Essent Group Ltd. · NYSE:ESNT
Essent — Investor Presentation (May 2020)
14 slides from Essent's investor presentation, May 28, 2020
Slide 1: Investor Presentation
Investor Presentation May 28 th , 2020
Slide 2: Disclaimer
Disclaimer Forward-Looking Statements This presentation may include “forward-looking statements” which are subject to known and unknown risks and uncertainties, many of which may be beyond the Company’s control. Forward-looking statements generally can be identified by the use of forward-looking ter
Slide 3: Essent is a Leading Specialty Insurer Providing Mortgage Insurance Solutions
Essent is a Leading Specialty Insurer Providing Mortgage Insurance Solutions @ IPO Buy, Manage & Key Highlights (20131) Distribute (20202) Serves the housing finance industry by offering mortgage insurance, reinsurance and risk IIF $32bn $166bn management products to mortgage lenders and investors
Slide 4: Essent's Current Business Model: Buy, Manage and Distribute
Essent’s Current Business Model: Buy, Manage and Distribute EssentEDGE® Monitoring Risk-based pricing Leverage underwriting engine standards to adjust Evaluates loan-level new business flows credit and borrower attributes in calculating Shape portfolio risk an MI rate profile Shapes new bu
Slide 5: Potential Impact of COVID-19 on the Mortgage Insurance Industry
Potential Impact of COVID-19 on the Mortgage Insurance Industry COVID-19 has resulted in a spike in unemployment that initially started to affect the U.S. housing market via a decline in home sales but recent trends suggest a rebound Current market environment may limit availability of credit ri
Slide 6: 2020 Year to Date Update
2020 Year to Date Update Q1 Financial Summary Commentary Q1 %∆ Q1 results highlight strength and sustainability of 2019 2020 Essent’s business model and puts Essent in a Key Metrics position of strength New Insurance Written $ 11.0bn $ 13.5bn 23 % Insurance In Force $ 143.2bn $ 165.6bn 16 % Net Pr
Slide 7: Essent is Acting from a Position of Capital Strength
Essent is Acting from a Position of Capital Strength… PMIERs Sufficiency Ratio1 Return on Equity2 200 % 138 % 130 % 20.8 % 117 % Essent 19.8 % Essent Radian MGIC NMI 17.8 % PMIERs Radian $1.2bn $1.1bn $1.3bn4 $0.2bn Cushion: 12.9 % HoldCo $0.3bn $1.2bn3 $0.6bn <$0.1bn Liquidity: 17.1 % Total Debt /
Slide 8: ...and with a Clean and Seasoned Portfolio
…and with a Clean and Seasoned Portfolio Insurance In Force of $165.6bn as of Q1 2020 By Vintage By FICO Score By LTV 680-699 <680 <=2015 2 020 8% Essent Q1 2020 IIF 11% 8% 7% >95% 15% 2016 11% <=90% 2019 39% 34% 2017 700+ 90.01-95% 17% 85% 46% 2018 19% 2007 Industry Average1 <620 8%
Slide 9: Illustrative Stress Testing Scenarios
Illustrative Stress Testing Scenarios Given the unprecedented environment, derived severe stress test scenarios beyond macroeconomic shocks informed by usual stress test scenarios Resulting peak delinquency rates range from ~13-18% — Expect majority of claims from 2020 delinquencies to be paid i
Slide 10: Essent Will Proactively Manage the Credit Cycle
Essent Will Proactively Manage the Credit Cycle High Hold Assets on Balance Sheet Shrink Exposure Cost of 3rd Party Capital Relative to Essent Conditions Conditions Opportunity for market consolidation and book Risk reward of retaining business is not value growth due to attractive market favora
Slide 11: Mortgage Industry Fundamentals are Supportive of Growth
Mortgage Industry Fundamentals are Supportive of Growth Growing Domestic First-Time Homebuyer Population New Entrants to Domestic First-Time Homebuyer Population (mm) 4.3 4.2 4.3 4.3 4.2 4.4 4.4 4.4 4.5 4.6 4.8 4.8 4.7 4.6 4.5 Millennial generation of roughly 80mm will drive 3.9 3.8 3.9 4.0 4.1 ho
Slide 12: Market Remains an Attractive Opportunity for Essent
Market Remains an Attractive Opportunity for Essent Key Highlights Market Size and Growth Insurance In Force ($bn) Essent continues to grow profitably and has become a Note: Chart not to scale CAGR scale player $ 1,237 9% $ 995 Essent’s focus has been on profitability vs. gaining $ 827 $ 738 7%
Slide 13: Appendix
@ ESSENT’ GROUP Appendix 13
Slide 14: Attractive Financial Profile Demonstrating High Quality Growth
Attractive Financial Profile Demonstrating High Quality Growth Increased Scale – IIF ($bn) Consistent Top Line Growth – Total Revenue ($mm) $164.0 $868 $137.7 $719 $110.5 $577 $83.3 $458 $65.2 $353 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Clean Book & More Efficient Operation – CoR Consiste