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

HAMILTON, Bermuda–(BUSINESS WIRE)–Essent Group Ltd. (NYSE: ESNT) today reported net income for the quarter ended June 30, 2022 of $231.8 million or $2.16 per diluted share, compared to $159.8 million or $1.42 per diluted share for the quarter ended June 30, 2021.

Essent also announced today that its Board of Directors has declared a quarterly cash dividend of $0.22 per common share. The dividend is payable on September 12, 2022, to shareholders of record on September 1, 2022.

“We are pleased with our strong financial results for the second quarter, which reflect the continued favorable credit performance of our portfolio,” said Mark A. Casale, Chairman and Chief Executive Officer. “We believe that the fundamentals of our business remain solid, and despite near-term headwinds, our long-term structural outlook for the housing market remains positive. In connection with that, we are pleased to announce that our Board has approved an increase in our quarterly dividend to $0.22 per share.”

Second Quarter 2022 Financial Highlights:

• New insurance written for the second quarter was $20.1 billion, compared to $12.8 billion in the first quarter of 2022 and $25.0 billion in the second quarter of 2021.
• Insurance in force as of June 30, 2022 was $215.9 billion, compared to $206.8 billion as of March 31, 2022 and $203.6 billion as of June 30, 2021.
• The combined ratio for the second quarter was negative (16.2%), compared to negative (30.7%) in the first quarter of 2022 and 23.3% in the second quarter of 2021.
• The provision in the second quarter of 2022 included a $62.9 million benefit associated with a change in the claim rate assumption for COVID-19 defaults recorded in the second and third quarters of 2020.
• During the quarter, Essent entered into a forward excess of loss transaction with a panel of reinsurers. The agreement covers 20% of all eligible policies written by Essent Guaranty, Inc. for the period October 1, 2021 through December 31, 2022.

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 June 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 June 30,								Six Months Ended June 30,
(In thousands, except per share amounts)	2022				2021				2022				2021
Revenues:
Direct premiums written	$	232,660			$	228,949			$	452,914			$	464,206
Ceded premiums		(22,318	)			(26,662	)			(42,841	)			(57,558	)
Net premiums written		210,342				202,287				410,073				406,648
Decrease in unearned premiums		1,669				15,150				17,268				29,856
Net premiums earned		212,011				217,437				427,341				436,504
Net investment income		29,339				21,743				54,019				43,531
Realized investment (losses) gains, net		(471	)			(253	)			(7,823	)			388
Income from other invested assets		1,953				122				26,658				648
Other income		1,577				4,212				8,825				6,987
Total revenues		244,409				243,261				509,020				488,058
Losses and expenses:
(Benefit) provision for losses and LAE		(76,199	)			9,651				(183,057	)			41,973
Other underwriting and operating expenses		41,898				41,114				82,694				83,353
Interest expense		2,887				2,073				5,113				4,124
Total losses and expenses		(31,414	)			52,838				(95,250	)			129,450
Income before income taxes		275,823				190,423				604,270				358,608
Income tax expense		44,054				30,628				98,334				63,165
Net income	$	231,769			$	159,795			$	505,936			$	295,443
Earnings per share:
Basic	$	2.17			$	1.43			$	4.70			$	2.64
Diluted		2.16				1.42				4.69				2.63
Weighted average shares outstanding:
Basic		106,921				112,118				107,540				112,067
Diluted		107,283				112,454				107,933				112,416
Net income	$	231,769			$	159,795			$	505,936			$	295,443
Other comprehensive income (loss):
Change in unrealized appreciation (depreciation) of investments		(134,268	)			36,360				(337,274	)			(22,843	)
Total other comprehensive income (loss)		(134,268	)			36,360				(337,274	)			(22,843	)
Comprehensive income	$	97,501			$	196,155			$	168,662			$	272,600
Loss ratio		(35.9	%)			4.4	%			(42.8	%)			9.6	%
Expense ratio		19.8				18.9				19.4				19.1
Combined ratio		(16.2	%)			23.3	%			(23.5	%)			28.7	%

					Exhibit B
Essent Group Ltd. and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
	June 30,				December 31,
(In thousands, except per share amounts)	2022				2021
Assets
Investments
Fixed maturities available for sale, at fair value	$	4,264,715			$	4,649,800
Short-term investments available for sale, at fair value		355,625				313,087
Total investments available for sale		4,620,340				4,962,887
Other invested assets		217,757				170,472
Total investments		4,838,097				5,133,359
Cash		77,852				81,491
Accrued investment income		26,716				26,546
Accounts receivable		51,281				46,157
Deferred policy acquisition costs		10,809				12,178
Property and equipment		20,569				11,921
Prepaid federal income tax		391,910				360,810
Other assets		103,868				49,712
Total assets	$	5,521,102			$	5,722,174
Liabilities and Stockholders’ Equity
Liabilities
Reserve for losses and LAE	$	209,973			$	407,445
Unearned premium reserve		168,117				185,385
Net deferred tax liability		348,374				373,654
Credit facility borrowings, net of deferred costs		420,336				419,823
Other accrued liabilities		102,307				99,753
Total liabilities		1,249,107				1,486,060
Commitments and contingencies
Stockholders’ Equity
Common shares, $0.015 par value:
Authorized – 233,333; issued and outstanding – 107,696 shares in 2022 and 109,377 shares in 2021		1,615				1,641
Additional paid-in capital		1,340,650				1,428,952
Accumulated other comprehensive (loss) income		(286,567	)			50,707
Retained earnings		3,216,297				2,754,814
Total stockholders’ equity		4,271,995				4,236,114
Total liabilities and stockholders’ equity	$	5,521,102			$	5,722,174
Return on average equity (1)		23.8	%			16.8	%

(1) The 2022 return on average equity is calculated by dividing annualized year-to-date 2022 net income by average equity. The 2021 return on average equity is calculated by dividing full year 2021 net income by average equity.

																		Exhibit C
Essent Group Ltd. and Subsidiaries
Supplemental Information
Historical Quarterly Data
		2022								2021
Selected Income Statement Data		June 30				March 31				December 31				September 30				June 30
(In thousands, except per share amounts)
Revenues:
Net premiums earned:
U.S. Mortgage Insurance Portfolio		$	198,891			$	203,312			$	205,877			$	207,127			$	204,149
GSE and other risk share			13,120				12,018				11,444				11,591				13,288
Net premiums earned			212,011				215,330				217,321				218,718				217,437
Net investment income			29,339				24,680				23,661				21,573				21,743
Realized investment (losses) gains, net			(471	)			(7,352	)			(191	)			221				(253	)
Income from other invested assets (1)			1,953				24,705				14,997				40,741				122
Other income (2)			1,577				7,248				1,128				2,283				4,212
Total revenues			244,409				264,611				256,916				283,536				243,261
Losses and expenses:
(Benefit) provision for losses and LAE			(76,199	)			(106,858	)			(3,433	)			(7,483	)			9,651
Other underwriting and operating expenses			41,898				40,796				41,232				42,272				41,114
Interest expense			2,887				2,226				2,095				2,063				2,073
Total losses and expenses			(31,414	)			(63,836	)			39,894				36,852				52,838
Income before income taxes			275,823				328,447				217,022				246,684				190,423
Income tax expense (3)			44,054				54,280				36,035				41,331				30,628
Net income		$	231,769			$	274,167			$	180,987			$	205,353			$	159,795
Earnings per share:
Basic		$	2.17			$	2.53			$	1.65			$	1.85			$	1.43
Diluted			2.16				2.52				1.64				1.84				1.42
Weighted average shares outstanding:
Basic			106,921				108,166				109,550				111,001				112,118
Diluted			107,283				108,590				110,028				111,387				112,454
Book value per share		$	39.67			$	38.98			$	38.73			$	37.58			$	36.32
Return on average equity (annualized)			21.8	%			26.0	%			17.2	%			19.9	%			16.0	%
Other Data:
Loss ratio (4)			(35.9	%)			(49.6	%)			(1.6	%)			(3.4	%)			4.4	%
Expense ratio (5)			19.8				18.9				19.0				19.3				18.9
Combined ratio			(16.2	%)			(30.7	%)			17.4	%			15.9	%			23.3	%
Credit Facility
Borrowings outstanding		$	425,000			$	425,000			$	425,000			$	325,000			$	325,000
Undrawn committed capacity		$	400,000			$	400,000			$	400,000			$	300,000			$	300,000
Weighted average interest rate (end of period)			2.92	%			1.99	%			1.79	%			2.13	%			2.13	%
Debt-to-capital			9.05	%			9.16	%			9.12	%			7.23	%			7.37	%

(1) Income from other invested assets for the three months ended September 30, 2021 includes $39.5 million of net unrealized gains, which includes $21.1 million of net unrealized gains that were accumulated in other comprehensive income at June 30, 2021 and prior periods.

(2) For each of the three month periods noted, Other income includes net favorable (unfavorable) changes in the fair value of embedded derivatives associated with certain of our third-party reinsurance agreements as follows: June 30, 2022: ($5,549); March 31, 2022: $4,365; December 31, 2021: ($2,931); September 30, 2021: ($1,493); June 30, 2021: $950.

(3) Income tax expense for the quarter ended December 31, 2021 includes $2,473 of discrete tax expense associated with an increase in the estimate of our beginning of the year deferred state income tax liability. Income tax expense for the quarters ended June 30, 2022, March 31, 2022, December 31, 2021 and September 30, 2021 includes ($299), $7,002, $1,759 and $8,271, respectively, of discrete tax (benefit) expense associated with realized and unrealized gains and losses.

(4) Loss ratio is calculated by dividing the provision for losses and LAE by net premiums earned.

(5) Expense ratio is calculated by dividing other underwriting and operating expenses by net premiums earned.

														Exhibit C, continued
Essent Group Ltd. and Subsidiaries
Supplemental Information
Historical Quarterly Data
		2022								2021
Other Data, continued:		June 30				March 31				December 31				September 30				June 30
($ in thousands)
U.S. Mortgage Insurance Portfolio
Flow:
New insurance written		$	20,096,135			$	12,841,482			$	16,379,082			$	23,579,884			$	25,004,854
New risk written			5,442,115				3,438,016				4,331,531				6,273,735				6,445,864
Bulk:
New insurance written		$	196			$	—			$	416			$	—			$	—
New risk written			29				—				41				—				—
Total:
New insurance written		$	20,096,331			$	12,841,482			$	16,379,498			$	23,579,884			$	25,004,854
New risk written		$	5,442,144			$	3,438,016			$	4,331,572			$	6,273,735			$	6,445,864
Average insurance in force		$	210,896,297			$	206,631,135			$	207,388,906			$	206,732,478			$	199,739,297
Insurance in force (end of period)		$	215,896,531			$	206,842,996			$	207,190,544			$	208,216,549			$	203,559,859
Gross risk in force (end of period) (6)		$	55,678,063			$	52,847,985			$	52,554,246			$	52,457,020			$	50,835,835
Risk in force (end of period)		$	47,289,910			$	45,261,164			$	45,273,383			$	45,074,159			$	42,906,519
Policies in force			789,652				774,002				785,119				798,877				794,743
Weighted average coverage (7)			25.8	%			25.5	%			25.4	%			25.2	%			25.0	%
Annual persistency			73.4	%			69.1	%			65.4	%			62.2	%			58.3	%
Loans in default (count)			12,707				14,923				16,963				19,721				23,504
Percentage of loans in default			1.61	%			1.93	%			2.16	%			2.47	%			2.96	%
U.S. Mortgage Insurance Portfolio premium rate:
Base average premium rate (8)			0.41	%			0.41	%			0.42	%			0.42	%			0.43	%
Single premium cancellations (9)			0.01	%			0.02	%			0.03	%			0.03	%			0.03	%
Gross average premium rate			0.42	%			0.43	%			0.45	%			0.45	%			0.46	%
Ceded premiums			(0.04	%)			(0.04	%)			(0.05	%)			(0.05	%)			(0.05	%)
Net average premium rate			0.38	%			0.39	%			0.40	%			0.40	%			0.41	%

(6) Gross risk in force includes risk ceded under third-party reinsurance.

(7) Weighted average coverage is calculated by dividing end of period gross risk in force by end of period insurance in force.

(8) Base average premium rate is calculated by dividing annualized base premiums earned by average insurance in force for the period.

(9) 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 D
Essent Group Ltd. and Subsidiaries
Supplemental Information
New Insurance Written: Flow
NIW by Credit Score
	Three Months Ended												Six Months Ended
	June 30, 2022						June 30, 2021						June 30, 2022						June 30, 2021
($ in thousands)
>=760	$	8,555,331		42.6	%		$	10,050,359		40.2	%		$	13,965,985		42.4	%		$	18,521,480		41.9	%
740-759		3,421,392		17.0				3,812,462		15.2				5,534,624		16.8				6,965,789		15.7
720-739		3,105,275		15.4				3,906,718		15.6				5,096,593		15.5				6,660,014		15.0
700-719		2,554,997		12.7				3,624,247		14.5				4,175,470		12.7				5,982,881		13.5
680-699		1,785,196		8.9				2,266,364		9.1				2,932,962		8.9				3,493,772		7.9
<=679		673,944		3.4				1,344,704		5.4				1,231,983		3.7				2,634,932		6.0
Total	$	20,096,135		100.0	%		$	25,004,854		100.0	%		$	32,937,617		100.0	%		$	44,258,868		100.0	%
Weighted average credit score		747						744						747						745
NIW by LTV
	Three Months Ended												Six Months Ended
	June 30, 2022						June 30, 2021						June 30, 2022						June 30, 2021
($ in thousands)
85.00% and below	$	1,675,255		8.3	%		$	3,355,412		13.4	%		$	2,937,293		8.9	%		$	7,323,988		16.6	%
85.01% to 90.00%		5,487,721		27.3				6,890,377		27.6				8,903,659		27.0				13,332,374		30.1
90.01% to 95.00%		10,874,315		54.1				11,463,713		45.8				17,290,570		52.5				18,516,235		41.8
95.01% and above		2,058,844		10.3				3,295,352		13.2				3,806,095		11.6				5,086,271		11.5
Total	$	20,096,135		100.0	%		$	25,004,854		100.0	%		$	32,937,617		100.0	%		$	44,258,868		100.0	%
Weighted average LTV		93	%					92	%					93	%					91	%
NIW by Product
	Three Months Ended												Six Months Ended
	June 30, 2022						June 30, 2021						June 30, 2022						June 30, 2021
Single Premium policies				6.5	%					3.4	%					4.7	%					4.9	%
Monthly Premium policies				93.5						96.6						95.3						95.1
				100.0	%					100.0	%					100.0	%					100.0	%
NIW by Purchase vs. Refinance
	Three Months Ended												Six Months Ended
	June 30, 2022						June 30, 2021						June 30, 2022						June 30, 2021
Purchase				98.0	%					82.3	%					96.5	%					73.6	%
Refinance				2.0						17.7						3.5						26.4
				100.0	%					100.0	%					100.0	%					100.0	%

																Exhibit E
Essent Group Ltd. and Subsidiaries
Supplemental Information
Insurance in Force and Risk in Force
Portfolio by Credit Score
IIF by FICO score	June 30, 2022						March 31, 2022						June 30, 2021
($ in thousands)
>=760	$	89,790,212		41.6	%		$	85,707,070		41.4	%		$	84,110,514		41.3	%
740-759		36,606,394		17.0				35,048,891		17.0				34,636,115		17.0
720-739		32,637,422		15.1				31,180,765		15.1				30,471,320		15.0
700-719		27,258,759		12.6				26,040,114		12.6				25,177,026		12.4
680-699		17,697,662		8.2				16,847,202		8.1				15,962,389		7.8
<=679		11,906,082		5.5				12,018,954		5.8				13,202,495		6.5
Total	$	215,896,531		100.0	%		$	206,842,996		100.0	%		$	203,559,859		100.0	%
Weighted average credit score		746						746						745
Gross RIF by FICO score	June 30, 2022						March 31, 2022						June 30, 2021
($ in thousands)
>=760	$	22,956,271		41.2	%		$	21,707,751		41.1	%		$	20,807,006		40.9	%
740-759		9,540,921		17.1				9,041,350		17.1				8,729,038		17.2
720-739		8,545,969		15.3				8,091,445		15.3				7,745,794		15.2
700-719		7,107,888		12.8				6,724,288		12.7				6,342,378		12.5
680-699		4,601,675		8.3				4,338,206		8.2				3,998,410		7.9
<=679		2,925,339		5.3				2,944,945		5.6				3,213,209		6.3
Total	$	55,678,063		100.0	%		$	52,847,985		100.0	%		$	50,835,835		100.0	%
Portfolio by LTV
IIF by LTV	June 30, 2022						March 31, 2022						June 30, 2021
($ in thousands)
85.00% and below	$	25,510,400		11.8	%		$	26,057,055		12.6	%		$	29,045,720		14.3	%
85.01% to 90.00%		61,304,806		28.4				59,113,908		28.6				60,027,287		29.5
90.01% to 95.00%		98,938,435		45.8				92,460,810		44.7				87,382,625		42.9
95.01% and above		30,142,890		14.0				29,211,223		14.1				27,104,227		13.3
Total	$	215,896,531		100.0	%		$	206,842,996		100.0	%		$	203,559,859		100.0	%
Weighted average LTV		92	%					92	%					92	%
Gross RIF by LTV	June 30, 2022						March 31, 2022						June 30, 2021
($ in thousands)
85.00% and below	$	3,012,030		5.4	%		$	3,062,878		5.8	%		$	3,360,970		6.6	%
85.01% to 90.00%		14,868,579		26.7				14,288,854		27.0				14,421,749		28.4
90.01% to 95.00%		28,921,722		52.0				26,960,457		51.0				25,329,870		49.8
95.01% and above		8,875,732		15.9				8,535,796		16.2				7,723,246		15.2
Total	$	55,678,063		100.0	%		$	52,847,985		100.0	%		$	50,835,835		100.0	%
Portfolio by Loan Amortization Period
IIF by Loan Amortization Period	June 30, 2022						March 31, 2022						June 30, 2021
($ in thousands)
FRM 30 years and higher	$	207,888,842		96.3	%		$	198,658,948		96.1	%		$	192,995,698		94.8	%
FRM 20-25 years		3,114,962		1.4				3,365,533		1.6				4,269,217		2.1
FRM 15 years		3,222,801		1.5				3,580,416		1.7				4,742,281		2.3
ARM 5 years and higher		1,669,926		0.8				1,238,099		0.6				1,552,663		0.8
Total	$	215,896,531		100.0	%		$	206,842,996		100.0	%		$	203,559,859		100.0	%

Contacts

Media

610.230.0556

[email protected]

Investor Relations

Philip Stefano

Vice President, Investor Relations

855-809-ESNT

[email protected]

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