Essent .(ESNT) - 2025 Q1 - Quarterly Report

Financial Performance - Net premiums earned for the three months ended March 31, 2025, were $245,848 thousand, slightly up from$ 245,590 thousand in the same period of 2024, indicating a growth of 0.1%[19] - Total revenues rose to $317,558 thousand for Q1 2025, compared to$ 298,357 thousand in Q1 2024, marking an increase of 6.4%[19] - Net income for Q1 2025 was $175,433 thousand, down from$ 181,719 thousand in Q1 2024, representing a decrease of 3.5%[19] - The company reported a comprehensive income of $247,171 thousand for Q1 2025, compared to$ 159,953 thousand in Q1 2024, reflecting a significant increase of 54.4%[19] - Total revenues for the three months ended March 31, 2025, were $317.56 million, compared to$ 298.36 million for the same period in 2024, representing an increase of approximately 6.4%[182] - Net premiums earned remained largely unchanged at $245.85 million for the three months ended March 31, 2025, compared to$ 245.59 million for the same period in 2024[183] - Basic earnings per share (EPS) for Q1 2025 was $1.71, slightly down from$ 1.72 in Q1 2024[97] - Diluted EPS for Q1 2025 was $1.69, compared to$ 1.70 in the same period last year[97] Assets and Equity - Total assets increased to $7,204,711 thousand as of March 31, 2025, compared to$ 7,111,649 thousand at December 31, 2024, reflecting a growth of 1.3%[17] - Total stockholders' equity rose to $5,659,306 thousand as of March 31, 2025, compared to$ 5,603,658 thousand at December 31, 2024, reflecting an increase of 1.0%[17] - Cash at the end of the period increased to $208,066 thousand from$ 164,255 thousand at the end of Q1 2024, a rise of 26.6%[23] - As of March 31, 2025, total investments available for sale amounted to $5,882.359 million, with an amortized cost of$ 6,153.624 million, reflecting unrealized losses of $282.386 million[40] - Total assets at fair value as of March 31, 2025, amounted to$ 5,882,359 thousand, compared to $5,876,721 thousand at the end of 2024[109] Investment Performance - The net investment income for the three months ended March 31, 2025, was$ 58.2 million, compared to $52.1 million for the same period in 2024, reflecting an increase of approximately 11.5%[51] - The gross investment income for the three months ended March 31, 2025, was$ 60.0 million, compared to $53.4 million in 2024, marking an increase of approximately 12.3%[51] - Income from other invested assets turned to a profit of$ 7.4 million in Q1 2025 compared to a loss of $1.9 million in Q1 2024[185] - The company maintains a diversified investment portfolio, with corporate debt securities making up 41.7% of total corporate debt as of March 31, 2025[40] Loss Reserves and Claims - The reserve for losses and LAE increased to$ 356,653 thousand as of March 31, 2025, compared to $328,866 thousand at December 31, 2024, an increase of 8.4%[17] - The provision for losses and loss adjustment expenses (LAE) increased to$ 31.29 million for the three months ended March 31, 2025, from $9.91 million in the same period of 2024[182] - The total reserves for losses and LAE at the end of Q1 2025 were$ 338.1 million, compared to $253.6 million at the end of Q1 2024, reflecting a 33.4% increase[197] - The number of claims paid increased to 153 in Q1 2025, with total claims paid amounting to$ 6.33 million, up from 123 claims and $3.61 million in Q1 2024[201] Dividends and Share Buybacks - The company declared dividends totaling$ 31,869 thousand in Q1 2025, compared to $29,906 thousand in Q1 2024, an increase of 6.5%[21] - The company acquired treasury stock amounting to$ 168,850 thousand in Q1 2025, compared to $13,552 thousand in Q1 2024, indicating a significant increase in share buybacks[23] - Essent Re paid dividends of$ 100 million and $37.5 million to its parent in the three months ended March 31, 2025 and 2024, respectively, with total equity of$ 1.8 billion as of March 31, 2025[94] Business Segments and Operations - The company has one reportable business segment, which is Mortgage Insurance, and it operates primarily through its subsidiary Essent Guaranty[32] - The mortgage insurance segment provides private mortgage insurance and reinsurance for U.S. residential properties, with a focus on credit risk management solutions[32] - Total revenues for the Mortgage Insurance segment were $288.9 million for the three months ended March 31, 2025, compared to$ 274.7 million for the same period in 2024, reflecting an increase of approximately 5.2%[131] - The loss ratio for the Mortgage Insurance segment was 13.1% for the three months ended March 31, 2025, compared to 4.1% for the same period in 2024, indicating a significant increase in losses relative to premiums earned[131] Regulatory and Economic Environment - The company is currently evaluating the impact of recently issued accounting standards on its consolidated financial statements, including ASU 2023-09 and ASU 2024-03[37][38] - The Federal Reserve reduced the target federal funds rate by 100 basis points since September 2024, impacting mortgage interest rates and potentially affecting the company's loss estimates[70] - The corporate income tax enacted in Bermuda will result in a new 15% corporate income tax starting January 1, 2025, but the company expects to qualify for a five-year exemption[144][145] - The company anticipates that legislative and regulatory developments will significantly impact its results and future success in the housing finance industry[142] Future Outlook - The company expects incurred losses and claims to increase as a greater amount of its insurance portfolio reaches the anticipated period of highest claim frequency[159] - The company expects the ultimate number of hurricane-related defaults to be less than non-hurricane-related defaults, with reserves for these defaults remaining materially unchanged as of March 31, 2025[68] - The company anticipates that as it continues to add new customers, its expenses will also continue to increase in line with the level of mortgage insurance and title insurance policies issued[170]