Earnings Sentiment

Sentiment Analysis of the earnings transcript to help figure out if there are any bullish or bearish sentiments that could be gathered from it. We're doing ML and AI based analysis on the earnings call to get some more insights.

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Sentiment Distribution


Earnings Call Transcript Word Cloud


Bullish Statements during Earnings call

So I think from a business perspective, we are very happy with the ratings upgrade -- rating upgrades we have received both in 2023 and 2024
We believe we are well-positioned heading into 2024 and remain focused on driving solid returns
We delivered very strong fourth quarter and full year 2023 results, including high quality growth in our insured portfolio, strong credit performance, increasing investment income, expense efficiency, and solid profitability in return, while also returning substantial capital to our shareholders
During the quarter, we completed our sixth ILN issuance, which saw strong interest from investors and reinforced our ability to access the capital markets
Our dynamic pricing rate engine enables us to deliver our best price to customers while targeting appropriate risk-adjusted returns in real time, ensuring we onboard a prudent mix of business while managing expected returns
There's a strong consumer, strong labor market
In addition to our strong financial performance, we achieved several strategic milestones during 2023 that will help position us to perform over the long term and across market cycles
But completely agree with Dean that when you think about that return against mortgage risk as an asset class, which has been significantly derisked after Dodd-Frank, whether it's a definition of qualified mortgage, risk-based capital, risk-based pricing, as well as CRT and new master policies, I think it's a much better industry and much more stable industry with very strong returns
These enhancements have improved the customer experience and are demonstrative of our commitment to deliver a high caliber, seamless, and efficient experience to our lender partners and have helped us add over 150 new customers in 2023 in a market that saw the number of lenders contract
Our new delinquency rate for the quarter was 1.2% compared to 1.1% in the fourth quarter of 2022 reflective of ongoing positive credit trends and primarily driven by historical seasonality and the normal loss development of new large books
Enact Re continues to provide high-quality and attractive GSE risk share business and we have participated in all seven of the GSE deals that have come to market since its launch
As this level of activity reflects, our credit risk transfer program remains a critical component of our enhanced business model, driving capital efficiency and volatility protection for unexpected losses
Shifting to Enact Re, as Rohit mentioned, Enact Re has continued to produce solid results since its launch
When we launched Enact Re, I discussed our view of the opportunities for compelling returns and we continue to be pleased with the strong underwriting and attractive risk-adjusted returns we have seen since its launch
Going forward, we continue to see Enact Re as a long-term capital and expense-efficient growth opportunity
It gives us the confidence to be able to provide the $300 million return of capital guidance on a full-year basis
We're very pleased with all we accomplished in 2023 and I would like to thank all of our employees for driving this outstanding performance
Higher persistency is good for our business
I'm very pleased with our operating performance and the strategic progress we achieved in 2023
As we look ahead, we are encouraged by the significant long-term opportunities for mortgage insurance and believe that our strength and flexibility position us to continue to execute and deliver value for all our stakeholders
After a strong 2023, I'm confident that we are well-positioned for continued success as we enter 2024
Those changes are things like QM, the introduction of PMIERs, capital standards, the risk-based pricing that we've introduced into the market, the ability to very quickly align price with risk, and of course, the mature CRT programs that Enact has, as well as the rest of the industry, all that's positively impacted the volatility profile of the business
Delinquency rates for prime mortgage borrowers are consistent with pre-pandemic levels and our manufacturing quality continues to be strong
Even as originations have slowed amid higher borrowing costs, we are encouraged by the pent-up demand amongst first-time homebuyers, the long-term outlook for housing, and the attractive opportunity we see in the private mortgage insurance market
Home prices continue to be supported by low housing inventory and strong demand, and mortgage insurance will remain an important tool to help buyers qualify for a mortgage
We again delivered strong results for the fourth quarter of 2023
So as I said in my prepared remarks, I think having A minus ratings for our insurance company is positions us very strongly in front of all counterparties, whether that's GSEs, whether that's depository institutions or for Enact Re, whether it's third parties that we do business with
The credit quality of our insured portfolio remains strong with a weighted average FICO score of 744 and a weighted average loan-to-value ratio of 93% in the fourth quarter and layered risk in our portfolio was 1.3%
We had a strong quarter and I'm very pleased with our performance in 2023
The strength and flexibility of our capital position allowed us to deploy capital to support new business and grow our insurance in-force, while also meeting our commitment to return capital to our shareholders

Bearish Statements during earnings call

New insurance written of $10 billion was down $4 billion or 27% sequentially and down $5 billion or 31% year-over-year
These declines were primarily driven by a lower estimated private mortgage insurance market in the fourth quarter
Our base premium rate of 40.1 basis points was down 0.1 basis points sequentially and 0.9 basis points year-to-date
But we're also in an environment where purchase activity is quelled by lack of supply
And I guess implied in your question is the significant release of reserves that we've seen over the last, whatever, six to eight quarters, probably not sustainable
And really, our thinking about that 10% claim rate really comes down to our forward view of the macroeconomic conditions and whether we align with the soft landing and the elimination of that macroeconomic uncertainty and/or just the continued experience that credit continued to perform well
But it is truly not born out of anything we've seen from an experience perspective and more just a view that there's a presence of heightened economic uncertainty in the market
Our net earned premium rate was 36.4 basis points, down 0.9 basis points sequentially, primarily reflecting higher ceded premiums in the current quarter
Net premiums earned were $240 million were down $3 million or 1% sequentially and up $7 million or 3% year-over-year
Given kind of the uncertainty in the market, industry has operated with higher capital
There is some obviously potential for lapse offset in that run rate, but lapse has been incredibly slow in our CRT program, given the high degree of persistency that we've experienced in the current quarter
I would just say we are operating in an uncertain and kind of different environment
Now, what's happened since then is that uncertainty hasn't materialized in any performance deterioration
So it's difficult for us to just take last few years of roll rate and extrapolate that
The decrease in net premiums earned sequentially was primarily driven by the lapse of older, higher-price policies and higher ceded premiums, driven by the successful execution of our CRT program and partially offset by insurance in-force growth
We may get more scrutiny on expense management in a smaller market
We still have a view that there is macroeconomic uncertainty present
And then even for borrowers that have had some financial stress, the availability of loss mitigation options in this market has been significant
We increased our price on NIW in certain cohorts and geographies in response to potential macroeconomic risks
So my question to you is, is this as good as it gets? What are some of the like big key risks that you're worried about? Like, maybe even just anything away from the macro specific to Enact that you can point to

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