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Essent .(ESNT) - 2022 Q4 - Annual Report
2023-02-16 16:00
Part I [Item 1. Business](index=7&type=section&id=Item%201.%20Business) Essent Group Ltd. is a private mortgage insurance company providing credit protection to lenders, with **$63.1 billion** in New Insurance Written and **$227.1 billion** in Insurance in Force for 2022 - Essent Guaranty, the primary U.S. mortgage insurance subsidiary, holds strong financial strength ratings: **A3 (Stable)** from Moody's, **BBB+ (Stable)** from S&P, and **A (Excellent)** from A.M. Best[27](index=27&type=chunk) - The company also operates Essent Reinsurance Ltd. in Bermuda, which provides reinsurance for GSE risk-sharing transactions and reinsures a portion of Essent Guaranty's NIW, with quota share reinsurance coverage increasing from **25% to 35%** for NIW effective January 1, 2021[28](index=28&type=chunk)[58](index=58&type=chunk) - As of December 31, 2022, the default rate on insured loans was **1.66% (13,433 loans)**, a decrease from **2.16% (16,963 loans)** at the end of 2021, showing improvement as pandemic-related forbearances resolve[31](index=31&type=chunk)[106](index=106&type=chunk) Key Business Metrics (2020-2022) | Metric | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | New Insurance Written (NIW) | $63.1 billion | $84.2 billion | $107.9 billion | | Insurance in Force (IIF) at Year-End | $227.1 billion | $207.2 billion | $198.9 billion | | NIW from Top 10 Customers | 39.9% | 41.6% | 35.8% | [Our Industry and Competition](index=8&type=section&id=Our%20Industry%20and%20Competition) The U.S. residential mortgage market, driven by GSEs, relies on private mortgage insurance for low down payment loans, with the industry's market share growing to an estimated **48%** in 2022 amidst intense competition from six private insurers and government programs - The private mortgage insurance industry's share of the total insured market has more than doubled since 2009, reaching an estimated **48%** in 2022[39](index=39&type=chunk) - The industry consists of six active private mortgage insurers: Essent Guaranty, Arch Mortgage Insurance, Enact Holdings, MGIC, National Mortgage Insurance, and Radian Guaranty[43](index=43&type=chunk) - Competition also comes from government agencies (FHA, VA), state-sponsored funds, and alternative products like 'piggyback loans' that eliminate the need for PMI[44](index=44&type=chunk)[45](index=45&type=chunk) [Our Products and Services](index=10&type=section&id=Our%20Products%20and%20Services) Essent primarily offers loan-by-loan primary mortgage insurance, with premiums paid monthly or upfront, and its Bermuda subsidiary, Essent Re, increased its quota share reinsurance of Essent Guaranty's New Insurance Written to **35%** - The majority of policies are primary mortgage insurance, with risk coverage typically ranging from **6% to 35%** of the underlying loan balance[47](index=47&type=chunk)[48](index=48&type=chunk) - Premium payments are primarily structured as monthly or single premium policies, with substantially all policies being of these types as of December 31, 2022[50](index=50&type=chunk)[54](index=54&type=chunk) - Essent Re, the Bermuda subsidiary, increased its quota share reinsurance of Essent Guaranty's NIW from **25% to 35%** effective January 1, 2021[58](index=58&type=chunk) [Our Mortgage Insurance Portfolio](index=13&type=section&id=Our%20Mortgage%20Insurance%20Portfolio) As of December 31, 2022, Essent's **$227.1 billion** insurance in force demonstrates high credit quality, with **84.3%** originated in the last three years, **41.1%** from borrowers with FICO scores >=760, and a geographically diverse concentration Insurance in Force (IIF) by Policy Year (as of Dec 31, 2022) | Year | IIF ($ thousands) | % of Total | | :--- | :--- | :--- | | 2022 | $60,609,538 | 26.7% | | 2021 | $71,533,600 | 31.5% | | 2020 | $59,228,334 | 26.1% | | 2019 | $14,742,465 | 6.5% | | 2018 | $6,714,277 | 3.0% | | 2017 and prior | $14,233,841 | 6.2% | | **Total** | **$227,062,055** | **100.0%** | Portfolio by FICO Score (IIF as of Dec 31, 2022) | FICO Score | IIF ($ thousands) | % of Total | | :--- | :--- | :--- | | >=760 | $93,389,066 | 41.1% | | 740-759 | $38,842,311 | 17.2% | | 720-739 | $34,981,632 | 15.4% | | 700-719 | $29,146,543 | 12.8% | | 680-699 | $18,859,824 | 8.3% | | <=679 | $11,842,679 | 5.2% | Portfolio by LTV (IIF as of Dec 31, 2022) | LTV | IIF ($ thousands) | % of Total | | :--- | :--- | :--- | | 85.00% and below | $24,454,468 | 10.8% | | 85.01% to 90.00% | $63,436,445 | 27.8% | | 90.01% to 95.00% | $107,932,064 | 47.6% | | 95.01% and above | $31,239,078 | 13.8% | - The portfolio is geographically diverse, with the top three states (California, Texas, Florida) accounting for **33.8%** of total IIF as of December 31, 2022[70](index=70&type=chunk)[72](index=72&type=chunk) [Underwriting and Risk Management](index=19&type=section&id=Underwriting%20and%20Risk%20Management) Essent employs a balanced underwriting approach, with **71%** of its insurance in force originated through its delegated program, and manages risk through a comprehensive loan life cycle framework supported by third-party reinsurance - As of December 31, 2022, approximately **71%** of insurance in force was originated through the Delegated Underwriting program, up from **66%** in the prior year[93](index=93&type=chunk) - The risk management process is structured around the "loan life cycle," encompassing customer qualification, policy acquisition (underwriting and pricing), and portfolio management (quality assurance and surveillance)[97](index=97&type=chunk) - The company uses various third-party reinsurance arrangements, including fully collateralized excess of loss coverage and quota share agreements, to hedge against adverse losses, provide capital relief, and diversify capital sources[102](index=102&type=chunk) [Regulation](index=25&type=section&id=Regulation) Essent is subject to extensive federal and state regulation, including GSEs' PMIERs, state insurance laws governing capital and rates, and federal laws like the Dodd-Frank Act, while its Bermuda subsidiary operates under a less restrictive framework - Essent Guaranty is in compliance with the GSEs' Private Mortgage Insurer Eligibility Requirements (PMIERs), which are critical for its ability to insure loans sold to Fannie Mae and Freddie Mac[123](index=123&type=chunk) - State insurance regulations, particularly in its domicile of Pennsylvania, govern capital levels, dividend payments, and transactions with affiliates, with control presumed if a person acquires **10% or more** of voting securities, requiring prior regulatory approval[124](index=124&type=chunk)[127](index=127&type=chunk) - Federal regulations such as the Dodd-Frank Act's QM and QRM rules directly impact the size of the residential mortgage market and the demand for private mortgage insurance[135](index=135&type=chunk)[139](index=139&type=chunk)[141](index=141&type=chunk) - The Bermuda-based subsidiary, Essent Reinsurance Ltd., is registered as a Class 3A insurer and is subject to the Bermuda Insurance Act, which imposes solvency, liquidity, and reporting standards supervised by the BMA[158](index=158&type=chunk)[162](index=162&type=chunk) [Item 1A. Risk Factors](index=40&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks related to intense industry competition, reliance on key customers, potential economic downturns, evolving regulatory requirements, and the tax implications of its corporate structure [Risks Relating to the Operation of Our Business](index=40&type=section&id=Risks%20Relating%20to%20the%20Operation%20of%20Our%20Business) Operational risks include intense competition, significant customer concentration with the top ten customers accounting for **39.9%** of NIW in 2022, and potential impacts from economic downturns or declining home values that could increase defaults and losses - Intense competition could negatively impact NIW if competitors reduce pricing or loosen underwriting guidelines[190](index=190&type=chunk) - The top ten customers accounted for **39.9%** of NIW in 2022, and one customer represented more than **10%** of consolidated revenues, highlighting significant customer concentration risk[191](index=191&type=chunk) - A downturn in the U.S. economy or a decline in home values could lead to more defaults and increase losses, as could catastrophic events[209](index=209&type=chunk) - Loss reserves are established only for loans in default, not based on ultimate loss estimates for the entire portfolio, which could lead to disproportionate adverse effects on earnings in certain periods[208](index=208&type=chunk) [Risks Relating to Regulation and Litigation](index=50&type=section&id=Risks%20Relating%20to%20Regulation%20and%20Litigation) The company's business is highly dependent on GSEs, making it vulnerable to legislative or regulatory changes to their role, evolving PMIERs, and the impact of federal rules like QM/QRM and Basel IV capital rules - The business is highly dependent on the GSEs; legislative or regulatory actions changing their role or credit enhancement requirements could significantly reduce revenues[233](index=233&type=chunk)[235](index=235&type=chunk) - Changes to the GSEs' PMIERs could negatively impact the company's ability to write mortgage insurance at current levels or generate anticipated returns[239](index=239&type=chunk) - The CFPB's QM rule and the multi-agency QRM rule could reduce the size of the mortgage origination market or create incentives for lenders to use government insurance programs over PMI[240](index=240&type=chunk)[245](index=245&type=chunk) - The implementation of Basel IV rules for banking organizations could decrease the demand for mortgage insurance if it no longer provides a capital benefit for lenders[246](index=246&type=chunk)[248](index=248&type=chunk) [Risks Relating to Taxes and Our Corporate Structure](index=55&type=section&id=Risks%20Relating%20to%20Taxes%20and%20Our%20Corporate%20Structure) Essent's Bermuda domicile poses tax risks, including potential U.S. federal income taxation, Controlled Foreign Corporation (CFC) rules for shareholders, Passive Foreign Investment Company (PFIC) classification, and limitations on dividend payments from regulated subsidiaries - The company's Bermuda-domiciled entities (Essent Group Ltd. and Essent Re) risk being subject to U.S. federal income tax if the IRS successfully contends they are engaged in a U.S. trade or business[256](index=256&type=chunk)[257](index=257&type=chunk) - Due to attribution rules, Essent Reinsurance Ltd. is deemed a Controlled Foreign Corporation (CFC), subjecting any **10%** U.S. Shareholder to current taxation on their pro rata share of "subpart F income"[259](index=259&type=chunk) - While management believes Essent Group Ltd. is not a Passive Foreign Investment Company (PFIC), changes in business circumstances or tax law could alter this status, leading to adverse tax consequences for U.S. investors[265](index=265&type=chunk)[266](index=266&type=chunk) - As a holding company, Essent Group Ltd.'s ability to pay dividends is dependent on receiving dividends from its insurance subsidiaries, which are restricted by state insurance laws; for example, Essent Guaranty's 2022 dividends to its parent were **$315.0 million**[275](index=275&type=chunk)[276](index=276&type=chunk) Part II [Item 5. Market for the Company's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=68&type=section&id=Item%205.%20Market%20for%20the%20Company's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Essent Group Ltd.'s common shares trade on the NYSE under "ESNT", with quarterly dividends totaling **$0.86 per share** in 2022, and an authorized **$250 million** share repurchase plan that remained unutilized as of year-end 2022 - The company's common shares are traded on the New York Stock Exchange under the symbol "ESNT"[315](index=315&type=chunk) - As of December 31, 2022, the company was authorized to purchase up to **$250 million** of its common shares under a plan announced in May 2022, with the full amount remaining available[322](index=322&type=chunk) Quarterly Dividends per Share (2022) | Quarter | Dividend per Share | | :--- | :--- | | Q1 2022 | $0.20 | | Q2 2022 | $0.21 | | Q3 2022 | $0.22 | | Q4 2022 | $0.23 | [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=70&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) For 2022, Essent reported **$831.4 million** net income, driven by a **$174.7 million** net benefit for losses due to favorable COVID-19 default development, despite a **3%** decrease in net premiums earned, while maintaining a strong capital position with **174%** of PMIERs Minimum Required Assets - The significant increase in net income for 2022 was primarily due to a **$174.7 million** benefit for losses, driven by a **$164.1 million** favorable revision to the estimated ultimate loss for early COVID-19 defaults[380](index=380&type=chunk)[390](index=390&type=chunk) - The average net premium rate decreased from **0.41%** in 2021 to **0.37%** in 2022, primarily due to changes in the mix of mortgages insured, pricing changes, and fewer cancellations of non-refundable single premium policies[377](index=377&type=chunk)[381](index=381&type=chunk) - As of December 31, 2022, Essent Guaranty's Available Assets under PMIERs were **$3.19 billion**, which is **174%** of its Minimum Required Assets of **$1.83 billion**, indicating a strong capital buffer[422](index=422&type=chunk) Summary of Operations (2021 vs 2022) | Metric (in thousands) | 2022 | 2021 | | :--- | :--- | :--- | | Net premiums earned | $842,527 | $872,543 | | Total revenues | $1,000,824 | $1,028,510 | | (Benefit) provision for losses and LAE | $(174,704) | $31,057 | | Total losses and expenses | $12,637 | $206,196 | | Net income | $831,353 | $681,783 | [Results of Operations](index=79&type=section&id=Results%20of%20Operations) Net income rose to **$831.4 million** in 2022 from **$681.8 million** in 2021, primarily due to a **$174.7 million** net benefit for losses, despite a **3%** decrease in net premiums earned, while net investment income increased **40%** - Net premiums earned decreased by **3%** in 2022 due to a lower average net premium rate (**0.37%** vs **0.41%** in 2021), partially offset by a **6%** increase in average insurance in force[381](index=381&type=chunk) - The provision for losses and LAE was a benefit of **$174.7 million** in 2022, a significant reversal from the **$31.1 million** expense in 2021, primarily due to a decrease in the estimated ultimate loss for Early COVID Defaults and strong cure activity[388](index=388&type=chunk)[395](index=395&type=chunk) - Net investment income increased **40%** to **$124.4 million** in 2022, driven by a higher average investment portfolio balance (**$5.1 billion** vs. **$4.7 billion**) and an increased pre-tax yield (**2.6%** vs. **2.0%**)[384](index=384&type=chunk) - The ending default inventory decreased to **13,433 loans** at year-end 2022 from **16,963 loans** at year-end 2021, with the default rate falling to **1.66%** from **2.16%**[389](index=389&type=chunk) [Liquidity and Capital Resources](index=84&type=section&id=Liquidity%20and%20Capital%20Resources) As of December 31, 2022, Essent maintained substantial liquidity with **$81.2 million** in cash and **$5.0 billion** in investments, and its U.S. insurance subsidiaries were well-capitalized with a combined risk-to-capital ratio of **10.2 to 1** - The company has substantial liquidity, with **$81.2 million** in cash and **$5.0 billion** in total investments as of December 31, 2022[403](index=403&type=chunk)[425](index=425&type=chunk) - Net cash from operating activities was **$588.8 million** in 2022, a decrease from **$709.3 million** in 2021, primarily due to changes in working capital and higher tax payments[408](index=408&type=chunk)[409](index=409&type=chunk) - Essent Guaranty is in compliance with PMIERs, with Available Assets of **$3.19 billion** exceeding Minimum Required Assets of **$1.83 billion** as of December 31, 2022[421](index=421&type=chunk)[422](index=422&type=chunk) U.S. Insurance Subsidiaries' Combined Statutory Capital (as of Dec 31, 2022) | Metric (in thousands) | Amount | | :--- | :--- | | Policyholders' surplus | $1,072,667 | | Contingency reserves | $2,105,484 | | **Combined statutory capital** | **$3,178,151** | | Combined net risk in force | $32,265,701 | | **Combined risk-to-capital ratio** | **10.2:1** | [Financial Condition](index=89&type=section&id=Financial%20Condition) As of December 31, 2022, stockholders' equity increased to **$4.5 billion**, supported by **$5.0 billion** in high-quality, primarily investment-grade fixed-income investments with an effective duration of **4.0 years** - Stockholders' equity grew to **$4.5 billion** at year-end 2022 from **$4.2 billion** at year-end 2021, primarily due to **$831.4 million** in net income[424](index=424&type=chunk)[379](index=379&type=chunk) - The effective duration of the investments available for sale portfolio was **4.0 years** as of December 31, 2022, indicating that a **100 basis point** parallel shift in the yield curve would change the portfolio's fair value by approximately **4.0%**[465](index=465&type=chunk) Investments Available for Sale by Rating (as of Dec 31, 2022) | Rating | Fair Value ($ thousands) | Percent | | :--- | :--- | :--- | | Aaa to Aa3 | $2,901,029 | 61.1% | | A1 to A3 | $1,102,350 | 23.3% | | Baa1 to Baa3 | $645,218 | 13.6% | | Below Baa3 | $93,028 | 2.0% | | **Total** | **$4,741,625** | **100.0%** | [Item 8. Financial Statements and Supplementary Data](index=100&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents Essent Group Ltd.'s audited consolidated financial statements for 2022, including balance sheets and income statements, with PricewaterhouseCoopers LLP issuing an unqualified opinion and highlighting the valuation of loss reserves as a critical audit matter - The independent auditor, PricewaterhouseCoopers LLP, issued an unqualified opinion on both the consolidated financial statements and the effectiveness of internal control over financial reporting as of December 31, 2022[472](index=472&type=chunk) - The auditor identified the valuation of the Reserve for Losses and Loss Adjustment Expenses as a Critical Audit Matter due to the significant management judgment involved in estimating claim rates and sizes, which required a high degree of auditor subjectivity and effort[478](index=478&type=chunk)[480](index=480&type=chunk) Consolidated Balance Sheet Highlights (as of Dec 31) | (in thousands) | 2022 | 2021 | | :--- | :--- | :--- | | Total Investments | $4,999,566 | $5,133,359 | | Total Assets | $5,723,797 | $5,722,174 | | Reserve for losses and LAE | $216,464 | $407,445 | | Total Liabilities | $1,261,488 | $1,486,060 | | Total Stockholders' Equity | $4,462,309 | $4,236,114 | [Item 9A. Controls and Procedures](index=143&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and internal control over financial reporting were effective as of December 31, 2022, a conclusion confirmed by the independent auditor - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of December 31, 2022[673](index=673&type=chunk) - Management assessed internal control over financial reporting using the COSO framework and concluded it was effective as of December 31, 2022[676](index=676&type=chunk) - No material changes to the company's internal control over financial reporting occurred during the most recent fiscal quarter[678](index=678&type=chunk) Part III [Items 10-14](index=144&type=section&id=Items%2010-14) Information for Items 10 through 14, covering governance, compensation, ownership, related transactions, and accounting fees, is incorporated by reference from the company's forthcoming 2023 proxy statement - Information regarding directors, executive officers, corporate governance, executive compensation, security ownership, related transactions, and principal accounting fees and services is incorporated by reference from the forthcoming 2023 proxy statement[682](index=682&type=chunk)[683](index=683&type=chunk)[684](index=684&type=chunk) Part IV [Item 15. Exhibits, Financial Statement Schedules](index=144&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section provides an index of all financial statements, schedules, and exhibits filed as part of the Annual Report on Form 10-K, including corporate governance documents and required certifications - This section provides an index of all financial statements, schedules, and exhibits filed with the Form 10-K[689](index=689&type=chunk)
Essent .(ESNT) - 2022 Q4 - Earnings Call Transcript
2023-02-10 18:50
Essent Group Ltd. (NYSE:ESNT) Q4 2022 Earnings Conference Call February 10, 2023 10:00 AM ET Company Participants Phil Stefano - Vice President-Investor Relations Mark Casale - Chairman and Chief Executive Officer Dave Weinstock - Interim Chief Financial Officer Chris Curran - President-Essent Guaranty Conference Call Participants Mark DeVries - Barclays Rick Shane - JPMorgan Mihir Bhatia - Bank of America Bose George - Keefe, Bruyette, &Woods Geoffrey Dunn - Dowling & Partners Operator Good morning, my nam ...
Essent .(ESNT) - 2022 Q3 - Quarterly Report
2022-11-07 16:00
Table of Contents Title of each class Trading Symbol(s) Name of each exchange on which registered Common Shares, $0.015 par value ESNT New York Stock Exchange UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the period ended September 30, 2022 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commi ...
Essent .(ESNT) - 2022 Q3 - Earnings Call Presentation
2022-11-04 17:34
ESSENT GROUP LTD. | NYSE: ESNT © 2022 Essent Group Ltd. All rights reserved. | essentgroup.com | 1 ESSENT GROUP LTD. INVESTOR PRESENTATION 3Q22 NYSE: ESNT November 4, 2022 Disclaimer This presentation may include "forward-looking statements" which are subject to known and unknown risks and uncertainties, many of which may be beyond our control. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "will," "should," "expect," "plan," "anticipate," "be ...
Essent .(ESNT) - 2022 Q3 - Earnings Call Transcript
2022-11-04 16:53
Essent Group Ltd. (NYSE:ESNT) Q3 2022 Earnings Conference Call November 4, 2022 10:00 AM ET Company Participants Phil Stefano – Vice President-Investor Relations Mark Casale – Chairman and Chief Executive Officer David Weinstock – Interim Chief Financial Officer Chris Curran – President-Essent Guaranty Conference Call Participants Mark DeVries – Barclays Rick Shane – JPMorgan John Kilichowski – Credit Suisse Alex Bond – KBW Mihir Bhatia – Bank of America Rowland Mayor – RBC Capital Markets Operator Good mor ...
Essent .(ESNT) - 2022 Q2 - Quarterly Report
2022-08-07 16:00
Table of Contents Title of each class Trading Symbol(s) Name of each exchange on which registered Common Shares, $0.015 par value ESNT New York Stock Exchange UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the period ended June 30, 2022 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission ...
Essent .(ESNT) - 2022 Q2 - Earnings Call Transcript
2022-08-05 19:23
Essent Group Ltd. (NYSE:ESNT) Q2 2022 Earnings Conference Call August 5, 2022 10:00 AM ET Company Participants Philip Stefano - Vice President of Investor Relations Mark Casale - Chief Executive Officer David Weinstock - Interim Chief Financial Officer Chris Curran - President of Essent Guaranty, Inc. Conference Call Participants Mark DeVries - Barclays Rick Shane - JPMorgan Doug Harter - Credit Suisse Bose George - KBW Mihir Bhatia - Bank of America Ryan Gilbert - BTIG Geoffrey Dunn - Dowling & Partners Op ...
Essent .(ESNT) - 2022 Q1 - Earnings Call Transcript
2022-05-06 20:25
Financial Data and Key Metrics Changes - For Q1 2022, the company reported net income of $274 million, up from $136 million a year ago, primarily due to the release of approximately $100 million of COVID reserves [6] - Diluted earnings per share increased to $2.52 from $1.21 a year ago, with an annualized return on average equity of 26% [6] - Book value per share rose to $38.98, a 12% increase from $34.75 a year ago, with an annualized growth rate of 21% since going public in 2013 [12] Business Line Data and Key Metrics Changes - The insurance in force increased by 5% to $207 billion compared to $197 billion a year ago, with a strong credit quality reflected in a weighted average FICO of 746 and a weighted average original LTV of 92% [8] - The net premium earned for Q1 2022 was $215 million, including $12 million from third-party business [17] - The average net premium rate for the U.S. mortgage insurance business decreased by 1 basis point to 39 basis points [17] Market Data and Key Metrics Changes - The company's 12-month persistency rate was 69%, while the 3-month annualized persistency was approximately 80% [9] - The company noted that rising rates and strong home price appreciation are starting to challenge affordability and housing demand, but the structural outlook for the housing market remains positive [7] Company Strategy and Development Direction - The company is focused on a diversified and programmatic reinsurance strategy, with approximately 90% of its portfolio reinsured as of March 31 [10] - The company emphasizes a measured approach to capital management, favoring attractive investments over share repurchases for long-term value creation [14] - A new $250 million share repurchase program was authorized, alongside a 24% increase in dividends, reflecting stability in earnings and cash flow [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of the operating model and the company's role in affordable and sustainable homeownership [25] - The company anticipates that insurance in force will grow throughout the year, supported by strong persistency and embedded home equity [29] - Management acknowledged that while the first quarter's new insurance written was strong, the overall outlook for the year may be tighter than expected due to rising rates and reduced supply [42] Other Important Information - The company reported a trailing 12-month underwriting margin of 93% and operating cash flow of $702 million, indicating a strong financial position [11] - The carrying value of other investment assets on the balance sheet was $213 million, with $82 million of value created from investments [13] Q&A Session Summary Question: Why did Essent not grow in terms of insurance in force this quarter? - Management indicated that pricing has been consistent, leading to a decline in market share, and they are cautious about the current market conditions [28] Question: What is the outlook for rational behavior among mortgage originators? - Management noted that there are good controls in place, and they do not see irrational behavior among competitors [32] Question: How do returns in the CRT market compare to core business returns? - Management stated that returns in the CRT market are better due to an imbalance in the reinsurance market, but they are cautious about allocating all capital to this area [35] Question: What is the outlook for new delinquency formation? - Management indicated that delinquencies have normalized, with strong employment and wage growth contributing to reduced expected losses [39] Question: What is the outlook for the industry’s new insurance written (NIW)? - Management expressed that while the first quarter was strong, achieving upper targets for NIW may be challenging due to rising rates and reduced supply [42]
Essent .(ESNT) - 2022 Q1 - Quarterly Report
2022-05-05 16:00
Table of Contents Title of each class Trading Symbol(s) Name of each exchange on which registered Common Shares, $0.015 par value ESNT New York Stock Exchange UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the period ended March 31, 2022 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commissio ...
Essent .(ESNT) - 2021 Q4 - Annual Report
2022-02-15 16:00
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Title of each class Trading Symbol(s) Name of each exchange on which registered Common Shares, $0.015 par value ESNT New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT ...