ACT — Enact Holdings, Inc.

Summary of Enact's Q3 2025 Earnings Call

1. Key Financial Results and Metrics:

• Adjusted Operating Income: $166 million, or $1.12 per diluted share (down from $1.16 YoY).
• Adjusted Return on Equity: 13%.
• Insurance In-Force: Increased 2% YoY to $272 billion.
• New Insurance Written: Over $14 billion, up 6% sequentially and 3% YoY.
• Total Delinquencies: Increased 6% sequentially to 23,400; new delinquencies rose 12%.
• Loss Ratio: 15%, up from 10% in Q2 2025 and 5% YoY.
• Expense Management: Operating expenses were $53 million, down from $56 million YoY; expense ratio remained at 22%.

2. Strategic Updates and Business Highlights:

• Capital Return Expectation: Increased to approximately $500 million for 2025, up from $400 million.
• Credit Facility: Entered a new $435 million revolving credit facility, enhancing financial flexibility.
• Credit Performance: Strong, with a PMIERs sufficiency ratio of 162%.
• Ratings Upgrades: Received a fourth upgrade from Moody's, with the insurance financial strength rating raised to A2.
• Technology Investments: Continued focus on enhancing underwriting processes and customer experience through technology, including the Rate360 pricing engine.

3. Forward Guidance and Outlook:

• Expense Forecast: Expected to be approximately $219 million for 2025, lower than previous guidance.
• Market Position: Confident in navigating a dynamic macroeconomic environment, with strong demographic tailwinds supporting long-term growth in the housing market.
• Delinquency Trends: Anticipated to align with historical patterns as portfolios season, with expectations for stable credit performance.

4. Challenges and Points of Concern:

• Delinquency Rates: New delinquencies increased, with total delinquencies up 6% sequentially, raising concerns about potential future credit performance.
• Market Conditions: Consumer caution and macroeconomic uncertainties may affect housing demand and mortgage origination levels.
• Expense Management: While expenses are currently well-managed, higher variable performance-based compensation is expected in Q4, which could impact overall expense levels.

5. Notable Q&A Insights:

• Delinquency Trends: Management indicated that credit performance remains strong, but future delinquencies will depend on the macroeconomic environment. They expect a plateau in delinquency rates around years 3 to 4 of seasoning.
• Expense Guidance: The increase in expenses in Q4 is expected due to higher performance-based incentives, consistent with past trends.
• Capital Return Confidence: The increase in capital return guidance reflects both strong business performance and favorable mortgage origination levels, indicating management's growing confidence in the company's outlook.

Overall, Enact's Q3 2025 performance reflects strong operational execution and financial health, though there are emerging concerns regarding delinquency trends and market conditions. The company remains focused on strategic growth initiatives and maintaining a robust balance sheet.