Essent Group Q2 Earnings Call Highlights

Strong second-quarter performance: Essent Group reported $190 million in net income, or $2.08 per diluted share, supported by favorable credit trends, high mortgage-insurance persistency and higher investment income. Book value per share increased nearly 13% year over year to $63.01. Mortgage portfolio remains resilient but growth is constrained: Insurance in force rose 1.2% year over year to $249.7 billion, while the default rate held near 2.53% and 97% of insurance in force had reinsurance protection. Affordability pressures and subdued mortgage originations are limiting near-term portfolio expansion. Capital returns and diversification continue: Essent repurchased $191 million of shares in the quarter and had bought back nearly $350 million through July 31, while maintaining strong capital and liquidity. The company is also expanding its P&C reinsurance business and investing in AI and other technology initiatives. Essent Group NYSE: ESNT reported second-quarter 2026 net income of $190 million, or $2.08 per diluted share, as a benign credit environment, elevated mortgage-insurance persistency and higher investment income supported results. The company said its annualized return on average equity was 13.4% for the quarter. Book value per share stood at $63.01 as of June 30 and had grown nearly 13% over the prior year, including the common dividend. Chairman and Chief Executive Officer Mark Casale said the company views book value per share growth as its primary measure of success. “Cash generation from our core MI business remains strong,” Casale said, adding that the company has flexibility to allocate capital between franchise investments and shareholder returns. Get Essent Group alerts: Sign Up Mortgage Insurance Portfolio and Credit Trends Insurance in force in Essent’s mortgage insurance business totaled $249.7 billion at June 30, up $1.8 billion from the end of the first quarter and $2.9 billion, or 1.2%, from a year earlier. Twelve-month persistency was 84%, compared with 84.7% at March 31. Casale said persistency remains supported by the interest-rate environment, noting that nearly half of the company’s in-force portfolio carries mortgage rates of 5.5% or less. At the same time, he said affordability constraints are likely to keep portfolio growth subdued in the near term because they continue to weigh on mortgage originations. The company’s mortgage insurance portfolio had a weighted-average credit score of 747 and weighted-average original loan-to-value ratio of 93%. Its default rate was 2.53% at June 30, essentially unchanged from the preceding quarter. Casale said embedded home equity within the portfolio should mitigate ultimate claims, while 97% of insurance in force is covered by reinsurance protection. Mortgage insurance premiums earned were $216 million during the second quarter. The average base premium rate was 40 basis points, down 1 basis point sequentially, while the average net premium rate was unchanged at 35 basis points. During the question-and-answer session, Casale said the company expects its average base premium rate to remain around 40 basis points this year and said any longer-term movement would likely be limited due to the weight and size of the existing insurance portfolio. He characterized the competitive environment as stable and said Essent focuses more on premium dollars and returns than market-share growth. Casale said the company has found opportunity in selected borrower segments, including areas with higher loan-to-value ratios or debt-to-income ratios, where he said competition can be less intense than in lower-risk borrower categories. Expenses, Losses and Capital Position The mortgage insurance provision for losses ...