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Enact Holdings Inc. Reports Strong Earnings Amid Economic Uncertainties

Enact Holdings Inc. Reports Strong Earnings Amid Economic Uncertainties

Enact Holdings Inc ((ACT)) has held its Q2 earnings call. Read on for the main highlights of the call.

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Enact Holdings Inc. recently held its earnings call, where the sentiment was largely positive, underscoring strong capital returns and robust credit performance. However, the company also acknowledged economic uncertainties and a decline in persistency and new insurance written year-over-year. The recognition as a best place to work further highlights a positive internal culture, though macroeconomic challenges could pose risks.

Increased Capital Returns

Enact announced a significant increase in expected capital returns for 2025, projecting approximately $400 million. This move underscores the company’s commitment to enhancing shareholder value and reflects confidence in its financial strategies.

Robust Adjusted Operating Income

The company reported an impressive adjusted operating income of $174 million, with an adjusted return on equity exceeding 13%. This robust performance indicates strong operational efficiency and profitability.

Insurance in Force and New Insurance Written

Enact’s insurance in force saw a 1% year-over-year increase, reaching $270 billion. Additionally, the company wrote over $13 billion in new insurance, demonstrating its continued growth in the insurance sector.

Strong Credit Performance

The credit portfolio remains solid, with a risk-weighted average FICO score of 746 and a favorable cure rate of 52%. These metrics highlight the company’s effective risk management and credit quality.

Recognition as a Best Place to Work

For the third consecutive year, Enact was recognized as one of the best places to work by the Triangle Business Journal. This accolade reflects the company’s strong internal culture and employee satisfaction.

Uncertainties in Macroeconomic Environment

The earnings call highlighted uncertainties such as unclear trade policies and potential reciprocal tariffs, which could introduce volatility and impact future performance.

Persistency Decline

Persistency rates declined by 2 points sequentially and 1 point year-over-year in the second quarter, indicating potential challenges in maintaining customer retention.

New Insurance Written Decline Year-Over-Year

Despite a 35% sequential increase, new insurance written was down 3% year-over-year, suggesting a slowdown in new business acquisition.

Expenses Amid Inflation

Operating expenses, excluding restructuring charges, remained flat year-over-year, showcasing the company’s ability to manage costs effectively despite inflationary pressures.

Forward-Looking Guidance

During the earnings call, Enact provided forward-looking guidance, emphasizing key financial metrics. The company reported an adjusted operating income of $174 million and adjusted earnings per diluted share of $1.15, with an adjusted return on equity over 13%. Enact’s insurance in force increased by 1% year-over-year to $270 billion, and they generated over $13 billion in new insurance written. The company maintained a robust PMIERs sufficiency ratio of 165%, demonstrating significant financial flexibility. Delinquencies decreased by 1% sequentially, and the cure rate was reported at 52%, contributing to a reserve release of $48 million and a loss ratio of 10%. Enact also announced an increase in expected capital returns for 2025 to approximately $400 million, underscoring their strong credit performance and commitment to shareholder value.

In summary, Enact Holdings Inc.’s earnings call painted a picture of strong financial health and strategic growth, despite facing some economic uncertainties. The company’s commitment to capital returns, robust credit performance, and recognition as a top workplace are key takeaways, positioning Enact well for future challenges and opportunities.

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