Essent Group Ltd. Announces Second Quarter 2021 Results & Increases Quarterly Dividend

HAMILTON, Bermuda–(BUSINESS WIRE)–Essent Group Ltd. (NYSE: ESNT) today reported net income for the quarter ended June 30, 2021 of $159.8 million or $1.42 per diluted share, compared to $15.4 million or $0.15 per diluted share for the quarter ended June 30, 2020.

Essent also announced today that its Board of Directors has declared a quarterly cash dividend of $0.18 per common share. The dividend is payable on September 10, 2021, to shareholders of record on September 1, 2021.

“We are pleased with our financial performance for the second quarter as we produced strong earnings and generated excess capital,” said Mark A. Casale, Chairman and Chief Executive Officer. “Our results reflect a favorable operating environment as credit continues to normalize and housing demand remains elevated. Our buy, manage and distribute model is operating on all cylinders and confidence in our economic engine remains high.”

Second Quarter 2021 Financial Highlights:

• Insurance in force as of June 30, 2021 was $203.6 billion, compared to $197.1 billion as of March 31, 2021 and $174.6 billion as of June 30, 2020.

• New insurance written for the second quarter was $25.0 billion, compared to $19.3 billion in the first quarter of 2021 and $28.2 billion in the second quarter of 2020.

• Net premiums earned for the second quarter were $217.4 million, compared to $219.1 million in the first quarter of 2021 and $211.5 million in the second quarter of 2020.

• The expense ratio for the second quarter was 18.9%, compared to 19.3% in the first quarter of 2021 and 18.4% in the second quarter of 2020.

• The provision for losses and LAE for the second quarter was $9.7 million, compared to a provision of $32.3 million in the first quarter of 2021 and a provision of $175.9 million in the second quarter of 2020.

• The percentage of loans in default as of June 30, 2021 was 2.96%, compared to 3.70% as of March 31, 2021 and 5.19% as of June 30, 2020.

• The combined ratio for the second quarter was 23.3%, compared to 34.0% in the first quarter of 2021 and 101.5% in the second quarter of 2020.

• The consolidated balance of cash and investments at June 30, 2021 was $5.0 billion, including cash and investment balances at Essent Group Ltd. of $509.8 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 10.6:1 as of June 30, 2021.

• On June 23, 2021, Essent Guaranty, Inc. obtained $557.9 million of fully collateralized excess of loss reinsurance coverage on mortgage insurance policies written by Essent in August 2020 through March 2021 from Radnor Re 2021-1 Ltd., a newly formed Bermuda special purpose insurer. Radnor Re 2021-1 Ltd. is not a subsidiary or an affiliate of Essent Group Ltd.

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 833-921-1656 inside the U.S., or 236-389-2661 for international callers, using passcode 2073556 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 2073556.

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; 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, 2020 filed with the Securities and Exchange Commission on February 26, 2021, 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, 2021
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)	2021				2020				2021				2020
Revenues:
Direct premiums written	$	228,949			$	228,044			$	464,206			$	434,024
Ceded premiums	(26,662		)		(22,140		)		(57,558		)		(36,377		)
Net premiums written	202,287				205,904				406,648				397,647
Decrease in unearned premiums	15,150				5,567				29,856				20,320
Net premiums earned	217,437				211,471				436,504				417,967
Net investment income	21,743				19,866				43,531				40,499
Realized investment (losses) gains, net	(253		)		(1,269		)		388				1,866
Other income	4,334				6,009				7,635				4,585
Total revenues	243,261				236,077				488,058				464,917
Losses and expenses:
Provision for losses and LAE	9,651				175,877				41,973				183,940
Other underwriting and operating expenses	41,114				38,819				83,353				80,766
Interest expense	2,073				2,566				4,124				4,698
Total losses and expenses	52,838				217,262				129,450				269,404
Income before income taxes	190,423				18,815				358,608				195,513
Income tax expense	30,628				3,435				63,165				30,610
Net income	$	159,795			$	15,380			$	295,443			$	164,903
Earnings per share:
Basic	$	1.43			$	0.15			$	2.64			$	1.65
Diluted	1.42				0.15				2.63				1.64
Weighted average shares outstanding:
Basic	112,118				102,500				112,067				100,224
Diluted	112,454				102,605				112,416				100,466
Net income	$	159,795			$	15,380			$	295,443			$	164,903
Other comprehensive income (loss):
Change in unrealized appreciation (depreciation) of investments	36,360				74,285				(22,843		)		64,211
Total other comprehensive income (loss)	36,360				74,285				(22,843		)		64,211
Comprehensive income	$	196,155			$	89,665			$	272,600			$	229,114
Loss ratio	4.4		%		83.2		%		9.6		%		44.0		%
Expense ratio	18.9				18.4				19.1				19.3
Combined ratio	23.3		%		101.5		%		28.7		%		63.3		%

					Exhibit B
Essent Group Ltd. and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
	June 30,				December 31,
(In thousands, except per share amounts)	2021				2020
Assets
Investments
Fixed maturities available for sale, at fair value	$	4,374,008			$	3,838,513
Short-term investments available for sale, at fair value	372,320				726,860
Total investments available for sale	4,746,328				4,565,373
Other invested assets	145,310				88,904
Total investments	4,891,638				4,654,277
Cash	142,140				102,830
Accrued investment income	24,468				19,948
Accounts receivable	53,127				50,140
Deferred policy acquisition costs	14,070				17,005
Property and equipment	12,989				15,095
Prepaid federal income tax	332,886				302,636
Other assets	50,471				40,793
Total assets	$	5,521,789			$	5,202,724
Liabilities and Stockholders’ Equity
Liabilities
Reserve for losses and LAE	$	421,872			$	374,941
Unearned premium reserve	220,580				250,436
Net deferred tax liability	343,098				305,109
Credit facility borrowings, net of deferred costs	322,316				321,720
Other accrued liabilities	129,095				87,885
Total liabilities	1,436,961				1,340,091
Commitments and contingencies
Stockholders’ Equity
Common shares, $0.015 par value:
Authorized – 233,333; issued and outstanding – 112,481 shares in 2021 and 112,423 shares in 2020	1,687				1,686
Additional paid-in capital	1,558,142				1,571,163
Accumulated other comprehensive income	115,431				138,274
Retained earnings	2,409,568				2,151,510
Total stockholders’ equity	4,084,828				3,862,633
Total liabilities and stockholders’ equity	$	5,521,789			$	5,202,724
Return on average equity (1)	14.9		%		12.1		%
(1) The 2021 return on average equity is calculated by dividing annualized year-to-date 2021 net income by average equity. The 2020 return on average equity is calculated by dividing full year 2020 net income by average equity.

														Exhibit C
Essent Group Ltd. and Subsidiaries
Supplemental Information
Historical Quarterly Data
		2021								2020
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		$	204,149			$	207,840			$	208,715			$	211,126			$	200,816
GSE and other risk share		13,288				11,227				13,624				11,132				10,655
Net premiums earned		217,437				219,067				222,339				222,258				211,471
Other revenues (1)		25,824				25,730				24,860				20,780				24,606
Total revenues		243,261				244,797				247,199				243,038				236,077
Losses and expenses:
Provision for losses and LAE		9,651				32,322				62,073				55,280				175,877
Other underwriting and operating expenses		41,114				42,239				36,825				37,100				38,819
Interest expense		2,073				2,051				2,149				2,227				2,566
Total losses and expenses		52,838				76,612				101,047				94,607				217,262
Income before income taxes		190,423				168,185				146,152				148,431				18,815
Income tax expense (2)		30,628				32,537				22,550				23,895				3,435
Net income		$	159,795			$	135,648			$	123,602			$	124,536			$	15,380
Earnings per share:
Basic		$	1.43			$	1.21			$	1.10			$	1.11			$	0.15
Diluted		1.42				1.21				1.10				1.11				0.15
Weighted average shares outstanding:
Basic		112,118				112,016				111,908				111,908				102,500
Diluted		112,454				112,378				112,310				112,134				102,605
Book value per share		$	36.32			$	34.75			$	34.36			$	33.33			$	32.23
Return on average equity (annualized)		16.0		%		13.9		%		13.0		%		13.5		%		1.8		%
Other Data:
Loss ratio (3)		4.4		%		14.8		%		27.9		%		24.9		%		83.2		%
Expense ratio (4)		18.9				19.3				16.6				16.7				18.4
Combined ratio		23.3		%		34.0		%		44.5		%		41.6		%		101.5		%
Credit Facility
Borrowings outstanding		$	325,000			$	325,000			$	325,000			$	425,000			$	425,000
Undrawn committed capacity		$	300,000			$	300,000			$	300,000			$	75,000			$	75,000
Weighted average interest rate (end of period)		2.13		%		2.13		%		2.19		%		1.90		%		1.93		%
Debt-to-capital		7.37		%		7.65		%		7.76		%		10.19		%		10.50		%
(1) Certain of our third-party reinsurance agreements contain an embedded derivative as the premium ceded under those agreements will vary based on changes in interest rates. For each of the three month periods noted, Other revenues include net favorable (unfavorable) changes in the fair value of these embedded derivatives as follows: June 30, 2021: $950; March 31, 2021: ($606); December 31, 2020: ($209); September 30, 2020: ($677); June 30, 2020: $2,502.
(2) Income tax expense for the quarter ended March 31, 2021 includes $5,718 of discrete tax expense associated with an increase in the estimate of our beginning of the year deferred state income tax liability.
(3) Loss ratio is calculated by dividing the provision for losses and LAE by net premiums earned.
(4) 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
		2021								2020
Other Data, continued:		June 30				March 31				December 31				September 30				June 30
($ in thousands)
U.S. Mortgage Insurance Portfolio
Flow:
New insurance written		$	25,004,854			$	19,254,014			$	29,566,820			$	36,664,583			$	28,163,212
New risk written		6,445,864				4,616,450				7,051,173				8,938,544				6,875,250
Bulk:
New insurance written		$	—			$	—			$	—			$	—			$	—
New risk written		—				—				—				—				—
Total:
New insurance written		$	25,004,854			$	19,254,014			$	29,566,820			$	36,664,583			$	28,163,212
New risk written		$	6,445,864			$	4,616,450			$	7,051,173			$	8,938,544			$	6,875,250
Average insurance in force		$	199,739,297			$	197,749,668			$	195,670,925			$	183,135,315			$	168,635,275
Insurance in force (end of period)		$	203,559,859			$	197,091,191			$	198,882,352			$	190,811,292			$	174,646,273
Gross risk in force (end of period) (5)		$	50,835,835			$	48,951,602			$	49,565,150			$	47,838,668			$	43,993,989
Risk in force (end of period)		$	42,906,519			$	41,135,978			$	41,339,262			$	41,219,216			$	39,113,879
Policies in force		794,743				785,382				799,893				781,836				733,651
Weighted average coverage (6)		25.0		%		24.8		%		24.9		%		25.1		%		25.2		%
Annual persistency		58.3		%		56.1		%		60.1		%		64.2		%		67.9		%
Loans in default (count)		23,504				29,080				31,469				35,464				38,068
Percentage of loans in default		2.96		%		3.70		%		3.93		%		4.54		%		5.19		%
U.S. Mortgage Insurance Portfolio premium rate:
Base average premium rate (7)		0.43		%		0.44		%		0.44		%		0.45		%		0.47		%
Single premium cancellations (8)		0.03		%		0.04		%		0.05		%		0.06		%		0.06		%
Gross average premium rate		0.46		%		0.48		%		0.49		%		0.51		%		0.53		%
Ceded premiums		(0.05		%)		(0.06		%)		(0.06		%)		(0.05		%)		(0.05		%)
Net average premium rate		0.41		%		0.42		%		0.43		%		0.46		%		0.48		%
(5) Gross risk in force includes risk ceded under third-party reinsurance.
(6) Weighted average coverage is calculated by dividing end of period gross risk in force by end of period insurance in force.
(7) Base average premium rate is calculated by dividing annualized base premiums earned by average insurance in force for the period.
(8) 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, 2021						June 30, 2020						June 30, 2021						June 30, 2020
($ in thousands)
>=760	$	10,050,359		40.2	%		$	12,163,927		43.2	%		$	18,521,480		41.9	%		$	17,819,643		42.7	%
740-759	3,812,462			15.2			5,300,459			18.8			6,965,789			15.7			7,758,491			18.6
720-739	3,906,718			15.6			4,352,367			15.5			6,660,014			15.0			6,371,241			15.3
700-719	3,624,247			14.5			3,278,269			11.6			5,982,881			13.5			4,837,012			11.6
680-699	2,266,364			9.1			1,950,905			6.9			3,493,772			7.9			2,995,823			7.2
<=679	1,344,704			5.4			1,117,285			4.0			2,634,932			6.0			1,930,301			4.6
Total	$	25,004,854		100.0	%		$	28,163,212		100.0	%		$	44,258,868		100.0	%		$	41,712,511		100.0	%
Weighted average credit score	744						749						745						748
NIW by LTV
	Three Months Ended												Six Months Ended
	June 30, 2021						June 30, 2020						June 30, 2021						June 30, 2020
($ in thousands)
85.00% and below	$	3,355,412		13.4	%		$	5,028,803		17.9	%		$	7,323,988		16.6	%		$	6,992,279		16.8	%
85.01% to 90.00%	6,890,377			27.6			9,079,625			32.2			13,332,374			30.1			13,066,899			31.3
90.01% to 95.00%	11,463,713			45.8			10,914,874			38.8			18,516,235			41.8			16,600,754			39.8
95.01% and above	3,295,352			13.2			3,139,910			11.1			5,086,271			11.5			5,052,579			12.1
Total	$	25,004,854		100.0	%		$	28,163,212		100.0	%		$	44,258,868		100.0	%		$	41,712,511		100.0	%
Weighted average LTV	92		%				91		%				91		%				91		%
NIW by Product
	Three Months Ended												Six Months Ended
	June 30, 2021						June 30, 2020						June 30, 2021						June 30, 2020
Single Premium policies				3.4	%					10.6	%					4.9	%					10.3	%
Monthly Premium policies				96.6						89.4						95.1						89.7
				100.0	%					100.0	%					100.0	%					100.0	%
NIW by Purchase vs. Refinance
	Three Months Ended												Six Months Ended
	June 30, 2021						June 30, 2020						June 30, 2021						June 30, 2020
Purchase				82.3	%					54.2	%					73.6	%					59.1	%
Refinance				17.7						45.8						26.4						40.9
				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, 2021						March 31, 2021						June 30, 2020
($ in thousands)
>=760		$	84,110,514		41.3	%		$	81,629,166		41.4	%		$	71,570,804		41.0	%
740-759		34,636,115			17.0			33,969,375			17.2			30,265,718			17.3
720-739		30,471,320			15.0			29,323,182			14.9			26,130,764			15.0
700-719		25,177,026			12.4			23,775,892			12.1			20,721,839			11.9
680-699		15,962,389			7.8			15,241,886			7.7			14,545,011			8.3
<=679		13,202,495			6.5			13,151,690			6.7			11,412,137			6.5
Total		$	203,559,859		100.0	%		$	197,091,191		100.0	%		$	174,646,273		100.0	%
Weighted average credit score		745						745						745
Gross RIF by FICO score		June 30, 2021						March 31, 2021						June 30, 2020
($ in thousands)
>=760		$	20,807,006		40.9	%		$	20,063,586		41.0	%		$	17,871,881		40.6	%
740-759		8,729,038			17.2			8,512,926			17.4			7,672,436			17.4
720-739		7,745,794			15.2			7,410,503			15.1			6,673,863			15.2
700-719		6,342,378			12.5			5,947,590			12.1			5,246,989			11.9
680-699		3,998,410			7.9			3,798,221			7.8			3,693,448			8.4
<=679		3,213,209			6.3			3,218,776			6.6			2,835,372			6.5
Total		$	50,835,835		100.0	%		$	48,951,602		100.0	%		$	43,993,989		100.0	%
Portfolio by LTV
IIF by LTV		June 30, 2021						March 31, 2021						June 30, 2020
($ in thousands)
85.00% and below		$	29,045,720		14.3	%		$	28,285,671		14.4	%		$	19,874,830		11.4	%
85.01% to 90.00%		60,027,287			29.5			58,587,812			29.7			50,446,645			28.9
90.01% to 95.00%		87,382,625			42.9			84,042,974			42.6			79,112,541			45.3
95.01% and above		27,104,227			13.3			26,174,734			13.3			25,212,257			14.4
Total		$	203,559,859		100.0	%		$	197,091,191		100.0	%		$	174,646,273		100.0	%
Weighted average LTV		92		%				92		%				92		%
Gross RIF by LTV		June 30, 2021						March 31, 2021						June 30, 2020
($ in thousands)
85.00% and below		$	3,360,970		6.6	%		$	3,260,280		6.7	%		$	2,292,935		5.2	%
85.01% to 90.00%		14,421,749			28.4			14,061,301			28.7			12,120,308			27.6
90.01% to 95.00%		25,329,870			49.8			24,287,268			49.6			22,760,884			51.7
95.01% and above		7,723,246			15.2			7,342,753			15.0			6,819,862			15.5
Total		$	50,835,835		100.0	%		$	48,951,602		100.0	%		$	43,993,989		100.0	%
Portfolio by Loan Amortization Period
IIF by Loan Amortization Period		June 30, 2021						March 31, 2021						June 30, 2020
($ in thousands)
FRM 30 years and higher		$	192,995,698		94.8	%		$	186,190,300		94.5	%		$	165,143,246		94.5	%
FRM 20-25 years		4,269,217			2.1			4,354,432			2.2			3,277,847			1.9
FRM 15 years		4,742,281			2.3			4,763,796			2.4			3,660,888			2.1
ARM 5 years and higher		1,552,663			0.8			1,782,663			0.9			2,564,292			1.5
Total		$	203,559,859		100.0	%		$	197,091,191		100.0	%		$	174,646,273		100.0	%

Contacts

Media
610.230.0556

[email protected]

Investor Relations
Christopher G. Curran

Senior Vice President – Investor Relations

855-809-ESNT

[email protected]

Read full story here