Executive Summary

ESNT delivered solid Q1 2025 results: Revenue $317.6M and diluted EPS $1.69, with YoY investment income tailwinds and strong portfolio persistency; EPS and revenue modestly beat S&P Global consensus, aided by higher net investment income and stable base premium rates . Q1 EPS $1.69 vs $1.65 in Q3’24 and $1.58 in Q4’24; Revenues $317.6M vs $316.6M in Q3’24 and $315.0M in Q4’24 . S&P Global consensus: EPS $1.649*, revenue $310.8M* (beat) (see Estimates Context).
Credit trends remained benign within expectations: default rate fell to 2.19% from 2.27% in Q4, with provision for losses down sequentially to $31.3M from $41.0M in Q4; MI loss ratio improved to 13.1% from 16.3% .
Capital and reinsurance positioning stay strong: PMIERs sufficiency ratio at 172%, ~$1.5B excess available assets; expanded reinsurance (forward quota share for 2025–2026; additional XOL deals effective July 1) and increased affiliate cession to 50% beginning Q2 (retro to Jan 1) support capital efficiency and risk transfer .
Capital return/catalysts: Declared $0.31 dividend; repurchased 3.9M shares YTD through April 30 for ~$218M, with $429M remaining under the $500M program—management emphasized valuation-sensitive buybacks and balanced capital allocation, which are likely stock drivers near term .

What Went Well and What Went Wrong

What Went Well

Revenue and EPS beat S&P Global consensus; topline benefited from higher net investment income (+12% YoY to $58.2M) and stable premium yields; management cited “favorable credit performance, elevated portfolio persistency and higher investment income” .
Credit remained within plan: default rate improved sequentially to 2.19% (from 2.27%), and MI loss ratio declined to 13.1% (from 16.3%); management expects defaults to remain in the 2–3% range and reminded that many defaults do not translate into claims due to HPA and cures .
Capital strength and risk transfer: PMIERs sufficiency at 172% (~$1.5B excess); two forward quota share deals (25% of eligible 2025–2026 NIW) and two XOL transactions (effective July 1) plus increased affiliate quota share to 50% enhance flexibility and reduce mezzanine risk .

What Went Wrong

NIW softer QoQ amid higher rates and constrained affordability: $9.95B vs $12.22B in Q4’24 (seasonality/rates), though up vs $8.32B in Q1’24 .
Expense ratio ticked up: MI expense ratio rose to 18.7% (from 17.5% in Q4) as operating expenses increased; management guided MI other underwriting and operating expenses to $160–$165M for FY 2025 .
Loss provision higher YoY: $31.3M vs $9.9M in Q1’24, reflecting seasoning, storm-related dynamics and portfolio mix; though sequentially lower than Q4’s $41.0M .

Financial Results

Summary Financials vs Prior Quarters and S&P Consensus

Metric	Q3 2024	Q4 2024	Q1 2025	Q1 2025 S&P Consensus
Total Revenues ($M)	316.6	315.0	317.6	310.8*
Net Premiums Earned ($M)	248.9	244.5	245.8	—
Net Investment Income ($M)	57.3	56.6	58.2	—
Net Income ($M)	176.2	167.9	175.4	—
Diluted EPS ($)	1.65	1.58	1.69	1.649*

Notes: S&P Global consensus estimates marked with *. Values retrieved from S&P Global.

Mortgage Insurance (MI) Margins

Metric	Q3 2024	Q4 2024	Q1 2025
Loss Ratio (%)	12.9	16.3	13.1
Expense Ratio (%)	16.7	17.5	18.7
Combined Ratio (%)	29.6	33.8	31.8

Segment Revenue Breakdown

Segment Total Revenues ($M)	Q3 2024	Q4 2024	Q1 2025
Mortgage Insurance	284.4	280.7	288.9
Corporate & Other	32.2	34.3	28.7

KPIs

KPI	Q3 2024	Q4 2024	Q1 2025
New Insurance Written (NIW) ($M)	12,513.7	12,221.0	9,945.3
Insurance in Force (IIF) EOP ($M)	242,976.0	243,645.4	244,692.5
Annual Persistency (%)	86.6	85.7	85.7
Base Avg Premium Rate (%)	0.41	0.41	0.41
Net Avg Premium Rate (%)	0.35	0.35	0.36
Loans in Default (count)	15,906	18,439	17,759
Default Rate (%)	1.95	2.27	2.19
Book Value/Share ($)	53.11	53.36	55.22
PMIERs Sufficiency Ratio (%)	189	178	172

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
MI Other Underwriting & OpEx ($M)	FY 2025	—	160–165	New
Base Avg Premium Rate (%)	FY 2025	~41% for 2025 (from Q4 commentary)	~41% (unchanged)	Maintained
Effective Tax Rate (%)	FY 2025	~15.5% (from Q4 commentary)	Management expects no dramatic change in 2025 from incremental affiliate cession	Maintained
Dividend/Share ($)	Q2 2025	$0.31 (run-rate)	$0.31 declared for Q2 2025	Maintained
Reinsurance (Forward Quota Share)	2025–2026	—	25% of eligible policies (two forward QS deals)	New
Affiliate Quota Share (Essent Re)	2025 NIW	35%	Increase to 50% effective Q2; retroactive to Jan 1, 2025	Raised
Excess of Loss (XOL)	2025–2026 NIW	—	Two XOL deals effective July 1 (each year)	New

Earnings Call Themes & Trends

Topic	Q3 2024 (Q-2)	Q4 2024 (Q-1)	Q1 2025 (Current)	Trend
Macro/affordability & persistency	Elevated persistency (~87%); constrained origination; long-term housing constructive	Persistency ~86%; affordability headwinds; hurricane-related default noise expected	Persistency 85.7%; pent-up demand; near-term macro headwinds but portfolio quality high	Stable narrative; near-term headwinds, long-term constructive
Pricing strategy	Programmatic pricing via EssentEDGE; steady base rate (41 bps)	Expect base rate ~41 bps in 2025	Micro price increases in select markets; through-the-cycle approach; watching tariffs	Maintained price discipline; selective tweaks
Credit/defaults & storms	Seasonality and aging; minimal storm impact in Q3; defaults 1.95%	Hurricane-related default spike; provision up; default 2.27%	Defaults 2.19%; expect 2–3% range; many defaults won’t become claims	Sequential improvement from Q4; within planned range
Reinsurance strategy	Continued ILN/XOL; strong demand	97% of portfolio reinsured; forward QS planned	Two forward QS (25% 2025–2026), two XOL (July 1), affiliate QS to 50%	Expanded protection and capital efficiency
Capital return	Dividends and measured buybacks	Dividend to $0.31; $500M authorization; opportunistic repurchases	3.9M shares repurchased YTD thru Apr; more capacity left; valuation-sensitive	Accelerated buybacks
Title business	Small, rate-sensitive; building capacity	Expect ‘more of the same’ near term; cost drag; long-term optionality	Limited commentary; remains non-core to near-term earnings	Neutral/slightly negative near term
Taxes/Regulatory (Bermuda)	—	2025 ETR ~15.5%; limited international presence exemption to 2030	Affiliate cession to 50% improves cash movement; no dramatic ETR change expected	Maintained

Management Commentary

“We continue to benefit from favorable credit performance, elevated portfolio persistency and higher investment income.” — Mark Casale, CEO .
“Annualized investment yield for the first quarter was 3.8%... new money rates remained over 5%... a tailwind for investment income.” — CEO .
“We entered into two forward quota share transactions... covering 25% of eligible policies in 2025 and 2026” and “two excess of loss transactions, effective July 1 of each year.” — Press release/CEO .
“We decided to increase the ceding percentage of our affiliate quota share from 35% to 50%... effective in the second quarter and retroactive to NIW starting from January 1, 2025.” — CFO .
“We repurchased nearly 4 million shares for over $200 million [YTD through April 30]... we are valuation-sensitive when it comes to buying back shares.” — CEO .
“MI operating expenses... will be between $160 million and $165 million for the full year 2025.” — CFO .

Q&A Highlights

Affordability cycle and geography: Management sees continued affordability constraints and elevated persistency; selectively raised pricing in certain markets to test elasticity; longer-term demand remains robust with first-time homebuyer age rising to 38 (pent-up demand) .
Macro/tariffs and pricing: No broad pricing changes yet; through-the-cycle pricing framework maintained; will reassess if a macro “event” materializes .
Credit outlook: Default rate expected in 2–3% range; many defaults do not result in claims due to cures/HPA; provisioning occurs at two missed payments but not all become paid claims .
Capital return mechanics: $157M buybacks in Q1 and $61M in April; plan to maximize ordinary dividends from MI subs subject to credit; affiliate cession increases cash flow efficiency .
Taxes: Incremental affiliate cession not expected to materially change 2025 ETR; Bermuda exemption through 2030, then 15% tax thereafter .

Estimates Context

Q1 2025 vs S&P Global consensus: EPS $1.69 actual vs $1.649* consensus (beat); Revenue $317.6M actual vs $310.8M* consensus (beat). Estimate counts: EPS (6), Revenue (5). Upcoming quarters: Q2 2025 EPS est $1.708*, revenue $318.2M* [GetEstimates].
Notes: S&P Global consensus values marked with *. Values retrieved from S&P Global.

Key Takeaways for Investors

Modest EPS and revenue beats with sequential credit improvement (loss ratio down, default rate down) and persistent investment income tailwinds should support near-term sentiment .
Reinsurance depth (forward QS/XOL) and higher affiliate cession enhance capital efficiency and reduce earnings volatility through mezzanine risk transfer; PMIERs excess remains sizable (172%, ~$1.5B) .
Buyback cadence accelerated YTD (~$218M through April 30) with ample authorization remaining—valuation-sensitive repurchases can amplify BVPS/ROE compounding into a low-growth NIW backdrop .
MI expense ratio rose; management guided MI OpEx to $160–$165M for 2025—watch operating leverage as NIW normalizes; base premium rate expected to hold near 41 bps in 2025 .
Credit normalization remains the key watch item—management’s 2–3% default expectation and commentary that many defaults do not become claims reduces tail risk but seasonality/portfolio aging could keep provisions choppy .
Strategic optionality (capital, potential industry consolidation, title option value) plus strong cash generation provide multiple levers for shareholder returns over the medium term .

Additional relevant press releases: ESNT added David Benson (ex-Fannie Mae) and April Galda Joyce to its Board on May 22, 2025, strengthening governance and housing/insurance expertise .

Essent Group Ltd. (ESNT)·Q1 2025 Earnings Summary