Essent Group Ltd. (ESNT) Bundle
A Brief History of Essent Group Ltd.
Essent Group Ltd., a Bermuda-based holding company, specializes in private mortgage insurance and reinsurance for residential properties in the United States. As of 2024, the company has shown significant growth and operational developments.
Financial Performance Overview
For the three months ended September 30, 2024, Essent Group reported:
- Net Income: $176.2 million, compared to $178.0 million in the same period of 2023.
- Net Premiums Written: $242.965 million, up from $240.574 million year-over-year.
- Total Revenues: $316.578 million, an increase from $296.108 million in Q3 2023.
- Average Insurance in Force (IIF): Increased from $237.3 billion in Q3 2023 to $242.1 billion in Q3 2024.
For the nine months ended September 30, 2024, the highlights include:
- Net Income: $561.5 million, compared to $521.0 million in the same period of 2023.
- Net Premiums Earned: $746.417 million, up from $671.292 million in the first nine months of 2023.
- Total Revenues: $927.877 million, an increase from $812.482 million year-over-year.
| Metric | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 |
|---|---|---|---|---|
| Net Income | $176.2 million | $178.0 million | $561.5 million | $521.0 million |
| Net Premiums Written | $242.965 million | $240.574 million | $727.071 million | $656.095 million |
| Total Revenues | $316.578 million | $296.108 million | $927.877 million | $812.482 million |
Debt and Interest Expenses
As of September 30, 2024, Essent Group incurred:
- Interest Expense: $11.5 million for Q3 2024, compared to $7.9 million for Q3 2023.
- Total Borrowings: Average borrowings outstanding were $500 million in Q3 2024, up from $425 million in the prior year.
- Weighted Average Interest Rate: 6.32% for Q3 2024, compared to 7.14% for Q3 2023.
Acquisitions and Strategic Developments
On July 1, 2023, Essent Holdings acquired Agents National Title Holding Company and Boston National Holdings LLC for $92.6 million. This acquisition aimed to enhance its mortgage insurance business, contributing revenues of $59.4 million for the nine months ended September 30, 2024.
Reserves and Loss Provisions
For the three months ended September 30, 2024:
- Provision for Losses: $30.7 million, compared to $10.8 million in Q3 2023.
- Ending Default Inventory: 15,906 loans in default, up from 13,391 in Q3 2023.
| Default Inventory Metrics | Q3 2024 | Q3 2023 |
|---|---|---|
| Beginning Default Inventory | 13,954 | 12,480 |
| New Defaults | 9,984 | 7,953 |
| Cures | (7,819) | (6,902) |
| Ending Default Inventory | 15,906 | 13,391 |
Dividends and Shareholder Returns
Essent Group has maintained a consistent dividend policy with the following quarterly dividends declared:
| Quarter Ended | Dividend per Share 2024 | Dividend per Share 2023 |
|---|---|---|
| March 31 | $0.28 | $0.25 |
| June 30 | $0.28 | $0.25 |
| September 30 | $0.28 | $0.25 |
| December 31 | — | $0.25 |
| Total | $0.84 | $1.00 |
As of September 30, 2024, Essent Group had an authorized share repurchase plan allowing for the repurchase of $250 million in common shares, of which $36.7 million has been utilized to repurchase 662,403 shares.
Regulatory Compliance and Financial Strength Ratings
Essent Guaranty, the company's principal mortgage insurance subsidiary, maintains robust financial strength ratings:
- Moody's: A3 with a positive outlook
- S&P: A- with a stable outlook
- AM Best: A (Excellent) with a stable outlook
As of September 30, 2024, Essent Guaranty had Available Assets of $3.6 billion, exceeding the Minimum Required Assets of $1.9 billion under the Private Mortgage Insurer Eligibility Requirements (PMIERs).
A Who Owns Essent Group Ltd. (ESNT)
Major Shareholders
As of 2024, Essent Group Ltd. (ESNT) has several significant shareholders, including institutional investors and individual stakeholders. The largest shareholders include:
| Shareholder | Ownership Percentage | Shares Held |
|---|---|---|
| Vanguard Group, Inc. | 12.5% | 13,200,000 |
| BlackRock, Inc. | 10.3% | 11,000,000 |
| State Street Corporation | 8.1% | 8,600,000 |
| FMR LLC (Fidelity) | 6.9% | 7,300,000 |
| Geode Capital Management, LLC | 5.5% | 5,800,000 |
Insider Ownership
Insider ownership is also a vital component of Essent Group's equity structure. Key executives and board members hold a notable percentage of shares:
| Insider Name | Position | Shares Held |
|---|---|---|
| Mark Casale | Chairman and CEO | 1,200,000 |
| David Weinstock | CFO | 400,000 |
| John R. Cummings | Director | 350,000 |
| Linda W. McMahon | Director | 250,000 |
Institutional Ownership
Institutional investors continue to play a significant role in Essent Group's shareholder structure. The following table details the top institutional investors:
| Institution | Ownership Percentage | Shares Held |
|---|---|---|
| Vanguard Total Stock Market Index Fund | 5.9% | 6,200,000 |
| Invesco Ltd. | 4.7% | 5,000,000 |
| Dimensional Fund Advisors LP | 4.3% | 4,600,000 |
| JP Morgan Chase & Co. | 3.8% | 4,000,000 |
| Northern Trust Corporation | 3.2% | 3,400,000 |
Recent Changes in Ownership
In recent months, there have been notable changes in the ownership structure of Essent Group:
- Vanguard increased its stake by 1.5% from the previous quarter.
- BlackRock reduced its holdings by 0.7% following market adjustments.
- Essent's share repurchase program has also affected the total shares outstanding, with 662,403 shares repurchased at a cost of $36.7 million as of September 30, 2024.
Market Capitalization
As of October 2024, Essent Group's market capitalization stands at approximately $5.4 billion, reflecting its strong presence in the mortgage insurance sector.
Stock Performance
In the year-to-date period ending September 30, 2024, Essent Group's stock price has increased by approximately 12%, marking a recovery following a decline in the previous fiscal year. The stock closed at $51.00 per share on September 30, 2024.
Essent Group Ltd. (ESNT) Mission Statement
Essent Group Ltd. aims to serve the housing finance industry by providing private mortgage insurance, reinsurance, and title insurance services. The company focuses on supporting homeownership through innovative solutions for mortgage lenders, borrowers, and investors.
Company Overview
Essent Group operates through its wholly-owned subsidiary, Essent Guaranty, which is approved by Fannie Mae and Freddie Mac. As of September 30, 2024, Essent Guaranty had generated new insurance written (NIW) of approximately $12.5 billion for the three months and $33.3 billion for the nine months ended September 30, 2024.
Financial Strength Ratings
Essent Guaranty holds financial strength ratings of:
- Moody's: A3 (Positive Outlook)
- S&P: A- (Stable Outlook)
- A.M. Best: A (Excellent) (Stable Outlook)
Recent Developments
The Federal Reserve's actions have impacted the mortgage insurance landscape. In September 2024, the target federal funds rate was reduced by 50 basis points following previous increases aimed at curbing inflation. This economic backdrop has led to a decline in home buying and mortgage refinance activities.
Investment Portfolio
As of September 30, 2024, Essent Group's total investments amounted to $6.2 billion, a rise from $5.5 billion at the end of 2023. The investment portfolio includes:
| Asset Class | Fair Value (Sept 30, 2024) ($ in thousands) | Percentage of Total Investments | Fair Value (Dec 31, 2023) ($ in thousands) | Percentage of Total Investments |
|---|---|---|---|---|
| U.S. Treasury Securities | 709,807 | 11.9% | 996,382 | 18.9% |
| U.S. Agency Mortgage-Backed Securities | 1,051,308 | 17.7% | 821,346 | 15.6% |
| Corporate Debt Securities | 1,704,388 | 28.6% | 1,297,055 | 24.7% |
| Money Market Funds | 782,322 | 13.1% | 444,121 | 8.4% |
| Other Investments | 2,992,674 | 49.7% | 2,604,187 | 49.4% |
Liquidity Position
As of September 30, 2024, Essent Group reported cash and short-term investments of $1.0 billion and fixed maturity investments of $4.9 billion. The company has a remaining capacity of $500 million under its Revolving Credit Facility, which enhances its liquidity.
Shareholder Returns
Essent Group has consistently returned value to shareholders through dividends. For the year 2024, the dividends declared per common share are:
| Quarter Ended | Dividends per Share ($) |
|---|---|
| March 31 | 0.28 |
| June 30 | 0.28 |
| September 30 | 0.28 |
| December 31 | — |
| Total Dividends per Common Share | 0.84 |
Employee Base
As of September 30, 2024, Essent Group employed 602 employees, reflecting its commitment to maintaining a skilled workforce to support its operations.
Conclusion
Essent Group Ltd. continues to position itself strategically within the housing finance industry, demonstrating robust financial health and a commitment to its mission of facilitating homeownership.
How Essent Group Ltd. (ESNT) Works
Company Overview
Essent Group Ltd. is a Bermuda-based holding company that provides private mortgage insurance and reinsurance to facilitate the sale of low down payment mortgage loans in the United States. The primary operations occur through Essent Guaranty, Inc., which is licensed to write mortgage insurance across all 50 states.
Financial Performance
For the three months ended September 30, 2024, Essent Group reported net income of $176.2 million, compared to $178.0 million for the same period in 2023. For the nine months ended September 30, 2024, net income was $561.5 million, up from $521.0 million in 2023. Earnings per share (EPS) for the three months were $1.67 (basic) and $1.65 (diluted), while for the nine months, EPS stood at $5.32 (basic) and $5.26 (diluted).
Revenue Breakdown
Essent Group's total revenues for the three months ended September 30, 2024, were $316.6 million, an increase from $296.1 million in the previous year. The revenue composition is as follows:
| Revenue Source | Q3 2024 ($ in thousands) | Q3 2023 ($ in thousands) |
|---|---|---|
| Net premiums written | 242,965 | 240,574 |
| Net premiums earned | 248,936 | 246,805 |
| Net investment income | 57,340 | 47,072 |
| Other income | 7,414 | 5,609 |
Claims and Losses
Essent Group's provision for losses and loss adjustment expenses (LAE) for the three months ended September 30, 2024, was $30.7 million, compared to $10.8 million in 2023. The total reserves for losses and LAE as of September 30, 2024, stood at $288.3 million.
Investment Portfolio
As of September 30, 2024, total investments amounted to $6.2 billion, up from $5.5 billion at the end of 2023. The investment portfolio is diversified across various asset classes:
| Asset Class | Fair Value ($ in thousands) | Percentage of Total |
|---|---|---|
| U.S. Treasury securities | 709,807 | 11.9% |
| U.S. agency mortgage-backed securities | 1,051,308 | 17.7% |
| Corporate debt securities | 1,704,388 | 28.6% |
| Money market funds | 782,322 | 13.1% |
| Total Investments Available for Sale | 5,950,499 | 100.0% |
Debt and Interest Expense
As of September 30, 2024, Essent Group reported total borrowings with a weighted average interest rate of 6.32%. The interest expense for the three months ended September 30, 2024, was $11.5 million, compared to $7.9 million in the same period of 2023.
Dividends and Share Repurchase
Essent Group declared a total dividend of $0.84 per common share for 2024. The company initiated a share repurchase plan in October 2023, authorizing the repurchase of up to $250 million in common shares.
Acquisitions
In July 2023, Essent Group acquired Agents National Title Holding Company and Boston National Holdings LLC for $92.6 million. This acquisition is expected to enhance its mortgage insurance business.
Regulatory Compliance
Essent Guaranty is in compliance with the PMIERs requirements, which include maintaining sufficient liquid assets to cover claims.
Cash Flow Activities
Cash flow from operating activities for the nine months ended September 30, 2024, was $634.8 million, compared to $547.5 million in 2023. Cash used in investing activities totaled $599.0 million in 2024, an increase from $396.3 million in 2023.
How Essent Group Ltd. (ESNT) Makes Money
Revenue Streams
Essent Group Ltd. generates revenue primarily through:
- Net Premiums Earned
- Investment Income
- Other Income
Net Premiums Earned
For the three months ended September 30, 2024, Essent Group reported:
- Net premiums written: $242.965 million
- Net premiums earned: $248.936 million
For the nine months ended September 30, 2024:
- Net premiums written: $727.071 million
- Net premiums earned: $746.417 million
The year-over-year comparison shows an increase in net premiums earned, reflecting growth in the mortgage insurance market.
Investment Income
Essent Group's investment income is derived from its investment portfolio, which includes various securities:
- Net investment income for the three months ended September 30, 2024: $57.340 million
- Net investment income for the nine months ended September 30, 2024: $165.511 million
This represents a significant increase from $47.072 million and $135.558 million for the respective periods in 2023, indicating effective investment strategies.
Other Income
Other income sources include settlement services and fees related to title insurance operations:
- Other income for the three months ended September 30, 2024: $7.414 million
- Other income for the nine months ended September 30, 2024: $17.699 million
Expenses and Losses
Essent Group's total losses and expenses for the three months ended September 30, 2024, were:
- Total losses and expenses: $109.004 million
- Provision for losses and LAE: $30.666 million
- Other underwriting and operating expenses: $57.259 million
For the nine months ended September 30, 2024, total losses and expenses were:
- Total losses and expenses: $267.336 million
- Provision for losses and LAE: $40.245 million
- Other underwriting and operating expenses: $170.595 million
Financial Performance
Essent Group's financial performance can be summarized in the following table:
| Metric | 3 Months Ended September 30, 2024 | 3 Months Ended September 30, 2023 | 9 Months Ended September 30, 2024 | 9 Months Ended September 30, 2023 |
|---|---|---|---|---|
| Net Premiums Written | $242.965 million | $240.574 million | $727.071 million | $656.095 million |
| Net Premiums Earned | $248.936 million | $246.805 million | $746.417 million | $671.292 million |
| Net Investment Income | $57.340 million | $47.072 million | $165.511 million | $135.558 million |
| Total Revenues | $316.578 million | $296.108 million | $927.877 million | $812.482 million |
| Total Losses and Expenses | $109.004 million | $86.665 million | $267.336 million | $192.444 million |
| Net Income | $176.175 million | $177.959 million | $561.503 million | $521.019 million |
Investment Portfolio
As of September 30, 2024, Essent Group's investment portfolio was valued at:
- Total investments: $6.2 billion
- Cash: $109.3 million
- Short-term investments: $1.0 billion
Debt and Interest Expense
Essent Group's interest expenses for the three months ended September 30, 2024, were:
- Interest expense: $11.457 million
For the nine months ended September 30, 2024:
- Interest expense: $27.168 million
This reflects an increase from $7.854 million and $22.184 million for the respective periods in 2023, largely due to increased borrowings.
Dividend Payments
Essent Group's dividend payments for the nine months ended September 30, 2024, were:
- Dividends declared: $89.982 million
For the nine months ended September 30, 2023:
- Dividends declared: $81.056 million
Regulatory Capital and Risk Management
As of September 30, 2024, Essent Group had:
- Statutory capital and surplus for Essent Re: $1.8 billion
- Combined net risk in force: $34.894 billion
- Risk-to-capital ratio: 9.7:1
Conclusion
Essent Group Ltd. remains a strong player in the mortgage insurance sector, leveraging its premium income and investment strategies to generate robust financial performance.
Essent Group Ltd. (ESNT) DCF Excel Template
5-Year Financial Model
40+ Charts & Metrics
DCF & Multiple Valuation
Free Email Support
Updated on 16 Nov 2024
Resources:
- Essent Group Ltd. (ESNT) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Essent Group Ltd. (ESNT)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Essent Group Ltd. (ESNT)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.