Essent Group Ltd.

Good morning, ladies and gentlemen. Welcome to the Essent Group third quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode, and please be advised that this call is being recorded. After the speaker's prepared remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star 1 on your telephone keypad. And if you would like to withdraw your question, press star 1 again. And now I'd like to turn the call over to Phil Stefano, Vice President, Investor Relations. Please go ahead.

Thank you, Beau. Good morning, everyone, and welcome to our call. Joining me today are Mark Gasau, Chairman and CEO, and David Weinstock, Interim Chief Financial Officer. Also on hand for the Q&A portion of the call is Chris Caron, President of Essent Guarantee. Our press release, which contains Essent's financial results for the third quarter of 2022, was issued earlier today and is available on our website at EssentGroup.com. Prior to getting started, I would like to remind participants that today's 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 the risks and uncertainties, which may cause actual results . For discussion of these risks and uncertainties, please review the cautionary language regarding forward-looking statements in state's press release, the risk factors included in our Form 10-K filed with the SEC on February 16, 2022, 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, Phil, and good morning, everyone. Today we released our quarterly financial results, which continue to reflect the strong operating performance of our business. For the third quarter of 2022, we reported a net income of $178 million as compared to $205 million a year ago. On a diluted per share basis, we earned $1.66 for the third quarter, compared to $1.84 a year ago, and our annualized return on average equity was 17%. Our long-term outlook for housing remains constructive, despite near-term headwinds. Sharply higher rates and elevated home price appreciation have pressured affordability, resulting in a slowdown of housing activity. However, housing inventory remains low at approximately three months, partially due to reductions in supply from the lock-in effect of existing homeowners and low-rate mortgages. Also, favorable demographic trends should continue to provide foundational support to housing demand. As of September 30th, our insurance in force was $223 billion, a 7% increase compared to a year ago. Our three-month annualized persistency on September 30th was 84%, while the weighted average note rate of our book is approximately 3.7%. As a result, The rise in rates should continue to translate to higher persistency for our in-force portfolio, which remains well positioned from both an expected duration and embedded home equity perspective. The credit quality of our insurance in-force remains strong, with a weighted average FICO of 746 and a weighted average original LTV of 92%. While the strong labor market has bolstered credit performance, forward results remain levered to unemployment trends. In the third quarter, we closed our eighth Radnor Re-ILN transaction, obtaining $238 million of fully collateralized excess of loss reinsurance coverage on our NIW from October 2021 through July 2022. This follows our quota share and excess of loss transactions placed earlier in the year, covering 40% of our current year business with forward reinsurance protection. As of September 30th, approximately 98% of our portfolio is reinsured. Our reinsurance entity, SNRE, continues to write profitable GSE business and support our MGA clients. In response to the current environment, SNRE is benefiting from increased reinsurance pricing while moving up the structure to optimize returns. As of September 30th, third-party annual run rate revenues are approximately $60 million, while our risk in force was $2 billion. We remain pleased with S&RE's performance and its contribution to the profitability of our franchise. Cash-in investments as of September 30th were nearly $5 billion, and the investment yield for the third quarter of 2022 was 2.7%, up from 2% in 2021. The recent rise in rates is providing clear tailwinds for our investment portfolio, as yields in the third quarter on new money approximated 4%. We continue to operate from a position of strength with $4.3 billion in gap equity, access to $2.6 billion in excess of loss reinsurance, and approximately $1 billion of available liquidity. With a trailing 12-month operating cash flow of $608 million, our franchise remains well-positioned from an earnings, cash flow, and balance sheet perspective. On September 21st, AMBEST affirmed the A financial strength rating of our insurance subsidiaries. S&Garantee also has a financial strength ratings of A3 by Moody's and BBB Plus by S&P. We continue to take a measured approach to capital and remain committed to managing for the long term. Given our strong 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 23 cents. We continue to believe that dividends are a meaningful demonstration of the confidence we have in the stability of our cash flow and the strength of our operating model. Now, let me turn the call over to Dave.