Essent Q4 results hit by hurricane damage

11-02-2019

Essent has reported net income for the quarter ended December 31, 2018 of $128.5 million, a fall of 21 percent from the $162.6 million it made in the same quarter of 2017.

The company said that the quarterly figure includes a reduction of $9.9 million, of the $11.1 million loss reserve established in the fourth quarter of 2017 for defaulted loans identified as related to Hurricanes Harvey and Irma. For the full year 2018, net income was $467.4 million, an increase on the $379.7 million it reported for full year 2017.

“We are pleased with our strong fourth quarter and full year 2018 results as we continued growing our high credit quality and profitable mortgage insurance portfolio,” said Mark Casale, chairman and chief executive officer. “Also during 2018, we successfully piloted our risk based pricing engine, EssentEDGETM, and executed in the reinsurance markets. We believe that increased sophistication in the front-end and back-end of our business positions us well to shape our insured portfolio and profitably manage the long tail mortgage credit risk.”

Insurance in force as of December 31, 2018 was $137.7 billion, compared to $131.2 billion as of September 30, 2018 and $110.5 billion as of December 31, 2017.

New insurance written for the fourth quarter was $11.4 billion, compared to $13.9 billion in the third quarter of 2018 and $11.2 billion in the fourth quarter of 2017.

Net premiums earned for the fourth quarter were $173.3 million, compared to $166.7 million in the third quarter of 2018 and $148.0 million in the fourth quarter of 2017.

The provision for losses and LAE for the fourth quarter was a benefit of $1.0 million, compared to a provision of $5.5 million in the third quarter of 2018 and a provision of $17.5 million in the fourth quarter of 2017. The provision in the fourth quarter of 2018 included a $9.9 million release of the $11.1 million reserve associated with loans identified as related to Hurricanes Harvey and Irma that was established in the fourth quarter of 2017.

The combined risk-to-capital ratio of the US mortgage insurance business, which includes statutory capital for both Essent Guaranty and Essent Guaranty of PA, was 13.9:1 as of December 31, 2018.

In December, Essent Guaranty, Inc. entered into an excess of loss reinsurance agreement with a panel of US and global reinsurers for $165.2 million of additional protection on mortgage insurance policies written by Essent in 2017.

Essent, results, Q4, 2018, hurricane, losses

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