Essent Group Ltd. · NYSE:ESNT
Essent — Q2 2022 Earnings Presentation
22 slides from Essent's earnings presentation, Aug 5, 2022
Slide 1: Investor Presentation 2Q22
ESSENT GROUP LTD. INVESTOR PRESENTATION 2Q22 NYSE: ESNT August 5, 2022 ESSENT GROUP LTD. | NYSE: ESNT © 2022 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 Company Overview 2Q22 1Q22 • Essent Group Ltd. is a Bermuda-based holding company that IIF ($B) $215.9 $206.8 went public in 2013, and is traded on the New York Stock NIW ($B) $20.1 $12.8 Exchange (NYSE: ESNT) • Two primary operating companies: Essent Guaranty, I
Slide 4: Delivering Shareholder Value
Delivering Shareholder Value BOOK VALUE PER SHARE GROWTH Annualized growth rate of 20.1% since December 31, 2013 $38.73 $39.67 $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 Jun-22 Strong Cash Flows Programmatic Steadily Increasi
Slide 5: Key Milestones in Essent's Evolution
Key Milestones in Essent’s Evolution Launch IPO Launch of First CRT EssentEDGE® EssentEDGE® of Essent Essent Re Next Generation Essent Essent initiates Essent Guaranty completes Essent Re its first credit- launches A cloud-based AI Essent IPO; emerges completes first risk transfer proprietary pricin
Slide 6: 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 $613 million ➢ The next generation of EssentEDGE® is a ➢ Continue to focus on op
Slide 7: Reducing Volatility via Credit Risk Transfer
Reducing Volatility via Credit Risk Transfer Since March 2018, Essent has transferred credit risk to: ▪ Capital market investors via seven Radnor Re Insurance-Linked Note (ILN) issuances ▪ Reinsurers via four Excess of Loss (XOL) reinsurance transactions ▪ Reinsurers via two Quota Share (QS) reinsur
Slide 8: Essent Re
Essent Re ➢ Essent Reinsurance Ltd. (“Essent Re”) is a Bermuda-based reinsurance company, rated A (Excellent) by A.M. Best and BBB+ by S&P, with $1.4 billion in GAAP equity as of June 30, 2022 ➢ Essent Re primarily focuses on three business lines: ➢ Affiliate quota share (QS) to reinsure Essent Guar
Slide 9: EssentVentures
EssentVentures ➢ Our EssentVentures unit continues to make investments to generate informational and financial returns, taking advantage of opportunities around the convergence of consumer finance, real estate and insurance ➢ Since 2018, we have invested in 10 venture capital firms providing us acce
Slide 10: Supportive Industry Fundamentals
Supportive Industry Fundamentals GROWING DOMESTIC FIRST-TIME HOMEBUYER POPULATION • Millennial generation of roughly 80M will New Entrants to Domestic First-Time Homebuyer Population (M) drive housing’s longer-term prospects 4.3 4.2 4.3 4.3 4.2 4.4 4.4 4.4 4.5 4.6 4.8 4.8 4.7 4.6 4.5 and first-time
Slide 11: Insurance In Force (IIF)
Insurance In Force (IIF) IIF BY VINTAGE YEAR ($B) ($ in billions) JUNE 30, 2022 DEC. 31, 2021 DEC. 31, 2020 2022 $32.3 15.0% - - - - 2021 $75.3 34.9% $79.8 38.5% - - 2020 $67.4 31.2% $76.6 36.9% $102.1 51.3% 2019 $16.6 7.7% $20.3 9.8% $38.7 19.5% 2018 $7.6 3.5% $9.5 4.6% $18.7 9.4% 2017 $6.8 3.2% $8
Slide 12: A High Credit Quality Portfolio
A High Credit Quality Portfolio As Of June 30, 2022, Essent Has $215.9 Billion Of Insurance In Force IIF BY VINTAGE IIF BY FICO SCORE IIF BY LTV <=2017 <680 2022 7.7% 2018 5.5% 15.0% 680- >=95.01% 3.5% 699 14.0% 2019 7.7% 8.2% ESSENT IIF 90.01- 95.00% 45.8% 2021 <=90.00% 34.9% 2020 31.2% 40.2% 700+
Slide 13: Financial Highlights
Financial Highlights AS OF END OF PERIOD ($ in millions, except per share amounts) 2Q22 1Q22 4Q21 3Q21 2Q21 KEY METRICS Insurance In Force $215,896.5 $206,843.0 $207,190.5 $208,216.5 $203,559.9 Total Assets $5,521.1 $5,586.1 $5,722.2 $5,589.5 $5,521.8 Total Investments $4,838.1 $4,875.4 $5,133.4 $5,
Slide 14: In Force Portfolio Premium Yield
In Force Portfolio Premium Yield U.S. Mortgage Insurance Portfolio PERIOD ENDING (in basis points) 2Q22 1Q22 4Q21 3Q21 2Q21 Base Premium Earned 41 bps 41 bps 42 bps 42 bps 43 bps Singles Cancellation Premium 1 bps 2 bps 3 bps 3 bps 3 bps Gross Premium Rate 42 bps 43 bps 45 bps 45 bps 46 bps Ceded Pr
Slide 15: Cost of Reinsurance Transactions
Cost of Reinsurance Transactions PERIOD ENDING ($ in millions) 2Q22 1Q22 4Q21 3Q21 2Q21 U.S. Mortgage Insurance Portfolio ILN/XOL Ceded Premium $20.23) $19.83) $19.09) $18.09) $14.88) QSR Ceded Premium $2.09) $0.69) $7.39) $8.79) $11.78) Total Ceded Premium $22.32) $20.52) $26.48) $26.88) $26.66) In
Slide 16: Default Rollforward
Default Rollforward U.S. Mortgage Insurance Portfolio PERIOD ENDING (number of loans) 2Q22 1Q22 4Q21 3Q21 2Q21 Beginning Default Inventory 14,923 16,963 19,721 23,504 29,080 Plus: New Defaults 5,495 6,188 5,809 5,132 4,934 Less: Cures (7,639) (8,167) (8,514) (8,862) (10,453) Less: Claims Paid (65) (
Slide 17: Components Of Provision For Losses & LAE
Components Of Provision For Losses & LAE U.S. Mortgage Insurance Portfolio PERIOD ENDING ($ in millions) 2Q22 1Q22 4Q21 3Q21 2Q21 Provision for Losses & LAE occurring in: Current Period $18.72) $24.35) $13.23) $11.37) $24.53) Prior Year Development ($94.81) ($130.11) ($16.62) ($18.85) ($14.96) Provi
Slide 18: Cumulative Incurred Loss Ratio By Vintage Year
Cumulative Incurred Loss Ratio By Vintage Year PRE-2015 2015 2016 2017 2018 2019 2020 2021 6/30/2022 Pre-2015 2.4% 2.9% 3.1% 3.0% 2.7% 2.6% 3.3% 3.3% 2.7% 2015 2.1% 3.3% 4.0% 3.0% 2.7% 4.6% 4.3% 2.8% 2016 2.3% 4.6% 3.4% 2.9% 6.4% 5.3% 3.1% 2017 7.5% 4.6% 4.2% 9.7% 8.3% 4.4% 2018 3.3% 6.0% 16.4% 13.7
Slide 19: U.S. Mortgage Insurance Subsidiaries
U.S. Mortgage Insurance Subsidiaries As of: ($ in millions) 2Q22 1Q22 4Q21 3Q21 2Q21 Scheduled Contingency Statutory Financial Information Reserve Releases(3) ($ in millions) Risk-to-capital ratio 10.2:1 9.9:1 10.4:1 10.5:1 10.6:1 Jul-Dec 2022 $14.1 Common stock and paid-in surplus(1) $744 $744 $744
Slide 20: Quarterly Financial Trends
Quarterly Financial Trends INSURANCE IN FORCE & NEW INSURANCE WRITTEN NET INCOME Total Insurance In Force ($B) Net Income ($M) Total New Insurance Written ($B) $215.9 $274.2 $203.6 $208.2 $207.2 $206.8 $198.9 $197.1 $190.8 $231.8 $205.4 $181.0 $159.8 $135.6 $124.5 $123.6 $36.7 $29.6 $25.0 $23.6 $19.
Slide 21: Annual Financial Trends
Annual Financial Trends INSURANCE IN FORCE & NEW INSURANCE WRITTEN NET INCOME Total Insurance In Force ($B) Net Income ($M) Total New Insurance Written ($B) $215.9 $207.2 $198.9 $681.8 $164.0 $555.7 $137.7 $505.9 $467.4 $110.5 $107.9 $413.0 $379.7 $83.3 $84.2 $63.6 $222.6 $43.9 $47.5 $34.9 $32.9 201
Slide 22: ESSENT GROUP LTD. | NYSE: ESNT © 2022 Essent Group Ltd. All rights reserved.
ESSENT GROUP LTD. | NYSE: ESNT © 2022 Essent Group Ltd. All rights reserved. | essentgroup.com | 22