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Essent Group's (ESNT) Q2 Earnings Top, Premiums Rise Y/Y

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Essent Group Ltd ESNT reported second-quarter 2020 operating net income per share of 15 cents, which beat the Zacks Consensus Estimate by 7.1%. The bottom line however decreased 89.2% year over year.

The quarter suffered from the initial impact of the COVID-19 pandemic on insured portfolio.

Operational Update

Essent Group generated total operating revenues of $236 million, which increased 11.3% year over year on higher net premiums earned (up 12.2%).

Insurance in force increased 13.9% to $174.6 billion. Annual persistency was 67.9% versus 84.8% in the year-ago quarter.

Percentage of loans in default as of Jun 30, 2020 was 5.19%, compared to 0.66% as of Jun 30, 2019.

New insurance written was $28.2 billion, up 56.7% year over year.

Total expenses increased more than fourfold to $217.3 million.

In the quarter under review, loss ratio was 83.2% compared with 2.6% in the year ago quarter.

Essent Group Ltd. Price, Consensus and EPS Surprise

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

Financial Update

Essent Group had $72.8 million in cash, up 2% from 2019 end. Total stockholders' equity increased to $3.6 billion from nearly $3 billion at 2019 end.

Adjusted book value per share was $31.02 as of Jun 30, 2020.

Return on equity deteriorated 120 basis points to 10% in the second quarter from 20.8% at 2019 end.

Combined risk-to-capital ratio of the U.S. mortgage insurance business, which includes statutory capital for both Essent Guaranty, Inc. and Essent Guaranty of PA, Inc., was 11.7:1 as of Jun 30, 2020.

Capital Deployment

The board of directors of Essent Group announced a quarterly cash dividend of 16 cents per share. The dividend will be paid out on Sep 12, 2020, to shareholders of record as of Aug 31.

Zacks Rank

Essent Group currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Insurance Releases

Of the insurance industry players that have reported second-quarter results so far, The Progressive Corporation PGR, Cincinnati Financial CINF, and RLI Corp. RLI beat the respective Zacks Consensus Estimate for earnings.

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