Essent Group Ltd. Announces First Quarter 2021 Results, Increase of Quarterly Dividend, and Board Authorization of $250 Million Share Repurchase Plan

HAMILTON, Bermuda–(BUSINESS WIRE)–Essent Group Ltd. (NYSE: ESNT) today reported net income for the quarter ended March 31, 2021 of $135.6 million or $1.21 per diluted share, compared to $149.5 million or $1.52 per diluted share for the quarter ended March 31, 2020.

Essent also announced today that its Board of Directors has authorized a $250 million share repurchase plan to be executed by the end of 2022 and declared a quarterly cash dividend of $0.17 per common share. The dividend is payable on June 10, 2021, to shareholders of record on June 1, 2021.

“We are pleased with our financial results for the first quarter which we believe demonstrate a return to pre-COVID-19 profitability, as the U.S. economy gains momentum coming out of the pandemic and our defaults continue to normalize,” said Mark A. Casale, Chairman and Chief Executive Officer. “At quarter end, our capital position remains strong as our buy, manage and distribute operating model has our franchise well positioned. As a reflection of this, we are pleased to announce our $250 million share repurchase program and $0.01 per share increase in our quarterly dividend.”

First Quarter 2021 Financial Highlights:

Insurance in force as of March 31, 2021 was $197.1 billion, compared to $198.9 billion as of December 31, 2020 and $165.6 billion as of March 31, 2020.

New insurance written for the first quarter was $19.3 billion, compared to $29.6 billion in the fourth quarter of 2020 and $13.5 billion in the first quarter of 2020.

Net premiums earned for the first quarter were $219.1 million, compared to $222.3 million in the fourth quarter of 2020 and $206.5 million in the first quarter of 2020.

The expense ratio for the first quarter was 19.3%, compared to 16.6% in the fourth quarter of 2020 and 20.3% in the first quarter of 2020.

The provision for losses and LAE for the first quarter was $32.3 million, compared to a provision of $62.1 million in the fourth quarter of 2020 and a provision of $8.1 million in the first quarter of 2020.

The percentage of loans in default as of March 31, 2021 was 3.70%, compared to 3.93% as of December 31, 2020 and 0.83% as of March 31, 2020.

The combined ratio for the first quarter was 34.0%, compared to 44.5% in the fourth quarter of 2020 and 24.2% in the first quarter of 2020.

The consolidated balance of cash and investments at March 31, 2021 was $4.9 billion, including cash and investment balances at Essent Group Ltd. of $540.3 million.

The combined risk-to-capital ratio of the U.S. mortgage insurance business, which includes statutory capital for both Essent Guaranty, Inc. and Essent Guaranty of PA, Inc., was 10.6:1 as of March 31, 2021.

Income taxes for the quarter ended March 31, 2021 include $5.7 million of discrete tax expense associated with an increase in our state deferred income tax liability.

Conference Call:

Essent management will hold a conference call at 10:00 AM Eastern time today to discuss its results. The conference call will be broadcast live over the Internet at The call may also be accessed by dialing 833-287-0797 inside the U.S., or 647-689-4456 for international callers, using passcode 4881985 or by referencing Essent.

A replay of the webcast will be available on the Essent website approximately two hours after the live broadcast ends for a period of one year. A replay of the conference call will be available approximately two hours after the call ends for a period of two weeks, using the following dial-in numbers and passcode: 800-585-8367 inside the U.S., or 416-621-4642 for international callers, passcode 4881985.

In addition to the information provided in the company’s earnings news release, other statistical and financial information, which may be referred to during the conference call, will be available on Essent’s website at

Forward-Looking Statements:

This press release may include “forward-looking statements” which are subject to known and unknown risks and uncertainties, many of which may be beyond our control. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” or “potential” or the negative thereof or variations thereon or similar terminology. Actual events, results and outcomes may differ materially from our expectations due to a variety of known and unknown risks, uncertainties and other factors. Although it is not possible to identify all of these risks and factors, they include, among others, the following: the impact of COVID-19 and related economic conditions; changes in or to Fannie Mae and Freddie Mac (the “GSEs”), whether through Federal legislation, restructurings or a shift in business practices; failure to continue to meet the mortgage insurer eligibility requirements of the GSEs; competition for customers; lenders or investors seeking alternatives to private mortgage insurance; an increase in the number of loans insured through Federal government mortgage insurance programs, including those offered by the Federal Housing Administration; decline in new insurance written and franchise value due to loss of a significant customer; decline in the volume of low down payment mortgage originations; the definition of “Qualified Mortgage” reducing the size of the mortgage origination market or creating incentives to use government mortgage insurance programs; the definition of “Qualified Residential Mortgage” reducing the number of low down payment loans or lenders and investors seeking alternatives to private mortgage insurance; the implementation of the Basel III Capital Accord discouraging the use of private mortgage insurance; a decrease in the length of time that insurance policies are in force; uncertainty of loss reserve estimates; deteriorating economic conditions; our non-U.S. operations becoming subject to U.S. Federal income taxation; becoming considered a passive foreign investment company for U.S. Federal income tax purposes; and other risks and factors described in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2020 filed with the Securities and Exchange Commission on February 26, 2021, as subsequently updated through other reports we file with the Securities and Exchange Commission. Any forward-looking information presented herein is made only as of the date of this press release, and we do not undertake any obligation to update or revise any forward-looking information to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.

About the Company:

Essent Group Ltd. (NYSE: ESNT) is a Bermuda-based holding company (collectively with its subsidiaries, “Essent”) which, through its wholly-owned subsidiary, Essent Guaranty, Inc., offers private mortgage insurance for single-family mortgage loans in the United States. Essent provides private capital to mitigate mortgage credit risk, allowing lenders to make additional mortgage financing available to prospective homeowners. Headquartered in Radnor, Pennsylvania, Essent Guaranty, Inc. is licensed to write mortgage insurance in all 50 states and the District of Columbia, and is approved by Fannie Mae and Freddie Mac. Essent also offers mortgage-related insurance, reinsurance and advisory services through its Bermuda-based subsidiary, Essent Reinsurance Ltd. Essent is committed to supporting environmental, social and governance (“ESG”) initiatives that are relevant to the company and align with the companywide dedication to responsible corporate citizenship that positively impacts the community and people served. Additional information regarding Essent may be found at www.essentgroup.com and www.essent.us.

Source: Essent Group Ltd.

 

 

 

 

 

 

Essent Group Ltd. and Subsidiaries

Financial Results and Supplemental Information (Unaudited)

Quarter Ended March 31, 2021

 

 

 

 

 

 

Exhibit A

 

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

Exhibit B

 

Condensed Consolidated Balance Sheets (Unaudited)

Exhibit C

 

Historical Quarterly Data

Exhibit D

 

New Insurance Written

Exhibit E

 

Insurance in Force and Risk in Force

Exhibit F

 

Other Risk in Force

Exhibit G

 

Portfolio Vintage Data

Exhibit H

 

Reinsurance Vintage Data

Exhibit I

 

Portfolio Geographic Data

Exhibit J

 

Rollforward of Defaults and Reserve for Losses and LAE

Exhibit K

 

Detail of Reserves by Default Delinquency

Exhibit L

 

Investments Available for Sale

Exhibit M

 

Insurance Company Capital

 

 

 

 

Exhibit A

 

 

 

 

 

Essent Group Ltd. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

(In thousands, except per share amounts)

 

2021

 

2020

Revenues:

 

 

 

 

Direct premiums written

 

$

235,257

 

 

$

205,980

 

Ceded premiums

 

(30,896)

 

 

(14,237)

 

Net premiums written

 

204,361

 

 

191,743

 

Decrease in unearned premiums

 

14,706

 

 

14,753

 

Net premiums earned

 

219,067

 

 

206,496

 

Net investment income

 

21,788

 

 

20,633

 

Realized investment gains, net

 

641

 

 

3,135

 

Other income (loss)

 

3,301

 

 

(1,424)

 

Total revenues

 

244,797

 

 

228,840

 

 

 

 

 

 

Losses and expenses:

 

 

 

 

Provision for losses and LAE

 

32,322

 

 

8,063

 

Other underwriting and operating expenses

 

42,239

 

 

41,947

 

Interest expense

 

2,051

 

 

2,132

 

Total losses and expenses

 

76,612

 

 

52,142

 

 

 

 

 

 

Income before income taxes

 

168,185

 

 

176,698

 

Income tax expense

 

32,537

 

 

27,175

 

Net income

 

$

135,648

 

 

$

149,523

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

Basic

 

$

1.21

 

 

$

1.53

 

Diluted

 

1.21

 

 

1.52

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

Basic

 

112,016

 

 

97,949

 

Diluted

 

112,378

 

 

98,326

 

 

 

 

 

 

Net income

 

$

135,648

 

 

$

149,523

 

 

 

 

 

 

Other comprehensive income (loss):

 

 

 

 

Change in unrealized depreciation of investments

 

(59,203)

 

 

(10,074)

 

Total other comprehensive loss

 

(59,203)

 

 

(10,074)

 

Comprehensive income

 

$

76,445

 

 

$

139,449

 

 

 

 

 

 

 

 

 

 

 

Loss ratio

 

14.8

%

 

3.9

%

Expense ratio

 

19.3

 

 

20.3

 

Combined ratio

 

34.0

%

 

24.2

%

 

 

 

Exhibit B

 

 

 

 

Essent Group Ltd. and Subsidiaries

Condensed Consolidated Balance Sheets (Unaudited)

 

 

 

 

 

 

March 31,

 

December 31,

(In thousands, except per share amounts)

2021

 

2020

Assets

 

 

 

Investments

 

 

 

Fixed maturities available for sale, at fair value

$

4,252,144

 

 

$

3,838,513

 

Short-term investments available for sale, at fair value

449,332

 

 

726,860

 

Total investments available for sale

4,701,476

 

 

4,565,373

 

Other invested assets

100,393

 

 

88,904

 

Total investments

4,801,869

 

 

4,654,277

 

Cash

81,022

 

 

102,830

 

Accrued investment income

23,600

 

 

19,948

 

Accounts receivable

45,618

 

 

50,140

 

Deferred policy acquisition costs

14,723

 

 

17,005

 

Property and equipment

14,258

 

 

15,095

 

Prepaid federal income tax

302,636

 

 

302,636

 

Other assets

48,120

 

 

40,793

 

 

 

 

 

Total assets

$

5,331,846

 

 

$

5,202,724

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

Liabilities

 

 

 

Reserve for losses and LAE

$

411,123

 

 

$

374,941

 

Unearned premium reserve

235,730

 

 

250,436

 

Net deferred tax liability

318,622

 

 

305,109

 

Credit facility borrowings, net of deferred costs

322,018

 

 

321,720

 

Other accrued liabilities

123,416

 

 

87,885

 

Total liabilities

1,410,909

 

 

1,340,091

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

Stockholders’ Equity

 

 

 

Common shares, $0.015 par value:

 

 

 

Authorized – 233,333; issued and outstanding – 112,847 shares in 2021 and 112,423 shares in 2020

1,693

 

 

1,686

 

Additional paid-in capital

1,571,134

 

 

1,571,163

 

Accumulated other comprehensive income

79,071

 

 

138,274

 

Retained earnings

2,269,039

 

 

2,151,510

 

Total stockholders’ equity

3,920,937

 

 

3,862,633

 

 

 

 

 

Total liabilities and stockholders’ equity

$

5,331,846

 

 

$

5,202,724

 

 

 

 

 

Return on average equity (1)

13.9

%

 

12.1

%

(1) The 2021 return on average equity is calculated by dividing annualized year-to-date 2021 net income by average equity. The 2020 return on average equity is calculated by dividing full year 2020 net income by average equity.

 

 

 

 

 

 

 

Exhibit C

Essent Group Ltd. and Subsidiaries

Supplemental Information

Historical Quarterly Data

 

 

 

 

 

 

 

 

 

 

 

 

 

2021

 

2020

Selected Income Statement Data

 

March 31

 

December 31

 

September 30

 

June 30

 

March 31

(In thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

Net premiums earned:

 

 

 

 

 

 

 

 

 

 

U.S. Mortgage Insurance Portfolio

 

$

207,840

 

 

$

208,715

 

 

$

211,126

 

 

$

200,816

 

 

$

195,718

 

GSE and other risk share

 

11,227

 

 

13,624

 

 

11,132

 

 

10,655

 

 

10,778

 

Net premiums earned

 

219,067

 

 

222,339

 

 

222,258

 

 

211,471

 

 

206,496

 

Other revenues (1)

 

25,730

 

 

24,860

 

 

20,780

 

 

24,606

 

 

22,344

 

Total revenues

 

244,797

 

 

247,199

 

 

243,038

 

 

236,077

 

 

228,840

 

 

 

 

 

 

 

 

 

 

 

 

Losses and expenses:

 

 

 

 

 

 

 

 

 

 

Provision for losses and LAE

 

32,322

 

 

62,073

 

 

55,280

 

 

175,877

 

 

8,063

 

Other underwriting and operating expenses

 

42,239

 

 

36,825

 

 

37,100

 

 

38,819

 

 

41,947

 

Interest expense

 

2,051

 

 

2,149

 

 

2,227

 

 

2,566

 

 

2,132

 

Total losses and expenses

 

76,612

 

 

101,047

 

 

94,607

 

 

217,262

 

 

52,142

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

168,185

 

 

146,152

 

 

148,431

 

 

18,815

 

 

176,698

 

Income tax expense (2)

 

32,537

 

 

22,550

 

 

23,895

 

 

3,435

 

 

27,175

 

Net income

 

$

135,648

 

 

$

123,602

 

 

$

124,536

 

 

$

15,380

 

 

$

149,523

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.21

 

 

$

1.10

 

 

$

1.11

 

 

$

0.15

 

 

$

1.53

 

Diluted

 

1.21

 

 

1.10

 

 

1.11

 

 

0.15

 

 

1.52