Essent Group Ltd. (ESNT) Earnings & Analysis

Latest quarter

Essent reported second-quarter revenue of $362.7 million, up from $319.1 million a year earlier and above the $327.9 million consensus. Adjusted earnings per share of $2.08 also exceeded the $1.77 consensus; diluted earnings per share rose from $1.93 a year earlier.

The company’s filing attributed higher net premiums earned primarily to property and casualty reinsurance assumed beginning in 2026. Its mortgage insurance operations wrote approximately $14.1 billion of new insurance in the quarter, compared with approximately $12.5 billion a year earlier. Mortgage insurance segment income before tax nevertheless fell, which the filing attributed primarily to a higher loss provision and lower net premiums earned, partly offset by investment income and lower operating expenses.

Essent reported an operating margin of 65.8%, compared with 75.0% a year earlier. Its filing attributed the increased consolidated loss provision primarily to the new property and casualty reinsurance business and higher reserves per default as mortgage insurance defaults aged. Free cash flow was $196.1 million, compared with $188.8 million a year earlier.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CEO Mark Casale said mortgage rates were keeping existing insurance policies in force for longer, while affordability continued to constrain mortgage originations. He put 12-month persistency at 84% and said nearly half of Essent’s in-force portfolio carried mortgage rates of 5.5% or lower. He expects those conditions to support persistency while portfolio growth remains on pause.

CFO David Weinstock said mortgage insurance in force ended the second quarter at $249.7 billion, up from $246.8 billion a year earlier. The portfolio’s default rate was 2.53% at June 30, essentially unchanged from the preceding quarter. Casale said embedded home equity should mitigate eventual claims and that 97% of insurance in force had reinsurance protection.

Asked about pricing and competition, Casale described the market as relatively stable and said Essent focused more on premium dollars than market share. He said the company had taken more risk in the quarter and increased premium on new insurance written by 10%. Weinstock put the quarter’s average base premium rate at 40 basis points and its average net premium rate at 35 basis points. Casale said the base rate could decline a little over the next couple of years, depending on new business and persistency, but did not expect a large move given the book’s size.

On investment, Casale said the company’s other invested assets portfolio was approximately $450 million, or 7% of the total portfolio. In response to a question about reinsurance, he described property and casualty as another place to allocate capital and said Essent had committed $100 million to strategic investments in the first half of 2026. He also said the company was investing in title technology while adding partners, but did not expect title to have a meaningful near-term impact on earnings.

Casale said Essent had repurchased nearly 6 million shares for approximately $350 million through July 31. He also announced a $0.35 common dividend for the third quarter of 2026.

Guidance

Casale reiterated that Essent expects approximately $320 million of property and casualty reinsurance written premiums in 2026, with roughly half earned during the year at a combined ratio in the high 90s. In its filing, Essent said it expects incurred losses and claims to rise as more of its mortgage insurance book enters the period when claims are typically most frequent.