Essent Group Report Q3 Net Income Of $59.7M
Bermuda-based Essent Group reported net income for the quarter ended September 30, 2016 of $59.7 million or $0.65 per diluted share, compared to $40.8 million or $0.44 per diluted share for the quarter ended September 30, 2015. As of September 30, 2016, Essent had insurance in force of $77.6 billion and consolidated stockholders’ equity of $1.3 billion.
“We had another strong quarter of operating performance and producing high quality and growing earnings for our shareholders,” said Mark Casale, Chairman and Chief Executive Officer.
“We grew insurance in force 25% year over year, which drove year over year growth in quarterly net income of 46% while also producing a 17.6% annualized return on average equity for the nine month period ended September 30, 2016.”
Financial Highlights:
- Insurance in force as of September 30, 2016 was $77.6 billion, compared to $62.1 billion as of September 30, 2015.
- New insurance written for the third quarter was $10.3 billion, compared to $7.6 billion in the third quarter of 2015.
- Net premiums earned for the third quarter were $110.8 million, compared to $83.7 million in the third quarter of 2015.
- The expense ratio for the third quarter was 29.6%, compared to 34.3% in the third quarter of 2015.
- The provision for losses and LAE for the third quarter was $5.0 million, compared to $3.4 million in the third quarter of 2015.
- The percentage of loans in default as of September 30, 2016 was 0.41%, compared to 0.29% as of September 30, 2015.
- The combined ratio for the third quarter was 34.1%, compared to 38.4% in the third quarter of 2015.
- The consolidated balance of cash and investments at September 30, 2016 was $1.6 billion, including cash and investment balances at Essent Group Ltd. of $44.6 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 14.8:1 as of September 30, 2016.
- Essent’s net income for the third quarter reflects a positive $2.0 million valuation adjustment associated with an amendment to certain GSE risk share transactions at Essent Reinsurance Ltd., which resulted in a conversion from derivative accounting to insurance accounting.
- Essent Reinsurance Ltd. reinsured a total of $5.2 million of risk in GSE risk share transactions in the third quarter of 2016.
- Essent drew $50.0 million under its revolving credit facility in the third quarter of 2016. The proceeds of the draw were contributed to Essent Reinsurance Ltd.
- On November 3, 2016, S&P Global Ratings assigned its ‘BBB+’ long-term counterparty and financial strength ratings to Essent Reinsurance Ltd.
