Enact (US:ACT)2024-08-04 06:33Financial Data and Key Metrics Changes - Adjusted operating income for Q2 2024 was $201 million, representing a 21% increase sequentially and a 13% increase year-over-year [7] - Adjusted EPS was $1.27, with an adjusted return on equity of 17% [7][14] - Insurance In-Force reached a record $266 billion, up 1% sequentially and 3% year-over-year [7][16] - GAAP net income for Q2 was $184 million or $1.16 per diluted share, compared to $1.04 per diluted share in the same period last year [14] Business Line Data and Key Metrics Changes - New insurance written was $14 billion, up $3 billion sequentially but down $1 billion or 10% year-over-year [16] - Persistency was 83%, down 2 percentage points sequentially and down 1 percentage point year-over-year [16] - Net premiums earned were $245 million, up 2% sequentially and 3% year-over-year [16] Market Data and Key Metrics Changes - The risk-weighted average FICO score of the insured portfolio was 745, with a risk-weighted average loan-to-value ratio of 94% [9] - The delinquency rate remained flat at 2%, consistent with expectations [9][10] - New delinquencies decreased sequentially to 10,500, aligning with seasonal expectations [20] Company Strategy and Development Direction - The company is focused on driving profitable growth, maximizing efficiency, and creating shareholder value [6] - Enact Re was launched to expand into the GSE credit risk transfer market, performing well since inception [12] - The company aims to balance maintaining a strong balance sheet, investing in business, and returning capital to shareholders [25] Management's Comments on Operating Environment and Future Outlook - The U.S. economy is stable with a strong labor market, although inflation and higher interest rates pose risks [7] - Management is optimistic about the long-term demand for mortgage insurance, particularly among first-time homebuyers [8] - The company remains well-positioned for the second half of 2024 and beyond, focusing on risk management and solid returns [26] Other Important Information - The company repurchased $49 million of shares during the quarter and distributed $29 million in dividends [11][24] - A voluntary separation program was initiated, resulting in a $3 million restructuring charge [20][58] Q&A Session Summary Question: Why was new insurance written lower compared to peers? - Management noted that there was no significant difference this quarter and that market share is viewed as an outcome rather than a goal [29][30] Question: How sustainable is the lower claim rate given potential consumer slowdowns? - Management indicated that the claim rate was lowered based on reduced economic uncertainty and strong delinquency performance [32][33] Question: How does the company view the potential impact of a new administration on mortgage insurance? - Management believes mortgage insurance is well-positioned under both Democratic and Republican administrations, aligning with consumer needs and private capital interests [37][38] Question: What are the expectations for premium rates moving forward? - Management expects base premium rates to stabilize and remain flattish throughout the year [54] Question: What is the driver behind the updated capital return guidance? - The increase in guidance is attributed to strong business performance and a favorable economic environment [46][49]