Enact Holdings Inc

Previous wording

The following discussion and analysis of our consolidated financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes for the six months ended June 30, 2024 and 2023, and our audited consolidated financial statements and related notes for the years ended December 31, 2023 and 2022 within our Annual Report on Form 10-K for the fiscal year ending December 31, 2023 (the “Annual Report”).

Current wording

The following discussion and analysis of our consolidated financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes for the nine months ended September 30, 2024 and 2023, and our audited consolidated financial statements and related notes for the years ended December 31, 2023 and 2022 within our Annual Report on Form 10-K for the fiscal year ending December 31, 2023 (the “Annual Report”).

Previous wording

Macroeconomic environment. During the second quarter of 2024, the United States economy has shown positive signs, but faces continued but lessening uncertainty due to inflationary pressure, the geopolitical environment and lingering macroeconomic concerns.

Current wording

Macroeconomic environment. During the third quarter of 2024, the United States economy has continued to show positive signs, but faces lingering uncertainty due to inflationary pressure, the geopolitical environment and macroeconomic concerns.

Previous wording

The Bureau of Labor Statistics reported in June 2024 that the Consumer Price Index was 3.0% year-over-year. Despite the first month of price deflation in nearly two years, inflationary pressures have remained a challenge. The Federal Reserve has taken an aggressive approach towards addressing inflation through interest rate increases in recent years and a reduction of its balance sheet. The Federal Reserve raised interest rates four times in 2023 following seven rate increases in 2022. Mortgage rates have remained elevated after reaching more than 20-year highs towards the end of 2023.

Current wording

The Bureau of Labor Statistics reported in September 2024 that the Consumer Price Index (“CPI”) was 2.4% year-over-year compared to 3.0% year-over-year in June 2024. Despite CPI improvement, inflationary pressures have remained a challenge. The Federal Reserve took an aggressive approach towards addressing inflation throughout 2022 and into 2023. After a period of no interest rate changes in late 2023 and early 2024, the Federal Reserve decreased interest rates by 50 basis points in September 2024. Mortgage rates remain elevated but have declined compared to highs in late 2023.

Previous wording

Mortgage origination activity remained relatively slow during the second quarter of 2024 in response to elevated mortgage rates and sustained low housing supply. Over the past few years, housing affordability has deteriorated as elevated mortgage rates and home price appreciation outpaced median family income according to the National Association of Realtors Housing Affordability Index. National house prices continued to rise into 2024 according to the FHFA Monthly Purchase-Only House Price Index.

Current wording

Mortgage origination activity has increased modestly in 2024 but remains relatively slow in response to elevated mortgage rates and sustained low housing supply. Over the past few years, housing affordability has deteriorated as elevated mortgage rates and home price appreciation outpaced median family income according to the National Association of Realtors Housing Affordability Index. National house prices continued to rise into 2024 according to the Federal Housing Finance Agency (“FHFA”) Monthly Purchase-Only House Price Index.

Previous wording

The unemployment rate as of June 30, 2024, was 4.1%, a modest increase from March 31, 2024. As of June 30, 2024, the number of unemployed Americans stood at approximately 6.8 million and the number of long-term unemployed Americans (over 26 weeks out of the workforce) was approximately 1.5 million.

Current wording

The unemployment rate as of September 30, 2024, was 4.1%, flat from June 30, 2024. As of September 30, 2024, the number of unemployed Americans stood at approximately 6.8 million and the number of long-term unemployed Americans (over 26 weeks out of the workforce) was approximately 1.6 million.

Previous wording

Although it is difficult to predict the future level of reported forbearance and how many of the policies in a forbearance plan that remain current on their monthly mortgage payment will go delinquent, servicer- reported forbearances have generally declined. As of June 30, 2024, approximately 1.0%, or 9,931, of our active primary policies were reported in a forbearance plan, of which approximately 25% were reported as delinquent. Approximately 7% of our primary new delinquencies in the second quarter of 2024 were subject to a forbearance plan as compared to 14% in the second quarter of 2023.

Current wording

Although it is difficult to predict the future level of reported forbearance and how many of the policies in a forbearance plan that remain current on their monthly mortgage payment will go delinquent, servicer-reported forbearances have generally declined. As of September 30, 2024, approximately 1.0%, or 9,987, of our active primary policies were reported in a forbearance plan, of which approximately 28% were reported as delinquent. Approximately 9% of our primary new delinquencies in the third quarter of 2024 were subject to a forbearance plan as compared to 12% in the third quarter of 2023.

Previous wording

On October 24, 2022, the FHFA announced the validation and approval of both the FICO 10T credit score model and the VantageScore 4.0 credit score model for use by the GSEs as well as changing the requirement that lenders provide credit reports from all three nationwide consumer reporting agencies and instead only requiring credit reports from two of the three nationwide credit reporting agencies. The validation of the new credit scores requires lenders to deliver both credit scores for each loan sold to the GSEs. In February 2024, the FHFA announced preliminary implementation in the fourth quarter of 2025. Implementation will require system and process updates along with coordination across stakeholders of the industry.

Current wording

On October 24, 2022, the FHFA announced the validation and approval of both the FICO 10T credit score model and the VantageScore 4.0 credit score model for anticipated use by the GSEs as well as proposing to change the requirement that lenders provide credit reports from all three nationwide consumer reporting agencies and instead only requiring credit reports from two of the three nationwide credit reporting agencies. The validation of the new credit scores is currently expected to require lenders to deliver both credit scores for each loan sold to the GSEs. In February 2024, the FHFA announced preliminary implementation in the fourth quarter of 2025. Implementation will require system and process updates along with coordination across stakeholders of the industry.

Previous wording

Our portfolio. New insurance written of $13.6 billion in the second quarter of 2024 decreased 10% compared to the second quarter of 2023. Changes in NIW are primarily impacted by the size of the mortgage insurance market and our market share. Our primary persistency rate was 83% during the second quarter of 2024 and 84% for the second quarter of 2023. The persistency rate remains higher than historical levels driven by a large percentage of our in-force policies with mortgage rates below current mortgage rates. Elevated persistency has continued to offset the decline in new insurance written, leading to an increase in primary insurance in-force (“IIF”) of approximately $3.1 billion since December 31, 2023.

Current wording

Our portfolio. New insurance written (“NIW”) of $13.6 billion in the third quarter of 2024 decreased 6% compared to the third quarter of 2023 driven by lower estimated market share. Our primary persistency rate was 83% during the third quarter of 2024 and 84% for the third quarter of 2023. The persistency rate remains higher than historical levels driven by a large percentage of our in-force policies with mortgage rates below current mortgage rates. Elevated persistency has continued to offset lower new insurance written, leading to an increase in primary insurance in-force (“IIF”) of approximately $5.1 billion since December 31, 2023.

Previous wording

Net earned premiums increased approximately 3% in the second quarter of 2024 compared to the second quarter of 2023 primarily as a result of insurance in-force growth, partially offset by higher ceded premiums.

Current wording

Net earned premiums increased approximately 2% in the third quarter of 2024 compared to the third quarter of 2023 primarily as a result of insurance in-force growth and higher assumed premiums, consisting primarily of Enact Re’s GSE credit risk transfer participation, partially offset by higher ceded premiums.

Previous wording

Loss experience. Our loss ratio for the three months ended June 30, 2024, was (7)% as compared to (2)% for the three months ended June 30, 2023. Both periods were impacted by favorable reserve development. In the second quarter of 2024, we released $77 million of reserves, driven by cure performance of delinquencies from early 2023 and prior. As part of the reserve adjustments, we also decreased our claim rate assumptions for new and existing delinquencies as a result of sustained favorable cure performance and lessening uncertainty in the economic environment, which impacted reserves from current and prior accident years. This compares to the second quarter of 2023, where we recorded a $63 million reserve release primarily related to favorable cure performance on delinquencies from 2021 and earlier, including those as a result of COVID-19.

Current wording

Loss experience. Our loss ratio for the three months ended September 30, 2024, was 5% as compared to 7% for the three months ended September 30, 2023. Both periods were impacted by favorable reserve development. In the third quarter of 2024, we released $65 million of reserves, driven by cure performance of delinquencies from 2023 and prior. This compares to the third quarter of 2023, where we recorded a $55 million reserve release primarily related to favorable cure performance on delinquencies from 2022 and earlier, including those as a result of COVID-19.

Previous wording

New delinquencies in the second quarter of 2024 increased compared to the second quarter of 2023 primarily due to the normal loss development pattern of our portfolio. Current period primary delinquencies of 10,461 contributed $60 million of loss expense in the second quarter of 2024. We incurred $58 million of losses from 9,205 delinquencies that were reported in the second quarter of 2023. In determining the loss expense estimate, considerations were given to recent cure and claim experience and the prevailing and prospective economic conditions.

Current wording

New delinquencies in the third quarter of 2024 increased compared to the third quarter of 2023 due to aging of our large, newer books. Current period primary delinquencies of 12,964 contributed $75 million of loss expense in the third quarter of 2024. We incurred $72 million of losses from 11,107 delinquencies that were reported in the third quarter of 2023. In determining the loss expense estimate, considerations were given to recent cure and claim experience and the prevailing and prospective economic conditions.

Previous wording

Capital requirements and ratings. As of June 30, 2024, EMICO’s risk-to-capital ratio under North Carolina law and enforced by the North Carolina Department of Insurance (“NCDOI”), EMICO’s domestic insurance regulator, was approximately 10.8:1, compared with a risk-to-capital ratio of 11.6:1 and 11.9:1 as of December 31, 2023, and June 30, 2023, respectively. EMICO’s risk-to-capital ratio remains below the NCDOI’s maximum risk-to-capital ratio of 25:1. North Carolina’s calculation of risk-to-capital excludes the risk in-force for delinquent loans given the established loss reserves against all delinquencies. EMICO’s ongoing risk-to-capital ratio will depend principally on the magnitude of future losses incurred by EMICO, the effectiveness of ongoing loss mitigation activities, new business volume and profitability, the impact of quota share reinsurance, the amount of policy lapses and the amount of additional capital that is generated or distributed by the business.

Current wording

Capital requirements and ratings. As of September 30, 2024, EMICO’s risk-to-capital ratio under North Carolina law and enforced by the North Carolina Department of Insurance (“NCDOI”), EMICO’s domestic insurance regulator, was approximately 10.4:1, compared with a risk-to-capital ratio of 11.6:1 as of both December 31, 2023, and September 30, 2023, respectively. EMICO’s risk-to-capital ratio remains below the NCDOI’s maximum risk-to-capital ratio of 25:1. North Carolina’s calculation of risk-to-capital excludes the risk in-force for delinquent loans given the established loss reserves against all delinquencies. EMICO’s ongoing risk-to-capital ratio will depend principally on the magnitude of future losses incurred by EMICO, the effectiveness of ongoing loss mitigation activities, new business volume and profitability, the impact of quota share reinsurance, the amount of policy lapses and the amount of additional capital that is generated or distributed by the business.

Previous wording

Under PMIERs, we are subject to operational and financial requirements that private mortgage insurers must meet in order to remain eligible to insure loans that are purchased by the GSEs. As of June 30, 2024, we had estimated available assets of $5,024 million against $2,967 million net required assets under PMIERs compared to available assets of $4,853 million against $2,970 million net required assets as of March 31, 2024. The sufficiency ratio as of June 30, 2024, was 169%, or $2,057 million, above the PMIERs requirements, compared to 163%, or $1,883 million, above the PMIERs requirements as of March 31, 2024. Our PMIERs required assets as of June 30, 2024, and March 31, 2024, benefited from the application of a 0.30 multiplier applied to the risk-based required asset amount factor for certain non-performing loans as defined under PMIERs. The application of the 0.30 multiplier to all eligible delinquencies provided $31 million of benefit to our June 30, 2024 PMIERs required assets compared to $48 million of benefit as of March 31, 2024. These amounts are gross of any incremental reinsurance benefit from the elimination of the 0.30 multiplier. Our PMIERs required assets also benefited from a reinsurance credit of $1,756 million and $1,722 million related to third-party reinsurance as of June 30, 2024, and March 31, 2024, respectively.

Current wording

Under PMIERs, we are subject to operational and financial requirements that private mortgage insurers must meet in order to remain eligible to insure loans that are purchased by the GSEs. As of September 30, 2024, we had estimated available assets of $5,194 million against $3,004 million net required assets under PMIERs compared to available assets of $5,024 million against $2,967 million net required assets as of June 30, 2024. The sufficiency ratio as of September 30, 2024, was 173%, or $2,190 million, above the PMIERs requirements, compared to 169%, or $2,057 million, above the PMIERs requirements as of June 30, 2024. Our PMIERs required assets benefited from a reinsurance credit of $1,807 million and $1,756 million related to third-party reinsurance as of September 30, 2024, and June 30, 2024, respectively. Our PMIERs required assets as of September 30, 2024, and June 30, 2024, also benefited from the application of a 0.30 multiplier applied to the risk-based required asset amount factor for certain non-performing loans as defined under PMIERs. The application of the 0.30 multiplier to all eligible delinquencies provided $28 million of benefit to our September 30, 2024 PMIERs required assets compared to $31 million of benefit as of June 30, 2024. These amounts are gross of any incremental reinsurance benefit from the elimination of the 0.30 multiplier. Per guidance released by the GSEs in the third quarter of 2024, use of the multiplier will be discontinued effective March 31, 2025.

Previous wording

Recent transactions. In November 2023, we contributed $250 million into Enact Re, our wholly owned Bermuda-based subsidiary. This contribution supported the increase to the ceding percentage of our previously announced affiliate quota share agreements from 7.5% to 12.5% during the first quarter of 2024, and a new quota share reinsurance agreement which cedes 12.5% of EMICO’s 2024 new insurance written. The contribution also supports new business opportunities, which primarily includes the continued execution of GSE credit risk transfer.

Current wording

Recent transactions. In November 2023, we contributed $250 million into Enact Re, our wholly owned Bermuda-based subsidiary. This contribution supported the increase to the ceding percentage of our previously announced affiliate quota share agreements from 7.5% to 12.5% during the first quarter of 2024, and a new quota share reinsurance agreement that cedes 12.5% of EMICO’s 2024 new insurance written. The contribution also supports new business opportunities, which primarily includes the continued execution of GSE credit risk transfer.

Previous wording

During the second quarter of 2024, we issued our 2029 Notes for an aggregate principal amount of $750 million. We used the proceeds from the issuance to redeem our 2025 Notes.

Current wording

On May 28, 2024, we issued our 2029 Notes for an aggregate principal amount of $750 million. We used the proceeds from the issuance to redeem our 2025 Notes.

Previous wording

Capital returns. In March 2024, our primary mortgage insurance operating company, EMICO, completed a distribution to EHI that supports our ability to pay a quarterly dividend. We paid a dividend of $0.16 per common share during the first quarter of 2024. On May 1, 2024, we also announced an increase to our quarterly dividend to $0.185 per common share which was paid in June 2024. Future dividend payments are subject to quarterly review and approval by our Board of Directors and Genworth and will be targeted to be paid in the third month of each quarter.

Current wording

Capital returns. In March 2024, our primary mortgage insurance operating company, EMICO, completed a distribution to EHI that supports our ability to pay a quarterly dividend. We paid a dividend of $0.16 per common share during the first quarter of 2024. On May 1, 2024, we also announced an increase to our quarterly dividend to $0.185 per common share which was paid in June and September 2024. Future dividend payments are subject to quarterly review and approval by our Board of Directors and Genworth and will be targeted to be paid in the third month of each quarter.

Previous wording

On May 1, 2024, we announced the authorization of a new share repurchase program which allows for the repurchase of up to an additional $250 million of EHI’s common stock. Under the program, share repurchases may be made at our discretion from time to time in open market transactions in compliance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended, privately negotiated transactions, or by other means, including through Rule 10b5-1 trading plans. In conjunction with this authorization, we have entered into an agreement with Genworth Holdings, Inc. to repurchase its EHI shares on a pro rata basis as part of the program. The share repurchase program is not expected to materially change Genworth’s ownership interest in Enact. We expect the timing and amount of any future share repurchases will be opportunistic and will depend on a variety of factors, including EHI’s share price, capital availability, business and market conditions, regulatory requirements, and debt covenant restrictions. The program does not obligate EHI to acquire any amount of common stock, it may be suspended or terminated at any time at the Company’s discretion without prior notice, and it does not have a specified expiration date.

Current wording

On May 1, 2024, we announced the authorization of a share repurchase program that allows for the repurchase of up to $250 million of EHI’s common stock. Under the program, share repurchases may be made at our discretion from time to time in open market transactions in compliance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended, privately negotiated transactions, or by other means, including through Rule 10b5-1 trading plans. In conjunction with this authorization, we have entered into an agreement with Genworth Holdings, Inc. to repurchase its EHI shares on a pro rata basis as part of the program. The share repurchase program is not expected to materially change Genworth’s ownership interest in Enact post-completion. We expect the timing and amount of any future share repurchases will be opportunistic and will depend on a variety of factors, including EHI’s share price, capital availability, business and market conditions, regulatory requirements, and debt covenant restrictions. The program does not obligate EHI to acquire any amount of common stock, it may be suspended or terminated at any time at the Company’s discretion without prior notice, and it does not have a specified expiration date.

Previous wording

Premiums increased for the three months ended June 30, 2024, compared to the three months ended June 30, 2023, primarily as a result of insurance in-force growth, partially offset by higher ceded premiums. The net earned premium rate was 0.36% for the three months ended June 30, 2024, relatively consistent with the three months ended June 30, 2023.

Current wording

Premiums increased for the three months ended September 30, 2024, compared to the three months ended September 30, 2023, primarily as a result of insurance in-force growth and increased assumed premiums, consisting primarily of Enact Re’s GSE credit risk transfer participation, partially offset by higher ceded premiums. The net earned premium rate was 0.36% for the three months ended September 30, 2024, down slightly from 0.37% for the three months ended September 30, 2023.

Previous wording

Net investment income increased for the three months ended June 30, 2024, compared to the three months ended June 30, 2023, primarily due to higher yields as a result of rising interest rates coupled with higher average invested assets.

Current wording

Net investment income increased for the three months ended September 30, 2024, compared to the three months ended September 30, 2023, primarily due to higher yields as a result of elevated interest rates coupled with higher average invested assets.

Previous wording

Net investment losses in the second quarter of 2024 and 2023 were driven by realized losses on the sale of fixed maturity securities as part of our yield optimization strategy that allows us to reinvest sales proceeds and recoup higher investment income. Our yield optimization strategy enables opportunistic security sales based on current and changing market conditions. We had more sales in the second quarter of 2023 than 2024.

Current wording

Net investment losses in the third quarter of 2024 and 2023 were driven by realized losses on the sale of fixed maturity securities.

Previous wording

Losses incurred during the second quarter of 2024 and 2023 were both impacted by prior year development. In the second quarter of 2024, we recorded a reserve release of $77 million, driven by cure performance of delinquencies from early 2023 and prior. As part of the reserve adjustments, we also decreased our claim rate assumptions for new and existing delinquencies as a result of sustained favorable cure performance and lessening uncertainty in the economic environment, which impacted reserves from current and prior accident years. In the second quarter of 2023, we recorded a reserve release of $63 million on prior years as we experienced better than expected cure performance primarily related to delinquencies from the first half of 2022 and earlier. Current period primary delinquencies of 10,461 contributed $60 million of loss expense in the three months ended June 30, 2024. This compares to $58 million of loss expense from 9,205 primary delinquencies in the second quarter of 2023.

Current wording

Losses incurred during the third quarter of 2024 and 2023 were both impacted by prior year development. In the third quarter of 2024, we recorded a reserve release of $65 million, driven by cure performance of delinquencies from 2023 and prior. In the third quarter of 2023, we recorded a reserve release of $55 million primarily related to better than expected cure performance on delinquencies from 2022 and earlier, including a portion of those as a result of COVID-19. A component of the reserve release also related to delinquencies from 2022, as uncertainty in the economic environment had not negatively impacted cure performance to the extent initially expected. Current period primary delinquencies of 12,964 contributed $75 million of loss expense in the three months ended September 30, 2024. This compares to $72 million of loss expense from 11,107 primary delinquencies in the third quarter of 2023.

Previous wording

(1)Excludes run-off business.

Current wording

(1)Excludes run-off and other reserves.

Previous wording

Acquisition and operating expenses, net of deferrals, increased for the three months ended June 30, 2024, driven primarily by severance expenses as a part of restructuring activities.

Current wording

Acquisition and operating expenses, net of deferrals, increased for the three months ended September 30, 2024, driven primarily by expenses incurred as a part of restructuring activities.

Previous wording

Interest expense primarily relates to our 2025 Notes and 2029 Notes. For additional details see Note 7 to our unaudited condensed consolidated financial statements for the six months ended June 30, 2024 and 2023.

Current wording

Interest expense primarily relates to our 2029 Notes. For additional details see Note 7 to our unaudited condensed consolidated financial statements for the three months ended September 30, 2024 and 2023.

Previous wording

(1)Loss ratio is calculated by dividing losses incurred by net earned premiums.

Current wording

(2)Loss ratio is calculated by dividing losses incurred by net earned premiums.

Previous wording

(2)Expense ratio (net earned premiums) is calculated by dividing acquisition and operating expenses, net of deferrals, plus amortization of DAC and intangibles by net earned premiums.

Current wording

(3)Expense ratio is calculated by dividing acquisition and operating expenses, net of deferrals, plus amortization of DAC and intangibles by net earned premiums.

Previous wording

(3)Net earned premium rate is calculated by dividing direct earned premium less ceded premium, by average primary IIF.

Current wording

(4)Net earned premium rate is calculated by dividing direct earned premium less ceded premium, by average primary IIF.

Previous wording

Premiums increased for the six months ended June 30, 2024, compared to the six months ended June 30, 2023, primarily attributable to insurance in-force growth, partially offset by higher ceded premium. The net earned premium rate was 0.36% for the six months ended June 30, 2024, relatively consistent with the six months ended June 30, 2023.

Current wording

Premiums increased for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, primarily attributable to insurance in-force growth and higher assumed premiums, consisting primarily of Enact Re’s GSE credit risk transfer participation, partially offset by higher ceded premiums. The net earned premium rate was 0.36% for the nine months ended September 30, 2024, down slightly from 0.37% for the nine months ended September 30, 2023.

Previous wording

Net investment income increased for the six months ended June 30, 2024, compared to the six months ended June 30, 2023, primarily attributable to an increase in investment yields in the current year and higher average invested assets.

Current wording

Net investment income increased for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, primarily attributable to an increase in investment yields in the current year and higher average invested assets.

Previous wording

Losses incurred during the first six months of 2024 and 2023 were both impacted by favorable reserve adjustments. During the first six months of 2024, we released reserves of $131 million primarily on prior accident year reserves driven by cure performance of delinquencies from early 2023 and prior. As part of the reserve adjustments, we also decreased our claim rate assumptions for new and existing delinquencies as a result of sustained favorable cure performance and lessening uncertainty in the economic environment, which impacted reserves from current and prior accident years. During the first six months of 2023, we recorded $133 million of reserve releases. New primary delinquencies of 21,856 contributed $134 million of loss expense in the first six months of 2024. This compares to $116 million of loss expense from 18,804 new primary delinquencies in the first six months of 2023.

Current wording

Losses incurred during the first nine months of 2024 and 2023 were both impacted by favorable reserve adjustments. During the first nine months of 2024, we released reserves of $196 million primarily on prior accident year reserves driven by cure performance of delinquencies from 2023 and prior. As part of the 2024 reserve adjustments, we decreased our claim rate assumptions for new and existing delinquencies as a result of sustained favorable cure performance and lessening uncertainty in the economic environment, which impacted reserves from current and prior accident years. During the first nine months of 2023, we released reserves of $188 million primarily due to better than expected cure experience on delinquencies from 2022 and earlier, including a portion of those related to the emergence of COVID-19. New primary delinquencies of 34,820 contributed $209 million of loss expense in the first nine months of 2024. This compares to $188 million of loss expense from 29,911 new primary delinquencies in the first nine months of 2023.

Previous wording

The following table shows incurred losses related to current and prior accident years for the six months ended June 30,:

Current wording

The following table shows incurred losses related to current and prior accident years for the nine months ended September 30,:

Previous wording

The loss of debt extinguishment relates to the expenses incurred associated with the redemption of our 2025 Notes.

Current wording

The loss on debt extinguishment relates to the expenses incurred associated with the redemption of our 2025 Notes.

Previous wording

Interest expense primarily relates to our 2025 Notes and 2029 Notes. For additional details see Note 7 to our unaudited condensed consolidated financial statements for the three months ended June 30, 2024 and 2023.

Current wording

Interest expense primarily relates to our 2025 Notes and 2029 Notes. For additional details see Note 7 to our unaudited condensed consolidated financial statements for the nine months ended September 30, 2024 and 2023.

Previous wording

The effective tax rate was 21.8% and 21.6% for the six months ended June 30, 2024 and 2023, respectively, consistent with the United States corporate federal income tax rate.

Current wording

The effective tax rate was 21.6% and 22.0% for the nine months ended September 30, 2024 and 2023, respectively, consistent with the United States corporate federal income tax rate.

Previous wording

(iii)Gains (losses) on the extinguishment of debt are also excluded from adjusted operating income, as they are not indicative of overall operating trends.

Current wording

(iii)Gains (losses) on the extinguishment of debt are also excluded from adjusted operating income, as we do not view them to be indicative of overall operating trends.

Previous wording

Adjusted operating income increased for the three months ended June 30, 2024, as compared to June 30, 2023, primarily due to the larger reserve release in the second quarter of 2024, coupled with increases in premiums and net investment income.

Current wording

Adjusted operating income increased for the three months ended September 30, 2024, as compared to September 30, 2023, primarily due to increases in premiums and net investment income, coupled with a larger reserve release in the third quarter of 2024.

Previous wording

Adjusted operating income increased for the six months ended June 30, 2024, as compared to June 30, 2023, primarily due to premium and net investment income growth, partially offset by higher losses.

Current wording

Adjusted operating income increased for the nine months ended September 30, 2024, as compared to September 30, 2023, primarily due to premium and net investment income growth, partially offset by higher losses.

Previous wording

NIW for the three months ended June 30, 2024, decreased 10% compared to the three months ended June 30, 2023 and decreased 14% compared to the six months ended June 30, 2023. Changes in NIW are primarily impacted by the size of the mortgage insurance market and our market share. We manage the quality of new business through pricing and our underwriting guidelines, which we modify from time to time as circumstances warrant.

Current wording

NIW for the three months ended September 30, 2024, decreased 6% compared to the three months ended September 30, 2023. NIW for the nine months ended September 30, 2024 decreased 11% compared to the nine months ended September 30, 2023. Changes in NIW are primarily impacted by the size of the mortgage insurance market and our market share. We manage the quality of new business through pricing and our underwriting guidelines, which we modify from time to time as circumstances warrant.

Previous wording

IIF increased as a result of NIW. Higher interest rates and the low refinance market led to lower lapse and cancellations during the second quarter of 2024 driving continued elevated persistency. The primary persistency rate was 83% and 84% for the three months ended June 30, 2024 and 2023. RIF increased primarily as a result of higher IIF.

Current wording

IIF increased as a result of NIW. Elevated interest rates and the low refinance market leading to lower lapse and cancellations during the third quarter of 2024 drove continued elevated persistency. The primary persistency rate was 83% and 84% for the three months ended September 30, 2024 and 2023, respectively. RIF increased primarily as a result of higher IIF.

Previous wording

Loss reserves in policy years 2008 and prior are outsized compared to their representation of RIF. The size of these policy years at origination, particularly 2005 through 2008, combined with the significant decline in home prices led to significant losses in policy years prior to 2009. Although uncertainty remains with respect to the ultimate losses we will experience on these policy years, they have become a smaller percentage of our total mortgage insurance portfolio. The concentration of loss reserves has shifted to newer book years in line with changes in RIF. As of June 30, 2024, our 2017 and newer policy years represented approximately 96% of our primary RIF and 79% of our total direct primary case reserves.

Current wording

Loss reserves in policy years 2008 and prior are outsized compared to their representation of RIF. The size of these policy years at origination, particularly 2005 through 2008, combined with the significant decline in home prices led to significant losses in policy years prior to 2009. Although uncertainty remains with respect to the ultimate losses we will experience on these policy years, they have become a smaller percentage of our total mortgage insurance portfolio. The concentration of loss reserves has shifted to newer book years in line with changes in RIF. As of September 30, 2024, our 2017 and newer policy years represented approximately 96% of our primary RIF and 81% of our total direct primary case reserves.