Enact Q2 2025 slides showcase robust earnings and $400M capital return target

Introduction & Market Context

Enact Holdings Inc. (NYSE:ACT) presented its second quarter 2025 financial results on July 30, 2025, highlighting solid performance despite ongoing challenges in the housing market. The mortgage insurer reported adjusted operating income of $174 million, up 3% quarter-over-quarter, while navigating a complex environment characterized by high mortgage rates and limited housing supply.

The company’s stock closed at $35.72 on the day of the announcement, up 1.74%, though it experienced a slight 0.5% dip in aftermarket trading to $35.54, suggesting a generally positive but measured market reaction to the results.

As shown in the following key takeaways from the presentation, Enact maintained strong fundamentals while increasing its capital return target:

Quarterly Performance Highlights

Enact reported robust financial results for Q2 2025, with net income of $168 million (up 1% quarter-over-quarter) and adjusted operating income of $174 million (up 3% quarter-over-quarter). Diluted adjusted operating income per share reached $1.15, representing a 5% sequential increase, while maintaining a strong adjusted operating return on equity of 13.4%.

The company’s insurance in-force grew to $270 billion, supported by $13.3 billion in new insurance written (up 35% quarter-over-quarter) and a persistency rate of 82%. Net premiums earned remained stable at $245 million, while net investment income increased to $66 million, up 5% from the previous quarter.

The comprehensive financial data presented in the following slide illustrates Enact’s consistent performance across key metrics:

Enact has demonstrated a strong track record of book value growth, with book value per share excluding accumulated other comprehensive income reaching $41.11 in Q2 2025. This represents a 65% increase since the company’s IPO, highlighting management’s focus on long-term value creation for shareholders.

As shown in the following chart, this growth has been consistent over time, reflecting the company’s disciplined approach to capital management:

Capital Position and Shareholder Returns

Enact’s strong capital position enabled significant returns to shareholders during the quarter. The company returned $116 million to shareholders, consisting of a $31 million quarterly dividend and $85 million in share repurchases (2.4 million shares at an average price of $35.45 per share).

Notably, Enact increased its expected 2025 capital return to approximately $400 million, signaling management’s confidence in the company’s financial strength and future prospects. During the quarter, the company completed its previously announced $250 million share buyback authorization.

The company maintained a robust PMIERs (Private Mortgage Insurer Eligibility Requirements) sufficiency ratio of 165%, representing $2.0 billion in excess capital. This strong capital position provides flexibility for both business growth and continued shareholder returns.

The following slide illustrates Enact’s PMIERs sufficiency and credit risk transfer strategy:

Portfolio Quality and Risk Management

Enact’s strong financial performance is underpinned by its high-quality insurance portfolio and disciplined risk management approach. The company reported a $48 million reserve release during the quarter, driven by favorable cure performance and effective loss mitigation efforts.

The delinquency rate remained stable at 2.3%, while the new delinquency rate decreased slightly to 1.2%. The loss ratio improved to 10%, down 2 percentage points quarter-over-quarter, reflecting the company’s strong credit performance.

As shown in the following slide, Enact maintains a high-quality portfolio with minimal exposure to high-risk layers:

The company’s strong credit performance is further illustrated by trends in new delinquencies and cure activity:

A key strength of Enact’s portfolio is the significant embedded equity, with 87% of all policies and 92% of delinquent policies having at least 10% equity. This substantial equity cushion provides protection against potential losses and supports the company’s strong credit performance.

The following chart illustrates the distribution of equity across Enact’s portfolio:

Forward-Looking Statements

Looking ahead, Enact’s management expressed confidence in the company’s ability to navigate the complex housing market environment. While acknowledging near-term challenges related to affordability and supply constraints, they highlighted several positive long-term trends, including favorable demographics for first-time homebuyers.

CEO Rohit Gupta emphasized the company’s mission to support homeownership responsibly, stating, "We remain grounded in our mission to help people responsibly achieve the dream of homeownership." During the quarter, Enact helped approximately 34,900 households achieve homeownership and assisted 4,400 households in staying in their homes.

The company expects operating expenses for 2025 to range between $220 million and $225 million, reflecting its disciplined approach to expense management. With a strong capital position, high-quality portfolio, and robust risk management framework, Enact appears well-positioned to continue delivering solid results despite market challenges.

Investors will likely focus on the company’s ability to maintain its strong credit performance and capital return program in the face of ongoing housing market constraints and potential economic uncertainties. The increased capital return target of approximately $400 million for 2025 suggests management’s confidence in the company’s financial strength and future prospects.

Full presentation:

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.