Enact Holdings, Inc. · NASDAQ:ACT
Enact — Q1 2023 Earnings Presentation
19 slides from Enact's earnings presentation, May 4, 2023
Slide 1: First Quarter 2023 Financial Results
First Quarter 2023 Financial Results May 04, 2023
Slide 2: Cautionary Note Regarding Forward-Looking Statements
Cautionary Note Regarding Forward-Looking Statements This communication contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act. These forward-looking statements may address, among other things, our expected financial and operational results, the rela
Slide 3: Key Takeaways
Key Takeaways Insurance-in-force reached a new record of $253B, driven by NIW of $13B and persistency of 85%; continue to capture high-quality business priced to generate attractive returns on a risk-adjusted basis Delinquency rate of 1.9% and new delq rate of 1.0% remain consistent with pre-pandemi
Slide 4: About us
About us Enact Our Strategy Private mortgage insurance company helping Purposefully invest to differentiate Enact millions of families achieve the dream of » Deliver best-in-class underwriting; expand well-established, deep and sustainable home ownership diversified customer base » Extend competitiv
Slide 5: Delivering Shareholder Value
Delivering Shareholder Value Book value per share excluding AOCI1 + cumulative dividends Adjusted operating ROE2 $31.42 $30.31 20% 19% $29.41 16% $28.23 17% $26.96 14% 1Q22 2Q22 3Q22 4Q22 1Q23 3 1Q22 2Q22 3Q22 4Q22 1Q23 Trailing 4Q 14% 16% 17% 17% 17% Adj ROE BVPS +Dividends 1 Book value per share e
Slide 6: Financial Highlights
Financial Highlights Primary Insurance in Force Up 2% Q/Q $253 New Insurance Written Down 13% Q/Q $13 Net Premiums Earned Up 1% Q/Q $235 billion billion million Net Income Up 22% Q/Q $176 Adjusted Operating Income1 $176 Net Investment Income Up 1% Q/Q $45 million Up 19% Q/Q million million Diluted N
Slide 7: Market and Industry Dynamics
Market and Industry Dynamics Complex market with favorable underpinnings Industry well positioned to navigate market conditions » Housing market has slowed as elevated interest rates and cumulative home price appreciation » Qualified Mortgage definition and regulators driving continue to reduce affo
Slide 8: Comprehensive Risk Management
Comprehensive Risk Management December 31, 2007 March 31, 2023 Significant Decrease in Layered Risk FICO at Origination1 <620 <620 2 % RIF % RIF 7% # of High-Risk Layers 0% 4Q07 1Q23 740+ 740+ 25% 58% 0 4.6% 0.6% 620-679 620-679 LTV > 95% 1 7.9% 0.6% 34% 8% 2 2.5% 0.1% 680-739 FICO < 680 3+ 0.0% 0.0
Slide 9: Consistent Insurance-in-Force Growth
Consistent Insurance-in-Force Growth Insurance-in-force ($B) and persistency Book year primary insurance-in-force ($B) 96% of Portfolio 86% 85% 80% 82% 76% $79 $62 $248 $253 $238 $242 $52 $232 $16 $13 $6 $6 $7 1Q22 2Q22 3Q22 4Q22 1Q23 IIF Persistency 2016 2017 2018 2019 2020 2021 2022 2023 Avg Mtg R
Slide 10: Portfolio Premium Yield & Premiums
Portfolio Premium Yield & Premiums In-force portfolio premium yield Premiums ($M) Base Premiums Single Ceded 1Q21 2Q22 3Q22 4Q22 1Q23 $234 $237 $235 $233 $235 Base Premium Rate (bps) 42.3 42.5 41.7 41.0 40.5 $10 $8 $5 $2 $2 Single Cancellations 1.7 1.3 0.9 0.3 0.3 $242 $249 $250 $252 $253 Ceded Prem
Slide 11: Delinquencies and Forbearance
Delinquencies and Forbearance New delinquencies1 Delinquent policies Not In Forbearance In Forbearance Not in Forbearance In Forbearance 76,960 44,904 73% 35,996 32,624 21% 71% 24,820 42% 19,943 18,633 41% 26% 25% 9,599 17% 29% 59% 74% 75% 27% 58% 79% 83% 2Q20 - 4Q20 2021 2022 1Q23 4Q20 4Q21 4Q22 1Q
Slide 12: Losses
Losses Losses ($M) Highlights 18 » 1Q23 loss performance driven by reserve release of $70 (10) (11) million (40) » Primarily from favorable cure performance from COVID related delinquencies (62) 1Q22 2Q22 3Q22 4Q22 1Q23 » Current period new delinquencies decreased primarily due to the prior quarter’
Slide 13: Strong PMIERs Sufficiency
Strong PMIERs Sufficiency Sufficiency to PMIERs1 ($M) Highlights » PMIERs sufficiency relatively flat sequentially as increase in 176% 174% available assets and current period CRT transaction mostly 166% 165% 164% offset by NIW and the amortization of existing reinsurance transactions 2,261 2,249 2,
Slide 14: Robust Capital Position & Ratings
Robust Capital Position & Ratings Strong capital position1 ($M) Highlights Equity Debt-to-Capital » During the quarter, we repurchased $22 million of our common stock through our share buyback program 15% 15% 15% 15% 15% $4,297 » Repurchases under program of $32 million thru April $4,049 $4,081 $4,1
Slide 15: Conservative and Highly Rated Investment Portfolio
Conservative and Highly Rated Investment Portfolio Composition by asset class1 Composition by rating2 Non-U.S. Government , 1% 0% 2% 9% Residential 10% MBS , 0% 23% U.S. Treasuries Municipals AAA 16% Non-U.S. Government 38% AA Residential MBS A U.S. Corporate BBB 13% Non-U.S. Corporate BB & Below Ot
Slide 16: Inaugural 2022 ESG Report
Inaugural 2022 ESG Report Enact has a strong foundation of corporate sustainability and we are proud of the role we play in the communities we serve and our processes that result in a sustainable business. ESG issues are a key component of our strategy to enhance long-term value creation for our sta
Slide 17: Appendix
Appendix “Enact
Slide 18: Non-GAAP Measures
Non-GAAP Measures Use of Non-GAAP Measures This communication includes the non-GAAP financial measures entitled “adjusted operating income (loss)”, “adjusted operating income (loss) per share", and “adjusted operating return on equity." Adjusted operating income (loss) per share is derived from adju
Slide 19: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 1 Net Income to Adj Operating Income 1Q22 2Q22 3Q22 4Q22 2022 1Q23 Net Income $165 $205 $191 $144 $704 $176 Adjustments to Net Income: Net investment (gains) losses $0 $0 $0 $1 $2 $0 Costs associated with reorganization $0 $0 ($0) $3 $3 ($1) Taxes on adjustments (