Essent group ltd. reports fourth quarter and full year 2015 results
Hamilton, bermuda--(business wire)--essent group ltd. (nyse: esnt) today reported net income for the quarter ended december 31, 2015 of $44.5 million or $0.48 per diluted share. net income for the full year 2015 was $157.3 million or $1.72 per diluted share. insurance in force as of december 31, 2015, was $65.2 billion, representing an increase of 29% compared to $50.8 billion of insurance in force as of december 31, 2014. as of december 31, 2015, essent had consolidated stockholders’ equity of $1.12 billion. “2015 was another successful year for essent, as we continue to grow a high-quality and profitable mortgage insurance portfolio,” said mark casale, chairman and chief executive officer. “not only did we grow net income 78% year over year, we also generated a return on average equity of over 15% for our shareholders in 2015.” financial highlights: insurance in force as of december 31, 2015 was $65.2 billion, compared to $62.1 billion as of september 30, 2015 and $50.8 billion as of december 31, 2014. flow new insurance written for the fourth quarter was $6.0 billion, compared to $7.4 billion in the third quarter of 2015 and $6.2 billion in the fourth quarter of 2014. for the full year 2015, flow new insurance written was $25.9 billion, compared to $23.0 billion for 2014. net premiums earned for the fourth quarter were $89.4 million, compared to $83.7 million in the third quarter of 2015 and $67.8 million in the fourth quarter of 2014. for the full year 2015, net premiums earned were $326.5 million, compared to $223.2 million for 2014. the expense ratio for the fourth quarter was 33.1%, compared to 34.3% in the third quarter of 2015 and 37.8% in the fourth quarter of 2014. for the full year 2015, the expense ratio was 34.6%, compared to 43.6% for 2014. the provision for losses and lae for the fourth quarter was $4.2 million, compared to $3.4 million in the third quarter of 2015 and $3.0 million in the fourth quarter of 2014. for the full year 2015, the provision for losses and lae was $11.9 million, compared to $6.3 million for 2014. the percentage of loans in default as of december 31, 2015 was 0.35%, compared to 0.29% as of september 30, 2015 and 0.20% as of december 31, 2014. the combined ratio for the fourth quarter was 37.8%, compared to 38.4% in the third quarter of 2015 and 42.3% in the fourth quarter of 2014. for the full year 2015, the combined ratio was 38.3%, compared to 46.4% for 2014. the consolidated balance of cash and investments at december 31, 2015 was $1.3 billion, including cash and investment balances at essent group ltd. of $70.6 million. the combined risk to capital ratio of the us mortgage insurance business, which includes statutory capital for both essent guaranty, inc. and essent guaranty of pa, inc., was 15.2:1 as of december 31, 2015. over the course of 2015, essent reinsurance ltd. reinsured a total of $121.0 million of risk across freddie mac’s agency credit insurance structure (“acis”) and fannie mae’s credit insurance risk transfer (“cirt”) programs as compared to $43.9 million in 2014. 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 877-201-0168 inside the u.s., or 647-788-4901 for international callers, using passcode 23883816 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: 855-859-2056 inside the u.s., or 404-537-3406 for international callers, passcode 23883816. 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," "plan," "seek," "comfortable with," "will," "expect," "intend," "estimate," "anticipate," "believe" or "continue" 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; 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, 2014 filed with the securities and exchange commission on february 27, 2015. 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 and reinsurance through its bermuda-based subsidiary, essent reinsurance ltd. additional information regarding essent may be found at www.essentgroup.com and www.essent.us. ($ in thousands, except per share amounts) (in thousands, except per share amounts) ($ in thousands, except per share amounts) ($ in thousands) ($ in thousands) 740-759 720-739 700-719 680-699 ($ in thousands) ($ in thousands) % 68.0 % 740-759 720-739 700-719 680-699 ($ in thousands) exhibit e ($ 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) % % exhibit f ($ in thousands) (1) essent reinsurance ltd. ("essent re") provides insurance or reinsurance in connection with freddie mac's agency credit insurance structure ("acis") program and covers the risk in force on the loans in the reference pools associated with stacr notes issued by freddie mac. essent re also provides reinsurance in connection with fannie mae's credit insurance risk transfer ("cirt") program and covers the risk in force on the loans in reference pools acquired by fannie mae. exhibit g originalinsurance written ($ in thousands) remaininginsurance in force ($ in thousands) insurance number ofpolicies in force incurredloss ratio(inception to date) (1) number ofloans in default % (1) incurred loss ratio is calculated by dividing the sum of case reserves and cumulative amount paid for claims by cumulative net premiums earned. ($ in thousands) number ofpolicies indefault percentage ofpolicies indefault amount ofreserves percentage ofreserves defaulted rif reserves as apercentage of rif ($ in thousands) number ofpolicies indefault percentage ofpolicies indefault amount ofreserves percentage ofreserves reserves as apercentage of rif ($ in thousands) ($ in thousands) ($ in thousands) ($ in thousands) ($ in thousands) ($ in thousands) u.s. mortgage insurance subsidiaries: 913,182 (1) combined statutory capital equals the sum of statutory capital of essent guaranty, inc. plus essent guaranty of pa, inc., after eliminating the impact of intercompany transactions. statutory capital is computed based on accounting practices prescribed or permitted by the pennsylvania insurance department. (2) net risk in force represents total risk in force, net of reinsurance ceded and net of exposures on policies for which loss reserves have been established. (3) the risk-to-capital ratio is calculated as the ratio of net risk in force to statutory capital. (4) the combined risk-to-capital ratio equals the sum of the net risk in force of essent guaranty, inc. and essent guaranty of pa, inc. divided by the combined statutory capital. we believe that long-term growth in adjusted book value per share is an important measure of our financial performance and is a measure used to determine vesting on certain restricted stock granted to senior management under the company’s long-term incentive plan. adjusted book value per share is a financial measure that is not calculated under standards or rules that comprise accounting principles generally accepted in the united states (gaap) and is referred to as a non-gaap measure. adjusted book value per share may be defined or calculated differently by other companies. adjusted book value per share is one measure used to monitor our results and should not be viewed as a substitute for those measures determined in accordance with gaap. adjusted book value per share is calculated by dividing adjusted book value by common shares and share units outstanding. adjusted book value is defined as consolidated stockholders’ equity of the company, excluding accumulated other comprehensive income (loss) plus the proceeds, if any, from the assumed exercise of all "in-the-money" options, warrants and similar instruments. common shares and share units outstanding is defined as total common shares outstanding plus all equity instruments (including restricted share units) issued to management and the board of directors and any "in-the-money" options, warrants and similar instruments. accumulated other comprehensive income (loss) includes unrealized gains and losses that arise from changes in the market value of the company’s investments that are classified as available for sale. the company does not view these unrealized gains and losses to be indicative of our fundamental operating performance. as of december 31, 2015 and december 31, 2014, the company does not have any options, warrants and similar instruments outstanding. the following table sets forth the reconciliation of adjusted book value to the most comparable gaap amount as of december 31, 2015 and december 31, 2014 in accordance with regulation g: (in thousands, except per share amounts) source: essent group ltd.
