Enact Holdings, Inc. · NASDAQ:ACT
Enact — Q3 2024 Earnings Presentation
22 slides from Enact's earnings presentation, Nov 7, 2024
Slide 1: Third Quarter 2024 Financial Results
Third Quarter 2024 Financial Results November 6, 2024
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 $268B, driven by NIW of $14B and persistency of 83% Reserve release of $65M driven by sustained favorable cure performance and our loss mitigation efforts Expense ratio declined to 22% and Operating Expenses on track to meet 2024 guidance of $
Slide 4: About Us
About Us enactmi.com Dynamic platform uniquely positioned with innovative approach, strong balance sheet, Leading private mortgage insurance 40+ year track record and cycle-tested company helping millions of families leadership team achieve the dream of sustainable home ownership Drive Profitable Gr
Slide 5: Financial Highlights
Financial Highlights enactmi.com Primary Insurance in-Force Up $2B Q/Q $268 New Insurance Written Flat Q/Q $13.6 Net Premiums Earned Up 2% Q/Q $249 billion billion million Net Income Down 2% Q/Q $181 Adjusted Operating Income1 $182 Net Investment Income Up 2% Q/Q $61 million Down 9% Q/Q million mill
Slide 6: Driving Continued Book Value Accretion
Driving Continued Book Value Accretion enactmi.com 1 Book value per share excluding AOCI + cumulative dividends 1 Book value per share excluding Accumulated Other Comprehensive Income “AOCI” is a non-GAAP measure. Please see appendix for a reconciliation 6
Slide 7: Market and Industry Dynamics
Market and Industry Dynamics enactmi.com Complex market with favorable Industry well positioned to navigate underpinnings market conditions » Housing market remains slow in the near-term » High quality credit portfolio and strong given low affordability manufacturing quality » Tight housing supply r
Slide 8: Strong & Comprehensive Risk Management
Strong & Comprehensive Risk Management enactmi.com 1 FICO at Origination (Risk in-force “RIF”) Significant decrease in layered risk # of High-Risk 4Q07 3Q23 4Q23 1Q24 2Q24 3Q24 Layers2 LTV > +0 4.6% 0.6% 0.6% 0.6% 0.6% 0.6% 95% +1 7.9% 0.6% 0.6% 0.6% 0.6% 0.6% & +2 2.5% 0.1% 0.1% 0.1% 0.1% 0.1% FICO
Slide 9: Primary Insurance in-Force (IIF) Growth
Primary Insurance in-Force (IIF) Growth enactmi.com 1, 2 NIW ($B), IIF ($B) and Persistency Rate Mortgage Rate IIF Concentration 8% >7.2% (Oct 31 Market Rate + 50bps buffer) 18% >6.7% (Sept 30 Market Rate + 50bps buffer) 70% 3Q24 » NIW flat sequentially and comprised of 95% monthly » 8% of our IIF h
Slide 10: Portfolio Premium Yield & Premiums
Portfolio Premium Yield & Premiums enactmi.com 1 In-force primary portfolio premium yield Primary direct & ceded premiums ($M) 3Q23 4Q23 1Q24 2Q24 3Q24 Base Premium Rate (bps) 40.2 40.1 40.1 40.3 40.2 Single Cancellations 0.3 0.2 0.2 0.2 0.4 Ceded Premium (3.2) (3.9) (4.0) (4.1) (4.3) Net Premium Ra
Slide 11: Strong Credit Performance
Strong Credit Performance enactmi.com New delinquencies1 Cure Activity1 2 3 Remaining 1,159 1,632 2,258 3,857 9,260 Total Delqs 19,241 20,432 19,492 19,051 21,027 Delqs Cumulative 89% 86% 80% 63% 29% Delq Rate 2.0% 2.1% 2.0% 2.0% 2.2% Cure Rate » New delinquencies and new delq rate increased sequent
Slide 12: Losses
Losses enactmi.com Losses ($M) & Loss Ratio Highlights » Sequential increase in losses and the loss ratio were primarily driven by higher new delinquencies and a lower reserve release of $65 million reflecting favorable cure performance and loss mitigation activities » $65 million reserve release co
Slide 13: Embedded Equity
Embedded Equity 1 enactmi.com Primary Portfolio Delinquent Policies 89% 98% 2% 95% Delinquent Current » Cumulative HPA and continued tight supply supporting housing prices support considerable embedded equity across our portfolio » 89% of all policies and 95% of delinquent policies have at least 10%
Slide 14: Continued Strong Capital Return and Low Leverage
Continued Strong Capital Return and Low Leverage enactmi.com GAAP Capital position1 ($M) Highlights » Returned $100M to shareholders during the quarter, consisting of $29M quarterly dividend, and share repurchases totaling $71M (2.1M shares at an average price of $34.04) » Repurchased an additional
Slide 15: Strong PMIERs Sufficiency
Strong PMIERs Sufficiency enactmi.com Sufficiency to PMIERs1, 2 ($M) PMIERs Credit by CRT Instrument » Operating leverage of 35% reflects successful execution of our well diversified CRT program in a complex market » 79% of our RIF was subject to our CRT program as of quarter end 1 PMIERs calculated
Slide 16: Robust Statutory Capital
Robust Statutory Capital enactmi.com EMICO Policyholder Surplus & Statutory Capital Scheduled Contingency Reserve Release1 Year $M 2024 $175 2025 $307 2026 $342 2027 $359 2028 $384 2029 $441 2030 $510 2031 $522 2032 $508 2033 $492 Contingency $3,917 $3,953 $4,140 $4,234 $4,281 Reserve Total $4,040 »
Slide 17: Strong and Diversified Ratings
Strong and Diversified Ratings enactmi.com Rating Date Updated EMICO1 EHI2 LT Debt3 EMIC-NC1 Enact Re1 Agency Rating / Outlook Rating / Outlook Rating / Outlook Rating / Outlook Rating / Outlook Outlook Upgraded Moody’s A3 / Positive Baa3 / Positive Baa3 / Stable - - March 2024 Initiated Enact Re S&
Slide 18: Highly Rated & Diversified Investment Portfolio
Highly Rated & Diversified Investment Portfolio enactmi.com $5.7B Investment Portfolio and $0.7B of Cash Equivalents Composition by asset class1 Composition by rating2 » Top 10 issuers comprise ~6% of portfolio » 99% of portfolio is investment grade » Book yield of 3.9% up 10bps versus prior quarter
Slide 19: Our ESG Pillars
Our ESG Pillars enactmi.com 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 s
Slide 20: Appendix
Appendix “Enact
Slide 21: Non-GAAP Measures
Non-GAAP Measures enactmi.com 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 deriv
Slide 22: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures enactmi.com Net Income to Adj Operating Income 1Q23 2Q23 3Q23 4Q23 2023 1Q24 2Q24 3Q24 Net Income $176 $168 $164 $157 $666 $161 $184 $181 Adjustments to Net Income: Net investment (gains) losses $0 $13 $0 $1 $14 $7 $8 $1 Costs associated with reorganization ($1) $