Enact Expects About $600 Million in 2026 Capital Returns as Q3 Earnings Decline

Enact Holdings Inc. (NASDAQ: ACT) said it expects to return about $600 million of capital to shareholders in 2026, supported by continued mortgage-insurance profitability and $1.8 billion of excess capital under private mortgage insurer eligibility requirements. The outlook accompanied third-quarter results showing lower sequential earnings, stable primary insurance in-force and a seasonal increase in delinquencies.

The mortgage insurer reported third-quarter net income available to common stockholders of $159 million, or $1.15 per diluted share, down 9% and 8%, respectively, from the second quarter. Adjusted operating income, a non-GAAP measure, declined 7% sequentially to $164 million, while adjusted operating income per diluted share fell 6% to $1.19.

Net premiums earned decreased by $2 million from the prior quarter to $242 million. Net investment income rose 2% to $74 million, while operating expenses declined 3% to $50 million. Enact’s expense ratio was unchanged at 21%. Adjusted operating return on equity was 12.4%, compared with 13.2% in the second quarter, and GAAP return on equity was 12.0%.

Persistency supports insurance portfolio

Enact wrote $14.1 billion of new insurance during the quarter, down 7% sequentially, primarily because of lower refinancing activity. Primary insurance in-force remained flat at $275 billion as persistency increased to 81%, helping offset pressure on new production from elevated mortgage rates.

The company said 89% of its insurance in-force carried mortgage rates below 7%, supporting continued high persistency. Only 6% had rates at least 50 basis points above the average prevailing market rate of 6.9% in September.

The portfolio’s net premium rate declined to 33.4 basis points from 34.1 basis points in the second quarter, mainly due to higher ceded premiums. Enact said year-over-year growth in ceded premiums primarily reflected quota-share reinsurance arrangements used since 2023. Those transactions generally produce higher ceded premiums, partly offset by effects on expenses and losses.

Delinquencies rise seasonally, while cures support reserve release

Losses incurred increased by $14 million sequentially to $47 million, lifting the loss ratio by six percentage points to 20%. The new-delinquency rate rose 0.3 percentage point to 1.6%, while the overall delinquency rate increased 0.2 percentage point to 2.8%. Enact attributed the sequential increases primarily to seasonality.

Total primary delinquencies ended the quarter at 26,085, up from 24,330 at the end of the second quarter. New delinquencies increased to 14,401 from 12,299, while cures totaled 12,104 and paid claims rose to 542.

Despite the increase, continued cure performance and loss-mitigation activity allowed Enact to release $37 million of reserves, matching the second-quarter release but below the $45 million released a year earlier. Losses before reserve releases were higher sequentially due mainly to seasonally higher new delinquencies. On a year-over-year basis, the company said newer insurance books progressed along their expected loss-development pattern, partly offset by a lower current-period claim rate.

Enact also reported that 87% of delinquent policies and 82% of all policies had at least 10% estimated equity. Paid-claim volume remained low relative to pre-pandemic levels, though the quarter included about 170 claims associated with settlements on nonperforming loans.

Capital return reaches $151 million in the quarter

Enact returned $151 million to shareholders during the third quarter, consisting of $33 million in dividends and $118 million of share repurchases. The company bought back 2.4 million shares at an average price of $48.19. It repurchased another $57 million of shares through Nov. 3, leaving about $200 million available under its $500 million authorization.

The board also declared a quarterly dividend of $0.24 per share, payable Dec. 17 to shareholders of record on Nov. 25. Enact said the final amount and form of its expected 2026 capital return will depend on business performance, market conditions and regulatory approvals.

Capital remained above regulatory requirements, with estimated PMIERs sufficiency of $1.8 billion, or 158%, at quarter-end. Enact’s operating leverage was 36%, reflecting credit-risk-transfer arrangements. The company also executed a quota-share reinsurance transaction covering the 2028 book year that is expected to cede about 35% of a portion of anticipated new insurance written.

Book value per share excluding accumulated other comprehensive income, a non-GAAP measure, rose to $40.47 from $39.66 in the second quarter. GAAP book value per share declined to $38.30 from $39.06 as higher interest rates increased unrealized investment losses. The unrealized loss on the investment portfolio widened to $346 million from $97 million.

Enact held a $5.9 billion investment portfolio and $500 million of cash equivalents. About 99% of the portfolio was investment grade, and its book yield increased 10 basis points sequentially to 4.7%.

Expense outlook and market risks

Based on year-to-date performance, Enact adjusted its 2026 operating-expense guidance, excluding reorganization costs, to the lower end of its $205 million to $210 million range.

Management described the near-term housing market as slow because of low affordability, with elevated persistency offsetting pressure on mortgage originations. Consumers using mortgage insurance remained generally healthy, supported by a resilient labor market, while long-term demand was underpinned by first-time homebuyer demographics.

The company cautioned that results remain exposed to an economic downturn, changes in political and regulatory conditions, changes involving Fannie Mae and Freddie Mac, mortgage-insurer eligibility requirements, competition and greater use of federal mortgage-insurance programs.