Earnings call transcript: Essent Group Q3 2025 misses EPS forecast, stock falls

Essent Group Ltd (ESNT) reported its Q3 2025 earnings, revealing a slight miss on both earnings per share (EPS) and revenue compared to forecasts. The company posted an EPS of $1.67, below the anticipated $1.77, and actual revenue of $311.83 million, falling short of the $315.73 million forecast. In reaction, Essent’s stock dropped 5.81% in pre-market trading, with shares priced at $57.25, down from the previous close of $60.78.

Key Takeaways

• Essent Group’s Q3 EPS of $1.67 missed the forecast of $1.77.
• Revenue for the quarter was $311.83 million, below the expected $315.73 million.
• The company’s stock fell 5.81% in pre-market trading following the earnings release.
• Essent continues to focus on its core mortgage insurance business and explore diversification through Essent Re.
• Strong capital position with significant cash and investments at holding companies.

Company Performance

Essent Group’s Q3 2025 performance showed resilience despite missing earnings expectations. The company reported a net income of $164 million, a decrease from $176 million in the same period last year. The diluted EPS of $1.67 marked a slight increase from $1.65 in the previous year. The U.S. mortgage insurance in force grew by 2% year-over-year to $249 billion, reflecting stability in its core business operations.

Financial Highlights

• Revenue: $311.83 million (down from forecast of $315.73 million)
• Earnings per share: $1.67 (down from forecast of $1.77)
• Net income: $164 million (down from $176 million year-ago)
• Consolidated cash and investments: $6.6 billion
• Year-to-date return on equity: 13%

Earnings vs. Forecast

Essent Group’s Q3 2025 EPS of $1.67 fell short of the $1.77 forecast, marking a 5.65% negative surprise. Revenue also missed expectations by 1.24%, coming in at $311.83 million against the projected $315.73 million. This performance contrasts with previous quarters where the company met or exceeded forecasts, highlighting a potential shift in market dynamics or operational challenges.

Market Reaction

Following the earnings report, Essent Group’s stock experienced a 5.81% decline in pre-market trading, reflecting investor disappointment with the earnings miss. The stock’s price dropped to $57.25, moving closer to its 52-week low of $51.61, suggesting heightened market sensitivity to the company’s financial performance.

Outlook & Guidance

Looking forward, Essent Group remains committed to a prudent capital strategy, including continued share repurchases and a new $500 million share repurchase authorization through 2027. The company has projected book value per share growth to $85-$90 in the next 4-5 years, indicating confidence in its long-term financial health. The quarterly dividend remains at $0.31 per share.

Executive Commentary

"Our performance this quarter reflects the strength and resilience of our franchise," stated CEO Mark Casale, emphasizing the company’s solid foundation despite the earnings miss. Casale also highlighted the "exceptional" credit quality within Essent’s business, underscoring the company’s focus on maintaining high standards in its operations.

Risks and Challenges

• Potential volatility in the housing market could impact mortgage insurance demand.
• Regulatory changes affecting the mortgage insurance industry.
• Economic downturns may affect credit quality and borrower defaults.
• Competition from other mortgage insurers and financial institutions.
• Interest rate fluctuations impacting investment yield and profitability.

Q&A

During the earnings call, analysts raised questions about Essent’s credit quality and market guardrails, seeking clarity on how the company plans to mitigate risks associated with credit expansion. Executives also addressed inquiries regarding potential business diversification and changes in the company’s tax rate, providing insights into strategic initiatives and financial planning.

Full transcript - Essent Group Ltd (ESNT) Q3 2025:

Abby, Conference Operator: Ladies and gentlemen, thank you for standing by. My name is Abby, and I’ll be your conference operator today. At this time, I would like to welcome everyone to the Essent Group Limited Third Quarter Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question and answer session.

Thank you. And I would now like to turn the conference over to Phil Stefano with Investor Relations. You may begin.

Phil Stefano, Investor Relations, Essent Group Limited: Thank you, Abby. Good morning, everyone, and welcome to our call. Joining me today are Mark Casale, Chairman and CEO and David Weinstock, Chief Financial Officer. Also on hand for the Q and A portion of the call is Chris Curran, President of Essent Guaranty. Our press release, which contains Essent’s financial results for the 2025, was issued earlier today and is available on our website at essentgroup.com.

Prior to getting started, I would like to remind participants that today’s discussions are being recorded and will include the use of forward looking statements. These statements are based on current expectations, estimates, projections and assumptions that are subject to risks and uncertainties, which may cause actual results to differ materially. For a discussion of these risks and uncertainties, please review the cautionary language regarding forward looking statements in today’s press release, the risk factors included in our Form 10 ks filed with the SEC on 02/19/2025, and any other reports and registration statements filed with the SEC, which are also available on our website. Now let me turn the call over to Mark.

Mark Casale, Chairman and CEO, Essent Group Limited: Thanks, Phil, good morning, everyone. Earlier today, we released our third quarter twenty twenty five financial results. Our performance this quarter again underscores the resilience of our business as we continue to benefit from favorable credit trends and the interest rate environment, which remains a tailwind for both persistency and investment income. These results reflect the strength of our buy, manage and distribute operating model, which we believe is well suited to navigate a range of macroeconomic scenarios and generate high quality earnings. For the 2025, we reported net income of $164,000,000 compared to $176,000,000 a year ago.

On a diluted per share basis, we earned 1.67 for the third quarter compared to $1.65 a year ago. On an annualized basis, our year to date return on equity was 13% through the third quarter. As of September 30, our U. S. Mortgage insurance in force was 249000000000Dollars a 2% increase versus a year ago.

Our twelve month persistency on September 30 was 86% flat from last quarter, while nearly half of our in force portfolio has a note rate of 5% or lower. We continue to expect that the current level of mortgage rates will support elevated persistency in the near term. The credit quality of our insurance in force remains strong. The weighted average FICO of seven forty six and a weighted average original LTV of 93%. Our portfolio default rate increased modestly from the 2025, reflecting the normal seasonality of the mortgage insurance business.

Meanwhile, we continue to believe that the substantial home equity embedded in our in force book should mitigate ultimate claims. Our consolidated cash and investments as of September 30 totaled $6,600,000,000 with an annualized investment yield in the third quarter of 3.9%. Our new money yield in the third quarter was nearly 5% holding largely stable over the past several quarters. We continue to operate from a position of strength with $5,700,000,000 in GAAP equity, access to $1,400,000,000 in excess of loss reinsurance and $1,000,000,000 in cash and investments at the holding companies. With a twelve month operating cash flow of $854,000,000 through the third quarter, our franchise remains well positioned from an earnings, cash flow and balance sheet perspective.

We remain committed to a prudent conservative capital strategy that allows us to maintain a strong balance sheet to navigate market volatility while preserving the flexibility to invest in strategic growth. Thanks to our robust capital position and strengthened earnings, we are well positioned actively return capital to shareholders in a value accretive fashion. With that in mind, year to date through October 31, we have repurchased nearly 9,000,000 shares for over $500,000,000 At the same time, I am pleased to announce that our Board has approved a common dividend of $0.31 for the 2025 and a new $500,000,000 share repurchase authorization that runs through year end 2027. Now let me turn the call over to Dave.

David Weinstock, Chief Financial Officer, Essent Group Limited: Thanks, Mark, good morning, everyone. Let me review our results for the quarter in a little more detail. For the third quarter, we earned $1.67 per diluted share compared to $1.93 last quarter and $1.65 in the third quarter a year ago. My comments today are going to focus primarily on the results of our mortgage insurance segment, which aggregates our U. S.

Mortgage insurance business and the GSE and other mortgage reinsurance business at our subsidiary Essent Re. There is additional information on corporate and other results in Exhibit O of the financial supplement. Our U. S. Mortgage insurance portfolio ended the third quarter with insurance in force of $248,800,000,000 an increase of $2,000,000,000 from June 30 and an increase of $5,800,000,000 or 2.4% compared to $243,000,000,000 at 09/30/2024.

Persistency at 09/30/2025 was 86% compared to 85.8% at 06/30/2025.

: Mortgage insurance net premium earned for the 2025 was $232,000,000 and included $15,900,000 of premiums earned by Essent Re on our third party business. The average base premium rate for The U.

David Weinstock, Chief Financial Officer, Essent Group Limited: S. Mortgage insurance portfolio for the third quarter was 41 basis points consistent with last quarter. And the average net premium rate was 35 basis points, down one basis point from last quarter. Our U. S.

Mortgage insurance provision for losses and loss adjustment expenses was $44,200,000 in the 2025 compared to $15,400,000 in the second quarter of twenty twenty five and twenty nine point eight million dollars in the third quarter a year ago. At September 30, the default rate on The U. S. Mortgage insurance portfolio was 2.29%, up 17 basis points from 2.12% at 06/30/2025. Mortgage insurance operating expenses in the third quarter were $34,200,000 and the expense ratio was 14.8% compared to $36,300,000 and 15.5% last quarter.

At September 30, Essent Guaranty’s PMIERs efficiency ratio was strong at 177% with $1,600,000,000 in excess available assets. Consolidated net investment income and our average cash investment portfolio balance in the third quarter were largely unchanged from last quarter due to our share repurchase activity. In the 2025, we increased our 2025 estimated annual effective tax rate, excluding the impact of discrete items, from 15.4% to 16.2%. This change was primarily due to withholding taxes incurred on a third quarter dividend from SNUS Holdings to its offshore parent company. As Mark noted, our holding company liquidity remains strong and includes $500,000,000 of undrawn revolver capacity under our committed credit facility.

At September 30, we had $500,000,000 of senior notes senior unsecured notes outstanding, and our debt to capital ratio was 8%. During the third quarter, Essent Guaranty paid a dividend of $85,000,000 to its U. S. Holding company. As of October 1, Essent Guaranty can pay additional ordinary dividends of $281,000,000 in 2025.

At quarter end, Essent Guaranty’s statutory capital was $3,700,000,000 with a risk to capital ratio of 8.9 to one. Note that statutory capital includes $2,600,000,000 of contingency reserves at September 30. During the third quarter, Essent Re paid a dividend of $120,000,000 to Essent Group. Also in the third quarter, Essent Group paid cash dividends totaling $30,100,000 to shareholders, and we repurchased 2,100,000.0 shares for $122,000,000 In October 2025, we repurchased 837,000 shares for $50,000,000 Now let me turn the call back over to Mark.

Mark Casale, Chairman and CEO, Essent Group Limited: Thanks, Dave. In closing, we are pleased with our third quarter financial results as Essent continues to generate high quality earnings, while our balance sheet and liquidity remains strong. Our performance this quarter reflects the strength and resilience of our franchise, while Essent remains well positioned to navigate a range of scenarios given the strength of our buy, manage and distribute operating model. Our strong earnings and cash flow continue to provide us with an opportunity to balance investing in our business and returning capital. We believe this approach is in the best long term interest of our stakeholders and that Essent is well positioned to deliver attractive returns for our shareholders.

Now let’s get to your questions. Operator?

Abby, Conference Operator: Thank you. And we’ll now begin the question and answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, press star one a second time. If you’re called upon to ask your question and are listening via

: you.

Abby, Conference Operator: And our first question comes from the line of Terry Ma with Barclays. Your line is open.

Terry Ma, Analyst, Barclays: Hey, thank you. Good morning. Just wanted to start off with credit. New notices were a bit lower than what we had, but the provision on those notices were higher. So any color on kind of just the makeup from a vintage or even geography perspective this quarter?

Mark Casale, Chairman and CEO, Essent Group Limited: Yeah. Hey, Terry. It’s Mark. I wouldn’t say there’s nothing really to read out in terms of geography or trends. The one thing for you guys as analysts, we pointed this out a few quarters ago, is just our average loan size continues to increase.

I mean, ever since you know, for years, was, $230,000 when the GSE started raising their limits, and it really kind of picked up post COVID. So our average loan size, if you just look through the stat supplement for the insurance force, close to $300,000. So, again, larger loans, when they come through, you know, kind of into default, it’s gonna be a larger provision. So I wouldn’t read any more into it than that. I think the, you know, again, default rates relatively flattish.

And and I think, you know, from a from a credit position, there’s there’s nothing we’re really seeing, that concerns us at the current time.

Terry Ma, Analyst, Barclays: Got it. That’s helpful. And then maybe just a follow-up on the claims amount. The number was higher and also the severity. So like anything to call out there like anything idiosyncratic or is there more of a trend?

Thank you.

David Weinstock, Chief Financial Officer, Essent Group Limited: Terry. It’s Dave Wimestock. Yes. There’s really nothing to point out there. A lot of that’s going to depend on when we get documents in and when the claims are fully adjudicated and ready for payment.

And so you can see fluctuations, based on what the underlying claims are. But at the end of the day, there are not a lot of claims there. And the biggest takeaway really is that the severity continues to be well below what we’re reserving at. So we’re getting favorable results there.

Mihir Bhatia, Analyst, Bank of America: Okay. Got it. Thank you.

Abby, Conference Operator: And our next question comes from the line of Bose George with KBW. Your line is open.

Bose George, Analyst, KBW: Hey, guys. Good morning. First just on the ceded premiums with kind of the high end of the range. Is that a good level going forward or is that just bounce around depending on the timing of when you’re doing the reinsurance transactions?

David Weinstock, Chief Financial Officer, Essent Group Limited: Hey Bose, it’s Dave Weinstein. Yes, it’s going to bounce around a little bit based on default and provision activity. So it’s seasonal. I think you saw the ceded premium being a little bit lower in the first half of the year similar to where you see our defaults being more favorable and lower. And this is a seasonal second half of the year as we’ve talked about.

We definitely we generally see an uptick. And so you’re going see a little bit of an uptick in the ceded premium.

Mark Casale, Chairman and CEO, Essent Group Limited: Yes. And also keep in mind Bose, we raised the quota share this year to 25%. So that is going to create a little bit more volatility. At the end of the day, comes through the wash, right? So in terms of the mix between the provision and expenses and ceding commission, but yeah, it’ll bounce around a little bit more.

So I’d conscious of that in your models.

Bose George, Analyst, KBW: Okay, great. That’s helpful. Thanks. And then just in terms of the tax rate, what drove the higher tax rate? And then just can you remind us just based on how much you’re seeding etcetera where you think the tax rate is going to be over the next say twelve months?

Mark Casale, Chairman and CEO, Essent Group Limited: Yeah. I mean, think Dave alluded to it in the script. A lot of it is just a little bit of the tax friction moving from kind of guarantee to U. S. Up to Bermuda and out to shareholders.

So I think 16,000,000 and maybe a touch higher going forward. Would think through that with your models I’d be relatively conservative of those. And it really gets back to the fact that we’re just distributing a lot more capital back to shareholders. And that’s a little bit of a signal that we don’t really see it changing much given where sitting with still $1,000,000,000 of cash at the holdco and where the stock is right around bookish value. And we and we pointed this out last time in in our investor deck, which will come out kind of post post earnings.

Like, the embedded value of the business, we we believe is much higher than kind of where we are today. Right? And just again, it’s it’s simple math. It’s it’s it’s nothing revolutionary. And we have $6,000,000,000 of cash, dollars 6,000,000,000 of equity.

We trade right around $6 ish billion. It doesn’t really give credit for the $250,000,000,000 of insurance and tours that we have. And it’s significant embedded value. I think we’ve proven that over the past ten years in terms of the cash flow. And just look again, just we generated $854,000,000 of cash flow over the last twelve months.

So based on that and where we’re just given the capital position and we’re still generating unit economics kind of in that 12 ish to 14 ish range, we think it’s the best value. So I think we’ll continue to do that. But there again, it’s just getting the cash out creates a little friction. But I think from a shareholder perspective, we’ll pay a couple extra bucks on the tax rate. But I think from lowering the share count and kind of delivering value to shareholders, it’s a little bit of a no brainer.

Bose George, Analyst, KBW: Okay. Great. Thanks.

Abby, Conference Operator: And our next question comes from the line of Rick Shane with JPMorgan. Your line is open.

Rick Shane, Analyst, JPMorgan: Hey guys, thanks for taking my question this morning. I’m looking at Exhibit K and one trend that is pretty consistent is the increase in severity rates and that makes sense given slowing home price appreciation and vintage mix. It was seventy eight percent this quarter. I’m curious long term where you think that could go. Are we sort of asymptotically approaching the limit there?

Or are we should we expect that to continue to rise?

Mark Casale, Chairman and CEO, Essent Group Limited: Yeah. I mean, I I wouldn’t I I don’t know if you would expect it to rise. Again, we we we the provision’s at a 100, Rick, just so you know. Yep. The embedded the embedded HPN the book is still kind of 75 ish.

So, I mean, in terms of mark to market LTV. So some of it’s just timing. Right? If if if if somebody, you know, from the later vintages, kinda call it ’23 or ’24, goes into default, you know, there’s gonna be a higher provision or if they go in claim we’re going to pay a higher claim there because they have less embedded value. But taking a step back just at the portfolio level, we’re not going to get too fussed about it Rick.

I mean again you’re talking about a relatively low losses. And remember just and we point this out every quarter or just what the real risk is in our business, right? Take from my seat, Rick, we own that first loss position, right? So call it two to three claims out of 100. We hedge out from above that kind of into that six, seven range and we reattach above that.

That’s the risk in the business, right? We are a specialty insurance type business almost like a cat where our catastrophe is a severe macroeconomic recession. And that’s when we hold capital when we think about PMIERs, we think about the different stress tests that we run, whether it’s Moody’s constant severity, S4, the GFC, that’s when we come in and think about it week to week or month to month. That’s we’re focused really on making sure we’re fine there and we clearly are given the amount of capital that we’re using to repurchase shares. So getting back to this, again, we clearly look at it.

I think we’re conservative in how we provision just from a severity standpoint because I think that’s the severity is an actuarial I mean the provisions in actuarial based model. So we don’t really mess with it quarter to quarter even year to year that much. So again, I’m just trying to from a big picture standpoint, sure, you’re to try to point out trends, know, and Terry pointed out the trends around the new notices. Those are all good. That’s that’s where like, guys have to do that for your models.

But I think taking, like, a step back, the the biggest metric for the quarter, Rick, is we produced $854,000,000 of cash over the last twelve months. So, again, I’m not trying to, you know, to get too too too high level, but, I mean, I I think it’s important to kinda put context around some of these numbers.

Rick Shane, Analyst, JPMorgan: No. Look. It it it’s it’s a fair point, Mark. You know, given how low losses have been for so long, a modest dollar movement looks like a larger looks like a significant percentage movement. And and and I think we’re all, sensitive to that and and trying to sort of, I think, what the normalized returns on the business are.

And do you think we are approaching those levels? Or do and look. You’ve enjoyed an extraordinary period for a long for a long time for a whole host of reasons that we we’ve all talked about. But as as the business normalizes and sort of reverts to, the return levels that the two of us spoke about a decade ago, or do you think we’re getting there now?

Mark Casale, Chairman and CEO, Essent Group Limited: Now it’s a good question. And and we we’ve been studying this. So let’s let’s go back in time. Right? Let’s let’s start with 1990, which is really the beginning of the modern day Fannie and Freddie.

And let’s just go with the last thirty five years. If you take away the the the GFC, which it’s hard to do, but just to play you know, stick with me here for a second, the average loss rate on Fannie and Freddie backed loans is less than 1%. That, I believe, is actually so it’s not this, oh my goodness. We have such a good run. When is it gonna end?

This is it. This is the business. It’s a great business. You’re talking about and again and some of the things that caused the great financial crisis, because you don’t want to ignore that. And the reason we like the business coming out of the crisis, you had the Dodd Frank qualified mortgage rule.

So 35% of the loans that were done during the crisis, they no longer qualify. They literally got the riffrapped out of the industry. So that is now either going it’s going into either FHA or it’s going to kind of non q m or they’re not being originated, which is the most case. A lot of those borrowers are ending up in single family rental. It’s a great outcome for them.

Right? So then also and then you add in, you know, the increased, I I would say, sophistication of DU and LP at the GSEs. Their their quality control has gotten significantly better, I mean, over the last fifteen years. That so all of a sudden that the the credit guardrails around our business are exceptional, and we don’t see a change in. Unless there’s something happens with GSE reform, and and I clearly we look at that, but as long as the market is where it is today, this it’s a very narrow fairway.

And And so we don’t see really credit changing that much. It’s hard. I mean, actually, credit for this the last two quarters, Rick, was the best FICO we’ve had since we started the company. So and part of that’s affordability, part of it is affordability, like just folks are having a harder time qualifying. But the credit quality in this business is exceptional.

And just from a public policy standpoint, sixty five percent of our borrowers are first time homeowners. I mean, was with a young guy last week who just got mortgage insurance through one of our clients. He’s paying like $65 a month. He put 10% down. I mean, you can’t beat it.

It’s a great value to the customer, which you always want to have, right? The borrower is our ultimate customer. And then I think the math for us. So I would say from and some of our longer term investors kind of know this clearly. I would stop and one of our other analysts has always asked me, Mark, is this as good as it gets?

Guys, it’s been good for a long time. I mean and I don’t really again, there’s going be some volatility, Rick, quarter to quarter or year to year. Look, if unemployment goes up, we’re probably going to pay some losses. But remember, we’re kind of capped. We’re kind of capped until we hit until we go through that mezz piece.

So it’s relatively well boxed. Hence, our confidence in paying the quarterly dividend. And right now in terms of where we are returning capital to shareholders, it’s been quite a shift the past twelve months. But part of it was we’ve just continued to accumulate cash and we’ve had this retain and invest mentality. We just haven’t invested in anything.

And so we look at it now and say the best investment we can make is in the company. And if we keep this pace up, Rick, every time you repurchase shares, our long term owners, which include the senior management team, we own a little bit more of the company. And and if I’m gonna own a business, this is this this is my this is my favorite business. So, we’ll see. So sorry for the long winded answer, but I wanted to, again, try to give, you know, some of the investors on the phone some context.

Rick Shane, Analyst, JPMorgan: No. Mark, look, I I appreciate it. And, I suspect there are some folks who are listening to this call imagining the two of us on rocking chairs debating themselves. And, that’s that’s okay too. I appreciate the answer.

Abby, Conference Operator: And our next question comes from the line of Mihir Bhatia with Bank of America. Your line is open.

Mihir Bhatia, Analyst, Bank of America: Hi, Mark. Good morning. Thank you for taking my question. I actually want to follow-up on Rick’s last question there about just about the guardrails around underwriting currently. I think there was news yesterday about Fannie removing the minimum credit score requirements.

There’s been some noises out of Washington about, you know, trying to do play a more active role in housing or lower increase housing demand, if you will. And I was just wondering from your seed, are you seeing any signs of that? Are originators trying to get more stuff under the get more stuff approved that maybe she wouldn’t have been they wouldn’t have tried it couple years ago. Wondering what that looks like. Thank you.

Mark Casale, Chairman and CEO, Essent Group Limited: It’s a good question. There is a lot of noise, around kinda credit scores and Vantage and and and Fair Isaac and Vantage can, you know, qualify more borrowers, all those sort of things. The reality is, Mihir, that GSEs haven’t changed their systems yet. So until that happens, you know, there there’s really not going to be change. So it like, there a lender would be unable today to kind of quote get something past the GSEs.

It gets back to my point. The GSEs, their systems are fantastic in terms of DU and LP very sophisticated. And if they do get through it, they’re most likely via their QC and repurchase program, they’re going to put that back to lenders. So lenders have I think lenders have really understood that the game today and you’re seeing some of the bigger lenders do it, the game today is all about lowering and being efficient on origination costs. That hasn’t always been the case.

So if you go before the crisis, what would happen is if you get a small or mid sized mortgage banker and all a sudden production is down, they immediately go to credit expansion. Right? I wouldn’t normally do that loan, but I have fixed cost. I’m going try to get that loan in either through the GSEs or to whole loan buyers. You can’t do that today.

I mean, whether it’s you’re trying to get it through the GSEs, you’re trying to go through some of the larger correspondent purchases like PennyMac whose systems are also excellent, and it’s not gonna happen. So you’re almost you have to either you have to manage costs. And, again, from a credit provider, that’s exactly where we want it. So we’re not too worried about it. And if it were to go we mentioned this last call.

If it were to change right? And I’m not saying it’s going if it were to change and and you could have, like, kind of a wider fairway, so to speak, so more things qualify, the fact that our credit engine, doesn’t really rely on FICO, we’re really we’re almost credit score agnostic. We’re looking at the 400 kind of variables underneath that along with things in in the 10 o three. We’re not too worried. We we can see through that.

In fact, our model works better when things are a little bit, you know, a little bit more disparate so to speak. It doesn’t work as well in a market like this. It kind of works more from a premium standpoint picking and choosing, but credit not you almost don’t really need it from a FICO standpoint. So again, I think I would look at it that way. I think it’s something that we’re pleased with, but I don’t see any kind of chink in the guardrails to date.

Mihir Bhatia, Analyst, Bank of America: Okay. Thank you for taking my question.

Abby, Conference Operator: And our next question comes from the line of Doug Harter with UBS. Your line is open.

: Thanks. Can you talk about your plans to upstream capital from the MI subsidiary? It sounds like you have a lot of capacity left for the year. Do you kind of spill that over or do a large dividend in the fourth quarter?

Mark Casale, Chairman and CEO, Essent Group Limited: I think it’s pretty consistent with the dividends. It might be a little bit larger in the fourth quarter for sure. I think again as we look at kind of PMIERs, Doug, and credit and where it’s going, we feel comfortable continuing to upstream cash from Guaranty to U. S. Holdings.

And as I said earlier, there’s a little bit of friction getting it back to the group level, that’s not the worst problem to have. And also, have the quota share reinsurance, that’s one of the reasons we took it up to 50 earlier this year. That’s another kind of backdoor way to get cash up to up to the holdco.

: And then, obviously, you bought title a little while ago. Can you just talk about how you’re thinking about the benefits of the great business that is MI versus looking to further diversify and have other avenues of growth?

Mark Casale, Chairman and CEO, Essent Group Limited: Yeah. I mean, think right now, it’s a good question. I think title has performed pretty much in line with what we thought if we would have thought rates would be this high to try to be honest with you. I think if rates go lower, we’re very levered to rates given the lender focus of the business. We have an underwriter.

It’s really kind of in its still small stages growing primarily in Texas and Florida and a bit of the Southeast. That’s kind of the purchase angle of the business, but it’s small. So the real lever is lenders and refinance. And and we’ve continued to to add lenders. You know, we’re working on, you know, developing a new system.

We’re still, you know, we’re still building the business out per se, and we’re fine with that. So I you know, it’s it’s kind of in corporate and other, Doug. And think of that almost as like an incubator. So, again, if it gets big enough, it’ll pop up as its own segment. If it stays small, it stays small.

And and and that that could happen. And, you know, clearly, Essent Re has some opportunities outside of mortgage. We haven’t really done anything yet, but there’s things that we look at. I would look at that as another incubator.

Mihir Bhatia, Analyst, Bank of America: We kind of

Mark Casale, Chairman and CEO, Essent Group Limited: call them call options. But for the time being, clearly the focus and where the cash flow is coming is from the MI business. And when we look at investment opportunities, whether it’s title, other acquisitions that come to us, we still feel at this time our stock is the best value. And we’re kind of voting with our feet there. And I don’t expect it to change absent like some large movement in the stock.

And then if there’s a large movement in the stock, which it’s it would be nice per se, but not necessarily. If you’re in the business of buying back shares and shrinking ownership, this isn’t the worst place to be in. If the stock were to move outside of our range, we would probably do like a special dividend. We’ll continue to look for ways to get capital back to shareholders. But given just how good the MI business is today, we would need to again, there has there’s going have to be a good reason for us to do it.

And I look at it as if you’re looking at a way to kind of quantify it. Our book value per share today is right around $60 So it’s a tad below $58 It will finish my guess is it will finish the year around $60 Doug. So if we look and say hey we’re going to grow it 10%, 12% a year which we’ve been doing That book value per share over the next four or five years is going to be $85.90 dollars right? Big picture, right? Just looking at the numbers.

So as we look at an acquisition, it’s going to have to either help us increase that book value per share target or achieve that book value per share target sooner. All else being equal or making us a stronger company and things like that. There’s other factors in there. That’s a pretty high bar. That’s a pretty high bar.

We kind of know this business well. And like what I’ve said just in my response to Rick earlier, this is such a good business. We’re a little bit spoiled in terms of how good the business is. Again, there’s going to be some bumps along the road. Always are, but that’s why you have capital, right?

You have capital to withstand those bumps and reinsurance is another form of capital. We expect kind of those expected losses per se and then you have capital and reinsurance for unexpected losses, they’ll come. But that’s what we’re prepared for. We don’t necessarily try to sit down and say where is the market going. We try to prepare for every different avenue that the market potentially could go down.

I mean that just comes with experience. We’ve been doing this for quite a while. But that being said, so the summing up the investment right now continues to be an asset. I don’t expect that the change absent something really special comes along.

: Appreciate that, Mark. Thank you.

Mihir Bhatia, Analyst, Bank of America: And

Abby, Conference Operator: there are no additional questions at this time. So I will now turn the conference back over to management for closing remarks.

Mark Casale, Chairman and CEO, Essent Group Limited: Thanks everyone for their time and questions and have a great weekend.

Abby, Conference Operator: And ladies and gentlemen, this concludes today’s call, and we thank you for your participation. You may now disconnect.

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