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Essent Group's (ESNT) Q3 Earnings Beat, Revenues Rise Y/Y

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Zacks Equity Research
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Essent Group Ltd ESNT reported third-quarter 2020 operating net income per share of $1.11, which beat the Zacks Consensus Estimate by 12.1%. The bottom line however decreased 24.5% year over year.

The quarter witnessed higher new insurance written, partially offset by higher total loss and expenses. Percentage of loans in default increased.

Operational Update    

Essent Group generated total operating revenues of $243 million, which increased 7.5% year over year on higher net premiums earned (up 0.5%).

Insurance in force increased 18.5% to $190.8 billion. Annual persistency was 64.2% versus 82.1% in the year-ago quarter.

Percentage of loans in default as of Sep 30, 2020 was 4.54%, compared with 0.75% as of Sep 30, 2019.

New insurance written was $36.7 billion, up 5.3% year over year.

Total loss and expenses increased 74.7% year over year to $94.6 million.

In the quarter under review, loss ratio was 24.9% compared with 4.9% 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 $118.7 million in cash, up 66.4% from 2019 end. Total stockholders' equity increased to $3.7 billion from nearly $3 billion at 2019 end.

Adjusted book value per share was $32.00 as of Sep 30, 2020, up 3.4% from 2019 end level.

Return on equity was 11.5% in the third quarter, up from 20.8% in the year-ago period.

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 11.6:1 as of Sep 30, 2020.

On Oct 14, 2020, Essent Group entered into an amended and restated credit facility, increasing the committed capacity to $625 million the committed capacity and extending the contractual maturity to Oct 16, 2023.

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 Dec 10, 2020, to shareholders of record as of Dec 1.

Zacks Rank

Essent Group currently carries a Zacks Rank #2 (Buy). 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 third-quarter results so far, The Progressive Corporation PGR, The Travelers Companies TRV, and RLI Corp. RLI beat the respective Zacks Consensus Estimate for earnings.

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