Essent group ltd. reports first quarter 2019 results
Hamilton, bermuda--(business wire)--essent group ltd. (nyse: esnt) today reported net income for the quarter ended march 31, 2019 of $127.7 million or $1.30 per diluted share, compared to $111.1 million or $1.13 per diluted share for the quarter ended march 31, 2018. as of march 31, 2019, essent had insurance in force of $143.2 billion and consolidated stockholders' equity of $2.5 billion. “we were pleased with our strong financial results for the first quarter as our operating environment remains favorable and credit continues to perform well,” said mark casale, chairman and chief executive officer. “also, we continue to make solid progress in strengthening our franchise as we successfully rolled out our risk based pricing engine essentedge and reinsured our 2018 niw. our outlook on our business and housing remains positive and we continue to believe that we are well positioned to continue growing our company.” financial highlights: insurance in force as of march 31, 2019 was $143.2 billion, compared to $137.7 billion as of december 31, 2018 and $115.3 billion as of march 31, 2018. new insurance written for the first quarter was $11.0 billion, compared to $11.4 billion in the fourth quarter of 2018 and $9.3 billion in the first quarter of 2018. net premiums earned for the first quarter were $177.8 million, compared to $173.3 million in the fourth quarter of 2018 and $152.6 million in the first quarter of 2018. the expense ratio for the first quarter was 23.1%, compared to 22.8% in the fourth quarter of 2018 and 25.0% in the first quarter of 2018. the provision for losses and lae for the first quarter was $7.1 million, compared to a benefit of $1.0 million in the fourth quarter of 2018 and a provision of $5.3 million in the first quarter of 2018. the provision in the fourth quarter of 2018 included a $9.9 million release of the $11.1 million reserve associated with loans identified as related to hurricanes harvey and irma that was established in the fourth quarter of 2017. the percentage of loans in default as of march 31, 2019 was 0.65%, compared to 0.66% as of december 31, 2018 and 0.86% as of march 31, 2018. the combined ratio for the first quarter was 27.1%, compared to 22.2% in the fourth quarter of 2018 and 28.5% in the first quarter of 2018. the consolidated balance of cash and investments at march 31, 2019 was $3.0 billion, including cash and investment balances at essent group ltd. of $73.8 million. the combined risk-to-capital ratio of the u.s. mortgage insurance business, which includes statutory capital for both essent guaranty, inc. and essent guaranty of pa, inc., was 13.5:1 as of march 31, 2019. in february, essent guaranty, inc. obtained $473.2 million of excess of loss reinsurance coverage on mortgage insurance policies written by essent in 2018. the reinsurance is fully collateralized by ten-year mortgage insurance-linked notes (“ilns”) issued by radnor re 2019-1 ltd., an unaffiliated special purpose insurer. in a separate transaction, essent guaranty, inc. entered into an excess of loss collateralized reinsurance agreement with a panel of u.s. and global reinsurers which provides additional reinsurance protection of $118.7 million on mortgage insurance policies written by essent in 2018. conference call essent management will hold a conference call at 10:00 am eastern time today to discuss its results. the conference call will be broadcast live over the internet at http://ir.essentgroup.com/investors/webcasts-and-presentations/event-calendar/default.aspx. the call may also be accessed by dialing 833-287-0797 inside the u.s., or 647-689-4456 for international callers, using passcode 7833038 or by referencing essent. a replay of the webcast will be available on the essent website approximately two hours after the live broadcast ends for a period of one year. a replay of the conference call will be available approximately two hours after the call ends for a period of two weeks, using the following dial-in numbers and passcode: 800-585-8367 inside the u.s., or 416-621-4642 for international callers, passcode 7833038. in addition to the information provided in the company's earnings news release, other statistical and financial information, which may be referred to during the conference call, will be available on essent's website at http://ir.essentgroup.com/investors/financial-information/quarterly-financial-supplements/default.aspx. forward-looking statements this press release may include “forward-looking statements” which are subject to known and unknown risks and uncertainties, many of which may be beyond our control. forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "will," “should,” “expect,” "plan," "anticipate," "believe," “estimate,” “predict,” or "potential" or the negative thereof or variations thereon or similar terminology. actual events, results and outcomes may differ materially from our expectations due to a variety of known and unknown risks, uncertainties and other factors. although it is not possible to identify all of these risks and factors, they include, among others, the following: changes in or to fannie mae and freddie mac (the “gses”), whether through federal legislation, restructurings or a shift in business practices; failure to continue to meet the mortgage insurer eligibility requirements of the gses; competition for customers; lenders or investors seeking alternatives to private mortgage insurance; an increase in the number of loans insured through federal government mortgage insurance programs, including those offered by the federal housing administration; decline in new insurance written and franchise value due to loss of a significant customer; decline in the volume of low down payment mortgage originations; the definition of "qualified mortgage" reducing the size of the mortgage origination market or creating incentives to use government mortgage insurance programs; the definition of "qualified residential mortgage" reducing the number of low down payment loans or lenders and investors seeking alternatives to private mortgage insurance; the implementation of the basel iii capital accord discouraging the use of private mortgage insurance; a decrease in the length of time that insurance policies are in force; uncertainty of loss reserve estimates; deteriorating economic conditions; our non-u.s. operations becoming subject to u.s. federal income taxation; becoming considered a passive foreign investment company for u.s. federal income tax purposes; and other risks and factors described in part i, item 1a “risk factors” of our annual report on form 10-k for the year ended december 31, 2018 filed with the securities and exchange commission on february 19, 2019. any forward-looking information presented herein is made only as of the date of this press release, and we do not undertake any obligation to update or revise any forward-looking information to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise. non-gaap financial measures in presenting essent group ltd.’s results, management has included financial measures, including adjusted book value per share, that are not calculated under standards or rules that comprise accounting principles generally accepted in the united states (“gaap”). such measures are referred to as “non-gaap measures.” these non-gaap measures may be defined or calculated differently by other companies. management believes these measures allow for a more complete understanding of the underlying business. these measures are used to monitor our results and should not be viewed as a substitute for those determined in accordance with gaap. reconciliations of such measures to the most comparable gaap figures are included in the attached financial supplement in accordance with regulation g. about the company essent group ltd. (nyse: esnt) is a bermuda-based holding company (collectively with its subsidiaries, “essent”) which, through its wholly-owned subsidiary, essent guaranty, inc., offers private mortgage insurance for single-family mortgage loans in the united states. essent provides private capital to mitigate mortgage credit risk, allowing lenders to make additional mortgage financing available to prospective homeowners. headquartered in radnor, pennsylvania, essent guaranty, inc. is licensed to write mortgage insurance in all 50 states and the district of columbia, and is approved by fannie mae and freddie mac. essent also offers mortgage-related insurance, reinsurance and advisory services through its bermuda-based subsidiary, essent reinsurance ltd. additional information regarding essent may be found at www.essentgroup.com and www.essent.us. source: essent group ltd. (in thousands, except per share amounts) (in thousands, except per share amounts) (1) the 2019 return on average equity is calculated by dividing annualized year-to-date 2019 net income by average equity. the 2018 return on average equity is calculated by dividing full year 2018 net income by average equity. (in thousands, except per share amounts) ($ in thousands) ($ in thousands) 740-759 720-739 700-719 680-699 ($ in thousands) ($ in thousands) 740-759 720-739 700-719 680-699 ($ in thousands) 740-759 720-739 700-719 680-699 ($ in thousands) ($ in thousands) ($ in thousands) ($ in thousands) (1) gse and other risk share includes gse risk share and other reinsurance transactions. essent reinsurance ltd. ("essent re") provides insurance or reinsurance relating to the risk in force on loans in reference pools acquired by freddie mac and fannie mae. originalinsurancewritten($ in thousands) remaininginsurancein force($ in thousands) % remaining oforiginal insurance number ofpolicies inforce incurredloss ratio(inceptionto date) (1) number ofloans indefault % ($ in thousands) reinsurance in force reinsurance in force remaininginsurancein force remainingriskin force otherreinsurance otherreinsurance lossescededto date originalfirst layerretention remainingfirst layerretention quarter-to-datepremiumsceded ($ in thousands) number ofpolicies indefault percentage ofpolicies indefault amount ofreserves percentage ofreserves defaultedrif reserves as apercentage ofdefaulted rif ($ in thousands) number ofpolicies indefault percentage ofpolicies indefault amount ofreserves percentage ofreserves defaultedrif reserves as apercentage ofdefaulted rif ($ in thousands) number ofpolicies indefault percentage ofpolicies indefault amount ofreserves percentage ofreserves defaultedrif reserves as apercentage ofdefaulted rif ($ in thousands) ($ in thousands) ($ in thousands) ($ in thousands) ($ in thousands) ($ in thousands) (in thousands, except per share amounts)
