Essent earnings flat as rise in expenses offsets premium jump

Essent Group reported flat net income for the third quarter of 2023 as rises in premiums written were offset by a rise in losses and retention of premium by agents. 

The company said it earned net income of $178 million, down $100,00 from $178.1 million in the same period in 2022. 

The Bermuda-based mortgage re/insurer said direct premium written were $270.8 million, up from $239.8 million in the third quarter of 2022. Net premiums earned were $246.8 million, up from $207.9 million 2022. 

“We are pleased with our third quarter 2023 financial results, as we continue to generate high quality earnings and robust returns,” said Mark A. Casale, chairman and chief executive officer. “The credit quality of our portfolio remains strong. Higher interest rates have translated to higher portfolio persistency and increased investment income, supporting our revenues and growth in book value per share.”

The company made provisions for $10.8 million for losses compared to $4.2 million in 2022, and underwriting and operating expenses rose to $54 million from $42 million. Premiums retained by agents were $13.2 million compared to nothing in 2022. 

Overall, losses and expenses rose 72% to $86.6 million from $50.8 million. 

Net investment income was $47.1 million compared to $32.6 million, while the company lost $3.4 million  in realised investment losses and losses from other invested assets compaed to a gain of $9.8 million in the same period a year earlier. 

The company said new insurance written in the third quarter was $12.5 billion, compared to $13.5 billion in the second quarter of 2023 and $17.1 billion in the third quarter of 2022.

On July 1, Essent completed its previously announced acquisition of Agents National Title Holding Company and Boston National Holdings LLC for $92.6 million.

On August 8, 2023, Essent closed its 9th insurance-linked note transaction, Radnor Re 2023-1, which provides $281.5 million of collateralized reinsurance coverage for NIW from August 2022 through June 2023.

Insurance in force as of September 30, 2023 was $238.7 billion, compared to $235.6 billion as of June 30, 2023 and $222.5 billion as of September 30, 2022.