Essent Group Q4 Net Income: $128.5 Million

February 10, 2019 | 0 Comments

Bermuda-based Essent Group reported net income for the quarter ended December 31, 2018 of $128.5 million or $1.31 per diluted share, which includes a reduction of $9.9 million, or $.08 per diluted share, of the $11.1 million loss reserve established in the fourth quarter of 2017 for defaulted loans identified as related to Hurricanes Harvey and Irma. For the full year 2018, net income was $467.4 million or $4.77 per diluted share.

“We are pleased with our strong fourth quarter and full year 2018 results as we continued growing our high credit quality and profitable mortgage insurance portfolio,” said Mark Casale, Chairman and Chief Executive Officer.

“Also during 2018, we successfully piloted our risk based pricing engine, EssentEDGETM, and executed in the reinsurance markets. We believe that increased sophistication in the front-end and back-end of our business positions us well to shape our insured portfolio and profitably manage the long tail mortgage credit risk.”

Financial Highlights:

  • Insurance in force as of December 31, 2018 was $137.7 billion, compared to $131.2 billion as of September 30, 2018 and $110.5 billion as of December 31, 2017.
  • New insurance written for the fourth quarter was $11.4 billion, compared to $13.9 billion in the third quarter of 2018 and $11.2 billion in the fourth quarter of 2017.
  • Net premiums earned for the fourth quarter were $173.3 million, compared to $166.7 million in the third quarter of 2018 and $148.0 million in the fourth quarter of 2017.
  • The expense ratio for the fourth quarter was 22.8%, compared to 22.1% in the third quarter of 2018 and 24.7% in the fourth quarter of 2017.
  • The provision for losses and LAE for the fourth quarter was a benefit of $1.0 million, compared to a provision of $5.5 million in the third quarter of 2018 and a provision of $17.5 million in the fourth quarter of 2017. The provision in the fourth quarter of 2018 included a $9.9 million release of the $11.1 million reserve associated with loans identified as related to Hurricanes Harvey and Irma that was established in the fourth quarter of 2017.
  • The percentage of loans in default as of December 31, 2018 was 0.66%, compared to 0.61% as of September 30, 2018 and 0.96% as of December 31, 2017.
  • The combined ratio for the fourth quarter was 22.2%, compared to 25.4% in the third quarter of 2018 and 36.4% in the fourth quarter of 2017.
  • The consolidated balance of cash and investments at December 31, 2018 was $2.9 billion, including cash and investment balances at Essent Group Ltd. of $78.4 million.
  • The combined risk-to-capital ratio of the U.S. mortgage insurance business, which includes statutory capital for both Essent Guaranty, Inc. and Essent Guaranty of PA, Inc., was 13.9:1 as of December 31, 2018.
  • In December, Essent Guaranty, Inc. entered into an excess of loss [“XOL”] reinsurance agreement with a panel of U.S. and global reinsurers for $165.2 million of additional protection on mortgage insurance policies written by Essent in 2017
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