Essent Group Ltd. Reports Strong Q1 2025 Results Amid Challenging Market Conditions
Essent Group Ltd., a leading mortgage insurance company, recently released its first quarter 2025 financial results, showcasing the firm's resilience in navigating a challenging market environment.
According to Mark Casale, Chairman and CEO of Essent Group, the company's operating model has allowed it to operate effectively across various economic conditions, generating attractive returns for shareholders. Casale stated that favorable demographic trends and current affordability issues have resulted in pent-up demand for housing, despite anticipating some headwinds to consumer spending and economic growth over the near term.
In its Q1 2025 results, Essent Group reported net income of $175 million, a slight decrease from the previous year's $182 million. On a diluted per share basis, the company earned $1.69 for the first quarter compared to $1.70 a year ago. The annualized return on average equity was 12% in the quarter.
The mortgage insurance segment faced challenges due to lower originations caused by higher rates, affordability issues, and limited supply. This led to decreased new insurance written by the industry. However, systematic credit guardrails established by government-sponsored enterprises (GSEs) continued to mitigate credit box expansion, resulting in strong credit quality and unit economics for Essent Group's new business.
As of March 31, Essent Group's U.S. mortgage insurance in force was $245 billion, a 3% increase from the previous year. The weighted average FICO score remained high at 746, with a weighted average original loan-to-value ratio (LTV) of 93%. The company's 12-month persistency on March 31 was 86%, flat from last quarter.
Essent Group's consolidated cash and investments as of March 31 were $6.4 billion, with new money yields exceeding 5% in the first quarter. The annualized investment yield for the period was 3.8%. The company's access to excess-of-loss reinsurance and a high PMIERs efficiency ratio further solidified its position.
The firm's capital strategy aimed to strike a balance between preserving optionality, optimizing shareholder returns, and being proactive in returning capital to shareholders. As a result, the Board approved a common dividend of $0.31 for the second quarter of 2025.
