Essent Reports Third Quarter 2019 Results

November 11, 2019 | 0 Comments

Essent Group Ltd. reported net income for the quarter ended September 30, 2019 of $144.6 million or $1.47 per diluted share, compared to $116.0 million or $1.18 per diluted share for the quarter ended September 30, 2018.

Essent also announced today that its Board of Directors has declared a quarterly cash dividend of $0.15 per common share. The dividend is payable on December 16, 2019, to shareholders of record on December 4, 2019.

“We are pleased with our strong financial results for the third quarter and our continued progress in transitioning our franchise to a buy, manage and distribute model through the utilization of EssentEDGE and reinsurance,” said Mark Casale, Chairman and Chief Executive Officer.

“Additionally, our recent financial strength rating upgrade by Moody’s to A3 was a significant achievement for Essent. We believe that this upgrade is further validation of the strength and sustainability that our buy, manage and distribute model provides our franchise.”

Financial Highlights:

  • Insurance in force as of September 30, 2019 was $161.0 billion, compared to $153.3 billion as of June 30, 2019 and $131.2 billion as of September 30, 2018.
  • New insurance written for the third quarter was $18.7 billion, compared to $18.0 billion in the second quarter of 2019 and $13.9 billion in the third quarter of 2018.
  • Net premiums earned for the third quarter were $203.5 million, compared to $188.5 million in the second quarter of 2019 and $166.7 million in the third quarter of 2018.
  • The expense ratio for the third quarter was 20.4%, compared to 22.0% in the second quarter of 2019 and 22.1% in the third quarter of 2018.
  • The provision for losses and LAE for the third quarter was $10.0 million, compared to a provision of $5.0 million in the second quarter of 2019 and a provision of $5.5 million in the third quarter of 2018.
  • The percentage of loans in default as of September 30, 2019 was 0.75%, compared to 0.66% as of June 30, 2019 and 0.61% as of September 30, 2018.
  • The combined ratio for the third quarter was 25.3%, compared to 24.7% in the second quarter of 2019 and 25.4% in the third quarter of 2018.
  • The consolidated balance of cash and investments at September 30, 2019 was $3.4 billion, including cash and investment balances at Essent Group Ltd. of $98.2 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 13.4:1 as of September 30, 2019.
  • During the quarter, we entered into our first quota share reinsurance transaction with a panel of third-party reinsurers. With an effective policy date of September 1, 2019 through December 31, 2020, the quota share agreement covers 20% of monthly NIW policies and 40% of single NIW policies written by Essent Guaranty, Inc. The transaction includes a 20% ceding commission and a profit commission of up to 60%.
  • On October 17, 2019, Moody’s Investors Service [Moody’s] upgraded the financial strength rating of Essent Guaranty, Inc. to A3 from Baa1.
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