Exhibit 99.1
Essent Group Ltd. Reports First Quarter 2014 Results
HAMILTON, Bermuda--(BUSINESS WIRE)--May 8, 2014--Essent Group Ltd. (NYSE: ESNT) today reported net income for the quarter ended March 31, 2014 of $15.0 million or $0.18 per diluted share. As of March 31, 2014, Essent had primary insurance in force of $34.8 billion and consolidated stockholders’ equity of $740.1 million.
Additionally, Essent’s combined risk to capital ratio, which includes statutory capital for both Essent Guaranty, Inc. and Essent Guaranty of PA, Inc., was 16.1:1 as of March 31, 2014.
“Our growing insurance in force portfolio generated $44.8 million in earned premium for the first quarter of 2014, an increase of 110% compared to the first quarter a year ago,” said Mark Casale, Chairman and Chief Executive Officer. “In addition, our strong capital levels and disciplined risk management approach continue to provide confidence to our counterparties and differentiate Essent in the market place.”
Financial Highlights:
- Insurance in force as of March 31, 2014 was $34.8 billion, compared to $32.0 billion as of December 31, 2013 and $17.4 billion as of March 31, 2013.
- New insurance written for the first quarter of 2014 was $3.6 billion, compared to $4.5 billion in the fourth quarter of 2013 and $4.3 billion in the first quarter of 2013.
- Income before taxes for the first quarter of 2014 was $23.5 million, compared to $19.4 million for the fourth quarter of 2013 and $7.3 million for the first quarter of 2013.
- Net premiums earned for the first quarter of 2014 were $44.8 million, compared to $40.3 million in the fourth quarter of 2013 and $21.3 million in the first quarter of 2013.
- The expense ratio for the first quarter of 2014 was 52.4%, compared to 55.3% for the fourth quarter of 2013 and 70.4% for the first quarter of 2013.
- The provision for losses and LAE for the first quarter of 2014 was $0.9 million, compared to $0.7 million for both the fourth and first quarters of 2013.
- The percentage of loans in default as of March 31, 2014 was 0.12%, compared to 0.11% as of December 31, 2013 and 0.10% as of March 31, 2013.
- The combined ratio for the first quarter of 2014 was 54.4%, compared to 57.0% for the fourth quarter of 2013 and 73.8% for the first quarter of 2013.
- On April 28, 2014, Standard & Poor’s affirmed its BBB+ Financial Strength Rating for Essent Guaranty, Inc. Moody’s continues to rate Essent Guaranty, Inc. as Baa2.
Conference Call
Essent management will hold a conference call at 10:00 AM Eastern time today to discuss its results. The conference call will be broadcast live over the Internet at http://ir.essentgroup.com/investors/webcasts-and-presentations/event-calendar/default.aspx. The call may also be accessed by dialing 877-201-0168 inside the U.S., or 647-788-4901 for international callers, using passcode 33651865 or by referencing Essent.
A replay of the webcast will be available on the Essent website approximately two hours after the live broadcast ends for a period of one year. A replay of the conference call will be available approximately two hours after the call ends for a period of two weeks, using the following dial-in numbers and passcode: 855-859-2056 inside the U.S., or 404-537-3406 for international callers, passcode 33651865.
In addition to the information provided in the company's earnings news release, other statistical and financial information, which may be referred to during the conference call, will be available on Essent's website at http://ir.essentgroup.com/investors/financial-information/quarterly-financial-supplements/default.aspx.
Forward Looking Statements
This press release may include “forward-looking statements” which are subject to known and unknown risks and uncertainties, many of which may be beyond our control. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "plan," "seek," "comfortable with," "will," "expect," "intend," "estimate," "anticipate," "believe" or "continue" or the negative thereof or variations thereon or similar terminology. Actual events, results and outcomes may differ materially from our expectations due to a variety of known and unknown risks, uncertainties and other factors. Although it is not possible to identify all of these risks and factors, they include, among others, the following: changes in or to Fannie Mae and Freddie Mac (the “GSEs”), whether through Federal legislation, restructurings or a shift in business practices; failure to continue to meet the mortgage insurer eligibility requirements of the GSEs; competition for customers; lenders or investors seeking alternatives to private mortgage insurance; an increase in the number of loans insured through Federal government mortgage insurance programs, including those offered by the Federal Housing Administration; decline in new insurance written and franchise value due to loss of a significant customer; decline in the volume of low down payment mortgage originations; the definition of "Qualified Mortgage" reducing the size of the mortgage origination market or creating incentives to use government mortgage insurance programs; the definition of "Qualified Residential Mortgage" reducing the number of low down payment loans or lenders and investors seeking alternatives to private mortgage insurance; the implementation of the Basel III Capital Accord discouraging the use of private mortgage insurance; a decrease in the length of time that insurance policies are in force; uncertainty of loss reserve estimates; deteriorating economic conditions; non-U.S. operations becoming subject to U.S. Federal income taxation; becoming considered a passive foreign investment company for U.S. Federal income tax purposes; and other risks and factors described in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2013 filed with the Securities and Exchange Commission on March 10, 2014. Any forward-looking information presented herein is made only as of the date of this press release, and we do not undertake any obligation to update or revise any forward-looking information to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.
Non-GAAP Financial Measures
In presenting Essent Group Ltd.’s results, management has included financial measures, including adjusted book value per share, that are not calculated under standards or rules that comprise accounting principles generally accepted in the United States (“GAAP”). Such measures are referred to as “non-GAAP measures.” These non-GAAP measures may be defined or calculated differently by other companies. Management believes these measures allow for a more complete understanding of the underlying business. These measures are used to monitor our results and should not be viewed as a substitute for those determined in accordance with GAAP. Reconciliations of such measures to the most comparable GAAP figures are included in the attached financial supplement in accordance with Regulation G.
About the Company
Essent Group Ltd. (NYSE: ESNT) is a Bermuda-based holding company which, through its wholly-owned subsidiary Essent Guaranty, Inc., offers private mortgage insurance for single-family mortgage loans in the United States. Essent provides private capital to mitigate mortgage credit risk, allowing lenders to make additional mortgage financing available to prospective homeowners. Headquartered in Radnor, Pennsylvania, Essent Guaranty, Inc. is licensed to write mortgage insurance in all 50 states and the District of Columbia, and is approved by Fannie Mae and Freddie Mac. Additional information regarding Essent may be found at www.essentgroup.com.
Essent Group Ltd. and Subsidiaries | ||||
Financial Results and Supplemental Information (Unaudited) | ||||
Quarter ended March 31, 2014 | ||||
Exhibit A: | Condensed Consolidated Statements of Comprehensive Income (Unaudited) | |||
Exhibit B: | Condensed Consolidated Balance Sheets (Unaudited) | |||
Exhibit C: | New Insurance Written | |||
Exhibit D: | Insurance in Force and Risk in Force | |||
Exhibit E: | Portfolio Vintage Data | |||
Exhibit F: | Portfolio Geographic Data | |||
Exhibit G: | Defaults, Reserve for Losses and LAE, and Claims | |||
Exhibit H: | Investment Portfolio | |||
Exhibit I: | Insurance Company Capital | |||
Exhibit J: | Historical Quarterly Data | |||
Exhibit K: | Earnings per Share | |||
Exhibit L: | Reconciliation of Non-GAAP Financial Measure - Adjusted Book Value per Share | |||
Exhibit A | ||||||||||
Essent Group Ltd. and Subsidiaries | ||||||||||
Condensed Consolidated Statements of Comprehensive Income (Unaudited) | ||||||||||
Quarter ended March 31, | ||||||||||
(In thousands, except per share amounts) | 2014 | 2013 | ||||||||
Revenues: | ||||||||||
Net premiums written | $ | 52,192 | $ | 33,373 | ||||||
Increase in unearned premiums | (7,442 | ) | (12,109 | ) | ||||||
Net premiums earned | 44,750 | 21,264 | ||||||||
Net investment income | 1,898 | 730 | ||||||||
Realized investment gains, net | 400 | 10 | ||||||||
Other income | 773 | 1,027 | ||||||||
Total revenues | 47,821 | 23,031 | ||||||||
Losses and expenses: | ||||||||||
Provision for losses and LAE | 902 | 730 | ||||||||
Other underwriting and operating expenses | 23,459 | 14,962 | ||||||||
Total losses and expenses | 24,361 | 15,692 | ||||||||
Income before income taxes | 23,460 | 7,339 | ||||||||
Income tax expense | 8,454 | 139 | ||||||||
Net income | $ | 15,006 | $ | 7,200 | ||||||
Earnings per share | ||||||||||
Basic: | ||||||||||
Common Shares | $ | 0.18 | N/A | |||||||
Class A common shares | N/A | $ | 0.23 | |||||||
Class B-2 common shares | N/A | - | ||||||||
Diluted: | ||||||||||
Common Shares | $ | 0.18 | N/A | |||||||
Class A common shares | N/A | $ | 0.23 | |||||||
Class B-2 common shares | N/A | - | ||||||||
Weighted average common shares outstanding | ||||||||||
Basic: | ||||||||||
Common Shares | 82,864 | N/A | ||||||||
Class A common shares | N/A | 31,805 | ||||||||
Class B-2 common shares | N/A | 853 | ||||||||
Diluted: | ||||||||||
Common Shares | 84,696 | N/A | ||||||||
Class A common shares | N/A | 31,864 | ||||||||
Class B-2 common shares | N/A | 6,009 | ||||||||
Net income | $ | 15,006 | $ | 7,200 | ||||||
Other comprehensive income (loss): | ||||||||||
Change in unrealized appreciation (depreciation) of investments, net of tax expense (benefit) of $370 and $(139) in 2014 and 2013 | 479 | (258 | ) | |||||||
Total other comprehensive income (loss) | 479 | (258 | ) | |||||||
Comprehensive income | $ | 15,485 | $ | 6,942 | ||||||
Loss ratio | 2.0 | % | 3.4 | % | ||||||
Expense ratio | 52.4 | % | 70.4 | % | ||||||
Combined ratio | 54.4 | % | 73.8 | % | ||||||
Exhibit B | ||||||||||
Essent Group Ltd. and Subsidiaries | ||||||||||
Condensed Consolidated Balance Sheets (Unaudited) | ||||||||||
March 31, | December 31, | |||||||||
(In thousands, except per share amounts) | 2014 | 2013 | ||||||||
Assets | ||||||||||
Investments available for sale, at fair value | ||||||||||
Fixed maturities | $ | 585,743 | $ | 318,476 | ||||||
Short-term investments | 261,525 | 14,079 | ||||||||
Total investments | 847,268 | 332,555 | ||||||||
Cash | 8,838 | 477,655 | ||||||||
Accrued investment income | 3,673 | 1,978 | ||||||||
Accounts receivable | 10,349 | 10,006 | ||||||||
Deferred policy acquisition costs | 6,628 | 6,173 | ||||||||
Property and equipment (at cost, less accumulated depreciation of $37,342 in 2014 and $36,796 in 2013) | 4,372 | 4,411 | ||||||||
Prepaid federal income tax | 18,000 | 8,000 | ||||||||
Net deferred tax asset | 2,869 | 10,346 | ||||||||
Other assets | 3,049 | 2,846 | ||||||||
Total assets | $ | 905,046 | $ | 853,970 | ||||||
Liabilities and Stockholders' Equity | ||||||||||
Liabilities | ||||||||||
Reserve for losses and LAE | $ | 3,804 | $ | 3,070 | ||||||
Unearned premium reserve | 110,841 | 103,399 | ||||||||
Amounts due under Asset Purchase Agreement | 4,967 | 4,949 | ||||||||
Accrued payroll and bonuses | 4,989 | 13,076 | ||||||||
Payable for securities | 35,192 | - | ||||||||
Other accrued liabilities | 5,124 | 7,335 | ||||||||
Total liabilities | 164,917 | 131,829 | ||||||||
Commitments and contingencies | ||||||||||
Stockholders' Equity | ||||||||||
Common Shares, $0.015 par value: | ||||||||||
Authorized - 233,333; issued - 86,494 shares in 2014 and 86,491 shares in 2013 | 1,297 | 1,297 | ||||||||
Additional paid-in capital | 756,893 | 754,390 | ||||||||
Accumulated other comprehensive loss | (968 | ) | (1,447 | ) | ||||||
Accumulated deficit | (17,093 | ) | (32,099 | ) | ||||||
Total stockholders' equity | 740,129 | 722,141 | ||||||||
Total liabilities and stockholders' equity | $ | 905,046 | $ | 853,970 | ||||||
Exhibit C | |||||||||||||||||||||||||||
Essent Group Ltd. and Subsidiaries | |||||||||||||||||||||||||||
Supplemental Information | |||||||||||||||||||||||||||
New Insurance Written | |||||||||||||||||||||||||||
NIW by Credit Score | |||||||||||||||||||||||||||
Quarter ended | |||||||||||||||||||||||||||
March 31, 2014 | December 31, 2013 | March 31, 2013 | |||||||||||||||||||||||||
($ in thousands) | |||||||||||||||||||||||||||
>=760 | $ | 1,614,436 | 44.5 | % | $ | 2,135,772 | 47.2 | % | $ | 2,437,590 | 56.4 | % | |||||||||||||||
740-759 | 636,859 | 17.5 | 802,262 | 17.7 | 775,559 | 17.9 | |||||||||||||||||||||
720-739 | 536,471 | 14.8 | 651,269 | 14.4 | 572,897 | 13.3 | |||||||||||||||||||||
700-719 | 375,500 | 10.3 | 465,611 | 10.3 | 314,473 | 7.3 | |||||||||||||||||||||
680-699 | 315,267 | 8.7 | 341,968 | 7.5 | 174,859 | 4.0 | |||||||||||||||||||||
<=679 | 152,040 | 4.2 | 131,018 | 2.9 | 46,178 | 1.1 | |||||||||||||||||||||
Total | $ | 3,630,573 | 100.0 | % | $ | 4,527,900 | 100.0 | % | $ | 4,321,556 | 100.0 | % | |||||||||||||||
Weighted-average Credit Score | 749 | 752 | 761 | ||||||||||||||||||||||||
NIW by LTV | |||||||||||||||||||||||||||
Quarter ended | |||||||||||||||||||||||||||
March 31, 2014 | December 31, 2013 | March 31, 2013 | |||||||||||||||||||||||||
($ in thousands) | |||||||||||||||||||||||||||
85.00% and below | $ | 435,733 | 12.0 | % | $ | 488,218 | 10.8 | % | $ | 819,486 | 19.0 | % | |||||||||||||||
85.01% to 90.00% | 1,240,528 | 34.2 | 1,528,857 | 33.8 | 1,634,282 | 37.8 | |||||||||||||||||||||
90.01% to 95.00% | 1,925,763 | 53.0 | 2,372,909 | 52.4 | 1,838,422 | 42.5 | |||||||||||||||||||||
95.01% and above | 28,549 | 0.8 | 137,916 | 3.0 | 29,366 | 0.7 | |||||||||||||||||||||
$ | 3,630,573 | 100.0 | % | $ | 4,527,900 | 100.0 | % | $ | 4,321,556 | 100.0 | % | ||||||||||||||||
Weighted-average LTV | 92% |
| 92% |
| 91% |
| |||||||||||||||||||||
NIW by Product | |||||||||||||||||||||||||||
Quarter ended | |||||||||||||||||||||||||||
March 31, 2014 | December 31, 2013 | March 31, 2013 | |||||||||||||||||||||||||
Single Premium policies | 18.2 | % | 19.2 | % | 18.9 | % | |||||||||||||||||||||
Monthly Premium policies | 81.8 | 80.8 | 81.1 | ||||||||||||||||||||||||
100.0 | % | 100.0 | % | 100.0 | % | ||||||||||||||||||||||
NIW by Purchase vs. Refinance | |||||||||||||||||||||||||||
Quarter ended | |||||||||||||||||||||||||||
March 31, 2014 | December 31, 2013 | March 31, 2013 | |||||||||||||||||||||||||
Purchase | 84.9 | % | 86.9 | % | 53.2 | % | |||||||||||||||||||||
Refinance | 15.1 | 13.1 | 46.8 | ||||||||||||||||||||||||
100.0 | % | 100.0 | % | 100.0 | % | ||||||||||||||||||||||
Exhibit D | |||||||||||||||||||||||||||
Essent Group Ltd. and Subsidiaries | |||||||||||||||||||||||||||
Supplemental Information | |||||||||||||||||||||||||||
Insurance in Force and Risk in Force | |||||||||||||||||||||||||||
Portfolio by Credit Score | |||||||||||||||||||||||||||
Total IIF by FICO score | March 31, 2014 | December 31, 2013 | March 31, 2013 | ||||||||||||||||||||||||
($ in thousands) | |||||||||||||||||||||||||||
>=760 | $ | 18,212,476 | 52.3 | % | $ | 17,102,961 | 53.3 | % | $ | 9,890,172 | 56.8 | % | |||||||||||||||
740-759 | 6,218,225 | 17.9 | 5,724,933 | 17.9 | 3,092,355 | 17.7 | |||||||||||||||||||||
720-739 | 4,804,322 | 13.8 | 4,380,452 | 13.7 | 2,316,338 | 13.3 | |||||||||||||||||||||
700-719 | 2,955,696 | 8.5 | 2,646,717 | 8.3 | 1,268,937 | 7.3 | |||||||||||||||||||||
680-699 | 1,940,162 | 5.6 | 1,665,196 | 5.2 | 683,646 | 3.9 | |||||||||||||||||||||
<=679 | 647,176 | 1.9 | 507,937 | 1.6 | 179,362 | 1.0 | |||||||||||||||||||||
Total | $ | 34,778,057 | 100.0 | % | $ | 32,028,196 | 100.0 | % | $ | 17,430,810 | 100.0 | % | |||||||||||||||
Weighted-average Credit Score | 757 | 758 | 761 | ||||||||||||||||||||||||
Total RIF by FICO score | March 31, 2014 | December 31, 2013 | March 31, 2013 | ||||||||||||||||||||||||
($ in thousands) | |||||||||||||||||||||||||||
>=760 | $ | 4,403,362 | 51.9 | % | $ | 4,106,913 | 52.9 | % | $ | 2,306,076 | 56.2 | % | |||||||||||||||
740-759 | 1,527,784 | 18.0 | 1,399,308 | 18.0 | 733,994 | 17.9 | |||||||||||||||||||||
720-739 | 1,192,630 | 14.0 | 1,081,286 | 13.9 | 556,051 | 13.6 | |||||||||||||||||||||
700-719 | 717,501 | 8.4 | 637,086 | 8.2 | 295,411 | 7.2 | |||||||||||||||||||||
680-699 | 488,405 | 5.8 | 415,414 | 5.3 | 164,618 | 4.0 | |||||||||||||||||||||
<=679 | 164,180 | 1.9 | 128,598 | 1.7 | 44,685 | 1.1 | |||||||||||||||||||||
Total | $ | 8,493,862 | 100.0 | % | $ | 7,768,605 | 100.0 | % | $ | 4,100,835 | 100.0 | % | |||||||||||||||
Portfolio by LTV | |||||||||||||||||||||||||||
Total IIF by LTV | March 31, 2014 | December 31, 2013 | March 31, 2013 | ||||||||||||||||||||||||
($ in thousands) | |||||||||||||||||||||||||||
85.00% and below | $ | 4,540,795 | 13.1 | % | $ | 4,322,612 | 13.5 | % | $ | 2,716,156 | 15.6 | % | |||||||||||||||
85.01% to 90.00% | 13,054,922 | 37.5 | 12,171,460 | 38.0 | 7,133,052 | 40.9 | |||||||||||||||||||||
90.01% to 95.00% | 16,748,932 | 48.2 | 15,121,279 | 47.2 | 7,501,474 | 43.0 | |||||||||||||||||||||
95.01% and above | 433,408 | 1.2 | 412,845 | 1.3 | 80,128 | 0.5 | |||||||||||||||||||||
$ | 34,778,057 | 100.0 | % | $ | 32,028,196 | 100.0 | % | $ | 17,430,810 | 100.0 | % | ||||||||||||||||
Weighted-average LTV | 91% | 91% | 91% | ||||||||||||||||||||||||
Total RIF by LTV | March 31, 2014 | December 31, 2013 | March 31, 2013 | ||||||||||||||||||||||||
($ in thousands) | |||||||||||||||||||||||||||
85.00% and below | $ | 503,315 | 5.9 | % | $ | 474,763 | 6.1 | % | $ | 293,690 | 7.2 | % | |||||||||||||||
85.01% to 90.00% | 3,074,541 | 36.2 | 2,858,683 | 36.8 | 1,656,244 | 40.4 | |||||||||||||||||||||
90.01% to 95.00% | 4,770,413 | 56.2 | 4,296,135 | 55.3 | 2,124,150 | 51.7 | |||||||||||||||||||||
95.01% and above | 145,593 | 1.7 | 139,024 | 1.8 | 26,751 | 0.7 | |||||||||||||||||||||
$ | 8,493,862 | 100.0 | % | $ | 7,768,605 | 100.0 | % | $ | 4,100,835 | 100.0 | % | ||||||||||||||||
Portfolio by Loan Amortization Period | |||||||||||||||||||||||||||
Total IIF by Loan Amortization Period | March 31, 2014 | December 31, 2013 | March 31, 2013 | ||||||||||||||||||||||||
($ in thousands) | |||||||||||||||||||||||||||
FRM 30 years and higher | $ | 29,906,738 | 85.9 | % | $ | 27,364,633 | 85.4 | % | $ | 14,415,309 | 82.7 | % | |||||||||||||||
FRM 20-25 years | 1,105,372 | 3.2 | 1,086,120 | 3.4 | 751,627 | 4.3 | |||||||||||||||||||||
FRM 15 years | 2,383,315 | 6.9 | 2,354,656 | 7.4 | 1,586,031 | 9.1 | |||||||||||||||||||||
ARM 5 years and higher | 1,382,632 | 4.0 | 1,222,787 | 3.8 | 677,843 | 3.9 | |||||||||||||||||||||
Total | $ | 34,778,057 | 100.0 | % | $ | 32,028,196 | 100.0 | % | $ | 17,430,810 | 100.0 | % | |||||||||||||||
Exhibit E | |||||||||||||||||||||||||||
Essent Group Ltd. and Subsidiaries | |||||||||||||||||||||||||||
Supplemental Information | |||||||||||||||||||||||||||
Portfolio Vintage Data | |||||||||||||||||||||||||||
Origination year | Original Insurance Written ($ in thousands) | Remaining Insurance in Force ($ in thousands) | % Remaining of Original Insurance | ||||||||||||||||||||||||
Insurance in Force as of March 31, 2014 | |||||||||||||||||||||||||||
% Purchase | >90% LTV | >95% LTV | FICO < 700 | FICO >= 760 | % FRM | ||||||||||||||||||||||
2010 | $ | 245,898 | $ | 101,057 | 41.1 | % | 71.7 | % | 36.7 | % | 0.0 | % | 3.1 | % | 60.1 | % | 97.0 | % | |||||||||
2011 | 3,229,720 | 1,656,252 | 51.3 | 70.2 | 39.5 | 0.3 | 4.2 | 57.6 | 92.3 | ||||||||||||||||||
2012 | 11,241,161 | 9,286,188 | 82.6 | 67.3 | 47.1 | 0.4 | 5.2 | 56.1 | 96.6 | ||||||||||||||||||
2013 | 21,152,638 | 20,140,578 | 95.2 | 72.8 | 50.6 | 1.8 | 7.8 | 51.6 | 96.4 | ||||||||||||||||||
2014 (through March 31) | 3,630,573 | 3,593,982 | 99.0 | 84.9 | 53.6 | 0.8 | 12.9 | 44.4 | 94.4 | ||||||||||||||||||
Total | $ | 39,499,990 | $ | 34,778,057 | 88.0 | 72.4 | 49.4 | 1.2 | 7.4 | 52.4 | 96.0 | ||||||||||||||||
Exhibit F | |||||||||
Essent Group Ltd. and Subsidiaries | |||||||||
Supplemental Information | |||||||||
Portfolio Geographic Data | |||||||||
IIF by State | |||||||||
As of March 31, 2014 | As of December 31, 2013 | As of March 31, 2013 | |||||||
CA | 11.2% | 11.1% | 11.1% | ||||||
TX | 8.3 | 8.2 | 7.8 | ||||||
FL | 4.9 | 4.6 | 4.0 | ||||||
NC | 4.3 | 4.3 | 4.3 | ||||||
IL | 3.9 | 4.0 | 4.2 | ||||||
WA | 3.7 | 3.6 | 3.3 | ||||||
NJ | 3.7 | 3.8 | 4.0 | ||||||
GA | 3.5 | 3.5 | 3.4 | ||||||
AZ | 3.5 | 3.5 | 3.4 | ||||||
PA | 3.5 | 3.6 | 4.0 | ||||||
All Others | 49.5 | 49.8 | 50.5 | ||||||
TOTAL | 100.0% | 100.0% | 100.0% | ||||||
RIF by State | |||||||||
As of March 31, 2014 | As of December 31, 2013 | As of March 31, 2013 | |||||||
CA | 10.6% | 10.5% | 10.7% | ||||||
TX | 8.1 | 8.0 | 7.6 | ||||||
FL | 5.0 | 4.8 | 4.1 | ||||||
NC | 4.4 | 4.4 | 4.5 | ||||||
IL | 3.9 | 4.0 | 4.3 | ||||||
WA | 3.8 | 3.6 | 3.4 | ||||||
GA | 3.7 | 3.6 | 3.5 | ||||||
NJ | 3.6 | 3.7 | 3.9 | ||||||
PA | 3.5 | 3.6 | 4.0 | ||||||
AZ | 3.3 | 3.3 | 3.3 | ||||||
All Others | 50.1 | 50.5 | 50.7 | ||||||
TOTAL | 100.0% | 100.0% | 100.0% | ||||||
Exhibit G | |||||||||||||||
Essent Group Ltd. and Subsidiaries | |||||||||||||||
Supplemental Information | |||||||||||||||
Defaults, Reserve for Losses and LAE, and Claims | |||||||||||||||
Rollforward of Insured Loans in Default | |||||||||||||||
Quarter ended | |||||||||||||||
March 31, | December 31, | March 31, | |||||||||||||
2014 | 2013 | 2013 | |||||||||||||
Beginning default inventory | 159 | 116 | 56 | ||||||||||||
Plus: new defaults | 167 | 108 | 70 | ||||||||||||
Less: cures | (128 | ) | (57 | ) | (49 | ) | |||||||||
Less: claims paid | (6 | ) | (8 | ) | (2 | ) | |||||||||
Ending default inventory | 192 | 159 | 75 | ||||||||||||
Rollforward of Reserve for Losses and LAE | |||||||||||||||
Quarter ended | |||||||||||||||
March 31, | December 31, | March 31, | |||||||||||||
($ in thousands) | 2014 | 2013 | 2013 | ||||||||||||
Reserve for losses and LAE at beginning of period | $ | 3,070 | $ | 2,727 | $ | 1,499 | |||||||||
Add provision for losses and LAE occurring in: | |||||||||||||||
Current year | 1,286 | 903 | 924 | ||||||||||||
Prior years | (384 | ) | (211 | ) | (194 | ) | |||||||||
Incurred losses during the period | 902 | 692 | 730 | ||||||||||||
Deduct payments for losses and LAE occurring in: | |||||||||||||||
Current year | - | 144 | 1 | ||||||||||||
Prior years | 168 | 205 | 64 | ||||||||||||
Loss and LAE payments during the period | 168 | 349 | 65 | ||||||||||||
Reserve for losses and LAE at end of period | $ | 3,804 | $ | 3,070 | $ | 2,164 | |||||||||
Claims | |||||||||||||||
Quarter ended | |||||||||||||||
March 31, | December 31, | March 31, | |||||||||||||
2014 | 2013 | 2013 | |||||||||||||
Number of claims paid | 6 | 8 | 2 | ||||||||||||
Total amount paid for claims (in thousands) | $ | 159 | $ | 343 | $ | 57 | |||||||||
Average amount paid per claim (in thousands) | $ | 27 | $ | 43 | $ | 29 | |||||||||
Severity | 84 | % | 87 | % | 106 | % | |||||||||
Exhibit G, continued | ||||||||||||||||||||||||
Essent Group Ltd. and Subsidiaries | ||||||||||||||||||||||||
Supplemental Information | ||||||||||||||||||||||||
Defaults, Reserve for Losses and LAE, and Claims | ||||||||||||||||||||||||
As of March 31, 2014 | ||||||||||||||||||||||||
Number of Policies in Default | Percentage of Policies in Default | Amount of Reserves | Percentage of Reserves | Defaulted RIF | Reserves as a Percentage of RIF | |||||||||||||||||||
($ in thousands) | ||||||||||||||||||||||||
Missed Payments: | ||||||||||||||||||||||||
Three payments or less | 95 | 49 | % | $ | 936 | 27 | % | $ | 4,309 | 22 | % | |||||||||||||
Four to eleven payments | 76 | 40 | % | 1,636 | 47 | % | 3,406 | 48 | % | |||||||||||||||
Twelve or more payments | 15 | 8 | % | 561 | 16 | % | 867 | 65 | % | |||||||||||||||
Pending claims | 6 | 3 | % | 348 | 10 | % | 360 | 97 | % | |||||||||||||||
TOTAL | 192 | 100 | % | 3,481 | 100 | % | $ | 8,942 | 39 | % | ||||||||||||||
IBNR | 261 | |||||||||||||||||||||||
LAE | 62 | |||||||||||||||||||||||
TOTAL | $ | 3,804 | ||||||||||||||||||||||
Average reserve per default: | ||||||||||||||||||||||||
Case | $ | 18.1 | ||||||||||||||||||||||
Total | $ | 19.8 | ||||||||||||||||||||||
Default Rate | 0.12 | % | ||||||||||||||||||||||
As of December 31, 2013 | ||||||||||||||||||||||||
Number of Policies in Default | Percentage of Policies in Default | Amount of Reserves | Percentage of Reserves | Defaulted RIF | Reserves as a Percentage of RIF | |||||||||||||||||||
($ in thousands) | ||||||||||||||||||||||||
Missed Payments: | ||||||||||||||||||||||||
Three payments or less | 88 | 56 | % | $ | 841 | 30 | % | $ | 3,972 | 21 | % | |||||||||||||
Four to eleven payments | 56 | 35 | % | 1,497 | 53 | % | 2,672 | 56 | % | |||||||||||||||
Twelve or more payments | 10 | 6 | % | 300 | 11 | % | 447 | 67 | % | |||||||||||||||
Pending claims | 5 | 3 | % | 169 | 6 | % | 166 | 102 | % | |||||||||||||||
TOTAL | 159 | 100 | % | 2,807 | 100 | % | $ | 7,257 | 39 | % | ||||||||||||||
IBNR | 211 | |||||||||||||||||||||||
LAE | 52 | |||||||||||||||||||||||
TOTAL | $ | 3,070 | ||||||||||||||||||||||
Average reserve per default: | ||||||||||||||||||||||||
Case | $ | 17.7 | ||||||||||||||||||||||
Total | $ | 19.3 | ||||||||||||||||||||||
Default Rate | 0.11 | % | ||||||||||||||||||||||
As of March 31, 2013 | ||||||||||||||||||||||||
Number of Policies in Default | Percentage of Policies in Default | Amount of Reserves | Percentage of Reserves | Defaulted RIF | Reserves as a Percentage of RIF | |||||||||||||||||||
($ in thousands) | ||||||||||||||||||||||||
Missed Payments: | ||||||||||||||||||||||||
Three payments or less | 45 | 61 | % | $ | 862 | 43 | % | $ | 2,659 | 32 | % | |||||||||||||
Four to eleven payments | 22 | 29 | % | 711 | 35 | % | 996 | 71 | % | |||||||||||||||
Twelve or more payments | 4 | 5 | % | 183 | 9 | % | 246 | 74 | % | |||||||||||||||
Pending claims | 4 | 5 | % | 258 | 13 | % | 256 | 101 | % | |||||||||||||||
TOTAL | 75 | 100 | % | 2,014 | 100 | % | $ | 4,157 | 48 | % | ||||||||||||||
IBNR | 101 | |||||||||||||||||||||||
LAE | 49 | |||||||||||||||||||||||
TOTAL | $ | 2,164 | ||||||||||||||||||||||
Average reserve per default: | ||||||||||||||||||||||||
Case | $ | 26.9 | ||||||||||||||||||||||
Total | $ | 28.9 | ||||||||||||||||||||||
Default Rate | 0.10 | % | ||||||||||||||||||||||
Exhibit H | ||||||||||||||||||
Essent Group Ltd. and Subsidiaries | ||||||||||||||||||
Supplemental Information | ||||||||||||||||||
Investment Portfolio | ||||||||||||||||||
Investment Portfolio by Asset Class | ||||||||||||||||||
Asset Class | March 31, 2014 | December 31, 2013 | ||||||||||||||||
($ in thousands) | Fair Value | Percent | Fair Value | Percent | ||||||||||||||
US Treasury securities | $ | 71,584 | 8.4 | % | $ | 59,187 | 17.8 | % | ||||||||||
US Agency securities | 11,193 | 1.3 | 14,839 | 4.5 | ||||||||||||||
US Agency Mortgage-backed securities | 47,468 | 5.6 | 22,241 | 6.7 | ||||||||||||||
Municipal debt securities | 146,154 | 17.3 | 57,650 | 17.3 | ||||||||||||||
Corporate debt securities | 230,823 | 27.2 | 125,593 | 37.8 | ||||||||||||||
Mortgage-backed securities | 39,688 | 4.7 | 18,581 | 5.6 | ||||||||||||||
Asset-backed securities | 61,626 | 7.3 | 20,385 | 6.1 | ||||||||||||||
Money market investments | 238,732 | 28.2 | 14,079 | 4.2 | ||||||||||||||
Total Investments | $ | 847,268 | 100.0 | % | $ | 332,555 | 100.0 | % | ||||||||||
Investment Portfolio by Credit Rating | ||||||||||||||||||
Rating (1) | March 31, 2014 | December 31, 2013 | ||||||||||||||||
($ in thousands) | Fair Value | Percent | Fair Value | Percent | ||||||||||||||
Aaa | $ | 471,707 | 55.6 | % | $ | 147,862 | 44.5 | % | ||||||||||
Aa1 | 32,267 | 3.8 | 21,570 | 6.5 | ||||||||||||||
Aa2 | 35,474 | 4.2 | 15,464 | 4.6 | ||||||||||||||
Aa3 | 26,106 | 3.1 | 11,902 | 3.6 | ||||||||||||||
A1 | 62,950 | 7.4 | 26,541 | 8.0 | ||||||||||||||
A2 | 42,179 | 5.0 | 17,045 | 5.1 | ||||||||||||||
A3 | 49,607 | 5.9 | 29,886 | 9.0 | ||||||||||||||
Baa1 | 52,395 | 6.2 | 24,441 | 7.3 | ||||||||||||||
Baa2 | 64,753 | 7.6 | 30,782 | 9.3 | ||||||||||||||
Baa3 | 9,830 | 1.2 | 7,062 | 2.1 | ||||||||||||||
Below Baa3 | - | - | - | - | ||||||||||||||
Total Investments | $ | 847,268 | 100.0 | % | $ | 332,555 | 100.0 | % | ||||||||||
(1) Based on ratings issued by Moody's, if available. S&P rating utilized if Moody's not available. | ||||||||||||||||||
Portfolio by Duration and Book Yield | ||||||||||||||||||
Effective Duration | March 31, 2014 | December 31, 2013 | ||||||||||||||||
($ in thousands) | Fair Value | Percent | Fair Value | Percent | ||||||||||||||
< 1 Year | $ | 322,695 | 38.0 | % | $ | 65,092 | 19.6 | % | ||||||||||
1 to < 2 Years | 48,987 | 5.8 | 19,093 | 5.7 | ||||||||||||||
2 to < 3 Years | 76,868 | 9.1 | 74,335 | 22.4 | ||||||||||||||
3 to < 4 Years | 99,948 | 11.8 | 63,214 | 19.0 | ||||||||||||||
4 to < 5 Years | 81,779 | 9.7 | 66,230 | 19.9 | ||||||||||||||
5 or more Years | 216,991 | 25.6 | 44,591 | 13.4 | ||||||||||||||
Total Investments | $ | 847,268 | 100.0 | % | $ | 332,555 | 100.0 | % | ||||||||||
Pre-tax investment income yield: | ||||||||||||||||||
Three months ended March 31, 2014 | 1.01 | % | ||||||||||||||||
Net cash and Investments at holding company Essent Group Ltd. ($ in thousands): | ||||||||||||||||||
As of March 31, 2014 | $ | 206,514 | ||||||||||||||||
As of December 31, 2013 | $ | 246,220 | ||||||||||||||||
Exhibit I | ||||||||
Essent Group Ltd. and Subsidiaries | ||||||||
Supplemental Information | ||||||||
Insurance Company Capital | ||||||||
As of | ||||||||
March 31, 2014 | December 31, 2013 | |||||||
Combined statutory capital (A) | $ | 528,234 | $ | 469,424 | ||||
Risk to capital ratios: (B) | ||||||||
Essent Guaranty, Inc. | 16.1:1 | 16.6:1 | ||||||
Essent Guaranty of PA, Inc. | 16.0:1 | 17.1:1 | ||||||
Combined (C) | 16.1:1 | 16.5:1 | ||||||
(A) Combined statutory capital equals the sum of statutory capital of Essent Guaranty, Inc. plus Essent Guaranty of PA, Inc., after eliminating the impact of intercompany transactions. Statutory capital is computed based on accounting practices prescribed or permitted by the Pennsylvania Insurance Department. |
(B) The risk to capital ratio is calculated as the ratio of net risk in force to statutory capital. Net risk in force represents total risk in force, net of reinsurance ceded and net of exposures on policies for which loss reserves have been established. |
(C) The combined risk to capital ratio equals the sum of the net risk in force of Essent Guaranty, Inc. and Essent Guaranty of PA, Inc. divided by the combined statutory capital. |
Exhibit J | |||||||||||||||||||||||||
Essent Group Ltd. and Subsidiaries | |||||||||||||||||||||||||
Supplemental Information | |||||||||||||||||||||||||
Historical Quarterly Data | |||||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||
Selected Income Statement Data | March 31 | December 31 | September 30 | June 30 | March 31 | ||||||||||||||||||||
(in thousands, except per share amounts) | |||||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||
Net premiums written | $ | 52,192 | $ | 52,878 | $ | 55,026 | $ | 44,923 | $ | 33,373 | |||||||||||||||
Net premiums earned | 44,750 | 40,344 | 34,282 | 27,481 | 21,264 | ||||||||||||||||||||
Other revenues | 3,071 | 2,009 | 2,173 | 2,083 | 1,767 | ||||||||||||||||||||
Total revenues | 47,821 | 42,353 | 36,455 | 29,564 | 23,031 | ||||||||||||||||||||
Losses and expenses: | |||||||||||||||||||||||||
Provision for losses and LAE | 902 | 692 | 319 | 580 | 730 | ||||||||||||||||||||
Other underwriting and operating expenses | 23,459 | 22,299 | 18,237 | 15,557 | 14,962 | ||||||||||||||||||||
Total losses and expenses | 24,361 | 22,991 | 18,556 | 16,137 | 15,692 | ||||||||||||||||||||
Income before income taxes | 23,460 | 19,362 | 17,899 | 13,427 | 7,339 | ||||||||||||||||||||
Income tax expense (benefit) | 8,454 | 345 | 2,280 | (10,150 | ) | 139 | |||||||||||||||||||
Net income | $ | 15,006 | $ | 19,017 | $ | 15,619 | $ | 23,577 | $ | 7,200 | |||||||||||||||
Earnings per share: | |||||||||||||||||||||||||
Basic: | |||||||||||||||||||||||||
Common Shares | $ | 0.18 | $ | 0.23 | N/A | N/A | N/A | ||||||||||||||||||
Class A common shares | N/A | N/A | $ | 0.36 | $ | 0.63 | $ | 0.23 | |||||||||||||||||
Class B-2 common shares | N/A | N/A | 0.07 | 0.40 | - | ||||||||||||||||||||
Diluted: | |||||||||||||||||||||||||
Common Shares | $ | 0.18 | $ | 0.22 | N/A | N/A | N/A | ||||||||||||||||||
Class A common shares | N/A | N/A | $ | 0.35 | $ | 0.62 | $ | 0.23 | |||||||||||||||||
Class B-2 common shares | N/A | N/A | 0.02 | 0.09 | - | ||||||||||||||||||||
Weighted average common shares outstanding | |||||||||||||||||||||||||
Basic: | |||||||||||||||||||||||||
Common Shares | 82,864 | 51,741 | N/A | N/A | N/A | ||||||||||||||||||||
Class A common shares | N/A | N/A | 43,616 | 36,793 | 31,805 | ||||||||||||||||||||
Class B-2 common shares | N/A | N/A | 1,822 | 1,334 | 853 | ||||||||||||||||||||
Diluted: | |||||||||||||||||||||||||
Common Shares | 84,696 | 55,130 | N/A | N/A | N/A | ||||||||||||||||||||
Class A common shares | N/A | N/A | 43,788 | 36,901 | 31,864 | ||||||||||||||||||||
Class B-2 common shares | N/A | N/A | 6,054 | 5,994 | 6,009 | ||||||||||||||||||||
Other Data: | |||||||||||||||||||||||||
($ in thousands) | |||||||||||||||||||||||||
Loss ratio (1) | 2.0 | % | 1.7 | % | 0.9 | % | 2.1 | % | 3.4 | % | |||||||||||||||
Expense ratio (2) | 52.4 | % | 55.3 | % | 53.2 | % | 56.6 | % | 70.4 | % | |||||||||||||||
Combined ratio | 54.4 | % | 57.0 | % | 54.1 | % | 58.7 | % | 73.8 | % | |||||||||||||||
New insurance written | $ | 3,630,573 | $ | 4,527,900 | $ | 6,408,055 | $ | 5,895,127 | $ | 4,321,556 | |||||||||||||||
Average premium rate (3) | 0.54 | % | 0.54 | % | 0.54 | % | 0.55 | % | 0.55 | % | |||||||||||||||
Insurance in force (end of period) | $ | 34,778,057 | $ | 32,028,196 | $ | 28,198,722 | $ | 22,576,300 | $ | 17,430,810 | |||||||||||||||
Policies in force | 154,451 | 141,417 | 123,737 | 98,818 | 76,455 | ||||||||||||||||||||
Weighted-average coverage (4) | 24.4 | % | 24.3 | % | 24.0 | % | 23.7 | % | 23.5 | % | |||||||||||||||
Annual persistency | 87.9 | % | 86.1 | % | 83.1 | % | 80.1 | % | 80.9 | % | |||||||||||||||
Loans in default (count) | 192 | 159 | 116 | 90 | 75 | ||||||||||||||||||||
Percentage of loans in default | 0.12 | % | 0.11 | % | 0.09 | % | 0.09 | % | 0.10 | % | |||||||||||||||
(1) Loss ratio is calculated by dividing the provision for loss and loss adjustment expenses by net premiums earned. |
(2) Expense ratio is calculated by dividing other underwriting and operating expenses by net premiums earned. |
(3) Net premium earned as a percentage of average insurance in force for the period. |
(4) End of period risk in force divided by insurance in force. |
Exhibit K | ||||||||
Essent Group Ltd. and Subsidiaries | ||||||||
Supplemental Information | ||||||||
Earnings per Share | ||||||||
Quarter ended | Quarter ended | |||||||
March 31, 2014 | March 31, 2013 | |||||||
(In thousands, except per share amounts) | ||||||||
Net income | $ | 15,006 | $ | 7,200 | ||||
Less: Class A dividends declared | N/A | - | ||||||
Less: Class B-2 dividends declared | N/A | - | ||||||
Undistributed net income | $ | 15,006 | $ | 7,200 | ||||
Net income allocable to Common Shares | $ | 15,006 | N/A | |||||
Net income allocable to Class A common shares | N/A | $ | 7,200 | |||||
Net income allocable to Class B-2 common shares | N/A | - | ||||||
Basic earnings per common share: | ||||||||
Common Shares | $ | 0.18 | N/A | |||||
Class A common shares | N/A | $ | 0.23 | |||||
Class B-2 common shares | N/A | - | ||||||
Diluted earnings per common share: | ||||||||
Common Shares | $ | 0.18 | N/A | |||||
Class A common shares | N/A | $ | 0.23 | |||||
Class B-2 common shares | N/A | - | ||||||
Basic weighted average common shares outstanding: | ||||||||
Common Shares | 82,864 | N/A | ||||||
Class A common shares | N/A | 31,805 | ||||||
Class B-2 common shares | N/A | 853 | ||||||
Diluted weighted average common shares outstanding: | ||||||||
Common Shares | 84,696 | N/A | ||||||
Class A common shares | N/A | 31,864 | ||||||
Class B-2 common shares | N/A | 6,009 | ||||||
Note: Prior to the Company’s initial public offering on November 5, 2013 (“IPO”), the Company had two classes of common shares outstanding: Class A common shares and Class B-2 common shares. Upon the completion of the IPO, all of the Class A common shares and the Class B-2 common shares converted into a single class of common shares of the Company (the “Common Shares”), as more fully described in the Company’s prospectus dated October 30, 2013. Earnings Per Share (“EPS”) was calculated and presented prior to the IPO using the “two-class” method which provides that earnings and losses are allocated to each class of common shares according to the dividends declared or unpaid cumulative dividends earned, with the remaining undistributed earnings allocated according to each share’s respective participation rights. |
Exhibit L |
Essent Group Ltd. and Subsidiaries |
Supplemental Information |
Reconciliation of Non-GAAP Financial Measure - Adjusted Book Value per Share |
We believe that long-term growth in Adjusted Book Value per Share is an important measure of our financial performance and is a measure used to determine vesting on certain restricted stock granted to senior management under the Company’s long-term incentive plan. Adjusted Book Value per Share is a financial measure that is not calculated under standards or rules that comprise accounting principles generally accepted in the United States (GAAP) and is referred to as a non-GAAP measure. Adjusted Book Value per Share may be defined or calculated differently by other companies. Adjusted Book Value per Share is one measure used to monitor our results and should not be viewed as a substitute for those measures determined in accordance with GAAP. |
Adjusted Book Value per Share is calculated by dividing Adjusted Book Value by Common Shares and Share Units Outstanding. Adjusted Book Value is defined as consolidated stockholders’ equity of the Company, excluding accumulated other comprehensive income (loss) plus the proceeds, if any, from the assumed exercise of all in the money options, warrants and similar instruments. Common Shares and Outstanding Restricted Share Units is defined as total common shares outstanding plus all equity instruments (including Restricted Stock Units) issued to management and the Board of Directors and any in the money options, warrants and similar instruments. Accumulated other comprehensive income (loss) includes unrealized gains and losses that arise from changes in the market value of the Company’s investments that are classified as available for sale. The Company does not view these unrealized gains and losses to be indicative of our fundamental operating performance. As of March 31, 2014 and December 31, 2013, the Company does not have any options, warrants and similar instruments outstanding. |
The following table sets forth the reconciliation of adjusted book value to the most comparable GAAP amount as of March 31, 2014 and December 31, 2013 in accordance with Regulation G: |
(in thousands, except per share amounts) | March 31, 2014 | December 31, 2013 | ||||||
Numerator: | ||||||||
Total Stockholders' Equity (Book Value) | $ | 740,129 | $ | 722,141 | ||||
Add Back: Accumulated Other Comprehensive Loss | 968 | 1,447 | ||||||
Adjusted Book Value | $ | 741,097 | $ | 723,588 | ||||
Denominator: | ||||||||
Total Outstanding Common Shares | 86,494 | 86,491 | ||||||
Add: Outstanding Restricted Share Units | 596 | 528 | ||||||
Total Outstanding Common Shares and Restricted Share Units | 87,090 | 87,019 | ||||||
Adjusted Book Value per Share | $ | 8.51 | $ | 8.32 | ||||
CONTACT:
Essent Group Ltd.
Media Contact
JD Walker Communications, LLC
Janice Daue Walker, 610-230-0556
media@essentgroup.com
or
Investor Relations Contact
855-809-ESNT
ir@essentgroup.com