Enact Holdings, Inc.

Good day and thank you for standing by. Welcome to the ANAC's Q2 2020 for Earnings Conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising that your hand is raised. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Mr. Daniel Cole, Vice President of Investor Relations. Please go ahead.

Thank you and good morning. Welcome to our second 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 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. I'll turn the call over to Rohit.

Thank you, Daniel. Good morning, everyone. Our second quarter results concluded an excellent first half of 2024. We remain focused on our priorities of driving profitable growth, maximizing efficiency, and creating value for our shareholders. Our disciplined execution across each of these translated into strong financial performance. During the quarter, we reported adjusted operating income of $201 million, up 21% sequentially and 13% year-over-year. Adjusted EPS was $1.27. Adjusted return on equity was a solid 17%, and insurance-enforced was a record $266 billion, up 1% sequentially and up 3% year-over-year. As we mentioned last quarter, we continue to navigate through a complex operating environment. The U.S. economy is holding up well with a strong labor market and household balance sheets that remain healthy overall. While macro factors such as inflation, higher interest rates, and geopolitical conflicts remain potential risks, there are a number of positive trends supportive of housing and credit. Delinquency rates for prime mortgage borrowers are consistent with pre-pandemic levels. Our manufacturing quality continues to be strong, and our portfolio continues to retain high embedded equity. Over the longer term, the drivers of demand also remain intact as a growing number of people with less than 20% down payment resources reach the typical age for purchasing their first home. Overall, we are confident that mortgage insurance will continue to be a crucial resource to both buyers and lenders alike. Higher rates continue to benefit persistency, which again offset the effect of a higher rate environment on origination volumes and help drive insurance-enforced growth. The credit quality of our insured portfolio continues to be strong. At quarter end, the risk-weighted average FICO score of the portfolio was 745. The risk-weighted average loan-to-value ratio was 94%, and layered risk was 1.3%. Pricing remained constructive in the quarter, and we maintained our commitment to prudent underwriting standards. Our pricing engine allows us to deliver competitive pricing on a risk-adjusted basis, and we continued to underwrite and select risk prudently while generating attractive returns. The delinquency rate in the quarter was 2%, flat as compared to last quarter and consistent with our expectations. During the quarter, we released reserves of $77 million, driven by favorable credit performance and our effective loss mitigation efforts. Based on continued strong cure performance and our current market expectations, we reduced our claim rate on new and existing delinquencies from 10% to 9% during the quarter. This change is aligned with our measured and prudent approach to loss reserves. We believe we remain well-reserved for a range of scenarios. Dean will have more to say on this shortly. We continue to operate from a position of financial strength and flexibility. At quarter end, our PMR sufficiency was 169% or $2.1 billion of sufficiency, and approximately 77% of our risk in force was subject to credit risk transfers. We continue to execute against our CRT strategy during the quarter with an additional excess of loss transaction, further reducing our credit risk and enhancing our capital efficiency. During the quarter, we issued $750 million in senior notes, further strengthening our financial position by allowing us to refinance near-term maturities and saving $2 million in annual interest expense. This was our first investment-grade debt issuance as a public company and the largest investment-grade debt issuance in the industry in over a decade. The strength of our capital position and cash flows has allowed us to continue executing against our capital allocation priorities, which are supporting existing policyholders, growing our current business, investing in attractive new business opportunities, and returning excess capital to shareholders. On our last capital allocation priority, we continued to return capital to our shareholders. During the quarter, we repurchased $49 million of shares. As of June 30th, we have completed our $100 million share repurchase program and have $238 million remaining in our recently announced $250 million authorization. We also distributed $29 million to shareholders via our quarterly dividend. We now expect our total capital return to be between $300 and $350 million in 2024, reflecting our continued strong performance and balance sheet. Finally, we have continued to pursue strategic opportunities to extend our platform into compelling adjacencies that enhance our return profile, differentiate our platform, and leverage our core competencies. A year ago, we successfully launched Anacri, expanding our platform into the GSE credit risk transfer market. During the quarter, we continued to participate in the GSE CRT transactions that came to market. Since its inception, Anacri has performed well, maintaining a strong underwriting and attractive return profile. An Act Re is sufficiently funded to support its growth for the foreseeable future and remains a long-term capital and expense efficient growth opportunity. Finally, I would like to take a moment to touch on our culture. At an Act, we strive to create a culture that encourages collaboration and are committed to maintaining an engaging work environment where our teams are at their best. I'm pleased to announce that during the quarter, an act was recognized as one of the best places to work by the Triangle Business Journal. We appreciate this acknowledgement of our leadership in the workplace and a testament to the strength of our team. Overall, we are pleased with our excellent performance in the first half of 2024. Looking ahead, we are focused on executing against our strategic priorities and are committed to maximizing value for all of our shareholders. With that, I will now turn the call over to Dean.