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Introduction & Market Context
Enact Holdings Inc (NYSE:NASDAQ:ACT), a leading private mortgage insurance provider, presented its fourth quarter and full-year 2024 financial results on February 5, 2025, highlighting record-setting annual performance despite navigating a challenging housing market environment. The company’s presentation emphasized its strong capital position, consistent shareholder returns, and high-quality credit portfolio as key differentiators in the current market.
The mortgage insurance sector continues to operate in a complex environment characterized by tight housing supply and elevated mortgage rates, though Enact noted the market benefits from a healthy labor market and strong demand from first-time homebuyers. The company’s strategic focus on risk management and capital efficiency has positioned it well to navigate these conditions.
Full-Year 2024 Performance Highlights
Enact achieved record financial results for the full year 2024, with adjusted operating income reaching $718 million, up from $676 million in 2023. Net income rose to $688 million from $666 million the previous year, while diluted earnings per share increased to $4.37 from $4.11. Adjusted diluted EPS showed even stronger growth, reaching $4.56 compared to $4.18 in 2023.
As shown in the following comprehensive financial results table:
The company’s return on equity was 14.3% for 2024, slightly down from 15.2% in 2023, while adjusted operating return on equity was 14.9% compared to 15.5% the previous year. Book value per share showed strong growth, increasing to $32.80 from $29.07, representing a 12.8% increase year-over-year.
A notable achievement was Enact’s capital return to shareholders, which totaled $354 million in 2024, up from $300 million in 2023, demonstrating the company’s commitment to delivering shareholder value.
Q4 2024 Financial Results
For the fourth quarter of 2024, Enact reported solid results across key metrics. Insurance in-force reached a new record of $269 billion, driven by new insurance written of $13.3 billion and a persistency rate of 82%. The company reported net income of $163 million and adjusted operating income of $169 million for the quarter.
The following table details the company’s fourth quarter financial performance:
Quarter-over-quarter comparisons show some moderation in performance metrics, with net income down 10% and adjusted operating income down 7% compared to the third quarter. The expense ratio increased slightly to 24%, up 2 percentage points from the previous quarter.
Enact also highlighted several key achievements for the quarter, including a reserve release of $56 million driven by favorable cure performance and a Fitch Ratings upgrade to ’A’ from ’A-’ in January 2025.
Capital Position and Shareholder Returns
Enact maintained a strong capital position throughout 2024, ending the year with robust metrics that support its business strategy and shareholder returns. The company’s PMIERs sufficiency ratio stood at 167%, representing $2.1 billion of excess capital above regulatory requirements.
In the fourth quarter alone, Enact returned $102 million to shareholders, consisting of $28 million in dividends and $74 million in share repurchases. This continued the trend of increasing capital returns throughout the year, as illustrated in the following chart:
The company’s book value per share has shown consistent growth since its IPO, increasing by 56% when including cumulative dividends. This growth trajectory is clearly demonstrated in the following chart:
Risk Management and Credit Performance
Enact emphasized its strong risk management practices and high-quality credit portfolio. The company’s insurance portfolio shows strong credit characteristics, with 88% of policies having at least 10% equity and 65% having more than 20% equity. Among delinquent policies, 93% have at least 10% equity, which helps mitigate potential loss severity.
The delinquency rate increased slightly to 2.4% in Q4, up 0.2 percentage points from the previous quarter, while the new delinquency rate was 1.5%, up 0.1 percentage points. The loss ratio increased to 10% from 5% in the previous quarter, reflecting normal seasonal patterns.
Enact’s investment portfolio remains highly rated and diversified, totaling $5.6 billion plus $0.6 billion in cash equivalents. The portfolio has a book yield of 4.0%, up 10 basis points from the previous quarter.
Outlook and Strategic Positioning
Looking ahead, Enact appears well-positioned to navigate the current market environment. The company’s strong capital base, high-quality credit portfolio, and disciplined risk management approach provide a solid foundation for continued performance. Management emphasized the company’s ability to adapt to market changes and highlighted its enhanced credit protections and elevated persistency as positive factors.
The company’s strategic focus remains on driving profitable growth, maximizing value and efficiency, maintaining strong capital levels, and fostering an exceptional employee experience. Enact also highlighted its ESG initiatives, including helping 1.3 million households achieve homeownership over the past five years and maintaining strong diversity metrics, with 54% of its workforce identifying as women.
While the housing market remains challenging due to tight supply and elevated mortgage rates, Enact’s conservative underwriting approach and strong capital position should help it weather potential economic uncertainties. The company’s consistent capital return strategy also provides a clear path for delivering shareholder value in the coming quarters.
Based on the recent earnings article for Q1 2025, Enact has continued its solid performance into the new year, with adjusted operating income of $169 million in Q1 2025, a 2% increase year-over-year. This suggests the company’s strategic initiatives and market positioning continue to yield positive results despite ongoing market challenges.
Full presentation:
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