• Net Income (Q4 2024): $168 million, compared to $175 million a year ago.
• Earnings Per Share (Q4 2024): $1.58 per diluted share, compared to $1.64 a year ago.
• Full Year Net Income (2024): $729 million or $6.85 per diluted share.
• Return on Average Equity (2024): 14%.
• Book Value Per Share (Dec 31, 2024): $53.36, an increase of 11% from a year ago.
• US Mortgage Insurance in Force (Dec 31, 2024): $244 billion, a 2% increase versus a year ago.
• Persistency Rate (Dec 31, 2024): 86%, down about 1 point from last quarter.
• Net Investment Income (2024): $222 million, up nearly 20% from 2023.
• Cash and Investments (Dec 31, 2024): $6.3 billion.
• Operating Cash Flow (2024): $852 million.
• Quarterly Dividend Increase: 11% to $0.31 per share.
• Share Repurchase Authorization: $500 million through year-end 2026.
• Net Premium Earned (Q4 2024): $244 million.
• Provision for Losses (Q4 2024): $37.2 million, impacted by hurricane-related defaults.
• Expense Ratio (Q4 2024): 28.7% consolidated; 19.4% excluding title.
• Effective Tax Rate (2024): 14.7%.
• Debt-to-Capital Ratio (Dec 31, 2024): 8%.
• PMIER Efficiency Ratio (Dec 31, 2024): 178%.

• Warning! GuruFocus has detected 2 Warning Sign with ESNT.

Release Date: February 14, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Essent Group Ltd (NYSE:ESNT) reported a strong net income of $168 million for Q4 2024, reflecting robust financial performance.
• The company's book value per share increased by 11% year-over-year, reaching $53.36 as of December 31, 2024.
• Essent Group Ltd (NYSE:ESNT) announced an 11% increase in its quarterly dividend to $0.31 per share, demonstrating confidence in its financial stability.
• The company successfully executed two quota share transactions with highly rated reinsurers, enhancing its capital resources and risk management.
• Essent Re, a subsidiary, contributed significantly to the company's performance with $80 million in annual third-party revenues and a strong track record of net income since 2014.

Negative Points

• Mortgage origination activity remains below historical levels, impacting potential growth in new business.
• The company experienced an increase in defaults due to Hurricanes Helen and Milton, affecting credit performance in Q4 2024.
• Persistency decreased slightly to 85.7% as of December 31, 2024, indicating a potential challenge in maintaining existing business.
• Essent Group Ltd (NYSE:ESNT)'s title operations incurred a pretax loss of approximately $21 million, with expectations of continued challenges in the near term due to rate sensitivity.
• The default rate on the US mortgage insurance portfolio increased to 2.27% by the end of 2024, reflecting aging of the portfolio and natural disaster impacts.

Q & A Highlights

Q: Is your expectation for 2025 that the title results will be similar to 2024, and was there anything unusual in title this quarter? A: Mark Casale, CEO: For 2025, I expect more of the same for title results. We have a cost structure in place, and while we are carrying capacity for a large lender, rates have not come down as expected. The fourth quarter saw an excess provision due to some cleanup from the underwriter we acquired.

Q: Regarding the hurricane-related defaults, were the 2,219 defaults in the inventory at quarter-end, or had some cured by then? A: Mark Casale, CEO: They were in the inventory at quarter-end. Most of the increase in defaults was due to the hurricane, and without them, the default rate would be closer to 2%.

Q: Can you explain why new notices were down sequentially despite typical seasonality? A: David Weinstock, CFO: There are ebbs and flows to default patterns. Overall, 2024's default pattern was favorable compared to historical quarters, and the fourth quarter continued this trend.

Q: How do you monitor whether borrowers are insured, and how do you consider insurance affordability in pricing risk? A: Mark Casale, CEO: Borrowers with a mortgage are required to have homeowners insurance, and if dropped, they get forced placed. We are not on the hook until the home is repaired, which provides a layer of protection. While insurance costs are rising, especially in high-cost areas, our exposure is limited.

Q: How are you thinking about the pacing of capital return versus opportunities to deploy capital? A: Mark Casale, CEO: Given the pause in growth and strong capital levels, we see an opportunity to return capital and become more capital efficient. We are confident in credit quality and have a strong PMIERs cushion, allowing us to focus on capital return while maintaining strategic growth options.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.