Essent Group Ltd. Reports First Quarter 2019 Results

HAMILTON, Bermuda–(BUSINESS WIRE)–Essent Group Ltd. (NYSE: ESNT) today reported net income for the quarter
ended March 31, 2019 of $127.7 million or $1.30 per diluted share,
compared to $111.1 million or $1.13 per diluted share for the quarter
ended March 31, 2018. As of March 31, 2019, Essent had insurance in
force of $143.2 billion and consolidated stockholders’ equity of $2.5
billion.

“We were pleased with our strong financial results for the first quarter
as our operating environment remains favorable and credit continues to
perform well,” said Mark Casale, Chairman and Chief Executive Officer.
“Also, we continue to make solid progress in strengthening our franchise
as we successfully rolled out our risk based pricing engine EssentEDGE
and reinsured our 2018 NIW. Our outlook on our business and housing
remains positive and we continue to believe that we are well positioned
to continue growing our company.”

Financial Highlights:

• Insurance in force as of March 31, 2019 was $143.2 billion, compared
  to $137.7 billion as of December 31, 2018 and $115.3 billion as of
  March 31, 2018.
• New insurance written for the first quarter was $11.0 billion,
  compared to $11.4 billion in the fourth quarter of 2018 and $9.3
  billion in the first quarter of 2018.
• Net premiums earned for the first quarter were $177.8 million,
  compared to $173.3 million in the fourth quarter of 2018 and $152.6
  million in the first quarter of 2018.
• The expense ratio for the first quarter was 23.1%, compared to 22.8%
  in the fourth quarter of 2018 and 25.0% in the first quarter of 2018.
• The provision for losses and LAE for the first quarter was $7.1
  million, compared to a benefit of $1.0 million in the fourth quarter
  of 2018 and a provision of $5.3 million in the first quarter of 2018.
  The provision in the fourth quarter of 2018 included a $9.9 million
  release of the $11.1 million reserve associated with loans identified
  as related to Hurricanes Harvey and Irma that was established in the
  fourth quarter of 2017.
• The percentage of loans in default as of March 31, 2019 was 0.65%,
  compared to 0.66% as of December 31, 2018 and 0.86% as of March 31,
  2018.
• The combined ratio for the first quarter was 27.1%, compared to 22.2%
  in the fourth quarter of 2018 and 28.5% in the first quarter of 2018.
• The consolidated balance of cash and investments at March 31, 2019 was
  $3.0 billion, including cash and investment balances at Essent Group
  Ltd. of $73.8 million.
• The combined risk-to-capital ratio of the U.S. mortgage insurance
  business, which includes statutory capital for both Essent Guaranty,
  Inc. and Essent Guaranty of PA, Inc., was 13.5:1 as of March 31, 2019.
• In February, Essent Guaranty, Inc. obtained $473.2 million of excess
  of loss reinsurance coverage on mortgage insurance policies written by
  Essent in 2018. The reinsurance is fully collateralized by ten-year
  mortgage insurance-linked notes (“ILNs”) issued by Radnor Re 2019-1
  Ltd., an unaffiliated special purpose insurer.
• In a separate transaction, Essent Guaranty, Inc. entered into an
  excess of loss collateralized reinsurance agreement with a panel of
  U.S. and global reinsurers which provides additional reinsurance
  protection of $118.7 million on mortgage insurance policies written by
  Essent in 2018.

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/investors/webcasts-and-presentations/event-calendar/default.aspx.
The call may also be accessed by dialing 833-287-0797 inside the U.S.,
or 647-689-4456 for international callers, using passcode 7833038 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: 800-585-8367 inside
the U.S., or 416-621-4642 for international callers, passcode 7833038.

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/investors/financial-information/quarterly-financial-supplements/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; 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; deteriorating economic conditions; 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, 2018 filed with the Securities and Exchange Commission on
February 19, 2019. 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.

Non-GAAP Financial Measures

In presenting Essent Group Ltd.’s results, management has included
financial measures, including adjusted book value per share, that are
not calculated under standards or rules that comprise accounting
principles generally accepted in the United States (“GAAP”). Such
measures are referred to as “non-GAAP measures.” These non-GAAP measures
may be defined or calculated differently by other companies. Management
believes these measures allow for a more complete understanding of the
underlying business. These measures are used to monitor our results and
should not be viewed as a substitute for those determined in accordance
with GAAP. Reconciliations of such measures to the most comparable GAAP
figures are included in the attached financial supplement in accordance
with Regulation G.

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.
Additional information regarding Essent may be found at www.essentgroup.com
and www.essent.us.

Source: Essent Group Ltd.

Contacts

Media Contact
610.230.0556
media@essentgroup.com

Investor Relations Contact
Christopher G. Curran
Senior
Vice President – Investor Relations
855-809-ESNT
ir@essentgroup.com

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