Essent Group Ltd.

Thank you, Rob. 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 first quarter of 2024, was issued earlier today and is available on our website at EssentGroup.com. Our press release includes non-GAAP financial measures that may be discussed during today's call. A complete description of these measures and the reconciliation to get 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 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 included in our Form 10-K filed with the SEC on February 16, 2024, 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 first quarter 2024 financial results. Our results continue to benefit from the favorable credit performance of our insured portfolio, and the impact of higher rates on both persistency and investment earnings. Given the state of the economy and higher rates, we are encouraged by the resilience of housing and the labor market. Over the longer term, our view remains constructive. We believe that improvement in supply, demand, and balances, along with favorable demographics, will continue to support housing growth, which is positive for our franchise. And now for our results. For the first quarter of 2024, we reported net income of $182 million compared to $171 million a year ago. On a diluted per share basis, we earned $1.70 for the first quarter compared to $1.59 a year ago. On an annualized basis, our return on average equity was 14%. As of March 31st, our U.S. mortgage insurance and force was $238 billion a 3% increase versus a year ago. Our 12-month persistency on March 31st was 87%, the same as last quarter, and over 70% of our in-force portfolio has a note rate of 5.5% or lower. We expect that the current level of rates should support elevated persistency throughout 2024. Credit quality of our insurance and force remains strong, with a weighted average FICO of 7.46%, and a weighted average original LTV of 93%. Overall, we remain pleased with the quality of the business that we are writing. Also, we anticipate that embedded home equity within the existing book should mitigate potential claims in the current housing environment. On the mortgage insurance front, we continue to focus on activating new lenders and strengthening our operating infrastructure. This includes enhancing our proprietary scoring engine, S&Edge, by integrating additional data sources. Our lenders benefit from the amount of data that we analyze in delivering our best rate to borrowers while also enabling us to optimize our unit economics. Given the challenging mortgage origination market, we believe that having access to S&Edge is an advantage for lenders and their borrowers. At S&RE, we continue to leverage our mortgage credit and reinsurance expertise in generating earnings for the S& franchise. As of March 31st, Essent Ridge's third-party risk and force was approximately $2.3 billion, up 10% from the first quarter of 2023. Our title operations incurred a pre-tax loss of approximately $4 million in the first quarter, similar to the third quarter and fourth quarter of 2023. With the post-acquisition integration complete, we have begun the build-out of Essent Title, which should enable us to leverage our strong operational infrastructure lender network, and risk analytics. Cash and investments as of March 31st were $5.8 billion, and our new money yield in the first quarter was approximately 5%. The annualized investment yield for the first quarter was 3.7%, up from 3.4% a year ago. New money rates have largely held stable over the past several quarters. We continue to operate from a position of strength with $5.2 billion in gap equity access to $1.4 billion in excess of loss reinsurance, and over $1 billion of available holding company liquidity. With a trailing 12-month mortgage insurance underwriting margin of 76%, our franchise remains well-positioned from an earnings, cash flow, and balance sheet perspective. In the first quarter of 2024, we entered into a quota share transaction with a panel of highly rated reinsurers to provide forward protection for our 2024 business. We are encouraged by the strong interest from the reinsurance market in supporting our program. Looking forward, we will continue executing upon our reinsurance strategy to mitigate earnings volatility during economic cycles while also providing capital relief. During the quarter, we were pleased that S&P upgraded the financial strength ratings of S&G and S&RE to single A-, and that Moody's affirmed S&G's A3 rating and raised its rating outlook to positive. We believe these actions reflect the significant enhancements made by our industry in transforming MI into a sustainable and through-the-cycle franchise. Given our strong financial performance and capital position, we continue to take a measured approach to capital distribution. Our goal is to balance capital deployment opportunities to generate incremental revenues while optimizing capital distributions and shareholder returns. Now let me turn the call over to Dave.

Thanks, Mark, and good morning, everyone. Let me review our results for the quarter in a little more detail. For the first quarter, we earned $1.70 per diluted share compared to $1.64 last quarter and $1.59 in the first quarter a year ago. Our U.S. mortgage insurance portfolio ended March 31, 2024, with insurance in force of $238.5 billion, essentially flat compared to December 31, and 3% higher compared to the first quarter a year ago. Persistency at March 31st was 86.9%, unchanged from the fourth quarter. Net premium earned for the first quarter, $246 million, and included $17.8 million of premiums earned by Essent Re on our third-party business, and $15.3 million of premiums earned by the title operations. The base average premium rate for the U.S. mortgage insurance portfolio for the first quarter was 41 basis points. And the net average premium rate was 36 basis points for the first quarter, both increasing one basis point from last quarter. Then investment income increased $1.5 million, or 3%, to $52.1 million in the first quarter of 2024 compared to last quarter, due primarily to higher balances and continuing to invest at higher yields than the book yield of our existing portfolio. Other income for the first quarter was $3.7 million compared to $6.4 million last quarter. The largest component of the decrease was the change in fair value of embedded derivatives in certain of our third-party reinsurance agreements. In the first quarter, we recorded a $1.9 million decrease in the fair value of these embedded derivatives compared to a $412,000 increase recorded last quarter. The provision for loss and loss adjustment expenses was $9.9 million in the first quarter, compared to $19.6 million in the fourth quarter of 2023, and a benefit of $180,000 in the first quarter a year ago. At March 31st, the default rate on the U.S. mortgage insurance portfolio was 1.72%, down eight basis points from 1.80% at December 31st, 2023, largely due to favorable cure activity on prior year defaults. Other underwriting and operating expenses in the first quarter were $57.4 million and include $11.8 million of title expenses. Expenses for the first quarter also include title premiums retained by agents of $9.5 million, which were reported separately on our consolidated income statement. Our consolidated expense ratio was 27% this quarter. Our expense ratio excluding title, which is a non-GAAP measure, was 20% this quarter. A description of our expense ratio excluding title and the reconciliation gap may be found in Exhibit O of our press release. We now estimate that other underwriting and operating expenses excluding our title operations will be approximately $185 million for the full year 2024. As Mark noted, our holding company liquidity remains strong and includes $400 million of undrawn revolver capacity under our committed credit facility. On March 31st, we had $425 million of term loan outstanding, with a weighted average interest rate of 7.06%, down from 7.11% at December 31st. At March 31st, 2024, our debt-to-capital ratio was 8%. At March 31st, Essendon Guarantee's PMR sufficiency ratio, excluding the 0.3 COVID factor, remained strong at 170%, with $1.4 billion in excess available assets. During the first quarter, Essendon Guarantee paid a dividend of $45 million to its U.S. holding company. Based on unassigned surplus at March 31st, the U.S. mortgage insurance companies can pay additional ordinary dividends of $331 million in 2024. At quarter end, the combined U.S. mortgage insurance business statutory capital was $3.5 billion, with a risk-to-capital ratio of 10 to 1. Note that statutory capital includes $2.4 billion of contingency reserves at March 31st. Over the last 12 months, the U.S. mortgage insurance business has grown statutory capital by $246 million, while at the same time paying $250 million of dividends to our U.S. holding company. During the first quarter, Essendon repaid a dividend of $37.5 million to Essendon Group. Also in the quarter, Essendon Group paid cash dividends totaling $29.6 million to shareholders, And we repurchased 97,000 shares for $5 million under the authorization approved by our board in October 2023. Now let me turn the call back over to Mark.