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

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

[email protected]

Investor Relations Contact

Philip Stefano

Vice President, Investor Relations

855-809-ESNT

[email protected]

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