Essent Group Ltd.

Ladies and gentlemen, thank you for standing by and welcome to the Essent Group Limited third quarter 2021 earnings call. All participant lines are in a listen only mode. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, send the number one on your telephone keypad. To withdraw yourself from the queue, simply press star one again. Thank you. I would now like to turn the call over to Chris Kern, Senior Vice President of Investor Relations. Please go ahead, sir.

Thank you, Paula. Good morning, everyone, and welcome to our call. Joining me today are Mark Cassell, Chairman and CEO, and Larry McAlee, Chief Financial Officer. Our press release, which contains Essence financial results for the third quarter of 2021, was issued earlier today and is available on our website at EssenceGroup.com. Prior to getting started, I would like to remind participants that these discussions are being recorded and will include the use of forward-looking statements. These statements are based on current expectations, estimates, projections, and assumptions that are subject to risks and uncertainties, which may cause actual results to differ materially. For a discussion of these risks and uncertainties, please review the cautionary language regarding forward-looking statements in today's press release. The risk factors included in our Form 10-K filed with the SEC on February 26, 2021, and any other reports and registration statements filed with the SEC, which are also available on our website. Now, let me turn the call over to Mark.

Thanks, Chris, and good morning, everyone. Earlier today, we released our third quarter earnings, which continue to demonstrate the strengths of our buy, manage, and distribute operating model in generating high-quality earnings, robust returns, and excess capital. Combined with investing capital back into the business and redistribution to shareholders through dividends and buybacks, our business is operating on all fronts. For the third quarter, we reported net income of $205 million as compared to $160 million last quarter. Income for the third quarter includes $41 million of earnings associated with some of our strategic investments and limited partnerships. On a diluted per share basis, we earned $1.84 for the third quarter compared to $1.42 last quarter, while our annualized return on average equity for the third quarter was 20%. At September 30th, our insurance and force was $208 billion, a 9% increase compared to $191 billion as of the third quarter a year ago. The credit quality of our insurance and force remains strong. with an average weighted FICO of 745 and an average LTV of 92%. Also, we have reinsurance coverage on 75% of the portfolio as of September 30th. On the business front, we formally rolled out the next generation of S&Edge in October. The latest iteration of our risk-based engine offers more refined pricing as we continue to optimize our unit economics. With edge technology sitting in the cloud, we are able to analyze large amounts of data with machine learning and seamlessly deliver price to customers. Given the commoditized nature of mortgage insurance, we believe that collecting and evaluating more data to price mortgage risk is a long-term competitive advantage. As of September 30th, we are in a position of strength with $4.2 billion in gap equity, access to $2.4 billion in excess of loss reinsurance, and over $800 million of available liquidity. With a year-to-date operating margin of 78% and operating cash flow of $518 million, our operating engine continues to drive our balance sheet strength. As evidence of this, Essent Guarantee remains the highest rated monoline in our industry at single A by AMVEST and A3 and BBB Plus by Moody's and S&P, respectively. While our preference has been to retain excess capital and reinvest back in the business, the strength of our model enables a measured approach to excess capital as evidenced by our dividend and share repurchase program. However, it's important to remind everyone that a credit event can quickly change the needs of our business, whereby capital distribution can quickly pivot to capital shortage. While reinsurance should help soften headwinds from credit cycles, we remain committed to managing capital for the long term and maintaining a fortress balance sheet. At September 30th, our book value per share was $37.58. We believe that success in our type of business is measured by growth in book value per share. Since going public in 2013, our annualized growth in book value per share is 21%, which we believe is a meaningful demonstration of our ability to invest capital and build long-term shareholder value. Finally, given our financial performance during the third quarter, I am pleased to announce that our board has approved a one cent per share increase in our dividend to 19 cents. This represents a 19% increase from the dividend that we paid in the fourth quarter of 2020. Now, let me turn the call over to Larry.