Essent Group NYSE: ESNT reported second-quarter 2026 net income of $190 million, or $2.08 per diluted share, as a benign credit environment, elevated mortgage-insurance persistency and higher investment income supported results.
The company said its annualized return on average equity was 13.4% for the quarter. Book value per share stood at $63.01 as of June 30 and had grown nearly 13% over the prior year, including the common dividend. Chairman and Chief Executive Officer Mark Casale said the company views book value per share growth as its primary measure of success.
“Cash generation from our core MI business remains strong,” Casale said, adding that the company has flexibility to allocate capital between franchise investments and shareholder returns.
Mortgage Insurance Portfolio and Credit Trends
Insurance in force in Essent’s mortgage insurance business totaled $249.7 billion at June 30, up $1.8 billion from the end of the first quarter and $2.9 billion, or 1.2%, from a year earlier. Twelve-month persistency was 84%, compared with 84.7% at March 31.
Casale said persistency remains supported by the interest-rate environment, noting that nearly half of the company’s in-force portfolio carries mortgage rates of 5.5% or less. At the same time, he said affordability constraints are likely to keep portfolio growth subdued in the near term because they continue to weigh on mortgage originations.
The company’s mortgage insurance portfolio had a weighted-average credit score of 747 and weighted-average original loan-to-value ratio of 93%. Its default rate was 2.53% at June 30, essentially unchanged from the preceding quarter. Casale said embedded home equity within the portfolio should mitigate ultimate claims, while 97% of insurance in force is covered by reinsurance protection.
Mortgage insurance premiums earned were $216 million during the second quarter. The average base premium rate was 40 basis points, down 1 basis point sequentially, while the average net premium rate was unchanged at 35 basis points.
During the question-and-answer session, Casale said the company expects its average base premium rate to remain around 40 basis points this year and said any longer-term movement would likely be limited due to the weight and size of the existing insurance portfolio. He characterized the competitive environment as stable and said Essent focuses more on premium dollars and returns than market-share growth.
Casale said the company has found opportunity in selected borrower segments, including areas with higher loan-to-value ratios or debt-to-income ratios, where he said competition can be less intense than in lower-risk borrower categories.
Expenses, Losses and Capital Position
The mortgage insurance provision for losses and loss adjustment expenses was $29.4 million, down from $37.6 million in the first quarter but above $15.3 million a year earlier. Mortgage insurance operating expenses were $31.9 million, down from $37.6 million in the first quarter, and the expense ratio improved to 14.8% from 17.4%.
Chief Financial Officer David Weinstock said Essent Guaranty’s PMIERs sufficiency ratio was 172% at June 30, representing $1.5 billion of excess available assets. Essent Guaranty had statutory capital of $3.7 billion and a risk-to-capital ratio of 8.5-to-1, including $2.7 billion of contingency reserves.
Weinstock said Essent Guaranty paid $115 million in dividends to its U.S. holding company year to date and could pay an additional $302 million in ordinary dividends during 2026 beginning July 1.
At the consolidated level, Essent reported $6.6 billion in cash and investments, $5.7 billion in GAAP equity and $1.1 billion in cash and investments at the holding companies. The company also had access to $1 billion in excess-of-loss reinsurance. Holding-company liquidity included $500 million of undrawn revolver capacity, while senior unsecured notes outstanding totaled $500 million. Its debt-to-capital ratio was 8%.
Reinsurance and Investment Income
Essent’s reinsurance segment continued to expand through non-mortgage property-and-casualty business. Net premiums written in the first half totaled $249 million, compared with $31 million in the prior-year period, while net premiums earned increased to $73 million from $30 million.
The reinsurance combined ratio was 77.9% in the second quarter, compared with 69.6% in the first quarter and 19.4% a year earlier. Weinstock said the change reflected expected differences between mortgage and non-mortgage underwriting performance as the business mix shifted. The segment’s pre-tax underwriting income remained predominantly tied to GSE and other mortgage risk-share business, with P&C activity not materially contributing during the quarter.
Casale said Essent expects approximately $320 million of written premium from its P&C reinsurance activity in 2026, with about half earned this year at a combined ratio in the high 90s. He described the P&C business as a longer-term capital-allocation opportunity and said its exposure is concentrated in casualty and specialty lines, with limited property exposure.
Consolidated net investment income rose 4% sequentially to $61.6 million. Income from other invested assets increased to $19.4 million from $10.2 million in the first quarter, primarily due to favorable fair-value adjustments. Casale said the company’s strategic-investment portfolio, focused on insurance, specialty finance and housing, totaled about $450 million, or 7% of total investments.
Capital Returns and Technology Investments
Essent repurchased 3.2 million shares for $191 million during the second quarter and paid $31.6 million in shareholder dividends. Through July 31, the company had repurchased nearly 6 million shares for approximately $350 million. The board approved a third-quarter common dividend of $0.35 per share.
Casale also said Essent is investing in technology, including artificial intelligence applications in analytics, risk management, information technology and title operations. He said the company sees AI as a way to improve pricing, claims processing, customer responsiveness and system-development cycle times rather than as a material near-term cost issue.
In title insurance, Casale said high interest rates remain a modest near-term headwind and the business is not expected to make a meaningful earnings contribution in the near term. He said Essent continues to add lender relationships and build technology infrastructure, positioning the segment for a future recovery in housing activity and refinancings.
About Essent Group (NYSE:ESNT)
Essent Group Ltd. NYSE: ESNT is a publicly traded insurance holding company specializing in private mortgage insurance and mortgage reinsurance solutions. Through its primary subsidiary, Essent Guaranty, the company provides credit protection to mortgage lenders, helping mitigate the risk of borrower default on residential mortgage loans. Essent's insurance policies enable lenders to offer low-down-payment programs, supporting homebuyers in achieving homeownership with reduced upfront equity requirements.
Beyond traditional mortgage insurance, Essent offers a suite of risk management and analytics services designed to help financial institutions monitor and manage mortgage portfolios.
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.
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