Essent Q2 2026 Earnings: Higher Loss Costs Offset Revenue Growth

Essent Group (NYSE: ESNT) reported Q2 2026 total revenue of $362.7 million, up 13.6% from $319.1 million a year earlier, while diluted EPS rose to $2.08 from $1.93. Net income declined 2.9% to $189.7 million as higher loss provisions and operating expenses absorbed the increase in premiums and investment-related income. Mortgage new insurance written rose to $14.1 billion, although mortgage defaults and reserves remained above year-earlier levels.

Core earnings data

Revenue growth came from an 11.2% increase in net premiums earned and higher income from other invested assets, which rose to $19.4 million from $4.5 million. Net investment income also increased modestly to $61.6 million.

The benefit was offset by a near tripling of the provision for losses and loss adjustment expenses, along with a 19.9% increase in other underwriting and operating expenses. As a result, pretax income was nearly unchanged and net income declined after a higher tax expense.

Business and segment performance

Mortgage Insurance remained Essent’s primary profit contributor. New insurance written increased 12.7% to $14.14 billion, while insurance in force reached $249.72 billion, up from $246.80 billion a year earlier. Segment revenue increased only modestly, however, and higher loss costs reduced pretax income.

Reinsurance produced much faster revenue growth, led by non-mortgage business. Its quarterly net premiums earned rose to $43.6 million from $13.9 million, but the provision for losses increased to $18.7 million from less than $0.1 million. Acquisition costs also rose to $11.8 million from $0.3 million, leaving reinsurance pretax income below the prior-year result despite the higher revenue base.

The segment data show a clear divergence between revenue expansion and underwriting profitability.

Higher loss costs offset premium and investment income growth

Mortgage Insurance’s loss ratio rose to 13.6% from 7.0%, while its provision for losses and LAE increased to $29.4 million from $15.3 million. The number of insured loans in default reached 20,278, compared with 17,255 a year earlier, and the default rate increased to 2.53% from 2.12%.

Claims also became more costly. The total amount paid for mortgage insurance claims rose to $17.3 million from $9.0 million, while the average payment per claim increased to $55,000 from $42,000. Mortgage Insurance reserves for losses and LAE stood at $475.0 million, up from $346.0 million a year earlier.

These increases explain why consolidated pretax income remained nearly flat even as total revenue grew by more than 13%. Income from other invested assets provided a meaningful offset, but it did not fully absorb higher mortgage insurance and reinsurance loss costs.

Lower share count lifted EPS despite lower net income

Diluted weighted-average shares declined approximately 9.6% to 91.4 million from 101.1 million. That reduction allowed diluted EPS to increase 7.8% even though total net income fell 2.9%.

Essent reported that it repurchased 5.8 million common shares for $348 million year to date through July 31, 2026. End-of-quarter shares outstanding were 89.9 million, compared with 99.6 million a year earlier. The company also declared a quarterly dividend of $0.35 per share, payable September 10, 2026, to shareholders of record on August 31.

Liquidity and capital position

Essent ended June with $6.55 billion of cash and investments, compared with $6.61 billion at the end of 2025. Borrowings remained at $500 million, the debt-to-capital ratio was 8.11%, and the company had $500 million of undrawn committed capacity.

At Essent Guaranty, available assets under private mortgage insurer eligibility requirements were $3.60 billion against minimum required assets of $2.09 billion. That left $1.51 billion of excess available assets and a sufficiency ratio of 172%, compared with $1.58 billion and 176% a year earlier. The capital cushion remained substantial, but both measures were lower year over year.

Recent insider transactions

The supplied insider data reports 258,588 shares across 18 purchases and 172,928 shares across eight sales during the last six months, producing net purchases of 85,660 shares. Total insider holdings were reported at 5.02 million shares.

Five recent records included a clearly identified seller, sale action, date and transaction value. Five additional director entries dated May 7, 2026 lacked a stated action and value and are therefore excluded from the table.

The supplied data did not specify a currency unit for the reported transaction values. These records describe the transactions but do not establish the insiders’ views about Essent’s future performance.

Risks investors need to watch

• Mortgage credit costs: The higher default rate, claim severity and loss reserves could continue to pressure Mortgage Insurance profitability if credit performance deteriorates further.
• Reinsurance underwriting economics: Reinsurance revenue expanded rapidly, but its 77.9% combined ratio and higher acquisition and loss costs show that revenue growth did not translate into higher pretax income this quarter.
• Mortgage insurance pricing and retention: The net average premium rate declined to 0.35% from 0.36%, while annual persistency fell to 84.0% from 85.8%. Continued pressure on either measure could limit premium growth even if new insurance written remains higher.
• Capital cushion trends: Essent Guaranty continued to hold assets well above its minimum requirement, but its PMIERs excess and sufficiency ratio declined year over year as the company also returned capital through repurchases and dividends.

Summary

Essent delivered double-digit revenue growth and higher diluted EPS in Q2 2026, supported by increased earned premiums, investment-related income and a substantially lower share count. Underlying profit did not grow, however, because mortgage insurance and reinsurance loss costs increased materially. Future results will depend on whether new insurance volume and reinsurance growth can outweigh rising defaults, claims and underwriting expenses while Essent maintains its capital cushion.