Executive Summary

Strong quarter with EPS of $1.93, a clear beat versus S&P Global consensus $1.71*; total revenue of $319.1M slightly topped $318.2M consensus*. Loss ratio fell to 6.6% and MI expense ratio improved to 15.5%, driving high-quality earnings and ROE uplift .
Credit trends remained favorable: default rate declined to 2.12% (from 2.19% in Q1), while cure activity continued; net premiums were stable and investment income modestly higher QoQ .
Capital strength and returns: PMIERs sufficiency at 176% with $1.579B excess; Board declared a $0.31 dividend; YTD through July 31, ESNT repurchased 6.8M shares for $387M, with $260M remaining under the $500M authorization .
Strategic/catalyst: Moody’s upgraded Essent Guaranty to A2 and Group senior debt to Baa2; management underscored valuation-sensitive buybacks and highlighted embedded value and persistency tailwinds as potential stock drivers .

What Went Well and What Went Wrong

What Went Well

Operating leverage: MI expense ratio improved to 15.5% (from 18.7% in Q1), contributing to EPS outperformance and lower combined ratio; CFO emphasized lower operating expenses QoQ .
Credit performance: Default rate decreased to 2.12% from 2.19% in Q1; loss ratio dropped to 6.6% from 13.1% in Q1, reflecting favorable cures and stable performance .
Strategic positioning and tone: “Our second quarter performance demonstrates the strength of our business model… We believe that our buy, manage and distribute operating model uniquely positions Essent…” — CEO Mark Casale .

What Went Wrong

Defaults still elevated YoY: Default rate 2.12% vs 1.71% a year ago; cure rate in Q2 was 26% vs 66% in Q1; average claim severity 67%, reflecting seasonality and hurricane cohort dynamics .
Title headwinds: Management reiterated title is unlikely to be a near-term earnings contributor given rates and transaction volumes .
Premium mix softness YoY: Net premiums earned down modestly vs Q2’24 ($248.8M vs $251.9M), with risk-share and title premiums also lower YoY .

Financial Results

Consolidated P&L (oldest → newest)

Metric	Q2 2024	Q1 2025	Q2 2025
Total Revenues ($M)	$312.9	$317.6	$319.1
Net Premiums Earned ($M)	$251.9	$245.8	$248.8
Net Investment Income ($M)	$56.1	$58.2	$59.3
Provision (Benefit) for Losses ($M)	$(0.3)	$31.3	$17.1
Other Underwriting & OpEx ($M)	$66.2	$71.1	$62.8
Interest Expense ($M)	$7.8	$8.1	$8.1
Net Income ($M)	$203.6	$175.4	$195.3
Diluted EPS ($)	$1.91	$1.69	$1.93

MI Segment Margins (oldest → newest)

Metric	Q2 2024	Q1 2025	Q2 2025
MI Loss Ratio (%)	(0.5)%	13.1%	6.6%
MI Expense Ratio (%)	16.7%	18.7%	15.5%
MI Combined Ratio (%)	16.2%	31.8%	22.1%

Segment Net Premiums Earned (oldest → newest)

Metric	Q2 2024	Q1 2025	Q2 2025
U.S. MI Net Premiums Earned ($M)	$217.5	$218.1	$220.3
GSE & Other Risk Share ($M)	$17.7	$15.5	$13.6
Title ($M)	$16.6	$12.2	$14.9

Key Performance Indicators (oldest → newest)

KPI	Q2 2024	Q1 2025	Q2 2025
New Insurance Written (NIW, $B)	$12.5	$9.9	$12.5
Insurance in Force (IIF, $B)	$240.7	$244.7	$246.8
Default Rate (%)	1.71%	2.19%	2.12%
Annual Persistency (%)	86.7%	85.7%	85.8%
Base Avg Premium Rate (%)	0.41%	0.41%	0.41%
Net Avg Premium Rate (%)	0.36%	0.36%	0.36%

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
MI Other Underwriting & Operating Expenses	FY 2025	$160–$165M (given on Q4’24/Q1’25 trajectory)	“On track…towards the lower end” (mid-year view)	Maintained; bias to low end
Effective Tax Rate	FY 2025	~15.5%	~15.5% (no update in Q2 call)	Maintained
Common Dividend	Quarterly	$0.31 (Q1)	$0.31 (declared for Sep 10, 2025)	Maintained
Share Repurchase Authorization	Through 2026	$500M (approved Feb 2025)	YTD through Jul 31: 6.8M shares/$387M repurchased; $260M remaining	Ongoing execution

Earnings Call Themes & Trends

Topic	Q4 2024 (two ago)	Q1 2025 (prior)	Q2 2025 (current)	Trend
Housing demand & affordability	Delayed demand; constructive long-term view	Persistency tailwind; pent-up demand; focus where populations grow	HPA outlook mixed across MSAs; some healthy declines; affordability constraints persist	Narrative consistent; more granular MSA view
Credit performance	Hurricane-related defaults elevated Q4; still strong overall	Default rate within 2–3% band expectation	Defaults seasonally normalizing; default rate 2.12%; cures improving; low loss ratio	Stabilizing after storm spike
Reinsurance & ceding	97% of portfolio covered; programmatic approach	Added forward quota shares; planned XOL; increased Essent Re cede	Executed two XOLs; affiliate cede to 50% retro to Jan 1	Continued de-risking
Capital returns	New $500M buyback; dividend up to $0.31	Opportunistic buybacks continue	$387M repurchased YTD; continued buyback emphasis; embedded value slide coming	Accelerated returns
Technology/EssentEDGE & AI	—	EssentEDGE pricing discipline; micro-pricing by MSA	Edge provides yield premium; selective AI for efficiency; potential third bureau	Gradual enhancement
Title business	Expect near-term drag; rate-sensitive	Long-term, supplemental earnings; minimal near-term contribution	No near-term impact expected	Unchanged
Regulatory/policy	GSE guardrails underpin discipline	—	Access/affordability remain focus in D.C.; industry role highlighted	Sustained policy messaging

Management Commentary

Strategy and model durability: “Our second quarter performance demonstrates the strength of our business model… buy, manage and distribute… uniquely positions Essent within a range of economic scenarios to generate high quality earnings.” — Mark Casale .
Capital strength and ratings: “Moody’s upgraded Essent Guaranty’s IFS to A2 and Essent Group’s senior debt to Baa2… reflect our consistent strong results, high quality insured portfolio… and comprehensive reinsurance program.” — Mark Casale .
Capital returns: “Our Board has approved a common dividend of $0.31… year to date through July 31, we repurchased nearly 7 million shares for approximately $390 million.” — Mark Casale .
Operating discipline: CFO noted MI expense ratio improvement to 15.5% (from 18.7% in Q1) and steady net average premium rate of 36 bps .

Q&A Highlights

Home price outlook and pricing: Management expects varied HPA by MSA, with some 5–10% declines being “healthy.” Pricing is calibrated at market level with “markets of focus,” guided by supply, job growth, and income trends .
Defaults seasonality and outlook: New defaults up YoY but decelerating; normalization to seasonal patterns expected; embedded equity dampens claim probability even as defaults ebb/flow .
Buyback sizing and capital framework: Buybacks are valuation-sensitive, supported by excess capital; management discussed embedded value in IIF and investment portfolio as underpinning repurchases .
Persistency by vintage: Lower persistency in ‘23 and aging ‘20–’21 vintages seen as natural; seconds/home equity less prevalent in MI cohort; lock-in effects still meaningful .
EssentEDGE and technology: Credit engine delivers yield premium vs peers; selective AI could enhance speed/efficiency; considering third credit bureau integration .

Estimates Context

Consensus vs Actual (S&P Global)

Metric	Consensus*	Actual	Surprise
EPS (Diluted)	$1.71* (7 est.)	$1.93	+13.0%
Total Revenue ($M)	$318.2* (6 est.)	$319.1	+0.3%

Values retrieved from S&P Global.
Notes: EPS consensus 1.70843*; revenue consensus $318.245M*; surprise percentages calculated from S&P Global consensus values and reported actuals.

Key Takeaways for Investors

Quality beat: Strong EPS beat on lower loss ratio and improved MI expense ratio; revenue inline to slightly above — supportive for positive estimate revisions near term .
Credit benign, reserves stable: Default rate edged down QoQ; cure activity intact; management maintained conservative hurricane-related reserving approach .
Capital deployment a catalyst: Accelerated buybacks and stable dividend underpin TSR; management sees undervaluation vs embedded value and persistency tailwinds .
Balance sheet resilience: PMIERs sufficiency at 176% and ratings upgrade enhance confidence in downside protection and capacity to write into recovery .
Macro sensitivity: NIW recovered QoQ; broader housing unlock likely requires improved affordability; management prepared to flex pricing and share as cycles shift .
Watch list: Default seasonality into 2H, title losses staying modest, reinsurance economics as ceding increases, and any change in HPA trends by MSA .
Medium-term thesis: Persistency plus investment yield support earnings; when refi/purchase cycles re-accelerate, NIW growth and premium earnings can compound — with capital returns smoothing the path .

S&P Global estimates disclaimer: Items marked with an asterisk (*) are values retrieved from S&P Global.

Essent Group Ltd. (ESNT)·Q2 2025 Earnings Summary