question comes from Steve Stelmach with FBR Capital Markets.
Steve Stelmach – FBR Capital Markets
Hi. Good morning and congrats on a good quarter. Just a couple of real quick questions and then maybe I'll hop back into queue. Bob I may have missed it, did you mention that the second-quarter provision included some true up of reserves due to rescission activity or is that?
C. Robert Quint
Well, the reserves always include an estimate of rescissions and denials. The point was that this estimate has gone up.
Steve Stelmach – FBR Capital Markets
Okay. All right. And then on the premium refund that you mentioned. Those loans that were poorly underwritten they clearly took up balance sheet capacity or capital capacity over the past few years when you calculate your premium refunds do you incorporate some opportunity cost that you lost with, otherwise would have been good loans on the balance sheet or on exposure to, does that make sense. So in other words you have, you could have that capacity that was taken up by a bad loan could have been taken up by a good loan. Do you get compensated for the fact that, your capital was absorbed by these poorly underwritten loans?
C. Robert Quint
No, we don't.
Steve Stelmach – FBR Capital Markets
Okay. And then on the shelf offering just lastly, is that just a liquidity issue it sounds like, just liquidity it's not needed for the capital at the operating company, is that correct?
Sanford A. Ibrahim
Steve, it gives us the flexibility, we've always said that we are open to looking at external capital at the right time and if it makes sense and this gives us the ability to do so. And as Bob said it may be something we could use to leap whatever gap remains in our 2011 liquidity needs.
Steve Stelmach – FBR Capital Markets
Okay, thank you.
Operator
Thank you. Next we have Joe DiMarino with Piper Jaffray.
Joseph DiMarino – Piper Jaffray
Thank you, good morning. Assuming you don't reach a capital solution in the near term at what point would you expect to bridge the 25 to 1 risk to capital limit?
Sanford A. Ibrahim
As we've said making projections like that is brought with a lot of uncertainty because a lot of it is driven by future default experiences and the default, and impact on reserves. So we do not make those projections all we can say is that we feel comfortable we can continue writing at least through 2009. And we also say that the 25 to 1 ceiling applies at this point only in 14 states that MICA is working on.
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