Essent .(US:ESNT)2025-08-08 15:00Financial 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]