ESSENT GROUP LTD. – 10-K – Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the "Selected
Financial Data" and our financial statements and related notes thereto included
elsewhere in this report. In addition to historical information, this discussion
contains forward-looking statements that involve risks, uncertainties and
assumptions that could cause actual results to differ materially from
management's expectations. Factors that could cause such differences are
discussed in the sections entitled "Special Note Regarding Forward-Looking
Statements" and "Risk Factors." We are not undertaking any obligation to update
any forward-looking statements or other statements we may make in the following
discussion or elsewhere in this document even though these statements may be
affected by events or circumstances occurring after the forward-looking
statements or other statements were made.

Overview

We are an established private mortgage insurance company. Essent Guaranty, Inc.,
our wholly-owned insurance subsidiary which we refer to as "Essent Guaranty," is
licensed to write coverage in all 50 states and the District of Columbia. The
financial strength ratings of Essent Guaranty are A3 with a stable outlook by
Moody's Investors Service ("Moody's"), BBB+ with a stable outlook by S&P Global
Ratings ("S&P") and A (Excellent) with a stable outlook by A.M. Best.

Our holding company is domiciled in Bermuda and our U.S. insurance business is
headquartered in Radnor, Pennsylvania. We operate an additional underwriting and
service center in Winston-Salem, North Carolina. We have a highly experienced,
talented team with 346 employees as of December 31, 2022. For the years ended
December 31, 2022, 2021 and 2020, we generated new insurance written, or NIW, of
approximately $63.1 billion, $84.2 billion and $107.9 billion, respectively. As
of December 31, 2022, we had approximately $227.1 billion of insurance in force.
Our top ten customers represented approximately 39.9%, 41.6% and 35.8% of our
NIW on a flow basis for the years ended December 31, 2022, 2021 and 2020,
respectively.

We also offer mortgage-related insurance and reinsurance through our
wholly-owned Bermuda-based subsidiary, Essent Reinsurance Ltd., which we refer
to as "Essent Re." As of December 31, 2022, Essent Re provided insurance or
reinsurance relating to GSE risk share and other reinsurance transactions
covering approximately $2.0 billion of risk. Essent Re also reinsures Essent
Guaranty's NIW under a quota share reinsurance agreement. In April 2021, Essent
Guaranty and Essent Re agreed to increase the quota share reinsurance coverage
of Essent Guaranty's NIW provided by Essent Re from 25% to 35% effective January
1, 2021. The quota share reinsurance coverage provided by Essent Re for Essent
Guaranty's NIW prior to January 1, 2021 will continue to be 25%, the quota share
percentage in effect at the time NIW was first ceded. The insurer financial
strength ratings of Essent Re are BBB+ with a stable outlook by S&P and A
(Excellent) with a stable outlook by A.M. Best.

COVID-19

Due to the novel coronavirus disease 2019 ("COVID-19"), we experienced a
significant increase in the amount of new defaults reported in 2020, especially
during the second and third quarters of 2020. We segmented these two quarters'
49,398 defaults as specifically COVID-19 related ("Early COVID Defaults") and
provided losses for these two cohorts differently as compared to our normal loss
reserving methodology. The default-to-claim transition patterns of the Early
COVID Defaults have been different than our historical defaults. We believe that
the borrowers associated with the Early COVID Defaults have been able to take
advantage of foreclosure moratoriums and mortgage forbearance programs
instituted by Federal legislation along with actions taken by the Federal
Housing Finance Agency ("FHFA"), Fannie Mae and Freddie Mac (collectively the
"GSEs") which has extend traditional default-to-claim timelines. As a result of
these programs, along with Federal stimulus, these borrowers associated with the
Early COVID Defaults have had more resources and an extended time period to
address the issues that triggered the default, that we believe will result in a
higher cure rate, and correspondingly lower claim payments than historical
defaults.

Over 90% of loans insured by Essent are federally backed by Fannie Mae or
Freddie Mac. As a mortgage loan in forbearance is considered delinquent, we will
provide loss reserves as loans in forbearance are reported to us as delinquent
once the borrower has missed two consecutive payments. However, we believe
providing borrowers time to recover from the adverse financial impact of the
COVID-19 event may allow some families to be able to remain in their homes and
avoid foreclosure.

As of December 31, 2022, approximately 99% of the Early COVID Defaults had
cured. While this level of cure activity exceeded our initial expectations for
the Early COVID Defaults, the transition of defaults to foreclosure or claim has
not returned to pre-pandemic levels. As a result, the level of defaults in the
default inventory that have missed twelve or more payments is above pre-pandemic
levels.
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Current Economic Developments

The economy in the United States is currently experiencing elevated levels of
consumer price inflation. The Federal Reserve has increased the target federal
funds rate several times during 2022 in an effort to reduce consumer price
inflation. These rate increases have resulted in higher mortgage interest rates
which may lower home sale activity and affect the options available to
delinquent borrowers. The impact on our reserves in future periods will be
dependent upon the amount of delinquent notices received from loan servicers and
our expectations for the amount of ultimate losses on these delinquencies. As
noted in "- Liquidity and Capital Resources," Essent had substantial liquidity
and had Available Assets in excess of Minimum Required Assets under PMIERs 2.0
as of December 31, 2022. Future increases in defaults may result in an increase
in our provisions for loss and loss adjustment expenses compared to prior
periods, reduced profit commission under our quota share reinsurance agreements
with panels of third-party reinsurers ("the QSR Agreements") and an increase in
our Minimum Required Assets.

Legislative and Regulatory Developments

Our results are significantly impacted by, and our future success may be
affected by, legislative and regulatory developments affecting the housing
finance industry. Key regulatory and legislative developments that may affect us
include:

Housing Finance, GSE Reform and GSE Qualified Mortgage Insurer Requirements

Because a substantial majority of our current and expected future business is
the provision of mortgage insurance on loans sold to the GSEs, changes to the
business practices of the GSEs or any regulation relating to the GSEs may impact
our business and our results of operations. The Federal Housing Finance Agency
("FHFA") is the regulator and conservator of the GSEs with authority to control
and direct their operations. The FHFA has directed, and is likely to continue to
direct, changes to the business operations of the GSEs in ways that affect the
mortgage insurance industry.

It is likely that Federal legislation will be necessary to resolve the
conservatorship of the GSEs, and such legislation could materially affect the
role and charter of the GSEs and the operation of the housing finance system. In
2011, the U.S. Department of the Treasury recommended options for winding down
the GSEs and using a combination of Federal housing policy changes to contract
the government's footprint in housing finance and restore a larger role for
private capital. Since 2011, members of Congress have introduced several bills
intended to reform the secondary market and the role of the GSEs, although no
comprehensive housing finance or GSE reform legislation has been enacted to
date.

Any changes to the charters or statutory authorities of the GSEs would require
Congressional action to implement. Congress, however, has not enacted any
legislation to date. See "Business-Regulation-Federal Mortgage-Related Laws and
Regulations-Housing Finance Reform," "Risk Factors-Risks Relating to Regulation
and Litigation-Legislative or regulatory actions or decisions to change the role
of the GSEs in the U.S. housing market generally, or changes to the charters of
the GSEs with regard to the use of credit enhancements generally and private
mortgage insurance specifically, could reduce our revenues or adversely affect
our profitability and returns," and "-Changes in the business practices of the
GSEs, including actions or decisions to decrease or discontinue the use of
mortgage insurance or changes in the GSEs' eligibility requirements for mortgage
insurers, could reduce our revenues or adversely affect our profitability and
returns."

Fannie Mae and Freddie Mac, maintain coordinated Private Mortgage Insurer
Eligibility Requirements, which we refer to as the "PMIERs." The PMIERs
represent the standards by which private mortgage insurers are eligible to
provide mortgage insurance on loans owned or guaranteed by Fannie Mae and
Freddie Mac. The PMIERs include financial strength requirements incorporating a
risk-based framework that require approved insurers to have a sufficient level
of liquid assets from which to pay claims. The PMIERs also include enhanced
operational performance expectations and define remedial actions that apply
should an approved insurer fail to comply with these requirements. As of
December 31, 2022, Essent Guaranty, our GSE-approved mortgage insurance company,
was in compliance with the PMIERs.

Dodd-Frank Act

Various regulatory agencies have produced, and are now in the process of
developing additional, new rules under the Dodd-Frank Act that are expected to
have a significant impact on the housing finance industry, including the
Qualified Mortgage, or QM, definition and the risk retention requirement and
related Qualified Residential Mortgage, or QRM, definition.

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QM Definition

Under the Dodd-Frank Act, the Consumer Financial Protection Bureau, or CFPB, is
authorized to issue regulations governing a loan originator's determination
that, at the time a loan is originated, the consumer has a reasonable ability to
repay the loan. The Dodd-Frank Act provides a statutory presumption that a
borrower will have the ability to repay a loan if the loan has characteristics
satisfying the QM definition. Under the CFPB's final rule regarding QMs, which
we refer to as the "QM Rule," a loan is deemed to be a QM if it has certain loan
features, satisfies extensive documentation requirements and meets limitations
on fees and points and APRs.

Under the QM Rule, a loan receives a conclusive presumption that the consumer
had the ability to repay if the annual percentage rate does not exceed the
average prime offer rate (APOR) for a comparable transaction by 1.5 percentage
points or more as of the date the interest rate is set. A loan receives a
rebuttable presumption that the consumer had the ability to repay if the annual
percentage rate exceeds the average prime offer rate for a comparable
transaction by 1.5 percentage points or more but by less than 2.25 percentage
points.

We expect that most lenders will be reluctant to make non-QM loans because they
will not be entitled to the presumption against civil liability under the
Dodd-Frank Act, and mortgage investors may be reluctant to purchase mortgages or
mortgage-backed securities that are not QMs due to potential assignee liability
for such loans. As a result, we believe that the QM regulations have a direct
impact on establishing a subset of borrowers who can meet the regulatory
standards and directly affect the willingness of lenders and mortgage investors
to extend mortgage credit and therefore the size of the residential mortgage
market. To the extent the use of private mortgage insurance causes a loan not to
meet the definition of a QM, the volume of loans originated with mortgage
insurance may decline. In addition, the impact of the mortgage insurance
premiums on the calculation of points and fees for purposes of QM may influence
the use of mortgage insurance, as well as our mix of premium plans and therefore
our profitability. See "-Factors Affecting Our Results of Operations-Persistency
and Business Mix" and "Risk Factors-Risks Relating to Regulation and
Litigation-Our business prospects and operating results could be adversely
impacted if, and to the extent that, the Consumer Financial Protection Bureau's
("CFPB") rule defining a qualified mortgage ("QM") reduces the size of the
origination market or creates incentives to use government mortgage insurance
programs."

Risk Retention Requirements and QRM Definition

The Dodd-Frank Act provides for an originator or issuer risk retention
requirement on securitized mortgage loans that do not meet the definition of a
QRM. The QRM regulations align the definition of a QRM loan with that of a QM
loan. If, however, the QRM definition is changed (or the QM definition is
amended) in a manner that is unfavorable to us, such as to give no consideration
to mortgage insurance in computing LTV or to require a large down payment for a
loan to qualify as a QRM, the attractiveness of originating and securitizing
loans with lower down payments may be reduced, which may adversely affect the
future demand for mortgage insurance. See "Business-Regulation-Federal
Mortgage-Related Laws and Regulation-Dodd-Frank Act-Qualified Residential
Mortgage Regulations-Risk Retention Requirements" and "Risk Factors-Risks
Relating to Our Business-The amount of insurance we write could be adversely
affected by the Dodd-Frank Act's risk retention requirements and the definition
of Qualified Residential Mortgage ("QRM")."

FHA Reform

We compete with the single-family mortgage insurance programs of the FHA, which
is part of the Department of Housing and Urban Development. The most recent FHA
report to Congress dated November 15, 2022 on the financial status of the FHA's
Mutual Mortgage Insurance Fund, or MMIF, showed the capital reserve ratio of the
MMIF at 11.1%, above the Congressionally mandated required minimum level of 2%.
See "Risk Factors-Risks Relating to the Operation of Our Business-The amount of
insurance we may be able to write could be adversely affected if lenders and
investors select alternatives to private mortgage insurance."

Tax Reform

The U.S. Internal Revenue Service and Department of the Treasury published both
final and newly proposed regulations in January 2021 relating to the tax
treatment of passive foreign investment companies ("PFICs"). The final
regulations provide guidance on various PFIC rules, including changes resulting
from the 2017 Tax Cuts and Jobs Act. In addition, the Company is evaluating the
potential impact of the newly proposed PFIC regulations to its shareholders and
business operations. The newly proposed regulations, among other provisions, set
a limit on the amount of assets that may be deemed "non-passive assets" within
the PFIC asset test of a foreign holding company. See "Risk Factors-Risks
Relating to Taxes and our Corporate Structure-U.S. Persons who hold our shares
will be subject to adverse tax consequences if we are considered to be a passive
foreign investment company ("PFIC") for U.S. Federal income tax purposes."
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On August 16, 2022, the "Inflation Reduction Act of 2022" ("IRA"), was enacted,
which, among other things, provides for a corporate alternative minimum tax and
an excise tax on corporate stock repurchases. Based on our current analysis of
the provisions, we do not expect the IRA to have a material impact on our
financial position or results of operations. As the IRS issues additional
guidance related to the IRA, we will evaluate any potential impact to our
consolidated financial statements.

Factors Affecting Our Results of Operations

Net Premiums Written and Earned

Premiums associated with our U.S. mortgage insurance business are based on
insurance in force, or IIF, during all or a portion of a period. A change in the
average IIF during a period causes premiums to increase or decrease as compared
to prior periods. Average net premium rates in effect during a given period will
also cause premiums to differ when compared to earlier periods. IIF at the end
of a reporting period is a function of the IIF at the beginning of such
reporting period plus NIW less policy cancellations (including claims paid)
during the period. As a result, premiums are generally influenced by:

•NIW, which is the aggregate principal amount of the new mortgages that are
insured during a period. Many factors affect NIW, including, among others, the
volume of low down payment home mortgage originations, the competition to
provide credit enhancement on those mortgages, the number of customers who have
approved us to provide mortgage insurance and changes in our NIW from certain
customers;

•Cancellations of our insurance policies, which are impacted by payments on
mortgages, home price appreciation, or refinancings, which in turn are affected
by mortgage interest rates. Cancellations are also impacted by the levels of
claim payments and rescissions;

•Premium rates, which represent the amount of the premium due as a percentage of
IIF. Premium rates are based on the risk characteristics of the loans insured,
the percentage of coverage on the loans, competition from other mortgage
insurers and general industry conditions; and

•Premiums ceded or assumed under reinsurance arrangements. See Note 5 to our
consolidated financial statements.

Premiums are paid either on a monthly installment basis ("monthly premiums"), in
a single payment at origination ("single premiums"), or in some cases as an
annual premium. For monthly premiums, we receive a monthly premium payment which
is recorded as net premiums earned in the month the coverage is provided.
Monthly premium payments are based on the original mortgage amount rather than
the amortized loan balance. Net premiums written may be in excess of net
premiums earned due to single premium policies. For single premiums, we receive
a single premium payment at origination, which is recorded as "unearned premium"
and earned over the estimated life of the policy, which ranges from 36 to
156 months depending on the term of the underlying mortgage and loan-to-value
ratio at date of origination. If single premium policies are cancelled due to
repayment of the underlying loan and the premium is non-refundable, the
remaining unearned premium balance is immediately recognized as earned premium
revenue. Substantially all of our single premium policies in force as of
December 31, 2022 were non-refundable. Premiums collected on annual policies are
recognized as net premiums earned on a straight-line basis over the year of
coverage. For the years ended December 31, 2022 and 2021, monthly premium
policies comprised 94% and 96% of our NIW, respectively.

Premiums associated with our GSE and other risk share transactions are based on
the level of risk in force and premium rates on the transactions.

Persistency and Business Mix

The percentage of IIF that remains on our books after any 12-month period is
defined as our persistency rate. Because our insurance premiums are earned over
the life of a policy, higher persistency rates can have a significant impact on
our profitability. The persistency rate on our portfolio was 82.1% at
December 31, 2022. Generally, higher prepayment speeds lead to lower
persistency.

Prepayment speeds and the relative mix of business between single premium
policies and monthly premium policies also impact our profitability. Our premium
rates include certain assumptions regarding repayment or prepayment speeds of
the mortgages. Because premiums are paid at origination on single premium
policies, assuming all other factors remain constant, if loans are prepaid
earlier than expected, our profitability on these loans is likely to increase
and, if loans are repaid slower than expected, our profitability on these loans
is likely to decrease. By contrast, if monthly premium loans are repaid earlier
than
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anticipated, our premium earned with respect to those loans and therefore our
profitability declines. Currently, the expected return on single premium
policies is less than the expected return on monthly policies.

Net Investment Income

Our investment portfolio was predominantly comprised of investment-grade fixed
income securities and money market funds as of December 31, 2022. The principal
factors that influence investment income are the size of the investment
portfolio and the yield on individual securities. As measured by amortized cost
(which excludes changes in fair market value, such as from changes in interest
rates), the size of our investment portfolio is mainly a function of increases
in capital and cash generated from or used in operations which is impacted by
net premiums received, investment earnings, net claim payments and expenses.
Realized gains and losses are a function of the difference between the amount
received on the sale of a security and the security's amortized cost, as well as
any provision for credit losses or impairments recognized in earnings. The
amount received on the sale of fixed income securities is affected by the coupon
rate of the security compared to the yield of comparable securities at the time
of sale.

Income from Other Invested Assets

As part of our overall investment strategy, we also allocate a relatively small
percentage of our portfolio to limited partnership investments in real estate,
consumer credit and traditional venture capital and private equity investments.
The results of these investing activities are reported in income from other
invested assets. These investments are generally accounted for under the equity
method or fair value using net asset value (or its equivalent) as a practical
expedient. For entities accounted for under the equity method that follow
industry-specific guidance for investment companies, our proportionate share of
earnings or losses includes changes in the fair value of the underlying assets
of these entities. Fluctuations in the fair value of these entities may increase
the volatility of the Company's reported results of operations.

Other Income

Other income includes revenues associated with contract underwriting services
and underwriting consulting services to third-party reinsurers. The level of
contract underwriting revenue is dependent upon the number of customers who have
engaged us for this service and the number of loans underwritten for these
customers. Revenue from underwriting consulting services to third-party
reinsurers is dependent upon the number of customers who have engaged us for
this service and the level of premiums associated with the transactions
underwritten for these customers.

In connection with the acquisition of our mortgage insurance platform, we
entered into a services agreement with Triad Guaranty Inc. and its wholly-owned
subsidiary, Triad Guaranty Insurance Corporation, which we refer to collectively
as "Triad," to provide certain information technology maintenance and
development and customer support-related services. In return for these services,
we receive a flat monthly fee which is recorded in other income. During 2022,
Triad exercised its one year renewal option extending the services agreement
through November 2023.

As more fully described in Note 5 to our consolidated financial statements, the
premiums ceded under certain reinsurance contracts with unaffiliated third
parties varies based on changes in market interest rates. Under GAAP, these
contracts contain embedded derivatives that are accounted for separately as
freestanding derivatives. The change in the fair value of the embedded
derivatives is reported in earnings and included in other income.

Provision for Losses and Loss Adjustment Expenses

The provision for losses and loss adjustment expenses reflects the current
expense that is recorded within a particular period to reflect actual and
estimated loss payments that we believe will ultimately be made as a result of
insured loans that are in default.

Losses incurred are generally affected by:

•the overall state of the economy, which broadly affects the likelihood that
borrowers may default on their loans and have the ability to cure such defaults;

•changes in housing values, which affect our ability to mitigate our losses
through the sale of properties with loans in default as well as borrower
willingness to continue to make mortgage payments when the value of the home is
below or perceived to be below the mortgage balance;

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•the product mix of IIF, with loans having higher risk characteristics generally
resulting in higher defaults and claims;

•the size of loans insured, with higher average loan amounts tending to increase
losses incurred;

•the loan-to-value ratio, with higher average loan-to-value ratios tending to
increase losses incurred;

•the percentage of coverage on insured loans, with deeper average coverage
tending to increase losses incurred;

•credit quality of borrowers, including higher debt-to-income ratios and lower
FICO scores, which tend to increase incurred losses;

•the level and amount of reinsurance coverage maintained with third parties;

•the rate at which we rescind policies. Because of tighter underwriting
standards generally in the mortgage lending industry and terms set forth in our
master policy, we expect that our level of rescission activity will be lower
than rescission activity seen in the mortgage insurance industry for vintages
originated prior to the financial crisis; and

•the distribution of claims over the life of a book. As of December 31, 2022,
84% of our IIF relates to business written since January 1, 2020 and was less
than three years old. As a result, based on historical industry performance, we
expect the number of defaults and claims we experience, as well as our provision
for losses and loss adjustment expenses ("LAE"), to increase as our portfolio
seasons. See "-Mortgage Insurance Earnings and Cash Flow Cycle" below.

We establish loss reserves for delinquent loans when we are notified that a
borrower has missed at least two consecutive monthly payments ("Case Reserves"),
as well as estimated reserves for defaults that may have occurred but not yet
been reported to us ("IBNR Reserves"). We also establish reserves for the
associated loss adjustment expenses, consisting of the estimated cost of the
claims administration process, including legal and other fees. Using both
internal and external information, we establish our reserves based on the
likelihood that a default will reach claim status and estimated claim severity.
See "-Critical Accounting Policies" for further information.

Based upon our experience and industry data, claims incidence for mortgage
insurance is generally highest in the third through sixth years after loan
origination. Claims incidence for defaults associated with COVID-19 may not
follow this pattern. As of December 31, 2022, 84% of our IIF relates to business
written since January 1, 2020 and was less than three years old. Although the
claims experience on new insurance written by us to date has been favorable, we
expect incurred losses and claims to increase as a greater amount of this book
of insurance reaches its anticipated period of highest claim frequency. The
actual default rate and the average reserve per default that we experience as
our portfolio matures is difficult to predict and is dependent on the specific
characteristics of our current in-force book (including the credit score of the
borrower, the loan-to-value ratio of the mortgage, geographic concentrations,
etc.), as well as the profile of new business we write in the future. In
addition, the default rate and the average reserve per default will be affected
by future macroeconomic factors such as housing prices, interest rates and
employment.

Due to business restrictions, stay-at-home orders and travel restrictions
initially implemented in March 2020 as a result of COVID-19, unemployment in the
United States increased significantly in the second quarter of 2020, declining
during the second half of 2020 through 2022. As unemployment is one of the most
common reasons for borrowers to default on their mortgage, the increase in
unemployment has increased the number of delinquencies on the mortgages we
insure, and has the potential to increase claim frequencies on defaults. As a
result, we received 36,784 defaults in the three months ended June 30, 2020 and
12,614 defaults in the three months ended September 30, 2020, which resulted in
a significant increase in our default rate from 0.83% at March 31, 2020 to 4.54%
at September 30, 2020.

In response to the COVID-19 pandemic, the United States government enacted a
number of policies to provide fiscal stimulus to the economy and relief to those
affected by this global disaster. Specifically, mortgage forbearance programs
and foreclosure moratoriums were instituted by Federal legislation along with
actions taken by FHFA and the GSEs. The mortgage forbearance plans permit these
borrowers to temporarily reduce or suspend their mortgage payments for up to 18
months for loans in an active COVID-19-related forbearance program as of
February 28, 2021. For borrowers that have the ability to begin to pay their
mortgage at the end of the forbearance period, we expect that mortgage servicers
will continue to work with them to modify their loans at which time the mortgage
will be removed from delinquency status. We believe that the forbearance process
could have a favorable effect on the frequency of claims that we ultimately pay.
Based on the forbearance programs in place and the credit characteristics of the
Early COVID Defaults, we believe that the ultimate number of Early COVID
Defaults that result in claims will be less than our historical default-to-claim
experience. Accordingly, we applied a lower reserve rate to
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the Early COVID Defaults than the rate used for defaults that had missed a
comparable number of payments as of March 31, 2020 and in prior periods that did
not have access to forbearance plans.

The defaulted loans reported to us in the second and third quarters of 2020 had
reached the end of their forbearance periods as of March 31, 2022. During the
first quarter of 2022, the Early COVID Defaults cured at elevated levels, and
the cumulative cure rate for the Early COVID Defaults at March 31, 2022 exceeded
our initial estimated cure rate implied by our estimate of ultimate loss for
these defaults established at the onset of the pandemic. Based on cure activity
through March 31, 2022 and our expectations for future cure activity, as of
March 31, 2022, we lowered our estimate of ultimate loss for the Early COVID
Defaults. During the three months ended June 30, 2022, Early COVID Defaults
cured at levels that exceeded our estimate as of March 31, 2022, and we further
lowered our estimate of loss for these defaults as of June 30, 2022 to 2% of the
initial risk in force. These revisions to our estimate of ultimate loss for the
Early COVID Defaults resulted in a benefit recorded to the provision for losses
of $164.1 million for the year ended December 31, 2022. As of December 31, 2022,
approximately 99% of the Early COVID Defaults had cured. Due to the level of
Early COVID Defaults remaining in the default inventory, beginning in the third
quarter of 2022, we resumed reserving for the Early COVID Defaults using our
normal reserve methodology. While the level of cure activity for the Early COVID
Defaults exceeded our initial expectations, the transition of defaults to
foreclosure or claim has not returned to pre-pandemic levels as of December 31,
2022. As a result, the level of defaults in the default inventory that have
missed twelve or more payments is above pre-pandemic levels.

The economy in the United States is currently experiencing elevated levels of
consumer price inflation. The Federal Reserve has increased the target federal
funds rate several times during 2022 in an effort to reduce consumer price
inflation. These rate increases have resulted in higher mortgage interest rates
which may lower home sale activity and affect the options available to
delinquent borrowers. It is reasonably possible that our estimate of losses
could change in the near term as a result of changes in the economic
environment, the impact of elevated levels of consumer price inflation on home
sale activity, housing inventory, and home prices.

In September 2022, Hurricane Ian made landfall in Florida and caused property
damage in certain counties. There are many factors contributing to the
uncertainty surrounding these insured loans. Under our master policy, loan
servicers are not required to notify us of a default until the borrower has
missed two consecutive minimum payments. Also, the level of damage being
reported in these areas varies significantly from region to region. Further,
under our master policy, our exposure may be limited on hurricane-related
claims. For example, we are permitted to exclude a claim entirely where
estimated restoration costs from damage to the property underlying a mortgage
equal 20% or more of the property's original value and adjust a claim where the
property underlying a mortgage in default is subject to unrestored physical
damage. This event has not materially affected our reserves as of December 31,
2022.

As more fully described in Note 5 to our condensed consolidated financial
statements, at December 31,2022, we had approximately $2.5 billion of excess of
loss reinsurance covering NIW from January 1, 2015 to December 31, 2022 and
quota share reinsurance on portions of our NIW effective September 1, 2019
through December 31, 2020 and January 1, 2022 through December 31, 2022. The
impact on our reserves in future periods will be dependent upon the amount of
delinquent notices received from loan servicers, the performance of defaults and
our expectations for the amount of ultimate losses on these delinquencies.

Third-Party Reinsurance

We use third-party reinsurance to provide protection against adverse loss
experience and to expand our capital sources. When we enter into a reinsurance
agreement, the reinsurer receives a premium and, in exchange, agrees to insure
an agreed upon portion of incurred losses. These arrangements have the impact of
reducing our earned premiums, but also reduce our risk in force ("RIF"), which
provides capital relief, and may include capital relief under the PMIERs
financial strength requirements. Our incurred losses are reduced by any incurred
losses ceded in accordance with the reinsurance agreement. For additional
information regarding reinsurance, see Note 5 to our consolidated financial
statements.

Other Underwriting and Operating Expenses

Our other underwriting and operating expenses include components that are
substantially fixed, as well as expenses that generally increase or decrease in
line with the level of NIW.

Our most significant expense is compensation and benefits for our employees,
which represented 59%, 61% and 60% of other underwriting and operating expenses
for the years ended December 31, 2022, 2021 and 2020, respectively. Compensation
and benefits expense includes base and incentive cash compensation, stock
compensation expense, benefits and payroll taxes.

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Underwriting and other expenses include legal, consulting, other professional
fees, premium taxes, travel, entertainment, marketing, licensing, supplies,
hardware, software, rent, utilities, depreciation and amortization and other
expenses. We anticipate that as we continue to add new customers and increase
our IIF, our expenses will also continue to increase.

Interest Expense

Interest expense is incurred as a result of borrowings under our secured credit
facility (the "Credit Facility"). Borrowings under the Credit Facility may be
used for working capital and general corporate purposes, including, without
limitation, capital contributions to Essent's insurance and reinsurance
subsidiaries. Borrowings accrue interest at a floating rate tied to a standard
short-term borrowing index, selected at the Company's option, plus an applicable
margin.

Income Taxes

Income taxes are incurred based on the amount of earnings or losses generated in
the jurisdictions in which we operate and the applicable tax rates and
regulations in those jurisdictions. Our U.S. insurance subsidiaries are
generally not subject to income taxes in most states in which we operate;
however, our non-insurance subsidiaries are subject to state income taxes. In
lieu of state income taxes, our insurance subsidiaries pay premium taxes that
are recorded in other underwriting and operating expenses.

Essent Group Ltd. ("Essent Group") and its wholly-owned subsidiary, Essent Re,
are domiciled in Bermuda, which does not have a corporate income tax. Under a
quota share reinsurance agreement, Essent Re reinsures 25% of Essent Guaranty's
NIW through December 31, 2020 and 35% of Essent Guaranty's NIW after December
31, 2020. Essent Re also provides insurance and reinsurance to Freddie Mac and
Fannie Mae.

The amount of income tax expense or benefit recorded in future periods will be
dependent on the jurisdictions in which we operate and the tax laws and
regulations in effect.

Mortgage Insurance Earnings and Cash Flow Cycle

In general, the majority of any underwriting profit (premium revenue minus
losses) that a book generates occurs in the early years of the book, with the
largest portion of any underwriting profit realized in the first year.
Subsequent years of a book generally result in modest underwriting profit or
underwriting losses. This pattern generally occurs because relatively few of the
claims that a book will ultimately experience typically occur in the first few
years of the book, when premium revenue is highest, while subsequent years are
affected by declining premium revenues, as the number of insured loans decreases
(primarily due to loan prepayments), and by increasing losses.

Key Performance Indicators

Insurance In Force

As discussed above, premiums we collect and earn are generated based on our IIF,
which is a function of our NIW and cancellations. The following table includes a
summary of the change in our IIF for the years ended December 31, 2022, 2021 and
2020 for our U.S. mortgage insurance portfolio. In addition, this table includes
our RIF at the end of each period.
                                                  Year Ended December 31,
($ in thousands)                        2022               2021               2020
IIF, beginning of period           $ 207,190,544      $ 198,882,352      $ 164,005,853
NIW                                   63,061,262         84,218,250        107,944,065
Cancellations                        (43,189,751)       (75,910,058)       (73,067,566)
IIF, end of period                 $ 227,062,055      $ 207,190,544      $ 198,882,352
Average IIF during the period      $ 215,485,518      $ 202,890,292      $ 178,294,034
RIF, end of period                 $  49,903,626      $  45,273,383      $  41,339,262



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The following is a summary of our IIF at December 31, 2022 by vintage:

                     ($ in thousands)               $               %
                     2022                       60,609,538        26.7  %
                     2021                       71,533,601        31.5
                     2020                       59,228,334        26.1
                     2019                       14,742,465         6.5
                     2018                        6,714,277         3.0
                     2017 and prior             14,233,841         6.2
                                             $ 227,062,055       100.0  %



Average Net Premium Rate

Our average net premium rate is calculated by dividing net premiums earned for
the U.S. mortgage insurance portfolio by average insurance in force for the
period and is dependent on a number of factors, including: (1) the risk
characteristics and average coverage on the mortgages we insure; (2) the mix of
monthly premiums compared to single premiums in our portfolio; (3) cancellations
of non-refundable single premiums during the period; (4) changes to our pricing
for NIW; and (5) premiums ceded under third-party reinsurance agreements. The
following table presents the average net premium rate for our U.S. mortgage
insurance portfolio:

                                                Year Ended December 31,
                                           2022                2021         2020
Base average premium rate                         0.41  %      0.43  %      0.46  %
Single premium cancellations                      0.01         0.03         0.05
Gross average premium rate                        0.42         0.46         0.51
Ceded premiums                                   (0.05)       (0.05)       (0.05)
Net average premium rate                          0.37  %      0.41  %      0.46  %

We anticipate that the continued use of third-party reinsurance along with
changes to the level of future cancellations of non-refundable single premium
policies and mix of IIF will reduce our average net premium rate in future
periods.

Persistency Rate

The measure for assessing the impact of policy cancellations on IIF is our
persistency rate, defined as the percentage of IIF that remains on our books
after any twelve-month period. See additional discussion regarding the impact of
the persistency rate on our performance in "-Factors Affecting Our Results of
Operations-Persistency and Business Mix."

Risk-to-Capital

The risk-to-capital ratio has historically been used as a measure of capital
adequacy in the U.S. mortgage insurance industry and is calculated as a ratio of
net risk in force to statutory capital. 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. Statutory capital for our U.S. insurance
companies is computed based on accounting practices prescribed or permitted by
the Pennsylvania Insurance Department. See additional discussion in "-Liquidity
and Capital Resources-Insurance Company Capital."

As of December 31, 2022, our combined net risk in force for our U.S. insurance
companies was $32.3 billion and our combined statutory capital was $3.2 billion,
resulting in a risk-to-capital ratio of 10.2 to 1. The amount of capital
required varies in each jurisdiction in which we operate; however, generally,
the maximum permitted risk-to-capital ratio is 25.0 to 1. State insurance
regulators are currently examining their respective capital rules to determine
whether, in light of the financial crisis, changes are needed to more accurately
assess mortgage insurers' ability to withstand stressful economic conditions. As
a result, the capital metrics under which they assess and measure capital
adequacy may change in the future. Independent of the state regulator and GSE
capital requirements, management continually assesses the risk of our insurance
portfolio and current market and economic conditions to determine the
appropriate levels of capital to support our business.

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Results of Operations

The following table sets forth our results of operations for the periods
indicated:
                                                         Year Ended December 31,
Summary of Operations
(In thousands)                                     2022            2021           2020
Revenues:
Net premiums written                           $  820,029      $  807,492      $ 834,113
Decrease in unearned premiums                      22,498          65,051         28,451
Net premiums earned                               842,527         872,543        862,564
Net investment income                             124,409          88,765         80,087
Realized investment (losses) gains, net           (13,172)            418   

2,697

Income (loss) from other invested assets           28,676          56,386           (215)
Other income                                       18,384          10,398         10,021
Total revenues                                  1,000,824       1,028,510        955,154

Losses and expenses:
(Benefit) provision for losses and LAE           (174,704)         31,057   

301,293

Other underwriting and operating expenses 171,733 166,857

     154,691
Interest expense                                   15,608           8,282          9,074
Total losses and expenses                          12,637         206,196        465,058
Income before income taxes                        988,187         822,314        490,096
Income tax expense                                156,834         140,531         77,055
Net income                                     $  831,353      $  681,783      $ 413,041

Year Ended December 31, 2022 Compared to the Year Ended December 31, 2021

For the year ended December 31, 2022, we reported net income of $831.4 million,
compared to net income of $681.8 million for the year ended December 31, 2021.
The increase in our operating results in 2022 over 2021 was primarily due to a
decrease in the provision for losses and LAE and an increase in net investment
income, partially offset by decreases in net premiums earned, income from other
invested assets and realized net investment gains and an increase in income
taxes.

Net Premiums Written and Earned

Net premiums earned decreased in the year ended December 31, 2022 by three
percent compared to the year ended December 31, 2021 due to the decrease in the
average net premium rate from 0.41% for the year ended December 31, 2021 to
0.37% for the year ended December 31, 2022 partially offset by the increase in
our average IIF from $202.9 billion in 2021 to $215.5 billion in 2022. The
decrease in the average net premium rate during the year ended December 31, 2022
was a primarily due to changes in the mix of the mortgages we insure, changes in
our pricing and a decrease in premiums earned on the cancellation of
non-refundable single premium policies. In the year ended December 31, 2022,
premiums earned on the cancellation of non-refundable single premium policies
decreased to $20.8 million from $63.8 million in the year ended December 31,
2021 as a result of a decrease in existing borrowers refinancing their mortgages
during 2022 as compared to 2021.

Net premiums written increased in the year ended December 31, 2022 by 2% over
the prior year. The increase was due primarily to the increase in average IIF
for the year ended December 31, 2022 as compared to the year ended December 31,
2021 partially offset by changes in the mix of mortgages we insure and changes
in our pricing for the year ended December 31, 2022 as compared to the year
ended December 31, 2021.

In the year ended December 31, 2022, unearned premiums decreased by $22.5
million as a result of $64.2 million of unearned premium that was recognized in
earnings during the year partially offset by net premiums written on single
premium policies of $41.7 million. In the year ended December 31, 2021, unearned
premiums decreased by $65.1 million as a result of $111.7 million of unearned
premium that was recognized in earnings during the year partially offset by net
premiums written on single premium policies of $46.7 million.
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Net Investment Income

Our net investment income was derived from the following sources for the periods
indicated:

                                                  Year Ended December 31,
               (In thousands)                       2022                2021
               Fixed maturities             $     129,530            $ 94,117
               Short-term investments               2,319                 171
               Gross investment income            131,849              94,288
               Investment expenses                 (7,440)             (5,523)
               Net investment income        $     124,409            $ 88,765



The increase in net investment income to $124.4 million for the year ended
December 31, 2022 as compared to $88.8 million for the year ended December 31,
2021 was due to the increase in the weighted average balance of our investment
portfolio, as well as an increase in the average yield on the investment
portfolio. The average balance of investments at amortized cost increased to
$5.1 billion during the year ended December 31, 2022 from $4.7 billion during
the year ended December 31, 2021, primarily as a result of investing cash flows
generated from operations, partially offset by cash used for share repurchases
and dividends. The pre-tax investment income yield increased from 2.0% in the
year ended December 31, 2021 to 2.6% in the year ended December 31, 2022
primarily due to a general increase in investment yields due to increasing
interest rates and a decrease in premium amortization on mortgage-backed and
asset-backed securities. The pre-tax investment income yields are calculated
based on amortized cost and exclude investment expenses. See "-Liquidity and
Capital Resources" for further details of our investment portfolio.

Income from Other Invested Assets

Income from other invested assets for the year ended December 31, 2022 was $28.7
million as compared to $56.4 million for the year ended December 31, 2021. The
decrease in income from other invested assets for the year ended December 31,
2022 as compared to the year ended December 31, 2021 was primarily due to lower
fair value adjustments recorded during 2022.

Through June 30, 2021, unrealized gains and losses reported by these entities
were included in other comprehensive income ("OCI"). Subsequent to June 30,
2021, management concluded that unrealized gains and losses on these investments
should be reflected in earnings rather than OCI. Income from other invested
assets for the year ended December 31, 2021 includes $7.6 million of net
unrealized gains that were accumulated in OCI at December 31, 2020.

Other Income

Other income for the year ended December 31, 2022 was $18.4 million compared to
$10.4 million for the year ended December 31, 2021. The increase in other income
for the year ended December 31, 2022 as compared to the year ended December 31,
2021 was primarily due to an increase in underwriting consulting services to
third-party reinsurers and changes in the fair value of the embedded derivatives
contained in certain of our reinsurance agreements, partially offset by lower
Triad service fees and a decrease in contract underwriting revenues. In the year
ended December 31, 2022 we recorded a net unfavorable decrease in the fair value
of the embedded derivatives of $2.5 million compared to a net unfavorable
decrease of $4.1 million in the year ended December 31, 2021.

Provision for Losses and Loss Adjustment Expenses

The decrease in the provision for losses and LAE in 2022 as compared to 2021 was
primarily due to a decrease in the estimate of ultimate loss for Early COVID
Defaults as well as cure activity for defaults with reserves using our normal
reserve methodology.

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The following table presents a rollforward of insured loans in default for our
U.S. mortgage insurance portfolio for the periods indicated:

                                                       Year Ended December 

31,

                                                     2022                   

2021

         Beginning default inventory               16,963                    31,469
         Plus: new defaults                        25,636                    23,297
         Less: cures                              (28,873)                  (37,566)
         Less: claims paid                           (261)                     (195)
         Less: rescissions and denials, net           (32)                      (42)
         Ending default inventory                  13,433                   

16,963

The following table includes additional information about our loans in default
as of the dates indicated for our U.S. mortgage insurance portfolio:

                                                                   As of 

December 31,

                                                                  2022            2021
    Case reserves (in thousands) (1)                          $ 199,419       $ 375,396
    Total reserves (in thousands) (1)                         $ 216,390       $ 406,096
    Ending default inventory                                     13,433          16,963
    Average case reserve per default (in thousands)           $    14.8       $    22.1
    Average total reserve per default (in thousands)          $    16.1       $    23.9
    Default rate                                                   1.66  %         2.16  %
    Claims received included in ending default inventory            121              60

_______________________________________________________________________________

(1)The U.S. mortgage insurance portfolio reserves exclude reserves on GSE and
other risk share risk in force at Essent Re of $0.1 million and $1.3 million as
of December 31, 2022 and 2021, respectively.

As of March 31, 2022, the defaulted loans reported to us in the second and third
quarters of 2020 had reached the end of their forbearance periods. During the
first quarter of 2022, the Early COVID Defaults cured at elevated levels, and
the cumulative cure rate for the Early COVID Defaults at March 31, 2022 exceeded
our initial estimated cure rate implied by our 7% estimate of ultimate loss for
these defaults. Based on cure activity through March 31, 2022 and our
expectations for future cure activity, we lowered our estimate of ultimate loss
for the Early COVID Defaults from 7% to 4% of the initial risk in force. During
the three months ended June 30, 2022, Early COVID Defaults cured at levels that
exceeded our estimate as of March 31, 2022, and we further lowered our estimate
of loss for these defaults as of June 30, 2022 to 2% of the initial risk in
force. These revisions to our estimate of ultimate loss for the Early COVID
Defaults resulted in a benefit recorded to the provision for losses of $164.1
million for the year ended December 31, 2022. As of December 31, 2022,
approximately 99% of the Early COVID Defaults had cured. Due to the level of
Early COVID Defaults remaining in the default inventory, beginning in the third
quarter of 2022, we resumed reserving for the Early COVID Defaults using our
normal reserve methodology.

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The following table provides a reconciliation of the beginning and ending
reserve balances for losses and LAE:

                                                                Year Ended 

December 31,

 (In thousands)                                                   2022      

2021

Reserve for losses and LAE at beginning of year $ 407,445

$ 374,941

 Less: Reinsurance recoverables                                  25,940     

19,061

 Net reserve for losses and LAE at beginning of year            381,505     

355,880

Add provision for losses and LAE occurring in:

 Current year                                                    99,372     

97,256

 Prior years                                                   (274,076)    

(66,199)

 Incurred losses and LAE during the current year               (174,704)    

31,057

Deduct payments for losses and LAE occurring in:

 Current year                                                       224                 388
 Prior years                                                      4,731     

5,044

 Loss and LAE payments during the current year                    4,955     

5,432

 Net reserve for losses and LAE at end of year                  201,846     

381,505

 Plus: Reinsurance recoverables                                  14,618     

25,940

 Reserve for losses and LAE at end of year                $     216,464     

$ 407,445

The following tables provide a detail of reserves and defaulted RIF by the
number of missed payments and pending claims for our U.S. mortgage insurance
portfolio:
                                                                                                          As of December 31, 2022
                                                  Number of               Percentage of                                                                                   Reserves as a
                                                 Policies in               Policies in              Amount of             Percentage of             Defaulted             Percentage of
($ in thousands)                                   Default                   Default                 Reserves                Reserves                  RIF                Defaulted RIF
Missed payments:
Three payments or less                              6,154                              46  %       $  32,242                           16  %       $ 411,624                            8  %
Four to eleven payments                             4,684                              35             65,071                           33            317,417                           21
Twelve or more payments                             2,474                              18             98,291                           49            147,247                           67
Pending claims                                        121                               1              3,815                            2              4,860                           78
Total case reserves (1)                            13,433                             100  %         199,419                          100  %       $ 881,148                           23
IBNR                                                                                                  14,956
LAE                                                                                                    2,015
Total reserves for losses and LAE (1)                                                              $ 216,390


_______________________________________________________________________________
(1)The U.S. mortgage insurance portfolio reserves exclude reserves on GSE and
other risk share risk in force at Essent Re of $0.1 million as of December 31,
2022.
                                                                                                            As of December 31, 2021
                                                   Number of               Percentage of                                                                                     Reserves as a
                                                  Policies in               Policies in              Amount of             Percentage of              Defaulted              Percentage of
($ in thousands)                                    Default                   Default                 Reserves                Reserves                   RIF                 Defaulted RIF
Missed payments:
Three payments or less                               4,113                              24  %       $  20,712                            5  %       $   243,511                            9  %
Four to eleven payments                              5,459                              32             77,822                           21              349,494                           22
Twelve or more payments                              7,331                              43            274,465                           73              470,859                           58
Pending claims                                          60                               1              2,397                            1                2,852                           84
Total case reserves (2)                             16,963                 

           100  %         375,396                          100  %       $ 1,066,716                           35
IBNR                                                                                                   28,155
LAE                                                                                                     2,545
Total reserves for losses and LAE (2)                                                               $ 406,096


_______________________________________________________________________________
(2)The U.S. mortgage insurance portfolio reserves exclude reserves on GSE and
other risk share risk in force at Essent Re of $1.3 million as of December 31,
2021.
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During the year ended December 31, 2022, the provision for losses and LAE was a
benefit of $174.7 million, comprised of $274.1 million of favorable prior years'
loss development partially offset by a provision of $99.4 million for current
year losses. During the year ended December 31, 2021, the provision for losses
and LAE was $31.1 million, comprised of $97.3 million of current year losses
partially offset by $66.2 million of favorable prior years' loss development. In
both periods, the favorable prior years' loss development was the result of a
re-estimation of amounts ultimately to be paid on prior year defaults in the
default inventory, including the impact of previously identified defaults that
cured.

The following table includes additional information about our claims paid and
claim severity as of the dates indicated:

                                                Year Ended December 31,
               ($ in thousands)                2022                    2021
               Number of claims paid              261                   195
               Amount of claims paid      $     4,665               $ 5,204
               Claim severity                      44  %                 59  %

Other Underwriting and Operating Expenses

Following are the components of our other underwriting and operating expenses
for the periods indicated:

                                                                    Year Ended December 31,
                                                                2022                        2021
 ($ in thousands)                                           $              %            $            %
 Compensation and benefits                            $    100,302        59  %    $ 101,339        61  %
 Premium taxes                                              17,756        10          18,150        11
 Other                                                      53,679        31          47,368        28

Total other underwriting and operating expenses $ 171,737 100 % $ 166,857 100 %

 Number of employees at end of year                                      346                       343

The significant factors contributing to the change in other underwriting and
operating expenses are:

•Compensation and benefits decreased primarily due to decreased stock
compensation expense and severance associated with the departure of former
executives, partially offset by an increase in incentive compensation.
Compensation and benefits includes salaries, wages and bonus, stock compensation
expense, benefits and payroll taxes.

•Premium taxes decreased primarily due to a decrease in our effective premium
tax rate.

•Other expenses increased primarily as a result of increases in professional
fees, travel expenses, rent expense and a decrease in ceding commission earned
under our QSR Agreements, partially offset by a decrease in amortization of net
deferred acquisition costs. Other expenses include professional fees, travel,
marketing, hardware, software, rent, depreciation and amortization and other
facilities expenses.

Interest Expense

For the years ended December 31, 2022 and 2021, we incurred interest expense of
$15.6 million and $8.3 million, respectively. Interest expense increased due to
an increase in the weighted average interest rate on amounts outstanding under
the Credit Facility and an increase in the average amounts outstanding under the
Credit Facility. For the years ending December 31, 2022 and 2021, the borrowings
under the Credit Facility had a weighted average interest rate of 3.42% and
2.07%, respectively. For the year ended December 31, 2022, the average amount
outstanding under the Credit Facility was $425.0 million as compared to $331.7
million for the year ended December 31, 2021.

Income Taxes

Our subsidiaries in the United States file a consolidated U.S. Federal income
tax return. Our income tax expense was $156.8 million for the year ended
December 31, 2022 compared to $140.5 million for the year ended December 31,
2021. The
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effective tax rate for the year ended December 31, 2022 was 15.9% compared to
17.1% for the year ended December 31, 2021. Our effective income tax rate
reflects the amount of earnings or losses generated in the jurisdictions in
which we operate, the applicable tax rates and regulations in those
jurisdictions, and the impact of discrete items. For the year ended December 31,
2021, income tax expense includes $8.2 million of expense associated with an
increase in the estimate of our beginning of the year deferred state income tax
liability.

At December 31, 2022 and 2021, we concluded that it was more likely than not
that our deferred tax assets would be realized.

Year Ended December 31, 2021 Compared to the Year Ended December 31, 2020

    Pursuant to the FAST Act Modernization and Simplification of Regulation S-K,
discussions related to the changes in results of operations for the year ended
December 31, 2021 compared to the year ended December 31, 2020 have been
omitted. Such omitted discussion can be found under Item 7 of our Annual Report
on Form 10-K for the year ended December 31, 2021 filed with the Securities and
Exchange Commission on February 15th, 2022.

Liquidity and Capital Resources

Overview

Our sources of funds consist primarily of:

•our investment portfolio and interest income on the portfolio;

•net premiums that we will receive from our existing IIF as well as policies
that we write in the future;

•borrowings under our Credit Facility; and

•issuance of capital shares.

Our obligations consist primarily of:

•claim payments under our policies;

•interest payments and repayment of borrowings under our Credit Facility;

•the other costs and operating expenses of our business;

•the repurchase of common shares under the share repurchase plan approved by our
Board of Directors; and

•the payment of dividends on our common shares.

As of December 31, 2022, we had substantial liquidity with cash of $81.2
million, short-term investments of $252.0 million and fixed maturity investments
of $4.5 billion. We also had $400 million of available capacity under the
revolving credit component of our Credit Facility, with $425 million of term
borrowings outstanding under our Credit Facility. Borrowings under the Credit
Facility contractually mature on December 10, 2026. Holding company net cash and
investments available for sale totaled $685.2 million at December 31, 2022. In
addition, Essent Guaranty is a member of the Federal Home Loan Bank of
Pittsburgh (the "FHLBank") and has access to secured borrowing capacity with the
FHLBank to provide Essent Guaranty with supplemental liquidity. Essent Guaranty
had no outstanding borrowings with the FHLBank at December 31, 2022.

Management believes that the Company has sufficient liquidity available both at
its holding companies and in its insurance and other operating subsidiaries to
meet its operating cash needs and obligations and committed capital expenditures
for the next 12 months.

While the Company and all of its subsidiaries are expected to have sufficient
liquidity to meet all their expected obligations, additional capital may be
required to meet any new capital requirements that are adopted by regulatory
authorities or the GSEs, to respond to changes in the business or economic
environment, to provide additional capital related to the growth of our risk in
force in our mortgage insurance portfolio, or to fund new business initiatives.
We regularly review potential
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investments and acquisitions, some of which may be material, that, if
consummated, would expand our existing business or result in new lines of
business, and at any given time we may be in discussions concerning possible
transactions. In February 2023, we announced that Essent US Holdings, Inc.
entered into an agreement to acquire the title insurance operations of a
subsidiary of Finance of America Companies for $100 million. We continually
evaluate opportunities based upon market conditions to further increase our
financial flexibility through the issuance of equity or debt, or other options
including reinsurance or credit risk transfer transactions. There can be no
guarantee that any such opportunities will be available on acceptable terms or
at all.

At the operating subsidiary level, liquidity could be impacted by any one of the
following factors:

•significant decline in the value of our investments;

•inability to sell investment assets to provide cash to fund operating needs;

•decline in expected revenues generated from operations;

•increase in expected claim payments related to our IIF; or

•increase in operating expenses.

Our U.S. insurance subsidiaries are subject to certain capital and dividend
rules and regulations prescribed by jurisdictions in which they are authorized
to operate and the GSEs. Under the insurance laws of the Commonwealth of
Pennsylvania, the insurance subsidiaries may pay dividends during any
twelve-month period in an amount equal to the greater of (i) 10% of the
preceding year-end statutory policyholders' surplus or (ii) the preceding year's
statutory net income. The Pennsylvania statute also requires that dividends and
other distributions be paid out of positive unassigned surplus without prior
approval. At December 31, 2022, Essent Guaranty, had unassigned surplus of
approximately $314.7 million and Essent Guaranty of PA, Inc. had unassigned
surplus of approximately $13.6 million. As of January 1, 2023, Essent Guaranty
has dividend capacity of $314.7 million and Essent PA has dividend capacity of
$5.3 million. Essent Re is subject to certain dividend restrictions as
prescribed by the Bermuda Monetary Authority and under certain agreements with
counterparties. In connection with a quota share reinsurance agreement with
Essent Guaranty, Essent Re has agreed to maintain a minimum total equity of $100
million. As of December 31, 2022, Essent Re had total equity of $1.5 billion. In
connection with its insurance and reinsurance activities, Essent Re is required
to maintain assets in trusts for the benefit of its contractual counterparties.
See Note 3 to our consolidated financial statements. At December 31, 2022, our
insurance subsidiaries were in compliance with these rules, regulations and
agreements.

Cash Flows

The following table summarizes our consolidated cash flows from operating,
investing and financing activities:

                                                                                  Year Ended December 31,
(In thousands)                                                         2022               2021                2020
Net cash provided by operating activities                          $ 588,817          $ 709,256          $    727,931
Net cash used in investing activities                               (398,872)          (583,167)           (1,154,417)
Net cash (used in) provided by financing activities                 (190,196)          (147,428)              457,966
Net (decrease) increase in cash                                    $    (251)         $ (21,339)         $     31,480



Operating Activities

Cash flow provided by operating activities totaled $588.8 million for the year
ended December 31, 2022, as compared to $709.3 million for the year ended
December 31, 2021 and $727.9 million for the year ended December 31, 2020. The
decrease in cash flow from operations of $120.4 million in 2022 compared to 2021
was primarily due to increases in other assets and accounts receivable, as well
as income tax payments. The decrease in cash flow from operations of $18.7
million in 2021 compared to 2020 was primarily due to an increase in income tax
payments and higher United States Mortgage Guaranty Tax and Loss Bonds ("T&L
Bonds") purchased during 2021 as well as higher premiums ceded under third-party
reinsurance agreements.

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Investing Activities

Cash flow used in investing activities totaled $398.9 million for the year ended
December 31, 2022 and primarily related to investing cash flows from the
business. Cash flow used in investing activities totaled $583.2 million for the
year ended December 31, 2021 and primarily related to investing cash flows from
the business and net increased borrowings under the Credit Facility. Cash flow
used in investing activities totaled $1.2 billion for the year ended
December 31, 2020 and primarily related to investing cash flows from the
business, net proceeds of approximately $440 million from the completion of a
public offering of common shares in June 2020 and net increased borrowings under
the Credit Facility.

Financing Activities

Cash flow used in financing activities totaled $190.2 million for the year ended
December 31, 2022 and primarily related to the repurchases of common shares as
part of our share repurchase plan, quarterly cash dividends paid in 2022 and
treasury stock acquired from employees to satisfy tax withholding obligations.
Cash flow provided by financing activities totaled $147.4 million for the year
ended December 31, 2021 and primarily related to the repurchases of common
shares as part of our share repurchase plan, quarterly cash dividends paid in
2021 and treasury stock acquired from employees to satisfy tax withholding
obligations, partially offset by net increased borrowings under the Credit
Facility. Cash flow used in financing activities totaled $458.0 million for the
year ended December 31, 2020 and primarily related to $440 million of net
proceeds from the completion of a public offering of common shares in June 2020
and net increased borrowings under the Credit Facility, partially offset by
quarterly cash dividends paid in 2020 and treasury stock acquired from employees
to satisfy tax withholding obligations.

Insurance Company Capital

We compute a risk-to-capital ratio for our U.S. insurance companies on a
separate company statutory basis, as well as for our combined insurance
operations. The risk-to-capital ratio is our net risk in force divided by our
statutory capital. Our net risk in force represents risk in force net of
reinsurance ceded, if any, and net of exposures on policies for which loss
reserves have been established. Statutory capital consists primarily of
statutory policyholders' surplus (which increases as a result of statutory net
income and decreases as a result of statutory net loss and dividends paid), plus
the statutory contingency reserve. The statutory contingency reserve is reported
as a liability on the statutory balance sheet. A mortgage insurance company is
required to make annual contributions to the contingency reserve of 50% of net
premiums earned. These contributions must generally be maintained for a period
of ten years. However, with regulatory approval, a mortgage insurance company
may make early withdrawals from the contingency reserve when incurred losses
exceed 35% of net premiums earned in a calendar year.

During the year ended December 31, 2022, no capital contributions were made to
our U.S. insurance subsidiaries and Essent Guaranty paid dividends to Essent US
Holdings, Inc. totaling $315.0 million. During the year ended December 31, 2022,
Essent Guaranty of PA paid a dividend to Essent US Holdings, Inc. totaling $5
million.

Essent Guaranty has entered into reinsurance agreements that provide excess of
loss reinsurance coverage for new defaults on portfolios of mortgage insurance
policies issued in 2015 through December 31, 2022. The aggregate excess of loss
reinsurance coverages decrease over a ten-year period as the underlying covered
mortgages amortize. Based on the level of delinquencies reported to us, the
insurance-linked note transactions (the "ILNs") that Essent Guaranty entered
into prior to March 31, 2020 became subject to a "trigger event" as of June 25,
2020. The aggregate excess of loss reinsurance coverage will not amortize during
the continuation of a trigger event. As of November 26, 2021, Radnor Re 2019-2
was no longer subject to a trigger event. Radnor Re 2020-1 was no longer subject
to a trigger event as of July 25, 2022.

Essent Guaranty has entered into quota share reinsurance agreements with panels
of third-party reinsurers ("QSR" agreements). Each of the third-party reinsurers
has an insurer minimum financial strength rating of A- or better by S&P Global
Ratings, A.M. Best or both. Under each QSR agreement, Essent Guaranty will cede
premiums earned on a percentage of risk on all eligible policies written during
a specified period, in exchange for reimbursement of ceded claims and claims
expenses on covered policies, a specified ceding commission, as well as a profit
commission that varies directly and inversely with ceded claims. These
reinsurance coverages also reduce net risk in force and PMIERs Minimum Required
Assets. See Note 5 to our consolidated financial statements.

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The following tables summarizes Essent Guaranty's QSR agreements as of
December 31, 2022:

    QSR Agreement                 Eligible Policy Period                Ceding Percentage            Ceding Commission               Profit Commission
      QSR-2019              September 1, 2019-December 31, 2020                (1)                          20%                       63%            (2)
      QSR-2022               January 1, 2022-December 31, 2022                 20%                          20%                       62%
      QSR-2023               January 1, 2023-December 31, 2023                17.5%                         20%                       58%

_______________________________________________________________________________
(1)Under QSR-2019, Essent Guaranty cedes 40% of premiums on singles policies and
20% on all other policies.
(2)The initial profit commission on QSR-2019 was up to 60%. Since Essent
Guaranty did not exercise its option to terminate this QSR agreement on December
31, 2021, the maximum profit commission that Essent Guaranty could earn
increased to 63% in 2022 and thereafter.

Our combined risk-to-capital calculation for our U.S. insurance subsidiaries as
of December 31, 2022 was as follows:

                                      Combined statutory capital:
                                      ($ in thousands)
                                      Policyholders' surplus              $  1,072,667
                                      Contingency reserves                   2,105,484
                                      Combined statutory capital          $  3,178,151
                                      Combined net risk in force          $ 32,265,701
                                      Combined risk-to-capital ratio              10.2:1



For additional information regarding regulatory capital see Note 16 to our
consolidated financial statements. Our combined statutory capital equals the sum
of statutory capital of Essent Guaranty plus Essent Guaranty of PA, Inc., after
eliminating the impact of intercompany transactions. The combined
risk-to-capital ratio equals the sum of the net risk in force of Essent Guaranty
and Essent Guaranty of PA, Inc. divided by combined statutory capital. The
information above has been derived from the annual and quarterly statements of
our insurance subsidiaries, which have been prepared in conformity with
accounting practices prescribed or permitted by the Pennsylvania Insurance
Department and the National Association of Insurance Commissioners Accounting
Practices and Procedures Manual. Such practices vary from accounting principles
generally accepted in the United States.

Essent Re has entered into GSE and other risk share transactions, including
insurance and reinsurance transactions with Freddie Mac and Fannie Mae. Under a
quota share reinsurance agreement, Essent Re reinsures 25% of Essent Guaranty's
NIW under through December 31, 2020 and 35% of Essent Guaranty's NIW after
December 31, 2020. During the years ended December 31, 2022 and 2021, Essent Re
paid no dividends to Essent Group and Essent Group made no capital contributions
to Essent Re. As of December 31, 2022, Essent Re had total stockholders' equity
of $1.5 billion and net risk in force of $19.5 billion.

Financial Strength Ratings

The insurer financial strength ratings of Essent Guaranty, our principal
mortgage insurance subsidiary, are A3 with a stable outlook by Moody's, BBB+
with a stable outlook by S&P and A (Excellent) with a stable outlook by A.M.
Best. The insurer financial strength ratings of Essent Re are BBB+ with a stable
outlook by S&P and A (Excellent) with a stable outlook by A.M. Best.

Private Mortgage Insurer Eligibility Requirements

Fannie Mae and Freddie Mac, maintain coordinated Private Mortgage Insurer
Eligibility Requirements, which we refer to as the "PMIERs." The PMIERs
represent the standards by which private mortgage insurers are eligible to
provide mortgage insurance on loans owned or guaranteed by Fannie Mae and
Freddie Mac. The PMIERs include financial strength requirements incorporating a
risk-based framework that require approved insurers to have a sufficient level
of liquid assets from which to pay claims. This risk-based framework provides
that an insurer must hold a substantially higher level of required assets for
insured loans that are in default compared to a performing loan. The PMIERs also
include enhanced operational performance expectations and define remedial
actions that apply should an approved insurer fail to comply with these
requirements. As of December 31, 2022, Essent Guaranty, our GSE-approved
mortgage insurance company, was in compliance with the PMIERs.
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As of December 31, 2022, Essent Guaranty's Available Assets were $3.19 billion
or 174% of its Minimum Required Assets were $1.83 billion based on our
interpretation of the PMIERs.

Under PMIERs guidance issued by the GSEs effective June 30, 2020, Essent will
apply a 0.30 multiplier to the risk-based required asset amount factor for each
insured loan in default backed by a property located in a Federal Emergency
Management Agency ("FEMA") Declared Major Disaster Area eligible for Individual
Assistance and that either 1) is subject to a forbearance plan granted in
response to a FEMA Declared Major Disaster, the terms of which are materially
consistent with terms of forbearance plans, repayment plans or loan modification
trial period offered by Fannie Mae or Freddie Mac, or 2) has an initial missed
payment occurring up to either (i) 30 days prior to the first day of the
incident period specified in the FEMA Major Disaster Declaration or (ii) 90 days
following the last day of the incident period specified in the FEMA Major
Disaster Declaration, not to exceed 180 days from the first day of the incident
period specified in the FEMA Major Disaster Declaration. In the case of the
foregoing, the 0.30 multiplier shall be applied to the risk-based required asset
amount factor for a non-performing primary mortgage guaranty insurance loan for
no longer than three calendar months beginning with the month the loan becomes a
non-performing primary mortgage guaranty insurance loan by reaching two missed
monthly payments absent a forbearance plan described in 1) above. Further, under
temporary provisions provided by the PMIERs guidance, Essent will apply a 0.30
multiplier to the risk-based required asset amount factor for each insured loan
in default backed by a property that has an initial missed payment occurring on
or after March 1, 2020 and prior to April 1, 2021 (COVID-19 Crisis Period). The
0.30 multiplier will be applicable for insured loans in default 1) subject to a
forbearance plan granted in response to a financial hardship related to COVID-19
(which shall be assumed to be the case for any loan that has an initial missed
payment occurring during the COVID-19 Crisis Period and is subject to a
forbearance plan, repayment plan or loan modification trial period), the terms
of which are materially consistent with terms offered by Fannie Mae or Freddie
Mac or 2) for no longer than three calendar months beginning with the month the
loan becomes a non-performing primary mortgage guaranty insurance loan by
reaching two missed monthly payments.

Financial Condition

Stockholders' Equity

As of December 31, 2022, stockholders' equity was $4.5 billion compared to $4.2
billion as of December 31, 2021. Stockholders' equity increased primarily due to
net income generated in 2022, partially offset by a decrease in accumulated
other comprehensive income related to an increase in our net unrealized
investment losses associated with increases in market interest rates during the
year ended December 31, 2022, the repurchase of common shares under our share
repurchase plan, and dividends paid.

Investments

As of December 31, 2022, investments totaled $5.0 billion compared to $5.1
billion as of December 31, 2021. In addition, our total cash was $81.2 million
as of December 31, 2022, compared to $81.5 million as of December 31, 2021. The
decrease in investments was primarily due to an increase in our net unrealized
investment losses primarily due to increases in market interest rates in the
during the year ended December 31, 2022, partially offset by investing net cash
flows from operations during the year ended December 31, 2022.

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                 Investments Available for Sale by Asset Class

Asset Class                                                December 31, 2022                                   December 31, 2021
($ in thousands)                                  Fair Value                 Percent                  Fair Value                 Percent
U.S. Treasury securities                     $         556,438                     11.7  %       $         448,793                      9.1  %
U.S. agency securities                                  49,058                      1.0                      5,504                      0.1
U.S. agency mortgage-backed securities                 783,743                     16.5                  1,008,863                     20.3
Municipal debt securities(1)                           602,690                     12.8                    627,599                     12.7
Non-U.S. government securities                          62,399                      1.3                     79,743                      1.6
Corporate debt securities(2)                         1,414,321                     29.8                  1,455,247                     29.3
Residential and commercial mortgage
securities                                             511,824                     10.8                    545,423                     11.0
Asset-backed securities                                624,561                     13.2                    581,703                     11.7
Money market funds                                     136,591                      2.9                    210,012                      4.2
Total Investments Available for Sale         $       4,741,625                    100.0  %       $       4,962,887                    100.0  %



_______________________________________________________________________________

                                                                                  December 31,                December 31,

(1) The following table summarizes municipal debt securities as of :

          2022                        2021
Special revenue bonds                                                                       79.0  %                     77.1  %
General obligation bonds                                                                    20.9                        20.5
Certificate of participation bonds                                                             -                         1.9
Tax allocation bonds                                                                         0.1                         0.5

Total                                                                                      100.0  %                    100.0  %


                                                                                   December 31,                December 31,

(2) The following table summarizes corporate debt securities as of :

           2022                        2021
Financial                                                                                    40.5  %                     33.7  %
Consumer, non-cyclical                                                                       17.9                        19.8
Consumer, cyclical                                                                            6.8                         7.0
Industrial                                                                                    6.8                         7.0
Utilities                                                                                     6.1                         4.6
Technology                                                                                    4.9                         6.8
Communications                                                                                8.4                        11.4
Energy                                                                                        6.4                         6.0
Basic Materials                                                                               2.1                         3.7
Government                                                                                    0.1                           -
Total                                                                                       100.0  %                    100.0  %



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                    Investments Available for Sale by Rating
Rating(1)                                                 December 31, 2022                                    December 31, 2021
($ in thousands)                                 Fair Value                  Percent                  Fair Value                 Percent
Aaa                                         $       2,226,951                      46.9  %       $       2,412,273                     48.6  %
Aa1                                                   111,342                       2.3                     96,331                      1.9
Aa2                                                   327,742                       6.9                    354,951                      7.2
Aa3                                                   234,994                       5.0                    221,914                      4.5
A1                                                    421,752                       8.9                    263,820                      5.3
A2                                                    411,670                       8.7                    427,282                      8.6
A3                                                    268,928                       5.7                    274,525                      5.5
Baa1                                                  236,793                       5.0                    305,204                      6.1
Baa2                                                  221,308                       4.7                    274,011                      5.5
Baa3                                                  187,117                       3.9                    240,755                      4.9
Below Baa3                                             93,028                       2.0                     91,821                      1.9

Total Investments Available for Sale        $       4,741,625                     100.0  %       $       4,962,887                    100.0  %

_______________________________________________________________________________

(1)Based on ratings issued by Moody's, if available. S&P or Fitch Ratings
("Fitch") rating utilized if Moody's not available.

              Investments Available for Sale by Effective Duration

Effective Duration                                        December 31, 2022                                    December 31, 2021
($ in thousands)                                 Fair Value                  Percent                  Fair Value                 Percent
< 1 Year                                    $       1,245,839                      26.3  %       $       1,104,397                     22.2  %
1 to < 2 Years                                        534,038                      11.3                    561,297                     11.3
2 to < 3 Years                                        511,701                      10.8                    539,174                     10.9
3 to < 4 Years                                        525,683                      11.1                    593,663                     12.0
4 to < 5 Years                                        400,540                       8.4                    663,127                     13.4
5 or more Years                                     1,523,824                      32.1                  1,501,229                     30.2
Total Investments Available for Sale        $       4,741,625                     100.0  %       $       4,962,887                    100.0  %



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                Top Ten Investments Available for Sale Holdings

                                                                                   December 31, 2022
Rank                                                                                            Amortized             Unrealized              Credit
($ in thousands)                               Security                      Fair Value            Cost             Gain (Loss)(1)          Rating(2)
1                                US Treasury 2.875% 06/15/2025              $  39,908          $  40,914          $        (1,006)             Aaa
2                                US Treasury 1.500% 08/15/2026                 31,025             34,413                   (3,388)             Aaa
                                 Federal Home Loan Banks 0.000%
3                                01/03/2023                                    27,080             27,077                        3               A2
4                                US Treasury 0.250% 05/31/2025                 23,249             25,585                   (2,336)             Aaa
5                                US Treasury 2.500% 01/31/2024                 19,911             20,389                     (478)             Aaa
6                                US Treasury 0.000% 02/23/2023                 19,879             19,970                      (91)             Aaa
7                                US Treasury 2.625% 06/30/2023                 19,562             19,737                     (175)             Aaa
8                                US Treasury 2.000% 04/30/2024                 19,369             19,470                     (101)             Aaa
9                                US Treasury 0.875% 06/30/2026                 17,584             19,640                   (2,056)             Aaa
10                               US Treasury 0.125% 10/15/2023                 17,003             17,617                     (614)             Aaa
Total                                                                      

$ 234,570 $ 244,812 $ (10,242)
Percent of Investments Available for Sale

4.9 %

_______________________________________________________________________________

(1)As of December 31, 2022, for securities in unrealized loss positions,
management believes decline in fair values are principally associated with the
changes in the interest rate environment subsequent to their purchase. Also, see
Note 3 to our consolidated financial statements, which summarizes the aggregate
amount of gross unrealized losses by asset class in which the fair value of
investments available for sale has been less than cost for less than 12 months
and for 12 months or more.

(2)Based on ratings issued by Moody's, if available. S&P or Fitch rating
utilized if Moody's not available.

           Rank                                  December 31, 2021
           ($ in thousands)                  Security                  Fair Value
           1                     Fannie Mae 2.000% 10/1/2051          $  34,743
           2                     U.S. Treasury 1.500% 8/15/2026          34,404
           3                     U.S. Treasury 0.000% 6/30/2022          28,548
           4                     U.S. Treasury 0.250% 5/31/2025          24,918
           5                     Fannie Mae 3.500% 1/1/2058              21,424
           6                     U.S. Treasury 2.625% 6/30/2023          20,348
           7                     U.S. Treasury 0.000% 12/29/2022         19,376
           8                     U.S. Treasury 0.875% 6/30/2026          19,349
           9                     U.S. Treasury 5.250% 11/15/2028         19,082
           10                    U.S. Treasury 0.125% 10/15/2023         17,449
           Total                                                      $ 239,641
           Percent of Investments Available for Sale                        4.8  %

The following tables includes municipal securities for states that represent
more than 10% of the total municipal bond position as of December 31, 2022:

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                                                                               Amortized                  Credit
($ in thousands)                                         Fair Value               Cost                Rating (1), (2)
California
Bay Area Toll Authority                                $      8,785          $    10,851          A1
State of California                                    $      8,737          $     8,989          Aa2
San Joaquin Hills Transportation Corridor Agency       $      5,947          $     7,725          A1
City of Anaheim CA                                     $      5,528          $     7,725          A1
Community Hospitals of Central California
Obligated Group                                        $      5,289          $     7,725          A1
Golden State Tobacco Securitization Corp               $      4,113          $     5,019          A3
San Francisco City & County Airport Comm-San
Francisco International Airport                        $      3,660          $     3,632          A1
City of Carson CA                                      $      3,243          $     4,402          Aa3
City of Long Beach CA Harbor Revenue                   $      3,160          $     3,132          Aa1
San Jose Unified School District                       $      3,075          $     4,090          Aaa
Redwoods/The a Community of Seniors                    $      2,849          $     3,740          Aa3
County of Kern CA                                      $      2,720          $     2,741          Baa2
City of Los Angeles Department of Airports             $      2,641          $     2,628          Aa3
Los Angeles Unified School District/CA                 $      2,601          $     3,040          Aa3
Chabot-Las Positas Community College District          $      2,526          $     2,649          Aa2
University of California                               $      2,460          $     2,512          Aa2
Port of Oakland                                        $      2,271          $     2,433          A1
City of Inglewood CA                                   $      2,243          $     3,128          Aa2
County of Riverside CA                                 $      2,081          $     2,250          Aa2
City of Monterey Park CA                               $      2,065          $     2,967          Aa2
State of California Personal Income Tax Revenue        $      1,943          $     2,045          Aa3
Foothill-Eastern Transportation Corridor Agency        $      1,608          $     2,350          A1
Kaiser Foundation Hospitals                            $      1,277          $     1,299          Aa3
Regents of the University of California Medical
Center Pooled Revenue                                  $      1,258          $     1,361          Aa3
Riverside County Transportation Commission             $      1,217          $     1,665          A2
City of Torrance CA                                    $      1,095          $     1,243          Aa2
City of San Francisco CA Public Utilities
Commission Water Revenue                               $      1,035          $     1,362          Aa2
City of El Cajon CA                                    $        924          $     1,283          Aa2
County of Sacramento CA                                $        886          $       886          A1
City of El Monte CA                                    $        816          $     1,000          Aa2
Alameda Corridor Transportation Authority              $        806          $       871          A3
Cathedral City Redevelopment Agency Successor
Agency                                                 $        725          $       718          Aa2
Pomona Redevelopment Agency Successor Agency           $        658          $       700          Aa2
California Independent System Operator Corp            $        493          $       725          A1
California County Tobacco Securitization Agency        $        409          $       475          A3
County of San Bernardino CA                            $        291          $       293          Aa1
Oxnard Union High School District                      $        205          $       250          Aa2
City of San Jose CA                                    $        166          $       205          Aa2
City of Riverside CA                                   $        149          $       155          Aa2
Compton Community College District                     $        119          $       116          Aa3
City of Los Angeles CA                                 $         89          $       111          Aa3
                                                       $     92,163          $   110,491

_______________________________________________________________________________

(1)Certain of the above securities may include financial guaranty insurance or
state enhancements. The above ratings include the effect of these credit
enhancements, if applicable.

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(2)Based on ratings issued by Moody's, if available. S&P or Fitch rating
utilized if Moody's not available.

                                                                               Amortized                  Credit
($ in thousands)                                        Fair Value               Cost                 Rating (1), (2)
New York
City of New York NY                                   $      8,957          $      8,972          Aa2
New York City Transitional Finance Authority
Future Tax Secured Revenue                            $      7,613          $      8,344          Aa1
Port Authority of New York & New Jersey               $      7,500          $      8,367          Aa3
State of New York Personal Income Tax Revenue         $      7,116          $      7,323          Aa1
Metropolitan Transportation Authority                 $      6,502          $      6,988          A3
Metropolitan Transportation Authority Payroll
Mobility Tax Revenue                                  $      6,166          $      7,211          Aa1
University of Rochester                               $      3,234          $      3,234          Aa3
New York City Water & Sewer System                    $      2,843          $      2,924          Aa1
Triborough Bridge & Tunnel Authority                  $      2,661          $      2,643          Aa3
Research Foundation of State University of New
York/The                                              $      2,139          $      2,470          A1
City of Yonkers NY                                    $      2,111          $      2,290          A3
Rochester Institute of Technology                     $      2,068          $      2,223          A1
Long Island Power Authority                           $      1,679          $      1,677          A2
New York State Dormitory Authority                    $      1,604          $      1,604          Aa3
New York City Transitional Finance Authority
Building Aid Revenue                                  $      1,485          $      1,497          Aa2
Trustees of Columbia University in the City of
New York/The                                          $      1,306          $      1,310          Aaa
State of New York Sales Tax Revenue                   $      1,166          $      1,489          Aa1
State University of New York Dormitory
Facilities Revenue                                    $        856          $      1,000          Aa3
Yankee Stadium LLC                                    $        671          $        793          A1
County of Nassau NY                                   $        274          $        274          A1
                                                      $     67,951          $     72,633

_______________________________________________________________________________

(1)Certain of the above securities may include financial guaranty insurance or
state enhancements. The above ratings include the effect of these credit
enhancements, if applicable.

(2)Based on ratings issued by Moody's, if available. S&P or Fitch rating
utilized if Moody's not available.

Material Cash Requirement from Known Contractual and Other Obligations

As of December 31, 2022, the approximate future cash requirements from known
contractual and other obligations of the type described in the table below are
as follows:
                                                                                         Payments due by period
                                                                         Less than                                                       More than
($ in thousands)                                        Total              1 year            1 - 3 years           3 - 5 years            5 years
Credit facility borrowings                           $ 425,000          $  

- $ - $ 425,000 $ -
Estimated loss and LAE payments (1)

                    216,464             57,198               115,508                43,758                   -
Operating lease obligations                             16,831              4,302                 4,667                 2,535               5,327
Unfunded investment commitments (2)                    117,400            117,400                     -                     -                   -
Total                                                $ 775,695          $ 178,900          $    120,175          $    471,293          $    5,327

_______________________________________________________________________________

(1)Our estimate of loss and LAE payments reflects the application of accounting
policies described below in "-Critical Accounting Policies-Reserve for Losses
and Loss Adjustment Expenses." The payments due by period are based on
management's estimates and assume that all of the loss and LAE reserves included
in the table will result in payments.
(2)Unfunded investment commitments are callable by our investment
counterparties. We have assumed that these investments will be funded in the
next year but the funding may occur over a longer period of time, due to market
conditions and other factors.
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We lease office space in Pennsylvania, North Carolina, New York, Virginia and
Bermuda under leases accounted for as operating leases. A portion of the space
leased in North Carolina has been subleased to Triad; minimum lease payments
shown above have not been reduced by minimum sublease rental income of $0.1
million due in 2023 under the non-cancelable sublease.

In February 2023 we announced that Essent US Holdings, Inc. entered into an
agreement to acquire the title insurance operations of a subsidiary of Finance
of America Companies for $100 million. The closing of this transaction is
expected to occur in the third quarter of 2023 and is subject to regulatory
approvals.

Off-Balance Sheet Arrangements

Essent Guaranty has entered into fully collateralized reinsurance agreements
("Radnor Re Transactions") with unaffiliated special purpose insurers domiciled
in Bermuda. The Radnor Re special purpose insurers are special purpose variable
interest entities that are not consolidated in our consolidated financial
statements because we do not have the unilateral power to direct those
activities that are significant to their economic performance. As of
December 31, 2022, our estimated off-balance sheet maximum exposure to loss from
the Radnor Re entities was $0.5 million, representing the estimated net present
value of investment earnings on the assets in the reinsurance trusts. See Note 5
to our consolidated financial statements for additional information.

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operation
are based upon our consolidated financial statements, which have been prepared
in conformity with U.S. generally accepted accounting principles ("GAAP"). In
preparing our consolidated financial statements, management has made estimates,
assumptions and judgments that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting periods. In preparing these financial
statements, management has utilized available information, including our past
history, industry standards and the current and projected economic and housing
environment, among other factors, in forming its estimates, assumptions and
judgments, giving due consideration to materiality. Because the use of estimates
is inherent in GAAP, actual results could differ from those estimates. In
addition, other companies may utilize different estimates, which may impact
comparability of our results of operations to those of companies in similar
businesses. A summary of the accounting policies that management believes are
critical to the preparation of our consolidated financial statements is set
forth below.

Insurance Premium Revenue Recognition

Mortgage guaranty insurance policies are contracts that are generally
non-cancelable by the insurer, are renewable at a fixed price, and provide for
payment of premium on a monthly, annual or single basis. Upon renewal, we are
not able to re-underwrite or re-price our policies. Consistent with industry
accounting practices, premiums written on a monthly basis are earned as coverage
is provided. Premiums written on an annual basis are amortized on a pro rata
basis over the year of coverage. Primary mortgage insurance written on policies
covering more than one year are referred to as single premium policies. A
portion of the revenue from single premium policies is recognized in earned
premium in the current period, and the remaining portion is deferred as unearned
premium and earned over the expected life of the policy. If single premium
policies related to insured loans are cancelled due to repayment by the
borrower, and the premium is non-refundable, then the remaining unearned premium
related to each cancelled policy is recognized as earned premium upon
notification of the cancellation. Unearned premium represents the portion of
premium written that is applicable to the estimated unexpired risk of insured
loans. Rates used to determine the earning of single premium policies are
estimates based on an analysis of the expiration of risk.

Reserve for Losses and Loss Adjustment Expenses

We establish reserves for losses based on our best estimate of ultimate claim
costs for defaulted loans using the general principles contained in ASC No. 944,
in accordance with industry practice. However, consistent with industry
standards for mortgage insurers, we do not establish loss reserves for future
claims on insured loans which are not currently in default. Loans are classified
as defaulted when the borrower has missed two consecutive payments. Once we are
notified that a borrower has defaulted, we will consider internal and
third-party information and models, including the status of the loan as reported
by its servicer and the type of loan product to determine the likelihood that a
default will reach claim status. In addition, we will project the amount that we
will pay if a default becomes a claim (referred to as "claim severity"). Based
on this information, at each reporting date we determine our best estimate of
loss reserves at a given point in time. Included in loss reserves are reserves
for incurred but not reported ("IBNR") claims. IBNR reserves represent our
estimated unpaid losses on loans that are
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in default, but have not yet been reported to us as delinquent by our customers.
We will also establish reserves for associated loss adjustment expenses,
consisting of the estimated cost of the claims administration process, including
legal and other fees and expenses associated with administering the claims
process. Establishing reserves is inherently subjective as it requires estimates
that are susceptible to significant revision as more information becomes
available. Our estimates of claim rates and claim sizes will be strongly
influenced by prevailing economic conditions, such as the overall state of the
economy, current rates or trends in unemployment, changes in housing values
and/or interest rates, and our best judgments as to the future values or trends
of these macroeconomic factors. Losses incurred are also generally affected by
the characteristics of our insured loans, such as the loan amount, loan-to-value
ratio, the percentage of coverage on the insured loan and the credit quality of
the borrower. See "-Results of Operations-Provision for Losses and Loss
Adjustment Expenses" for a discussion of this estimate and Note 6 to our
consolidated financial statements a sensitivity of the key assumption for this
estimate.

Income Taxes

Deferred income tax assets and liabilities are determined using the asset and
liability (or balance sheet) method. Under this method, we determine the net
deferred tax asset or liability based on the tax effects of the temporary
differences between the book and tax bases of the various assets and liabilities
and give current recognition to changes in tax rates and laws. Changes in tax
laws, rates, regulations and policies, or the final determination of tax audits
or examinations, could materially affect our tax estimates. We evaluate the
realizability of the deferred tax asset and recognize a valuation allowance if,
based on the weight of all available positive and negative evidence, it is more
likely than not that some portion or all of the deferred tax asset will not be
realized. When evaluating the realizability of the deferred tax asset, we
consider estimates of expected future taxable income, existing and projected
book/tax differences, carryback and carryforward periods, tax planning
strategies available, and the general and industry specific economic outlook.
This realizability analysis is inherently subjective, as it requires management
to forecast changes in the mortgage market, as well as the related impact on
mortgage insurance, and the competitive and general economic environment in
future periods. Changes in the estimate of deferred tax asset realizability, if
applicable, are included in income tax expense on the consolidated statements of
comprehensive income.

ASC No. 740 provides a recognition threshold and measurement attribute for the
financial statement recognition and measurement of a tax position taken or
expected to be taken in a tax return. In accordance with ASC No. 740, before a
tax benefit can be recognized, a tax position is evaluated using a threshold
that it is more likely than not that the tax position will be sustained upon
examination. When evaluating the more-likely-than-not recognition threshold, ASC
No. 740 provides that a company should presume the tax position will be examined
by the appropriate taxing authority that has full knowledge of all relevant
information. If the tax position meets the more-likely-than-not recognition
threshold, it is initially and subsequently measured as the largest amount of
benefit that is greater than 50% likely of being realized upon ultimate
settlement. This analysis is inherently subjective, as it requires management to
forecast the outcome of future tax examinations and the amount of tax benefits
that will ultimately be realized given the facts, circumstances, and information
available at the reporting date. New information may become available in future
periods that could cause the actual amount of tax benefits to vary from
management's estimates.

Investments

Our fixed maturity and short-term investments are classified as available for
sale and are reported at fair value. The related unrealized gains or losses are,
after considering the related tax expense or benefit, recognized as a component
of accumulated other comprehensive income (loss) in stockholders' equity.
Realized investment gains and losses are reported in income based upon specific
identification of securities sold. Each quarter we perform reviews of all of our
investments in order to determine whether declines in fair value below amortized
cost were considered other-than-temporary in accordance with applicable
guidance. In evaluating whether a decline in fair value is other-than-temporary,
we consider several factors including, but not limited to:

•our intent to sell the security or whether it is more likely than not that we
will be required to sell the security before recovery;

•failure of the issuer to make scheduled interest or principal payments;

•credit ratings from third-party rating agencies and changes in these credit
ratings below investment-grade;

•current credit spreads, downgrade trends, industry and asset sector trends, and
issuer disclosures and financial reports to determine if credit ratings from
third-party credit agencies are reasonable; and

•adverse conditions specifically related to the security, an industry, or a
geographic area.

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An investment security is impaired if the fair value of the security is less
than its amortized cost basis. Under the current guidance we determine whether
the impairment has resulted from a credit loss or other factors. We determine
whether a credit loss exists by considering information about the collectability
of the instrument, current market conditions, and reasonable and supportable
forecasts of economic conditions. We recognize an allowance for credit losses,
up to the amount of the impairment when appropriate, and write down the
amortized cost basis of the investment if it is more likely than not we will be
required or we intend to sell the investment before recovery of its amortized
cost basis. Under the previous other-than-temporary impairment model for
available-for-sale investment securities, a security impairment was deemed
other-than-temporary if we either intend to sell the security, or it was more
likely than not that we would be required to sell the security before recovery
or we did not expect to collect cash flows sufficient to recover the amortized
cost basis of the security. During the years ended December 31, 2022, 2021 and
2020, the unrealized losses recorded in the investment portfolio principally
resulted from fluctuations in market interest rates and credit spreads. Each
issuer was current on its scheduled interest and principal payments. We recorded
impairments of $12.7 million in the year ended December 31, 2022. We recorded
other-than-temporary impairments of $0.4 million in the year ended December 31,
2020. The impairments resulted from our intent to sell these securities
subsequent to the reporting date. There were no impairments in the year ended
December 31, 2021.

For information on our material holdings in an unrealized loss position, see
"-Financial Condition-Investments."

Recently Issued Accounting Pronouncements

There are no recently issued accounting standards that are expected to have a
material effect on our financial condition, results of operations or cash flows.
See Note 2 of our consolidated financial statements.