Essent Group Ltd. · NYSE:ESNT
Essent — Q4 2022 Earnings Presentation
24 slides from Essent's earnings presentation, Feb 10, 2023
Slide 1: Investor Presentation 4Q22 & 2022
ESSENT GROUP LTD. INVESTOR PRESENTATION 4Q22 & 2022 NYSE: ESNT February 10, 2023 ESSENT GROUP LTD. | NYSE: ESNT © 2023 Essent Group Ltd. All rights reserved. | essentgroup.com | 1
Slide 2: Disclaimer
Disclaimer This presentation 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," “shou
Slide 3: Essent Is A Leading Mortgage Insurer
Essent Is A Leading Mortgage Insurer Company Overview 3Q22 4Q22 • Essent Group Ltd. is a Bermuda-based holding company that IIF ($B) $222.5 $227.1 went public in 2013, and is traded on the New York Stock NIW ($B) $17.1 $13.0 Exchange (NYSE: ESNT) • Two primary operating companies: Essent Guaranty, I
Slide 4: Delivering Shareholder Value
Delivering Shareholder Value BOOK VALUE PER SHARE GROWTH Annualized growth rate of 19.5% since December 31, 2013 $41.44 $38.73 $34.36 $30.34 $24.11 $19.71 $14.43 $12.08 $10.33 $8.35 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 Dec-20 Dec-21 Dec-22 Strong Cash Flows Programmatic Steadily Increasi
Slide 5: Key Milestones in Essent's Evolution
Key Milestones in Essent’s Evolution Launch IPO Launch of First CRT EssentEDGE® EssentEDGE® of Essent Essent Re Next Generation Essent Essent initiates Essent Guaranty completes Essent Re its first credit- launches A cloud-based AI Essent IPO; emerges completes first risk transfer proprietary pricin
Slide 6: Buy, Manage & Distribute Operating Model
Buy, Manage & Distribute Operating Model EssentEDGE® Enables Rapid Execution Strong Operating Results of Targeted Pricing Strategies ➢ Last Twelve Months Operating Cash Flow of ➢ Lender utilization continues to increase $589 million ➢ The next generation of EssentEDGE® is a ➢ Continue to focus on op
Slide 7: Credit Risk Transfer
Credit Risk Transfer Since March 2018, Essent has transferred credit risk to: ▪ Capital market investors via eight(1) Radnor Re Insurance-Linked Note (ILN) issuances ▪ Reinsurers via four Excess of Loss (XOL) reinsurance transactions ▪ Reinsurers via two Quota Share (QS) reinsurance programs, with a
Slide 8: Essent Re
Essent Re ➢ Essent Reinsurance Ltd. (“Essent Re”) is a Bermuda-based reinsurance company, rated A (Excellent) by A.M. Best and BBB+ by S&P, with $1.5 billion in GAAP equity as of December 31, 2022 ➢ Essent Re primarily focuses on three business lines: ➢ Affiliate quota share (QS) to reinsure Essent
Slide 9: EssentVentures
EssentVentures ➢ Our EssentVentures unit continues to make investments to generate informational and financial returns, taking advantage of opportunities around the convergence of consumer credit, real estate and insurance ➢ Since 2018, we have invested across venture capital, private equity and str
Slide 10: Title Insurance: Overview and Deal Consideration
Title Insurance: Overview and Deal Consideration • Agents National Title Insurance Company (“ANTIC”) is a national • Boston National Title Agency (“BNT”) is a refinance-focused title title insurance underwriter with licenses in 44 states and settlement services agency licensed in 40 states and the D
Slide 11: Title Insurance: Strategic Rationale
Title Insurance: Strategic Rationale Attractive • Provides access to large addressable title insurance market with $18 - $25 billion in annual premiums Industry Profile • Title insurance is a capital light business and historically has relatively low and stable loss ratios • Leverages Essent’s core
Slide 12: Industry Fundamentals
Industry Fundamentals STABLE DEMAND OF FIRST-TIME HOMEBUYER POPULATION MONTH’S SUPPLY OF HOUSING INVENTORY New Entrants to Domestic First-Time Homebuyer Population (M) 4.7 4.7 4.7 4.6 4.5 4.4 4.4 4.5 4.5 4.4 4.5 4.5 4.5 4.5 4.6 4.0 3.9 4.0 4.1 4.2 Favorable demographic trends should continue to prov
Slide 13: Insurance In Force (IIF) & New Insurance Written (NIW)
Insurance In Force (IIF) & New Insurance Written (NIW) IIF BY VINTAGE YEAR ($B) ($ in billions) DEC. 31, 2020 DEC. 31, 2021 DEC. 31, 2022 IIF % of Total IIF % of Total IIF % of Total WA Coupon 2022 - - - - $60.6 26.7% 5.1% 2021 - - $79.8 38.5% $71.5 31.5% 3.1% 2020 $102.1 51.3% $76.6 36.9% $59.2 26.
Slide 14: A High Credit Quality Portfolio
A High Credit Quality Portfolio As Of December 31, 2022, Essent Has $227.1 Billion Of Insurance In Force IIF BY VINTAGE IIF BY FICO SCORE IIF BY LTV <=2017 <680 6.2% 2018 5.2% 3.0% 680- >=95.01% 2022 2019 699 13.8% 26.7% 6.5% 8.3% ESSENT IIF 90.01- 95.00% 47.6% 2020 26.1% <=90.00% 38.6% 2021 700+ 31
Slide 15: Financial Highlights
Financial Highlights AS OF END OF PERIOD ($ in millions, except per share amounts) 4Q21 1Q22 2Q22 3Q22 4Q22 KEY METRICS Insurance In Force $207,190.5 $206,843.0 $215,896.5 $222,542.6 $227,062.1 Total Assets $5,722.2 $5,586.1 $5,521.1 $5,556.9 $5,723.8 Total Investments $5,133.4 $4,875.4 $4,838.1 $4,
Slide 16: In Force Portfolio Premium Yield
In Force Portfolio Premium Yield U.S. Mortgage Insurance Portfolio PERIOD ENDING (in basis points) 4Q21 1Q22 2Q22 3Q22 4Q22 Base Premium Earned 42 bps 41 bps 41 bps 40 bps 40 bps Singles Cancellation Premium 3 bps 2 bps 1 bps 1 bps 0 bps Gross Premium Rate 45 bps 43 bps 42 bps 41 bps 40 bps Ceded Pr
Slide 17: Cost of Reinsurance Transactions
Cost of Reinsurance Transactions PERIOD ENDING ($ in millions) 4Q21 1Q22 2Q22 3Q22 4Q22 U.S. Mortgage Insurance Portfolio ILN/XOL Ceded Premium $19.09) $19.83) $20.23) $22.44) $23.85) QSR Ceded Premium $7.39) $0.69) $2.09) $8.10) $10.44) Total Ceded Premium $26.48) $20.52) $22.32) $30.54) $34.29) In
Slide 18: Default Rollforward
Default Rollforward U.S. Mortgage Insurance Portfolio PERIOD ENDING (number of loans) 4Q21 1Q22 2Q22 3Q22 4Q22 Beginning Default Inventory 19,721 16,963 14,923 12,707 12,435 Plus: New Defaults (1) 5,809 6,188 5,495 6,448 7,505 Less: Cures (8,514) (8,167) (7,639) (6,642) (6,425) Less: Claims Paid (47
Slide 19: Components Of Provision For Losses & LAE
Components Of Provision For Losses & LAE U.S. Mortgage Insurance Portfolio PERIOD ENDING ($ in millions) 4Q21 1Q22 2Q22 3Q22 4Q22 Provision for Losses & LAE occurring in: Current Period $13.23) $24.35) $18.72) $20.14) $36.14) Prior Year Development ($16.62) ($130.11) ($94.81) ($15.85) ($32.01) Provi
Slide 20: Cumulative Incurred Loss Ratio By Vintage Year
Cumulative Incurred Loss Ratio By Vintage Year PRE-2015 2015 2016 2017 2018 2019 2020 2021 2022 Pre-2015 2.4% 2.9% 3.1% 3.0% 2.7% 2.6% 3.3% 3.3% 2.6% 2015 2.1% 3.3% 4.0% 3.0% 2.7% 4.6% 4.3% 2.7% 2016 2.3% 4.6% 3.4% 2.9% 6.4% 5.3% 2.8% 2017 7.5% 4.6% 4.2% 9.7% 8.3% 4.0% 2018 3.3% 6.0% 16.4% 13.7% 5.3
Slide 21: U.S. Mortgage Insurance Subsidiaries
U.S. Mortgage Insurance Subsidiaries As of: ($ in millions) 4Q21 1Q22 2Q22 3Q22 4Q22 Scheduled Contingency Statutory Financial Information Reserve Releases(3) ($ in millions) Risk-to-capital ratio 10.4:1 9.9:1 10.2:1 10.1:1 10.2:1 2023 $62 Common stock and paid-in surplus(1) $744 $744 $744 $744 $744
Slide 22: Quarterly Financial Trends
Quarterly Financial Trends INSURANCE IN FORCE & NEW INSURANCE WRITTEN NET INCOME Total Insurance In Force ($B) Net Income ($M) Total New Insurance Written ($B) $227.1 $215.9 $222.5 $208.2 $207.2 $206.8 $274.2 $197.1 $203.6 $231.8 $205.4 $181.0 $178.1 $159.8 $147.4 $135.6 $19.3 $25.0 $23.6 $20.1 $16.
Slide 23: Annual Financial Trends
Annual Financial Trends INSURANCE IN FORCE & NEW INSURANCE WRITTEN NET INCOME Total Insurance In Force ($B) $227.1 Net Income ($M) Total New Insurance Written ($B) $207.2 $198.9 $831.4 $164.0 $681.8 $137.7 $555.7 $110.5 $107.9 $467.4 $413.0 $83.3 $84.2 $379.7 $63.6 $63.1 $43.9 $47.5 $222.6 $34.9 201
Slide 24: ESSENT GROUP LTD. | NYSE: ESNT © 2023 Essent Group Ltd. All rights reserved.
ESSENT GROUP LTD. | NYSE: ESNT © 2023 Essent Group Ltd. All rights reserved. | essentgroup.com | 24