Enact Holdings, Inc.

Hello and welcome to our next first quarter earnings call. 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. You may 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. ANAC delivered very strong financial and operational results in the first quarter of 2025. This was driven by continued execution against our strategic priorities robust credit performance, and our commitment to creating long-term value for shareholders. In addition, we delivered on our capital allocation priorities, highlighted by a new share repurchase authorization and a meaningful dividend increase, which we'll discuss in detail later. During the quarter, we reported adjusted operating income of $169 million, up 2% year over year. Adjusted earnings per share was $1.10, up 6% year-over-year, adjusted return on equity was 13.4%, and insurance in force was $268 billion, which was up 2% year-over-year. Housing market conditions in the first quarter were similar to prior recent periods and supported our strong performance. Housing inventories stayed tight with sustained elevated home prices despite high borrowing costs. While affordability remains challenged, there is potential for improvement if mortgage rates decline. Additionally, the consumer and labor market continue to be stable with wage growth moderating slightly and a moderate rise in inflation. Looking ahead, we continue to operate in a dynamic and complex environment driven by shifting economic policies and elevated geopolitical uncertainty. However, Over the longer term, we believe the drivers of the housing market are intact, given the pent-up demand in first-time homebuyer population as more Americans reach the average first-time homebuyer age. Overall, we believe that mortgage insurance will continue to be a crucial resource to both buyers and lenders alike. Against this backdrop, our capital position and credit performance remain key strengths. Our PMR sufficiency ratio stood at a robust 165%, highlighting our strong capital foundation. Our credit and underwriting quality remains strong and is further supported by the significant embedded equity within our portfolio. At the end of the first quarter, approximately 8% of our insurance in force had mortgage rates at least 50 basis points above March's average mortgage rate of 6.7%, and the credit quality of our insured portfolio remained strong. Additionally, the risk-weighted average FICO score of the portfolio was 745. The risk-weighted average load-to-value ratio was 93%, and layered risk was 1.3% of risk-in-force. Pricing was, again, constructive in the quarter, and we maintained our commitment to prudent underwriting standards. Our pricing engine, which we have recently branded as RAID 360, allows us to deliver competitive pricing on a risk-adjusted basis. And we continue to underwrite and select risk prudently while generating attractive returns. We saw favorable delinquency and cure performance during the quarter that followed typical seasonal sequential trends. Total delinquencies improved and were down 5% sequentially, with new delinquencies also decreasing by 11%. We have now passed the peak of new delinquencies from the recent hurricane, and as expected, we are seeing favorable cure trends from those events. Additionally, a significant portion of our portfolio continues to have a considerable amount of embedded equity, and when combined with our loss mitigation efforts, drove a cure rate of 56% which aligns with the strength of cure rate trends in the first quarter of each year. This strong cure rate drove a reserve release of $47 million during the quarter, and our resulting loss ratio was 12%. We continue to see strong credit performance and remain well-reserved for a range of scenarios. Dean will have more to say on this shortly. The strength of our capital position and cash flows enabled us to consistently deliver on our capital allocation priorities, which are to support existing policyholders by maintaining a strong balance sheet, invest in our business to drive organic growth and efficiency, fund attractive new business opportunities to diversify our platform, and return excess capital to shareholders. As it relates to diversifying our platform, Anakri continues to perform well, maintaining a strong underwriting and attractive return profile. During the quarter, we continued to participate in GSC CRT transactions that came to market in both the single-family and multifamily markets. Anakri continues to be a long-term growth vehicle for our company. We continue to maintain a disciplined approach to expense management while investing in technologies and processes that improve the customer experience and our business operation. As I mentioned earlier, we deployed our latest generation of our comprehensive rate engine, RACE 360, which leverages our proprietary data combined with market information, advanced analytical models, and machine learning capabilities. Rate 360 enables us to deliver competitive risk-adjusted pricing to our lender partners and consumers while enabling prudent risk selection and generating attractive returns. RAID 360 enhances our ability to serve our customers and drive profitable growth by enabling us to adjust pricing more effectively and quickly in a rapidly evolving, increasingly complex market and represents our ongoing commitment to innovation and leadership in our industry. During the quarter, our expenses improved with a 9% reduction sequentially and were down 1% from the same period in 2024, despite the ongoing inflationary environment. We are pleased with this performance and are reaffirming our 2025 expense guidance range of $220 million to $225 million. We continue to prioritize maintaining our strong financial foundation and flexibility and our robust balance sheet positions us to prudently manage risk and generate long-term shareholder value. We again delivered on our commitment to return capital to our shareholders in the first quarter by returning over $94 million through share buyback and our quarterly dividend. We issued a press release last night announcing that our board of directors authorized a new $350 million share repurchase program and approved a 14% increase to our dividend from 18.5 cents to 21 cents per share. We continue to expect to deliver capital returns in 2025, similar to 2024 levels. Before I turn the call over to Dean, I would like to comment on how we are positioned for an uncertain macroeconomic backdrop. We have had a good start to 2025, and we continue to operate from a position of strength. We are closely monitoring development and remain prepared to navigate a range of scenarios. The MI industry has fundamentally transformed since the global financial crisis. Specifically, in regards to enact, our business fundamentals remain solid. We are supported by our large, diverse pool of insurance and force, our commitment to underwriting and pricing discipline, embedded home price appreciation across our book, our prudent approach to reserves, and a resilient investment portfolio. Our insurance and force and our 2025 and 2026 books have meaningful coverage via our CRT program. We also maintain strong financial flexibility with our robust PMR sufficiency well above our regulatory requirements and a very strong statutory capital position. We believe we are operating from a point of strength, and we remain committed to executing against all aspects of our strategy and creating value for all of our stakeholders. In closing, I want to thank our entire ENAC team for their unwavering commitment and outstanding performance. As we look ahead, we are encouraged by the constructive and collaborative dialogue we have had to date with the new administration and look forward to continued constructive engagement. We remain confident in our strategy and our ability to deliver continued value for our customers, employees, and shareholders in 2025 and beyond. With that, I will now turn the call over to Dean.