Essent .(US:ESNT)2023-05-09 16:00Financial Performance - Net income for Q1 2023 was $170,827 thousand, a decrease from $274,167 thousand in Q1 2022, reflecting a decline of 37.5%[20] - Earnings per share (EPS) for Q1 2023 were $1.60 (basic), down from $2.53 in Q1 2022, indicating a decrease of 36.8%[20] - Comprehensive income for Q1 2023 was $229,580 thousand, compared to $71,161 thousand in Q1 2022, reflecting a significant increase[20] - For the three months ended March 31, 2023, net income was $170.8 million, a decrease of 37.6% from $274.2 million in the same period of 2022[104] - Basic earnings per share for Q1 2023 was $1.60, down 36.8% from $2.53 in Q1 2022[104] Assets and Equity - Total assets increased to $5,927,506 thousand as of March 31, 2023, compared to $5,723,797 thousand at December 31, 2022, reflecting a growth of 3.56%[18] - Total stockholders' equity increased to $4,648,941 thousand as of March 31, 2023, from $4,462,309 thousand at the end of 2022, a rise of 4.2%[18] - The accumulated other comprehensive loss at the end of Q1 2023 was $324.0 million, an improvement from $382.8 million at the beginning of the year[108] - The combined statutory capital for U.S. insurance subsidiaries as of March 31, 2023, was $3.2 billion, with a risk-to-capital ratio of 10.3:1[215] Investment Income - Net investment income rose significantly to $43,236 thousand in Q1 2023, compared to $24,680 thousand in Q1 2022, marking a growth of 75.8%[20] - The net investment income for the three months ended March 31, 2023, was $43.2 million, an increase from $24.7 million in the same period of 2022[50] - The fair value of investments deposited with insurance regulatory authorities was $9.2 million at March 31, 2023, compared to $9.1 million at December 31, 2022[49] Cash Flow - Cash at the end of Q1 2023 was $68,633 thousand, down from $203,845 thousand at the end of Q1 2022, a decrease of 66.3%[24] - The net cash provided by operating activities was $184,789 thousand for Q1 2023, slightly up from $180,629 thousand in Q1 2022, an increase of 2.4%[24] - Operating activities generated $184.8 million in cash flow for Q1 2023, up from $180.6 million in Q1 2022, primarily due to increased premiums collected[206] Insurance and Risk Management - The company ceded $7.3 billion in total risk in force (RIF) under quota share reinsurance agreements as of March 31, 2023[57] - The company has entered into reinsurance agreements to manage risk exposure effectively, including quota share agreements with third-party reinsurers[212] - The company continues to monitor the impact of the discontinuance of LIBOR on its contracts and transactions, indicating a proactive approach to regulatory changes[34] Dividends and Share Repurchase - The company declared dividends totaling $27,178 thousand in Q1 2023, compared to $21,819 thousand in Q1 2022, an increase of 24.5%[21] - The company declared a quarterly cash dividend of $0.25 per common share for Q1 2023, an increase from $0.20 in Q1 2022, totaling $0.25 for the year so far[87] - The share repurchase plan authorized the company to repurchase up to $250 million of its common shares by the end of 2023, with $16.6 million spent on repurchasing 431,904 shares as of March 31, 2023[88] Regulatory Compliance - The company remains in compliance with covenants under the credit facility as of March 31, 2023[81] - Essent Guaranty is in compliance with PMIERs 2.0 as of March 31, 2023, ensuring eligibility to provide mortgage insurance on loans owned or guaranteed by Fannie Mae and Freddie Mac[121] Employee and Operational Metrics - The company has a highly experienced team of 337 employees as of March 31, 2023[129] - The number of employees decreased to 337 as of March 31, 2023, from 347 in the previous year, indicating a reduction in workforce[194] - Compensation and benefits for employees represented 55% of other underwriting and operating expenses for the three months ended March 31, 2023, down from 61% in the same period of 2022[164] Market Conditions and Future Outlook - The Federal Reserve has increased the target federal funds rate multiple times in 2022 and 2023 to combat elevated consumer price inflation, impacting mortgage interest rates and potentially lowering home sale activity[80] - Legislative and regulatory developments continue to significantly impact the housing finance industry, which may affect the company's future success[136] - The company expects incurred losses and claims to increase as the portfolio seasons, particularly as 61% of the in-force insurance relates to business written since January 1, 2021[156]