ACT — Enact Holdings Inc.

Summary of Enact's Q4 2025 Earnings Call

1. Key Financial Results and Metrics

• Q4 Adjusted Operating Income: $179 million, or $1.23 per diluted share, up from $1.09 in Q4 2024.
• Full Year Adjusted Operating Income: $688 million, or $4.61 per diluted share, compared to $718 million, or $4.56 per diluted share in 2024.
• Adjusted Return on Equity: 13.5% for Q4.
• New Insurance Written (NIW): $14 billion in Q4, up 2% sequentially and 8% year-over-year.
• Insurance In-Force: $273 billion, a $1 billion increase from Q3 2025.
• Operating Expenses: $59 million in Q4, with a full-year total of $218 million, slightly below guidance.
• Capital Returns: $157 million returned to shareholders in Q4, with a total of $503 million for the year.

2. Strategic Updates and Business Highlights

• Risk Management and Innovation: Continued enhancement of risk selection and pricing capabilities through the Rate360 pricing engine.
• Market Position: Maintained a strong capital position with a PMIERs sufficiency ratio of 162%.
• Cure Performance: Outperformed expectations, leading to a net reserve release of $60 million in Q4.
• Awards and Recognition: Received multiple credit rating upgrades and industry awards, reflecting strong operational performance and employee satisfaction.

3. Forward Guidance and Outlook

• 2026 Capital Return Expectations: Approximately $500 million, with a new share repurchase program authorized.
• Mortgage Market Outlook: Anticipated growth in the mortgage insurance market by 10-15% in 2026, depending on mortgage rate and affordability conditions.
• Operating Expenses: Expected to remain between $215 million to $220 million for 2026, excluding reorganization costs.

4. Bad News, Challenges, or Points of Concern

• Persistency Rate: Declined to 80% in Q4, down 3 points sequentially and 2 points year-over-year, indicating potential challenges in retaining business amidst falling mortgage rates.
• Delinquency Rates: New delinquencies increased to 13,700, with total delinquencies rising to 24,900, reflecting seasonal trends but raising concerns about credit performance.
• Regulatory Environment: Potential changes in regulations, such as FHA rate cuts, could impact the market dynamics and profitability.
• Market Volatility: Ongoing uncertainties in the macroeconomic environment may affect future performance and capital return strategies.

5. Notable Q&A Insights

• Capital Return Sensitivities: Management emphasized that capital return plans for 2026 will depend on business performance, market conditions, and regulatory environment.
• Regulatory Engagement: The company is actively involved in discussions with policymakers regarding housing affordability and inventory challenges, indicating a proactive approach to potential regulatory changes.
• Credit Performance: Recent vintages are performing in line with expectations, but management is cautious about geographic risks and changing market dynamics, particularly in states experiencing home price fluctuations.
• Expense Management: Continued focus on technology investments to maintain flat expenses while improving operational efficiency, with aspirations to further reduce the expense ratio over time.

Overall, Enact reported a strong finish to 2025, with solid financial results and strategic initiatives, but faces challenges related to market conditions, regulatory changes, and credit performance trends.