Enact Holdings, Inc. Q2 FY2025 earnings call

• Enact closed the second quarter with strong results, including adjusted operating income of $174M, adjusted EPS of $1.15, and adjusted ROE over 13%.
• Insurance in force grew 1% Y/Y to $270B, with new insurance written over $13B.
• Navigated complex macro environment, with strong demographic trends, especially among first-time homebuyers.
• Capital position strong: PMIERs sufficiency ratio 165%, credit portfolio excellent (FICO 746, LTV 93%, layered risk 1.2%).
• Pricing was constructive, with prudent underwriting; favorable delinquency and cure performance (delinquencies down 1% Q/Q, new delinquencies down 5%, cure rate 52%, reserve release $48M, loss ratio 10%).
• Expenses excluding restructuring were flat Y/Y, with investment in tech for customer experience.
• Enact Re building momentum in GSE CRT transactions.
• Returned $116M to shareholders in Q2, increasing 2025 capital returns to ~$400M.
• Recognized as one of the best places to work for the third year.

For the second quarter, Enact reported adjusted operating income of $174 million, with adjusted earnings per diluted share at $1.15 and adjusted return on equity over 13%. Insurance in force increased 1% year-over-year to $270 billion, and new insurance written was over $13 billion. Total net premiums earned were $245 million, flat sequentially. Investment income in the second quarter was $66 million, up $6 million year-over-year. Credit performance was favorable: total delinquencies down 1% sequentially, new delinquencies down 5%, cure rate 52% leading to a reserve release of $48 million and a loss ratio of 10%.

• Increased expected capital returns for 2025 to approximately $400 million.
• Q2 investment income up 5% Q/Q and 10% Y/Y.
• Full year capital return guidance adjusted to ~$400M based on strong business performance.

• Macroeconomic uncertainties, including trade policy and potential reciprocal tariffs.
• Affordability challenges, national home inventory imbalance (more buyers than sellers).
• Potential impact of regional home price weakness on credit performance, though mitigated by risk-based pricing and strong borrower fundamentals.

Q: Talk about the seasoning of the recent origination vintages and how regional home price weakness might affect them.

A: Dean mentioned credit performance remains strong, with embedded HPA across the portfolio; Rohit added borrowers prioritize mortgage payments despite slight price declines, and risk-based pricing accounts for future home prices.

Q: Discuss the addressable market and its impact on capital return plans.

A: Rohit said MI market size is expected similar to 2024, with capital return guidance based on business performance, market conditions, and share price.

Q: Ask about delinquency outlook and Washington engagement.

A: Dean and Rohit discussed credit fundamentals supportive, no major change in housing credit view; Rohit mentioned Enact is actively engaged on Washington front for housing finance system.

Q: Follow-up on embedded HPA trend and default to claim.

A: Dean said HPA slowed but remains substantial, 9% claim rate is prudent due to uncertainty, but performance better than 9%.