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Essent Group Ltd. Announces Third Quarter 2022 Results and Increases Quarterly Dividend

HAMILTON, Bermuda, November 04, 2022--(BUSINESS WIRE)--November 4, 2022--Essent Group Ltd. (NYSE: ESNT) today reported net income for the quarter ended September 30, 2022 of $178.1 million or $1.66 per diluted share, compared to $205.4 million or $1.84 per diluted share for the quarter ended September 30, 2021.

Essent also announced today that its Board of Directors has declared a quarterly cash dividend of $0.23 per common share. The dividend is payable on December 12, 2022, to shareholders of record on December 1, 2022.

"We are pleased with our financial performance for the third quarter as we produced strong earnings and robust returns," said Mark A. Casale, Chairman and Chief Executive Officer. "Our results reflect our focus on optimizing unit economics along with continued favorable credit performance. At the same time, we remain committed to taking a measured approach to capital management. In connection with this, we are pleased to announce that our Board has approved an increase in our quarterly dividend to $0.23 per share."

Third Quarter 2022 Financial Highlights:

  • New insurance written for the third quarter was $17.1 billion, compared to $20.1 billion in the second quarter of 2022 and $23.6 billion in the third quarter of 2021.

  • Insurance in force as of September 30, 2022 was $222.5 billion, compared to $215.9 billion as of June 30, 2022 and $208.2 billion as of September 30, 2021.

  • The combined ratio for the third quarter was 22.3%, compared to negative (16.2%) in the second quarter of 2022 and 15.9% in the third quarter of 2021.

  • During the quarter, Essent Guaranty, Inc. obtained $237.9 million of fully collateralized excess of loss reinsurance coverage on mortgage insurance policies written by Essent in October 2021 through July 2022 from Radnor Re 2022-1 Ltd., a newly formed Bermuda special purpose insurer. Radnor Re 2022-1 Ltd. is not a subsidiary or an affiliate of Essent Group Ltd.

  • During the quarter, A.M. Best affirmed its "A (Excellent)" financial strength rating of Essent Guaranty, Inc. and Essent Reinsurance Ltd. and the long-term issuer credit rating of "a" of the operating subsidiaries of Essent Group Ltd. Essent Guaranty, Inc. also has financial strength ratings of "A3" by Moody’s and "BBB+" by S&P.

Conference Call:

Essent management will hold a conference call at 10:00 AM Eastern time today to discuss its results. The conference call will be broadcast live over the Internet at http://ir.essentgroup.com/events-and-presentations/events/default.aspx. The call may also be accessed by dialing 888-330-2384 inside the U.S., or 240-789-2701 for international callers, using passcode 9824537 or by referencing Essent.

A replay of the webcast will be available on the Essent website approximately two hours after the live broadcast ends for a period of one year. A replay of the conference call will be available approximately two hours after the call ends for a period of two weeks, using the following dial-in numbers and passcode: 800-770-2030 inside the U.S., or 647-362-9199 for international callers, passcode 9824537.

In addition to the information provided in the Company's earnings news release, other statistical and financial information, which may be referred to during the conference call, will be available on Essent's website at http://ir.essentgroup.com/financials/quarterly-results/default.aspx.

Forward-Looking Statements:

This press release may include "forward-looking statements" which are subject to known and unknown risks and uncertainties, many of which may be beyond our control. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "will," "should," "expect," "plan," "anticipate," "believe," "estimate," "predict," or "potential" or the negative thereof or variations thereon or similar terminology. Actual events, results and outcomes may differ materially from our expectations due to a variety of known and unknown risks, uncertainties and other factors. Although it is not possible to identify all of these risks and factors, they include, among others, the following: the impact of COVID-19 and related economic conditions; changes in or to Fannie Mae and Freddie Mac (the "GSEs"), whether through Federal legislation, restructurings or a shift in business practices; failure to continue to meet the mortgage insurer eligibility requirements of the GSEs; competition for customers; lenders or investors seeking alternatives to private mortgage insurance; deteriorating economic conditions (including inflation, rising interest rates and other adverse economic trends); an increase in the number of loans insured through Federal government mortgage insurance programs, including those offered by the Federal Housing Administration; decline in new insurance written and franchise value due to loss of a significant customer; decline in the volume of low down payment mortgage originations; the definition of "Qualified Mortgage" reducing the size of the mortgage origination market or creating incentives to use government mortgage insurance programs; the definition of "Qualified Residential Mortgage" reducing the number of low down payment loans or lenders and investors seeking alternatives to private mortgage insurance; the implementation of the Basel III Capital Accord discouraging the use of private mortgage insurance; a decrease in the length of time that insurance policies are in force; uncertainty of loss reserve estimates; our non-U.S. operations becoming subject to U.S. Federal income taxation; becoming considered a passive foreign investment company for U.S. Federal income tax purposes; and other risks and factors described in Part I, Item 1A "Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the Securities and Exchange Commission on February 16, 2022, as subsequently updated through other reports we file with the Securities and Exchange Commission. Any forward-looking information presented herein is made only as of the date of this press release, and we do not undertake any obligation to update or revise any forward-looking information to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.

About the Company:

Essent Group Ltd. (NYSE: ESNT) is a Bermuda-based holding company (collectively with its subsidiaries, "Essent") which, through its wholly-owned subsidiary, Essent Guaranty, Inc., offers private mortgage insurance for single-family mortgage loans in the United States. Essent provides private capital to mitigate mortgage credit risk, allowing lenders to make additional mortgage financing available to prospective homeowners. Headquartered in Radnor, Pennsylvania, Essent Guaranty, Inc. is licensed to write mortgage insurance in all 50 states and the District of Columbia, and is approved by Fannie Mae and Freddie Mac. Essent also offers mortgage-related insurance, reinsurance and advisory services through its Bermuda-based subsidiary, Essent Reinsurance Ltd. Essent is committed to supporting environmental, social and governance ("ESG") initiatives that are relevant to the company and align with the companywide dedication to responsible corporate citizenship that positively impacts the community and people served. Additional information regarding Essent may be found at www.essentgroup.com and www.essent.us.

Source: Essent Group Ltd.

Essent Group Ltd. and Subsidiaries

Financial Results and Supplemental Information (Unaudited)

Quarter Ended September 30, 2022

Exhibit A

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

Exhibit B

Condensed Consolidated Balance Sheets (Unaudited)

Exhibit C

Historical Quarterly Data

Exhibit D

New Insurance Written

Exhibit E

Insurance in Force and Risk in Force

Exhibit F

Other Risk in Force

Exhibit G

Portfolio Vintage Data

Exhibit H

Reinsurance Vintage Data

Exhibit I

Portfolio Geographic Data

Exhibit J

Rollforward of Defaults and Reserve for Losses and LAE

Exhibit K

Detail of Reserves by Default Delinquency

Exhibit L

Investments Available for Sale

Exhibit M

Insurance Company Capital

Exhibit A

Essent Group Ltd. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

(In thousands, except per share amounts)

2022

2021

2022

2021

Revenues:

Direct premiums written

$

239,773

$

229,228

$

692,687

$

693,434

Ceded premiums

(30,543

)

(26,880

)

(73,384

)

(84,438

)

Net premiums written

209,230

202,348

619,303

608,996

Decrease (increase) in unearned premiums

(1,296

)

16,370

15,972

46,226

Net premiums earned

207,934

218,718

635,275

655,222

Net investment income

32,594

21,573

86,613

65,104

Realized investment (losses) gains, net

175

221

(7,648

)

609

Income from other invested assets

9,617

40,741

36,275

41,389

Other income

11,447

2,283

20,272

9,270

Total revenues

261,767

283,536

770,787

771,594

Losses and expenses:

(Benefit) provision for losses and LAE

4,252

(7,483

)

(178,805

)

34,490

Other underwriting and operating expenses

42,144

42,272

124,838

125,625

Interest expense

4,450

2,063

9,563

6,187

Total losses and expenses

50,846

36,852

(44,404

)

166,302

Income before income taxes

210,921

246,684

815,191

605,292

Income tax expense

32,870

41,331

131,204

104,496

Net income

$

178,051

$

205,353

$

683,987

$

500,796

Earnings per share:

Basic

$

1.67

$

1.85

$

6.37

$

4.48

Diluted

1.66

1.84

6.35

4.47

Weighted average shares outstanding:

Basic

106,870

111,001

107,314

111,708

Diluted

107,337

111,387

107,732

112,070

Net income

$

178,051

$

205,353

$

683,987

$

500,796

Other comprehensive income (loss):

Change in unrealized appreciation (depreciation) of investments

(137,010

)

(36,917

)

(474,284

)

(59,760

)

Total other comprehensive income (loss)

(137,010

)

(36,917

)

(474,284

)

(59,760

)

Comprehensive income

$

41,041

$

168,436

$

209,703

$

441,036

Loss ratio

2.0

%

(3.4

%)

(28.1

%)

5.3

%

Expense ratio

20.3

19.3

19.7

19.2

Combined ratio

22.3

%

15.9

%

(8.5

%)

24.4

%

Exhibit B

Essent Group Ltd. and Subsidiaries

Condensed Consolidated Balance Sheets (Unaudited)

September 30,

December 31,

(In thousands, except per share amounts)

2022

2021

Assets

Investments

Fixed maturities available for sale, at fair value

$

4,253,705

$

4,649,800

Short-term investments available for sale, at fair value

331,139

313,087

Total investments available for sale

4,584,844

4,962,887

Other invested assets

263,126

170,472

Total investments

4,847,970

5,133,359

Cash

79,467

81,491

Accrued investment income

29,598

26,546

Accounts receivable

59,069

46,157

Deferred policy acquisition costs

10,408

12,178

Property and equipment

19,778

11,921

Prepaid federal income tax

405,910

360,810

Other assets

104,704

49,712

Total assets

$

5,556,904

$

5,722,174

Liabilities and Stockholders' Equity

Liabilities

Reserve for losses and LAE

$

212,494

$

407,445

Unearned premium reserve

169,413

185,385

Net deferred tax liability

340,627

373,654

Credit facility borrowings, net of deferred costs

420,600

419,823

Other accrued liabilities

119,562

99,753

Total liabilities

1,262,696