Essent Group Ltd. · NYSE:ESNT
Essent — Q1 2021 Earnings Presentation
22 slides from Essent's earnings presentation, May 7, 2021
Slide 1: Investor Presentation 1Q21
ESSENT GROUP LTD. INVESTOR PRESENTATION 1Q21 NYSE: ESNT May 7, 2021 ESSENT GROUP LTD. | NYSE: ESNT © 2021 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 Specialty Insurer
Essent Is A Leading Specialty Insurer Company Highlights 1Q21 4Q20 • Essent Group Ltd. is a Bermuda-based holding company that IIF ($B) $197.1 $198.9 went public in 2013, and is traded on the New York Stock Exchange (NYSE: ESNT) NIW ($B) $19.3 $29.6 • Serves the U.S. housing finance industry by offe
Slide 4: Delivering Shareholder Value
Delivering Shareholder Value BOOK VALUE PER SHARE GROWTH Annualized growth rate of 21.7% from December 31, 2013 $34.36 $34.75 $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 Mar-21 Programmatic Strong Cash Flows Steadily Increasing Initiating S
Slide 5: Industry Fundamentals Are Supportive Of Growth
Industry Fundamentals Are Supportive Of Growth GROWING DOMESTIC FIRST-TIME HOMEBUYER POPULATION • Millennial generation of roughly 80M will New Entrants to Domestic First-Time Homebuyer Population (M) drive housing’s longer-term prospects 4.4 4.4 4.4 4.5 4.6 4.8 4.8 4.7 4.6 4.5 and first-time buyer
Slide 6: Market Remains An Attractive Opportunity
Market Remains An Attractive Opportunity KEY HIGHLIGHTS ANNUAL MARKET SHARE 7.9 8.0 10.0 Essent maintains a strong market position while 9.4 11.8 ~18 continuing to grow its share of industry insurance in force 13.0 16.3 16.3 18.0 NMI 16.6 ~13 Essent Essent has averaged an annual NIW market share
Slide 7: Buy, Manage & Distribute Operating Model
Buy, Manage & Distribute Operating Model ESSENTEDGE® • Risk-based pricing engine • Evaluates loan-level credit and borrower attributes in calculating an MI rate • Shapes new business at granular levels of FICO, LTV, and DTI • Integrated with lender partners and loan origination systems PORTFOLIO MON
Slide 8: Focus On Profitability, Capital & Liquidity
Focus On Profitability, Capital & Liquidity… EssentEDGE Enables Rapid Execution of Targeted Pricing Strategies • Launched EssentEDGE 2.0 with select lenders • Sophisticated granular risk data and pricing evaluation 1 • Risk management tool, not a market share tool • Flexibility to also target tail r
Slide 9: While Building A High Credit Quality Portfolio
…While Building A High Credit Quality Portfolio As Of March 31, 2021, Essent Has $197.1 Billion Of Insurance In Force IIF BY VINTAGE IIF BY FICO SCORE IIF BY LTV 2021 <=2016 <680 6.7% >=95.01% 9.7% 10.0% 680-699 13.3% 2017 7.7% 6.9% ESSENT Q1 IIF 2018 90.01- 7.9% 95.00% 42.6% 2020 2019 16.5% <=90.00
Slide 10: Key Milestones in Essent's Evolution
Key Milestones in Essent’s Evolution Essent is primed for future growth with the convergence of housing finance, real estate, insurance and technology sectors 2010 2013 2014 2018 2019 2021 VERTICAL INTEGRATION Launch IPO Launch of First CRT EssentEDGE® EssentEDGE® of Essent Essent Re 2.0 Scaled Guar
Slide 11: Financial Highlights
Financial Highlights AS OF END OF PERIOD ($ in millions, except per share amounts) 1Q21 4Q20 3Q20 2Q20 1Q20 KEY METRICS Insurance In Force $197,091.2 $198,882.4 $190,811.3 $174,646.3 $165,615.5 Total Assets $5,331.8 $5,202.7 $5,107.1 $4,899.9 $4,186.9 Total Investments $4,801.9 $4,654.3 $4,585.4 $4,
Slide 12: Insurance In Force (IIF)
Insurance In Force (IIF) ($ in billions) MAR. 31, 2021 DEC. 31, 2020 DEC. 31, 2019 IIF BY VINTAGE YEAR ($B) 2021 $19.1 9.7% - - - - 2020 $96.5 49.0% $102.1 51.3% - - $198.9 $197.1 $200 2019 $32.5 16.5% $38.7 19.5% $59.5 36.3% 2018 $15.7 7.9% $18.7 9.4% $35.3 21.5% 2021 2017 $13.7 6.9% $16.3 8.2% $29
Slide 13: In Force Portfolio Premium Yield
In Force Portfolio Premium Yield PERIOD ENDING (in basis points) 1Q21 4Q20 3Q20 2Q20 1Q20 Base Premium Earned 44 bps 44 bps 45 bps 47 bps 47 bps Singles Cancellation Premium 4 bps 5 bps 6 bps 6 bps 4 bps Gross Premium Rate 48 bps 49 bps 51 bps 53 bps 51 bps Ceded Premium (6) bps (6) bps (5) bps (5)
Slide 14: Default Rollforward
Default Rollforward PERIOD ENDING (number of loans) 1Q21 4Q20 3Q20 2Q20 1Q20 Beginning Default Inventory 31,469 35,464 38,068 5,841 5,947 Plus: New Defaults 7,422 8,745 12,614 37,357 3,933 Less: Cures (9,737) (12,679) (15,135) (4,983) (3,914) Less: Claims Paid (61) (49) (67) (144) (118) Less: Recess
Slide 15: Components Of Provision For Losses & LAE
Components Of Provision For Losses & LAE U.S. Mortgage Insurance Portfolio PERIOD ENDING ($ in millions) 1Q21 4Q20 3Q20 2Q20 1Q20 Current Period Defaults $47.76 $63.60 $55.66 $181.78 $15.42 Prior Period Defaults ($15.68) ($1.88) ($1.07) ($5.91) ($7.19) Provision For Losses & LAE $32.08 $61.72 $54.59
Slide 16: Cumulative Incurred Loss Ratio By Vintage Year
Cumulative Incurred Loss Ratio By Vintage Year PRE-2015 2015 2016 2017 2018 2019 2020 3/31/21 Pre-2015 2.4% 2.9% 3.1% 3.0% 2.7% 2.6% 3.3% 3.3% 2015 2.1% 3.3% 4.0% 3.0% 2.7% 4.6% 4.5% 2016 2.3% 4.6% 3.4% 2.9% 6.4% 6.2% 2017 7.5% 4.6% 4.2% 9.7% 9.6% 2018 3.3% 6.0% 16.4% 16.0% 2019 4.2% 31.2% 29.9% 202
Slide 17: Excess Of Loss Reinsurance Coverage by Vintage
Excess Of Loss Reinsurance Coverage by Vintage As Of March 31, 2021 ($ in millions) Excess Of Loss Coverage as % RIF Ceded to of Excess Of Loss Vintage Gross RIF QS(1) RIF Net of QS(1) RIF Net of QS(1) Reference Pool 2014 and prior $1,307 $- $1,307 - $- 2015 1,302 - 1,302 97.6% 1,271 2016 2,570 - 2,
Slide 18: Maintaining A Sufficient PMIERs Cushion
Maintaining A Sufficient PMIERs Cushion • At March 31, 2021, Essent Guaranty, Inc. (“Essent PMIERS WITH AND WITHOUT 0.3x MULTIPLIER Guaranty”) has a PMIERs required asset amount of $1.9 billion and an excess asset amount of $1.1 billion, yielding 161% SUFFICIENCY 149% a PMIERs sufficiency ratio of 1
Slide 19: Quarterly Financial Trends
Quarterly Financial Trends INSURANCE IN FORCE & NEW INSURANCE WRITTEN NET INCOME Total Insurance In Force ($B) Net Income ($M) Total New Insurance Written ($B) $198.9 $197.1 $144.6 $147.0 $149.5 $190.8 $136.4 $135.6 $174.6 $124.5 $164.0 $165.6 $123.6 $161.0 $153.3 $36.7 $28.2 $29.6 $15.4 $18.0 $18.7
Slide 20: Annual Financial Trends
Annual Financial Trends INSURANCE IN FORCE & NEW INSURANCE WRITTEN NET INCOME Total Insurance In Force ($B) Net Income ($M) Total New Insurance Written ($B) $198.9 $197.1 $555.7 $164.0 $467.4 $413.0 $137.7 $379.7 $110.5 $107.9 $83.3 $222.6 $65.2 $63.6 $157.3 $50.8 $47.5 $135.6 $43.9 $34.9 $88.5 $24.
Slide 21: Key Takeaways
Key Takeaways Essent is a leading specialty Essent’s financial strength insurance company operating and flexibility positions us to in a large and growing market seize attractive opportunities with high barrier of entry as the market evolves Strong capital and liquidity, Essent has transformed its a
Slide 22: ESSENT GROUP LTD. | NYSE: ESNT © 2021 Essent Group Ltd. All rights reserved.
ESSENT GROUP LTD. | NYSE: ESNT © 2021 Essent Group Ltd. All rights reserved. | essentgroup.com | 22