Essent Group Ltd. · NYSE:ESNT

Essent — Q3 2020 Earnings Presentation

17 slides from Essent's earnings presentation, Nov 6, 2020

  1. Slide 1: Essent Group Ltd. Investor Presentation 3Q20

    ESSENT GROUP LTD. INVESTOR PRESENTATION 3Q20 NYSE: ESNT NOVEMBER 6, 2020

  2. 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

  3. Slide 3: Essent Is a Leading Specialty Insurer

    ESSENT IS A LEADING SPECIALTY INSURER COMPANY HIGHLIGHTS @ IPO BUY, MANAGE & 3Q20 2 2Q20 (2013) DISTRIBUTE (2020)3  Essent Group Ltd. is a Bermuda-based holding company that went public in 2013, and is traded on the New York Stock Exchange (NYSE: ESNT) IIF ($B) $190.8 $174.6  Serves the U.S. housi

  4. Slide 4: Financial Performance

    FINANCIAL PERFORMANCE 3Q20 Financial Summary Annual Financial Summary Period Ending Full Year Results 3Q20 2Q20 %Δ YTD 9/30 2019 2018 2017 2016 2015 Key Metrics Key Metrics New Insurance Written $B $36.7 $28.2 30% New Insurance Written $B $78.4 $63.6 $47.5 $43.9 $34.9 $26.2 Insurance In Force $B $19

  5. Slide 5: Mortgage Insurance Industry: COVID-19's Impact

    MORTGAGE INSURANCE INDUSTRY: COVID-19’S IMPACT  COVID-19 has significantly impacted the U.S economy as a whole, resulting in increased unemployment and mortgage defaults.  Housing, however, has remained resilient as record low interest rates have boosted refinance activities and Mortgage Industry

  6. Slide 6: Housing Tailwinds & Headwinds

    HOUSING TAILWINDS & HEADWINDS Tailwinds Headwinds  Low inventory & strong demand X Continued high unemployment rate  Low interest rates X Slowdown in GDP Growth  Demographic trend intact (“Millennials”) X Surges of COVID  Strong credit quality X Expiration of Federal stimulus  Fiscal and moneta

  7. Slide 7: Credit Is Trending the Right Direction Yet Cautious Outlook Is Warranted

    CREDIT IS TRENDING THE RIGHT DIRECTION YET CAUTIOUS OUTLOOK IS WARRANTED Pace of new COVID defaults is decelerating 1  37.4k in Q2 vs. 12.6k in Q3  3k in October Cure pattern of COVID defaults is encouraging 2  ~40% of Q2 defaults cured by the end of Q3  ~50% of Q2 defaults cured by the end of O

  8. Slide 8: Industry Fundamentals Are Supportive of Growth

    INDUSTRY FUNDAMENTALS ARE SUPPORTIVE OF GROWTH Growing Domestic First-Time Homebuyer Population New Entrants to Domestic First-Time Homebuyer Population (m) 4.8 4.8 4.7 4.6 4.5  Millennial generation of roughly 80M will drive 4.3 4.2 4.3 4.3 4.2 4.4 4.4 4.4 4.5 4.6 3.9 3.8 3.9 4.0 4.1 housing’s lon

  9. Slide 9: Market Remains an Attractive Opportunity

    MARKET REMAINS AN ATTRACTIVE OPPORTUNITY Key Highlights Annual Market Share  Essent maintains a strong market position while continuing to grow its share of industry insurance in force  Essent has averaged an annual NIW market share of ~15% from 2013 through year-to-date 2020.  The MI industry co

  10. Slide 10: Essent's Business Model: Buy, Manage & Distribute

    ESSENT’S BUSINESS MODEL: BUY, MANAGE & DISTRIBUTE EssentEDGE® Monitoring  Risk-based pricing  Leverage underwriting engine standards to adjust  Evaluates loan-level new business flows credit and borrower attributes in  Shape portfolio risk calculating an MI rate profile  Shapes new business  R

  11. Slide 11: Focus on Profitability, Robust Capital & Strong Liquidity

    FOCUS ON PROFITABILITY, ROBUST CAPITAL & STRONG LIQUIDITY… Buy, Manage & Distribute Model Proving Its Value In the Wake of COVID EssentEdge Enabling Rapid Execution of Targeted Pricing Strategies 1  ~10% pricing increases since the inception of COVID  Continued EDGE engine refinement by targeting

  12. Slide 12: While Building a High Credit Quality Portfolio

    …WHILE BUILDING A HIGH CREDIT QUALITY PORTFOLIO AS OF SEPTEMBER 30, 2020, ESSENT HAS $190.8 BILLION OF INSURANCE IN FORCE IIF By Vintage IIF By FICO Score IIF By LTV 2020 Essent Q3 2020 IIF 39.8% 90.01- >=95.01% <=2015 95.00% 7.4% 14.0% 700+ 44.3% <680 2016 85.7% 6.3% 7.0% 680-699 2017 8.0% <=90.00%

  13. Slide 13: And Maintaining a Sufficient PMIERs Cushion

    …AND MAINTAINING A SUFFICIENT PMIERS CUSHION  At September 30, 2020, Essent Guaranty, Inc. has a PMIERs w/ and w/o 0.3x Multiplier PMIERs required asset amount of $1.7 billion and an excess asset amount of $981 million, yielding a PMIERs sufficiency ratio of 156%, with the 0.3x factor applied to th

  14. Slide 14: Quarterly Financial Trends

    QUARTERLY FINANCIAL TRENDS Insurance In Force & New Insurance Written Net Income Total New Insurance Written ($B) Net Income ($M) $147.0 $149.5 Total Insurance in Force ($B) $144.6 $136.4 $190.8 $128.5 $127.7 $124.5 $174.6 $161.0 $164.0 $165.6 $153.3 $137.7 $143.2 $36.7 $28.2 $15.4 $18.0 $18.7 $15.8

  15. Slide 15: Annual Financial Trends

    ANNUAL FINANCIAL TRENDS Insurance In Force & New Insurance Written Net Income Total Insurance in Force ($B) Net Income ($M) $555.7 Total New Insurance Written ($B) $190.8 $467.4 $164.0 $379.7 $137.7 $289.4 $110.5 $222.6 $83.3 $78.4 $65.2 $157.3 $63.6 $50.8 $47.5 $43.9 $88.5 $32.0 $34.9 $65.4 $21.2 $

  16. Slide 16: Key Takeaways

    KEY TAKEAWAYS Essent is a leading specialty insurance company operating in a large and growing market with high barrier of entry Essent has transformed its business model from “Buy and Hold” to “Buy, Manage & Distribute” Strong capital and liquidity, along with 3rd party reinsurance, enable Essent t

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