Essent Group Ltd. · NYSE:ESNT
Essent — Q1 2024 Earnings Presentation
24 slides from Essent's earnings presentation, May 3, 2024
Slide 1: Investor Presentation 1Q24
ESSENT GROUP LTD. INVESTOR PRESENTATION 1Q24 NYSE: ESNT May 3, 2024 ESSENT GROUP LTD. | NYSE: ESNT © 2024 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 Mortgage Insurer
Essent Is A Leading Mortgage Insurer 4Q23 1Q24 Company Overview Consolidated Financial Results • Essent Group Ltd. is a Bermuda-based holding company that went Net Income ($M) $175.4 $181.7 public in 2013, and is traded on the New York Stock Exchange (NYSE: ESNT). Combined Ratio 34.9% 31.1% • Two pr
Slide 4: Delivering Shareholder Value
Delivering Shareholder Value BOOK VALUE PER SHARE GROWTH Annualized growth rate of 18.8% since December 31, 2013 $47.87 $48.96 $41.44 $38.73 $34.36 $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 Dec-21 Dec-22 Dec-23 Mar-24 Strong Cash Flows Pr
Slide 5: Key Milestones in Essent's Evolution
Key Milestones in Essent’s Evolution Launch IPO Launch of First CRT EssentEDGE® EssentEDGE® Essent Title of Essent Essent Re Next Generation Guaranty Essent Essent initiates Essent Essent acquires Essent Re its first credit- launches A cloud-based AI title insurance completes Essent completes first
Slide 6: Industry Fundamentals
Industry Fundamentals STABLE DEMAND OF FIRST-TIME HOMEBUYER POPULATION MONTHS’ SUPPLY OF HOUSING INVENTORY Total housing inventory remains low at approximately 3 months, driven by existing Favorable demographic trends should continue to provide fundamental support to home inventory pressures from va
Slide 7: Buy, Manage & Distribute Operating Model
Buy, Manage & Distribute Operating Model EssentEDGE® Enables Rapid Execution Strong Operating Results of Targeted Pricing Strategies ➢ Last Twelve Months Operating Cash Flow of ➢ Lender utilization continues to increase $795 million ➢ The latest generation of EssentEDGE® is a ➢ Continue to focus on
Slide 8: Credit Risk Transfer
Credit Risk Transfer Since March 2018, Essent has transferred credit risk to: ▪ Capital market investors via nine(1) Radnor Re Insurance-Linked Note (ILN) issuances ▪ Reinsurers via five (1) Excess of Loss (XOL) reinsurance transactions ▪ Reinsurers via four Quota Share (QS) reinsurance programs As
Slide 9: Essent Re
Essent Re ➢ Essent Reinsurance Ltd. (“Essent Re”) is a Bermuda-based reinsurance company, rated A (Excellent) by A.M. Best and A- by S&P. At March 31, 2024, Essent Re’s GAAP equity was $1.8 billion. ➢ Essent Re primarily focuses on three business lines: ➢ Affiliate quota share to reinsure Essent Gua
Slide 10: Investment Portfolio
Investment Portfolio As Of March 31, 2024, Essent Has $5.6 Billion Of Total Investments Portfolio by Asset Class Portfolio by Rating1 Non-U.S. Below Baa3 Other Invested Assets Government 1.6% 5.0% 1.2% Baa Money 12.2% market funds U.S. 12.2% Government and Agency Debt RMBS & 32.2% A CMBS 19.7% 9.0%
Slide 11: Quarterly Financial Highlights
Quarterly Financial Highlights AS OF END OF PERIOD ($ in millions, except per share amounts) 1Q23 2Q23 3Q23 4Q23 1Q24 KEY METRICS U.S. Mortgage IIF $231,537.4 $235,649.9 $238,661.6 $239,078.3 $238,477.4 Total Revenue $256.2 $260.1 $296.1 $297.3 $298.4 Net Income $170.8 $172.2 $178.0 $175.4 $181.7 To
Slide 12: Annual Financial Highlights
Annual Financial Highlights AS OF END OF PERIOD ($ in millions, except per share amounts) 2020 2021 2022 2023 1Q24 KEY METRICS U.S. Mortgage IIF $198,882.4 $207,190.5 $227,062.1 $239,078.3 $238,477.4 Total Revenue $955.2 $1,028.5 $1,000.8 $1,109.8 $298.4 Net Income $413.0 $681.8 $831.4 $696.4 $181.7
Slide 13: U.S. Mortgage Insurance In Force (IIF) & New Insurance Written (NIW)
U.S. Mortgage Insurance In Force (IIF) & New Insurance Written (NIW) IIF BY VINTAGE YEAR ($B) ($ in billions) DEC. 31, 2022 DEC. 31, 2023 MAR. 31, 2024 IIF % of Total IIF % of Total IIF % of Total WA Coupon 2024 - - - - $8.3 3.5% 6.7% 2023 - - $45.7 19.1% $44.8 18.8% 6.7% 2022 $60.6 26.7% $56.9 23.8
Slide 14: A High Credit Quality IIF Portfolio
A High Credit Quality IIF Portfolio IIF BY FICO SCORE ($B) ($ in billions) DEC. 31, 2022 DEC. 31, 2023 MAR. 31, 2024 IIF % of Total IIF % of Total IIF % of Total >=760 $93.4 41.1% $97.1 40.6% $96.7 40.6% 740-759 $38.8 17.2% $41.5 17.4% $41.5 17.4% 720-739 $35.0 15.4% $37.4 15.7% $37.3 15.7% 700-719
Slide 15: In Force Portfolio Premium Yield
In Force Portfolio Premium Yield U.S. Mortgage Insurance Portfolio PERIOD ENDING (in basis points) 1Q23 2Q23 3Q23 4Q23 1Q24 Base Premium Earned 40 bps 40 bps 40 bps 40 bps 41 bps Singles Cancellation Premium 0 bps 0 bps 0 bps 0 bps 0 bps Gross Premium Rate 40 bps 40 bps 40 bps 40 bps 41 bps Ceded Pr
Slide 16: Cost of Reinsurance Transactions
Cost of Reinsurance Transactions PERIOD ENDING ($ in millions) 1Q23 2Q23 3Q23 4Q23 1Q24 U.S. Mortgage Insurance Portfolio ILN/XOL Ceded Premium $22.3) $27.7) $16.6) $16.6) $16.3) QSR Ceded Premium $11.3) $11.8) $13.7) $14.5) $14.1) Total Ceded Premium $33.6) $39.5) $30.3) $31.1) $30.4) Increase (Red
Slide 17: Default Rollforward
Default Rollforward U.S. Mortgage Insurance Portfolio PERIOD ENDING (number of loans) 1Q23 2Q23 3Q23 4Q23 1Q24 Beginning Default Inventory 13,433 12,773 12,480 13,391 14,819 Plus: New Defaults (1) 7,015 6,575 7,953 9,007 8,260 Less: Cures (7,574) (6,761) (6,902) (7,418) (8,951) Less: Claims Paid (94
Slide 18: Components Of Provision For Losses & LAE
Components Of Provision For Losses & LAE U.S. Mortgage Insurance Portfolio PERIOD ENDING ($ in millions) 1Q23 2Q23 3Q23 4Q23 1Q24 Provision for Losses & LAE occurring in: Current Period $32.7) $31.4 $35.6 $38.9 $39.4 Prior Year Development ($32.9) ($30.1) ($25.5) ($19.9) ($30.1) Provision For Losses
Slide 19: Cumulative Incurred Loss Ratio By Vintage Year
Cumulative Incurred Loss Ratio By Vintage Year U.S. Mortgage Insurance Portfolio PRE-2015 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Pre-2015 2.4% 2.9% 3.1% 3.0% 2.7% 2.6% 3.3% 3.3% 2.6% 2.5% 2.4% 2015 2.1% 3.3% 4.0% 3.0% 2.7% 4.6% 4.3% 2.7% 2.5% 2.3% 2016 2.3% 4.6% 3.4% 2.9% 6.4% 5.3% 2.8% 2
Slide 20: U.S. Mortgage Insurance Subsidiaries
U.S. Mortgage Insurance Subsidiaries As of: ($ in millions) 1Q23 2Q23 3Q23 4Q23 1Q24 Scheduled Contingency Statutory Financial Information Reserve Releases(3) ($ in millions) Risk-to-capital ratio 10.3:1 10.5:1 10.3:1 10.2:1 10.0:1 Apr-Dec 2024 $87 Common stock and paid-in surplus(1) $744 $744 $744
Slide 21: Quarterly Financial Trends
Quarterly Financial Trends U.S. MORTGAGE IIF & NIW NET INCOME Total Insurance In Force ($B) Net Income ($M) Total New Insurance Written ($B) $231.8 $231.5 $235.6 $238.7 $239.1 $238.5 $222.5 $227.1 $215.9 $178.1 $178.0 $175.4 $181.7 $170.8 $172.2 $147.4 $20.1 $17.1 $13.0 $12.9 $13.5 $12.5 $8.8 $8.3 2
Slide 22: Annual Financial Trends
Annual Financial Trends U.S. MORTGAGE IIF & NIW NET INCOME Total Insurance In Force ($B) Net Income ($M) Total New Insurance Written ($B) $239.1 $238.5 $227.1 $831.4 $207.2 $198.9 $681.8 $696.4 $164.0 $555.7 $137.7 $467.4 $107.9 $413.0 $84.2 $63.6 $63.1 $47.5 $47.7 $181.7 $8.3 2018 2019 2020 2021 20
Slide 23: CRT Summary: As Of 3/31/24
CRT Summary: As Of 3/31/24 1. Insurance Linked Note Transactions (ILN) are with Radnor Re 2. Excess of Loss Agreements (XOL) and Quota Share (QSR) 4. Reduction in PMIERs Minimum Required Assets estimated (RMIR) entities transactions are with panels of U.S. & global reinsurers by the Company ➢ The Ra
Slide 24: ESSENT GROUP LTD. | NYSE: ESNT © 2024 Essent Group Ltd. All rights reserved.
ESSENT GROUP LTD. | NYSE: ESNT © 2024 Essent Group Ltd. All rights reserved. | essentgroup.com | 24