Enact Holdings, Inc. Q1 FY2025 earnings call

Key Points

• Enact delivered strong financial results in Q1 2025: Adjusted operating income was $169 million, up 2% year-over-year; adjusted earnings per share was $1.10, up 6% year-over-year; adjusted return on equity was 13.4%; insurance in-force was $268 billion, up 2% year-over-year.
• Credit performance was favorable: Delinquencies improved, with total delinquencies down 5% sequentially and new delinquencies down 11%; cure rate was 56%, leading to a reserve release of $47 million and a loss ratio of 12%.
• Capital allocation: Returned over $94 million to shareholders via share buybacks and dividend; Board authorized a new $350 million share repurchase program and approved a 14% dividend increase.
• Enact Re: Continued to perform well, participating in GSE CRT transactions in single-family and multifamily markets, a long-term growth vehicle.
• Expense management: Disciplined with a 9% sequential expense reduction; reaffirmed 2025 expense guidance of $220 million to $225 million.
• Rate360: Deployed the latest rate engine leveraging proprietary data, market information, advanced analytics, and machine learning for competitive risk-adjusted pricing.

Primary insurance in-force was $268 billion in the first quarter of 2025, relatively flat from $269 billion in the fourth quarter of 2024 and up $4 billion or 2% year-over-year. New insurance written was $10 billion, down 26% sequentially and 7% year-over-year. Total net premiums earned were $245 million, down $1 million sequentially but up $4 million or 2% year-over-year. Enact Re continues to perform well, participating in GSE CRT transactions in single-family and multifamily markets, serving as a long-term growth vehicle for the company.

Forward-Looking Statements

• 2025 total capital return guidance remains unchanged at $350 million.
• Base premium rates are expected to stabilize around 2024 levels.
• 2025 expense guidance is reaffirmed at $220 million to $225 million.

Risks

• Dynamic and complex macroeconomic environment with shifting economic policies and elevated geopolitical uncertainty.
• Impact of elevated mortgage rates and home prices on affordability and origination activity.
• Uncertainty related to the economic impact from evolving tariffs and other factors.

Q: About underwriting and pricing in response to increasing uncertainty in April.

A: Diligent monitoring of economic impact, maintaining prudent guidelines, using Rate360 to adjust pricing for uncertainty.

Q: On-the-ground impact of government policy changes, especially loss mitigation.

A: Constructive engagement with FHFA and GSEs, continued strength in GSE loss mitigation.

Q: Pricing dynamics and market share shifts.

A: Market participation stable, market share changes influenced by risk-return alignment, lender activity, and market composition.

Q: Portfolio aging and risks.

A: Portfolio seasoning leading to slowing new delinquency development, risk-based pricing considering prospective home price views.

Q: Cancellation rates and other income.

A: Cancellation rates not a big driver, other income includes contract services fees with components not just premiums.