Essent Group Ltd. Announces Third Quarter 2023 Results and Declares Quarterly Dividend

HAMILTON, Bermuda–(BUSINESS WIRE)–Essent Group Ltd. (NYSE: ESNT) today reported net income for the quarter ended September 30, 2023 of $178.0 million or $1.66 per diluted share, compared to $178.1 million or $1.66 per diluted share for the quarter ended September 30, 2022.

Essent also announced today that its Board of Directors has declared a quarterly cash dividend of $0.25 per common share. The dividend is payable on December 11, 2023, to shareholders of record on December 1, 2023.

“We are pleased with our third quarter 2023 financial results, as we continue to generate high quality earnings and robust returns,” said Mark A. Casale, Chairman and Chief Executive Officer. “The credit quality of our portfolio remains strong. Higher interest rates have translated to higher portfolio persistency and increased investment income, supporting our revenues and growth in book value per share.”

Financial Highlights:

New insurance written for the third quarter of 2023 was $12.5 billion, compared to $13.5 billion in the second quarter of 2023 and $17.1 billion in the third quarter of 2022.

Insurance in force as of September 30, 2023 was $238.7 billion, compared to $235.6 billion as of June 30, 2023 and $222.5 billion as of September 30, 2022.

Net investment income for the third quarter of 2023 was $47.1 million, up 44% from the third quarter of 2022. For the nine months ended September 30, 2023, net investment income was $135.6 million, up 57% from the comparable period in 2022.

On July 1, 2023, Essent Group Ltd. completed its previously announced acquisition of Agents National Title Holding Company and Boston National Holdings LLC for $92.6 million.

On August 8, 2023, Essent closed its 9th insurance-linked note transaction, Radnor Re 2023-1, which provides $281.5 million of collateralized reinsurance coverage for NIW from August 2022 through June 2023.

In October 2023, the Board approved a share repurchase plan that authorizes the Company to repurchase $250 million of common shares in the open market between January 1, 2024 and December 31, 2025.

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: 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); the impact of COVID-19 and related economic conditions; 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, 2022 filed with the Securities and Exchange Commission on February 17, 2023, 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 serves the housing finance industry by offering private mortgage insurance, reinsurance, risk management products and title insurance and settlement services to mortgage lenders, borrowers, and investors to support homeownership. Additional information regarding Essent may be found at www.essentgroup.com.

Source: Essent Group Ltd.



Essent Group Ltd. and Subsidiaries
Financial Results and Supplemental Information (Unaudited)
Quarter Ended September 30, 2023


Exhibit A		Condensed Consolidated Statements of Comprehensive Income (Unaudited)
Exhibit B		Condensed Consolidated Balance Sheets (Unaudited)
Exhibit C		Consolidated Historical Quarterly Data
Exhibit D		U.S Mortgage Insurance Portfolio Historical Quarterly Data
Exhibit E		New Insurance Written – U.S. Mortgage Insurance Portfolio
Exhibit F		Insurance in Force and Risk in Force – U.S. Mortgage Insurance Portfolio
Exhibit G		Other Risk in Force
Exhibit H		U.S. Mortgage Insurance Portfolio Vintage Data
Exhibit I		U.S. Mortgage Insurance Portfolio Reinsurance Vintage Data
Exhibit J		U.S. Mortgage Insurance Portfolio Geographic Data
Exhibit K		Rollforward of Defaults and Reserve for Losses and LAE
Exhibit L		Detail of Reserves by Default Delinquency
Exhibit M		Investments Available for Sale
Exhibit N		U.S. Mortgage Insurance Company Capital
Exhibit O		Loss, Expense and Combined Ratios and Reconciliation of Non-GAAP Financial Measures

										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)		2023			2022			2023			2022
Revenues:
Direct premiums written	$	270,868		$	239,773		$	759,526		$	692,687
Ceded premiums		(30,294	)		(30,543	)		(103,431	)		(73,384	)
Net premiums written		240,574			209,230			656,095			619,303
Decrease in unearned premiums		6,231			(1,296	)		15,197			15,972
Net premiums earned		246,805			207,934			671,292			635,275
Net investment income		47,072			32,594			135,558			86,613
Realized investment losses, net		(235	)		175			(2,312	)		(7,648	)
(Loss) income from other invested assets		(3,143	)		9,617			(10,697	)		36,275
Other income		5,609			11,447			18,641			20,272
Total revenues		296,108			261,767			812,482			770,787

Losses and expenses:
Provision (benefit) for losses and LAE		10,822			4,252			11,902			(178,805	)
Other underwriting and operating expenses		54,814			42,144			145,183			124,838
Premiums retained by agents		13,175			—			13,175			—
Interest expense		7,854			4,450			22,184			9,563
Total losses and expenses		86,665			50,846			192,444			(44,404	)

Income before income taxes		209,443			210,921			620,038			815,191
Income tax expense		31,484			32,870			99,019			131,204
Net income	$	177,959		$	178,051		$	521,019		$	683,987


Earnings per share:
Basic	$	1.68		$	1.67		$	4.90		$	6.37
Diluted		1.66			1.66			4.86			6.35

Weighted average shares outstanding:
Basic		105,979			106,870			106,387			107,314
Diluted		107,025			107,337			107,232			107,732

Net income	$	177,959		$	178,051		$	521,019		$	683,987

Other comprehensive income (loss):
Change in unrealized depreciation of investments		(76,248	)		(137,010	)		(53,593	)		(474,284	)
Total other comprehensive loss		(76,248	)		(137,010	)		(53,593	)		(474,284	)
Comprehensive income	$	101,711		$	41,041		$	467,426		$	209,703

				Exhibit B

Essent Group Ltd. and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)


	September 30,			December 31,
(In thousands, except per share amounts)		2023			2022
*Assets*
Investments
Fixed maturities available for sale, at fair value	$	4,241,757		$	4,489,598
Short-term investments available for sale, at fair value		755,931			252,027
Total investments available for sale		4,997,688			4,741,625
Other invested assets		272,619			257,941
Total investments		5,270,307			4,999,566
Cash		96,779			81,240
Accrued investment income		36,651			33,162
Accounts receivable		68,332			57,399
Deferred policy acquisition costs		9,375			9,910
Property and equipment		40,710			19,571
Prepaid federal income tax		461,386			418,460
Goodwill and intangible assets, net		64,271			—
Other assets		46,389			104,489
Total assets	$	6,094,200		$	5,723,797

*Liabilities and Stockholders’ Equity*
Liabilities
Reserve for losses and LAE	$	241,333		$	216,464
Unearned premium reserve		147,712			162,887
Net deferred tax liability		329,721			356,810
Credit facility borrowings, net of deferred costs		421,656			420,864
Other accrued liabilities		145,771			104,463
Total liabilities		1,286,193			1,261,488

Commitments and contingencies

Stockholders’ Equity
Common shares, $0.015 par value:
Authorized – 233,333; issued and outstanding – 106,887 shares in 2023 and 107,683 shares in 2022		1,603			1,615
Additional paid-in capital		1,309,717			1,350,377
Accumulated other comprehensive loss		(436,383	)		(382,790	)
Retained earnings		3,933,070			3,493,107
Total stockholders’ equity		4,808,007			4,462,309

Total liabilities and stockholders’ equity	$	6,094,200		$	5,723,797

Return on average equity (1)		15.0	%		19.1	%

(1) The 2023 return on average equity is calculated by dividing annualized year-to-date 2023 net income by average equity. The 2022 return on average equity is calculated by dividing full year 2022 net income by average equity.

													Exhibit C
Essent Group Ltd. and Subsidiaries
Supplemental Information
Consolidated Historical Quarterly Data

	2023									2022
Selected Income Statement Data	September 30			June 30			March 31			December 31			September 30
(In thousands, except per share amounts)
Revenues:
Net premiums earned:
U.S. Mortgage Insurance Portfolio	$	209,351		$	195,502		$	196,565		$	192,670		$	194,272
GSE and other risk share		16,850			17,727			14,693			14,582			13,662
Title insurance		20,604			—			—			—			—
Net premiums earned		246,805			213,229			211,258			207,252			207,934
Net investment income		47,072			45,250			43,236			37,796			32,594
Realized investment (losses) gains, net		(235	)		(1,589	)		(488	)		(5,524	)		175
(Loss) income from other invested assets		(3,143	)		(4,852	)		(2,702	)		(7,599	)		9,617
Other income (loss) (1)		5,609			8,090			4,942			(1,888	)		11,447
Total revenues		296,108			260,128			256,246			230,037			261,767

Losses and expenses:
Provision (benefit) for losses and LAE		10,822			1,260			(180	)		4,101			4,252
Other underwriting and operating expenses		54,814			42,174			48,195			46,895			42,144
Premiums retained by agents		13,175			—			—			—			—
Interest expense		7,854			7,394			6,936			6,045			4,450
Total losses and expenses		86,665			50,828			54,951			57,041			50,846

Income before income taxes		209,443			209,300			201,295			172,996			210,921
Income tax expense (2)		31,484			37,067			30,468			25,630			32,870
Net income	$	177,959		$	172,233		$	170,827		$	147,366		$	178,051

Earnings per share:
Basic	$	1.68		$	1.62		$	1.60		$	1.38		$	1.67
Diluted		1.66			1.61			1.59			1.37			1.66

Weighted average shares outstanding:
Basic		105,979			106,249			106,943			106,881			106,870
Diluted		107,025			107,093			107,585			107,419			107,337

Book value per share	$	44.98		$	44.24		$	43.18		$	41.44		$	39.87
Return on average equity (annualized)		14.9	%		14.7	%		15.0	%		13.5	%		16.6	%


Credit Facility
Borrowings outstanding	$	425,000		$	425,000		$	425,000		$	425,000		$	425,000
Undrawn committed capacity	$	400,000		$	400,000		$	400,000		$	400,000		$	400,000
Weighted average interest rate (end of period)		7.07	%		6.87	%		6.52	%		6.02	%		4.39	%
Debt-to-capital		8.12	%		8.24	%		8.38	%		8.70	%		9.01	%

(1) Other income includes net favorable (unfavorable) changes in the fair value of embedded derivatives associated with certain of our third-party reinsurance agreements, which for the quarters ended September 30, 2023, June 30, 2023, March 31, 2023, December 31, 2022, and September 30, 2022 was ($898), $2,726, ($368), ($6,515), and $5,177, respectively.
(2) Income tax expense for the quarters ended September 30, 2023, June 30, 2023, March 31, 2023, December 31, 2022 and September 30, 2022 includes ($763), $(888), ($368), ($4,122), and $2,925 respectively, of discrete tax (benefit) expense associated with realized and unrealized gains and losses. Income tax expense for the quarter ended June 30, 2023 also includes $5,295 of net discrete tax expense associated with prior year tax returns.

							Exhibit D
Essent Group Ltd. and Subsidiaries
Supplemental Information
U.S Mortgage Insurance Portfolio Historical Quarterly Data


	2023									2022
Other Data:	September 30			June 30			March 31			December 31			September 30
($ in thousands)

U.S. Mortgage Insurance Portfolio
Flow:
New insurance written	$	12,505,823		$	13,498,080		$	12,893,789		$	13,011,432		$	17,112,017
New risk written		3,458,467			3,726,513			3,548,015			3,522,726			4,570,699

Bulk:
New insurance written	$	—		$	—		$	—		$	—		$	—
New risk written		—			—			—			—			—

Total:
New insurance written	$	12,505,823		$	13,498,080		$	12,893,789		$	13,011,432		$	17,112,017
New risk written	$	3,458,467		$	3,726,513		$	3,548,015		$	3,522,726		$	4,570,669

Average insurance in force	$	237,270,093		$	233,484,941		$	228,885,174		$	224,840,675		$	219,280,350
Insurance in force (end of period)	$	238,661,612		$	235,649,884		$	231,537,417		$	227,062,055		$	222,542,569
Gross risk in force (end of period) (1)	$	63,605,057		$	62,403,400		$	60,879,979		$	59,276,489		$	57,743,091
Risk in force (end of period)	$	53,920,308		$	53,290,643		$	51,469,312		$	49,903,626		$	48,690,571
Policies in force		825,248			821,690			815,751			808,596			800,745
Weighted average coverage (2)		26.7	%		26.5	%		26.3	%		26.1	%		25.9	%
Annual persistency		86.6	%		85.8	%		84.4	%		82.1	%		77.9	%

Loans in default (count)		13,391			12,480			12,773			13,433			12,435
Percentage of loans in default		1.62	%		1.52	%		1.57	%		1.66	%		1.55	%

U.S. Mortgage Insurance Portfolio premium rate:
Base average premium rate (3)		0.40	%		0.40	%		0.40	%		0.40	%		0.40	%
Single premium cancellations (4)		—	%		—	%		—	%		—	%		0.01	%
Gross average premium rate		0.40	%		0.40	%		0.40	%		0.40	%		0.41	%
Ceded premiums		(0.05	%)		(0.07	%)		(0.06	%)		(0.06	%)		(0.06	%)
Net average premium rate		0.35	%		0.33	%		0.34	%		0.34	%		0.35	%


(1) Gross risk in force includes risk ceded under third-party reinsurance.
(2) Weighted average coverage is calculated by dividing end of period gross risk in force by end of period insurance in force.
(3) Base average premium rate is calculated by dividing annualized base premiums earned by average insurance in force for the period.
(4) Single premium cancellations is calculated by dividing annualized premiums on the cancellation of non-refundable single premium policies by average insurance in force for the period.

																Exhibit E

Essent Group Ltd. and Subsidiaries
Supplemental Information – U.S. Mortgage Insurance Portfolio
New Insurance Written: Flow


NIW by Credit Score
	Three Months Ended										Nine Months Ended
	September 30, 2023					September 30, 2022					September 30, 2023					September 30, 2022
($ in thousands)
>=760	$	5,212,343		41.8	%	$	6,976,123		40.8	%	$	15,473,191		39.8	%	$	20,942,108		41.8	%
740-759		2,205,066		17.6			2,965,115		17.3			7,031,821		18.1			8,499,739		17.0
720-739		1,911,320		15.3			2,788,573		16.3			6,310,564		16.2			7,885,166		15.8
700-719		1,867,510		14.9			2,277,251		13.3			5,892,704		15.1			6,452,721		12.9
680-699		891,471		7.1			1,476,982		8.6			3,024,347		7.8			4,409,944		8.8
<=679		418,113		3.3			627,973		3.7			1,165,065		3.0			1,859,956		3.7
Total	$	12,505,823		100.0	%	$	17,112,017		100.0	%	$	38,897,692		100.0	%	$	50,049,634		100.0	%

Weighted average credit score		747					746					746					747


NIW by LTV
	Three Months Ended										Nine Months Ended
	September 30, 2023					September 30, 2022					September 30, 2023					September 30, 2022
($ in thousands)
85.00% and below	$	849,250		6.7	%	$	1,618,912		9.5	%	$	2,801,011		7.2	%	$	4,556,205		9.1	%
85.01% to 90.00%		2,445,924		19.6			4,753,686		27.8			7,951,062		20.4			13,657,345		27.3
90.01% to 95.00%		6,614,050		52.9			9,171,095		53.5			21,383,696		55.0			26,461,665		52.9
95.01% and above		2,596,599		20.8			1,568,324		9.2			6,761,923		17.4			5,374,419		10.7
Total	$	12,505,823		100.0	%	$	17,112,017		100.0	%	$	38,897,692		100.0	%	$	50,049,634		100.0	%

Weighted average LTV		93	%				93	%				93	%				93	%


NIW by Product
	Three Months Ended										Nine Months Ended
	September 30, 2023					September 30, 2022					September 30, 2023					September 30, 2022
Single Premium policies				2.8	%				8.2	%				3.8	%				5.9	%
Monthly Premium policies				97.2					91.8					96.2					94.1
				100.0	%				100.0	%				100.0	%				100.0	%


NIW by Purchase vs. Refinance
	Three Months Ended										Nine Months Ended
	September 30, 2023					September 30, 2022					September 30, 2023					September 30, 2022
Purchase				99.0	%				98.7	%				98.8	%				97.2	%
Refinance				1.0					1.3					1.2					2.8
				100.0	%				100.0	%				100.0	%				100.0	%

														Exhibit F

Essent Group Ltd. and Subsidiaries
Supplemental Information
Insurance in Force and Risk in Force – U.S. Mortgage Insurance Portfolio


Portfolio by Credit Score
IIF by FICO score	September 30, 2023					June 30, 2023					September 30, 2022
($ in thousands)
>=760	$	97,027,348		40.7	%	$	95,925,520		40.8	%	$	92,309,692		41.5	%
740-759		41,362,480		17.3			40,733,799		17.3			37,821,201		17.0
720-739		37,297,809		15.6			36,791,104		15.6			33,910,646		15.2
700-719		31,674,346		13.3			30,970,132		13.1			28,263,518		12.7
680-699		19,850,176		8.3			19,667,866		8.3			18,351,570		8.2
<=679		11,449,453		4.8			11,561,463		4.9			11,885,942		5.4
Total	$	238,661,612		100.0	%	$	235,649,884		100.0	%	$	222,542,569		100.0	%

Weighted average credit score		746					746					746

Gross RIF by FICO score	September 30, 2023					June 30, 2023					September 30, 2022
($ in thousands)
>=760	$	25,594,262		40.1	%	$	25,138,762		40.3	%	$	23,743,335		41.1	%
740-759		11,165,727		17.6			10,922,780		17.5			9,920,331		17.2
720-739		10,090,889		15.9			9,896,425		15.9			8,934,327		15.5
700-719		8,568,811		13.5			8,319,353		13.3			7,412,542		12.8
680-699		5,327,434		8.4			5,248,349		8.4			4,801,986		8.3
<=679		2,857,934		4.5			2,877,731		4.6			2,930,570		5.1
Total	$	63,605,057		100.0	%	$	62,403,400		100.0	%	$	57,743,091		100.0	%

Portfolio by LTV
IIF by LTV	September 30, 2023					June 30, 2023					September 30, 2022
($ in thousands)
85.00% and below	$	21,226,685		8.9	%	$	22,427,649		9.5	%	$	25,121,995		11.3	%
85.01% to 90.00%		63,374,562		26.6			63,562,258		27.0			62,963,331		28.3
90.01% to 95.00%		118,461,030		49.6			115,768,826		49.1			103,794,020		46.6
95.01% and above		35,599,335		14.9			33,891,151		14.4			30,663,223		13.8
Total	$	238,661,612		100.0	%	$	235,649,884		100.0	%	$	222,542,569		100.0	%

Weighted average LTV		93	%				93	%				92	%

Gross RIF by LTV	September 30, 2023					June 30, 2023					September 30, 2022
($ in thousands)
85.00% and below	$	2,525,753		4.0	%	$	2,667,981		4.3	%	$	2,975,898		5.2	%
85.01% to 90.00%		15,566,095		24.5			15,583,198		25.0			15,317,449		26.5
90.01% to 95.00%		34,848,762		54.8			34,026,320		54.5			30,388,328		52.6
95.01% and above		10,664,447		16.7			10,125,901		16.2			9,061,416		15.7
Total	$	63,605,057		100.0	%	$	62,403,400		100.0	%	$	57,743,091		100.0	%

Portfolio by Loan Amortization Period
IIF by Loan Amortization Period	September 30, 2023					June 30, 2023					September 30, 2022
($ in thousands)
FRM 30 years and higher	$	232,186,999		97.3	%	$	228,745,641		97.1	%	$	214,688,363		96.5	%
FRM 20-25 years		1,910,610		0.8			2,124,690		0.9			2,859,734		1.3
FRM 15 years		1,719,467		0.7			1,953,448		0.8			2,903,355		1.3
ARM 5 years and higher		2,844,536		1.2			2,826,105		1.2			2,091,117		0.9
Total	$	238,661,612		100.0	%	$	235,649,884		100.0	%	$	222,542,569		100.0	%

													Exhibit G

Essent Group Ltd. and Subsidiaries
Supplemental Information
Other Risk in Force

	2023									2022
($ in thousands)	September 30			June 30			March 31			December 31			September 30
GSE and other risk share (1):
Risk in Force	$	2,247,393		$	2,276,702		$	2,098,033		$	2,030,571		$	2,026,895
Reserve for losses and LAE	$	54		$	55		$	65		$	74		$	102

Weighted average credit score		749			749			749			749			748
Weighted average LTV		82	%		83	%		83	%		83	%		84	%

(1) GSE and other risk share includes GSE risk share and other reinsurance transactions. Essent Reinsurance Ltd. (“Essent Re”) provides insurance or reinsurance relating to the risk in force on loans in reference pools acquired by Freddie Mac and Fannie Mae.

Contacts

Media Contact

610.230.0556

media@essentgroup.com

Investor Relations Contact

Philip Stefano

Vice President, Investor Relations

855-809-ESNT

ir@essentgroup.com

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