Essent Group Ltd. Q4 FY2024 earnings call

• Financial results: Fourth quarter net income $168M, full-year $729M. Book value per share $53.36, up 11% y-o-y. Return on average equity 14%.
• Mortgage insurance: US mortgage insurance in force $244B (2% increase y-o-y). Credit quality strong (weighted avg FICO 746, LTV 93%). Q4 defaults impacted by hurricanes; entered quota share transactions in Q1 2025 for forward protection.
• Investments: Cash and investments $6.3B, new money yield >5% in Q4. Full-year investment income $222M, up 20% y-o-y.
• Dividends/share repurchase: Board approved 11% dividend increase to $0.31/share. $500M share repurchase authorization through 2026.

For the fourth quarter of 2024, net income was $168 million compared to $175 million a year ago. On a diluted per share basis, $1.58 for the quarter vs $1.64 prior year. Full-year net income was $729 million or $6.85 per diluted share. Return on average equity was 14%. US mortgage insurance in force was $244 billion, a 2% increase vs prior year. Persistency at December 31, 2024 was 86%, down 1 point from last quarter. Nearly 60% of in force portfolio has note rate of 5.5% or lower. Essent Re had annual third party revenues of approx $80 million with third party risk in force $2.2 billion. Title operations incurred pre-tax loss of ~$21 million prior year, levered to rates with no near-term material impact on earnings.

• Full-year 2024 net income $729M, diluted EPS $6.85, return on average equity 14%.
• 2025 estimated annual effective tax rate ~15.5% (excluding discrete items).
• Plan to continue share repurchases and dividend increases, balancing with capital deployment considerations.

• Credit performance impacted by hurricanes (Helene, Milton) and potential California wildfires.
• Industry competition and economic uncertainties affecting mortgage origination and persistency.
• Interest rate fluctuations impacting title operations and investment income.
• Catastrophic events (severe macroeconomic recession) posing risk to PMIERs sufficiency ratio.

Q: On title, expectation for 2025 and unusual items in Q4 A: Expect more of the same, some cleanup in Q4 provision Q: Hurricane-related default count, cured by quarter end A: Defaults in inventory at quarter end Q: Default rate ex-hurricanes, vintage seasoning A: Too early to call, default rate may increase in 2025 Q: Homeowners insurance impact, HPA A: Homeowners insurance an issue in high-cost areas, HPA pause allows incomes to catch up Q: Capital return, investment opportunities A: Good time to return capital, no attractive investments seen Q: Tax rate, buyback info A: 2025 effective tax rate ~15.5%, repurchased 1.2M shares in Q4, ~1M in Jan Q: Non-bank lenders, prepay behavior A: Prepay behavior rate-dependent, non-banks efficient but need rates to drop Q: Expense guidance, investment portfolio yield A: No 2025 expense guidance yet, repositioning investment portfolio affecting yield