Enact Holdings, Inc.

Good day and thank you for standing by. Welcome to NX first quarter 2024 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session and instructions will be given at that time. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker, Daniel Cole, Vice President of Investor Relations. Please begin.

Thank you and good morning. Welcome to our first 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 closed 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 FCC, 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.

Thank you, Daniel. Good morning, everyone. Our first quarter results marked a strong start to 2024. Our insured portfolio continued to grow. We operated with expense discipline. Credit performance remained robust, and we distributed more capital to shareholders through dividends and share repurchases than in any prior first quarter. The strong performance is a result of our commitment to our strategy, our strong position in the market, and our focus on driving long-term value creation for our shareholders. Our execution can be clearly seen in our strong financial performance. Net income for the quarter was $161 million, or $1 per diluted share. Return on equity was a solid 14%, and insurance in force increased 4% year over year to a record $264 billion, driven by a persistency of 85% and new insurance written of $11 billion. Our business continues to perform well as we navigate through a complex operating environment. The U.S. economy has been resilient with a strong labor market and healthy household balance sheet, while macro factors such as geopolitical conflicts, inflation, and higher interest rates continue to pose potential risk. Having said that, delinquency rates for prime mortgage borrowers are consistent with pre-pandemic levels, and our manufacturing quality remains solid. While higher borrowing costs have slowed origination, Home prices continue to be supported by structurally lower housing inventory as well as strong demand. We continue to be optimistic about the pent-up demand in first-time homebuyer population as more Americans reach the average first-time homebuyer age, and we believe that mortgage insurance will remain an important tool to help buyers attain this important milestone. I'll also note that higher rates continue to benefit persistency, which helps offset the effect of rates on origination volumes. The credit quality of our insured portfolio continues to be strong. At quarter end, the risk-weighted average FICO score of the portfolio was 744, and the risk-weighted average loan-to-value ratio was 93%, and layered risk was 1.3%. Pricing remained constructed through the quarter, and underwriting standards were rigorous. Our pricing engine allows us to deliver competitive pricing on a risk-adjusted basis, and we continue to underwrite and select risk prudently while managing to attract the returns. The delinquency rate in the quarter was 2%, down nine basis points sequentially and consistent with our expectations. During the quarter, we released $54 million of reserves, driven by favorable credit performance and our effective loss mitigation efforts. We remain well-reserved for a range of scenarios. We continue to operate from a position of financial strength and flexibility. At quarter end, our PMIR sufficiency was 163 percent, or $1.9 billion of sufficiency, and approximately 90 percent of our risk in force was subject to credit risk transfers. The strength of our capital position and cash flows allowed us to both reinvest in the business and return capital to our shareholders aligned with our capital allocation priorities. We've executed on strategic opportunities to extend our platform into compelling adjacencies while maintaining a sharp focus on our core MI business. An act we continue to perform well, and we continue to participate in GSC CRT transactions that came to market during the quarter. We remain pleased with the strong underwriting and attractive return profile of Anakri. We returned $75 million of capital to shareholders in the first quarter. Given the increased liquidity in our stock, we increased share repurchases in the first quarter to $49 million and remain committed to returning capital to shareholders. This is also reflected in today's announcement that we are increasing our quarterly dividend 16% to 18.5 cents per share, as well as the Board's decision to approve a new share repurchase authorization of $250 million. We continue to expect to deliver capital returns in 2024, similar to 2023 levels. I'm also pleased to note that during the quarter, S&P upgraded Emeco's long-term financial strength and issuer credit rating to A- stable. and EHI's long-term issuer credit rating to BBB minus stable. This is the fourth upgrade from S&P since our IPO and demonstrates the strength of our business and execution by our dedicated team. Additionally, both Moody's and Fitch upgraded us to a positive outlook, reflecting our continued strong execution and positive financial results. Our strong quarter is a testament to the dedication and hard work of our team, and I thank them again for their effort. Looking ahead, we remain committed to serving our customers and their borrowers while maximizing value for our shareholders. With that, I will now turn the call over to Dean.