Financial Data and Key Metrics Changes - For Q2 2025, the company reported net income of $195 million, a decrease from $204 million a year ago [5] - Diluted earnings per share were $1.93, slightly up from $1.91 a year ago [6] - The return on average equity was 14% for the quarter [6] - Consolidated cash and investments totaled $6.4 billion with an annualized investment yield of 3.9% [10] Business Line Data and Key Metrics Changes - The U.S. Mortgage insurance in force was $247 billion, a 3% increase year-over-year [6] - The weighted average FICO score of the insurance in force was 746, with a weighted average original LTV of 93% [7] - The mortgage insurance net premium earned was $234 million, including $13.6 million from Essent Re [15] - Operating expenses for mortgage insurance were $36.3 million, with an expense ratio of 15.5% [17] Market Data and Key Metrics Changes - The twelve-month persistency rate was 86%, unchanged from the previous quarter [7] - The default rate on the U.S. Mortgage insurance portfolio was 2.12%, down from 2.19% [16] - The risk in force for Essent Re was $2.3 billion for GSE and other risk share [8] Company Strategy and Development Direction - The company aims to maintain a conservative balance sheet while pursuing strategic growth opportunities [11] - The focus remains on supporting affordable homeownership and navigating the current economic environment [21] - The company is actively returning capital to shareholders, with a common dividend of $0.31 approved for 2025 [12] Management's Comments on Operating Environment and Future Outlook - Management expressed a constructive outlook on housing demand driven by demographics [4] - The company believes that the current level of mortgage rates will support elevated persistency in the near term [7] - There is a focus on affordability challenges and the need for access to homeownership [8] Other Important Information - Moody's upgraded Essent Guaranty's insurance financial strength rating to A2 [11] - The company repurchased nearly 7 million shares for approximately $390 million year-to-date through July 31 [12] Q&A Session Summary Question: Expectations on home prices and pricing strategy - Management indicated that home price trends depend on local market conditions, with some areas expected to see price increases while others may weaken [23][24] Question: Insights on new defaults and credit outlook - New defaults were up 9% year-over-year, but management noted this aligns with normal seasoning patterns [31][32] Question: Buyback strategy and excess capital - The buyback pace is characterized as both opportunistic and valuation-sensitive, with a focus on shareholder returns [36][37] Question: Persistency trends by vintage - Management acknowledged that persistency varies by vintage, with natural aging contributing to trends observed [60][63] Question: Impact of AI and fintech on the business - Management does not see significant risk from borrowers canceling MI due to appraisals, viewing it as a minor concern [92][93]

Financial Data and Key Metrics Changes - The company reported adjusted operating income of $169 million, up 2% year over year [6] - Adjusted earnings per share was $10, up 6% year over year [6] - GAAP net income was $166 million or $1.08 per diluted share, compared to $1.01 per diluted share in the same period last year [17] - Adjusted operating return on equity was 13.4% [18] - Insurance in force was $258 billion, up 2% year over year [6] Business Line Data and Key Metrics Changes - New insurance written was $10 billion, down 26% sequentially and down 7% year over year [18] - Primary insurance in force was $268 billion, relatively flat from $269 billion in the fourth quarter of 2024 and up 2% year over year [19] - Total net premiums earned were $245 million, down $1 million sequentially and up $4 million or 2% year over year [19] Market Data and Key Metrics Changes - Persistency was 84% in the first quarter, up two points sequentially and down one point year over year [19] - The risk-weighted average FICO score of the portfolio was 745, and the risk-weighted average loan-to-value ratio was 93% [8] Company Strategy and Development Direction - The company is focused on maintaining a strong balance sheet, investing in business growth, and returning excess capital to shareholders [10][12] - The introduction of the Rate three sixty pricing engine aims to deliver competitive pricing on a risk-adjusted basis [11][12] - The company continues to participate in GSE CRT transactions to diversify its platform [11] Management's Comments on Operating Environment and Future Outlook - The management noted a stable consumer and labor market, with potential improvement if mortgage rates decline [7] - The company is prepared to navigate a range of scenarios amid elevated geopolitical uncertainty [14] - Management expressed confidence in the long-term drivers of the housing market, citing pent-up demand among first-time homebuyers [7] Other Important Information - The company returned over $94 million to shareholders through share buybacks and dividends [13] - A new $350 million share repurchase program was authorized, along with a 14% increase in the dividend from 18.5 cents to 21 cents per share [13][28] - The PMIERs sufficiency ratio stood at 165, indicating a strong capital foundation [8] Q&A Session Summary Question: How is the company reacting to market uncertainty in underwriting and pricing? - The company is maintaining prudent guidelines and leveraging its strong capital base to help well-qualified borrowers [34] Question: Has there been any impact from government policy changes on loss mitigation? - The company has seen continued strength in GSE loss mitigation programs and is optimistic about new options for consumers [37] Question: What are the pricing dynamics affecting market share changes? - Market share is influenced by risk alignment and the quality of business rather than solely pricing [42] Question: How does the seasoning of the portfolio affect delinquency development? - The average age of the book is now 3.9 years, which is expected to slow the increase in new delinquency development [52] Question: Are cancellation rates increasing? - The company has not observed any significant change in borrower-initiated cancellations, which remain stable [68]