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Enact Holdings, Inc. reported its third-quarter 2025 earnings, surpassing analysts’ expectations with an earnings per share (EPS) of $1.12, compared to a forecast of $1.08. The company’s revenue also slightly exceeded projections, reaching $311.46 million against a projected $310.76 million. Despite these positive results, the stock experienced a 1.51% decline in after-hours trading, closing at $35.93.
Key Takeaways
- Enact Holdings’ EPS exceeded expectations by 3.7%.
- Revenue slightly outperformed forecasts with a $0.7 million surprise.
- The stock fell 1.51% in after-hours trading despite the earnings beat.
- Enact’s adjusted operating income reached $166 million for the quarter.
- The company continues to invest in technology and innovation.
Company Performance
Enact Holdings demonstrated solid performance in Q3 2025, with adjusted operating income reaching $166 million and a return on equity of 13%. The company maintained stable total net premiums earned at $245 million. Enact’s focus on technology and innovation, particularly through its Rate 360 pricing engine, has positioned it well in the competitive insurance market.
Financial Highlights
- Revenue: $311.46 million, slightly above the forecast of $310.76 million.
- Earnings per share: $1.12, beating the forecast of $1.08.
- Adjusted operating income: $166 million.
- Investment income: $69 million, up 12% year-over-year.
Earnings vs. Forecast
Enact Holdings reported an EPS of $1.12, surpassing the forecast of $1.08 by 3.7%. Revenue also exceeded expectations, albeit marginally, with a $0.7 million surprise. This performance marks a continuation of the company’s trend of meeting or exceeding earnings expectations in recent quarters.
Market Reaction
Despite the earnings beat, Enact Holdings’ stock declined by 1.51% in after-hours trading, closing at $35.93. This price movement reflects investor caution, possibly due to broader market conditions or sector-specific concerns. The stock remains within its 52-week range, with a high of $39.47 and a low of $30.79.
Outlook & Guidance
Looking forward, Enact Holdings has updated its 2025 capital return expectation to $500 million. The company remains optimistic about the long-term U.S. housing market and is confident in its ability to navigate economic cycles. Enact continues to focus on risk management and enhancing shareholder returns.
Executive Commentary
CEO Rohit Gupta stated, "We continue to navigate a complex and evolving environment from a position of strength." He emphasized the company’s strong balance sheet and disciplined operating approach, which positions Enact well to handle uncertainty. Gupta also highlighted ongoing technology investments aimed at harvesting long-term benefits.
Risks and Challenges
- Economic Uncertainty: Potential macroeconomic pressures could impact consumer spending and housing market stability.
- Market Competition: Increased competition in the insurance sector may challenge Enact’s market position.
- Regulatory Changes: Future regulatory changes could affect operational costs and compliance requirements.
- Technology Implementation: Successful implementation and integration of new technologies remain critical for maintaining competitive advantage.
Q&A
During the earnings call, analysts inquired about delinquency trends and portfolio seasoning. Enact’s management addressed expense management strategies and clarified the rationale behind the increased capital return expectation. The discussion highlighted the company’s proactive approach to managing its financial and operational strategies.
Full transcript - Enact Holdings Inc (ACT) Q3 2025:
Conference Operator: Hello and welcome to Enact’s third quarter 2025 earnings call. Please be advised that today’s conference is being recorded. Should you need assistance, please signal a conference specialist by pressing star, then zero on your telephone keypad. I would now like to hand the conference over to your first speaker, Daniel Kohl, Vice President of Investor Relations. You may begin.
Daniel Kohl, Vice President of Investor Relations, Enact: Thank you and good morning. Welcome to our third quarter earnings call. Joining me today are Rohit Gupta, President and Chief Executive Officer, and Dean Mitchell, Chief Financial Officer and Treasurer. Rohit will provide an overview of our business, performance, and progress against our strategy. Dean will then discuss the details of our quarterly results before turning the call back to Rohit for closing remarks. We will then take your questions. The earnings materials we issued after market close yesterday contain our financial results for the quarter, along with a comprehensive set of financial and operational metrics. These are available on the Investor Relations section of our website. Today’s call is being recorded and will include the use of forward-looking statements. These statements are based on current assumptions, estimates, expectations, and projections as of today’s date.
Additionally, they are subject to risks and uncertainties, which may cause actual results to be materially different, and we undertake no obligation to update or revise such statements as a result of new information. For a discussion of these risks and uncertainties, please review the cautionary language regarding forward-looking statements in today’s press release, as well as in our filings with the SEC, which will be available on our website. Please keep in mind the earnings materials and management’s prepared remarks today include certain non-GAAP measures. Reconciliations of these measures to the most relevant GAAP metrics can be found in the press release, our earnings presentation, and our upcoming SEC filing on our website. With that, I’ll turn the call over to Rohit.
Rohit Gupta, President and Chief Executive Officer, Enact: Thank you, Daniel. Good morning, everyone. I am pleased to report that Enact delivered another strong quarter of performance, reflecting the continued disciplined execution of our strategy and the strength of our operating model. Our results demonstrate the strength of our business and our ongoing commitment to creating long-term value for our shareholders. To that end, we are pleased to announce our updated 2025 capital return expectation of approximately $500 million, up from prior guidance of $400 million. Additionally, we entered a new $435 million revolving credit facility with favorable terms, providing additional financial flexibility with which to manage our business and execute our strategy. Dean will discuss both in more detail. For the third quarter, we reported adjusted operating income of $166 million or $1.20 per diluted share.
Additionally, adjusted return on equity was 13%, while insurance in force increased 2% year over year to $272 billion, and we generated robust new insurance written of over $14 billion. We continue to navigate a dynamic macroeconomic environment with discipline and focus. The U.S. economy continues to be supported by steady consumer spending, moderating inflation, and a resilient labor market, even as hiring momentum cools. On a national level, steady wage growth, lower mortgage rates, and generally stable home prices have driven modest improvements to affordability. However, given broader macro uncertainties, consumers are more cautious, and many buyers are still waiting for the right conditions, leading to an increase in housing supply in certain geographies. Overall, our business remains underpinned by strong demographic tailwinds, particularly from prospective first-time homebuyers entering the market. We remain optimistic about the long-term health of the U.S.
Housing market and confident in our ability to deliver through economic cycles. Against this backdrop, our capital position and credit performance remain key strengths. During the quarter, we executed against our CRT program with a new quota share agreement that will cover new insurance written in 2027. In addition, after quarter-end, we closed on a new forward excess of loss agreement that will provide approximately $170 million of coverage on a portion of our 2027 book. Our PMIERs sufficiency ratio was 162%, providing significant financial flexibility, and our credit and investment portfolios are in excellent shape. Our insurance in force portfolio remains resilient with a risk-weighted average FICO score of the portfolio at 746. The risk-weighted average loan-to-value ratio was 93%, and layered risk was 1.2% of risk in force. Pricing was constructive again in the quarter, and we maintained our commitment to prudent underwriting standards.
Our pricing engine, Rate 360, dynamically delivers competitive risk-adjusted pricing by factoring in actual and projected housing market trends at a detailed geographic level. Total delinquencies were up 6% sequentially, with new delinquencies up 12% and cures down 1%, both consistent with seasonal trends. We had a reserve release of $45 million, and our resulting loss ratio for the quarter was 15%. Credit performance continues to be strong, and we remain well-reserved for a range of scenarios. We delivered another quarter of strong expense management with expenses that were down year over year despite the ongoing inflationary environment. We are pleased with our disciplined cost management year to date, and Dean will discuss the improved expectations for the remainder of 2025.
We continue to advance against our capital allocation priorities: support existing policyholders by maintaining a strong balance sheet, invest in our business to drive organic growth and efficiencies, fund attractive new business opportunities, and return excess capital to shareholders. Regarding our first priority, I’ve already discussed our strong capital position. Underscored by a robust PMIERs buffer, as well as the ongoing execution of our Credit Risk Transfer program and new credit facility. I’m also pleased to note that during the quarter, we received our fourth ratings upgrade from Moody’s since going public in 2021, upgrading MI rating to A2 from A3 and Enact Holdings ratings to Baa2 from Baa3, while AM Best moved our outlook to positive.
In relation to our second priority, we continue to invest in initiatives to drive growth in our core MI business, including pursuing opportunities to deepen our existing relationships with lenders through technology enhancements, increasing customer engagement, and improving the efficiency of our operations. In addition, Enact Re continues to perform well and participate in attractive GSE single and multifamily deals while maintaining strong underwriting standards and generating attractive risk-adjusted returns. Enact Re remains a long-term growth opportunity that is both capital and expense-efficient. Finally, as it relates to capital returns, during the third quarter, we returned $136 million to shareholders through share repurchases and dividends. As I mentioned earlier, we are increasing our expected capital returns to approximately $500 million for the year. This represents our highest capital return since the IPO, while also maintaining a very strong balance sheet and investing in our future.
This upward revision reflects the strength of our business model and the current levels of mortgage originations. Overall, we are pleased with our performance in the third quarter and through the first nine months of 2025. We continue to navigate a complex and evolving environment from a position of strength, supported by robust new insurance written with excellent credit quality, a strong balance sheet, and prudent expense management. As always, we are actively engaged with our lending partners, the GSEs, and the administration to ensure we remain well-positioned to adapt to an evolving environment. With that, I will now hand it over to Dean to walk through our financial results in more detail.
Dean Mitchell, Chief Financial Officer and Treasurer, Enact: Thanks, Rohit. Good morning, everyone. Adjusted operating income was $166 million, or $1.12 per diluted share, compared to $1.16 per diluted share in the same period last year and $1.15 per diluted share in the second quarter of 2025. Adjusted operating return on equity was 13%. A detailed reconciliation of GAAP net income to adjusted operating income can be found in our earnings release. Turning to revenue drivers, new insurance written was $14 billion, up 6% sequentially and up 3% year over year. Persistency was 83% in the third quarter, up 1 percentage point sequentially and flat year over year, continuing its trend above historical norms. While mortgage rates have fallen recently, our portfolio remains resilient, with 21% of mortgages having rates at least 50 basis points above September’s average of 6.4%. Historically, persistency has varied in relation to mortgage rates.
As rates continue to change, we may see persistency shift from its current level. The combination of solid new insurance written and elevated persistency drove primary insurance in force of $272 billion in the third quarter, up $2 billion, or approximately 1%, from the second quarter of 2025, and $4 billion, or approximately 2%, year over year. Total net premiums earned were $245 million, flat sequentially and down modestly year over year. The year-over-year decrease was primarily driven by higher ceded premiums. Our base premium rate of 39.7 basis points was down 0.1 basis points sequentially, aligned with our expectation for base premium rate in 2025 to approximate 2024 levels. As a reminder, our base premium rate is impacted by several factors and tends to modestly fluctuate from quarter to quarter. Our net earned premium rate was 34.9 basis points, down slightly sequentially, driven by higher ceded premiums.
Investment income in the third quarter was $69 million, up $3 million, or 4% sequentially, and up $8 million, or 12%, year over year. Our new money investment yield continues to exceed 5%, lifting our overall portfolio book yield. As we noted in the past, while we typically hold investments to maturity, we may selectively pursue income enhancement opportunities. During the quarter, we sold certain assets that will allow us to recoup realized losses through future higher net investment income. Turning to credit, we continue to see stable credit performance across our overall portfolio. New delinquencies increased sequentially to 13,000 in the quarter, from 11,600 in the second quarter of 2025, in line with expected seasonal trends.
Our new delinquency rate continues to remain consistent with pre-pandemic levels for the quarter at 1.4%, an increase of 20 basis points compared to 1.2% in the second quarter of 2025, and flat to the 1.4% in the third quarter of 2024. We assess our claims rate on a regular basis and maintained our claim rate on new delinquencies at 9%. Total delinquencies in the third quarter increased sequentially to $23,400, from $22,100 as news outpaced cures, and the delinquency rate increased 20 basis points sequentially to 2.5%. Losses in the third quarter of 2025 were $36 million, and the loss ratio was 15%, compared to $25 million and 10%, respectively, in the second quarter of 2025 and $12 million and 5%, respectively, in the third quarter of 2024.
The current quarter’s reserve release of $45 million from favorable cure performance and loss mitigation activities compares to a reserve release of $48 million and $65 million in the second quarter of 2025 and third quarter of 2024, respectively. Turning to our continued prudent expense management, operating expenses for the third quarter of 2025 were $53 million, and the expense ratio was 22%. Consistent with the second quarter of 2025, and lower than the $56 million and 22%, respectively, in the third quarter of 2024. Based on our performance and fourth quarter outlook, we now forecast 2025 expenses, excluding reorganization costs, at approximately $219 million, lower than our previous range of $220 million-$225 million, despite inflationary headwinds. We continue to operate from a strong capital and liquidity position. Reinforced by our robust PMIERs sufficiency and the successful execution of our diversified Credit Risk Transfer program.
Our PMIERs sufficiency was 162%, or $1.9 billion, above PMIERs requirements at the end of the third quarter. During the quarter, we entered into a new forward quota share reinsurance agreement, which ceded approximately 34% of our 2027 new insurance written to a broad panel of highly rated reinsurers. Subsequent to the end of the quarter, we secured approximately $170 million of additional excess of loss reinsurance coverage for a portion of our 2027 book by a broad panel of highly rated reinsurers. These transactions demonstrate our commitment to disciplined risk management while providing certainty of coverage at favorable market terms. As of September 30, 2023, our third-party CRT program provides $1.9 billion of PMIERs capital credit. During the quarter, Moody’s upgraded the insurance financial strength rating for our flagship insurance subsidiary, Enact Mortgage Insurance Corporation, to A2 from A3.
Moody’s also upgraded Enact Holdings’ long-term issuer rating and senior unsecured debt rating to Baa2 from Baa3, and the outlook for the ratings is stable. This marks the fourth upgrade since our IPO in 2021 from Moody’s. Also, AM Best raised our ratings outlook from stable to positive. Additionally, we entered into a new $435 million, five-year senior unsecured revolving credit facility at favorable terms, expanding our borrowing capacity, extending our maturity profile, and providing greater flexibility and liquidity to support our operations. In addition, our conservative debt-to-capital ratio of 12% provides additional financial flexibility. Turning now to capital allocation, during the quarter, we paid out $31 million, or $0.21 per share, through our quarterly dividend. Today, we announced our third-quarter dividend of $0.21 per common share, payable December 11th. In addition, we bought 2.8 million shares for $105 million in the third quarter of 2023 through October 31st.
We repurchased an additional 1.2 million shares for $42 million. As Rohit mentioned earlier, we are increasing our 2025 total capital return guidance to approximately $500 million, recognizing our ongoing strong business performance and current mortgage origination levels. As always, the final amount and form of capital return to shareholders will depend on business performance, market conditions, and regulatory approvals. Overall, we are pleased with our performance in 2025 to date, and we believe we are well-positioned for a strong end of the year. We remain focused on prudently managing risk, maintaining a strong balance sheet, and delivering solid returns for our shareholders. With that, let me turn the call back to Rohit.
Rohit Gupta, President and Chief Executive Officer, Enact: Thanks, Dean. Looking ahead, while the external environment remains dynamic, our strong balance sheet, embedded equity, and disciplined operating approach positions us well to navigate uncertainty and capitalize on long-term opportunities. I want to thank our entire team for their continued dedication and exceptional execution. Their commitment to our mission of helping people responsibly achieve the dream of homeownership is what drives our success. We continue to remain focused on delivering long-term value for all our stakeholders, and we are confident in our ability to continue building on our strong history of consistent performance. Operator, we are now ready for Q&A.
Conference Operator: We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you’re using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question comes from Bose George with KBW. Please go ahead.
Hey, everyone. Good morning. First, I wanted to just ask about expectations for delinquency trends. Can you talk about where you think delinquencies will peak on portfolios as they’re fully seasoned? Can we look at books that are closer to being fully seasoned, like maybe 2021, or as a way to gauge where the newer books will season?
Dean Mitchell, Chief Financial Officer and Treasurer, Enact: Yeah, Bose, thanks for the question. From a credit perspective, very much in line with what we said in our prepared remarks, credit performance remains very strong through the third quarter. It is certainly supported by a lot of different factors, kind of chief among them the resilient macroeconomic environment, coupled with the embedded home price appreciation across our portfolio. I think from a vintage perspective, getting to that part of your question, as we disaggregate the portfolio, we really do not see any variance to expectations across variables across the portfolio, and that includes book years. Obviously, there are book years with different mixes of risk variables. More recently, the 2022 and forward book years have a higher concentration to a purchase origination market, which tends to have higher concentration in high LTV, high DTIs.
When you consider those risk attributes mixed, we really see good alignment between our actual performance and our expectations when we onboard that business from the onset. I think certainly credit performance is going to be very dependent on the macroeconomic environment. If we continue to see the resiliency that we’ve seen to date, we would expect credit performance to stay in that, very aligned with the very strong credit performance that we’ve seen to date.
Okay, great. Is the typical seasoning sort of four years, five years? Is that when they’re fully seasoned?
Yeah, from an aging of the overall portfolio, we’ve talked about the normal loss development curve and the progression up that curve towards a plateau at around years three to four. It’s not a point. It’s kind of a plateauing, and that plateau happens between years three and four and maybe another 12 months thereafter. What we’ve seen, what we talked about, our expectation heading into 2025, was, given the aging of that portfolio up in that three to four-year time period, that we would see some slowing in the delinquency development from a year-over-year change perspective. I think that’s actually what we’ve seen. When you look back 2023 to 2024, you saw kind of mid-teens % change and increase in new delinquencies. This year, you see more kind of mid-single digits, 5%, 6% change year over year.
I think that has a lot to do with the aging of the portfolio and the development or the progression of the normal loss development curve.
Okay, great. Just actually one clarification on the expense. The year-over-year increase, obviously, is very modest, but just in terms of the quarterly trends, the last couple of quarters, I guess, were a little lighter than 2024. This year, I guess, is the fourth quarter just a little more back-end heavy versus the other quarters?
Yeah, Bose, we’ve talked about this in the past, that our expenses aren’t level throughout a calendar year. We typically have higher variable performance-based incentive comp over the last second half of a year. I think that’s going to have a more meaningful impact in the last quarter of this year. If you look back at prior year experience as well, you see that in the third and fourth quarters of just going back to like 2024. Yeah, similar driver and a little bit more disproportionate in the fourth quarter of this year.
Okay, great. Thanks.
Conference Operator: Again, if you have a question, please press star then one. The next question comes from Rick Shane with J.P. Morgan. Please go ahead.
Hey, guys. Thanks for taking my questions. Really a couple of things. One. You’ve provided favorable guidance on expenses. One of the questions that I think everybody’s wrestling with is how technology, particularly AI, is transforming different businesses. Can you talk a little bit about what’s driving your favorable expense guidance, but also longer term, how you see AI transforming your business?
Rohit Gupta, President and Chief Executive Officer, Enact: Absolutely right. Good morning. I would say in terms of favorable performance of expenses, as Dean talked about it in his prepared remarks, we are always prudent in our expense management. As a company, and you have seen that play out since our IPO. During 2021, our expenses were close to $240 million, I would say low $240 million range. Since that time, despite inflationary pressures, we have actually reduced our expenses close to $25 million. In the last three years, we basically have our expenses trending flat in terms of total expense dollars. I think that is just our general mindset, that when we think about our expenses, we are very mindful of the environment where we are making investments, how do we make our existing processes more efficient, whether it comes to our underwriting processes, whether running the rest of the business. We are making technology investments.
On an ongoing basis to harvest benefits from those investments. That being said, we also make technology investments to make smarter decisions. In the past, I’ve talked about investments in our Rate 360 engine, where six, seven years ago, we started investments in our data, then we started investments in machine learning. As a result, we believe we have a very granular, risk-based pricing system in Rate 360 that allows us to make decisions and changes at a more granular level and in a more agile way in the market so we can respond to market changes. Lastly, I would say that we also spend time and investments in customer experience. In places where we can improve customer experience, that allows us to have a bigger footprint in the market.
We are proud of our customer base in terms of the number of customers we do business with on an active basis that continues to be close to 1,600 lenders in the country, as well as doing business with all top 20 originators in the country. I would say that is our technology strategy. When it comes to AI, I have said in the past that we continue to invest on that front, both for efficiency reasons and making smarter and more granular decisions. That is basically how we see that playing out for our business.
Got it. Okay. That’s helpful. Just if we can think about a little bit in terms of you’ve increased your return of capital allocation for the year 25%. It’s risen steadily throughout the year. This was a strong quarter in line, roughly, I think, with at least street expectations. Is it just that you guys sort of, as you move through the year and gather more information, feel more confident in terms of setting your capital return expectations? I don’t think this year is way out of whack with your expectations, and I don’t think third quarter or fourth quarter outlook seems radically different. What drives a 25% increase in capital return outlook?
Dean Mitchell, Chief Financial Officer and Treasurer, Enact: Yeah, Rick, hey, it’s Dean. Appreciate the question. I think you hit on a lot of the points. When we set our return of capital plans at the beginning of the year, we’re thinking about our expectations around business performance. We’re thinking about the current and prospective macroeconomic environment. We’re thinking about the regulatory landscape to determine kind of what the appropriate level of capital return is, given the intersection of those three considerations. I think as we go through the year, we both make assessments of how we’re doing relative to our original expectations. To your point, we’re gaining more and more confidence in those drivers as we progress through the year.
From my perspective, the increase from 400 to 500, and even if you go back a quarter, the increase from 350 to 500, I think it reflects both the favorable business performance year to date and also, certainly, an indication of the current level of mortgage originations that are in the market today. I think it’s really the combination of those two things that has caused us to come back and revise our return of capital guidance upwards.
Got it. If I were to summarize that, the year has manifested. Potentially better than your conservative expectations, but this is really about the confidence interval on that performance narrowing to the higher end as we sort of move into fourth quarter.
Rohit Gupta, President and Chief Executive Officer, Enact: Yeah, Rick, I’m not sure if I would call it conservative expectations. I would just say we operate in an uncertain environment, so we always keep that in mind. You see that in our commentary, in our prepared remarks, that. We are running the business with a mindset that we need to be confident in our actions. And as we gain that confidence with actual performance coming through. We continue to update it along the year. I think it’s just the nature of how we actually manage the business and how we make sure that. We can deliver on our promises consistently.
Got it. Fair point that uncertainty has been mitigated as we move through this year in general. That’s a fair point. Thank you, guys.
Dean Mitchell, Chief Financial Officer and Treasurer, Enact: Thank you, Rick.
Conference Operator: This concludes our question and answer session. I would like to turn the conference back over to Rohit Gupta for any closing remarks.
Rohit Gupta, President and Chief Executive Officer, Enact: Thank you, Drew. Thank you, everyone. We appreciate your interest in Enact. Once again, I would like to wrap up the call by thanking all of our employees for their hard work and dedication in fulfilling our mission to help people buy a house and keep it their home. Thank you.
Conference Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.
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