Enact (ACT) Q3 2024 earnings summary

Executive summary

• Achieved Q3 2024 adjusted operating income of $182M ($1.16 per share), GAAP net income of $181M ($1.15 per share), and robust ROE of 14.7%-15%, with insurance in-force at a record $268B and persistency at 83%.

• Returned $100M to shareholders in Q3 via $29M in dividends and $71M in share buybacks, totaling $283M YTD, with capital return for 2024 expected at the upper end of $300M-$350M guidance.

• Credit quality remains strong with a risk-weighted average FICO of 745, LTV of 93%, and 70% of loans having mortgage rates below 6%.

• Helped approximately 37,600 households achieve homeownership and 3,300 retain homes in Q3.

• Released $65M in reserves due to favorable credit performance and proactive loss mitigation; expenses before restructuring costs are on track to be flat or down versus 2023.

Financial highlights

• Net premiums earned were $249M, up 2% sequentially and year over year; net investment income was $61M, up 11% year over year.

• Losses in Q3 were $12M with a loss ratio of 5%, down from $18M and 7% year over year, driven by strong cure rates and a $65M reserve release.

• Operating expenses were $56M with an expense ratio of 22%; full-year expenses expected within $220M-$225M guidance.

• Book value per share excluding AOCI was $37.90, a 52% increase since IPO.

• Net investment losses of $1.2M in Q3 2024, primarily from fixed maturity security sales.

Outlook and guidance

• Full-year 2024 expenses (excluding one-time charges) expected to be flat to down versus 2023, with capital return at the upper end of $300M-$350M guidance.

• Persistency expected to remain elevated, offsetting lower production in a high-rate environment.

• Management expects to maintain capital sufficiency well above updated PMIERS requirements.