Essent rides investment returns to post 19% increase in profit

Mortgage re/insurer Essent Group's net income rose 18.9% in the fourth quarter as it benefited from "favourable credit percormance and higher interest rates". 

The Bermuda-based company said net income was $175.4 million, up from $147.4 million in the same period in 2022. 

For the full year, net income dropped 16.2% to $696.4 million compared to $831.4 million for 2022.

“We are pleased with our fourth quarter and full year 2023 financial results, which benefited from favourable credit performance and higher interest rates,” said Mark A. Casale, chairman and chief executive officer. 

“Our results continue to demonstrate the earnings power of our business and provide us with attractive levels of operating cash flows, indicating the overall strength and stability of our franchise.”

The company said new insurance written for the fourth quarter of 2023 was $8.8 billion, compared to $12.5 billion in the third quarter of 2023 and $13 billion in the fourth quarter of 2022.

Insurance in force as of December 31, 2023 was $239.1 billion, compared to $238.7 billion as of September 30, 2023 and $227.1 billion as of December 31, 2022.

Net investment income for the fourth quarter of 2023 was $50.6 million, up 34% from the fourth quarter of 2022. In 2023, net investment income was $186.1 million, up 50% from 2022.

On January 8, 2024, S&P Global Ratings raised its long-term financial strength and issuer credit ratings on Essent Guaranty, Inc. and Essent Reinsurance Ltd. to ‘A-’ from ‘BBB+’, with a stable outlook.

Essent, which has a large ILS presence through Radnor Re, said direct written premiums rose to $269.25 million in the quarter compared to $235 million a year earlier. For the year, NPW were $1.02 billion compared to $927 million. 

For the quarter, Essent increased its loss provision to $19.6 milion from $4.1 million in 2022 while the loss provision for the year rose to $31.5 million compared to a benefit of $174 million in 2022.

The company's combined ratio rose to 34.9% in the fourth quarter compared to 31.7% in the third quarter of 2023 and 24.6% in the fourth quarter of 2022.