Essent Group Ltd. ESNT reported fourth-quarter 2023 operating net income per share of $1.64, which beat the Zacks Consensus Estimate by 3.1%. The bottom line increased 19.7% year over year.
The quarter witnessed improved revenues attributable to higher net premiums earned. Losses and expenses increased, attributable to provision for losses and loss adjustment expense (LAE). There was an increase in the percentage of loans in default during the reported quarter.
Operational Update
Total revenues of $297.3 million improved 29.3% year over year, attributable to higher net premiums earned. The bottom line beat the consensus estimate by 7.8%.
Essent Group Ltd. Price, Consensus and EPS Surprise
Essent Group Ltd. Price, Consensus and EPS Surprise
Essent Group Ltd. price-consensus-eps-surprise-chart | Essent Group Ltd. Quote
New insurance written dropped 3.2% year over year to $8.8 billion. Net investment income was $50.6 million, up 34%.
As of Dec 31, 2023, insurance in force climbed 5.3% year over year to $239.1 billion.
As of Dec 31, 2023, the percentage of loans in default was 1.80%, an increase from 1.66% a year ago.
Total losses and expenses of $94.3 million increased 65.3% year over year due to provision for losses and LAE, higher other underwriting, premiums retained by agent, operating expenses as well as interest expense.
The combined ratio came in at 34.9, down 1030 basis points (bps) year over year. The loss ratio was 7.9, declining 590 bps year over year. The expense ratio deteriorated 40 bps year over year to 27 in the quarter under review.
Financial Update
Essent Group exited 2023 with a cash balance of $141.5 million, up 74.5% from the 2022-end level. As of Dec 31, 2023, total stockholders' equity of $5.1 billion increased 14.3% from the figure at 2021 end.
Book value per share came in at $47.87 as of Dec 31, 2023, up 15.5% from the year-ago end level.
Annualized return on average equity in 2023 expanded 70 bps year over year to 14.2%.
Across the U.S. mortgage insurance business, encompassing statutory capital for both Essent Guaranty, Inc. and Essent Guaranty of PA, Inc., the combined risk-to-capital ratio came in at 10.2:1, the same as the 2022 figure.
Dividend Update
The board of directors approved a 12% increase in its quarterly cash dividend to 28 cents per share. The dividend will be paid out on Mar 22, 2024, to shareholders of record as of Mar 13.
Zacks Rank
Essent Group currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Finance Sector Participants
Radian Group Inc. RDN reported fourth-quarter 2023 adjusted operating income of 96 cents per share, which beat the Zacks Consensus Estimate by 15.6%. The bottom line decreased 8.5% year over year. Operating revenues increased 4.4% year over year to $329 million due to higher services revenues and net investment income.
MI New Insurance Written declined 17.3% year over year to $10.6 billion. Primary mortgage insurance in force totaled $270 billion as of Dec 31, 2023, up 3% year over year. Persistency was 84% as of Dec 31, 2023, up 400 bps year over year. Primary delinquent loans were 22,021 as of Dec 31, 2023, up 0.5% year over year.
MGIC Investment Corporation MTG reported fourth-quarter 2023 operating net income per share of 67 cents, which beat the Zacks Consensus Estimate by 17.5%. The bottom line improved 4.7% year over year. MGIC Investment recorded total operating revenues of $285 million, which declined 2.1% year over year on lower net premiums written, partially offset by higher net investment income. The top line missed the consensus mark by 6%.
Insurance in force declined 0.6% from the prior-year quarter to $293.5 billion, missing our estimate of $300.7 billion. The insurer witnessed a 2.8% decrease in primary delinquency to 25,650 loans. Persistency, the percentage of insurance remaining in force from one year prior, was 86.1% as of Dec 31, 2023, up from 82.2% in the year-ago quarter.
New insurance written was $10.9 billion, down 15.5% year over year due to a decline in origination markets.
Assurant, Inc. AIZ reported fourth-quarter 2023 net operating income of $4.58 per share, which beat the Zacks Consensus Estimate by 23.4%. The bottom line surged 41.8% year over year. Total revenues increased 12.4% year over year to $3 billion due to higher net earned premiums, fees and other income, and net investment income. The top line beat the Zacks Consensus Estimate by 7.9%.
Adjusted EBITDA, excluding reportable catastrophes, increased 29% to $382.4 million.
Assurant expects adjusted EBITDA, excluding reportable catastrophes, to increase by mid-single digits, driven by both Global Lifestyle and Global Housing, at similar growth rates.
Adjusted EPS, excluding catastrophes, is expected to grow modestly below adjusted EBITDA, excluding catastrophes growth, primarily reflecting an increase in depreciation expense from strategic technology investments.
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