Essent .(ESNT) - 2025 Q2 - Quarterly Results

Earnings Release Overview This section provides an overview of Essent Group Ltd.'s Q2 2025 financial performance, key operational highlights, and corporate information Q2 2025 Financial Results and Dividend Essent Group Ltd. reported net income of $195.3 million or $1.93 per diluted share for Q2 2025, a decrease from $203.6 million or $1.91 per diluted share in Q2 2024. The Board of Directors declared a quarterly cash dividend of $0.31 per common share | Metric | Q2 2025 | Q2 2024 | | :------------------- | :------ | :------ | | Net Income | $195.3M | $203.6M | | Diluted EPS | $1.93 | $1.91 | | Quarterly Dividend | $0.31 | N/A | - CEO Mark A. Casale highlighted continued strength in credit, elevated portfolio persistency, and increased investment income as drivers for Q2 2025 financial results, emphasizing consistent execution and a resilient operating model[3] Key Financial and Operational Highlights The company reported strong new insurance written (NIW) and insurance in force (IIF) figures, an increase in net investment income, and a credit rating upgrade from Moody's. Essent also executed reinsurance agreements and continued its share repurchase program | Metric | Q2 2025 | Q1 2025 | Q2 2024 | YoY Change (Q2 2025 vs Q2 2024) | | :-------------------------- | :------ | :------ | :------ | :------------------------------ | | New Insurance Written (NIW) | $12.5B | $9.9B | $12.5B | 0% | | Insurance in Force (IIF) | $246.8B | $244.7B | $240.7B | +2.5% | | Net Investment Income (H1) | $117.5M | N/A | $108.17M| +9% | - Moody's Ratings upgraded Essent Guaranty, Inc.'s insurance financial strength rating to A2 from A3 and Essent Group Ltd.'s senior unsecured debt rating to Baa2 from Baa3, with a stable outlook[10] - Essent entered into two excess of loss reinsurance agreements covering 20% of eligible policies written in 2025 and 2026, and increased the ceding percentage on its affiliate quota share with Essent Reinsurance Ltd. from 35% to 50% retroactive to January 1, 2025[10] - Year-to-date through July 31st, Essent repurchased 6.8 million common shares for $387 million, with $260 million remaining under the $500 million repurchase plan[10] Conference Call Information Essent management hosted a conference call on August 8, 2025, to discuss Q2 2025 results. Details for live broadcast, dial-in access, and replays were provided - A live webcast of the conference call was available at http://ir.essentgroup.com/events-and-presentations/events/default.aspx, with replays available for one year[5][6] Forward-Looking Statements The press release includes forward-looking statements subject to known and unknown risks and uncertainties, which may cause actual results to differ materially from expectations. Key risks include changes to GSEs, competition, economic conditions, and loss reserve estimates - Forward-looking statements are identified by terms like 'may,' 'will,' 'expect,' and 'anticipate,' and are subject to risks such as changes in Fannie Mae and Freddie Mac, competition, and deteriorating economic conditions[8] About the Company Essent Group Ltd. is a Bermuda-based holding company providing private mortgage insurance, reinsurance, and title insurance and settlement services to the housing finance industry - Essent Group Ltd. (NYSE: ESNT) offers private mortgage insurance, reinsurance, and title insurance and settlement services[9] Financial Results and Supplemental Information (Unaudited) This section presents Essent Group Ltd.'s unaudited consolidated financial statements, including income statements, balance sheets, and detailed portfolio data for the second quarter of 2025 Condensed Consolidated Statements of Comprehensive Income (Unaudited) For the three months ended June 30, 2025, Essent Group Ltd. reported total revenues of $319.1 million, a slight increase from $312.9 million in Q2 2024. Net income decreased to $195.3 million from $203.6 million year-over-year, primarily due to a higher provision for losses and LAE | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net Premiums Earned | $248,809 | $251,891 | $494,657 | $497,481 | | Net Investment Income | $59,289 | $56,086 | $117,499 | $108,171 | | Total Revenues | $319,143 | $312,942 | $636,701 | $611,299 | | Provision for Losses and LAE | $17,055 | $(334) | $48,342 | $9,579 | | Total Losses and Expenses | $87,968 | $73,717 | $198,527 | $158,332 | | Net Income | $195,339 | $203,609 | $370,772 | $385,328 | | Diluted EPS | $1.93 | $1.91 | $3.62 | $3.61 | - Net investment income increased by 5.7% YoY for the quarter and 8.6% for the six months ended June 30, 2025, reflecting improved investment performance[15] - The provision for losses and LAE significantly increased from a benefit of $(334) thousand in Q2 2024 to a provision of $17,055 thousand in Q2 2025, impacting net income[15] Condensed Consolidated Balance Sheets (Unaudited) As of June 30, 2025, total assets increased to $7.22 billion from $7.11 billion at December 31, 2024, driven by growth in total investments. Total stockholders' equity also saw an increase to $5.67 billion, while the return on average equity slightly decreased to 13.2% | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Total Investments | $6,326,360 | $6,180,621 | | Total Assets | $7,220,561 | $7,111,649 | | Reserve for Losses and LAE | $364,749 | $328,866 | | Total Liabilities | $1,547,713 | $1,507,991 | | Total Stockholders' Equity | $5,672,848 | $5,603,658 | | Return on Average Equity | 13.2% | 13.6% | - Accumulated other comprehensive loss improved from $(303.9) million at December 31, 2024, to $(215.6) million at June 30, 2025, indicating a positive change in unrealized investment appreciation[17] Consolidated Historical Quarterly Data This section provides a detailed quarterly breakdown of consolidated financial performance, showing trends in revenues, expenses, net income, and key per-share metrics. Net income for Q2 2025 was $195.3 million, a decrease from $203.6 million in Q2 2024, while book value per share increased to $56.98 | Metric (in thousands, except per share) | Q2 2025 | Q1 2025 | Q4 2024 | Q3 2024 | Q2 2024 | | :-------------------------------------- | :------ | :------ | :------ | :------ | :------ | | Net Premiums Earned | $248,809| $245,848| $244,465| $248,936| $251,891| | Net Investment Income | $59,289 | $58,210 | $56,559 | $57,340 | $56,086 | | Total Revenues | $319,143| $317,558| $315,027| $316,578| $312,942| | Provision for Losses and LAE | $17,055 | $31,287 | $40,975 | $30,666 | $(334) | | Net Income | $195,339| $175,433| $167,900| $176,175| $203,609| | Diluted EPS | $1.93 | $1.69 | $1.58 | $1.65 | $1.91 | | Book Value Per Share | $56.98 | $55.22 | $53.36 | $53.11 | $50.58 | | Return on Average Equity (annualized) | 13.8% | 12.5% | 11.9% | 12.8% | 15.4% | - Book value per share has shown consistent growth, increasing from $50.58 in Q2 2024 to $56.98 in Q2 2025[19] - The provision for losses and LAE has fluctuated significantly, moving from a benefit in Q2 2024 to a substantial provision in Q4 2024, Q1 2025, and Q2 2025[19] U.S. Mortgage Insurance Portfolio Historical Quarterly Data The U.S. Mortgage Insurance Portfolio shows consistent growth in insurance in force, reaching $246.8 billion by June 30, 2025. New insurance written remained strong at $12.5 billion for Q2 2025, matching Q2 2024 levels. The percentage of loans in default increased to 2.12% from 1.71% YoY | Metric (in thousands) | June 30, 2025 | March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | | :-------------------------- | :------------ | :------------- | :---------------- | :----------------- | :------------ | | New Insurance Written | $12,544,731 | $9,945,336 | $12,220,968 | $12,513,695 | $12,503,125 | | Insurance in Force (EOP) | $246,797,619 | $244,692,492 | $243,645,423 | $242,976,043 | $240,669,165 | | Loans in Default (count) | 17,255 | 17,759 | 18,439 | 15,906 | 13,954 | | Percentage of Loans in Default | 2.12% | 2.19% | 2.27% | 1.95% | 1.71% | | Annual Persistency | 85.8% | 85.7% | 85.7% | 86.6% | 86.7% | - The net average premium rate remained stable at 0.36% in Q2 2025, consistent with Q2 2024[22] New Insurance Written - U.S. Mortgage Insurance Portfolio New insurance written (NIW) for Q2 2025 totaled $12.5 billion, with a significant portion (50%) attributed to borrowers with credit scores of 760 or higher, an increase from 43.6% in Q2 2024. The majority of NIW (92.6%) was for purchase mortgages, and monthly premium policies dominated at 98.7% | NIW by Credit Score | Q2 2025 (%) | Q2 2024 (%) | | :------------------ | :---------- | :---------- | | >=760 | 50.0% | 43.6% | | <=679 | 4.9% | 4.8% | | Weighted Avg. Score | 753 | 748 | | NIW by LTV | Q2 2025 (%) | Q2 2024 (%) | | :------------------ | :---------- | :---------- | | 90.01% to 95.00% | 50.9% | 55.0% | | 95.01% and above | 16.5% | 18.8% | | Weighted Avg. LTV | 93% | 93% | | NIW by Type | Q2 2025 (%) | Q2 2024 (%) | | :------------------ | :---------- | :---------- | | Monthly Premium | 98.7% | 98.7% | | Purchase | 92.6% | 97.8% | | Refinance | 7.4% | 2.2% | Insurance in Force and Risk in Force - U.S. Mortgage Insurance Portfolio As of June 30, 2025, total insurance in force (IIF) reached $246.8 billion, with 41.1% of the portfolio having a FICO score of 760 or higher. The weighted average credit score remained stable at 746, and the weighted average LTV was 93% | Portfolio by Credit Score (IIF) | June 30, 2025 (%) | June 30, 2024 (%) | | :------------------------------ | :---------------- | :---------------- | | >=760 | 41.1% | 40.6% | | <=679 | 4.7% | 4.7% | | Weighted Avg. Credit Score | 746 | 746 | | Portfolio by LTV (IIF) | June 30, 2025 (%) | June 30, 2024 (%) | | :------------------------------ | :---------------- | :---------------- | | 90.01% to 95.00% | 52.7% | 51.3% | | 95.01% and above | 17.4% | 16.0% | | Weighted Avg. LTV | 93% | 93% | - The majority of the IIF (97.8%) consists of Fixed Rate Mortgages (FRM) with 30 years and higher amortization periods[27] Other Risk in Force Essent's GSE and other risk share portfolio reported $2.32 billion in risk in force as of June 30, 2025, with a weighted average credit score of 751 and LTV of 83% | Metric (in thousands) | June 30, 2025 | March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | | :-------------------- | :------------ | :------------- | :---------------- | :----------------- | :------------ | | Risk in Force | $2,321,008 | $2,220,477 | $2,240,284 | $2,254,726 | $2,304,885 | | Reserve for Losses and LAE | $88 | $52 | $51 | $37 | $33 | | Weighted Avg. Credit Score | 751 | 751 | 751 | 750 | 750 | | Weighted Avg. LTV | 83% | 82% | 82% | 82% | 82% | - Essent Reinsurance Ltd. provides insurance or reinsurance for loans in reference pools acquired by Freddie Mac and Fannie Mae[29] U.S. Mortgage Insurance Portfolio Vintage Data The vintage data for the U.S. Mortgage Insurance Portfolio as of June 30, 2025, shows that newer vintages (2022-2025) have a higher percentage of remaining insurance in force and generally higher incurred loss ratios compared to older vintages, reflecting the seasoning of the portfolio and recent economic conditions | Year | Original Insurance Written ($ thousands) | Remaining Insurance in Force ($ thousands) | % Remaining | Incurred Loss Ratio (Inception to Date) | Number of Loans in Default | Percentage of Loans in Default | | :--- | :--------------------------------------- | :----------------------------------------- | :---------- | :-------------------------------------- | :------------------------- | :----------------------------- | | 2010-2015 | $86,862,507 | $1,602,905 | 1.8% | 2.3% | 367 | 4.15% | | 2021 | $84,218,250 | $45,343,252 | 53.8% | 6.3% | 3,489 | 2.25% | | 2022 | $63,061,262 | $48,421,149 | 76.8% | 18.3% | 3,486 | 2.46% | | 2023 | $47,666,852 | $38,646,995 | 81.1% | 19.7% | 2,518 | 2.27% | | 2024 | $45,561,332 | $41,260,566 | 90.6% | 16.8% | 1,179 | 1.06% | | 2025 (through June 30) | $22,490,067 | $21,981,050 | 97.7% | 5.6% | 52 | 0.09% | - The total portfolio has a weighted average coupon of 5.08% and a 92.3% purchase mortgage composition[31] U.S. Mortgage Insurance Portfolio Reinsurance Vintage Data Essent utilizes various reinsurance structures, including Insurance Linked Notes (ILNs), Excess of Loss, and Quota Share agreements, to manage risk and reduce PMIERs Minimum Required Assets. As of June 30, 2025, these agreements collectively reduced PMIERs Minimum Required Assets by over $1.7 million | Reinsurance Type | Remaining Insurance in Force ($ thousands) | Remaining Risk in Force ($ thousands) | Reduction in PMIERs Minimum Required Assets ($ thousands) | | :----------------- | :--------------------------------------- | :------------------------------------ | :-------------------------------------------------------- | | ILNs | $127,822,754 | $35,400,791 | $875,568 | | Excess of Loss | $141,472,015 | $38,833,403 | $229,027 | | Quota Share | $181,450,323 | $49,766,596 | $675,994 | - The most recent Quota Share agreement (Jan. 2025 - Dec. 2025) has a ceding percentage of 25% and contributes $97.1 million to PMIERs Minimum Required Assets reduction[35] U.S. Mortgage Insurance Portfolio Geographic Data California, Florida, and Texas continue to represent the largest concentrations of Essent's insurance in force (IIF) and gross risk in force (RIF) as of June 30, 2025, collectively accounting for over 35% of the portfolio | State | IIF by State (June 30, 2025) | Gross RIF by State (June 30, 2025) | | :---- | :--------------------------- | :--------------------------------- | | CA | 12.3% | 12.3% | | FL | 12.0% | 12.2% | | TX | 11.3% | 11.5% | | CO | 4.0% | 4.0% | | AZ | 3.9% | 4.0% | | GA | 3.8% | 3.9% | - The geographic distribution of both IIF and Gross RIF has remained relatively stable compared to March 31, 2025, and June 30, 2024[39] Rollforward of Defaults and Reserve for Losses and LAE - U.S. Mortgage Insurance Portfolio The number of insured loans in default decreased slightly to 17,255 at June 30, 2025, from 17,759 at March 31, 2025. The cure rate for new defaults was 26% in Q2 2025, a significant decrease from 66% in Q1 2025. The net reserve for losses and LAE increased to $304.0 million at the end of Q2 2025 | Metric | Q2 2025 | Q1 2025 | Q4 2024 | Q3 2024 | Q2 2024 | | :-------------------------- | :------ | :------ | :------ | :------ | :------ | | Beginning Default Inventory | 17,759 | 18,439 | 15,906 | 13,954 | 13,992 | | New Defaults | 8,810 | 9,664 | 11,136 | 9,984 | 8,119 | | Cures | (9,078) | (10,173)| (8,408) | (7,819) | (7,956) | | Ending Default Inventory | 17,255 | 17,759 | 18,439 | 15,906 | 13,954 | | Cure Rate | 26% | 66% | 77% | 83% | 88% | | Total Paid for Claims ($k) | $9,007 | $6,330 | $7,740 | $5,749 | $5,566 | | Severity | 67% | 70% | 68% | 58% | 60% | | Metric (in thousands) | June 30, 2025 | March 31, 2025 | December 31, 2024 | June 30, 2024 | | :-------------------------- | :------------ | :------------- | :---------------- | :------------ | | Net Reserve for Losses and LAE (EOP) | $303,986 | $297,777 | $273,501 | $220,085 | | Incurred Losses and LAE (period) | $15,323 | $30,720 | $37,236 | $(1,227) | Detail of Reserves by Default Delinquency - U.S. Mortgage Insurance Portfolio As of June 30, 2025, the total case reserves for losses and LAE were $319.4 million across 17,255 defaulted policies. Policies with four or more missed payments account for a significant portion of both defaulted policies (52%) and case reserves (79%). The overall default rate was 2.12% | Missed Payments | Number of Policies in Default (June 30, 2025) | Percentage of Policies in Default (June 30, 2025) | Amount of Reserves ($ thousands) (June 30, 2025) | Percentage of Reserves (June 30, 2025) | | :---------------- | :-------------------------------------------- | :------------------------------------------------ | :----------------------------------------------- | :------------------------------------- | | Two payments | 5,634 | 33% | $29,534 | 9% | | Three payments | 2,375 | 14% | $23,028 | 7% | | Four to eleven payments | 6,644 | 38% | $134,497 | 42% | | Twelve or more payments | 2,388 | 14% | $118,154 | 37% | | Total Case Reserves | 17,255 | 100% | $319,408 | 100% | | Total Reserves for Losses and LAE | N/A | N/A | $345,952 | N/A | | Default Rate | 2.12% | N/A | N/A | N/A | - The average reserve per default (total) increased to $20.0 thousand at June 30, 2025, from $16.8 thousand at December 31, 2024[46] Investments Available for Sale Essent's total investments available for sale increased to $5.97 billion at June 30, 2025, from $5.88 billion at December 31, 2024. Corporate debt securities represent the largest asset class (32.0%), and the portfolio maintains a high credit quality, with 54.4% rated Aa1 or higher | Asset Class (in thousands) | June 30, 2025 (Fair Value) | June 30, 2025 (Percent) | December 31, 2024 (Fair Value) | December 31, 2024 (Percent) | | :------------------------- | :------------------------- | :---------------------- | :----------------------------- | :-------------------------- | | Corporate debt securities | $1,908,167 | 32.0% | $1,783,046 | 30.3% | | U.S. agency mortgage-backed securities | $1,172,715 | 19.7% | $1,125,436 | 19.2% | | Asset-backed securities | $796,065 | 13.4% | $631,959 | 10.8% | | Total investments available for sale | $5,966,537 | 100.0% | $5,876,721 | 100.0% | | Credit Rating (in thousands) | June 30, 2025 (Fair Value) | June 30, 2025 (Percent) | December 31, 2024 (Fair Value) | December 31, 2024 (Percent) | | :--------------------------- | :------------------------- | :---------------------- | :----------------------------- | :-------------------------- | | Aaa | $816,766 | 15.2% | $2,513,014 | 48.1% | | Aa1 | $1,815,159 | 33.7% | $101,809 | 2.0% | | Aa2 | $297,712 | 5.5% | $301,080 | 5.8% | | Total (excluding money market funds) | $5,385,573 | 100.0% | $5,219,116 | 100.0% | - The pre-tax investment income yield for the three months ended June 30, 2025, was 3.85%[52] U.S. Mortgage Insurance Company Capital Essent's U.S. Mortgage Insurance Subsidiaries reported combined statutory capital of $3.71 billion at June 30, 2025, with a PMIERs sufficiency ratio of 176%. Essent Guaranty, Inc.'s risk-to-capital ratio was 9.2:1, indicating a strong capital position | Metric (in thousands) | June 30, 2025 | March 31, 2025 | December 31, 2024 | June 30, 2024 | | :-------------------------- | :------------ | :------------- | :---------------- | :------------ | | Combined Statutory Capital | $3,714,146 | $3,642,374 | $3,594,381 | $3,530,462 | | Combined Net Risk in Force | $33,986,508 | $34,968,089 | $35,159,976 | $34,812,227 | | Essent Guaranty, Inc. Risk-to-Capital Ratio | 9.2:1 | 9.6:1 | 9.8:1 | 10.2:1 | | PMIERs Available Assets | $3,654,460 | $3,628,675 | $3,612,993 | $3,513,609 | | PMIERs Minimum Required Assets | $2,075,409 | $2,107,620 | $2,029,738 | $2,052,135 | | PMIERs Sufficiency Ratio | 176% | 172% | 178% | 171% | | Essent Reinsurance Ltd. Stockholder's Equity (GAAP) | $1,751,720 | $1,780,924 | $1,773,044 | $1,793,777 | - Essent Guaranty of PA, Inc. commuted its outstanding risk in force back to Essent Guaranty and surrendered its insurance license effective December 31, 2024, consolidating capital reporting to Essent Guaranty only[57] Historical Quarterly Segment Information The Mortgage Insurance segment reported total revenues of $289.8 million in Q2 2025, with an income before income tax expense of $238.2 million. The Corporate & Other segment, which includes title insurance and holding company operations, reported a loss before income tax expense of $(7.0) million | Metric (in thousands) | Mortgage Insurance (Q2 2025) | Corporate & Other (Q2 2025) | Consolidated (Q2 2025) | | :-------------------------- | :--------------------------- | :-------------------------- | :--------------------- | | Net Premiums Earned | $233,907 | $14,902 | $248,809 | | Net Investment Income | $48,892 | $10,397 | $59,289 | | Total Revenues | $289,817 | $29,326 | $319,143 | | Provision for Losses and LAE | $15,359 | $1,696 | $17,055 | | Income (Loss) before Income Tax Expense | $238,206 | $(7,031) | $231,175 | | Loss Ratio | 6.6% | N/A | N/A | | Expense Ratio | 15.5% | N/A | N/A | | Combined Ratio | 22.1% | N/A | N/A | - The Mortgage Insurance segment's combined ratio improved to 22.1% in Q2 2025 from 31.8% in Q1 2025, primarily due to a lower loss ratio[60]