HAMILTON, Bermuda–(BUSINESS WIRE)–Essent Group Ltd. (NYSE: ESNT) today reported net income for the quarter ended March 31, 2022 of $274.2 million or $2.52 per diluted share, compared to $135.6 million or $1.21 per diluted share for the quarter ended March 31, 2021.
Essent also announced today that its Board of Directors has declared a quarterly cash dividend of $0.21 per common share. The dividend is payable on June 10, 2022, to shareholders of record on June 1, 2022.
“Our strong results for the quarter reflect the continued favorable credit performance of our portfolio,” said Mark A. Casale, Chairman and Chief Executive Officer. “Our outlook on housing remains positive, and we believe that the fundamentals of our business remain solid. More importantly, with the strength of our balance sheet and buy, manage, and distribute operating model, we are built to manage through economic cycles. In connection with that, we are pleased to announce that our Board has approved an increase in our quarterly dividend to $0.21 per share.”
First Quarter 2022 Financial Highlights:
Insurance in force as of March 31, 2022 was $206.8 billion, compared to $207.2 billion as of December 31, 2021 and $197.1 billion as of March 31, 2021.
New insurance written for the first quarter was $12.8 billion, compared to $16.4 billion in the fourth quarter of 2021 and $19.3 billion in the first quarter of 2021.
Net premiums earned for the first quarter were $215.3 million, compared to $217.3 million in the fourth quarter of 2021 and $219.1 million in the first quarter of 2021.
Income from other invested assets for the first quarter was $24.7 million, compared to $15.0 million in the fourth quarter of 2021.
The expense ratio for the first quarter was 18.9%, compared to 19.0% in the fourth quarter of 2021 and 19.3% in the first quarter of 2021.
The provision for losses and LAE for the first quarter was a benefit of $106.9 million, compared to a benefit of $3.4 million in the fourth quarter of 2021 and a provision of $32.3 million in the first quarter of 2021.
The provision in the first quarter of 2022 included a $101.2 million benefit associated with a change in the claim rate assumption for COVID-19 defaults recorded in the second and third quarters of 2020.
The percentage of loans in default as of March 31, 2022 was 1.93%, compared to 2.16% as of December 31, 2021 and 3.70% as of March 31, 2021.
The combined ratio for the first quarter was negative (30.7%), compared to 17.4% in the fourth quarter of 2021 and 34.0% in the first quarter of 2021.
The consolidated balance of cash and investments at March 31, 2022 was $5.1 billion, which includes holding company net cash and investments available for sale of $578.6 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 9.9:1 as of March 31, 2022.
During the quarter, we entered into a second quota share reinsurance transaction with a panel of highly rated third-party reinsurers. The quota share agreement covers 20% of all eligible policies written by Essent Guaranty, Inc. for the period January 1, 2022 through December 31, 2022.
Essent’s Board of Directors has authorized a new share repurchase plan of up to $250 million of the Company’s common shares through December 31, 2023. The prior repurchase authorization from May 2021 was completed in April 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.
Essent Group Ltd. and Subsidiaries
Financial Results and Supplemental Information (Unaudited)
Quarter Ended March 31, 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 March 31,
(In thousands, except per share amounts)
2022
2021
Revenues:
Direct premiums written
$
220,254
$
235,257
Ceded premiums
(20,523
)
(30,896
)
Net premiums written
199,731
204,361
Decrease in unearned premiums
15,599
14,706
Net premiums earned
215,330
219,067
Net investment income
24,680
21,788
Realized investment (losses) gains, net
(7,352
)
641
Income from other invested assets
24,705
526
Other income
7,248
2,775
Total revenues
264,611
244,797
Losses and expenses:
(Benefit) provision for losses and LAE
(106,858
)
32,322
Other underwriting and operating expenses
40,796
42,239
Interest expense
2,226
2,051
Total losses and expenses
(63,836
)
76,612
Income before income taxes
328,447
168,185
Income tax expense
54,280
32,537
Net income
$
274,167
$
135,648
Earnings per share:
Basic
$
2.53
$
1.21
Diluted
2.52
1.21
Weighted average shares outstanding:
Basic
108,166
112,016
Diluted
108,590
112,378
Net income
$
274,167
$
135,648
Other comprehensive income (loss):
Change in unrealized depreciation of investments
(203,006
)
(59,203
)
Total other comprehensive loss
(203,006
)
(59,203
)
Comprehensive income
$
71,161
$
76,445
Loss ratio
(49.6
%)
14.8
%
Expense ratio
18.9
19.3
Combined ratio
(30.7
%)
34.0
%
Exhibit B
Essent Group Ltd. and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
March 31,
December 31,
(In thousands, except per share amounts)
2022
2021
Assets
Investments
Fixed maturities available for sale, at fair value
$
4,145,542
$
4,649,800
Short-term investments available for sale, at fair value
517,363
313,087
Total investments available for sale
4,662,905
4,962,887
Other invested assets
212,521
170,472
Total investments
4,875,426
5,133,359
Cash
203,845
81,491
Accrued investment income
23,233
26,546
Accounts receivable
45,167
46,157
Deferred policy acquisition costs
11,148
12,178
Property and equipment
20,308
11,921
Prepaid federal income tax
360,810
360,810
Other assets
46,208
49,712
Total assets
$
5,586,145
$
5,722,174
Liabilities and Stockholders’ Equity
Liabilities
Reserve for losses and LAE
$
293,072
$
407,445
Unearned premium reserve
169,786
185,385
Net deferred tax liability
359,919
373,654
Credit facility borrowings, net of deferred costs
420,073
419,823
Other accrued liabilities
128,227
99,753
Total liabilities
1,371,077
1,486,060
Commitments and contingencies
Stockholders’ Equity
Common shares, $0.015 par value:
Authorized – 233,333; issued and outstanding – 108,140 shares in 2022 and 109,377 shares in 2021
1,622
1,641
Additional paid-in capital
1,358,583
1,428,952
Accumulated other comprehensive (loss) income
(152,299
)
50,707
Retained earnings
3,007,162
2,754,814
Total stockholders’ equity
4,215,068
4,236,114
Total liabilities and stockholders’ equity
$
5,586,145
$
5,722,174
Return on average equity (1)
26.0
%
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
March 31
December 31
September 30
June 30
March 31
(In thousands, except per share amounts)
Revenues:
Net premiums earned:
U.S. Mortgage Insurance Portfolio
$
203,312
$
205,877
$
207,127
$
204,149
$
207,840
GSE and other risk share
12,018
11,444
11,591
13,288
11,227
Net premiums earned
215,330
217,321
218,718
217,437
219,067
Net investment income
24,680
23,661
21,573
21,743
21,788
Realized investment (losses) gains, net
(7,352
)
(191
)
221
(253
)
641
Income from other invested assets (1)
24,705
14,997
40,741
122
526
Other income (2)
7,248
1,128
2,283
4,212
2,775
Total revenues
264,611
256,916
283,536
243,261
244,797
Losses and expenses:
(Benefit) provision for losses and LAE
(106,858
)
(3,433
)
(7,483
)
9,651
32,322
Other underwriting and operating expenses
40,796
41,232
42,272
41,114
42,239
Interest expense
2,226
2,095
2,063
2,073
2,051
Total losses and expenses
(63,836
)
39,894
36,852
52,838
76,612
Income before income taxes
328,447
217,022
246,684
190,423
168,185
Income tax expense (3)
54,280
36,035
41,331
30,628
32,537
Net income
$
274,167
$
180,987
$
205,353
$
159,795
$
135,648
Earnings per share:
Basic
$
2.53
$
1.65
$
1.85
$
1.43
$
1.21
Diluted
2.52
1.64
1.84
1.42
1.21
Weighted average shares outstanding:
Basic
108,166
109,550
111,001
112,118
112,016
Diluted
108,590
110,028
111,387
112,454
112,378
Book value per share
$
38.98
$
38.73
$
37.58
$
36.32
$
34.75
Return on average equity (annualized)
26.0
%
17.2
%
19.9
%
16.0
%
13.9
%
Other Data:
Loss ratio (4)
(49.6
%)
(1.6
%)
(3.4
%)
4.4
%
14.8
%
Expense ratio (5)
18.9
19.0
19.3
18.9
19.3
Combined ratio
(30.7
%)
17.4
%
15.9
%
23.3
%
34.0
%
Credit Facility
Borrowings outstanding
$
425,000
$
425,000
$
325,000
$
325,000
$
325,000
Undrawn committed capacity
$
400,000
$
400,000
$
300,000
$
300,000
$
300,000
Weighted average interest rate (end of period)
1.99
%
1.79
%
2.13
%
2.13
%
2.13
%
Debt-to-capital
9.16
%
9.12
%
7.23
%
7.37
%
7.65
%
(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: March 31, 2022: $4,365; December 31, 2021: ($2,931); September 30, 2021: ($1,493); June 30, 2021: $950; March 31, 2021: ($606).
(3) Income tax expense for the quarters ended December 31, 2021 and March 31, 2021 includes $2,473 and $5,718, respectively, 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 March 31, 2022, December 31, 2021 and September 30, 2021 includes $7,002, $1,759 and $8,271, respectively, of discrete tax expense associated with realized and unrealized gains and losses.
(4) Loss ratio is calculated by dividing the provision for losses and LAE by net premiums earned.
(5) Expense ratio is calculated by dividing other underwriting and operating expenses by net premiums earned.
Exhibit C, continued
Essent Group Ltd. and Subsidiaries
Supplemental Information
Historical Quarterly Data
2022
2021
Other Data, continued:
March 31
December 31
September 30
June 30
March 31
($ in thousands)
U.S. Mortgage Insurance Portfolio
Flow:
New insurance written
$
12,841,482
$
16,379,082
$
23,579,884
$
25,004,854
$
19,254,014
New risk written
3,438,016
4,331,531
6,273,735
6,445,864
4,616,450
Bulk:
New insurance written
$
—
$
416
$
—
$
—
$
—
New risk written
—
41
—
—
—
Total:
New insurance written
$
12,841,482
$
16,379,498
$
23,579,884
$
25,004,854
$
19,254,014
New risk written
$
3,438,016
$
4,331,572
$
6,273,735
$
6,445,864
$
4,616,450
Average insurance in force
$
206,631,135
$
207,388,906
$
206,732,478
$
199,739,297
$
197,749,668
Insurance in force (end of period)
$
206,842,996
$
207,190,544
$
208,216,549
$
203,559,859
$
197,091,191
Gross risk in force (end of period) (6)
$
52,847,985
$
52,554,246
$
52,457,020
$
50,835,835
$
48,951,602
Risk in force (end of period)
$
45,261,164
$
45,273,383
$
45,074,159
$
42,906,519
$
41,135,978
Policies in force
774,002
785,119
798,877
794,743
785,382
Weighted average coverage (7)
25.5
%
25.4
%
25.2
%
25.0
%
24.8
%
Annual persistency
69.1
%
65.4
%
62.2
%
58.3
%
56.1
%
Loans in default (count)
14,923
16,963
19,721
23,504
29,080
Percentage of loans in default
1.93
%
2.16
%
2.47
%
2.96
%
3.70
%
U.S. Mortgage Insurance Portfolio premium rate:
Base average premium rate (8)
0.41
%
0.42
%
0.42
%
0.43
%
0.44
%
Single premium cancellations (9)
0.02
%
0.03
%
0.03
%
0.03
%
0.04
%
Gross average premium rate
0.43
%
0.45
%
0.45
%
0.46
%
0.48
%
Ceded premiums
(0.04
%)
(0.05
%)
(0.05
%)
(0.05
%)
(0.06
%)
Net average premium rate
0.39
%
0.40
%
0.40
%
0.41
%
0.42
%
(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
March 31, 2022
December 31, 2021
March 31, 2021
($ in thousands)
>=760
$
5,410,654
42.1
%
$
6,643,740
40.6
%
$
8,471,121
44.0
%
740-759
2,113,232
16.5
2,833,379
17.3
3,153,327
16.4
720-739
1,991,318
15.5
2,472,738
15.1
2,753,296
14.3
700-719
1,620,473
12.6
2,170,829
13.2
2,358,634
12.2
680-699
1,147,766
8.9
1,504,268
9.2
1,227,408
6.4
<=679
558,039
4.4
754,128
4.6
1,290,228
6.7
Total
$
12,841,482
100.0
%
$
16,379,082
100.0
%
$
19,254,014
100.0
%
Weighted average credit score
747
745
747
NIW by LTV
Three Months Ended
March 31, 2022
December 31, 2021
March 31, 2021
($ in thousands)
85.00% and below
$
1,262,038
9.8
%
$
1,799,336
11.0
%
$
3,968,576
20.6
%
85.01% to 90.00%
3,415,938
26.6
4,372,552
26.7
6,441,997
33.5
90.01% to 95.00%
6,416,255
50.0
7,722,842
47.1
7,052,522
36.6
95.01% and above
1,747,251
13.6
2,484,352
15.2
1,790,919
9.3
Total
$
12,841,482
100.0
%
$
16,379,082
100.0
%
$
19,254,014
100.0
%
Weighted average LTV
93
%
92
%
91
%
NIW by Product
Three Months Ended
March 31, 2022
December 31, 2021
March 31, 2021
Single Premium policies
1.9
%
2.7
%
6.9
%
Monthly Premium policies
98.1
97.3
93.1
100.0
%
100.0
%
100.0
%
NIW by Purchase vs. Refinance
Three Months Ended
March 31, 2022
December 31, 2021
March 31, 2021
Purchase
94.1
%
92.1
%
62.3
%
Refinance
5.9
7.9
37.7
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
March 31, 2022
December 31, 2021
March 31, 2021
($ in thousands)
>=760
$
85,707,070
41.4
%
$
85,501,113
41.3
%
$
81,629,166
41.4
%
740-759
35,048,891
17.0
35,111,019
17.0
33,969,375
17.2
720-739
31,180,765
15.1
31,158,325
15.0
29,323,182
14.9
700-719
26,040,114
12.6
26,105,790
12.6
23,775,892
12.1
680-699
16,847,202
8.1
16,819,629
8.1
15,241,886
7.7
<=679
12,018,954
5.8
12,494,668
6.0
13,151,690
6.7
Total
$
206,842,996
100.0
%
$
207,190,544
100.0
%
$
197,091,191
100.0
%
Weighted average credit score
746
745
745
Gross RIF by FICO score
March 31, 2022
December 31, 2021
March 31, 2021
($ in thousands)
>=760
$
21,707,751
41.1
%
$
21,488,011
40.9
%
$
20,063,586
41.0
%
740-759
9,041,350
17.1
8,992,181
17.1
8,512,926
17.4
720-739
8,091,445
15.3
8,029,952
15.3
7,410,503
15.1
700-719
6,724,288
12.7
6,693,045
12.7
5,947,590
12.1
680-699
4,338,206
8.2
4,299,245
8.2
3,798,221
7.8
<=679
2,944,945
5.6
3,051,812
5.8
3,218,776
6.6
Total
$
52,847,985
100.0
%
$
52,554,246
100.0
%
$
48,951,602
100.0
%
Portfolio by LTV
IIF by LTV
March 31, 2022
December 31, 2021
March 31, 2021
($ in thousands)
85.00% and below
$
26,057,055
12.6
%
$
27,362,267
13.2
%
$
28,285,671
14.4
%
85.01% to 90.00%
59,113,908
28.6
59,567,378
28.7
58,587,812
29.7
90.01% to 95.00%
92,460,810
44.7
91,350,909
44.1
84,042,974
42.6
95.01% and above
29,211,223
14.1
28,909,990
14.0
26,174,734
13.3
Total
$
206,842,996
100.0
%
$
207,190,544
100.0
%
$
197,091,191
100.0
%
Weighted average LTV
92
%
92
%
92
%
Gross RIF by LTV
March 31, 2022
December 31, 2021
March 31, 2021
($ in thousands)
85.00% and below
$
3,062,878
5.8
%
$
3,200,124
6.1
%
$
3,260,280
6.7
%
85.01% to 90.00%
14,288,854
27.0
14,366,450
27.3
14,061,301
28.7
90.01% to 95.00%
26,960,457
51.0
26,592,162
50.6
24,287,268
49.6
95.01% and above
8,535,796
16.2
8,395,510
16.0
7,342,753
15.0
Total
$
52,847,985
100.0
%
$
52,554,246
100.0
%
$
48,951,602
100.0
%
Portfolio by Loan Amortization Period
IIF by Loan Amortization Period
March 31, 2022
December 31, 2021
March 31, 2021
($ in thousands)
FRM 30 years and higher
$
198,658,948
96.1
%
$
198,243,758
95.7
%
$
186,190,300
94.5
%
FRM 20-25 years
3,365,533
1.6
3,658,366
1.8
4,354,432
2.2
FRM 15 years
3,580,416
1.7
3,996,684
1.9
4,763,796
2.4
ARM 5 years and higher
1,238,099
0.6
1,291,736
0.6
1,782,663
0.9
Total
$
206,842,996
100.0
%
$
207,190,544
100.0
%
$
197,091,191
100.0
%
Contacts
Media Contact
610.230.0556
media@essentgroup.com
Investor Relations Contact
Philip Stefano
Vice President, Investor Relations
855-809-ESNT
ir@essentgroup.com
