Enact Holdings, Inc.

Hello and welcome to the next first quarter earnings call. Please be advised that today's conference call is being recorded. I would now like to hand the conference over to your first speaker, David Cole, Vice President of Finance. 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 SEC, which will be available on our website. Please keep in mind the earnings materials and management's prepared remarks today will 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 a strong start to 2026 amid a volatile rate environment. This performance was underpinned by the disciplined execution of our strategy, resilient credit performance, and our clear focus on long-term value creation. For the first quarter, we reported adjusted operating income of $172 million, or $1.21 per deleted share. Adjusted return on equity was 13%, and we generated strong new insurance return of $13 billion, resulting in total insurance in force of $272 billion. The housing market remained dynamic. with mortgage rate volatility impacting mortgage activity in the quarter. Overall, purchase application volume followed seasonal trends, while lower rates early in the quarter supported elevated refinance applications. Additionally, recent loan vintages with lower embedded equity have contributed to increased mortgage insurance penetration in refinance activity. Conversely, as rates increased during March and April, the refinance trend slowed, but we have seen the impact of the spring selling season on purchase applications. Against this backdrop, persistency remained elevated at 80% in the first quarter. Additionally, across our portfolio, 58% of loans in our book have rates below 6%, providing continued support for elevated persistency. While the macro environment remains uncertain and inflationary pressures accelerated as gas prices have risen, the consumer continues to show resilience. Overall, labor market conditions remain supportive and credit performance remains healthy. Importantly, we have not seen any meaningful impact within our credit portfolio, and overall credit trends remain in line with our expectations. We will continue to monitor these dynamics closely and believe that the underlying credit fundamentals of our business remain strong. In fact, our insurance-in-force portfolio remains resilient with a risk-weighted average FICO score of 746, risk-weighted average loan-to-value ratio of 93%, and layered risk was 1.2% of risk-in-force. Pricing remained constructive in the quarter, and our dynamic risk-adjusted pricing engine, Rate360, is enabling us to prudently target the right risk for the right price at a granular level with changing market conditions. Turning to losses, total delinquencies were down 1% sequentially, with new delinquencies down 1% and cures up 13%, both consistent with seasonal trends. Our strong cure performance was driven by favorable credit trends and our effective loss mitigation efforts. This drove a net reserve release of $39 million in the quarter, and our resulting loss ratio was 15%. Credit performance continues to be strong, and we are well-reserved for a range of scenarios. Turning to expenses, we delivered another quarter of prudent expense management, putting us on track to achieve our 2026 expense guidance range of $215 million to $220 million, excluding reorganizational costs. We continue to execute against our capital allocation priorities, including maintaining a strong and resilient balance sheet to support existing policyholders, investing in our business to drive organic growth and operating efficiencies, funding attractive new business opportunities, and returning excess capital to shareholders. At the end of the quarter, our PMR sufficiency ratio was 162%, providing significant financial flexibility and our credit and investment portfolios are in excellent shape. Our strong capital position is further reinforced by our CRT program and the backing of our undrawn credit facility. We continue to execute on our growth and diversification efforts. Our growth efforts in ENACRE continue to deliver consistent and strong performance in the first quarter, generating attractive risk-adjusted returns. ENACRE remains a long-term growth and diversification opportunity that is both capital and expense efficient. Our strong performance supported robust capital returns to our shareholders. During the first quarter, we returned $123 million through share repurchases and dividends and are pleased to announce that our board of directors approved a 14% increase to our dividend from 21 cents to 24 cents per share, which also marks the fourth year that we have increased our quarterly dividend payment. We continue to expect to deliver capital returns in 2026 of approximately $500 million. Turning to recent housing policy announcements, we applaud the FHFA and the GFCs for their thoughtful approach to credit modernization through the announced limited rollout of Vantage Score 4.0. And that supports ongoing efforts to modernize credit evaluation in ways that responsibly expand access to sustainable homeownership. We remain committed to supporting our customers and to staying operationally aligned as the GSEs advance this initiative and provide additional information. Overall, we've had a great start in 2026 that positions Enact for long-term success. I want to thank our entire team for their relentless commitment and outstanding performance. With that, I will now hand the call over to Dean. Thanks, Rohit, and good morning, everyone.