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