Enact Q1 2026 Earnings Report

Enact EPS Results

• Actual EPS: $1.21
• Consensus EPS: $1.21
• Beat/Miss: Met Expectations
• One Year Ago EPS: N/A

Enact Revenue Results

• Actual Revenue: $312.07 million
• Expected Revenue: $314.91 million
• Beat/Miss: Missed by -$2.84 million
• YoY Revenue Growth: +1.70%

Enact Announcement Details

• Quarter: Q1 2026
• Date: 5/5/2026
• Time: After Market Closes
• Conference Call Date: Wednesday, May 6, 2026
• Conference Call Time: 8:00AM ET

Enact (NASDAQ:ACT) operates as a private mortgage insurance company in the United States. It engages in writing and assuming residential mortgage guaranty insurance. The company also offers private mortgage insurance products primarily insuring prime-based, individually underwritten residential mortgage loans; contract underwriting services for mortgage lenders; and mortgage-related reinsurance products. It primarily serves originators of residential mortgage loans. The company was formerly known as Genworth Mortgage Holdings, Inc. and changed its name to Enact Holdings, Inc. in May 2021. Enact Holdings, Inc. was founded in 1981 and is headquartered in Raleigh, North Carolina. Enact Holdings, Inc. operates as a subsidiary of Genworth Holdings Inc.

Enact Q1 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Strong Q1 financials — Adjusted operating income was $172M ($1.21/share) with adjusted ROE ~13%, new insurance written of $13B and total insurance-in-force of $272B.
• Positive Sentiment: Credit and reserves remain healthy — Total delinquencies fell sequentially, cures rose, the company released $39M of reserves and reported a 15% loss ratio while maintaining an 8% claim rate on new delinquencies.
• Positive Sentiment: Strong capital position and shareholder returns — PMIER sufficiency was 162% (~$1.9B above requirement), $123M returned in Q1 via buybacks/dividends, dividend raised 14% to $0.24 and ~$500M capital return target for 2026 remains.
• Positive Sentiment: Pricing and technology advantage — Management says Rate360 enabled constructive pricing and targeted risk selection across geographies, supporting attractive risk‑adjusted returns on new insurance written.
• Negative Sentiment: Macro and policy uncertainty — Mortgage rate volatility, rising inflation/gas prices, portfolio seasoning with newer higher‑LTV vintages, and pending GSE/PMIER guidance on VantageScore create risks that could put upward pressure on delinquencies or require pricing/capital adjustments.

Presentation

[Operator]

Hello, and welcome to Enact's first quarter earnings call. Please be advised that today's conference call is being recorded. I would now like to hand the conference over to your first speaker, Daniel Kohl, Vice President of Finance. You may begin.

[Daniel Kohl, VP of Finance at Enact]

Thank you and good morning. Welcome to our first quarter earnings call. Joining me today are Rohit Gupta, President and Chief Executive Officer, and Dean Mitchell, Chief Financial Officer and Treasurer. Rohit will provide an overview of our business performance and progress against our strategy. Dean will then discuss the details of our quarterly results before turning the call back to Rohit for closing remarks. We will then take your questions. The earnings materials we issued after market close yesterday contain our financial results for the quarter, along with a comprehensive set of financial and operational metrics. These are available on the investor relations section of our website. Today's call is being recorded and will include the use of forward-looking statements. These statements are based on current assumptions, estimates, expectations and projections as of today's date.

[Daniel Kohl, VP of Finance at Enact]

Additionally, they are subject to risks and uncertainties which may cause actual results to be materially different, and we undertake no obligation to update or revise such statements as a result of new information. For a discussion of these risks and uncertainties, please review the cautionary language regarding forward-looking statements in today's press release, as well as in our filings with the SEC, which will be available on our website. Please keep in mind the earnings materials and management's prepared remarks today will include certain non-GAAP measures. Reconciliations of these measures to the most relevant GAAP metrics can be found in the press release, our earnings presentation, and our upcoming SEC filing on our website. With that, I'll turn the call over to Rohit.

[Rohit Gupta, President and CEO at Enact]

Thank you, Daniel. Good morning, everyone. Enact delivered a strong start to 2026 amid a volatile rate environment. This performance was underpinned by the disciplined execution of our strategy, resilient credit performance, and our clear focus on long-term value creation. For the first quarter, we reported adjusted operating income of $172 million, or $1.21 per diluted share. Adjusted return on equity was 13%, and we generated strong new insurance written of $13 billion, resulting in total insurance in force of $272 billion. The housing market remained dynamic, with mortgage rate volatility impacting mortgage activity in the quarter. Overall, purchase application volume followed seasonal trends, while lower rates early in the quarter supported elevated refinance applications. Additionally, recent loan vintages with lower embedded equity have contributed to increased mortgage insurance penetration in refinance activity.

[Rohit Gupta, President and CEO at Enact]

Conversely, as rates increased during March and April, the refinance trend slowed, but we have seen the impact of the spring selling season on purchase applications. Against this backdrop, persistency remained elevated at 80% in the first quarter. Additionally, across our portfolio, 58% of loans in our book have rates below 6%, providing continued support for elevated persistency. While the macro environment remains uncertain and inflationary pressures accelerated as gas prices have risen, the consumer continues to show resilience. Overall, labor market conditions remain supportive and credit performance remains healthy. Importantly, we have not seen any meaningful impact within our credit portfolio and overall credit trends remain in line with our expectations. We will continue to monitor these dynamics closely and believe that the underlying credit fundamentals of our business remain strong.

[Rohit Gupta, President and CEO at Enact]

In fact, our insurance in force portfolio remains resilient with a risk-weighted average FICO score of 746, risk-weighted average loan-to-value ratio of 93% and layered risk was 1.2% of risk in force. Pricing remained constructive in the quarter and our dynamic risk-adjusted pricing engine, Rate 360, is enabling us to prudently target the right risk for the right price at a granular level with changing market conditions. Turning to losses, total delinquencies were down 1% sequentially, with new delinquencies down 1% and cures up 13%, both consistent with seasonal trends. Our strong cure performance was driven by favorable credit trends and our effective loss mitigation efforts. This drove a net reserve release of $39 million in the quarter, and our resulting loss ratio was 15%.

[Rohit Gupta, President and CEO at Enact]

Credit performance continues to be strong, and we are well reserved for a range of scenarios. Turning to expenses, we delivered another quarter of prudent expense management, putting us on track to achieve our 2026 expense guidance range of $215 million-$220 million, excluding reorganizational costs. We continue to execute against our capital allocation priorities, including maintaining a strong and resilient balance sheet to support existing policyholders, investing in our business to drive organic growth and operating efficiencies, funding attractive new business opportunities, and returning excess capital to shareholders. At the end of the quarter, our PMIER sufficiency ratio was 162%, providing significant financial flexibility. Our credit and investment portfolios are in excellent shape. Our strong capital position is further reinforced by our CRT program and the backing of our undrawn credit facility.

[Rohit Gupta, President and CEO at Enact]

We continue to execute on our growth and diversification efforts. Our growth efforts in Enact Re continue to deliver consistent and strong performance in the first quarter, generating attractive risk-adjusted returns. Enact Re remains a long-term growth and diversification opportunity that is both capital and expense efficient. Our strong performance supported robust capital returns to our shareholders. During the first quarter, we returned $123 million through share repurchases and dividends and are pleased to announce that our board of directors approved a 14% increase to our dividend from $0.21-$0.24 per share, which also marks the fourth year that we have increased our quarterly dividend payment. We continue to expect to deliver capital returns in 2026 of approximately $500 million.

[Rohit Gupta, President and CEO at Enact]

Turning to recent housing policy announcements, we applaud the FHFA and the GSEs for their thoughtful approach to credit modernization through the announced limited rollout of VantageScore 4.0. Enact supports ongoing efforts to modernize credit evaluation in ways that responsibly expand access to sustainable homeownership. We remain committed to supporting our customers and to staying operationally aligned as the GSEs advance this initiative and provide additional information. Overall, we've had a great start in 2026 that positions Enact for long-term success. I want to thank our entire team for their relentless commitment and outstanding performance. With that, I will now hand the call over to Dean.

[Dean Mitchell, CFO and Treasurer at Enact]

Thanks, Rohit. Good morning, everyone. We began 2026 with another quarter of strong results. Adjusted operating income was $172 million or $1.21 per diluted share, compared to $1.10 per diluted share in the same period last year and $1.23 per diluted share in the fourth quarter of 2025. Adjusted operating return on equity was 12.9%. A detailed reconciliation of GAAP net income to adjusted operating income can be found in our earnings release. Turning to revenue drivers, new insurance written was $13 billion in the first quarter, down 11% sequentially and up 30% year-over-year as rate trends and seasonal dynamics played out across the period. Persistency was 80% in the quarter, flat sequentially and down four points year-over-year on lower prevailing mortgage rates.

[Dean Mitchell, CFO and Treasurer at Enact]

While rates were volatile over the quarter, only 21% of mortgages in our portfolio have rates at least 50 basis points above March's average of 6.2%, providing support for continued elevated persistency. Primary insurance in force was $272 billion in the quarter, down $1 billion from the fourth quarter of 2025 and up $4 billion or approximately 2% year-over-year. Total net premiums earned were $243 million, down $3 million sequentially and down $2 million year-over-year, primarily driven by higher ceded premiums. Our base premium rate of 39.4 basis points was down 0.2 basis points sequentially in line with our expectations. As a reminder, our base premium rate is impacted by several factors and tends to modestly fluctuate from quarter-to-quarter.

[Dean Mitchell, CFO and Treasurer at Enact]

Our net earned premium rate was 34.3 basis points, down 0.5 basis points sequentially, driven by higher ceded premiums. Investment income in the first quarter was $71 million, up $2 million or 3% sequentially, and up $8 million or 12% year-over-year. Our new money investment yield of 5% contributed to an increase in the average portfolio book yield of 4.5% for the quarter. While we typically hold investments to maturity, we may selectively pursue income enhancement opportunities. During the quarter, we sold certain assets that will allow us to recoup realized losses through future higher net investment income. Turning to credit, we continue to see strong loss performance across our overall portfolio.

[Dean Mitchell, CFO and Treasurer at Enact]

New delinquencies decreased sequentially to 13,600 in the quarter from 13,700 in the fourth quarter of 2025, in line with expected seasonal trends. Our new delinquency rate for the quarter remained consistent with pre-pandemic levels at 1.5%, flat from the fourth quarter of 2025, and an increase of 20 basis points from the first quarter of 2025. Additionally, our cure rate increased sequentially three percentage points to 54% and remains well above pre-pandemic levels. We maintained our claim rate on new delinquencies at 8%. Total delinquencies in the first quarter decreased sequentially to 24,700 from 24,900, and the delinquency rate was flat sequentially at 2.6%.

[Dean Mitchell, CFO and Treasurer at Enact]

Losses in the first quarter of 2026 were $37 million, and the loss ratio was 15% compared to $18 million and 7% respectively in the fourth quarter of 2025 and $31 million and 12% in the first quarter of 2025. The current quarter reserve release of $39 million from favorable cure performance and loss mitigation activities compares to a net reserve release of $60 million, inclusive of our claim rate reduction from 9%-8% in the fourth quarter of 2025 and $47 million in the first quarter of 2025. Operating expenses in the first quarter of 2026 were $49 million, and the expense ratio was 20% compared to $59 million and 24% respectively in the fourth quarter of 2025, and $53 million and 21% in the first quarter of 2025.

[Dean Mitchell, CFO and Treasurer at Enact]

As a reminder, our expenses are typically higher in the back half of the year. For full-year 2026, we continue to anticipate operating expenses in the range of $215 million-$220 million, excluding any reorganization costs as we prudently manage our expense base, balancing our ongoing focus on driving further efficiencies across the business, with continuing to invest in our growth initiatives. We continue to operate from a strong capital and liquidity position underpinned by our robust PMIER sufficiency and the successful execution of our diversified CRT program. Our PMIER sufficiency was 162%, or $1.9 billion above PMIERs requirements, and our third-party CRT program provides $1.9 billion of PMIERs capital credit at the end of the first quarter. Turning now to capital allocation.

[Dean Mitchell, CFO and Treasurer at Enact]

During the quarter, we paid out $30 million or $0.21 per share through our quarterly dividend and bought back 2.3 million shares at an average price of $40.66 from $93 million. Through April 30th, we have repurchased an additional 0.7 million shares for $30 million as well. Yesterday, we announced a 14% increase to our quarterly dividend from $0.21 per share to $0.24 per share, payable June 18th, 2026. The increased dividend is consistent with our commitment to returning capital to shareholders and reflects the continued strength of our financial position and confidence in our business. As Rohit mentioned earlier, our 2026 total capital return guidance remains unchanged at approximately $500 million.

[Dean Mitchell, CFO and Treasurer at Enact]

As in the past, the final amount and form of capital returned to shareholders will ultimately depend on business performance, market conditions, and regulatory approvals. Overall, we are pleased with our start to 2026 and believe we remain well positioned to prudently manage risk, maintain a strong balance sheet, and deliver solid returns for our shareholders. With that, let me turn the call back to Rohit.

[Rohit Gupta, President and CEO at Enact]

Thanks, Dean. Our mission to responsibly help more people achieve the dream of homeownership guides everything we do. Looking ahead, we remain encouraged by the long-term fundamentals in the housing market and are confident that Enact's strategy and durable business model position us to generate compelling performance and attractive returns while continuing to navigate a dynamic operating environment. We appreciate your interest in Enact and your continued support. Operator, we are now ready for Q&A.

[Operator]

Thank you. At this time, we will conduct a question-and-answer session. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Bose George with KBW. Please go ahead.

[Bose George, Analyst at KBW]

Hey, everyone. Good morning. Just want to start on credit. Credit, you know, looks solid. I'm just curious if there are markets where you're keeping an eye on in terms of home prices and have had to adjust anything in terms of pricing or your exposures, you know, based on home price expectations.

[Dean Mitchell, CFO and Treasurer at Enact]

Yeah, Bose, good morning. This is Dean. Thanks for the question. I'd agree with your general assessment at the macro level. We think overall credit performance remains very strong, both in terms of delinquency development and cure activity. As you would expect, we continue to assess performance across borrower and loan attributes. We really haven't seen any material deviation from our pricing expectations when we set a price and ultimately onboard risk. That doesn't mean that there aren't differentiations across different attributes, and certainly your question about geographies is on point. You know, in terms of geography, there are areas where housing supply has increased and home prices have moderated or even declined in some parts of the country.

[Dean Mitchell, CFO and Treasurer at Enact]

We've called out the Sun Belt, and particularly markets like Florida and Texas, as areas where this dynamic is going on. There's other geographies, obviously, where housing supply remains low and home prices continue to appreciate. The Northeast Corridor is a good example of that. I think in terms of how we handle that, just as a reminder, inside our proprietary pricing engine, Rate360, we have the ability to price across over 300 metropolitan statistical areas, and we price based on our view of the market's future home prices. What that means is we charge incremental premium when we feel markets are more likely to pull back for the higher risk of the potential for claim. That's really aligned with our principle of the right risk at the right price.

[Dean Mitchell, CFO and Treasurer at Enact]

The bottom line from my perspective, Bose, is while there are differences in home prices across geographies, and they do affect performance, we really haven't seen performance differ from our pricing expectations in any material market. Again, we still believe we've onboarded the right risk at the right price across geographies based on performance to date.

[Bose George, Analyst at KBW]

Okay, great. Thanks. Actually switching over to the VantageScore rollout. Actually a couple of things there. One, since PMIERs incorporates FICO into setting your capital standards. Does PMIERs have to be revisited as part of this whole process as well? How do you, when you're sort of providing mortgage insurance, make the adjustments since I guess FICO is whom we started the key driver for you guys as well, I would think. Or GSE.

[Rohit Gupta, President and CEO at Enact]

Yeah. Good morning. This is Rohit. Thank you for the question. Absolutely. As you mentioned that PMIERs on classic FICO is the foundation of how we think about one of the pricing regimes that governs our returns. Just given that fact, as we think about Vantage, I first wanna say that, as I said in my prepared remarks, we are fully supportive of initiatives that qualify more home-ready consumers to prudently get into homes. From an implementation perspective, we have been working very constructively with FHFA and the GSEs to be operationally ready, and we stand ready today to operationally implement VantageScore 4.0.

[Rohit Gupta, President and CEO at Enact]

As we think about the next step, I think it's items like PMIERs where we just need further guidance. We are waiting for GSEs to provide that guidance and look forward to actually serving the market as that becomes available. Our broader mindset as we have talked about our risk appetite and the way we price is to always have this principle of charging the right price for the right risk at a very granular level. Aligned with that intent, as we get PMIERs for VantageScore 4.0, we would basically take that PMIERs guidance and incorporate that into our return calculation for loan cohorts across our Rate360 engine. That would generate pricing for a VantageScore loan versus a classic FICO loan.

[Rohit Gupta, President and CEO at Enact]

Down the road, as FICO 10T gets rolled out, our mindset would be the same. Essentially, the intent here is to support these initiatives, but at the same time, charge the right price for the right risk across any score that is coming to us from lenders.

[Bose George, Analyst at KBW]

Yeah. Okay. Makes sense. Thanks a lot.

[Rohit Gupta, President and CEO at Enact]

Absolutely.

[Operator]

Thank you. One moment for our next question. Our next question comes from the line of Mihir Bhatia with Bank of America. Please go ahead.

[Mihir Bhatia, Analyst at Bank of America]

Good morning, Rohit and team. Thank you for taking my question. I wanted to start with just on credit and the delinquency rate expectations going forward. Just any comments on that, just how you expect delinquency rate to trend? Is there upward pressure from portfolio seasoning, et cetera? Just things we should be keeping in mind as we build our models and think about the credit outlook.

[Dean Mitchell, CFO and Treasurer at Enact]

Mihir, it's Dean again. Thanks for the question. A very good question. You know, I think in terms of delinquency rate, it's a little bit hard to project as there's a lot that goes into that. It's gonna be dependent upon, of course, the macroeconomic environment and changes in its potential trajectory would have a meaningful impact on delq rate. It also is impacted by things like NIW levels. To the extent we write, more new insurance written, that could suppress what would otherwise be the delq rate. Of course, it's impacted by claim timing. As we've seen this quarter and we've seen in prior quarters, that's been de minimis to date. I think that makes it difficult to predict with precision.

[Dean Mitchell, CFO and Treasurer at Enact]

At the same time, in trying to be responsive to your question, I think, you know, given some of the aging that we're seeing in the newer purchase-heavy books, those books having slightly higher risk attributes, LTV, DTI, and a little bit lower FICO, I think it's reasonable to expect the delinquency rate could tick up from the Q1 levels. Again, gotta be caveated with all things being equal, macroeconomic NIW claims and et cetera. I think it could tick up from the 2.6 that you see in the first quarter.

[Mihir Bhatia, Analyst at Bank of America]

Got it. Just if we talk about the premium yield, expectations for the rest of the year, just any call-outs we should keep in mind even quarter-over-quarter. Maybe just also use the opportunity to talk about competitive intensity that you're seeing.

[Dean Mitchell, CFO and Treasurer at Enact]

Yeah. I'll start that off, Mihir, on base premium rate and turn it over to Rohit on the competitive environment. As we've talked about in prior quarters, base premium rate is affected by a lot of different variables, NIW levels, NIW price. This quarter, very importantly, the mix of purchase and refi, which obviously impacts NIW price, and other things such as lapse, where that lapse is coming from, and things that you might not even consider in the calculation of base premium rate like delinquency premium accruals. You know, I think at the end of the day, we've guided towards a flattish base premium rate over the over the quarter, acknowledging that over the full-year rather, acknowledging that quarter to quarter you could see some volatility.

[Dean Mitchell, CFO and Treasurer at Enact]

Some of the volatility that you saw on the sequential quarter basis is what I mentioned, the refi purchase mix. We had an increase in a refi mix this quarter. I think if we had normalized that to the prior period, you would have seen that 0.2 basis points decline be something closer to 0.1 basis point decline. There is gonna be quarter-to-quarter volatility, but I think we're still very comfortable with the guidance of flattish, base premium rate over the course of the full-year 2026.

[Rohit Gupta, President and CEO at Enact]

Yeah. Mihir, good morning. Oh, yeah. The second part of your question in terms of market dynamics, I would say, as I said in my prepared remarks, we found the pricing to be attractive in the quarter. We believe the market remains constructive, and we like the NIW. We wrote, almost $13 billion of NIW we wrote in the first quarter, and the returns we are getting on that NIW. I would say that we continue to price, for some uncertainty, economic uncertainty in the market in our pricing. As Dean said in his previous response, when it comes to geographical markets or some risk attributes, we continue to make sure that we are getting adequately paid for the conditional view that we have down to each geographical area. Hope that provides you, some kind of construct and color on the market.

[Mihir Bhatia, Analyst at Bank of America]

You know, that's helpful. Just the last question, just I want to touch on Washington, but specifically on the GSEs. Are you seeing any shifts in GSE behavior? I know you talked about Vantage a little bit, but just in general, any shifts in the housing credit GSE behavior that could affect MI eligibility or volumes? Just anything we should be keeping an eye on?

[Rohit Gupta, President and CEO at Enact]

Sure. I would say at a macro level, nothing that would actually think of us changing the MI volume or MI penetration. I would say, while the market size numbers are still not finalized, we actually believe that there was a little bit of an uptick in MI penetration in Q1, in the Q1 NIW, so certain loans. That was driven by the GSE execution in Q1 being better than FHA execution and that benefiting the MI industry also. I would say outside of that, from a policy perspective, GSE risk appetite continues to stay relatively stable.

[Rohit Gupta, President and CEO at Enact]

GSEs continue to look at loan performance, credit characteristics, and continue to make kind of minor adjustments to their appetite as they always do, but nothing beyond that, in terms of any meaningful changes to report.

[Mihir Bhatia, Analyst at Bank of America]

All right. Thank you.

[Rohit Gupta, President and CEO at Enact]

Thank you.

[Operator]

Thank you. One moment for our next question. Our next question comes from the line of Rick Shane from JPMorgan. Please go ahead.

[Rick Shane, Analyst at JPMorgan]

Hey, guys. Thanks for taking my questions this morning. Look, we've had in the past couple quarters, a few windows of lower rates. And obviously at some point we all expect rates to fall, though that seems to be getting pushed out. I'm curious what insights you can gather from those windows in terms of what we should anticipate for activity. Obviously, we see refis pick up, but I'm curious how that impacts the risk within the portfolio. Are there certain cohorts either that are riskier or less risky that are refinancing at faster rates during those windows? And what types of purchase loans are you seeing? Are they in sort of your risk spectrum? I'm curious to think about what we might see going forward when we get into a real lower rate environment.

[Rohit Gupta, President and CEO at Enact]

Sure, Rick. Good morning. This is Rohit. I'll get started and then Dean will chime in in terms of adding color. I would say a very good point in terms of, we have had few refi windows, as we called it, in the market, and those refi windows, although they were short, they've given us insights into, borrower behavior and lender behavior as well in the last six, seven months. I would say, these windows have primarily been in time frames when the purchase market just seasonally is not expected to be super large because that's not when people are planning to buy homes. We have seen obviously more reaction from the refinance part of the market.

[Rohit Gupta, President and CEO at Enact]

What I would kind of share with you is the activity has been very much in line with expectations that the books that were more in the money during those windows. July 2022 onwards, we've had higher rates, so consumers who originated their loans in that high rate environment are more likely to refinance when the rates come down to closer to that 6% level. That's exactly what we have seen both in Q4 and in Q1, that when rates come to that level, we basically see consumers-- lenders and consumers take advantage of those short refi opportunities to get into a better economic condition. I would say the impact on lapse has been on those books.

[Rohit Gupta, President and CEO at Enact]

2023 book, 2024 book have been the ones that actually see more lapse. From a risk attribute perspective, as Dean mentioned earlier, those books do have more purchase activity originally with slightly higher LTVs, slightly more red FICO and slightly higher debt to income. As refi activity happens, obviously that composition changes. One upside that we see in this business cycle is normally our refinance penetration in the market is about 4% of every 100 loans that go in the market. Given the fact that some of these books have lower embedded equity, when consumers are refinancing, a good number of times those consumers are not below 80 LTV. As a result, they end up refinancing back into MI.

[Rohit Gupta, President and CEO at Enact]

We have seen MI penetration go from that 4% number closer to 6%-7%, and we see a boost in MI market, even coming through the refinance portion of the market. That's basically a little bit of color on the refinance side, and I'll quickly pivot to the purchase side. I would simply say that. When rates drop during kind of not purchasing season, we see less activity because it's not that consumers can suddenly go and buy a home because rates dropped for a 15-day window.

[Rohit Gupta, President and CEO at Enact]

Refinance loans can take advantage of that, purchase loans can't. If rates were to drop in the purchase selling season, we do believe that there's a significant amount of pent-up demand on the sideline, that you could see those consumers come to market, and that would benefit homeownership rates, and that would benefit MI market. Let me pause there and just ask Dean to chime in on anything I left out.

[Dean Mitchell, CFO and Treasurer at Enact]

Yeah, Rohit, I agree with everything you said. That was really comprehensive. I don't have much to add to that.

[Rohit Gupta, President and CEO at Enact]

Okay.

[Rick Shane, Analyst at JPMorgan]

Hey, Rohit. It was a great answer. I really do appreciate it. If I can ask a quick follow-up. When you think about that refi activity that we've seen in those windows, do you think it over-indexes, under-indexes or sort of pari passu indexes to the layered risk within the portfolio?

[Rohit Gupta, President and CEO at Enact]

Just naturally, what I would expect, I don't have any specific numbers from the last six months, and I can get that to you offline. My general take would be, Rick, consumers who are in better credit position when rates are lower are more likely to refinance than consumers who are not. I think that's just kind of how the market is structured. If you started off as a consumer who was at 720 FICO, but over the last six months or over the last two years, your FICO has risen to 780 because you've managed your credit well, then you are just going to get a better execution when you come to refinance in the market.

[Rohit Gupta, President and CEO at Enact]

Versus if you started with 720 and you drifted down to 640, when you come back to market, you're gonna see an impact of loan-level price adjustments in your note rate, you're less likely to refinance. I would say it over-indexes on lower risk attributes in terms of possibility of refinancing a loan.

[Rick Shane, Analyst at JPMorgan]

Great. As always, I appreciate the clarity of the answer. Thank you, guys.

[Rohit Gupta, President and CEO at Enact]

Thank you, Rick.

[Operator]

Thank you. One moment for our next question. Our next question comes from the line of Brian Meredith of UBS. Please go ahead.

[Marissa Lobo, Analyst at UBS]

Thanks, and good morning. It's actually Marissa Lobo on for Brian today. With tariffs creating some uncertainty in the labor market, what assumptions are embedded in your reserves around unemployment, HPA and cure rates? Have any of those assumptions changed since the Q4 call?

[Dean Mitchell, CFO and Treasurer at Enact]

Hey, Marissa, it's Dean. You know, I think our actuarial methods really aren't econometrically driven, so I can't give you expressed macroeconomic assumptions embedded in our reserving. More traditional reserving techniques, chain ladder, things along those lines, looking at performance trends through time. What I can say is, from a claim rate perspective, we maintained our claim rate at 8%. We still continue to believe that credit performance is holding up well and that a consistent number, eight out of every 100 new delinquencies, will roll to claim. Obviously, commensurate with the reserve release that we took, $39 million this quarter, we continue to see on prior period reserves cure performance above our expectations.

[Dean Mitchell, CFO and Treasurer at Enact]

As a result, we have, in the past, and we did this quarter, released a certain portion of reserves on prior period delinquencies given that elevated cure activity. Really, as it relates to the assumptions of booking reserves on new delinquencies, we didn't make any changes this quarter.

[Rohit Gupta, President and CEO at Enact]

Marissa, just to add a little bit of color to Dean's point. When it comes to a loan already being delinquent, unemployment level at a macro level or at a geographical level has less impact on that loan. The assumptions that you did mention are incorporated in our conditional pricing view. We are incorporating an assumption on unemployment rate, home price appreciation, into our pricing that we are charging on net new loans for that month or that week. That's how we think about implementing a conditional view into our business.

[Marissa Lobo, Analyst at UBS]

Got it. That's very helpful. Thank you. On Rate360, it's clearly been a differentiator. Can you give us a sense of how it's influencing your NIW mix, pricing outcomes and what you plan to invest in for the next iteration?

[Rohit Gupta, President and CEO at Enact]

Yes. A very good question, Marissa. As I said, as I've said in the past, Rate360 continues to iterate in terms of our innovation, our level of analytics, and always kind of this desire to find the next new attribute that can actually give us more predictive power. We've been investing in that tool for possibly last seven years or so, and we've gone through four or five versions of the pricing engine by this time. I think in terms of talking about the capabilities and what it is capable of delivering in the market, just given the commercial nature of our pricing and the fact that we operate in an opaque market, I wouldn't wanna talk about any specifics.

[Rohit Gupta, President and CEO at Enact]

I would say that we continue to invest in that tool, continue to invest in the modeling and the research that it takes to derive what basically causes a consumer or loan to go delinquent versus another loan not to go delinquent. All of those kind of drivers and outcomes are where we continue to invest, and we are very happy with where our journey has been and where it's going. Moving forward, we continue to incorporate all kinds of technologies, including machine learning and artificial intelligence, to make sure that those are guiding the pricing we deploy in the market every single day. I think from a risk principle perspective, only two things I'll mention is the right price for the right risk.

[Rohit Gupta, President and CEO at Enact]

That is always our intent, that down to the granularity of every single loan, we can charge the right price. Then making sure that when it comes to layered risk, we are willing to take single attribute risk. When it comes to layered risk, we try to make sure that we are pricing in the loans where we can expect a stress scenario, but not the loans where basically the multiple levels of risk could make the loan performance unpredictable.

[Marissa Lobo, Analyst at UBS]

Appreciate the answers. Thank you.

[Rohit Gupta, President and CEO at Enact]

Thank you, Marissa.

[Dean Mitchell, CFO and Treasurer at Enact]

Thanks, Marissa.

[Operator]

Thank you. I am showing no further questions at this time. I would now like to turn the call back to Rohit Gupta for closing remarks.

[Rohit Gupta, President and CEO at Enact]

Thank you, Rory, and thank you, everyone. We appreciate your interest in Enact, and we look forward to seeing many of you in New York at BTIG's Housing Ecosystem Conference on May 7th, or virtually at KBW's Real Estate Finance and Technology Conference on May 19th. Thank you.

[Operator]

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Participants

Executives

• Daniel Kohl, VP of Finance
• Dean Mitchell, CFO and Treasurer
• Rohit Gupta, President and CEO

Analysts

• Bose George, Analyst at KBW
• Marissa Lobo, Analyst at UBS
• Mihir Bhatia, Analyst at Bank of America
• Rick Shane, Analyst at JPMorgan