ESNT 8-K

Essent Group Ltd. (ESNT)

8-K 2023-11-02 For: 2023-11-02

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Added on April 04, 2026

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☐			Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐			Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐			Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐			Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))




Essent Group Ltd. and Subsidiaries
Financial Results and Supplemental Information (Unaudited)
Quarter Ended September 30, 2023


Exhibit A						Condensed Consolidated Statements of Comprehensive Income (Unaudited)
Exhibit B						Condensed Consolidated Balance Sheets (Unaudited)
Exhibit C						Consolidated Historical Quarterly Data
Exhibit D						U.S Mortgage Insurance Portfolio Historical Quarterly Data
Exhibit E						New Insurance Written - U.S. Mortgage Insurance Portfolio
Exhibit F						Insurance in Force and Risk in Force - U.S. Mortgage Insurance Portfolio
Exhibit G						Other Risk in Force
Exhibit H						U.S. Mortgage Insurance Portfolio Vintage Data
Exhibit I						U.S. Mortgage Insurance Portfolio Reinsurance Vintage Data

Exhibit J						U.S. Mortgage Insurance Portfolio Geographic Data
Exhibit K						Rollforward of Defaults and Reserve for Losses and LAE
Exhibit L						Detail of Reserves by Default Delinquency
Exhibit M						Investments Available for Sale
Exhibit N						U.S. Mortgage Insurance Company Capital
Exhibit O						Loss, Expense and Combined Ratios and Reconciliation of Non-GAAP Financial Measures


							Exhibit A

Essent Group Ltd. and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income (Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands, except per share amounts)	2023		2022		2023		2022
Revenues:
Direct premiums written	$	270,868	$	239,773	$	759,526	$	692,687
Ceded premiums	(30,294)		(30,543)		(103,431)		(73,384)
Net premiums written	240,574		209,230		656,095		619,303
Decrease in unearned premiums	6,231		(1,296)		15,197		15,972
Net premiums earned	246,805		207,934		671,292		635,275
Net investment income	47,072		32,594		135,558		86,613
Realized investment losses, net	(235)		175		(2,312)		(7,648)
(Loss) income from other invested assets	(3,143)		9,617		(10,697)		36,275
Other income	5,609		11,447		18,641		20,272
Total revenues	296,108		261,767		812,482		770,787

Losses and expenses:
Provision (benefit) for losses and LAE	10,822		4,252		11,902		(178,805)
Other underwriting and operating expenses	54,814		42,144		145,183		124,838
Premiums retained by agents	13,175		—		13,175		—
Interest expense	7,854		4,450		22,184		9,563
Total losses and expenses	86,665		50,846		192,444		(44,404)

Income before income taxes	209,443		210,921		620,038		815,191
Income tax expense	31,484		32,870		99,019		131,204
Net income	$	177,959	$	178,051	$	521,019	$	683,987


Earnings per share:
Basic	$	1.68	$	1.67	$	4.90	$	6.37
Diluted	1.66		1.66		4.86		6.35

Weighted average shares outstanding:
Basic	105,979		106,870		106,387		107,314
Diluted	107,025		107,337		107,232		107,732

Net income	$	177,959	$	178,051	$	521,019	$	683,987

Other comprehensive income (loss):
Change in unrealized depreciation of investments	(76,248)		(137,010)		(53,593)		(474,284)
Total other comprehensive loss	(76,248)		(137,010)		(53,593)		(474,284)
Comprehensive income	$	101,711	$	41,041	$	467,426	$	209,703


				Exhibit B

Essent Group Ltd. and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)


	September 30,			December 31,
(In thousands, except per share amounts)	2023			2022
Assets
Investments
Fixed maturities available for sale, at fair value	$	4,241,757		$	4,489,598
Short-term investments available for sale, at fair value	755,931			252,027
Total investments available for sale	4,997,688			4,741,625
Other invested assets	272,619			257,941
Total investments	5,270,307			4,999,566
Cash	96,779			81,240
Accrued investment income	36,651			33,162
Accounts receivable	68,332			57,399
Deferred policy acquisition costs	9,375			9,910
Property and equipment	40,710			19,571
Prepaid federal income tax	461,386			418,460
Goodwill and intangible assets, net	64,271			—
Other assets	46,389			104,489
Total assets	$	6,094,200		$	5,723,797

Liabilities and Stockholders' Equity
Liabilities
Reserve for losses and LAE	$	241,333		$	216,464
Unearned premium reserve	147,712			162,887
Net deferred tax liability	329,721			356,810
Credit facility borrowings, net of deferred costs	421,656			420,864
Other accrued liabilities	145,771			104,463
Total liabilities	1,286,193			1,261,488

Commitments and contingencies

Stockholders' Equity
Common shares, $0.015 par value:
Authorized - 233,333; issued and outstanding - 106,887 shares in 2023 and 107,683 shares in 2022	1,603			1,615
Additional paid-in capital	1,309,717			1,350,377
Accumulated other comprehensive loss	(436,383)			(382,790)
Retained earnings	3,933,070			3,493,107
Total stockholders' equity	4,808,007			4,462,309

Total liabilities and stockholders' equity	$	6,094,200		$	5,723,797

Return on average equity (1)	15.0		%	19.1		%

(1) The 2023 return on average equity is calculated by dividing annualized year-to-date 2023 net income by average equity. The 2022 return on average equity is calculated by dividing full year 2022 net income by average equity.


													Exhibit C
Essent Group Ltd. and Subsidiaries
Supplemental Information
Consolidated Historical Quarterly Data

	2023									2022
Selected Income Statement Data	September 30			June 30			March 31			December 31			September 30
(In thousands, except per share amounts)
Revenues:


Net premiums earned:
U.S. Mortgage Insurance Portfolio	$	209,351		$	195,502		$	196,565		$	192,670		$	194,272
GSE and other risk share	16,850			17,727			14,693			14,582			13,662
Title insurance	20,604			—			—			—			—
Net premiums earned	246,805			213,229			211,258			207,252			207,934
Net investment income	47,072			45,250			43,236			37,796			32,594
Realized investment (losses) gains, net	(235)			(1,589)			(488)			(5,524)			175
(Loss) income from other invested assets	(3,143)			(4,852)			(2,702)			(7,599)			9,617
Other income (loss) (1)	5,609			8,090			4,942			(1,888)			11,447
Total revenues	296,108			260,128			256,246			230,037			261,767

Losses and expenses:
Provision (benefit) for losses and LAE	10,822			1,260			(180)			4,101			4,252
Other underwriting and operating expenses	54,814			42,174			48,195			46,895			42,144
Premiums retained by agents	13,175			—			—			—			—
Interest expense	7,854			7,394			6,936			6,045			4,450
Total losses and expenses	86,665			50,828			54,951			57,041			50,846

Income before income taxes	209,443			209,300			201,295			172,996			210,921
Income tax expense (2)	31,484			37,067			30,468			25,630			32,870
Net income	$	177,959		$	172,233		$	170,827		$	147,366		$	178,051

Earnings per share:
Basic	$	1.68		$	1.62		$	1.60		$	1.38		$	1.67
Diluted	1.66			1.61			1.59			1.37			1.66

Weighted average shares outstanding:
Basic	105,979			106,249			106,943			106,881			106,870
Diluted	107,025			107,093			107,585			107,419			107,337

Book value per share	$	44.98		$	44.24		$	43.18		$	41.44		$	39.87
Return on average equity (annualized)	14.9		%	14.7		%	15.0		%	13.5		%	16.6		%






Credit Facility
Borrowings outstanding	$	425,000		$	425,000		$	425,000		$	425,000		$	425,000
Undrawn committed capacity	$	400,000		$	400,000		$	400,000		$	400,000		$	400,000
Weighted average interest rate (end of period)	7.07		%	6.87		%	6.52		%	6.02		%	4.39		%
Debt-to-capital	8.12		%	8.24		%	8.38		%	8.70		%	9.01		%

(1) Other income includes net favorable (unfavorable) changes in the fair value of embedded derivatives associated with certain of our third-party reinsurance agreements, which for the quarters ended September 30, 2023, June 30, 2023, March 31, 2023, December 31, 2022, and September 30, 2022 was ($898), $2,726, ($368), ($6,515), and $5,177, respectively.
(2) Income tax expense for the quarters ended September 30, 2023, June 30, 2023, March 31, 2023, December 31, 2022 and September 30, 2022 includes ($763), $(888), ($368), ($4,122), and $2,925 respectively, of discrete tax (benefit) expense associated with realized and unrealized gains and losses. Income tax expense for the quarter ended June 30, 2023 also includes $5,295 of net discrete tax expense associated with prior year tax returns.


																			Exhibit E

Essent Group Ltd. and Subsidiaries
Supplemental Information - U.S. Mortgage Insurance Portfolio
New Insurance Written: Flow


NIW by Credit Score
	Three Months Ended						Nine Months Ended
	September 30, 2023					September 30, 2022						September 30, 2023						September 30, 2022
($ in thousands)
>=760	$	5,212,343		41.8	%		$	6,976,123		40.8	%		$	15,473,191		39.8	%		$	20,942,108		41.8	%
740-759	2,205,066			17.6			2,965,115			17.3			7,031,821			18.1			8,499,739			17.0
720-739	1,911,320			15.3			2,788,573			16.3			6,310,564			16.2			7,885,166			15.8
700-719	1,867,510			14.9			2,277,251			13.3			5,892,704			15.1			6,452,721			12.9
680-699	891,471			7.1			1,476,982			8.6			3,024,347			7.8			4,409,944			8.8
<=679	418,113			3.3			627,973			3.7			1,165,065			3.0			1,859,956			3.7
Total	$	12,505,823		100.0	%		$	17,112,017		100.0	%		$	38,897,692		100.0	%		$	50,049,634		100.0	%

Weighted average credit score	747						746						746						747



NIW by LTV
	Three Months Ended						Nine Months Ended
	September 30, 2023					September 30, 2022						September 30, 2023						September 30, 2022
($ in thousands)
85.00% and below	$	849,250		6.7	%		$	1,618,912		9.5	%		$	2,801,011		7.2	%		$	4,556,205		9.1	%
85.01% to 90.00%	2,445,924			19.6			4,753,686			27.8			7,951,062			20.4			13,657,345			27.3
90.01% to 95.00%	6,614,050			52.9			9,171,095			53.5			21,383,696			55.0			26,461,665			52.9
95.01% and above	2,596,599			20.8			1,568,324			9.2			6,761,923			17.4			5,374,419			10.7
Total	$	12,505,823		100.0	%		$	17,112,017		100.0	%		$	38,897,692		100.0	%		$	50,049,634		100.0	%

Weighted average LTV	93		%				93		%				93		%				93		%



NIW by Product
	Three Months Ended						Nine Months Ended
	September 30, 2023					September 30, 2022						September 30, 2023						September 30, 2022
Single Premium policies				2.8	%					8.2	%					3.8	%					5.9	%
Monthly Premium policies				97.2						91.8						96.2						94.1
				100.0	%					100.0	%					100.0	%					100.0	%



NIW by Purchase vs. Refinance
	Three Months Ended						Nine Months Ended
	September 30, 2023					September 30, 2022						September 30, 2023						September 30, 2022
Purchase				99.0	%					98.7	%					98.8	%					97.2	%
Refinance				1.0						1.3						1.2						2.8
				100.0	%					100.0	%					100.0	%					100.0	%



Excess of Loss Reinsurance (2)
																	Earned Premiums Ceded
Deal Name	Vintage	Remaining Insurance in Force		Remaining Risk in Force		Original Reinsurance in Force		Remaining Reinsurance in Force		Losses Ceded to Date		Original First Layer Retention		Remaining First Layer Retention			Quarter-to-Date		Year-to-Date		Reduction in PMIERs Minimum Required Assets (3)
XOL 2018-1	Jan. 2017 - Dec. 2017	$	4,920,622	$	1,297,126	$	165,167	$	57,250	$	—	$	678,283	$	421,003		$	291	$	955	$	—
XOL 2019-1	Jan. 2018 - Dec. 2018	5,730,888		1,496,891		118,650		76,144		—		253,643		246,939		(4)	627		1,861		—
XOL 2020-1	Jan. 2019 - Dec. 2019	7,185,440		1,864,143		55,102		38,579		—		215,605		213,798		(4)	303		931		—
XOL 2022-1	Oct. 2021 - Dec. 2022	71,671,369		19,351,146		141,992		141,992		—		507,114		506,301			1,611		4,779		137,913
Total		$	89,508,319	$	24,009,306	$	480,911	$	313,965	$	—	$	1,654,645	$	1,388,041		$	2,832	$	8,526	$	137,913


Quota Share Reinsurance (2)
										Losses Ceded				Ceding Commission				Earned Premiums Ceded
Year	Ceding Percentage	Remaining Insurance in Force		Remaining Risk in Force		Remaining Ceded Insurance in Force		Remaining Ceded Risk in Force		Quarter-to-Date		Year-to-Date		Quarter-to-Date		Year-to-Date		Quarter-to-Date		Year-to-Date		Reduction in PMIERs Minimum Required Assets (3)
Sep. 2019 - Dec. 2020	(5)	$	54,596,089	$	14,208,745	$	12,218,215	$	3,142,000	$	(464)	$	(2,208)	$	2,631	$	8,343	$	4,403	$	13,227	$	187,406
Jan. 2022 - Dec. 2023	20%	57,688,314		15,600,877		11,537,663		3,120,175		2,592		7,473		1,942		5,880		6,282		18,645		229,964
Jan. 2023 - Dec. 2023	17.5%	37,561,195		10,380,842		6,573,209		1,816,647		791		1,123		1,061		1,837		3,019		4,981		129,422
Total		$	149,845,598	$	40,190,464	$	30,329,087	$	8,078,822	$	2,919	$	6,388	$	5,634	$	16,060	$	13,704	$	36,853	$	546,792

(1) Reinsurance provided by unaffiliated special purpose insurers through the issuance of mortgage insurance-linked notes ("ILNs").
(2) Reinsurance provided by panels of reinsurers.
(3) Represents the reduction in Essent Guaranty, Inc.'s Minimum Required Assets based on our interpretation of the PMIERs.
(4) First layer retentions shown are ILN retention levels as a result of overlapping coverage within the vintage.
(5) Reinsurance coverage on 40% of eligible single premium policies and 20% of all other eligible policies.


Holding company net cash and investments available for sale:
($ in thousands)
As of September 30, 2023	$	648,658
As of December 31, 2022	$	685,178


(d)			Exhibits


											Exhibit F

Essent Group Ltd. and Subsidiaries
Supplemental Information
Insurance in Force and Risk in Force - U.S. Mortgage Insurance Portfolio


Portfolio by Credit Score
IIF by FICO score	September 30, 2023				June 30, 2023				September 30, 2022
($ in thousands)
>=760	$	97,027,348	40.7	%	$	95,925,520	40.8	%	$	92,309,692	41.5	%
740-759	41,362,480		17.3		40,733,799		17.3		37,821,201		17.0
720-739	37,297,809		15.6		36,791,104		15.6		33,910,646		15.2
700-719	31,674,346		13.3		30,970,132		13.1		28,263,518		12.7
680-699	19,850,176		8.3		19,667,866		8.3		18,351,570		8.2
<=679	11,449,453		4.8		11,561,463		4.9		11,885,942		5.4
Total	$	238,661,612	100.0	%	$	235,649,884	100.0	%	$	222,542,569	100.0	%

Weighted average credit score	746				746				746

Gross RIF by FICO score	September 30, 2023				June 30, 2023				September 30, 2022
($ in thousands)
>=760	$	25,594,262	40.1	%	$	25,138,762	40.3	%	$	23,743,335	41.1	%
740-759	11,165,727		17.6		10,922,780		17.5		9,920,331		17.2
720-739	10,090,889		15.9		9,896,425		15.9		8,934,327		15.5
700-719	8,568,811		13.5		8,319,353		13.3		7,412,542		12.8
680-699	5,327,434		8.4		5,248,349		8.4		4,801,986		8.3
<=679	2,857,934		4.5		2,877,731		4.6		2,930,570		5.1
Total	$	63,605,057	100.0	%	$	62,403,400	100.0	%	$	57,743,091	100.0	%

Portfolio by LTV
IIF by LTV	September 30, 2023				June 30, 2023				September 30, 2022
($ in thousands)
85.00% and below	$	21,226,685	8.9	%	$	22,427,649	9.5	%	$	25,121,995	11.3	%
85.01% to 90.00%	63,374,562		26.6		63,562,258		27.0		62,963,331		28.3
90.01% to 95.00%	118,461,030		49.6		115,768,826		49.1		103,794,020		46.6
95.01% and above	35,599,335		14.9		33,891,151		14.4		30,663,223		13.8
Total	$	238,661,612	100.0	%	$	235,649,884	100.0	%	$	222,542,569	100.0	%


																							Exhibit H

Essent Group Ltd. and Subsidiaries
Supplemental Information
U.S. Mortgage Insurance Portfolio Vintage Data
September 30, 2023


								Insurance in Force
Year	Original Insurance Written ($ in thousands)		Remaining Insurance in Force ($ in thousands)		% Remaining of Original Insurance		Number of Policies in Force	Weighted Average Coupon		% Purchase		>90% LTV		>95% LTV		FICO < 700		FICO >= 760		Incurred Loss Ratio (Inception to Date) (1)		Number of Loans in Default	Percentage of Loans in Default

2010 - 2014	$	60,668,851	$	1,598,284	2.6	%	9,938	4.32	%	73.3	%	62.4	%	7.0	%	15.1	%	43.4	%	2.5	%	392	3.94	%
2015	26,193,656		1,521,374		5.8		9,232	4.21		84.2		74.8		4.6		17.7		39.6		2.5		327	3.54
2016	34,949,319		3,234,730		9.3		18,705	3.89		87.8		80.6		12.0		15.9		42.4		2.3		560	2.99
2017	43,858,322		5,031,656		11.5		29,934	4.27		91.3		71.7		20.7		20.4		37.8		3.5		1,176	3.93
2018	47,508,525		5,805,471		12.2		32,505	4.79		94.7		71.3		26.0		21.7		32.6		4.6		1,484	4.57
2019	63,569,183		12,907,957		20.3		61,266	4.22		88.1		68.1		24.5		18.8		35.5		4.4		1,813	2.96
2020	107,944,065		49,162,995		45.5		187,990	3.19		68.0		56.5		13.0		10.8		45.6		3.3		2,373	1.26
2021	84,218,250		64,048,451		76.1		208,074	3.08		86.3		62.6		15.3		13.9		40.5		7.1		3,038	1.46
2022	63,061,262		57,742,660		91.6		163,804	5.07		97.8		65.2		11.2		12.7		39.7		19.9		1,962	1.20
2023 (through September 30)	38,897,692		37,608,034		96.7		103,800	6.51		98.8		72.6		17.8		10.9		39.1		11.3		266	0.26
Total	$	570,869,125	$	238,661,612	41.8		825,248	4.28		87.6		64.6		14.9		13.1		40.7		4.3		13,391	1.62

(1) Incurred loss ratio is calculated by dividing the sum of case reserves and cumulative amount paid for claims by cumulative net premiums earned.


													Exhibit K

Essent Group Ltd. and Subsidiaries
Supplemental Information
Rollforward of Defaults and Reserve for Losses and LAE
U.S. Mortgage Insurance Portfolio

Rollforward of Insured Loans in Default
	Three Months Ended
	2023						2022
	September 30			June 30			March 31			December 31			September 30
Beginning default inventory	12,480			12,773			13,433			12,435			12,707
Plus: new defaults (A)	7,953			6,575			7,015			7,505			6,448
Less: cures	(6,902)			(6,761)			(7,574)			(6,425)			(6,642)
Less: claims paid	(129)			(96)			(94)			(73)			(68)
Less: rescissions and denials, net	(11)			(11)			(7)			(9)			(10)
Ending default inventory	13,391			12,480			12,773			13,433			12,435

(A) New defaults remaining as of September 30, 2023	5,664			2,630			1,520			1,199			672
Cure rate (1)	29		%	60		%	78		%	84		%	90		%

Total amount paid for claims (in thousands)	$	2,956		$	1,890		$	1,959		$	1,441		$	1,261
Average amount paid per claim (in thousands)	$	23		$	20		$	21		$	20		$	19
Severity	66		%	58		%	59		%	46		%	47		%

Rollforward of Reserve for Losses and LAE
	Three Months Ended
	2023						2022
($ in thousands)	September 30			June 30			March 31			December 31			September 30
Reserve for losses and LAE at beginning of period	$	216,888		$	215,957		$	216,390		$	212,392		$	209,829
Less: Reinsurance recoverables	17,958			16,357			14,618			13,244			13,657
Net reserve for losses and LAE at beginning of period	198,930			199,600			201,772			199,148			196,172
Add provision for losses and LAE occurring in:
Current period	35,609			31,377			32,693			36,141			20,144
Prior years	(25,533)			(30,107)			(32,864)			(32,012)			(15,850)
Incurred losses and LAE during the period	10,076			1,270			(171)			4,129			4,294
Deduct payments for losses and LAE occurring in:
Current period	156			31			—			113			30
Prior years	2,889			1,909			2,001			1,392			1,288