Essent Group Ltd.

Hello, and thank you for standing by. My name is Tiffany, and I will be your conference operator today. At this time, I would like to welcome everyone to the Essent Group Limited fourth 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 would like to ask a question during that time, simply press star, then the number one on your telephone keypad. I would now like to turn the call over to Phil Stefano, Investor Relations. Phil, please go ahead.

Thank you, Tiffany. Good morning, everyone, and welcome to our call. Joining me today are Mark Cassell, Chairman and CEO, and David Weinstock, 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 fourth quarter and full year 2025, was issued earlier today and is available on our website at SMgroup.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 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, which was filed with the SEC on February 19, 2025. And then the 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 financial results for the fourth quarter and full year of 2025. Our strong performance this year was driven by positive credit trends and the benefit of higher interest rates from both persistency and investment income. These results demonstrate the strength of our buy, manage, and distribute operating model in generating high-quality earnings, which has enabled us to take a more strategic approach to capital management. For the fourth quarter of 2025, we reported net income of $155 million, or $1.60 per diluted share. For the full year, we earned $690 million, or $6.90 per diluted share, while generating a return on average equity of 12%. As of December 31st, our book value per share was $60.31, an increase of 13% from a year ago. As of December 31st, our mortgage insurance and force was $248 billion, a 2% increase versus a year ago. Our 12-month persistency on December 31st was 86%. with roughly 60% of our in-force portfolio having a note rate of 6% or lower. Over the last several quarters, persistency has been relatively flat, reflecting higher mortgage rates and a smaller origination market. As a result, we believe that over the near term, earned premium and insurance-in-force growth will be modest. The credit quality of our insurance-in-force remains strong, with a weighted average FICO of 747 and a weighted average original LTV of 93%. our portfolio default rate increased modestly quarter over quarter reflecting normal seasonality and the continued aging of our insurance in force. Looking forward, we believe that the substantial home equity embedded in our in-force book should mitigate ultimate claims. Outward reinsurance continues to play an integral role in operating our business. At the end of 2025, 98% of our mortgage insurance portfolio was subject to some form of reinsurance. During the fourth quarter of 2025, we entered into a quota share transaction with a panel of highly rated reinsurers, providing forward protection for our 2027 business. We remain pleased with the execution of our reinsurance strategy, seeding a meaningful portion of our mezzanine credit risk and diversifying our capital resources. On the Bermuda front, S&RE continues to be a very effective platform in deploying capital and generating additional earnings for S&RE. For 2025, S&RE earned nearly $80 million in third-party net income while ending the year with $2.3 billion in risk. In addition, during the fourth quarter, S&RE entered into quota share reinsurance agreements backed by funds at Lloyds to reinsure certain property and casualty risks. These agreements are effective in the first quarter of 2026, and we expect $100 to $150 million of written premium with approximately two-thirds to be earned in 2026. at a combined ratio consistent with a diversified P&C reinsurance company. Looking forward, we believe that P&C will be an ongoing opportunity to generate supplemental earnings for S&RE. On the title front, we remain focused on activations, leveraging our lender network, and building out our transaction management system. However, as a primarily centralized refinance platform, our title operations are unlikely to have a substantial impact on earnings unless there's a material decrease in mortgage rates. Our consolidated cash and investments as of December 31st totaled $6.6 billion, with an aggregate yield for the year of 3.9%. New money yields on our core portfolio in the fourth quarter were nearly 5%, holding largely stable over the past several quarters. We continue to operate from a position of strength. with $5.8 billion in gap equity, access to $1.3 billion in excess of loss reinsurance, and $1.3 billion in cash and investments at the holding companies. With a full year 2025 operating cash flow of $856 million, our franchise remains well-positioned from an earnings, cash flow, and balance sheet perspective. We remain committed to a measured and diversified capital strategy, which enabled us to return nearly $700 million to shareholders in 2025 between dividends and repurchases. During the year, we repurchased nearly 10% of the shares outstanding at the end of 2024. Furthermore, I am pleased that our board has approved a 13% increase in our quarterly dividend of $0.35 per share starting in the first quarter of 2026. Now let me turn the call over to Dave.