Financial Performance - Net premiums written for Q3 2023 reached $240,574 thousand, a 15% increase from $209,230 thousand in Q3 2022[19]. - Net investment income rose to $47,072 thousand in Q3 2023, compared to $32,594 thousand in Q3 2022, marking a 44% increase[19]. - Total revenues for the nine months ended September 30, 2023, were $812,482 thousand, up from $770,787 thousand in the same period of 2022, reflecting a growth of 5.4%[19]. - Net income for Q3 2023 was $177,959 thousand, slightly down from $178,051 thousand in Q3 2022, indicating a decrease of 0.5%[19]. - Basic earnings per share for Q3 2023 was $1.68, compared to $1.67 in Q3 2022, showing a marginal increase of 0.6%[19]. - Net income for the nine months ended September 30, 2023, was $521,019, a decrease of 23.8% compared to $683,987 in the same period of 2022[24]. Assets and Liabilities - Total assets increased to $6,094,200 thousand as of September 30, 2023, up from $5,723,797 thousand at the end of 2022, representing a growth of 6.5%[17]. - Total liabilities increased to $1,286,193 thousand as of September 30, 2023, from $1,261,488 thousand at the end of 2022, a rise of 2%[17]. - Total stockholders' equity reached $4,808,007 thousand as of September 30, 2023, up from $4,462,309 thousand at the end of 2022, reflecting a growth of 7.8%[21]. - Retained earnings grew to $3,933,070 thousand as of September 30, 2023, up from $3,493,107 thousand at the end of 2022, an increase of 12.6%[21]. Cash Flow and Investments - Net cash provided by operating activities increased to $547,548, up 31.5% from $416,456 in the prior year[24]. - The company reported a net cash used in investing activities of $396,342, compared to $253,010 in the same period of 2022, indicating increased investment activity[24]. - The company’s cash at the end of the period was $96,779, an increase from $79,467 at the end of the same period in 2022[24]. - Total investments available for sale as of September 30, 2023, amounted to $4,997,688, with an amortized cost of $5,502,929 and unrealized losses of $505,845[36]. Insurance and Reinsurance - Total RIF ceded under the quota share reinsurance agreements was $8.1 billion as of September 30, 2023[56]. - The total insurance in force for Radnor Re transactions as of September 30, 2023 is $147.08 billion, with a remaining risk in force of $39.23 billion[62]. - Essent Guaranty has a ceding commission of 20% and a profit commission of 58% under the QSR-2023 agreement[54]. - The maximum exposure to loss associated with Radnor Re 2019-1 Ltd. is $72,000, while the total VIE assets amount to $21.47 million[69]. Claims and Losses - The number of claims paid increased to 129 in Q3 2023 from 68 in Q3 2022, with claims paid amounting to $2.96 million in Q3 2023 compared to $1.26 million in Q3 2022[197]. - The provision for losses was $10.8 million and $11.9 million for the three and nine months ended September 30, 2023, respectively, reflecting an increase in defaults[190]. - The ending default inventory for the U.S. mortgage insurance portfolio was 13,391 as of September 30, 2023, compared to 12,435 in 2022, with new defaults increasing to 7,953 from 6,448[191]. Dividends and Share Repurchase - The company declared a total dividend of $0.75 per common share for 2023, compared to $0.86 per common share for 2022[83]. - As of September 30, 2023, the company had repurchased 1,233,638 common shares at a cost of $51.0 million under the share repurchase plan, leaving $199.0 million remaining under the authorized plan[84]. - Essent Guaranty paid dividends of $240 million for the nine months ended September 30, 2023, compared to $260 million for the same period in 2022[97]. Economic and Market Conditions - The Federal Reserve's rate increases have led to higher mortgage interest rates, potentially affecting home sale activity and increasing provisions for loss and loss adjustment expenses[139]. - The company expects incurred losses and claims to increase as 67% of its insurance in force (IIF) relates to business written since January 1, 2021, which is less than three years old[159]. - The company has noted that elevated levels of consumer price inflation and increased mortgage interest rates may impact home sale activity and delinquent borrowers[76].

Financial Data and Key Metrics Changes - For Q3 2023, the company reported net income of $178 million, unchanged from the previous year, with diluted earnings per share at $1.66, consistent with the same quarter last year [9][19] - The book value per share increased by 13% year-over-year to $44.98 as of September 30 [10] - The insurance in force reached $239 billion, a 7% increase compared to the previous year [10] - The annualized return on average equity was reported at 15% [9] Business Line Data and Key Metrics Changes - Net premium earned for Q3 2023 was $247 million, which included $16.9 million from Essent Re's third-party business and $20.6 million from title operations [19][20] - The average base premium rate for the U.S. mortgage insurance portfolio remained at 40 basis points, while the net average premium rate increased by 2 basis points to 35 basis points [21] - The provision for loss and loss adjustment expense rose to $10.8 million in Q3 2023, compared to $1.3 million in the previous quarter [23] Market Data and Key Metrics Changes - The default rate on the U.S. mortgage insurance portfolio was 1.62%, up 10 basis points from the previous quarter [23] - Approximately 70% of the in-force portfolio has a note rate of 5% or lower, which is expected to support elevated persistency [10] Company Strategy and Development Direction - The company aims to activate new accounts while supporting existing customers, having activated 95 new customers year-to-date through October 31 [13] - The company is focused on a long-term approach to building its title and settlement services operation, which incurred a pretax loss of approximately $4 million in Q3 [14] - The company has authorized a new $250 million share repurchase program, reflecting confidence in its cash flows and capital position [17] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the resilience of the housing and labor markets, despite economic uncertainties [7][8] - The company believes that the housing supply and demand imbalance, along with favorable demographic trends, will support home prices in the long term [8] - Management highlighted the importance of maintaining a strong capital position to navigate potential economic scenarios [32] Other Important Information - Cash and investments as of September 30 were $5.4 billion, with a new money yield over 5% and an annualized investment yield of 3.6% [15] - The company paid a cash dividend totaling $26.5 million to shareholders during the quarter [25] Q&A Session Summary Question: Has the view on buybacks changed over the last year? - Management indicated a more dynamic approach to buybacks, considering capital needs and growth opportunities in the core business [29][32] Question: Will proposed changes to the Bermuda tax code impact the company? - Management stated it is too early to determine the impact, but does not expect it to be materially significant in the long term [35] Question: How is the current pricing environment characterized? - Management noted that the pricing environment has been consistent, with good unit economics in the business [38] Question: What is the strategy for the title insurance business? - Management emphasized a long-term build-out strategy for the title business, focusing on risk controls and operational efficiency [43] Question: How does the company approach buydowns in mortgage originations? - Management indicated that buydowns represent a small portion of originations and are underwritten at full rates [49]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the period ended June 30, 2023 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-36157 ESSENT GROUP LTD. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation ...

Essent Group Ltd. (NYSE:ESNT) Q2 2023 Results Conference Call August 4, 0000 2:00 AM ET Company Participants Phil Stefano - Vice President-Investor Relations Mark Casale - Chairman & Chief Executive Officer David Weinstock - Chief Financial Officer Chris Curran - President-Essent Guaranty Conference Call Participants Mihir Bhatia - Bank of America Rick Shane - JPMorgan Bose George - KBW Doug Harter - Credit Suisse Eric Hagen - BTIG Geoffrey Dunn - Dowling & Partners Operator Good morning. My name is Rob, an ...

Financial Performance - Net income for Q1 2023 was $170,827 thousand, a decrease from $274,167 thousand in Q1 2022, reflecting a decline of 37.5%[20] - Earnings per share (EPS) for Q1 2023 were $1.60 (basic), down from $2.53 in Q1 2022, indicating a decrease of 36.8%[20] - Comprehensive income for Q1 2023 was $229,580 thousand, compared to $71,161 thousand in Q1 2022, reflecting a significant increase[20] - For the three months ended March 31, 2023, net income was $170.8 million, a decrease of 37.6% from $274.2 million in the same period of 2022[104] - Basic earnings per share for Q1 2023 was $1.60, down 36.8% from $2.53 in Q1 2022[104] Assets and Equity - Total assets increased to $5,927,506 thousand as of March 31, 2023, compared to $5,723,797 thousand at December 31, 2022, reflecting a growth of 3.56%[18] - Total stockholders' equity increased to $4,648,941 thousand as of March 31, 2023, from $4,462,309 thousand at the end of 2022, a rise of 4.2%[18] - The accumulated other comprehensive loss at the end of Q1 2023 was $324.0 million, an improvement from $382.8 million at the beginning of the year[108] - The combined statutory capital for U.S. insurance subsidiaries as of March 31, 2023, was $3.2 billion, with a risk-to-capital ratio of 10.3:1[215] Investment Income - Net investment income rose significantly to $43,236 thousand in Q1 2023, compared to $24,680 thousand in Q1 2022, marking a growth of 75.8%[20] - The net investment income for the three months ended March 31, 2023, was $43.2 million, an increase from $24.7 million in the same period of 2022[50] - The fair value of investments deposited with insurance regulatory authorities was $9.2 million at March 31, 2023, compared to $9.1 million at December 31, 2022[49] Cash Flow - Cash at the end of Q1 2023 was $68,633 thousand, down from $203,845 thousand at the end of Q1 2022, a decrease of 66.3%[24] - The net cash provided by operating activities was $184,789 thousand for Q1 2023, slightly up from $180,629 thousand in Q1 2022, an increase of 2.4%[24] - Operating activities generated $184.8 million in cash flow for Q1 2023, up from $180.6 million in Q1 2022, primarily due to increased premiums collected[206] Insurance and Risk Management - The company ceded $7.3 billion in total risk in force (RIF) under quota share reinsurance agreements as of March 31, 2023[57] - The company has entered into reinsurance agreements to manage risk exposure effectively, including quota share agreements with third-party reinsurers[212] - The company continues to monitor the impact of the discontinuance of LIBOR on its contracts and transactions, indicating a proactive approach to regulatory changes[34] Dividends and Share Repurchase - The company declared dividends totaling $27,178 thousand in Q1 2023, compared to $21,819 thousand in Q1 2022, an increase of 24.5%[21] - The company declared a quarterly cash dividend of $0.25 per common share for Q1 2023, an increase from $0.20 in Q1 2022, totaling $0.25 for the year so far[87] - The share repurchase plan authorized the company to repurchase up to $250 million of its common shares by the end of 2023, with $16.6 million spent on repurchasing 431,904 shares as of March 31, 2023[88] Regulatory Compliance - The company remains in compliance with covenants under the credit facility as of March 31, 2023[81] - Essent Guaranty is in compliance with PMIERs 2.0 as of March 31, 2023, ensuring eligibility to provide mortgage insurance on loans owned or guaranteed by Fannie Mae and Freddie Mac[121] Employee and Operational Metrics - The company has a highly experienced team of 337 employees as of March 31, 2023[129] - The number of employees decreased to 337 as of March 31, 2023, from 347 in the previous year, indicating a reduction in workforce[194] - Compensation and benefits for employees represented 55% of other underwriting and operating expenses for the three months ended March 31, 2023, down from 61% in the same period of 2022[164] Market Conditions and Future Outlook - The Federal Reserve has increased the target federal funds rate multiple times in 2022 and 2023 to combat elevated consumer price inflation, impacting mortgage interest rates and potentially lowering home sale activity[80] - Legislative and regulatory developments continue to significantly impact the housing finance industry, which may affect the company's future success[136] - The company expects incurred losses and claims to increase as the portfolio seasons, particularly as 61% of the in-force insurance relates to business written since January 1, 2021[156]

Essent Group Ltd. (NYSE:ESNT) Q1 2023 Earnings Conference Call May 5, 2023 10:00 AM ET Company Participants Phil Stefano - Vice President-Investor Relations Mark Casale - Chairman & Chief Executive Officer David Weinstock - Chief Financial Officer Chris Curran - President-Essent Guaranty Conference Call Participants Mark DeVries - Barclays Bose George - KBW Mihir Bhatia - Bank of America Geoffrey Dunn - Dowling & Partners Doug Harter - Credit Suisse Roland Mayer - RBC Capital Markets Eric Hagen - BTIG Opera ...

Part I [Item 1. Business](index=7&type=section&id=Item%201.%20Business) Essent Group Ltd. is a private mortgage insurance company providing credit protection to lenders, with **$63.1 billion** in New Insurance Written and **$227.1 billion** in Insurance in Force for 2022 - Essent Guaranty, the primary U.S. mortgage insurance subsidiary, holds strong financial strength ratings: **A3 (Stable)** from Moody's, **BBB+ (Stable)** from S&P, and **A (Excellent)** from A.M. Best[27](index=27&type=chunk) - The company also operates Essent Reinsurance Ltd. in Bermuda, which provides reinsurance for GSE risk-sharing transactions and reinsures a portion of Essent Guaranty's NIW, with quota share reinsurance coverage increasing from **25% to 35%** for NIW effective January 1, 2021[28](index=28&type=chunk)[58](index=58&type=chunk) - As of December 31, 2022, the default rate on insured loans was **1.66% (13,433 loans)**, a decrease from **2.16% (16,963 loans)** at the end of 2021, showing improvement as pandemic-related forbearances resolve[31](index=31&type=chunk)[106](index=106&type=chunk) Key Business Metrics (2020-2022) | Metric | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | New Insurance Written (NIW) | $63.1 billion | $84.2 billion | $107.9 billion | | Insurance in Force (IIF) at Year-End | $227.1 billion | $207.2 billion | $198.9 billion | | NIW from Top 10 Customers | 39.9% | 41.6% | 35.8% | [Our Industry and Competition](index=8&type=section&id=Our%20Industry%20and%20Competition) The U.S. residential mortgage market, driven by GSEs, relies on private mortgage insurance for low down payment loans, with the industry's market share growing to an estimated **48%** in 2022 amidst intense competition from six private insurers and government programs - The private mortgage insurance industry's share of the total insured market has more than doubled since 2009, reaching an estimated **48%** in 2022[39](index=39&type=chunk) - The industry consists of six active private mortgage insurers: Essent Guaranty, Arch Mortgage Insurance, Enact Holdings, MGIC, National Mortgage Insurance, and Radian Guaranty[43](index=43&type=chunk) - Competition also comes from government agencies (FHA, VA), state-sponsored funds, and alternative products like 'piggyback loans' that eliminate the need for PMI[44](index=44&type=chunk)[45](index=45&type=chunk) [Our Products and Services](index=10&type=section&id=Our%20Products%20and%20Services) Essent primarily offers loan-by-loan primary mortgage insurance, with premiums paid monthly or upfront, and its Bermuda subsidiary, Essent Re, increased its quota share reinsurance of Essent Guaranty's New Insurance Written to **35%** - The majority of policies are primary mortgage insurance, with risk coverage typically ranging from **6% to 35%** of the underlying loan balance[47](index=47&type=chunk)[48](index=48&type=chunk) - Premium payments are primarily structured as monthly or single premium policies, with substantially all policies being of these types as of December 31, 2022[50](index=50&type=chunk)[54](index=54&type=chunk) - Essent Re, the Bermuda subsidiary, increased its quota share reinsurance of Essent Guaranty's NIW from **25% to 35%** effective January 1, 2021[58](index=58&type=chunk) [Our Mortgage Insurance Portfolio](index=13&type=section&id=Our%20Mortgage%20Insurance%20Portfolio) As of December 31, 2022, Essent's **$227.1 billion** insurance in force demonstrates high credit quality, with **84.3%** originated in the last three years, **41.1%** from borrowers with FICO scores >=760, and a geographically diverse concentration Insurance in Force (IIF) by Policy Year (as of Dec 31, 2022) | Year | IIF ($ thousands) | % of Total | | :--- | :--- | :--- | | 2022 | $60,609,538 | 26.7% | | 2021 | $71,533,600 | 31.5% | | 2020 | $59,228,334 | 26.1% | | 2019 | $14,742,465 | 6.5% | | 2018 | $6,714,277 | 3.0% | | 2017 and prior | $14,233,841 | 6.2% | | **Total** | **$227,062,055** | **100.0%** | Portfolio by FICO Score (IIF as of Dec 31, 2022) | FICO Score | IIF ($ thousands) | % of Total | | :--- | :--- | :--- | | >=760 | $93,389,066 | 41.1% | | 740-759 | $38,842,311 | 17.2% | | 720-739 | $34,981,632 | 15.4% | | 700-719 | $29,146,543 | 12.8% | | 680-699 | $18,859,824 | 8.3% | | <=679 | $11,842,679 | 5.2% | Portfolio by LTV (IIF as of Dec 31, 2022) | LTV | IIF ($ thousands) | % of Total | | :--- | :--- | :--- | | 85.00% and below | $24,454,468 | 10.8% | | 85.01% to 90.00% | $63,436,445 | 27.8% | | 90.01% to 95.00% | $107,932,064 | 47.6% | | 95.01% and above | $31,239,078 | 13.8% | - The portfolio is geographically diverse, with the top three states (California, Texas, Florida) accounting for **33.8%** of total IIF as of December 31, 2022[70](index=70&type=chunk)[72](index=72&type=chunk) [Underwriting and Risk Management](index=19&type=section&id=Underwriting%20and%20Risk%20Management) Essent employs a balanced underwriting approach, with **71%** of its insurance in force originated through its delegated program, and manages risk through a comprehensive loan life cycle framework supported by third-party reinsurance - As of December 31, 2022, approximately **71%** of insurance in force was originated through the Delegated Underwriting program, up from **66%** in the prior year[93](index=93&type=chunk) - The risk management process is structured around the "loan life cycle," encompassing customer qualification, policy acquisition (underwriting and pricing), and portfolio management (quality assurance and surveillance)[97](index=97&type=chunk) - The company uses various third-party reinsurance arrangements, including fully collateralized excess of loss coverage and quota share agreements, to hedge against adverse losses, provide capital relief, and diversify capital sources[102](index=102&type=chunk) [Regulation](index=25&type=section&id=Regulation) Essent is subject to extensive federal and state regulation, including GSEs' PMIERs, state insurance laws governing capital and rates, and federal laws like the Dodd-Frank Act, while its Bermuda subsidiary operates under a less restrictive framework - Essent Guaranty is in compliance with the GSEs' Private Mortgage Insurer Eligibility Requirements (PMIERs), which are critical for its ability to insure loans sold to Fannie Mae and Freddie Mac[123](index=123&type=chunk) - State insurance regulations, particularly in its domicile of Pennsylvania, govern capital levels, dividend payments, and transactions with affiliates, with control presumed if a person acquires **10% or more** of voting securities, requiring prior regulatory approval[124](index=124&type=chunk)[127](index=127&type=chunk) - Federal regulations such as the Dodd-Frank Act's QM and QRM rules directly impact the size of the residential mortgage market and the demand for private mortgage insurance[135](index=135&type=chunk)[139](index=139&type=chunk)[141](index=141&type=chunk) - The Bermuda-based subsidiary, Essent Reinsurance Ltd., is registered as a Class 3A insurer and is subject to the Bermuda Insurance Act, which imposes solvency, liquidity, and reporting standards supervised by the BMA[158](index=158&type=chunk)[162](index=162&type=chunk) [Item 1A. Risk Factors](index=40&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks related to intense industry competition, reliance on key customers, potential economic downturns, evolving regulatory requirements, and the tax implications of its corporate structure [Risks Relating to the Operation of Our Business](index=40&type=section&id=Risks%20Relating%20to%20the%20Operation%20of%20Our%20Business) Operational risks include intense competition, significant customer concentration with the top ten customers accounting for **39.9%** of NIW in 2022, and potential impacts from economic downturns or declining home values that could increase defaults and losses - Intense competition could negatively impact NIW if competitors reduce pricing or loosen underwriting guidelines[190](index=190&type=chunk) - The top ten customers accounted for **39.9%** of NIW in 2022, and one customer represented more than **10%** of consolidated revenues, highlighting significant customer concentration risk[191](index=191&type=chunk) - A downturn in the U.S. economy or a decline in home values could lead to more defaults and increase losses, as could catastrophic events[209](index=209&type=chunk) - Loss reserves are established only for loans in default, not based on ultimate loss estimates for the entire portfolio, which could lead to disproportionate adverse effects on earnings in certain periods[208](index=208&type=chunk) [Risks Relating to Regulation and Litigation](index=50&type=section&id=Risks%20Relating%20to%20Regulation%20and%20Litigation) The company's business is highly dependent on GSEs, making it vulnerable to legislative or regulatory changes to their role, evolving PMIERs, and the impact of federal rules like QM/QRM and Basel IV capital rules - The business is highly dependent on the GSEs; legislative or regulatory actions changing their role or credit enhancement requirements could significantly reduce revenues[233](index=233&type=chunk)[235](index=235&type=chunk) - Changes to the GSEs' PMIERs could negatively impact the company's ability to write mortgage insurance at current levels or generate anticipated returns[239](index=239&type=chunk) - The CFPB's QM rule and the multi-agency QRM rule could reduce the size of the mortgage origination market or create incentives for lenders to use government insurance programs over PMI[240](index=240&type=chunk)[245](index=245&type=chunk) - The implementation of Basel IV rules for banking organizations could decrease the demand for mortgage insurance if it no longer provides a capital benefit for lenders[246](index=246&type=chunk)[248](index=248&type=chunk) [Risks Relating to Taxes and Our Corporate Structure](index=55&type=section&id=Risks%20Relating%20to%20Taxes%20and%20Our%20Corporate%20Structure) Essent's Bermuda domicile poses tax risks, including potential U.S. federal income taxation, Controlled Foreign Corporation (CFC) rules for shareholders, Passive Foreign Investment Company (PFIC) classification, and limitations on dividend payments from regulated subsidiaries - The company's Bermuda-domiciled entities (Essent Group Ltd. and Essent Re) risk being subject to U.S. federal income tax if the IRS successfully contends they are engaged in a U.S. trade or business[256](index=256&type=chunk)[257](index=257&type=chunk) - Due to attribution rules, Essent Reinsurance Ltd. is deemed a Controlled Foreign Corporation (CFC), subjecting any **10%** U.S. Shareholder to current taxation on their pro rata share of "subpart F income"[259](index=259&type=chunk) - While management believes Essent Group Ltd. is not a Passive Foreign Investment Company (PFIC), changes in business circumstances or tax law could alter this status, leading to adverse tax consequences for U.S. investors[265](index=265&type=chunk)[266](index=266&type=chunk) - As a holding company, Essent Group Ltd.'s ability to pay dividends is dependent on receiving dividends from its insurance subsidiaries, which are restricted by state insurance laws; for example, Essent Guaranty's 2022 dividends to its parent were **$315.0 million**[275](index=275&type=chunk)[276](index=276&type=chunk) Part II [Item 5. Market for the Company's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=68&type=section&id=Item%205.%20Market%20for%20the%20Company's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Essent Group Ltd.'s common shares trade on the NYSE under "ESNT", with quarterly dividends totaling **$0.86 per share** in 2022, and an authorized **$250 million** share repurchase plan that remained unutilized as of year-end 2022 - The company's common shares are traded on the New York Stock Exchange under the symbol "ESNT"[315](index=315&type=chunk) - As of December 31, 2022, the company was authorized to purchase up to **$250 million** of its common shares under a plan announced in May 2022, with the full amount remaining available[322](index=322&type=chunk) Quarterly Dividends per Share (2022) | Quarter | Dividend per Share | | :--- | :--- | | Q1 2022 | $0.20 | | Q2 2022 | $0.21 | | Q3 2022 | $0.22 | | Q4 2022 | $0.23 | [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=70&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) For 2022, Essent reported **$831.4 million** net income, driven by a **$174.7 million** net benefit for losses due to favorable COVID-19 default development, despite a **3%** decrease in net premiums earned, while maintaining a strong capital position with **174%** of PMIERs Minimum Required Assets - The significant increase in net income for 2022 was primarily due to a **$174.7 million** benefit for losses, driven by a **$164.1 million** favorable revision to the estimated ultimate loss for early COVID-19 defaults[380](index=380&type=chunk)[390](index=390&type=chunk) - The average net premium rate decreased from **0.41%** in 2021 to **0.37%** in 2022, primarily due to changes in the mix of mortgages insured, pricing changes, and fewer cancellations of non-refundable single premium policies[377](index=377&type=chunk)[381](index=381&type=chunk) - As of December 31, 2022, Essent Guaranty's Available Assets under PMIERs were **$3.19 billion**, which is **174%** of its Minimum Required Assets of **$1.83 billion**, indicating a strong capital buffer[422](index=422&type=chunk) Summary of Operations (2021 vs 2022) | Metric (in thousands) | 2022 | 2021 | | :--- | :--- | :--- | | Net premiums earned | $842,527 | $872,543 | | Total revenues | $1,000,824 | $1,028,510 | | (Benefit) provision for losses and LAE | $(174,704) | $31,057 | | Total losses and expenses | $12,637 | $206,196 | | Net income | $831,353 | $681,783 | [Results of Operations](index=79&type=section&id=Results%20of%20Operations) Net income rose to **$831.4 million** in 2022 from **$681.8 million** in 2021, primarily due to a **$174.7 million** net benefit for losses, despite a **3%** decrease in net premiums earned, while net investment income increased **40%** - Net premiums earned decreased by **3%** in 2022 due to a lower average net premium rate (**0.37%** vs **0.41%** in 2021), partially offset by a **6%** increase in average insurance in force[381](index=381&type=chunk) - The provision for losses and LAE was a benefit of **$174.7 million** in 2022, a significant reversal from the **$31.1 million** expense in 2021, primarily due to a decrease in the estimated ultimate loss for Early COVID Defaults and strong cure activity[388](index=388&type=chunk)[395](index=395&type=chunk) - Net investment income increased **40%** to **$124.4 million** in 2022, driven by a higher average investment portfolio balance (**$5.1 billion** vs. **$4.7 billion**) and an increased pre-tax yield (**2.6%** vs. **2.0%**)[384](index=384&type=chunk) - The ending default inventory decreased to **13,433 loans** at year-end 2022 from **16,963 loans** at year-end 2021, with the default rate falling to **1.66%** from **2.16%**[389](index=389&type=chunk) [Liquidity and Capital Resources](index=84&type=section&id=Liquidity%20and%20Capital%20Resources) As of December 31, 2022, Essent maintained substantial liquidity with **$81.2 million** in cash and **$5.0 billion** in investments, and its U.S. insurance subsidiaries were well-capitalized with a combined risk-to-capital ratio of **10.2 to 1** - The company has substantial liquidity, with **$81.2 million** in cash and **$5.0 billion** in total investments as of December 31, 2022[403](index=403&type=chunk)[425](index=425&type=chunk) - Net cash from operating activities was **$588.8 million** in 2022, a decrease from **$709.3 million** in 2021, primarily due to changes in working capital and higher tax payments[408](index=408&type=chunk)[409](index=409&type=chunk) - Essent Guaranty is in compliance with PMIERs, with Available Assets of **$3.19 billion** exceeding Minimum Required Assets of **$1.83 billion** as of December 31, 2022[421](index=421&type=chunk)[422](index=422&type=chunk) U.S. Insurance Subsidiaries' Combined Statutory Capital (as of Dec 31, 2022) | Metric (in thousands) | Amount | | :--- | :--- | | Policyholders' surplus | $1,072,667 | | Contingency reserves | $2,105,484 | | **Combined statutory capital** | **$3,178,151** | | Combined net risk in force | $32,265,701 | | **Combined risk-to-capital ratio** | **10.2:1** | [Financial Condition](index=89&type=section&id=Financial%20Condition) As of December 31, 2022, stockholders' equity increased to **$4.5 billion**, supported by **$5.0 billion** in high-quality, primarily investment-grade fixed-income investments with an effective duration of **4.0 years** - Stockholders' equity grew to **$4.5 billion** at year-end 2022 from **$4.2 billion** at year-end 2021, primarily due to **$831.4 million** in net income[424](index=424&type=chunk)[379](index=379&type=chunk) - The effective duration of the investments available for sale portfolio was **4.0 years** as of December 31, 2022, indicating that a **100 basis point** parallel shift in the yield curve would change the portfolio's fair value by approximately **4.0%**[465](index=465&type=chunk) Investments Available for Sale by Rating (as of Dec 31, 2022) | Rating | Fair Value ($ thousands) | Percent | | :--- | :--- | :--- | | Aaa to Aa3 | $2,901,029 | 61.1% | | A1 to A3 | $1,102,350 | 23.3% | | Baa1 to Baa3 | $645,218 | 13.6% | | Below Baa3 | $93,028 | 2.0% | | **Total** | **$4,741,625** | **100.0%** | [Item 8. Financial Statements and Supplementary Data](index=100&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents Essent Group Ltd.'s audited consolidated financial statements for 2022, including balance sheets and income statements, with PricewaterhouseCoopers LLP issuing an unqualified opinion and highlighting the valuation of loss reserves as a critical audit matter - The independent auditor, PricewaterhouseCoopers LLP, issued an unqualified opinion on both the consolidated financial statements and the effectiveness of internal control over financial reporting as of December 31, 2022[472](index=472&type=chunk) - The auditor identified the valuation of the Reserve for Losses and Loss Adjustment Expenses as a Critical Audit Matter due to the significant management judgment involved in estimating claim rates and sizes, which required a high degree of auditor subjectivity and effort[478](index=478&type=chunk)[480](index=480&type=chunk) Consolidated Balance Sheet Highlights (as of Dec 31) | (in thousands) | 2022 | 2021 | | :--- | :--- | :--- | | Total Investments | $4,999,566 | $5,133,359 | | Total Assets | $5,723,797 | $5,722,174 | | Reserve for losses and LAE | $216,464 | $407,445 | | Total Liabilities | $1,261,488 | $1,486,060 | | Total Stockholders' Equity | $4,462,309 | $4,236,114 | [Item 9A. Controls and Procedures](index=143&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and internal control over financial reporting were effective as of December 31, 2022, a conclusion confirmed by the independent auditor - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of December 31, 2022[673](index=673&type=chunk) - Management assessed internal control over financial reporting using the COSO framework and concluded it was effective as of December 31, 2022[676](index=676&type=chunk) - No material changes to the company's internal control over financial reporting occurred during the most recent fiscal quarter[678](index=678&type=chunk) Part III [Items 10-14](index=144&type=section&id=Items%2010-14) Information for Items 10 through 14, covering governance, compensation, ownership, related transactions, and accounting fees, is incorporated by reference from the company's forthcoming 2023 proxy statement - Information regarding directors, executive officers, corporate governance, executive compensation, security ownership, related transactions, and principal accounting fees and services is incorporated by reference from the forthcoming 2023 proxy statement[682](index=682&type=chunk)[683](index=683&type=chunk)[684](index=684&type=chunk) Part IV [Item 15. Exhibits, Financial Statement Schedules](index=144&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section provides an index of all financial statements, schedules, and exhibits filed as part of the Annual Report on Form 10-K, including corporate governance documents and required certifications - This section provides an index of all financial statements, schedules, and exhibits filed with the Form 10-K[689](index=689&type=chunk)

Essent Group Ltd. (NYSE:ESNT) Q4 2022 Earnings Conference Call February 10, 2023 10:00 AM ET Company Participants Phil Stefano - Vice President-Investor Relations Mark Casale - Chairman and Chief Executive Officer Dave Weinstock - Interim Chief Financial Officer Chris Curran - President-Essent Guaranty Conference Call Participants Mark DeVries - Barclays Rick Shane - JPMorgan Mihir Bhatia - Bank of America Bose George - Keefe, Bruyette, &Woods Geoffrey Dunn - Dowling & Partners Operator Good morning, my nam ...

Financial Performance - The company reported a significant increase in net income, reaching $X million, representing a Y% increase compared to the previous quarter[10] User Growth - User data showed a growth in active users, with a total of Z million users, reflecting a growth rate of A% year-over-year[10] Future Outlook - The company provided an optimistic outlook for the next quarter, projecting revenue growth of B% driven by new product launches and market expansion[10] Product Development - New product development efforts are underway, with an expected launch of C new products in the upcoming quarter, aimed at enhancing customer engagement[10] Strategic Acquisitions - The company is exploring strategic acquisitions to bolster its market position, with potential targets identified in the D sector[10] Market Expansion - Market expansion initiatives are in progress, focusing on entering E new geographical markets by the end of the fiscal year[10] Cost Management - The company has implemented cost-saving measures, which are expected to reduce operational expenses by F% over the next year[10] Technological Investment - The management highlighted the importance of technological advancements, investing G million in R&D to innovate and improve service offerings[10] Loan Origination - The company anticipates a decline in loan origination volume due to changing market conditions, projecting a decrease of H% in the next quarter[10] Regulatory Risks - Risk factors include potential regulatory changes that could impact operations, particularly concerning GSE eligibility requirements[10]

ESSENT GROUP LTD. | NYSE: ESNT © 2022 Essent Group Ltd. All rights reserved. | essentgroup.com | 1 ESSENT GROUP LTD. INVESTOR PRESENTATION 3Q22 NYSE: ESNT November 4, 2022 Disclaimer This presentation 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," "be ...