에센트 그룹(ESNT) 2026년 3분기 실적 발표 콘퍼런스콜: MI 유지율 및 5억 달러 규모 자사주 매입

핵심 요약

• 에센트 그룹(Essent Group Limited)은 2026년 3분기 순이익이 1억 6,300만 달러(희석 주당 1.82달러)를 기록했다고 발표했다. 이는 2026년 2분기의 2.08달러, 2025년 3분기의 1.67달러와 비교되는 수치다. 연환산 평균자기자본이익률(ROE)은 약 12%를 기록했다.
• 유효 모기지 보험 계약잔액은 전분기 대비 3억 4,200만 달러, 전년 동기 대비 13억 달러 증가한 2,501억 달러에 달했다. 금리 환경에 힘입어 유지율은 83.3%로 높은 수준을 유지했다.
• 모기지 보험 연체율은 전분기의 2.53%에서 2.75%로 상승했다. 손실 및 손실조정비용 충당금 전입액은 대출 건당 평균 잔액이 증가한 점 등이 일부 반영되어 5,170만 달러로 증가했다.
• 재보험 순원수보험료는 손해보험(P&C) 재보험 확대에 힘입어 연초 대비 누적으로 전년 동기 4,900만 달러에서 3억 3,000만 달러로 급증했다. 해당 부문의 3분기 합산비율은 84.7%였다.
• 이사회는 5억 달러 규모의 신규 자사주 매입 프로그램을 승인하고 주당 0.35달러의 2026년 4분기 보통주 배당금을 결의했다. 에센트는 2026년 들어 10월 31일까지 약 4억 7,500만 달러를 투입해 800만 주에 달하는 자사주를 매입했다.
• 경영진의 장기 경영 목표 틀에는 80% 전후의 유지율, 2~3% 수준의 최종 보험금 청구율, 35~45%의 모기지 보험 합산비율이 포함되어 있다.

주요 재무 데이터

사업 및 영업 실적

모기지 보험은 여전히 에센트의 핵심 현금흐름 창출원이었다. 포트폴리오의 가중평균 신용점수는 747점, 가중평균 최초 담보인정비율(LTV)은 93%를 기록했다. 경영진은 유효 계약 포트폴리오에 축적된 상당한 주택 자산 가치(home equity)가 최종 보험금 청구를 제한하는 데 기여할 것이라고 밝혔다. 유효 보험 계약 잔액의 약 95%는 재보험 보호를 받고 있다.

유효 계약 포트폴리오의 절반 이상이 6% 이하의 모기지 금리를 적용받고 있어 유지율은 높은 수준을 유지했다. 다만 경영진은 주택 구매 여력 부족으로 모기지 취급이 제약되는 동안 유효 보험 계약 잔액의 성장은 둔화된 상태를 유지할 것으로 내다봤다. 회사는 계약 소멸(runoff)과 신규 인수 계약(new insurance written)이 거의 균형을 이루면서 포트폴리오가 대체로 정체 상태를 유지할 수 있다고 시사했다.

모기지 보험 충당금 증가는 준비금 산정 방식의 변화라기보다는 대출 건당 평균 규모가 커진 것을 반영한다. 경영진은 지난 18개월 동안 피보험 대출의 평균 잔액이 약 30만 달러에서 약 40만 달러로 증가했다고 밝혔다.

재보험 부문의 성장은 비모기지 손해보험(P&C) 사업이 견인했다. 연초 이후 순경과보험료는 1억 3,700만 달러에 달해 2025년 동기의 4,600만 달러에서 크게 늘었다. 그러나 3분기 세전 보험영업이익은 여전히 정부후원기업(GSE) 및 기타 모기지 위험분담 거래에 편중되어 있었으며, P&C의 기여도는 미미한 수준이었다.

투자수익은 65억 달러 규모의 현금 및 투자자산 포트폴리오의 수혜를 입었다. 기타 투자자산 수익은 양호한 공정가치 평가 조정을 반영해 2분기의 1,940만 달러에서 감소했으나 전년 동기의 180만 달러보다는 늘어난 1,070만 달러를 기록했다.

경영진 가이던스

경영진은 2026년 손해보험(P&C) 재보험 원수보험료가 약 3억 2,000만 달러를 기록하고 합산비율은 90%대 후반에 달할 것으로 예상하고 있다. 회사는 점진적으로 플랫폼을 구축하는 데 집중하고 있으며 단순한 외형 성장을 위한 확장은 추구하지 않겠다고 밝혔다.

장기 모기지 보험 모델링과 관련해 경영진은 80% 전후의 유지율, 2~3% 수준의 최종 보험금 청구율, 35~45%의 합산비율을 제시했다. 또한 모기지 보험을 정상화 기준 12~15%의 수익률을 내는 사업으로 규정하며, 이는 전략적 투자 및 에센트 리(Essent Re)에 대한 회사의 목표 수익률(허들 레이트)과 부합한다고 설명했다.

경영진은 미국에서 버뮤다로 자금을 송금할 때 발생하는 5%의 원천징수 비용 등을 감안해 향후 유효세율을 약 17~18% 수준으로 제시했다.

리스크 및 점검 요인

포트폴리오의 연식이 경과함에 따라 모기지 보험 연체율이 정상화되고 있다. 경영진은 2023~2025년 취급분(빈티지)이 이례적으로 우수했던 2022년 이전 계약보다 정상적인 신용 성과를 더 잘 반영하고 있으며, 대출 잔액 증가는 청구 건당 손실 심도(claim severity)와 보고되는 충당금 액수를 높일 수 있다고 설명했다.

경영진은 최종 모기지 보험금 청구의 가장 중요한 동인으로 실업률을 지목했다. 분기 중 지역, 대출 기관 또는 채권 관리 기관(servicer)별로 유의미한 악화는 관찰되지 않았으나, 경기 침체 국면에서는 채권 관리 역량이 중요해질 것이라고 언급했다.

주택 시장 거래가 부진한 상태를 지속할 경우 유효 보험 계약 잔액의 성장은 제한적일 수 있다. 또한 경영진은 2021년 취급분의 계약 소멸이 늘어나 2028년 또는 2029년경 정점을 찍을 가능성이 있다고 예상했다.

손해보험(P&C) 재보험은 여전히 초기 성장 단계에 머물러 있다. 경영진은 갱신을 앞두고 선별적 기조를 유지해야 하는 이유로 시장의 풍부한 자본과 로이즈(Lloyd's) 시장 참여자들과의 이해관계 차이를 들었다.

애널리스트 Q&A 주요 내용

• 유지율 및 해지: 경영진은 보다 정상화된 환경에서 약 80%의 유지율을 예상한다. 분기 중 차주 부담 모기지 보험의 해지 대부분은 차주의 요청에 의한 해약보다는 원금 상환에 기인했다.
• 경쟁 및 시장 점유율: 에센트는 시장 점유율보다 단위당 수익성(unit economics)을 계속해서 우선시하고 있다고 밝혔다. 회사의 신용 평가 엔진인 에센트 에지(Essent Edge)는 기초 신용 데이터를 평가하며 가격 책정, 지역 및 대출 기관 전반에 걸친 테스트를 지원한다.
• 대체 신용 점수: 밴티지스코어(VantageScore)는 에센트의 신규 취급 건수 중 5% 미만을 차지했다. 경영진은 대체 신용 점수의 채택 확대가 완만한 가격 인하 압박을 초래할 수 있으나, 일부 FHA(연방주택청) 대출 차주가 일반 대출로 이동할 경우 일반 모기지 보험 시장이 확대될 수도 있다고 밝혔다.
• 자본 배분: 에센트는 3분기에 7,400만 달러 규모의 자사주 110만 주를 매입했으며, 10월에는 5,080만 달러에 80만 2,000주를 추가 매입했다. 경영진은 자사주 매입 활동을 분기별이 아닌 연간 단위로 평가해야 한다고 밝혔다.
• 재보험 전략: 회사는 무차입 기준으로 모기지 보험 요율을 책정하며, 원수 보험료를 낮추기 위해 더 저렴한 재보험을 이용하지 않는다. 경영진은 잉여 자본을 방어적 보호 수단과 시장 혼란기 기회 포착 모두에 활용할 수 있는 유용한 가용 자금(드라이 파우더)으로 보고 있다.
• 기타 수익: 모기지 보험 기타 수익의 전분기 대비 증가는 보험연계채권(ILN) 거래 종료에 따른 것으로, 내재파생상품 부채가 수익으로 환입된 점이 반영되었다. 경영진은 이 같은 규모의 수익이 매 분기 반복되지는 않을 것으로 예상된다고 밝혔다.

실적 발표 컨퍼런스 콜 전문

전체 실적 발표 컨퍼런스 콜 녹취록

경영진 발표

Operator

Good day, and thank you for standing by. Welcome to the Essent Group Limited Third Quarter 2026 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Frank Fanta, Investor Relations.

Unknown Executive

Thank you, Daniel. Good morning, everyone, and welcome to our call. Joining me today are Mark Casale, Chairman and CEO; and David Weinstock, Chief Financial Officer. Also on hand for the Q&A portion of the call is Chris Curran, President of Essent Guaranty.

Our press release, which contains Essent's financial results for the third quarter of 2026, and was issued earlier today and is available on our website at essentgroup.com. Our press release includes non-GAAP financial measures that may be discussed during today's call. A complete description of these measures and the reconciliation to GAAP may be found in Exhibit Q of our press release and in our third quarter 2026 earnings presentation posted on our website. Prior getting started, I would like to remind participants that today's discussions are being recorded and will include the use of forward-looking statements.

These statements are based on current expectations, estimates, projections and assumptions that are subject to risks and uncertainties, which may cause actual results to differ materially. For a discussion of these risks and uncertainties, please review the cautionary language regarding forward-looking statements in today's press release. The risk factors included in our Form 10-K filed with the SEC on February 18, 2026, and any other reports and registration statements filed with the SEC, which are also available on our website. Now let me turn the call over to Mark.

Mark Casale

Thanks, Frank, and good morning, everyone. Earlier today, we released our third quarter 2026 financial results, which reflect solid credit performance and the continued impact of interest rates on persistency and investment income. The cash flow from our core MI business remains strong and gives us the flexibility to invest in the franchise while also returning capital to shareholders. .

For the third quarter of 2026, we reported net income of $163 million or $1.82 per diluted share, representing an annualized return on average equity of approximately 12%. And our book value per share was $62.58 as of September 30 and inclusive of common dividends has increased approximately 9% from a year ago. Turning to our MI business. Our insurance in force ended September 30 at $250 billion, up 1% from a year ago. 12-month persistency was 83%, which reflects the current rate environment with over half of our in-force portfolio having a mortgage rate of 6% lower. We expect this dynamic to continue supporting elevated persistency while portfolio growth stays muted as affordability continues to impact origination volume.

Over the long term, we remain constructive on housing as favorable demographics and pent-up demand should provide foundational support to home prices and purchase origination volume. The credit quality of our insurance in force remains strong with a weighted average credit score of 747 and a weighted average original LTV of 93%. And Consistent with our expectations, the portfolio default rate increased to 2.75%, reflective of seasonality and the aging of our portfolio. We continue to believe that substantial home equity embedded in our in-force book should help mitigate ultimate claims. Additionally, 95% of insurance in force is subject to reinsurance protection, which provides capital relief and reduces tail risk.

Turning to the Reinsurance segment. We expect written premiums of approximately $320 million from our P&C reinsurance activity in 2026, with roughly half in this year at a combined ratio in the high 90s. And we are currently focused on building Essent Re's P&C platform and remain disciplined with our underwriting. While mortgage risk and the related MGA business will drive the majority of the segment's earnings in the near term, we expect the P&C business to provide complementary earnings in the long term as well as capital synergy given diversification credit.

Our consolidated cash and investments totaled $6.5 billion as of September 30, an annualized aggregate investment yield for the third quarter was 4.4%. And that yield includes income from other invested assets, a portfolio of strategic investments that now totals approximately $450 million or 7% of our total portfolio. While returns will vary from period to period, this portfolio gives us another way to deploy capital outside of our core business to generate income and grow book value. We continue to operate from a position of strength with $5.6 million of GAAP equity, access to $1 billion of excess of loss reinsurance and $1 billion of cash and investments at the holding companies.

With trailing 12-month operating cash flow of $857 million, our franchise remains well positioned from an earnings, cash flow and balance sheet perspective. We remain committed to a balanced capital strategy that seeks to optimize shareholder returns over the long term while preserving flexibility for our strategic growth. Year-to-date through October 31, we have purchased nearly 8 million shares for approximately $475 million.

In addition, I'm pleased to announce that our Board has approved a common dividend of $0.35 per share for the fourth quarter of 2026 and has also authorized a new share repurchase plan of $500 million. Now let me turn the call over to Dave.

David Weinstock

Thanks, Mark, and good morning, everyone. Let me review our results for the quarter in a little more detail. For the third quarter, we earned $1.82 per diluted share compared to $2.08 last quarter and $1.67 in the third quarter a year ago. My comments today are going to focus primarily on the results of our mortgage insurance and reinsurance segments. There's additional information on corporate and other results and Exhibit D and E of the financial supplement. .

Our mortgage insurance portfolio ended the quarter with insurance in force of $250.1 billion, an increase of $342 million from June 30, and an increase of $1.3 billion compared to $248.8 million at September 30, 2025. Persistency at September 30, 2026, was 83.3% and compared to 84% at June 30, 2026. Mortgage Insurance net premium earned for the third quarter of was $211 million. The average base premium rate for the mortgage insurance portfolio for the third quarter was 40 basis points, consistent with last quarter and the average net premium rate was 34 basis points, down 1 basis point from last quarter.

Our mortgage insurance provision for loss and loss adjustment expenses was $51.7 million in the third quarter of 2026, and compared to $29.4 million in the second quarter of 2026 and $44.2 million in the third quarter a year ago. At September 30, the default rate on the mortgage insurance portfolio was 2.75%. And up from 2.53% at June 30, 2026. mortgage insurance operating expenses in the third quarter of 2026 were $31.9 million and the expense ratio was 15.1% and compared to $31.9 million and 14.8% last quarter and $31.2 million and 14.4% in the third quarter last year.

At September 30, Essent Guaranty's PMIERs efficiency ratio was strong at 177% with $1.6 million in excess available assets. Turning to our reinsurance segment. net premiums written year-to-date through September 30, 2026 were $330 million. compared with $49 million over the same period of 2025. Net premiums earned year-to-date 2026 were $137 million compared with $46 million over the same period of 2025. The increase in premiums reflects the growth in nonmortgage business from our expansion in the P&C reinsurance activity. The reinsurance combined ratio was 84.7% in the third quarter of 2026 compared to 77.9% last quarter, a 19.2% a year ago. The change in the combined ratio was as expected, reflecting a difference in underwriting performance between the mortgage and non-mortgage lines and the changing business mix of the segment's premiums.

The pretax underwriting income for the Reinsurance segment predominantly reflects the underwriting results of our GSE and other mortgage risk share business, while the contribution from our P&C activity was not material. Consolidated net investment income was $63 million in the third quarter of 2026, up $1.3 million from the prior quarter. Income from other invested assets was $10.7 million in the third quarter of 2026. And compared to $19.4 million last quarter and $1.8 million in the third quarter a year ago. The results this quarter again reflect the net favorable fair value adjustments on these investments.

Total holding company liquidity remains strong and includes $500 million of undrawn revolver capacity under our committed credit facility. At September 30, we had $500 million of senior unsecured notes outstanding and our debt-to-capital ratio was 8.3%. Year-to-date, Essent Guaranty paid $115 million dividend to a holding company. At quarter end, sent guarantee statutory capital was $3.7 billion with a risk-to-capital ratio of 8.2:1. Note that statutory capital increased $2.7 billion of contingency reserves at September 30.

As of October 1, Essent Guaranty could pay additional ordinary dividends of $324 million in 2026. On October 2, Essent Guaranty paid a dividend to its holding company of $85 million. During the third quarter, Essent Group paid cash dividends totaling $31.1 million to shareholders, and we repurchased 1.1 million shares for $74 million. In October, we repurchased 802,000 shares for $50.8 million.

Now let me turn the call back over to Mark.

Mark Casale

Thanks, Dave. In closing, Essent remains a well-capitalized high-quality franchise with strong and consistent cash flow generation. we are well positioned to keep growing book value per share, returning capital to shareholders and investing in opportunities that strengthen our franchise for the long term while continuing to support affordable and sustainable homeownership.

Now let's get to your questions. Operator?

Operator

Our first question comes from Terry Ma with Barclays.

질의응답

Terry Ma

Maybe just to start off with persistency. Can you help us understand what you've been seeing in the mix of MI cancellations between scheduled versus borrower initiated. And then just looking ahead, how should we think about translation activity and the impact on persistency?

Mark Casale

Yes. Terry, it seems to be a popular topic this quarter amongst all the MIs, not sure why. I would look at -- I think you're focused on the right metric, Terry, because I do think there's not that many things that move the business. Persistency is 1 of them. So when you think just bigger picture, I know in terms of cancellation, a lot of it is going to be that 2021 book that just simply amortizes off over. It started already, but it's probably going to be peak in like '28, '29.

And then when you start thinking about growth -- normal growth kind of consistent with this slow market, I would think a persistency kind of in the 80% range. So it's fairly it's fairly muted, clearly lower than we've been. But remember, we've also experienced persistency of 60%, I believe it was in 2020 and parts of '21. So Bigger picture, I really do think you have to focus it there. In terms of like MI cancellation, by -- we actually had to look it up, right? I mean it's not something we track day on and day out. But I mean, to give it's probably 37,000 in the quarter. those was refinanced and the other 22 was cancellation, about 4 or 5, maybe. It's a little tough with the codes was borrower initiated. And the rest was just amortization.

So I mean big picture again, Terry, the process works. It's a good -- line is a really good product. and it's been around for a long time since -- really since almost 70 years. It's fairly effectively priced. So on an average $400,000 loan, it's like $1,200 a year -- and down payment, we're saving folks probably anywhere from $40,000 to $45,000. So -- and also remember, this is an industry that during the great financial crisis didn't take any tarp probably 1 of the few financial services that didn't. So a lot of credit to some of our peers who manage through that process and an industry that paid billion in claims over the years.

So again, good product I know there's a lot of kind of clearly emphasis on MI cancellation -- and clearly, you want to make the process. We're always what's best about for the borrower. So if there's ways in the future working with the GSEs and working with FHFA to kind of ease the friction, we're supportive, and we'll work with them to do that.

Terry Ma

Got it. That's helpful. And then maybe just a quick housekeeping question. Just on the current period provision for the quarter, the $81 million on NI. Anything to kind of call out or impact there? It's quite a bit higher than what we were expecting.

David Weinstock

Terry, it's Dave Weinstock. Really, I think when you look at our provision, I think 1 of the things that's really driving is that the average loan size is increasing. So when you look at our supplement, and specifically, if you look at Exhibit M, which kind of looks at reserves per bucket, we're reserving pretty much the same way we always have. Our reserve methodology hasn't changed. The loans that we're insuring have grown. I would say, in the past 18 months, they've probably grown from an average of the now to about 300,000 to now 400,000. So that's going to be what's increasing the loan size and the risk in force and it's going to increase the dollar of our provision. But overall, I think that's what you're seeing.

Mark Casale

Yes. And I mean, Terry, again, I think it's a good question. And I agree with Dave, the severity, just the bigger loans are going to hike the provision up -- at the end of the day, it's really going to be about unemployment. So I mean a lot of these still have to roll the claim as they do. Clearly, the pre '22 book has a lot of build in equity -- it will be -- it's going to be, I would say, the post '22 book is really the more normal. So you're going to see we're seeing higher severities -- that's really the business. I wouldn't really look at 2021 as the business that was really an anomaly that's starting to work its way out.

And if you again, thinking longer term or from a modeling perspective, Terry, we've always said kind of we expect 2% to 3% claim rate. That's what we priced for. And then in terms of combined ratio, kind of in that 35% to 45% ratio. So this is -- I don't want to say it's always within our expectations, but it doesn't really surprise us -- and I still think just look at our cash flow over the past 12 months, still in excess of $800 mil -- so not a lot of cash is leaving the company yet. I mean, again, we'll start paying more claims over time. But I do think what you're seeing is a normal MI business. And based on that, it's still -- I mean, it's still pretty good.

Operator

Our next question comes from Doug Harter with BTIG.

Douglas Harter

Hoping you could just talk about your view on competition. You guys continue to kind of be slightly below pro rata market share -- and just kind of how do you think -- what that tells us about your view of the risk-adjusted returns in the market? .

Mark Casale

Doug, welcome back. Nice to have you back on the call. I would say the competitive market is still pretty similar. We haven't seen much of a change. I think for us, we always do -- we probably fall back a lot on the unit economics and we tend to look at our earned premium base premium is a little bit higher than the industry. We focus a little bit on that. And we like to do just it's a small market, Doug. So we don't really look -- we'd love to be 1 of 6, so a little bit higher on the share. But we're not particularly concern given the smaller nature of the market. And we're kind of using this opportunity to test a lot of things.

We'll test pricing. Remember, Essent Edge, which is really our credit engine and does help us so -- and we can get into that a little bit more just in terms of Vantage. But it really helps us kind of we're really looking at kind of our estimated claim rate. So we'll test geographies. We'll test lenders, we'll test entails. So it's working as well as we'd like. I mean sometimes we know we may sacrifice a little bit of volume for that. But I think longer term, it's -- and given the small nature of the market, we're not particularly concerned.

In terms of the competitive environment, I would look at it as every MI seems to have their own buy box, right? Some like lower LTVs, some like higher credit, some like certain geographies, certain lenders. But I do think it kind of balances out in the end. So I wouldn't read too much into our kind of take on the market because we're a little bit lower.

Operator

Our next question comes from Mihir Bhatia with Bank of America.

Mihir Bhatia

Maybe I'll just start with something you just mentioned there, Mark, about Vantage and Essent Edge. Can you talk a little bit more about that? .

Mark Casale

Sure. I mean I think Vantage is coming into the market, and it's not very big right now. I mean here, it's probably less than 5% of our originations. I don't think it's going to impact the MI industry that much. I think it's going to impact the MBS buyers and certain buyers of loans more because they're so focused on FICO.

But I think when we look at it, FICO, FICO 10T, VSF, the GSEs are looking at like post and their scores I think our advantage with Edge is we're looking at the raw credit data. So we're coming up with our own score. So we're agnostic to kind of -- we use it will impact those scores, but it's not really driving our ultimate claim rate. And anything we're on the card with, clearly, that's going to go advantage or FICO depending on the lender.

We also run that through Edge on the back end. So we feel like we have a real good common denominator that we -- and we may start disclosing that over time. We'll see how it goes. But it will at least give investors what our view is on credit in the ups and downs. I think from a bigger picture, I think with Vantage, you could see a little bit of pricing compression if they start to pick like the best of all and I would be surprised if the industry doesn't respond and raise pricing a little bit. I mean you're talking like a basis point or 2. It's not big dollars, but I'd be surprised if the industry doesn't react.

I think on the other hand, I do think you may see a larger market. I would believe, especially if there's some inflation, you could see FHA borrowers migrate to conventional, which I think, again, if that's better for the borrower, that's good. So I think net-net, it's probably a positive for the industry over the next year or 2.

Mihir Bhatia

Got it. The other question I had was just in terms of insurance in force growth at current market size, right? I mean if you think about 80% persistency, you have 50% -- I guess, approximately $50 billion running off each year. NIW is running about that same level. Should we expect insurance in force to be flat or even down next year?

Mark Casale

Well, it's hard -- It's tough for me to say right now. I do say that it has been relatively flat. I mean we're entering '27, kind of the fifth plus year of just a flat market. So -- and I think given where rates were, we were able to grow insurance in force a little bit over the past few years. I wouldn't be surprised if it flattens out a bit. That being said me here. I do think we're levered more for the upside. I do. I think when you think about where housing has been relatively stagnant, and we can talk all day long about demographics, but I do believe there's a pent-up demand for housing.

And kind of the longer stays this kind of slowness hangs around the larger the staff back will be. So look bigger picture, look at [$1.6 trillion] of industry in force for the whole industry. I wouldn't be surprised to see that grow to , not next year or not, but let's say, over a certain period of time, again, take our share. So I do think growth will resume. And I don't think and I don't think a lot of investors see that. And that's fun right? It's hard in this environment. But I do think we have that kind of growth because housing will come back. It always does.

It always resumes it will grow in line with GDP. Just you have to think through it's not growing. And part of it was 2021 was such an anomaly. We literally pulled 5, 6 years' worth of growth into 1 year or 2 years. home price is up 50% in 2 years. It's just not normal. So now that you're seeing more of the normalization. So we're flattening out. We're fortunate as a company that because of the persistency in the noncredit environment, we're still driving a lot of cash flow to the bottom line, but some of the other participants, the transaction-oriented businesses us so.

But I do think we've really -- we kind of get -- we kind of look at it internally as we're paid to wait in the way we're kind of managing capital over time. Because remember, insurance in force, if it doesn't grow, the capital needed to support it doesn't grow. So that becomes free cash flow, which, again, we've used predominantly the last 18-plus months to repurchase shares, which we think right now is a pretty good use of proceeds for the company.

Operator

Our next question comes from Rowland Mayer with RBC Capital Markets.

Rowland Mayor

Mark, I think you said in response to a question that you price for a 2% to 3% claims rate, but then you still book new notices and a much higher figure than that. What would it take to close the gap? .

Mark Casale

Well, remember, when we book new notices, that's not what our ultimate these things roll. So it's -- that's our initial claim rate, 2% to 3% rolling at the end. So it's kind of apples and oranges. So think of it again as the ultimate claim rate. So just picture unit economics, right? So premium rate, net premium rate kind of loss rate, which is your claim rate, that's kind of your kind of return on asset, then you have your expenses and your investment income. It's relatively straightforward.

But I do think the claim rate for historically for us has been like less than 1%. That is just and we're pleased with it. But I think normally, you're going to have to look in that 2% to 3% range. Hence, when you kind of run through the math, that gets you to that 35% to 45% combined ratio. And I do think that's a good guide. 35% to 45% combined ratio kind of 80-ish persistency longer term is actually a good guide as you start to model this stuff out?

Rowland Mayor

That's helpful. And then I guess from a competitive dynamic, we've seen a lot of multiyear quota-share deals announced in the industry at fairly cheap cost of capital. Do you expect that to drive any change in pricing decisions is that a result of the improved reinsurance dynamics? .

Mark Casale

Great question. I don't know. We don't do it. I mean we look at it -- we price on an unlevered basis. We do not take the reinsurance cost and rotate that back into the front end. And part of it is just how the market works, right? I mean there's only 6 participants. So if you use that to lower price, it's easily matched. And I'd be surprised if the other participants use it that way, too, because it's really just reducing premium in the industry. So I think what we would do, the way we look at it is we'll price for kind of an unlevered return and anything that is cheaper, so to speak, on the reinsurance side, really benefits for shareholders.

And we took that in this lower price and the shareholders don't really gain from that. And I think for reinsurance, we generally have gone 2 years. We've seen some of the -- yes, we've done a few participants go 3 years, which again speaks to, 1, the demand for reinsurance and MI. There's really not a lot of GSE reinsurance. So we're kind of the only game in town. -- we like it, and I think we'll -- we think it's a great tool, but I would remind you that we do like capital too, right? I mean I think reinsurance protects you in the event of a kind of lower, call it, higher unemployment, more losses, reinsurance clearly protects you.

Capital lets you take advantage of those type of situations. And I'll give you the example at stated now 2020 we talked earlier, we were the lowest in market share. But in 2020, we -- we've only been #1 in market share twice in our history, and both times were in 2020. The second and third quarter, when we had -- we went out and had raised capital in May. We had a lot of capital. We wrote -- I think we had a 20% handle 1 and part of it was because some of the -- there was as much capital around the industry and there's a little bit of a shock event, we took advantage of it. So again, I think you have to look at it both ways.

Reinsurance is a great tool. It's really part of our -- when we think about by manage and distribute as a key piece of it. But when you think about capital longer term, you also have to worry about the tail right? So when we think about how do we think about excess capital, clearly insurance or a growing we have a lot of excess capital. could we use it for opportunities outside of the core relatively small. We'd love to plow it back into the core business. And then we look and say, how much do we need in an event.

So remember, we hold first loss, we really hedge out against the mezz, we reattach at the top. So for our business, Rowland, I know you cover the P&C market, a cat event for us is a severe macroeconomic recession, what's the probability of that happening in the next 2 to 5 years, probably pretty low, it's not 0. So I think we like -- we've been through it. I've managed through the GOC, I've been through the subprime crisis or the late '90s. We've seen the movie before. So we like -- we think having dry powder to take advantage of an event.

And also when you think about just the kind of the price of the -- it's a call option, right? I mean so the price of holding on that additional capital, we actually think is relatively cheap. -- versus returning all of it to shareholders. I think for us, from a capital return, we're going to be in excess of 100% this year. We bought back 10% of the company last year and wouldn't be surprised that we're close to that this year.

Again, I think we're fortunate in terms of how much capital we're generating. I think we're using most of it to buy back capital because we think that's the best use of funds now, but we're still we're still retaining a little bit for -- we like to have dry powder either for an opportunity that presents itself on the offensive nature or just being defensive.

Rowland Mayor

And then if I could just sneak in 1 more. We're coming up on 1/1 renewals here. Is there any interest in expanding the P&C appetite? And can you may discuss your premium expectations there?

Mark Casale

Yes. I mean we're clearly in conversations now with Lloyd's around kind of our funds at Lloyd's commitments. I think there's a few where we'd like to increase our allocation, 1 or 2, we're going to decline. -- because it's -- they're using 100% fail. There's not a lot of alignment. So we're not -- the key there is to continue to -- we've talked about testing.

We're continuing to test the market -- we like our approach with Lloyd's. It's clearly different than some, but I think it's probably more suits our style. So you could see us grow a little bit, but I wouldn't expect a lot. And then on the quota share that we did last year, that actually renews again for another year. And we'll look to do potentially do some other retros or even some direct reinsurance with sedans, but we'll see how it goes. We're seeing -- a lot of the submissions are coming in, but it's really the same unit economics kind of framework that we have on the MI side. So we're looking at it.

We're building out the infrastructure -- but I'll give you a lot more color in February. It's a little early to tell because we're just starting to see it. But again, lots of capital floating out there. We don't need to kind of push on growth there for the sake of growth.

Operator

[Operator Instructions] Our next question comes from Bose George with KBW.

Bose George

Actually, just a couple of book keeping questions for me. What was the share repurchase activity just in October?

David Weinstock

Yes, Bose. It was about 50 million shares. Let me just pull it back up. Yes. about 51 million shares for a little over $800,000.

Bose George

Okay. Great. And then actually, in terms of the tax rate, it was up a bit..

David Weinstock

I got it backwards. Let me correct that. I read it backwards. 802,000 shares for about $51 million makes more sense.

Bose George

On the tax rate, what's a good number going forward? It was up a little bit? Is it more flattish going forward?

Mark Casale

Yes. I would -- I mean, Dave can kick in, but I would think kind of -- I would guide a little higher, Bose, I mean, it's kind of 17-ish, maybe even 18. Just remember, the friction costs we have from getting it from the U.S. to Bermuda. So there's a 5% withholding tax. So you can kind of do the weightings. But I'd be a little conservative there, if I were you.

Bose George

Okay. Great. And then actually just 1 more. The other income line item, just to confirm, that's the GSE CRT business, right?

David Weinstock

Actually, other income for MI this quarter, which had a little bit of an increase as we've disclosed, we have -- with our ILN transactions, there's a little bit of an accounting nuance there where we have an embedded derivative where the literature says we have an embedded derivative in those ILN transactions.

We mark them to market every quarter. We did have a transaction terminate in the third quarter which released the liability and ultimately flowed into income. So that's what you're seeing there. We have that disclosed in the financial supplement. Not something you see every quarter at that magnitude, but that's really what you're seeing.

Bose George

Okay. Great. And so the CRT stuff goes through the regular premium line? The reinsurance.

Christopher Curran

That is correct. That's right. the CRT business, and Ray will go through the premium. That's right.

Operator

Our next question comes from Rick Shane with JPMorgan.

Richard Shane

Look, defaults picking up and some of that is seasonality and some of that is cyclicality. I am curious where you guys sort of think we are from a cyclical perspective? And can you give us any characterization of the defaults that emerged during the third quarter so we can think about peers or risk associated with them.

Mark Casale

Rick, I still don't -- we don't see really any trends. I mean the defaults are up there close to 22,000. I do, and we sound like a broken record here, but when the book is 40 months old and these guys have been around for a while, some of them are going to default a little bit more the newer book this '23, '24, '25 book, I just think it's not as good as the earlier book. So you're going to see, as Dave said, larger loan sizes. So some of it's coming through that in terms of the provision.

But -- we don't really see -- we look all the time, right? So you're looking at defaults. And you're looking at it, there's a couple of ways you have to look at it clearly by geography, right, given where home prices could be up and down. You're looking at by lender, you also have to look at it by servicer. And that's something you have to be -- I think investors have to be cognizant of if there is a downturn can the servicer actually collect the payments from the borrower. And that's going to be critical. We're not seeing much. And again, I would always tie it back to unemployment. Unemployment, I think it actually ticked down. So it's 4.1%. So as long as the economy stays strong, I wouldn't be surprised to see that we'll continue -- maybe to normalize, but we don't see any kind of skelems in the clause whatsoever.

Richard Shane

Got it. As always, I appreciate the transparency Mark. .

Operator

Our next question comes from Geoffrey Dunn with Dowling & Partners.

Geoffrey Dunn

Unit economics are double digit. But when we consider the necessary capital buffer, Mark, do you think MI is a double-digit return business in a normalized market? .

Mark Casale

Yes. Firmly. I mean, again, don't confuse unit economics with our balance sheet. I would look -- we firmly think it's 12% to 15%. That's our hurdle. It's also the hurdle with strategic investments as we put money to work there. It's clearly the hurdle at Essent Re. It's the hurdle of title and quite frankly, titles not hitting that hurdle because of where rates are. I think, again, the lag between our unit economics in the business is really just the capital we're holding on the balance sheet.

And again, Geoff, we just think that's a relatively cheap option to hold. And -- so it's probably a couple of points in terms of excess capital that we're holding. But again, given where we are in the market and just our experience, we're perfectly comfortable holding that capital. And meanwhile, we're still returning a lot to shareholders. But hopefully, that helps you.

Geoffrey Dunn

And then I apologize, I got the October buyback, but missed it a quarter's buyback intel.

David Weinstock

Yes, Geoff. So for the quarter, we repurchased about 1.1 million shares for $74 million. That was for the third quarter.

Mark Casale

Yes, pretty light in the quarter, Geoff, I wouldn't read too much into it. I think we kind of look at it more on a yearly basis. I think we bought a lot back in the second quarter -- and again, I think it's public. I think we bought back 1 million shares at like $56 in June. Someone just had to dump the shares. And I think it was the week that Google was raising their $84 billion and people were looking. So we like to take advantage of those things. And again, if you look at bigger picture, we continue to grow book value per share. We've grown it whatever since the IPO, 17%, 18%.

The stock is -- it looks like a bad EKG in terms of the performance. It goes up, but it pretty volatile. And I think our view is we like to continue to buy it when it gets, we think, cheaper and then probably lighten up a little bit on the other end. So I wouldn't read too much in quarter-to-quarter.

Operator

Thank you. I'm showing no further questions at this time. I would now like to turn it back to management for closing remarks.

Mark Casale

I'd like to thank everyone for joining today, excellent questions, and have a great weekend. .

Operator

This concludes today's conference call. Thank you for participating. You may now disconnect.