Essent Group Ltd. has reported net income of $136.4 million for the second-quarter of 2019 compared with $111.8 million in the prior year quarter, assisted by growth in net premiums earned and an improved expense ratio, partly offset by an increase in losses and loss adjustment expenses (LAE) in the period.
The Bermuda-based holding company, which offers private mortgage insurance for single-family mortgage loans in the U.S. through its Essent Guaranty subsidiary, recorded insurance in-force of $153.3 million as of the end of June, 2019 compared with $122.5 million a year earlier.
New insurance written also increased in Q2 2019 when compared by the previous year, by more than $5 billion to $18 billion, while Essent Group’s net premiums earned in Q2 2019 reached $188.5 million, which is up on the $157 million recorded in Q2 2018.
At 22%, the mortgage insurer’s expense ratio improved from the 23.2% recorded in Q2 2018. Essent states that its losses and LAE for the second-quarter of 2019 amounts to $5 million, which is up roughly 178% on the $1.8 million recorded in Q2 2018.
As a result, the insurer’s combined ratio remained relatively flat in the second-quarter of 2019 at 24.7%, compared with 24.4% in Q2 2018.
Commenting on the firm’s second-quarter performance, Chairman and Chief Executive Officer (CEO), Mark Casale, said: “We are pleased with our strong financial results for the second quarter and our continued progress in transitioning our franchise to a buy, manage and distribute model through utilization of EssentEDGE and reinsurance.
“Our performance, along with the use of reinsurance, continues to generate excess capital. As a result, we are pleased to announce our inaugural dividend and believe that it is a tangible demonstration of the benefits in a buy, manage and distribute operating model.”
In June of this year, the firm purchased almost $334 million of mortgage reinsurance protection from the capital markets, in the form of a mortgage-ILS deal, Radnor Re 2019-2 Ltd. As shown by our sister publication, Artemis’ Deal Directory, which tracks mortgage and other ILS deals, this is the second time this year that Essent has accessed the capital markets for reinsurance protection, and the third time overall.
In total, Essent has sponsored three mortgage ILS deals, securing more than $1.2 billion of capital markets-backed reinsurance protection.
