Essent Group Ltd. (NYSE: ESNT) today reported net income for the
quarter ended September 30, 2018 of $116.0 million or $1.18 per
diluted share, compared to $78.4 million or $0.82 per diluted share
for the quarter ended September 30, 2017. As of September 30, 2018,
Essent had insurance in force of $131.2 billion and consolidated
stockholders' equity of $2.2 billion.
“We are pleased with our strong operating performance for the
third quarter as we grew net income 48% compared to the third
quarter of 2017, while also generating a 21% annualized return on
average equity,” said Mark Casale, Chairman and Chief Executive
Officer. “Our third quarter results were driven by a 26% increase
in our insurance in force to $131.2 billion compared to $103.9
billion at the end of the third quarter 2017, as well as another
quarter of solid credit performance.”
Financial Highlights:
- Insurance in force as of September 30,
2018 was $131.2 billion, compared to $103.9 billion as of September
30, 2017.
- New insurance written for the third
quarter was $13.9 billion, compared to $13.2 billion in the third
quarter of 2017.
- Net premiums earned for the third
quarter were $166.7 million, compared to $137.9 million in the
third quarter of 2017.
- The expense ratio for the third quarter
was 22.1%, compared to 26.8% in the third quarter of 2017.
- The provision for losses and LAE for
the third quarter was $5.5 million, compared to $4.3 million in the
third quarter of 2017.
- The percentage of loans in default as
of September 30, 2018 was 0.61%, compared to 0.46% as of September
30, 2017.
- The combined ratio for the third
quarter was 25.4%, compared to 30.0% in the third quarter of
2017.
- The consolidated balance of cash and
investments at September 30, 2018 was $2.7 billion, including cash
and investment balances at Essent Group Ltd. of $77.2 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 14.1:1 as of September 30, 2018.
Conference Call
Essent management will hold a conference call at 10:00 AM
Eastern time today to discuss its results. The conference call will
be broadcast live over the Internet at
http://ir.essentgroup.com/investors/webcasts-and-presentations/event-calendar/default.aspx.
The call may also be accessed by dialing 866-393-4306 inside the
U.S., or 734-385-2616 for international callers, using passcode
6486334 or by referencing Essent.
A replay of the webcast will be available on the Essent website
approximately two hours after the live broadcast ends for a period
of one year. A replay of the conference call will be available
approximately two hours after the call ends for a period of two
weeks, using the following dial-in numbers and passcode:
855-859-2056 inside the U.S., or 404-537-3406 for international
callers, passcode 6486334.
In addition to the information provided in the company's
earnings news release, other statistical and financial information,
which may be referred to during the conference call, will be
available on Essent's website at
http://ir.essentgroup.com/investors/financial-information/quarterly-financial-supplements/default.aspx.
Forward-Looking Statements
This press release may include “forward-looking statements”
which are subject to known and unknown risks and uncertainties,
many of which may be beyond our control. Forward-looking statements
generally can be identified by the use of forward-looking
terminology such as "may," "will," “should,” “expect,” "plan,"
"anticipate," "believe," “estimate,” “predict,” or "potential" or
the negative thereof or variations thereon or similar terminology.
Actual events, results and outcomes may differ materially from our
expectations due to a variety of known and unknown risks,
uncertainties and other factors. Although it is not possible to
identify all of these risks and factors, they include, among
others, the following: changes in or to Fannie Mae and Freddie Mac
(the “GSEs”), whether through Federal legislation, restructurings
or a shift in business practices; failure to continue to meet the
mortgage insurer eligibility requirements of the GSEs; competition
for customers; lenders or investors seeking alternatives to private
mortgage insurance; an increase in the number of loans insured
through Federal government mortgage insurance programs, including
those offered by the Federal Housing Administration; decline in new
insurance written and franchise value due to loss of a significant
customer; decline in the volume of low down payment mortgage
originations; the definition of "Qualified Mortgage" reducing the
size of the mortgage origination market or creating incentives to
use government mortgage insurance programs; the definition of
"Qualified Residential Mortgage" reducing the number of low down
payment loans or lenders and investors seeking alternatives to
private mortgage insurance; the implementation of the Basel III
Capital Accord discouraging the use of private mortgage insurance;
a decrease in the length of time that insurance policies are in
force; uncertainty of loss reserve estimates; deteriorating
economic conditions; our non-U.S. operations becoming subject to
U.S. Federal income taxation; becoming considered a passive foreign
investment company for U.S. Federal income tax purposes; and other
risks and factors described in Part I, Item 1A “Risk Factors” of
our Annual Report on Form 10-K for the year ended December 31, 2017
filed with the Securities and Exchange Commission on February 20,
2018. Any forward-looking information presented herein is made only
as of the date of this press release, and we do not undertake any
obligation to update or revise any forward-looking information to
reflect changes in assumptions, the occurrence of unanticipated
events, or otherwise.
Non-GAAP Financial Measures
In presenting Essent Group Ltd.’s results, management has
included financial measures, including adjusted book value per
share, that are not calculated under standards or rules that
comprise accounting principles generally accepted in the United
States (“GAAP”). Such measures are referred to as “non-GAAP
measures.” These non-GAAP measures may be defined or calculated
differently by other companies. Management believes these measures
allow for a more complete understanding of the underlying business.
These measures are used to monitor our results and should not be
viewed as a substitute for those determined in accordance with
GAAP. Reconciliations of such measures to the most comparable GAAP
figures are included in the attached financial supplement in
accordance with Regulation G.
About the Company
Essent Group Ltd. (NYSE: ESNT) is a Bermuda-based holding
company (collectively with its subsidiaries, “Essent”) which,
through its wholly-owned subsidiary Essent Guaranty, Inc., offers
private mortgage insurance for single-family mortgage loans in the
United States. Essent provides private capital to mitigate mortgage
credit risk, allowing lenders to make additional mortgage financing
available to prospective homeowners. Headquartered in Radnor,
Pennsylvania, Essent Guaranty, Inc. is licensed to write mortgage
insurance in all 50 states and the District of Columbia, and is
approved by Fannie Mae and Freddie Mac. Essent also offers
mortgage-related insurance, reinsurance and advisory services
through its Bermuda-based subsidiary, Essent Reinsurance Ltd.
Additional information regarding Essent may be found at
www.essentgroup.com and www.essent.us.
Source: Essent Group Ltd.
Essent Group Ltd. and Subsidiaries
Financial Results and Supplemental Information (Unaudited)
Quarter Ended September 30, 2018 Exhibit A
Condensed Consolidated Statements of Comprehensive Income
(Unaudited) Exhibit B Condensed Consolidated Balance Sheets
(Unaudited) Exhibit C Historical Quarterly Data Exhibit D New
Insurance Written Exhibit E Insurance in Force and Risk in Force
Exhibit F Other Risk in Force Exhibit G Portfolio Vintage Data
Exhibit H Portfolio Geographic Data Exhibit I Defaults, Reserve for
Losses and LAE, and Claims Exhibit J Investments Available for Sale
Exhibit K Insurance Company Capital Exhibit L Reconciliation of
Non-GAAP Financial Measure - Adjusted Book Value per Share
Exhibit A Essent Group
Ltd. and Subsidiaries Condensed Consolidated Statements of
Comprehensive Income (Unaudited) Three Months
Ended September 30, Nine Months Ended September 30,
(In thousands,
except per share amounts)
2018 2017 2018 2017 Revenues:
Net premiums written $ 175,221 $ 155,055 $ 508,850 $ 408,415
Increase in unearned premiums (8,546 ) (17,115 ) (32,659 ) (26,261
) Net premiums earned 166,675 137,940 476,191 382,154 Net
investment income 16,646 10,626 45,494 28,461 Realized investment
gains, net 524 564 1,160 1,763 Other income 1,153 1,073
3,384 3,023
Total revenues 184,998
150,203 526,229 415,401
Losses and expenses: Provision for losses and LAE 5,452
4,313 12,574 9,776 Other underwriting and operating expenses 36,899
37,035 111,451 109,053 Interest expense 2,500 1,456
7,568 3,361
Total losses and expenses 44,851
42,804 131,593 122,190 Income
before income taxes 140,147 107,399 394,636 293,211 Income tax
expense 24,136 29,006 55,801 76,102
Net income $ 116,011 $ 78,393 $ 338,835
$ 217,109
Earnings per share: Basic $
1.19 $ 0.83 $ 3.48 $ 2.35 Diluted 1.18 0.82 3.46 2.31
Weighted average shares outstanding: Basic 97,438 94,185
97,388 92,285 Diluted 98,013 96,094 97,944 94,104
Net
income $ 116,011 $ 78,393 $ 338,835 $ 217,109
Other
comprehensive income (loss): Change in unrealized
(depreciation) appreciation of investments (8,201 ) 1,978
(44,197 ) 15,298 Total other comprehensive (loss) income
(8,201 ) 1,978 (44,197 ) 15,298
Comprehensive
income $ 107,810 $ 80,371 $ 294,638 $
232,407
Loss ratio 3.3 % 3.1 % 2.6 %
2.6 %
Expense ratio 22.1 26.8 23.4 28.5
Combined ratio 25.4 % 30.0 % 26.0 % 31.1 %
Exhibit B Essent Group Ltd. and
Subsidiaries Condensed Consolidated Balance Sheets
(Unaudited) September 30, December
31,
(In thousands,
except per share amounts)
2018 2017 Assets Investments Fixed maturities
available for sale, at fair value $ 2,473,840 $ 1,992,371
Short-term investments available for sale, at fair value 191,912
312,694 Total investments available for sale
2,665,752 2,305,065 Other invested assets 24,865 500
Total investments 2,690,617 2,305,565 Cash 29,797 43,524 Accrued
investment income 17,125 12,807 Accounts receivable 35,597 29,752
Deferred policy acquisition costs 16,159 15,354 Property and
equipment 7,387 6,979 Prepaid federal income tax 185,935 252,157
Other assets 10,806 8,230
Total assets
$ 2,993,423 $ 2,674,368
Liabilities and
Stockholders' Equity Liabilities Reserve for losses and
LAE $ 53,355 $ 46,850 Unearned premium reserve 292,331 259,672 Net
deferred tax liability 155,349 127,636 Credit facility borrowings,
net of deferred costs 223,487 248,591 Securities purchased payable
21,741 14,999 Other accrued liabilities 32,021 36,184
Total liabilities 778,284 733,932 Commitments
and contingencies
Stockholders' Equity Common shares
1,472 1,476 Additional paid-in capital 1,107,206 1,127,137
Accumulated other comprehensive loss (47,449 ) (3,252 ) Retained
earnings 1,153,910 815,075 Total stockholders' equity
2,215,139 1,940,436
Total liabilities and
stockholders' equity $ 2,993,423 $ 2,674,368
Return on average equity (1) 21.7 % 23.1 %
(1) The 2018 return on average
equity is calculated by dividing annualized year-to-date 2018 net
income by average equity. The 2017 return on average equity is
calculated by dividing full year 2017 net income by average
equity.
Exhibit C
Essent Group Ltd. and Subsidiaries Supplemental
Information Historical Quarterly Data
2018 2017 Selected Income Statement Data
September 30 June 30 March 31 December
31 September 30 June 30 March 31
(In thousands,
except per share amounts)
Revenues: Net premiums written $ 175,221 $ 168,404
$ 165,225 $ 161,771 $ 155,055 $ 134,063
$ 119,297 Net premiums earned
(1)
166,675 156,958 152,558 147,976 137,940 126,563 117,651 Other
revenues 18,323 16,810 14,905 13,134
12,263 11,043 9,941 Total revenues 184,998
173,768 167,463 161,110 150,203
137,606 127,592
Losses and expenses:
Provision for losses and LAE 5,452 1,813 5,309 17,456 4,313 1,770
3,693 Other underwriting and operating expenses 36,899 36,428
38,124 36,480 37,035 35,686 36,332 Interest expense 2,500
2,618 2,450 1,817 1,456 1,189
716 Total losses and expenses 44,851 40,859
45,883 55,753 42,804 38,645 40,741
Income before income taxes 140,147 132,909 121,580
105,357 107,399 98,961 86,851 Income tax expense (benefit)
(2)
(3) 24,136 21,154 10,511 (57,281 ) 29,006
26,843 20,253
Net income $ 116,011
$ 111,755 $ 111,069 $ 162,638 $ 78,393
$ 72,118 $ 66,598
Earnings per
share: Basic $ 1.19 $ 1.15 $ 1.14 $ 1.69 $ 0.83 $ 0.79 $ 0.73
Diluted 1.18 1.14 1.13 1.65 0.82 0.77 0.72
Weighted
average shares outstanding: Basic 97,438 97,426 97,298 96,429
94,185 91,381 91,258 Diluted 98,013 97,866 97,951 98,497 96,094
93,162 93,023
Other Data: Loss ratio
(4) 3.3 %
1.2 % 3.5 % 11.8 % 3.1 % 1.4 % 3.1 % Expense ratio
(5) 22.1
23.2 25.0 24.7 26.8 28.2
30.9 Combined ratio 25.4 % 24.4 % 28.5 % 36.4 % 30.0 % 29.6
% 34.0 % Return on average equity (annualized) 21.5 % 21.8 %
22.6 % 35.0 % 19.1 % 19.8 % 19.3 %
(1) Net premiums
earned are net of premiums ceded to Radnor Re 2018-1 Ltd., an
unaffiliated special purpose insurer domiciled in Bermuda, in
connection with a fully collateralized reinsurance agreement
entered into on March 22, 2018. Premiums ceded to Radnor Re totaled
$3,158, $3,585 and $294 in the three months ended September, 30,
2018, June 30, 2018 and March 31, 2018, respectively.
(2)
Income tax expense for the quarter ended September 30, 2018
includes $1,450 of expense associated with accrual to return
adjustments associated with the completion of the 2017 U.S. federal
income tax return. Income tax expense for the quarters ended March
31, 2018 and 2017 was reduced by $9,549 and $3,023, respectively,
of excess tax benefits associated with the vesting of common shares
and common share units during each period.
(3) Income tax
expense for the quarter ended December 31, 2017 was reduced by
$85,091 of income tax benefit due to the one-time impact of the
reduced U.S. corporate income tax rate on the company's net
deferred tax liability position.
(4) Loss ratio is
calculated by dividing the provision for losses and LAE by net
premiums earned.
(5) Expense ratio is calculated by dividing
other underwriting and operating expenses by net premiums earned.
Exhibit C,
continued Essent Group Ltd. and Subsidiaries
Supplemental Information Historical Quarterly Data
2018 2017 Other Data, continued:
September 30 June 30 March 31 December
31 September 30 June 30 March 31
($ in
thousands)
U.S. Mortgage Insurance Portfolio Flow: New
insurance written $ 13,913,191 $ 12,850,642 $ 9,336,150 $
11,234,855 $ 13,221,038 $ 11,368,276 $ 8,034,153 New risk written
3,430,942 3,201,610 2,295,314 2,737,008 3,228,603 2,786,501
1,929,832
Bulk: New insurance written $ — $ — $ — $ —
$ — $ — $ — New risk written — — — — — — —
Total:
Average gross premium rate
(6) 0.51 % 0.52 % 0.52 % 0.53 %
0.53 % 0.53 % 0.53 % Average net premium rate
(7) 0.50 %
0.51 % 0.52 % 0.53 % 0.53 % 0.53 % 0.53 % New insurance written $
13,913,191 $ 12,850,642 $ 9,336,150 $ 11,234,855 $ 13,221,038 $
11,368,276 $ 8,034,153 New risk written $ 3,430,942 $ 3,201,610 $
2,295,314 $ 2,737,008 $ 3,228,603 $ 2,786,501 $ 1,929,832 Insurance
in force (end of period) $ 131,249,957 $ 122,501,246 $ 115,250,949
$ 110,461,950 $ 103,936,307 $ 95,494,390 $ 87,993,227 Gross risk in
force (end of period)
(8) $ 32,786,194 $ 30,579,106 $
28,691,561 $ 27,443,985 $ 25,807,358 $ 23,665,045 $ 21,801,667 Risk
in force (end of period) $ 32,361,782 $ 30,154,694 $ 28,267,149 $
27,443,985 $ 25,807,358 $ 23,665,045 $ 21,801,667 Policies in force
581,570 546,576 517,215 496,477 467,483 430,585 397,650 Weighted
average coverage
(9) 25.0 % 25.0 % 24.9 % 24.8 % 24.8 % 24.8
% 24.8 % Annual persistency 84.0 % 83.0 % 83.5 % 83.9 % 82.1 % 80.1
% 78.2 % Loans in default (count) 3,538 3,519 4,442 4,783
2,153 1,776 1,777 Percentage of loans in default 0.61 % 0.64 % 0.86
% 0.96 % 0.46 % 0.41 % 0.45 %
Other Risk in Force GSE
and other risk share
(10) $ 612,750 $ 592,493 $ 557,692 $
538,944 $ 501,485 $ 479,762 $ 436,991
Credit Facility
Borrowings outstanding $ 225,000 $ 225,000 $ 265,000 $ 250,000 $
175,000 $ 175,000 $ 125,000 Undrawn committed capacity $ 275,000 $
275,000 $ 110,000 $ 125,000 $ 200,000 $ 200,000 $ 75,000 Weighted
average interest rate 4.15 %
(6) Average gross
premium rate is calculated by dividing annualized premiums earned
for the U.S. mortgage insurance portfolio, before reductions for
premiums ceded under third-party reinsurance, by average insurance
in force for the period.
(7) Average net premium rate is
calculated by dividing annualized net premiums earned for the U.S.
mortgage insurance portfolio by average insurance in force for the
period.
(8) Gross risk in force includes risk ceded under
third-party reinsurance.
(9) Weighted average coverage is
calculated by dividing end of period gross risk in force by
insurance in force.
(10) GSE and other risk share includes
GSE risk share and other reinsurance transactions. Essent Re
provides insurance or reinsurance relating to the risk in force on
loans in reference pools acquired by Freddie Mac and Fannie Mae,
including in connection with Freddie Mac's Agency Credit Insurance
Structure ("ACIS") and Fannie Mae's Credit Insurance Risk Transfer
("CIRT") programs.
Exhibit D Essent Group Ltd. and
Subsidiaries Supplemental Information New Insurance
Written: Flow NIW by Credit Score Three
Months Ended Nine Months Ended September 30, 2018
September 30, 2017 September 30, 2018 September
30, 2017
($ in
thousands)
>=760 $ 5,873,337 42.2 % $ 5,590,793 42.3 % $ 15,165,595 42.0 %
$ 13,903,707 42.6 %
740-759
2,349,227 16.9 2,028,500 15.3 6,116,659 17.0 5,057,461 15.5
720-739
1,989,413 14.3 1,882,227 14.2 5,209,892 14.4 4,578,846 14.0
700-719
1,676,184 12.0 1,571,170 11.9 4,365,387 12.1 3,850,420 11.8
680-699
1,097,160 7.9 1,160,771 8.8 2,847,365 7.9 2,818,724 8.7 <=679
927,870 6.7 987,577 7.5
2,395,085 6.6 2,414,309 7.4
Total $ 13,913,191 100.0 % $ 13,221,038
100.0 % $ 36,099,983 100.0 % $ 32,623,467
100.0 % Weighted average credit score 745 745
745 745
NIW by LTV Three Months
Ended Nine Months Ended September 30, 2018
September 30, 2017 September 30, 2018 September
30, 2017
($ in
thousands)
85.00% and below $ 1,644,226 11.8 % $ 1,682,491 12.7 % $ 4,347,598
12.0 % $ 4,307,262 13.2 % 85.01% to 90.00% 3,804,681 27.3 3,893,155
29.4 10,102,450 28.0 9,785,966 30.0 90.01% to 95.00% 5,961,310 42.9
5,811,182 44.0 15,623,886 43.3 14,455,640 44.3 95.01% and above
2,502,974 18.0 1,834,210 13.9
6,026,049 16.7 4,074,599
12.5 Total $ 13,913,191 100.0 % $ 13,221,038
100.0 % $ 36,099,983 100.0 % $
32,623,467 100.0 % Weighted average LTV 93 %
92 % 92 % 92 %
NIW by Product Three
Months Ended Nine Months Ended September 30, 2018
September 30, 2017 September 30, 2018 September
30, 2017 Single Premium policies 14.2 % 16.8 % 15.9 % 15.4 %
Monthly Premium policies 85.8 83.2 84.1 84.6
100.0 % 100.0 % 100.0 % 100.0 %
NIW
by Purchase vs. Refinance Three Months Ended Nine
Months Ended September 30, 2018 September 30,
2017 September 30, 2018 September 30, 2017
Purchase 93.8 % 87.6 % 91.3 % 85.4 % Refinance 6.2 12.4
8.7 14.6 100.0 % 100.0 % 100.0 % 100.0 %
Exhibit E
Essent Group Ltd. and Subsidiaries Supplemental
Information Insurance in Force and Risk in Force
Portfolio by Credit Score IIF by FICO score
September 30, 2018 June 30, 2018 September 30,
2017
($ in
thousands)
>=760 $ 56,686,270 43.2 % $ 53,145,884 43.4 % $ 46,220,799 44.5
%
740-759
21,661,445 16.5 20,127,254 16.4 16,890,061 16.2
720-739
18,909,281 14.4 17,605,819 14.4 14,767,164 14.2
700-719
14,928,024 11.4 13,836,837 11.3 11,307,184 10.9
680-699
10,828,068 8.2 10,145,188 8.3 8,523,233 8.2 <=679 8,236,869
6.3 7,640,264 6.2
6,227,866 6.0 Total $ 131,249,957
100.0 % $ 122,501,246 100.0 % $ 103,936,307
100.0 % Weighted average credit score 746 746
747 Gross RIF by FICO score
September 30, 2018
June 30, 2018 September 30, 2017
($ in
thousands)
>=760 $ 14,119,178 43.1 % $ 13,245,851 43.3 % $ 11,434,540 44.3
%
740-759
5,434,079 16.6 5,052,409 16.5 4,218,828 16.3
720-739
4,773,174 14.5 4,438,671 14.5 3,707,571 14.4
700-719
3,735,034 11.4 3,450,490 11.3 2,805,886 10.9
680-699
2,718,524 8.3 2,540,531 8.3 2,129,638 8.2 <=679 2,006,205
6.1 1,851,154 6.1 1,510,895
5.9 Total $ 32,786,194 100.0 % $
30,579,106 100.0 % $ 25,807,358 100.0 %
Portfolio by LTV IIF by LTV
September 30, 2018
June 30, 2018 September 30, 2017
($ in
thousands)
85.00% and below $ 14,641,309 11.2 % $ 13,868,422 11.3 % $
12,103,499 11.6 % 85.01% to 90.00% 39,598,332 30.2 37,558,668 30.6
33,129,815 31.9 90.01% to 95.00% 63,167,371 48.1 59,491,807 48.6
51,684,041 49.7 95.01% and above 13,842,945 10.5
11,582,349 9.5 7,018,952
6.8 Total $ 131,249,957 100.0 % $ 122,501,246
100.0 % $ 103,936,307 100.0 %
Weighted average LTV 92 % 92 % 92 % Gross RIF by LTV
September 30, 2018 June 30, 2018 September 30,
2017
($ in
thousands)
85.00% and below $ 1,680,050 5.1 % $ 1,584,294 5.2 % $ 1,366,982
5.3 % 85.01% to 90.00% 9,458,067 28.8 8,950,145 29.3 7,858,283 30.4
90.01% to 95.00% 18,090,207 55.2 17,068,140 55.8 14,810,490 57.4
95.01% and above 3,557,870 10.9 2,976,527
9.7 1,771,603 6.9 Total $
32,786,194 100.0 % $ 30,579,106 100.0 %
$ 25,807,358 100.0 %
Portfolio by Loan
Amortization Period IIF by Loan Amortization Period
September 30, 2018 June 30, 2018 September 30,
2017
($ in
thousands)
FRM 30 years and higher $ 121,455,115 92.6 % $ 112,753,292 92.0 % $
94,299,877 90.7 % FRM 20-25 years 3,032,593 2.3 3,040,764 2.5
2,695,714 2.6 FRM 15 years 3,571,994 2.7 3,638,461 3.0 3,779,626
3.7 ARM 5 years and higher 3,190,255 2.4
3,068,729 2.5 3,161,090 3.0
Total $ 131,249,957 100.0 % $ 122,501,246
100.0 % $ 103,936,307 100.0 %
Exhibit F Essent Group Ltd.
and Subsidiaries Supplemental Information Other Risk
in Force
($ in
thousands)
September 30, 2018 June 30, 2018 September 30,
2017 GSE and other risk share
(1) $ 612,750
$ 592,493 $ 501,485 Weighted average
credit score 749 748 749 Weighted average LTV 85 % 85 % 84 %
(1) GSE and other risk share includes GSE risk share and
other reinsurance transactions. Essent Reinsurance Ltd. ("Essent
Re") provides insurance or reinsurance relating to the risk in
force on loans in reference pools acquired by Freddie Mac and
Fannie Mae, including in connection with Freddie Mac's Agency
Credit Insurance Structure ("ACIS") and Fannie Mae's Credit
Insurance Risk Transfer ("CIRT") programs.
Exhibit G Essent Group Ltd. and
Subsidiaries Supplemental Information Portfolio
Vintage Data September 30, 2018
Insurance in Force Origination Year
OriginalInsuranceWritten($ in
thousands)
RemainingInsurancein
Force($ in thousands)
% Remaining
ofOriginalInsurance
Number ofPolicies
inForce
% Purchase >90% LTV
>95% LTV FICO < 700 FICO >=
760 % FRM
IncurredLoss
Ratio(Inception toDate) (1)
Number ofLoans
inDefault
2010 $ 245,898 $ 8,615 3.5 % 60 75.3 % 70.2 % 0.0 % 1.1 %
65.1 % 100.0 % 2.6 % — 2011 3,229,720 273,058 8.5 1,611 75.1 53.3
0.3 6.3 52.3 98.1 3.7 35 2012 11,241,161 2,057,354 18.3 10,903 76.2
60.7 0.6 5.7 56.1 98.9 2.2 95 2013 21,152,638 5,388,328 25.5 28,088
79.8 60.9 2.1 7.8 51.5 98.4 2.4 283 2014 24,799,434 8,726,281 35.2
46,317 88.5 63.4 4.4 15.6 41.4 96.3 3.3 580 2015 26,193,656
14,202,260 54.2 67,074 84.0 57.7 2.6 14.7 43.7 97.5 3.4 640 2016
34,949,319 26,510,429 75.9 115,759 81.5 56.1 6.5 13.7 45.3 98.3 3.7
809 2017 43,858,322 38,894,605 88.7 169,912 85.8 58.0 13.6 16.2
41.5 97.0 6.2 968 2018 (through September 30) 36,099,983
35,189,027 97.5 141,846 91.3 60.2 16.9 14.6
41.6 97.8 2.2 128 Total $ 201,770,131 $ 131,249,957
65.0 581,570 86.0 58.7 10.5 14.5 43.2 97.6 3.4 3,538
(1) Incurred loss ratio is calculated by dividing the
sum of case reserves and cumulative amount paid for claims by
cumulative net premiums earned.
Exhibit
H Essent Group Ltd. and Subsidiaries
Supplemental Information Portfolio Geographic Data
IIF by State September 30, 2018 June
30, 2018 September 30, 2017 CA 9.1 % 9.2 % 9.4 % TX 7.9
8.0 8.1 FL 7.3 7.2 7.0 WA 4.8 4.8 4.8 IL 3.9 3.9 4.0 NJ 3.8 3.7 3.6
NC 3.5 3.5 3.6 GA 3.4 3.4 3.4 CO 3.3 3.3 3.0 OH 3.3 3.2 3.2 All
Others 49.7 49.8 49.9 Total 100.0 % 100.0 %
100.0 %
Gross RIF by State September
30, 2018 June 30, 2018 September 30, 2017 CA 8.9
% 8.9 % 9.1 % TX 8.1 8.2 8.3 FL 7.4 7.3 7.1 WA 4.8 4.9 4.9 IL 3.8
3.8 3.9 NJ 3.7 3.6 3.6 NC 3.5 3.5 3.6 GA 3.5 3.5 3.5 OH 3.3 3.3 3.2
CO 3.3 3.2 2.9 All Others 49.7 49.8 49.9 Total
100.0 % 100.0 % 100.0 %
Exhibit I Essent Group Ltd. and Subsidiaries
Supplemental Information Defaults, Reserve for Losses and
LAE, and Claims Rollforward of Insured Loans
in Default Three Months Ended Nine Months Ended
September 30, September 30, September 30,
September 30, 2018 2017 2018
2017 Beginning default inventory 3,519 1,776 4,783 1,757
Plus: new defaults 2,285 1,592 5,980 3,897 Less: cures (2,201 )
(1,145 ) (7,043 ) (3,322 ) Less: claims paid (64 ) (68 ) (179 )
(176 ) Less: rescissions and denials, net (1 ) (2 ) (3 ) (3 )
Ending default inventory 3,538 2,153 3,538
2,153
Rollforward of Reserve for
Losses and LAE Three Months Ended Nine Months
Ended September 30, September 30, September
30, September 30,
($ in
thousands)
2018 2017 2018 2017 Reserve for losses
and LAE at beginning of period $ 50,016 $ 29,798 $
46,850 $ 28,142 Add provision for losses and LAE
occurring in: Current year 8,671 7,150 25,199 19,266 Prior years
(3,219 ) (2,837 ) (12,625 ) (9,490 ) Incurred losses and LAE during
the period 5,452 4,313 12,574 9,776
Deduct payments for losses and LAE occurring in: Current year 409
146 620 243 Prior years 1,704 2,386 5,449
6,096 Loss and LAE payments during the period 2,113
2,532 6,069 6,339 Reserve for losses and LAE
at end of period $ 53,355 $ 31,579 $ 53,355 $
31,579
Claims Three Months
Ended Nine Months Ended September 30,
September 30, September 30, September 30,
2018 2017 2018 2017 Number of claims
paid 64 68 179 176 Total amount paid for claims (in thousands) $
2,029 $ 2,468 $ 5,848 $ 6,155 Average amount paid per claim (in
thousands) $ 32 $ 36 $ 33 $ 35 Severity 69 % 76 % 70 % 81 %
Exhibit I, continued
Essent Group Ltd. and Subsidiaries Supplemental
Information Defaults, Reserve for Losses and LAE, and
Claims September 30, 2018
Number ofPolicies
inDefault
Percentage ofPolicies
inDefault
Amount ofReserves
Percentage ofReserves
Defaulted RIF
Reserves as aPercentage
ofDefaulted RIF
($ in
thousands)
Missed Payments: Three payments or less 1,886 53 % $ 10,498 22 % $
101,755 10 % Four to eleven payments 1,252 36 24,531 50 68,670 36
Twelve or more payments 351 10 11,795 24 20,160 59 Pending claims
49 1 1,941 4
2,212 88 Total case reserves 3,538 100
% 48,765 100 % $ 192,797 25 IBNR 3,657 LAE 933
Total reserves for losses and LAE $ 53,355 Average
reserve per default: Case $ 13.8 Total $ 15.1 Default Rate
0.61 %
December 31, 2017
Number ofPolicies
inDefault
Percentage ofPolicies
inDefault
Amount ofReserves
Percentage ofReserves
Defaulted RIF
Reserves as aPercentage
ofDefaulted RIF
($ in
thousands)
Missed Payments: Three payments or less 3,243 68 % $ 15,925 37 % $
187,163 9 % Four to eleven payments 1,284 27 18,087 42 73,547 25
Twelve or more payments 211 4 6,781 16 11,139 61 Pending claims 45
1 2,075 5
2,355 88 Total case reserves 4,783 100 %
42,868 100 % $ 274,204 16 IBNR 3,215 LAE 767
Total reserves for losses and LAE $ 46,850 Average
reserve per default: Case $ 9.0 Total $ 9.8 Default Rate
0.96 %
September 30, 2017
Number ofPolicies
inDefault
Percentage ofPolicies
inDefault
Amount ofReserves
Percentage ofReserves
Defaulted RIF
Reserves as aPercentage
ofDefaulted RIF
($ in
thousands)
Missed Payments: Three payments or less 1,228 57 % $ 7,935 27 % $
68,317 12 % Four to eleven payments 690 32 12,948 45 38,003 34
Twelve or more payments 195 9 6,105 21 10,087 61 Pending claims 40
2 2,036 7
2,376 86 Total case reserves 2,153 100 %
29,024 100 % $ 118,783 24 IBNR 2,177 LAE 378
Total reserves for losses and LAE $ 31,579 Average
reserve per default: Case $ 13.5 Total $ 14.7 Default Rate
0.46 %
Exhibit J
Essent Group Ltd. and Subsidiaries Supplemental
Information Investments Available for Sale
Investments Available for Sale by Asset Class Asset Class
September 30, 2018 December 31, 2017
($ in
thousands)
Fair Value Percent Fair Value Percent
U.S. Treasury securities $ 265,233 9.9 % $ 227,805 9.9 % U.S.
agency securities 32,677 1.2 33,114 1.4 U.S. agency mortgage-backed
securities 566,626 21.3 456,037 19.8 Municipal debt securities
457,506 17.2 465,255 20.2 Non-U.S. government securities 44,798 1.7
— — Corporate debt securities 706,330 26.5 611,728 26.5 Residential
and commercial mortgage securities 101,649 3.8 79,407 3.5
Asset-backed securities 299,021 11.2 167,922 7.3 Money market funds
191,912 7.2 263,797 11.4 Total investments
available for sale $ 2,665,752 100.0 % $ 2,305,065 100.0 %
Investments Available for Sale by Credit Rating
Rating
(1) September 30, 2018 December 31,
2017
($ in
thousands)
Fair Value Percent Fair Value Percent
Aaa $ 1,314,053 49.3 % $ 1,160,200 50.3 % Aa1 131,368 4.9 115,237
5.0 Aa2 187,542 7.0 123,551 5.4 Aa3 130,983 4.9 127,785 5.6 A1
223,943 8.4 205,369 8.9 A2 171,217 6.4 157,651 6.8 A3 148,670 5.6
148,246 6.4 Baa1 167,283 6.3 115,178 5.0 Baa2 127,092 4.8 87,869
3.8 Baa3 33,953 1.3 43,024 1.9 Below Baa3 29,648 1.1
20,955 0.9 Total investments available for sale $ 2,665,752
100.0 % $ 2,305,065 100.0 %
(1) Based on
ratings issued by Moody's, if available. S&P or Fitch rating
utilized if Moody's not available.
Investments Available
for Sale by Duration and Book Yield Effective Duration
September 30, 2018 December 31, 2017
($ in
thousands)
Fair Value Percent Fair Value Percent
< 1 Year $ 598,900 22.5 % $ 628,958 27.3 % 1 to < 2 Years
259,820 9.7 164,856 7.2 2 to < 3 Years 250,341 9.4 280,177 12.2
3 to < 4 Years 217,233 8.2 263,799 11.4 4 to < 5 Years
461,890 17.3 263,273 11.4 5 or more Years 877,568 32.9
704,002 30.5 Total investments available for sale $
2,665,752 100.0 % $ 2,305,065 100.0 % Pre-tax
investment income yield: Three months ended September 30, 2018 2.60
% Nine months ended September 30, 2018 2.49 % Net cash and
investments at holding company, Essent Group Ltd.:
($ in
thousands)
As of September 30, 2018 $ 77,206 As of December 31, 2017 $ 104,167
Exhibit K Essent Group Ltd.
and Subsidiaries Supplemental Information Insurance
Company Capital September 30, 2018
December 31, 2017
($ in
thousands)
U.S. Mortgage Insurance Subsidiaries: Combined statutory
capital
(1) $ 1,781,912 $ 1,528,869 Combined net risk
in force
(2) $ 25,124,809 $ 21,637,409
Risk-to-capital ratios:
(3) Essent Guaranty, Inc. 14.7:1
14.7:1 Essent Guaranty of PA, Inc. 4.4:1 5.4:1 Combined
(4)
14.1:1 14.2:1
Essent Reinsurance Ltd.: Stockholder's
equity (GAAP basis) $ 749,205 $ 662,819 Net risk in force
(2) $ 7,797,302 $ 6,299,437
(1) Combined
statutory capital equals the sum of statutory capital of Essent
Guaranty, Inc. plus Essent Guaranty of PA, Inc., after eliminating
the impact of intercompany transactions. Statutory capital is
computed based on accounting practices prescribed or permitted by
the Pennsylvania Insurance Department and the National Association
of Insurance Commissioners Accounting Practices and Procedures
Manual.
(2) Net risk in force represents total risk in
force, net of reinsurance ceded and net of exposures on policies
for which loss reserves have been established.
(3) The
risk-to-capital ratio is calculated as the ratio of net risk in
force to statutory capital.
(4) The combined risk-to-capital
ratio equals the sum of the net risk in force of Essent Guaranty,
Inc. and Essent Guaranty of PA, Inc. divided by the combined
statutory capital.
Exhibit L Essent Group Ltd. and Subsidiaries
Supplemental Information Reconciliation of Non-GAAP
Financial Measure - Adjusted Book Value per Share
We believe that long-term growth in
Adjusted Book Value per Share is an important measure of our
financial performance and is a measure used to determine vesting on
certain restricted stock granted to senior management under the
Company’s long-term incentive plan. Adjusted Book Value per Share
is a financial measure that is not calculated under standards or
rules that comprise accounting principles generally accepted in the
United States (GAAP) and is referred to as a non-GAAP measure.
Adjusted Book Value per Share may be defined or calculated
differently by other companies. Adjusted Book Value per Share is
one measure used to monitor our results and should not be viewed as
a substitute for those measures determined in accordance with
GAAP.
Adjusted Book Value per Share is
calculated by dividing Adjusted Book Value by Common Shares and
Share Units Outstanding. Adjusted Book Value is defined as
consolidated stockholders’ equity of the Company, excluding
accumulated other comprehensive income (loss) plus the proceeds, if
any, from the assumed exercise of all "in-the-money" options,
warrants and similar instruments. Common Shares and Share Units
Outstanding is defined as total common shares outstanding plus all
equity instruments (including restricted share units) issued to
management and the Board of Directors and any "in-the-money"
options, warrants and similar instruments. Accumulated other
comprehensive income (loss) includes unrealized gains and losses
that arise from changes in the market value of the Company’s
investments that are classified as available for sale. The Company
does not view these unrealized gains and losses to be indicative of
our fundamental operating performance. As of September 30, 2018,
December 31, 2017 and September 30, 2017, the Company does not have
any options, warrants and similar instruments outstanding.
The following table sets forth the
reconciliation of Adjusted Book Value to the most comparable GAAP
amount as of September 30, 2018, December 31, 2017 and September
30, 2017 in accordance with Regulation G:
(In thousands,
except per share amounts)
September 30, 2018 December 31, 2017 September 30,
2017 Numerator: Total Stockholders' Equity (Book Value)
$ 2,215,139 $ 1,940,436 $ 1,780,570 Subtract: Accumulated
Other Comprehensive Income (Loss) (47,449 ) (3,252 ) 3,043
Adjusted Book Value $ 2,262,588 $ 1,943,688 $
1,777,527 Denominator: Total Common Shares Outstanding
98,128 98,434 98,423 Add: Restricted Share Units Outstanding
468 536 553 Total Common Shares and Share
Units Outstanding 98,596 98,970 98,976
Adjusted Book Value per Share $ 22.95 $ 19.64 $ 17.96
View source
version on businesswire.com: https://www.businesswire.com/news/home/20181109005049/en/
Essent Group Ltd.Media
Contact610-230-0556media@essentgroup.comorInvestor Relations
ContactChristopher G. CurranSenior Vice President – Investor
Relations855-809-ESNTir@essentgroup.com
Essent (NYSE:ESNT)
Historical Stock Chart
From Aug 2024 to Sep 2024
Essent (NYSE:ESNT)
Historical Stock Chart
From Sep 2023 to Sep 2024