Enact Holdings, Inc. Q4 FY2025 earnings call

• Enact had a strong finish in 2025, helping over 134,000 borrowers buy homes and over 16,000 keep homes.
• Innovated risk selection and pricing with Rate360 using advanced modeling and machine learning.
• Generated $52 billion of new insurance written and ended the year with record insurance in-force of $273 billion.
• Maintained expense discipline with full-year operating expenses at $217 million excluding restructuring charges.
• Returned over $500 million of capital to shareholders in 2025 and announced $500 million capital return expectations for 2026.
• Enhanced financial flexibility with a new $435 million revolving credit facility and CRT deals.
• Enact Re performed well, participating in attractive GSE deals while maintaining strong underwriting standards.
• In Q4, adjusted operating income was $179 million or $1.23 per diluted share, new insurance written was $14 billion, investment income was $69 million, operating expenses were $59 million, and there was a net reserve release of $60 million due to favorable cure performance and claim rate reduction.

For the fourth quarter, Enact reported adjusted operating income of $179 million or $1.23 per diluted share. Adjusted return on equity was 13.5%, and new insurance written was over $14 billion. Primary insurance in-force was $273 billion. Investment income in the fourth quarter was $69 million. Operating expenses for the fourth quarter were $59 million. For the full year, adjusted operating income totaled $688 million or $4.61 per diluted share, with adjusted return on equity of 13.5% for the quarter and the year-end adjusted book value per share increased 11% to $37.87. New insurance written for the full year was $52 billion, and operating expenses excluding restructuring charges were $217 million.

• Anticipates capital returns of approximately $500 million in 2026.
• Board authorized a new share repurchase program, the largest in Enact's history.
• For 2026, expects an operating expense range of $215 million to $220 million excluding reorganization costs.
• Base premium rate in 2026 is expected to be relatively flat versus 2025.

• Macro environment uncertainties that could impact actual results.
• Regulatory changes that may affect capital return plans and operations.
• Housing market dynamics, including inventory challenges and affordability issues, which can influence mortgage originations and insurance in-force.
• Credit performance risks, such as changes in delinquency rates and loss ratios.

Q: Doug Harter asked about sensitivities to the 2026 capital return goal and factors that could cause it to come in better or slower.

A: Dean Mitchell responded that they are confident in delivering $500 million but will evaluate business performance, macroeconomic environment, and regulatory environment.

Q: Mihir Bhatia inquired about regulatory environment and mortgage market expectations for 2026.

A: Rohit Gupta said Enact is actively engaged with the administration on topics like inventory and affordability, and expects mortgage market originations to increase by 10%-15% from 2025 to 2026 based on external forecasts.

Q: Rick Shane asked about credit performance of the front book and elevated risks in certain cohorts.

A: Dean Mitchell stated recent book years have performed in line with or better than pricing expectations, and newer books are priced for risk attributes with no negative variation from expectations.

Q: Bose George asked about expenses and reinsurance transactions.

A: Rohit Gupta said expenses have been reduced through technology investments, and Dean Mitchell discussed reinsurance pricing being favorable with attachment around 3% and detachment within PMIERs requirements.