Enact Holdings, Inc. · NASDAQ:ACT
Enact — Q3 2023 Earnings Presentation
21 slides from Enact's earnings presentation, Nov 2, 2023
Slide 1: Third Quarter 2023 Financial Results
CONFIDENTIAL Third Quarter 2023 Financial Results November 1, 2023
Slide 2: Cautionary Note Regarding Forward-Looking Statements
CONFIDENTIAL 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 resu
Slide 3: Key Takeaways
Key Takeaways CONFIDENTIAL Insurance-in-force reached a new record of $262B, driven by NIW of $14B and elevated persistency of 84% Continued focus on cost discipline; on track to reduce 2023 operating expenses 6% Y/Y to $225M Strong loss performance primarily driven by reserve release on 2022 and ea
Slide 4: About us
About us CONFIDENTIAL 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 » Exte
Slide 5: Financial Highlights
Financial Highlights CONFIDENTIAL Primary Insurance in Force Up 2% Q/Q $262 New Insurance Written Down 5% Q/Q $14 Net Premiums Earned Up 2% Q/Q $243 billion billion million Net Income Down 2% Q/Q $164 Adjusted Operating Income1 $164 Net Investment Income Up 8% Q/Q $55 million Down 8% Q/Q million mil
Slide 6: Delivering Shareholder Value
Delivering Shareholder Value CONFIDENTIAL Book value per share excluding AOCI1 + cumulative dividends Adjusted operating ROE2 3 Trailing 4Q 17% 17% 17% 16% 15% Adj ROE 1 Book value per share excluding Accumulated Other Comprehensive Income “AOCI” is a non-GAAP measure. Please see appendix for a reco
Slide 7: Market and Industry Dynamics
Market and Industry Dynamics CONFIDENTIAL Complex market with favorable underpinnings Industry well positioned to navigate market conditions » Housing market has slowed as elevated interest rates and cumulative home price appreciation » Qualified Mortgage definition and regulators driving continue t
Slide 8: Comprehensive Risk Management
Comprehensive Risk Management CONFIDENTIAL December 31, 2007 September 30, 2023 Significant decrease in layered risk FICO at Origination1 <620 7% <620 2 % RIF % RIF 0% # of High-Risk Layers 740+ 740+ 4Q07 3Q23 25% 59% 0 4.6% 0.6% 620-679 620-679 LTV > 95% 1 7.9% 0.6% 34% 7% 2 2.5% 0.1% 680-739 34% F
Slide 9: Consistent Insurance-in-Force Growth
Consistent Insurance-in-Force Growth CONFIDENTIAL Insurance-in-force ($B) and persistency Book year primary insurance-in-force ($B) 96% of Portfolio Avg Mtg Rate 3.9% 4.3% 4.8% 4.2% 3.3% 3.1% 4.9% 6.5% » Strong NIW and continued elevated persistency drove IIF » 1% of portfolio had mortgage rates at
Slide 10: Portfolio Premium Yield & Premiums
Portfolio Premium Yield & Premiums CONFIDENTIAL In-force primary portfolio premium yield Primary direct & Ceded premiums1 ($M) Base Premiums Single Ceded 3Q22 4Q22 1Q23 2Q23 3Q23 Base Premium Rate (bps) 41.7 41.0 40.5 40.3 40.2 $235 $232 $235 $238 $243 $5 $2 $2 $2 $2 Single Cancellations 0.9 0.3 0.3
Slide 11: Delinquencies and Forbearance
Delinquencies and Forbearance CONFIDENTIAL New delinquencies1 Delinquent policies 76,960 Not In Forbearance In Forbearance Not in Forbearance In Forbearance 73% 44,904 35,996 32,624 21% 29,911 14% 71% 24,820 42% 19,943 19,241 41% 26% 19% 29% 59% 74% 81% 27% 58% 79% 86% 2Q20 - 4Q20 2021 2022 YTD 2023
Slide 12: Losses
Losses CONFIDENTIAL Losses ($M) Highlights 18 18 » 3Q23 loss performance driven by new delinquencies partially (4) offset by $55 million reserve release (11) » Reserve release driven by favorable cure performance (40) primarily from 2022 and earlier delinquencies 3Q22 4Q22 1Q23 2Q23 3Q23 » Current p
Slide 13: Enact Re
Enact Re CONFIDENTIAL We expect Enact Re to create shareholder value in the long-term while preserving our dividend capacity Enact Re is a subsidiary of EMICO and Bermuda-based entity; fully licensed by Bermuda Monetary Authority and GSE approved as a non-exclusive reinsurer; A- rating from A.M. Bes
Slide 14: Strong PMIERs Sufficiency
Strong PMIERs Sufficiency CONFIDENTIAL Sufficiency to PMIERs1, 2 ($M) Highlights » The modest increase in PMIERs sufficiency for the quarter was driven by business cash flows mostly offset by increase 174% in required assets 165% 164% 162% 162% 2,249 2,050 2,098 1,958 2,017 » Our previously announce
Slide 15: Robust Capital Position
Robust Capital Position CONFIDENTIAL Strong capital position1 ($M) Highlights » Returned a total of $32M to shareholders during the quarter, consisting of $26M quarterly dividend and share repurchases totaling $6M » Year-to-date through October, repurchased $78 million as part of our share repurchas
Slide 16: Strong & Diversified Ratings
Strong & Diversified Ratings CONFIDENTIAL Rating Agency Date Updated EMICO1 EHI2 LT Debt3 EMIC-NC1 Enact Re1 Rating / Outlook Rating / Outlook Rating / Outlook Rating / Outlook Rating / Outlook Upgraded Moody’s A3 / Stable Baa3 / Stable Baa3 / Stable - - March 2023 Upgraded S&P BBB+ / Stable BB+ / S
Slide 17: Highly Rated & Diversified Investment Portfolio
Highly Rated & Diversified Investment Portfolio CONFIDENTIAL Composition by asset class1 Composition by rating2 » Top 10 issuers comprise ~6% of portfolio » 98% of portfolio is investment grade » Book yield of 3.5% up 0.1 points versus prior quarter » 3Q23 unrealized gain / (loss) position of $(499)
Slide 18: Our ESG Pillars
Our ESG Pillars CONFIDENTIAL 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
Slide 19: Appendix
CONFIDENTIAL Appendix “Enact
Slide 20: Non-GAAP Measures
Non-GAAP Measures CONFIDENTIAL 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 deri
Slide 21: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 1 CONFIDENTIAL 1 Figures may not foot due to rounding. See Enact 3Q23 Quarterly Financial Supplement (QFS). 21