Essent Group Q3 Earnings Call Highlights

Key Points

• Essent reported Q3 net income of $163 million, or $1.82 per diluted share, up from $1.67 a year earlier but down from $2.08 in Q2. Book value per share reached $62.58, up about 9% year over year including dividends.
• Mortgage insurance in force edged up to $250.1 billion, but affordability pressures may keep growth muted; persistency fell to 83.3%. The default rate rose to 2.75%, and loss provisions increased to $51.7 million.
• Shareholder returns remain substantial: Essent authorized a new $500 million repurchase plan and a $0.35 fourth-quarter dividend. The company said capital returns are expected to exceed 100% this year.

Essent Group NYSE: ESNT reported third-quarter 2026 net income of $163 million, or $1.82 per diluted share, as its mortgage insurance portfolio posted higher defaults and the company continued to return capital to shareholders.

Earnings per share rose from $1.67 a year earlier but declined from $2.08 in the second quarter, Chief Financial Officer David Weinstock said on the company’s earnings call. Annualized return on average equity was approximately 12%.

Chairman and CEO Mark Casale said the results reflected solid credit performance and the continued effects of interest rates on policy persistency and investment income. Book value per share was $62.58 at September 30, up approximately 9% from a year earlier when including common dividends.

Mortgage Insurance Growth Remains Muted

Mortgage insurance in force ended the quarter at $250.1 billion, up from $248.8 billion a year earlier and $342 million above the second-quarter level. Twelve-month persistency, which measures the portion of policies remaining in force, was 83.3%, down from 84% at June 30.

Casale said more than half of Essent’s in-force portfolio carries mortgage rates of 6% or lower, a dynamic he expects to support elevated persistency. He also said affordability continues to constrain origination volume and could keep portfolio growth muted.

Asked about the outlook for insurance in force, Casale said he would not be surprised if it flattened, although he expects housing demand and industry growth to recover over time. For longer-term modeling, he suggested persistency of around 80%.

Essent’s mortgage insurance default rate rose to 2.75% at September 30 from 2.53% at June 30. Casale attributed the increase in part to seasonality and the aging of the portfolio. He said the company had not identified significant trends in defaults and pointed to unemployment as an important factor for future claims.

The mortgage insurance provision for loss and loss adjustment expenses was $51.7 million, up from $29.4 million in the second quarter and $44.2 million a year earlier. Weinstock said larger insured loan balances are increasing the dollar amount of provisions, while Essent’s reserving methodology has not changed.

Casale said loans written after 2022 are showing higher severities than the earlier book, which has substantial home equity embedded in it. He said the company prices for an ultimate claim rate of 2% to 3% and considers a combined ratio of 35% to 45% a useful longer-term guide for the mortgage insurance business.

Reinsurance and Investments

Essent expects approximately $320 million of written premiums from its property and casualty reinsurance activity in 2026, with roughly half earned during the year at a combined ratio in the high 90s, Casale said. Mortgage risk and the related managing general agent business are expected to account for most reinsurance segment earnings in the near term.

Reinsurance segment net premiums written reached $330 million in the first nine months of 2026, compared with $49 million a year earlier. Weinstock said the increase reflected growth in non-mortgage business. The segment’s third-quarter combined ratio was 84.7%, versus 77.9% in the prior quarter.

Casale said Essent is considering some increases to its allocations at Lloyd’s while declining others. The company also may pursue additional retrocession or direct reinsurance opportunities, but he said it does not need to push for growth for its own sake.

Consolidated cash and investments totaled $6.5 billion at quarter-end, with an annualized aggregate investment yield of 4.4%. Third-quarter net investment income was $63 million, including $10.7 million from other invested assets.

Share Repurchases and Capital

Essent’s board authorized a new $500 million share repurchase plan and approved a fourth-quarter common dividend of $0.35 per share. Through October 31, the company had repurchased nearly 8 million shares for approximately $475 million during 2026, Casale said.

Essent repurchased 1.1 million shares for $74.5 million in the third quarter and another 802,000 shares for $50.8 million in October, according to Weinstock.

Casale said the company expects its capital return to exceed 100% this year, while retaining some capital for potential opportunities or a downturn. Essent Guaranty ended September with a 177% PMIERs sufficiency ratio and $1.6 billion in excess available assets, Weinstock said.

About Essent Group (NYSE:ESNT)

Essent Group Ltd. NYSE: ESNT is a Bermuda-based holding company that provides private mortgage insurance and related risk-management services in the United States. Through its operating subsidiaries, the company helps protect mortgage lenders and investors against losses when borrowers default on residential mortgage loans.

Its principal business is mortgage insurance for low-down-payment conventional residential mortgages, enabling qualified borrowers to obtain home financing with less than a 20% down payment.

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.