Core Insights - Essent Group reported strong financial results for the fourth quarter and full year of 2025, driven by positive credit trends and higher interest rates, leading to increased persistency and investment income [4][20] - The company expects modest growth in earned premium and insurance in force due to a challenging rate environment and high mortgage rates [2][18] Financial Performance - Fourth-quarter net income was $155 million, translating to $1.60 per diluted share, while full-year net income reached $690 million or $6.90 per diluted share, with a 12% return on average equity [3][7] - Book value per share increased by 13% year-over-year to $60.31, and mortgage insurance in force totaled $248 billion, up 2% from the previous year [2][7] - The company returned nearly $700 million to shareholders in 2025 through dividends and share repurchases, with a 13% increase in the quarterly dividend to $0.35 per share starting in Q1 2026 [15][16] Mortgage Insurance Metrics - Mortgage insurance in force ended the fourth quarter at $248.4 billion, down $452 million from the previous quarter but up $4.7 billion (1.9%) from the previous year [1][2] - Persistency was reported at 85.7% as of December 31, 2025, slightly down from 86% at the end of the third quarter [1][2] - The default rate for mortgage insurance was 2.5%, an increase of 21 basis points from the previous quarter, attributed to normal seasonality and an aging portfolio [8][6] Reinsurance and Capital Deployment - Approximately 98% of the mortgage insurance portfolio is reinsured, with Essent Re generating nearly $80 million in third-party net income on $2.3 billion of risk [5][11] - The company is expanding into Lloyd's-backed quota share property and casualty reinsurance, expecting to write $100–150 million in premium, with two-thirds earned in 2026 [5][12] Operating Expenses - Mortgage insurance operating expenses for the fourth quarter were $34.3 million, with an expense ratio of 16.1%, compared to $31.2 million and 14.4% in the prior quarter [9] - Full-year operating expenses for the mortgage insurance segment were $140 million, with expectations of approximately $145 million for 2026 [9] Management Outlook - Management anticipates modest near-term growth in earned premium and insurance in force, emphasizing a focus on unit economics over market share [18][20] - The company has not observed significant credit performance issues across different vintages or states, although Florida showed slightly higher concerns due to hurricanes [19]