Essent Group Ltd.

Thank you for standing by. My name is Adam and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Essent Group Limited third quarter earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I'd now like to turn the call over to Phil Stefano. Please go ahead.

Thank you, Adam. Good morning, everyone, and welcome to our call. Joining me today are Mark Casale, Chairman and CEO, and David Weinstock, Chief Financial Officer. Also on hand for the Q&A portion of the call is Chris Curran, President of Essent Guarantee. Our press release, which contains Essent's financial results for the third quarter of 2023, was issued earlier today and is available on our website at EssentGroup.com. Our press release this quarter includes non-GAAP financial measures that may be discussed during today's call. A complete description of these measures and the reconciliation to GATT may be found in Exhibit O of our press release. 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 risks and uncertainties, which may cause our actual results to differ materially. For discussion of these risks and uncertainties, please review the cautionary language regarding forward-looking statements in today's press release, the risk factors that are included in Form 10-K filed with the SEC on February 17, 2023, 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. Earlier today, we released our third quarter 2023 financial results, which continue to benefit from both favorable credit performance and the current interest rate environment. As mentioned last quarter, rising interest rates continue to drive higher investment income and elevated persistency, which has supported our revenue growth this year. As we look ahead, we remain encouraged by the resilience of the housing and labor markets. The housing supply and demand imbalance and favorable demographic trends are expected to provide foundational support to home prices over the longer term. While economic uncertainty remains, we continue to believe the strength of our balance sheet and our buy, manage, and distribute operating model should position us well to be prepared for a range of economic scenarios. And now for our results. For the third quarter of 2023, we reported net income of $178 million compared to $178 million a year ago. On a diluted per share basis, we earned $1.66 for the third quarter compared to $1.66 a year ago, and our annualized return on average equity was 15%. As of September 30th, our book value per share was $44.98, an increase of 13% from a year ago. As of September 30th, our insurance and force was $239 billion, a 7% increase versus a year ago. Our 12-month persistency on September 30th was 87%, and approximately 70% of our in-force portfolio has a note rate of 5% or lower. We expect that the current level of rates should support elevated persistency through the end of this year. As a portfolio business, mortgage insurance is less beholden to transaction activity than other sectors of the housing ecosystem. The credit quality of our insurance in-force remains strong. with a weighted average FICO of 746 and a weighted average original LTV of 93%. Regulatory guardrails, including the qualified mortgage rule and prudential GSE underwriting guidelines, has significantly improved industry credit quality and performance since the global financial crisis. In addition, credit performance should continue to be supported by embedded home price appreciation, and implied mark-to-market values, particularly for the 2021 and prior vintages, which represent approximately 60% of the overall bulk. On the business front, while mortgage lenders remain challenged given the interest rate environment, we continue to focus on activating new accounts. We believe it is very important to identify and activate new customers while also continuing to support our current customers. Year-to-date through October 31st, we activated 95 new customers. We take a long-term approach in managing Essent and best positioning our franchise, especially during times like now as the lender landscape continues to shift and evolve. As of September 30th, Essent REIT third-party year-to-date revenues were approximately $60 million, while third-party risk and force was $2.2 billion. Essent REIT continues to leverage our expertise in mortgage credit and the Bermuda platform to deliver complementary earnings to the Essent franchise. Our title and settlement services operation incurred a pre-tax loss of approximately $4 million in the third quarter. As we continue to work through the title integration, we will be taking a long-term approach to building out the business with a focus on risk controls and operational efficiency. Cash and investments as of September 30th were $5.4 billion. Our new money yield in the third quarter was over 5%, while our annualized investment yield was 3.6% for the third quarter, up from 2.7% a year ago. Net investment income was $47 million in the third quarter, up approximately 44% from the same quarter last year. Higher investment income is another way that our business is levered to higher rates. Our balance sheet remains strong with $4.8 billion in gap equity, access to $1.6 billion in excess of loss reinsurance, and over $1 billion of available holding company liquidity. During the third quarter, we closed on our ninth Radnor Re ION transaction. The utilization of programmatic reinsurance helps to diversify our capital resources while ceding a meaningful portion of our mezzanine credit risk. With a trailing 12-month operating cash flow of $720 million and a mortgage insurance underrating margin of 75%, our franchise remains well-positioned from an earnings, cash flow, and balance sheet perspective. Our strong financial performance and capital position enable us to take a balanced approach between capital deployment and distribution. Year to date through October 31st, we were purchased approximately 1.4 million shares for $57 million. I am pleased to announce that our board has authorized a new $250 million share repurchase program and has approved a common dividend of 25 cents. We continue to see our dividend as a meaningful demonstration of the confidence we have in the stability of our cash flows, the strength of our capital position. Now, let me turn the call over to Dave.