Essent Group Ltd.

Previous wording

The following discussion should be read together with the “Selected Financial Data” and our audited consolidated financial statements and related notes included in our Annual Report on Form 10-K as of and for the year ended December 31, 2024 as filed with the Securities and Exchange Commission and referred to herein as the “Annual Report,” and our condensed consolidated financial statements and related notes as of and for the three and nine months ended September 30, 2025 included in Part I, Item 1 of this Quarterly Report on Form 10-Q, which we refer to as the “Quarterly Report.” In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties and assumptions that could cause actual results to differ materially from management’s expectations. Factors that could cause such differences are discussed in the sections entitled “Special Note Regarding Forward-Looking Statements” in this Quarterly Report and Part I, Item 1A “Risk Factors” in our Annual Report and Part II, Item 1A “Risk Factors” in this Quarterly Report. We are not undertaking any obligation to update any forward-looking statements or other statements we may make in the following discussion or elsewhere in this document even though these statements may be affected by events or circumstances occurring after the forward-looking statements or other statements were made.

Current wording

The following discussion should be read together with our audited consolidated financial statements and related notes included in our Annual Report on Form 10-K as of and for the year ended December 31, 2025 as filed with the Securities and Exchange Commission and referred to herein as the “Annual Report,” and our condensed consolidated financial statements and related notes as of and for the three months ended March 31, 2026 included in Part I, Item 1 of this Quarterly Report on Form 10-Q, which we refer to as the “Quarterly Report.” In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties and assumptions that could cause actual results to differ materially from management’s expectations. Factors that could cause such differences are discussed in the sections entitled “Special Note Regarding Forward-Looking Statements” in this Quarterly Report and Part I, Item 1A “Risk Factors” in our Annual Report and Part II, Item 1A “Risk Factors” in this Quarterly Report. We are not undertaking any obligation to update any forward-looking statements or other statements we may make in the following discussion or elsewhere in this document even though these statements may be affected by events or circumstances occurring after the forward-looking statements or other statements were made.

Previous wording

Essent Group Ltd. (collectively with its subsidiaries, “Essent”) serves the housing finance industry by offering private mortgage insurance and reinsurance, title insurance and settlement services to mortgage lenders, borrowers and investors to support homeownership. We have one reportable segment: Mortgage Insurance.

Current wording

Essent Group Ltd. (collectively with its subsidiaries, “Essent”) serves the housing finance industry by offering private mortgage insurance and reinsurance, title insurance and settlement services to mortgage lenders, borrowers and investors to support homeownership. We have two reportable segments: Mortgage Insurance and Reinsurance.

Previous wording

Essent Guaranty, Inc., our wholly-owned mortgage insurance subsidiary which we refer to as "Essent Guaranty," is approved by Fannie Mae and Freddie Mac and licensed to write coverage in all 50 states and the District of Columbia. Our mortgage insurance operations generated new insurance written, or NIW, of approximately $12.2 billion and $34.7 billion for the three and nine months ended September 30, 2025, respectively, compared to approximately $12.5 billion and $33.3 billion for the three and nine months ended September 30, 2024, respectively. The financial strength ratings of Essent Guaranty are A2 with a stable outlook by Moody’s Ratings (“Moody's”), A- with a stable outlook by S&P Global Ratings (“S&P”) and A (Excellent) with a stable outlook by A.M. Best Ratings Services, Inc. ("AM Best").

Current wording

Essent Guaranty, Inc., our wholly-owned mortgage insurance subsidiary which we refer to as "Essent Guaranty," is approved by Fannie Mae and Freddie Mac and licensed to write coverage in all 50 states and the District of Columbia. Our mortgage insurance operations generated new insurance written, or NIW, of approximately $11.1 billion for the three months ended March 31, 2026 compared to approximately $9.9 billion for the three months ended March 31, 2025. The financial strength ratings of Essent Guaranty are A2 with a stable outlook by Moody’s Ratings (“Moody's”), A- with a stable outlook by S&P Global Ratings (“S&P”) and A (Excellent) with a stable outlook by A.M. Best Ratings Services, Inc. ("AM Best").

Previous wording

Through our wholly-owned Bermuda-based subsidiary, Essent Reinsurance Ltd., which we refer to as "Essent Re", we reinsure U.S. mortgage risk in the GSE credit risk transfer market and provide underwriting consulting services to third-party reinsurers. As of September 30, 2025, Essent Re provided insurance or reinsurance relating to GSE and other mortgage risk share and other reinsurance transactions covering approximately $2.2 billion of risk. Essent Re also reinsures Essent Guaranty’s NIW under a quota share reinsurance agreement. The financial strength ratings of Essent Re are A- with a stable outlook by S&P and A (Excellent) with a stable outlook by AM Best.

Current wording

Through our wholly-owned Bermuda-based subsidiary, Essent Reinsurance Ltd., which we refer to as "Essent Re", we reinsure U.S. mortgage risk in the GSE credit risk transfer market and also provide underwriting consulting services to third-party reinsurers. As of March 31, 2026, Essent Re provided insurance or reinsurance relating to GSE and other mortgage risk share transactions covering approximately $2.1 billion of risk. Essent Re also reinsures Essent Guaranty’s NIW under a quota share reinsurance agreement. Effective January 1, 2026, Essent Re began reinsuring certain property and casualty risks. The financial strength ratings of Essent Re are A- with a stable outlook by S&P and A (Excellent) with a stable outlook by AM Best.

Previous wording

We also offer title insurance products both directly and through a network of title insurance agents, as well as title and settlement services. This operating segment was established upon our acquisitions of Agents National Title Insurance Company (renamed Essent Title Insurance, Inc. effective January 1, 2025), a title insurance underwriter, and Boston National Title, a national title agency, which was effective July 1, 2023. Title insurance operations are included in the Corporate & Other category.

Current wording

We also offer title insurance products both directly and through a network of title insurance agents through Essent Title Insurance, Inc., which we refer to as "Essent Title", as well as title and settlement services. Title insurance operations are included in the Corporate & Other category.

Previous wording

We have a highly experienced, talented team with 510 employees as of September 30, 2025. Our holding company and reinsurance business are domiciled in Bermuda. Our U.S. mortgage insurance and title insurance operations are headquartered in Radnor, Pennsylvania.

Current wording

We have a highly experienced, talented team with 520 employees as of March 31, 2026. Our holding company and reinsurance business are domiciled in Bermuda. Our U.S. mortgage insurance and title insurance operations are headquartered in Radnor, Pennsylvania.

Previous wording

The Federal Reserve increased the target federal funds rate several times during 2022 and 2023 in an effort to reduce consumer price inflation. As a result of progress on inflation, the Federal Reserve reduced the target federal funds rate by 100 basis points in 2024 and by another 25 basis points in the three and nine months ended September 30, 2025. Mortgage interest rates, however, remain elevated, which has reduced home buying and mortgage refinance activity resulting in lower volumes of mortgage originations, NIW and title insurance and settlement service transactions. Higher interest rates have also resulted in increases in our net investment income generated by our investment portfolio and the persistency of our mortgage insurance in force.

Current wording

The Federal Reserve increased the target federal funds rate several times during 2022 and 2023 in an effort to reduce consumer price inflation. As a result of progress on inflation, the Federal Reserve reduced the target federal funds rate by 100 basis points in 2024 and by another 75 basis points during 2025. Mortgage interest rates, however, remain elevated, which has reduced home buying and mortgage refinance activity resulting in lower volumes of mortgage originations, NIW and title insurance and settlement service transactions. Higher interest rates have also resulted in increases in our net investment income generated by our investment portfolio and the persistency of our mortgage insurance in force.

Previous wording

On December 27, 2023, the Government of Bermuda enacted the Corporate Income Tax Act 2023 (CIT). Starting January 1, 2025, the CIT will result in a new 15% corporate income tax on in-scope entities that are resident in Bermuda or that have a Bermuda permanent establishment, without regard to any assurances that had previously been given pursuant to the Exempted Undertakings Tax Protection Act 1966.

Current wording

On December 27, 2023, the Government of Bermuda enacted the Corporate Income Tax Act 2023 (CIT). Starting January 1, 2025, the CIT imposes a new 15% corporate income tax on in-scope entities that are resident in Bermuda or that have a Bermuda permanent establishment, without regard to any assurances that had previously been given pursuant to the Exempted Undertakings Tax Protection Act 1966.

Previous wording

Mortgage insurance premiums are paid either on a monthly installment basis (“monthly premiums”), in a single payment at origination (“single premiums”), or in some cases as an annual premium. For monthly premiums, we receive a monthly premium payment which is recorded as net premiums earned in the month the coverage is provided. Monthly premium payments are based on the original mortgage amount rather than the amortized loan balance. Net premiums written may be in excess of net premiums earned due to single premium policies. For single premiums, we receive a single premium payment at origination, which is recorded as “unearned premium” and earned over the estimated life of the policy, which ranges from 36 to 156 months depending on the term of the underlying mortgage and loan-to-value ratio at date of origination. If single premium policies are cancelled due to repayment of the underlying loan and the premium is non-refundable, the remaining unearned premium balance is immediately recognized as earned premium revenue. Substantially all of our single premium policies in force as of September 30, 2025 were non-refundable. Premiums collected on annual policies are recognized as net premiums earned on a straight-line basis over the year of coverage. For the nine months ended September 30, 2025 and 2024, monthly premium policies comprised 99% and 98% of our NIW, respectively.

Current wording

Mortgage insurance premiums are paid either on a monthly installment basis (“monthly premiums”), in a single payment at origination (“single premiums”), or in some cases as an annual premium. For monthly premiums, we receive a monthly premium payment which is recorded as net premiums earned in the month the coverage is provided. Monthly premium payments are based on the original mortgage amount rather than the amortized loan balance. Net premiums written may be in excess of net premiums earned due to single premium policies. For single premiums, we receive a single premium payment at origination, which is recorded as “unearned premium” and earned over the estimated life of the policy, which ranges from 36 to 156 months depending on the term of the underlying mortgage and loan-to-value ratio at date of origination. If single premium policies are cancelled due to repayment of the underlying loan and the premium is non-refundable, the remaining unearned premium balance is immediately recognized as earned premium revenue. Substantially all of our single premium policies in force as of March 31, 2026 were non-refundable. Premiums collected on annual policies are recognized as net premiums earned on a straight-line basis over the year of coverage. For the three months ended March 31, 2026 and 2025, monthly premium policies comprised 98% and 99% of our NIW, respectively.

Previous wording

Premiums associated with our GSE and other mortgage risk share transactions are based on the level of risk in force and premium rates on the transactions.

Current wording

Premiums associated with our GSE and other mortgage risk share transactions are based on the level of risk in force and premium rates on the transactions. Premiums associated with property and casualty reinsurance are generally earned on a pro rata basis over the terms of the underlying policies or reinsurance contracts. Premiums written are based on contract and policy terms and include estimates based on information received from ceding companies. Subsequent revisions to premium estimates are recorded in the period in which they are determined.

Previous wording

The percentage of IIF that remains on our books after any 12-month period is defined as our persistency rate. Because our insurance premiums are earned over the life of a policy, higher persistency rates can have a significant impact on our profitability. The persistency rate on our portfolio was 86.0% at September 30, 2025. Generally, higher prepayment speeds lead to lower persistency.

Current wording

The percentage of IIF that remains on our books after any 12-month period is defined as our persistency rate. Because our insurance premiums are earned over the life of a policy, higher persistency rates can have a significant impact on our profitability. The persistency rate on our portfolio was 84.7% at March 31, 2026. Generally, higher prepayment speeds lead to lower persistency.

Previous wording

As part of our overall investment strategy, we also allocate a relatively small percentage of our portfolio to limited partnership investments and traditional venture capital and private equity investments. The results of these investing activities are reported in income from other invested assets. These investments are generally accounted for under the equity method or fair value using net asset value (or its equivalent) as a practical expedient. For entities accounted for under the equity method that follow industry-specific guidance for investment companies, our proportionate share of earnings or losses includes changes in the fair value of the underlying assets of these entities. Fluctuations in the fair value of these entities may increase the volatility of the Company’s reported results of operations.

Current wording

As part of our overall investment strategy, we also allocate a percentage of our portfolio to limited partnership investments and traditional venture capital and private equity investments. The results of these investing activities are reported in income from other invested assets. These investments are generally accounted for under the equity method or fair value using net asset value (or its equivalent) as a practical expedient. For entities accounted for under the equity method that follow industry-specific guidance for investment companies, our proportionate share of earnings or losses includes changes in the fair value of the underlying assets of these entities. Fluctuations in the fair value of these entities may increase the volatility of the Company’s reported results of operations.

Previous wording

•the distribution of claims over the life of a book. As of September 30, 2025, 45% of our IIF relates to business written since January 1, 2023 and was less than three years old. As a result, based on historical industry performance, we expect the number of defaults and claims we experience, as well as our provision for losses and loss adjustment expenses ("LAE"), to increase as our portfolio continues to season. See “— Mortgage Insurance Earnings and Cash Flow Cycle” below.

Current wording

•the distribution of claims over the life of a book. As of March 31, 2026, 51% of our IIF relates to mortgage insurance business written before January 1, 2023 and was at least three years old. As a result, based on historical industry performance, we expect the number of defaults and claims we experience, as well as our provision for losses and loss adjustment expenses ("LAE"), to increase as our portfolio seasons. See “— Mortgage Insurance Earnings and Cash Flow Cycle” below.

Previous wording

Based upon our experience and industry data, claims incidence for mortgage insurance is generally highest in the third through sixth years after loan origination. As of September 30, 2025, 45% of our IIF relates to business written since January 1, 2023 and was less than three years old. Although the claims experience on new insurance written by us to date has been favorable, we expect incurred losses and claims to increase as a greater amount of this book of insurance reaches its anticipated period of highest claim frequency. The actual default rate and the average reserve per default that we experience as our portfolio matures is difficult to predict and is dependent on the specific characteristics of our current in-force book (including the credit score of the borrower, the loan-to-value ratio of the mortgage, geographic concentrations, etc.), as well as the profile of new business we write in the future. In addition, the default rate and the average reserve per default will be affected by future macroeconomic factors such as housing prices, interest rates and employment.

Current wording

Based upon our experience and industry data, claims incidence for mortgage insurance is generally highest in the third through sixth years after loan origination. As of March 31, 2026, 51% of our IIF relates to business written before January 1, 2023 and was at least three years old. As such, we expect incurred losses and claims to increase as a greater amount of this book of insurance is entering its anticipated period of highest claim frequency. The actual default rate and the average reserve per default that we experience as our portfolio matures is difficult to predict and is dependent on the specific characteristics of our current in-force book (including the credit score of the borrower, the loan-to-value ratio of the mortgage, geographic concentrations, etc.), as well as the profile of new business we write in the future. In addition, the default rate and the average reserve per default will be affected by future macroeconomic factors such as housing prices, interest rates and employment.

Previous wording

The Federal Reserve increased the target federal funds rate several times during 2022 and 2023 in an effort to reduce consumer price inflation. As a result of subsequent reductions in inflation rates, the Federal Reserve reduced the target federal funds rate by 100 basis points in 2024 and by another 25 basis points in the three and nine months ended September 30, 2025. Mortgage interest rates, however, have remained elevated, which may lower home sale activity and affect the options available to delinquent borrowers. It is reasonably possible that our estimate of losses could change in the near term as a result of changes in the economic environment, the impact of elevated levels of consumer price inflation on home sale activity, housing inventory, and home prices.

Current wording

The Federal Reserve increased the target federal funds rate several times during 2022 and 2023 in an effort to reduce consumer price inflation. As a result of subsequent reductions in inflation rates, the Federal Reserve reduced the target federal funds rate by 100 basis points in 2024 and by another 75 basis points during 2025. Mortgage interest rates, however, have remained elevated, which may lower home sale activity and affect the options available to delinquent borrowers. It is reasonably possible that our estimate of losses could change in the near term as a result of changes in the economic environment, the impact of elevated levels of consumer price inflation on home sale activity, housing inventory, and home prices.

Previous wording

On September 26, 2024, Hurricane Helene made landfall and caused property damage in certain counties in Florida, Georgia, South Carolina, North Carolina, Tennessee and Virginia. On October 9, 2024, Hurricane Milton made landfall, causing damage in certain counties in Florida. Loans in default at December 31, 2024 included 2,119 defaults that we identified as hurricane-related defaults. Based on prior industry experience, we expect the ultimate number of hurricane-related defaults that result in claims will be less than the default-to-claim experience of non-hurricane-related defaults. In addition, under our master policy, our exposure may be limited on hurricane-related claims. For example, we are permitted to exclude a claim entirely where damage to the property underlying a mortgage was the proximate cause of the default and adjust a claim where the property underlying a mortgage in default is subject to unrestored physical damage. Accordingly, when establishing our loss reserves as of December 31, 2024, we applied a lower estimated claim rate to new default notices received in the fourth quarter of 2024 from the affected areas than the claim rate we apply to other notices in our default inventory. The impact on our reserves in future periods will be dependent upon the performance of the hurricane-related defaults and our expectations for the amount of ultimate losses on these delinquencies. As of September 30, 2025, the reserves established for the Hurricane Milton and Helene defaults are materially unchanged from December 31, 2024 as this amount continues to be our best estimate of the ultimate losses to be incurred for claims associated with those defaults.

Current wording

On September 26, 2024, Hurricane Helene made landfall and caused property damage in certain counties in Florida, Georgia, South Carolina, North Carolina, Tennessee and Virginia. On October 9, 2024, Hurricane Milton made landfall, causing damage in certain counties in Florida. Loans in default increased by 3,620 in the year ended December 31, 2024, including 2,119 defaults we identified as hurricane-related defaults. Based on prior industry experience, we expect the ultimate number of hurricane-related defaults that result in claims will be less than the default-to-claim experience of non-hurricane-related defaults. In addition, under our master policy, our exposure may be limited on hurricane-related claims. For example, we are permitted to exclude a claim entirely where damage to the property underlying a mortgage was the proximate cause of the default and adjust a claim where the property underlying a mortgage in default is subject to unrestored physical damage. Accordingly, when establishing our loss reserves as of December 31, 2024, we applied a lower estimated claim rate to new default notices received in the fourth quarter of 2024 from the affected areas than the claim rate we apply to other notices in our default inventory. The impact on our reserves in future periods will be dependent upon the performance of the hurricane-related defaults and our expectations for the amount of ultimate losses on these delinquencies.

Previous wording

As more fully described in Note 4 to our condensed consolidated financial statements, at September 30, 2025, we had approximately $1.4 billion of excess of loss reinsurance covering NIW from January 1, 2018 through August 31, 2019 and August 1, 2020 through December 31, 2025 and quota share reinsurance on portions of our NIW effective September 1, 2019 through December 31, 2020 and January 1, 2022 through December 31, 2025. The impact on our reserves in future periods will be dependent upon the amount of delinquent notices received from loan servicers, the performance of defaults and our expectations for the amount of ultimate losses on these delinquencies.

Current wording

As more fully described in Note 4 to our condensed consolidated financial statements, at March 31, 2026, we had approximately $1.1 billion of excess of loss reinsurance covering NIW from January 1, 2019 through August 31, 2019 and August 1, 2020 through December 31, 2025 and quota share reinsurance on portions of our NIW effective September 1, 2019 through December 31, 2020 and January 1, 2022 through December 31, 2026. The impact on our reserves in future periods will be dependent upon the amount of delinquent notices received from loan servicers, the performance of defaults and our expectations for the amount of ultimate losses on these delinquencies.

Previous wording

Our other underwriting and operating expenses include components that are substantially fixed, as well as expenses that generally increase or decrease in line with the level of mortgage insurance NIW, title insurance policies issued and settlement services provided.

Current wording

Our other underwriting and operating expenses include components that are substantially fixed, as well as expenses that generally increase or decrease in line with the level of mortgage insurance NIW, reinsurance premiums earned, title insurance policies issued and settlement services provided.

Previous wording

Our most significant expense is compensation and benefits for our employees, which represented 49% and 51% of other underwriting and operating expenses for the three and nine months ended September 30, 2025, respectively, compared to 51% and 51% of other underwriting and operating expenses for the three and nine months ended September 30, 2024, respectively. Compensation and benefits expense includes base and incentive cash compensation, stock compensation expense, benefits and payroll taxes.

Current wording

Our most significant expense is compensation and benefits for our employees, which represented 50% of other underwriting and operating expenses for the three months ended March 31, 2026, compared to 56% for the three months ended March 31, 2025. Compensation and benefits expense includes base and incentive cash compensation, stock compensation expense, benefits and payroll taxes.

Previous wording

Underwriting and other expenses include legal, consulting, other professional fees, premium taxes, travel, entertainment, marketing, licensing, supplies, hardware, software, rent, utilities, depreciation and amortization and other expenses. We anticipate that as we continue to add new customers and increase our mortgage insurance IIF, title insurance policies issued and settlement services provided, our expenses will also continue to increase.

Current wording

Underwriting and other expenses include acquisition costs, legal, consulting, other professional fees, premium taxes, travel, entertainment, marketing, licensing, supplies, hardware, software, rent, utilities, depreciation and amortization and other expenses. Acquisition costs are net of ceding commissions earned on outward reinsurance and include ceding commissions incurred on reinsurance assumed. We anticipate that as we continue to add new customers and increase our mortgage insurance IIF, assume additional reinsurance, and increase title insurance policies issued and settlement services provided, our expenses will also continue to increase.

Previous wording

Income taxes are incurred based on the amount of earnings or losses generated in the jurisdictions in which we operate and the applicable tax rates and regulations in those jurisdictions. Our U.S. insurance subsidiaries are generally not subject to income taxes in most states in which we operate; however, our non-insurance subsidiaries are subject to state income taxes. In lieu of state income taxes, our insurance subsidiaries pay premium taxes that are recorded in other underwriting and operating expenses.

Current wording

Income taxes are incurred based on the amount of earnings or losses generated in the jurisdictions in which we operate and the applicable tax rates and regulations in those jurisdictions. Our U.S. insurance subsidiaries are generally not subject to income taxes in most states in which we operate; however, our non-insurance subsidiaries are subject to state income taxes. Except for six states, most notably Florida, our insurance subsidiaries pay premium taxes in lieu of state income taxes. Premium taxes are recorded in other underwriting and operating expenses.

Previous wording

Essent Group Ltd. ("Essent Group") and its wholly-owned subsidiary, Essent Re, are domiciled in Bermuda, and their income is currently not subject to a corporate income tax. See "—Legislative and Regulatory Developments—Bermuda Corporate Income Tax" above. Under a quota share reinsurance agreement, Essent Re reinsures 25% of Essent Guaranty’s NIW through December 31, 2020 and 35% of Essent Guaranty’s NIW after December 31, 2020. In April 2025, Essent Guaranty and Essent Re agreed to increase the quota share reinsurance coverage of Essent Guaranty’s NIW provided by Essent Re to 50% effective January 1, 2025. The quota share reinsurance coverage provided by Essent Re for Essent Guaranty’s NIW prior to January 1, 2025 will continue at the quota share percentage in effect at the time NIW was first ceded. Essent Re also provides insurance and reinsurance to Freddie Mac and Fannie Mae.

Current wording

Essent Group Ltd. ("Essent Group") and its wholly-owned subsidiary, Essent Re, are domiciled in Bermuda, and their income is currently not subject to a corporate income tax. See "—Legislative and Regulatory Developments—Bermuda Corporate Income Tax" above. Essent Re reinsures U.S. mortgage risk in the GSE credit risk transfer market, provides underwriting consulting services to third-party reinsurers and effective January 1, 2026, reinsures certain property and casualty risks. Essent Re also reinsures Essent Guaranty's NIW under a quota share reinsurance agreement. The following table summarizes the quota share reinsurance coverage that Essent Re has provided to Essent Guaranty for the respective NIW periods:

Previous wording

In general, the majority of any underwriting profit (premium revenue minus losses) that a book generates occurs in the early years of the book, with the largest portion of any underwriting profit realized in the first year. Subsequent years of a book generally result in modest underwriting profit or underwriting losses. This pattern generally occurs because relatively few of the claims that a book will ultimately experience typically occur in the first few years of the book, when premium revenue is highest, while subsequent years are affected by declining premium revenues, as the number of insured loans decreases (primarily due to loan prepayments), and by increasing losses.

Current wording

In general, the majority of any underwriting profit (premium revenue minus losses) that a book of mortgage insurance policies generates occurs in the early years of the book, with the largest portion of any underwriting profit realized in the first year. Subsequent years of a book generally result in modest underwriting profit or underwriting losses. This pattern generally occurs because relatively few of the claims that a book will ultimately experience typically occur in the first few years of the book, when premium revenue is highest, while subsequent years are affected by declining premium revenues, as the number of insured loans decreases (primarily due to loan prepayments), and by increasing losses.

Previous wording

As discussed above, mortgage insurance premiums we collect and earn are generated based on our IIF, which is a function of our NIW and cancellations. The following table includes a summary of the change in our IIF for the three and nine months ended September 30, 2025 and 2024 for our U.S. mortgage insurance portfolio. In addition, this table includes our RIF at the end of each period.

Current wording

As discussed above, mortgage insurance premiums we collect and earn are generated based on our IIF, which is a function of our NIW and cancellations. The following table includes a summary of the change in our IIF for the three months ended March 31, 2026 and 2025 for our U.S. mortgage insurance portfolio. In addition, this table includes our RIF at the end of each period.

Previous wording

Our average net premium rate is calculated by dividing net premiums earned for the U.S. mortgage insurance portfolio by average insurance in force for the period and is dependent on a number of factors, including: (1) the risk characteristics and average coverage on the mortgages we insure; (2) the mix of monthly premiums compared to single premiums in our portfolio; (3) cancellations of non-refundable single premiums during the period; (4) changes to our pricing for NIW; and (5) premiums ceded under third-party reinsurance agreements. The following table presents the average net premium rate for our U.S. mortgage insurance portfolio:

Current wording

Our average net premium rate is calculated by dividing net premiums earned for the mortgage insurance portfolio by average insurance in force for the period and is dependent on a number of factors, including: (1) the risk characteristics and average coverage on the mortgages we insure; (2) the mix of monthly premiums compared to single premiums in our portfolio; (3) cancellations of non-refundable single premiums during the period; (4) changes to our pricing for NIW; and (5) premiums ceded under third-party reinsurance agreements. The following table presents the average net premium rate for our U.S. mortgage insurance portfolio:

Previous wording

The continued use of third-party reinsurance along with changes to the level of future cancellations of non-refundable single premium policies and mix of IIF may impact our average net premium rate in future periods.

Current wording

The continued use of outward reinsurance along with changes to the level of future cancellations of non-refundable single premium policies and mix of IIF may impact our average net premium rate in future periods.

Previous wording

As of September 30, 2025, the net risk in force for Essent Guaranty was $33.4 billion and its statutory capital was $3.7 billion, resulting in a risk-to-capital ratio of 8.9:1. The amount of capital required varies in each jurisdiction in which we operate; however, generally, the maximum permitted risk-to-capital ratio is 25.0 to 1. State insurance regulators have continued to examine their respective capital rules to determine whether, in light of the 2007-2008 financial crisis, changes are needed to more accurately assess mortgage insurers' ability to withstand stressful economic conditions. As a result, the capital metrics under which they assess and measure capital adequacy may change in the future. Independent of the state regulator and GSE capital requirements, management continually assesses the risk of our insurance portfolio and current market and economic conditions to determine the appropriate levels of capital to support our business.

Current wording

As of March 31, 2026, the net risk in force for Essent Guaranty was $31.8 billion and its statutory capital was $3.7 billion, resulting in a risk-to-capital ratio of 8.6:1. The amount of capital required varies in each jurisdiction in which we operate; however, generally, the maximum permitted risk-to-capital ratio is 25.0 to 1. State insurance regulators have continued to examine their respective capital rules to determine whether, in light of the 2007-2008 financial crisis, changes are needed to more accurately assess mortgage insurers' ability to withstand stressful economic conditions. As a result, the capital metrics under which they assess and measure capital adequacy may change in the future. Independent of the state regulator and GSE capital requirements, management continually assesses the risk of our insurance portfolio and current market and economic conditions to determine the appropriate levels of capital to support our business.

Previous wording

Net premiums earned for the three and nine months ended September 30, 2025 decreased compared to the three and nine months ended September 30, 2024. For more information, see Net Premiums Written and Earned under “Results of Operations: Mortgage Insurance” and Net Premiums Earned under “Results of Operations: Corporate & Other”.

Current wording

Net premiums earned for the three months ended March 31, 2026 increased compared to the three months ended March 31, 2025. For more information, see Net Premiums Written and Earned under “Results of Operations: Mortgage Insurance”, Net Premiums Written and Earned under “Results of Operations: Reinsurance” and Net Premiums Earned under “Results of Operations: Corporate & Other”.

Previous wording

Our net investment income was derived from the following sources for the periods indicated:

Current wording

Our consolidated net investment income was derived from the following sources for the periods indicated:

Previous wording

The pre-tax investment income yield increased from 3.8% in the three months ended September 30, 2024 to 3.9% for the three months ended September 30, 2025, primarily due to a general increase in investment yields due to rising interest rates. The pre-tax investment income yield was 3.8% for both the nine months ended September 30, 2025 and 2024. See “— Liquidity and Capital Resources” for further details of our investment portfolio.

Current wording

The increase in net investment income for the three months ended March 31, 2026 as compared to the same period in 2025 was due to an increase in the pre-tax investment income yield. The pre-tax investment income yield on cash and available-for-sale investments increased from 3.77% in the three months ended March 31, 2025 to 3.80% for the three months ended March 31, 2026, primarily due to a general increase in investment yields due to rising interest rates. The average cash and available-for-sale investment portfolio balance was $6.4 billion for both the three months ended March 31, 2026 and 2025, respectively. See “— Liquidity and Capital Resources” for further details of our investment portfolio.

Previous wording

Income from other invested assets for the three months ended September 30, 2025 was $1.8 million as compared to $2.8 million for the three months ended September 30, 2024 and $13.6 million for the nine months ended September 30, 2025 compared to $0.5 million for the nine months ended September 30, 2024. The increase in income from other invested assets for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 was primarily due to increased favorable fair value adjustments recorded.

Current wording

Income from other invested assets for the three months ended March 31, 2026 was $10.2 million as compared to $7.4 million for the three months ended March 31, 2025. The increase in income from other invested assets for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 was primarily due to increased favorable fair value adjustments recorded.

Previous wording

The increased provision for losses for the three and nine months ended September 30, 2025 compared to the three and nine months ended September 30, 2024 was primarily due to an increase in the number of defaults as well as an increase in average reserve per default due to aging of defaults remaining within the mortgage insurance portfolio and a reduction in hurricane-related defaults without a corresponding change in reserves for hurricane-related defaults. See “Results of Operations: Mortgage Insurance" for more information.

Current wording

The increased provision for losses for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 was primarily due to property and casualty reinsurance assumed beginning January 1, 2026 and an increase in the number of defaults as well as an increase in the average reserve per default due to aging of defaults remaining within the mortgage insurance portfolio. See “Results of Operations: Mortgage Insurance" and “Results of Operations: Reinsurance" for more information.

Previous wording

For the three and nine months ended September 30, 2025, we incurred interest expense of $8.3 million and $24.5 million as compared to $11.5 million and $27.2 million for the three and nine months ended September 30, 2024, respectively. On July 1, 2024, Essent Group completed an underwritten public offering of $500 million principal amount of 6.25% Senior Notes due 2029 (the “Senior Notes"). The Company used the net proceeds from the sale of the Senior Notes to repay all of the borrowings outstanding under the term loan portion of the Existing Credit Facility on July 1, 2024. The decrease in interest expense during both the three and nine months ended September 30, 2025 was primarily due to a loss on debt extinguishment of $3.2 million recorded during the third quarter of 2024. For the three and nine month periods ended September 30, 2025, the average amount of borrowings outstanding were $500 million compared to $500 million and $450 million for the three and nine months ended September 30, 2024, respectively. For the three and nine months ended September 30, 2025, our total borrowings had a weighted average interest rate of 6.25% as compared to 6.32% and 6.84% for the three and nine months ended September 30, 2024, respectively.

Current wording

For the three months ended March 31, 2026 and 2025, we incurred interest expense of $8.1 million. In both the three month periods ended March 31, 2026 and 2025, the average amount of borrowings outstanding were $500 million at a weighted average interest rate of 6.25%.

Previous wording

Our subsidiaries in the United States file a consolidated U.S. Federal income tax return. Our income tax expense was $34.9 million and $31.4 million for the three months ended September 30, 2025 and 2024, respectively and $102.3 million and $99.0 million for the nine months ended September 30, 2025 and 2024, respectively. The provision for income taxes for the nine months ended September 30, 2025 was calculated using an estimated annual effective tax rate of 16.2% compared to 15.1% for the nine months ended September 30, 2024. The increase in our estimated annual effective tax rate is primarily related to withholding taxes incurred on intercompany dividends paid by Essent US Holdings, Inc. to its parent company. For the nine months ended September 30, 2025, income tax expense includes $3.2 million of discrete tax expense associated with realized and unrealized gains recognized during the period partially offset by $0.8 million excess tax benefits associated with the vesting of common shares and common share units as well as $0.8 million of favorable adjustments related to prior year tax returns. For the nine months ended September 30, 2024, income tax expense includes $0.6 million of discrete tax benefit associated with realized and unrealized losses recognized during the period partially offset by excess tax deficits associated with the vesting of common shares and common share units.

Current wording

Our subsidiaries in the United States file a consolidated U.S. Federal income tax return. Our income tax expense was $34.9 million and $31.6 million for the three months ended March 31, 2026 and 2025, respectively. The provision for income taxes for the three months ended March 31, 2026 was calculated using an estimated annual effective tax rate of 17.2% compared to 15.4% for the three months ended March 31, 2025. The increase in our estimated annual effective tax rate is primarily related to estimated withholding taxes to be incurred on intercompany dividends by Essent US Holdings, Inc. to its parent company. For the three months ended March 31, 2026, income tax expense includes $2.4 million of discrete tax expense associated with realized and unrealized gains recognized during the period partially offset by $1.1 million excess tax benefits associated with the vesting of common shares and common share units. For the three months ended March 31, 2025, income tax expense includes $1.6 million of discrete tax expense associated with realized and unrealized gains recognized during the period partially offset by $0.7 million excess tax benefits associated with the vesting of common shares and common share units.

Previous wording

The increase in net investment income for the three months ended September 30, 2025 as compared to the same period in 2024 was due to an increase in the weighted average balance of our investment portfolio as well as an increase in the pre-tax investment income yield. The increase in net investment income for the nine months ended September 30, 2025 as compared to the same period in 2024 was due to an increase in the weighted average balance of our investment portfolio.

Current wording

Three Months Ended March 31, 2026 Compared to the Three Months Ended March 31, 2025

Previous wording

For the three months ended September 30, 2025, our Mortgage Insurance segment reported income before income tax expense of $204.2 million, compared to income before income tax expense of $216.0 million for the three months ended September 30, 2024. The decrease in our operating results during the three months ended September 30, 2025 compared to the same period in 2024 was primarily due to an increase in the provision for losses and decreases in income from other invested assets and other income, partially offset by an increases in net investment income and decreases in other underwriting and operating expenses.

Current wording

For the three months ended March 31, 2026, our Mortgage Insurance segment reported income before income tax expense of $190.1 million, compared to income before income tax expense of $193.9 million for the three months ended March 31, 2025. The decrease in our operating results during the three months ended March 31, 2026 compared to the same period in 2025 was primarily due to an increase in the provision for losses and a decrease in net premiums earned, partially offset by an increase in income from other invested assets and a decrease in other underwriting and operating expenses.

Previous wording

Net premiums earned increased to $699.2 million in the nine months ended September 30, 2025 compared to $696.8 million in the nine months ended September 30, 2024. The increase in net premiums earned was due to an increase in our average IIF from $240.2 billion for the nine months ended September 30, 2024 to $245.9 billion for the nine months ended September 30, 2025, partially offset by a decrease in the average net premium rate to 0.35% for the nine months ended September 30, 2025 compared to 0.36% for the nine months ended September 30, 2024. The decrease in the average net premium rate was due to an increase in ceded premiums as a result of higher ceded losses under our third party quota share arrangements.

Current wording

Net premiums earned in the three months ended March 31, 2026 decreased compared to the three months ended March 31, 2025 due to a decrease in the average net premium rate partially offset by an increase in our average IIF. The average net premium rate was 0.35% for the three months ended March 31, 2026 compared to 0.36% for the three months ended March 31, 2025 due to an increase in ceded premiums as a result of higher ceded losses under our third party quota share arrangements. Our average IIF increased from $244.0 billion for the three months ended March 31, 2025 to $247.8 billion for the three months ended March 31, 2026.

Previous wording

In the three months ended September 30, 2025 we recorded a provision for losses of $44.2 million compared to a provision of $29.8 million for the three months ended September 30, 2024. In the nine months ended September 30, 2025 we recorded a provision of $90.3 million compared to a provision of $37.9 million for the nine months ended September 30, 2024. The increase in the provision for losses in the three and nine months ended September 30, 2025 compared to the same periods in 2024 was primarily due to an increase in the number of defaults as well as an increase in our reserve per default. The increase in average reserve per default was due to aging of defaults remaining within the mortgage insurance portfolio as well as a reduction in hurricane-related defaults during the three and nine months ended September 30, 2025 without a corresponding change in reserves established for hurricane-related defaults.

Current wording

In the three months ended March 31, 2026 we recorded a provision for losses of $37.6 million compared to a provision of $30.7 million for the three months ended March 31, 2025. The increase in the provision for losses in the three months ended March 31, 2026 compared to the same period in 2025 was primarily due to an increase in the number of defaults as well as an increase in our average reserve per default. The increase in average reserve per default was due to aging of defaults remaining within the mortgage insurance portfolio and an increase in the average RIF per default.

Previous wording

The following table presents a rollforward of insured loans in default for our U.S. mortgage insurance portfolio for the periods indicated:

Current wording

The following table presents a rollforward of insured loans in default for our mortgage insurance portfolio for the periods indicated:

Previous wording

The following table includes additional information about our loans in default as of the dates indicated for our U.S. mortgage insurance portfolio:

Current wording

The following table includes additional information about our loans in default as of the dates indicated for our mortgage insurance portfolio: