• Adjusted Operating Income: $169 million, up 2% year-over-year.
• Adjusted Earnings Per Share (EPS): $1.10, up 6% year-over-year.
• Adjusted Return on Equity: 13.4%.
• Insurance in Force: $268 billion, up 2% year-over-year.
• PMIER Sufficiency Ratio: 165%.
• Reserve Release: $47 million during the quarter.
• Loss Ratio: 12%.
• Operating Expenses: $53 million, with a 9% reduction sequentially.
• Expense Guidance for 2025: $220 million to $225 million.
• Share Buybacks and Dividends: Returned over $94 million through share buybacks and quarterly dividend.
• New Share Repurchase Authorization: $350 million.
• Dividend Increase: 14% increase to $0.21 per share.
• GAAP Net Income: $166 million or $1.08 per diluted share.
• New Insurance Written: $10 billion, down 26% sequentially and 7% year-over-year.
• Persistency Rate: 84% in the first quarter.
• Total Net Premiums Earned: $245 million, up 2% year-over-year.
• Investment Income: $63 million, up 11% year-over-year.
• Primary Delinquency Rate: 2.3%.

• Warning! GuruFocus has detected 7 Warning Signs with ACT.

Release Date: May 01, 2025

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

Positive Points

• Enact Holdings Inc (NASDAQ:ACT) reported strong financial and operational results for Q1 2025, with adjusted operating income of $169 million, up 2% year-over-year.
• The company announced a new $350 million share repurchase program and a 14% increase in its dividend, reflecting confidence in its financial position.
• Enact Holdings Inc (NASDAQ:ACT) maintained a robust PMIER Sufficiency ratio of 165%, highlighting a strong capital foundation.
• The company saw favorable delinquency and cure performance, with total delinquencies down 5% sequentially and a cure rate of 56%.
• Enact Holdings Inc (NASDAQ:ACT) successfully deployed its Rate 360 pricing engine, enhancing its ability to deliver competitive risk-adjusted pricing and drive profitable growth.

Negative Points

• New insurance written was down 26% sequentially and 7% year-over-year, reflecting muted mortgage activity due to elevated rates and home prices.
• Persistency was high at 84%, which could limit new business opportunities as fewer policies lapse.
• The loss ratio increased to 12% in Q1 2025 from 10% in the previous quarter, driven by a lower reserve release.
• Operating expenses included $1 million of reorganization costs, and the company continues to face inflationary pressures.
• The macroeconomic environment remains uncertain, with potential impacts from shifting economic policies and geopolitical tensions.

Q & A Highlights

Q: How is Enact Holdings reacting to the increased market uncertainty, particularly in terms of underwriting and pricing? A: Rohit Gupta, President and CEO, stated that Enact is diligently monitoring economic impacts and maintaining prudent underwriting guidelines. The company has adjusted its pricing using its Rate 360 capabilities to reflect current uncertainties, although it is too early to determine the broader market's response.

Q: Have there been any impacts from recent government policy changes, particularly in loss mitigation? A: Rohit Gupta noted that while most changes have been on the FHA and VA side, GSE loss mitigation remains strong. The company is optimistic about the continuation of effective loss mitigation programs post-COVID, which provide more options for consumers to recover from delinquencies.

Q: Can you discuss the pricing dynamics and market share changes in the mortgage insurance industry? A: Rohit Gupta explained that Enact's market participation has been stable, with market share not being a primary target. Market share changes can result from pricing, lender-specific activities, and market composition shifts between purchase and refinance segments.

Q: How does the current portfolio's age and composition affect Enact's risk profile and performance expectations? A: Hardin Mitchell, CFO, highlighted that the portfolio's increased age leads to slower new delinquency development. The company has not observed any variance from pricing expectations across book years, and the risk-based pricing approach ensures alignment with economic assumptions, including future home prices.

Q: Are there any signs of increasing cancellation rates in the current environment? A: Hardin Mitchell stated that there has been no significant change in borrower-initiated cancellations. Most cancellations occur due to refinancing, loans paid in full, or auto cancellations when loans amortize to 78% LTV.

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