On February 6, 2024, Enact Holdings Inc (ACT, Financial) released its 8-K filing, announcing its financial results for the fourth quarter and the full year of 2023. The company, a prominent player in the private mortgage insurance market, reported a robust performance with significant growth in its core business and a disciplined approach to expenses.
Enact Holdings Inc (ACT, Financial) ended the year with a record insurance in-force, demonstrating its commitment to expanding its market presence and providing value to shareholders. The company's product offerings, including Primary and Pool mortgage insurance, have been pivotal in its growth trajectory, catering to the needs of the U.S. housing finance market.
Financial Performance and Challenges
The company's fourth-quarter GAAP Net Income stood at $157 million, or $0.98 per diluted share, compared to $144 million, or $0.88 per diluted share, in the fourth quarter of 2022. The full-year GAAP Net Income was $666 million, or $4.11 per diluted share. Adjusted Operating Income for the fourth quarter was $158 million, or $0.98 per diluted share, with a full-year Adjusted Operating Income of $676 million, or $4.18 per diluted share.
Despite a decrease in New Insurance Written (NIW) due to a smaller estimated private mortgage insurance market, Enact Holdings Inc (ACT, Financial) managed to increase its Primary insurance in-force to a record $263 billion. The company's persistency rate remained high at 86%, indicative of a strong customer retention rate in a challenging environment with elevated mortgage rates.
Net premiums earned were $240 million for the fourth quarter, a slight decrease from the previous quarter but an increase from the same period last year. The company's loss ratio increased to 10%, up from 7% in the third quarter and 8% in the fourth quarter of 2022, reflecting higher current period delinquencies.
Operating expenses for the quarter were $59 million with an expense ratio of 25%, showing effective cost management compared to the previous year. Net investment income increased to $56 million, benefiting from rising interest rates and higher average invested assets.
Enact Holdings Inc (ACT, Financial)'s Return on Equity (ROE) for the fourth quarter was 13.8%, with an Adjusted Operating Return on Equity of 13.9%. The full-year ROE was 15.2%, and the Adjusted Operating Return on Equity was 15.5%, reflecting the company's strong profitability and efficient use of shareholders' equity.
Capital Management and Shareholder Returns
The company's commitment to returning capital to shareholders was evident with over $300 million returned in 2023, including dividends and share repurchases. The PMIERs Sufficiency stood at 161%, indicating a robust capital position above regulatory requirements.
Enact Holdings Inc (ACT, Financial) also reported a Book Value Per Share of $29.07 and a Book Value Per Share excluding AOCI of $30.52, signifying the underlying value of the company.
Outlook and Strategic Initiatives
Looking ahead, Enact Holdings Inc (ACT, Financial) is well-positioned to continue its growth trajectory, with strategic initiatives in place to support policyholders and generate shareholder value. The company's participation in GSE deals and reinsurance transactions, along with its upgraded ratings by S&P, underscore its financial stability and strategic direction.
Enact Holdings Inc (ACT, Financial)'s performance in 2023, characterized by solid earnings, growth in insurance in-force, and strong capital management, positions the company favorably for the future. Investors and stakeholders can anticipate continued focus on responsible growth and value creation as the company navigates the evolving mortgage insurance landscape.
For a detailed review of Enact Holdings Inc (ACT, Financial)'s financial results and strategic outlook, investors are encouraged to examine the full earnings release and financial supplement available on the company's website.
Explore the complete 8-K earnings release (here) from Enact Holdings Inc for further details.
