Enact Holdings Inc ((ACT)) has held its Q1 earnings call. Read on for the main highlights of the call.
The recent earnings call from Enact Holdings Inc. presented a balanced sentiment, reflecting both strong financial performance and existing market challenges. The company reported impressive financial results and effective capital allocation, yet faced hurdles such as decreased new insurance written and increased losses. This duality of positive outcomes and market difficulties characterized the overall tone of the call.
Strong Financial and Operational Results
Enact Holdings Inc. showcased robust financial and operational results for Q1 2025, with an adjusted operating income of $169 million, marking a 2% increase year-over-year. The adjusted earnings per share also saw a rise, reaching $1.10, a 6% increase compared to the previous year.
Capital Allocation and Shareholder Returns
The company announced a significant $350 million share repurchase program alongside a 14% increase in dividends. In Q1 2025 alone, Enact returned over $94 million to shareholders through share buybacks and quarterly dividends, demonstrating a strong commitment to shareholder value.
Stable Insurance Metrics
Enact reported stable insurance metrics with insurance in-force totaling $268 billion, a 2% year-over-year increase. The persistency rate stood at 84%, and the PMIER Sufficiency ratio was a robust 165%, underscoring a solid capital foundation.
Favorable Delinquency and Cure Performance
The company experienced an improvement in delinquency metrics, with total delinquencies down 5% sequentially and new delinquencies decreasing by 11%. This positive trend allowed for a reserve release of $47 million, supported by a cure rate of 56%.
Decrease in New Insurance Written
Despite the positive financial results, Enact faced a decrease in new insurance written, which was $10 billion, down 26% sequentially and 7% year-over-year. This decline was attributed to seasonally lower purchase originations and subdued mortgage activity.
Losses and Loss Ratio Increase
The first quarter saw an increase in losses, totaling $31 million with a loss ratio of 12%, up from $24 million and a 10% loss ratio in the previous quarter. This was primarily due to a lower reserve release and incremental new delinquencies.
Challenges in Mortgage Market
Enact continues to navigate challenges in the mortgage market, with elevated mortgage rates and home prices affecting affordability and consequently the size of the origination market.
Forward-Looking Guidance
Looking ahead, Enact remains optimistic about its financial trajectory, with a strong adjusted operating income and a solid capital foundation. The company reaffirmed its 2025 expense guidance range of $220 million to $225 million, maintaining a disciplined approach to expense management. Enact’s strategic capital allocation and favorable delinquency trends are expected to support its future performance.
In summary, Enact Holdings Inc.’s earnings call highlighted a balanced sentiment, with strong financial results and effective capital allocation countered by market challenges such as decreased new insurance written and increased losses. The company’s strategic initiatives and robust capital foundation position it well to navigate these challenges and continue delivering value to shareholders.