Essent .(US:ESNT)2025-11-07 16:00Financial Data and Key Metrics Changes - For Q3 2025, the company reported net income of $164 million, a decrease from $176 million a year ago [4] - Diluted earnings per share were $1.67, compared to $1.65 a year ago [5] - The year-to-date return on equity was 13% through Q3 [5] - Consolidated cash and investments totaled $6.6 billion with an annualized investment yield of 3.9% [7] Business Line Data and Key Metrics Changes - The U.S. Mortgage insurance in force was $249 billion, a 2% increase year-over-year [5] - The mortgage insurance net premium earned for 2025 was $232 million [13] - The average base premium rate for the U.S. Mortgage insurance portfolio was 41 basis points, consistent with the previous quarter [14] - The default rate on the U.S. Mortgage insurance portfolio was 2.29%, up from 2.12% in the previous quarter [15] Market Data and Key Metrics Changes - The twelve-month persistency rate was 86%, flat from the previous quarter [6] - The weighted average FICO score was 746, and the weighted average original LTV was 93% [6] Company Strategy and Development Direction - The company maintains a conservative capital strategy to navigate market volatility while allowing for strategic growth investments [8] - A new $500 million share repurchase authorization was approved, running through year-end 2027 [9] - The company is focused on returning capital to shareholders while balancing investments in the business [19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the business, benefiting from favorable credit trends and the interest rate environment [4] - The company believes that the substantial home equity embedded in its in-force book will mitigate ultimate claims [6] - Management indicated that the credit quality remains strong, with no significant concerns at the current time [25] Other Important Information - The company repurchased nearly 9 million shares for over $500 million year-to-date through October 31 [8] - The average loan size has increased to close to $300,000, impacting provisions for losses [24] Q&A Session Summary Question: Credit trends and provisions - Management noted that the average loan size has increased, which affects provisions for losses, but there are no significant concerns regarding credit quality [24][25] Question: Claims amount and severity - Management indicated that fluctuations in claims are normal and that severity continues to be below reserves [27] Question: Ceded premiums and reinsurance transactions - Management explained that ceded premiums will fluctuate based on seasonal activity and the quota share increase [30][32] Question: Tax rate changes - The increase in the estimated annual effective tax rate was attributed to withholding taxes on dividends [34] Question: Severity rates and long-term expectations - Management stated that while severity rates have increased, they do not expect a significant rise in the long term [41][42] Question: Underwriting guardrails and credit score requirements - Management confirmed that current GSE systems have not changed, and there are no signs of loosening credit standards [62][66] Question: Upstreaming capital from MI subsidiary - Management indicated plans for consistent dividends from the MI subsidiary, with potential for a larger dividend in Q4 [70][71] Question: Title business performance and growth avenues - Management stated that the title business is performing as expected and remains focused on the MI business for cash flow [73][78]