Essent Group (ESNT) Q2 EPS Beats by 12%

Key Points

• Driven by strong investment income and buybacks, Total GAAP revenue was $319.1 million, up 2.0% from $312.9 million in Q2 2024.

• The GAAP provision for losses shifted from a net benefit in Q2 2024 to an expense in Q2 2025, and new insurance written remained flat at $12.5 billion.

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Essent Group (NYSE:ESNT), a leading provider of private mortgage insurance and real estate-related insurance, reported results for Q2 2025 on August 8, 2025. The highlight was GAAP earnings per share (EPS) of $1.93, beating the analyst consensus of $1.72 per diluted share (GAAP). GAAP revenue came in at $319.1 million. GAAP net income declined 4.1% to $195.3 million, compared to $203.6 million in Q2 2024, while new insurance written (NIW) was unchanged year over year at $12.5 billion (calendar year basis). The company's strong capital position and elevated investment income helped deliver a solid quarter.

Source: Analyst estimates for the quarter provided by FactSet.

Essent Group: Business Overview and Key Focuses

Essent Group operates at the heart of the U.S. housing finance system by providing private mortgage insurance. This insurance protects mortgage lenders from losses on low down payment loans. It plays a critical role for homebuyers who cannot afford a 20% down payment and allows lenders to reduce risk by meeting requirements imposed by government-sponsored enterprises (GSEs) like Fannie Mae and Freddie Mac. The bulk of its business comes from mortgage insurance, but it also has a growing presence in title insurance, which relates to the transfer of real estate ownership.

The company's key priorities revolve around maintaining strong relationships with top mortgage lenders, adhering to the evolving rules of the GSEs, and tightly managing credit risk through reinsurance and capital discipline. Regulatory compliance and risk management are consistently flagged as vital, with current strategy heavily emphasizing credit quality, capital efficiency, and shareholder returns. Success depends on preserving its approvals with the GSEs, remaining competitive in pricing, and managing a robust risk profile.

Quarter in Review: Metrics, Strategy, and Shifts

Essent Group delivered GAAP diluted EPS of $1.93. Book value per share climbed to $56.98, up 12.6% from the prior year (calendar year basis). GAAP revenue improved to $319.1 million and reflecting stable core income streams. Net investment income increased by 5.7% to $59.3 million (GAAP), thanks to a $6.3 billion investment portfolio as of June 30, 2025, which continues to benefit from higher yields. Essent repurchased 6.8 million shares for $387 million through July 2025.

GAAP net premiums earned slipped 1.2% year over year. New insurance written was $12.5 billion (GAAP), unchanged from Q2 2024. and up sequentially from the previous quarter (Q1 2025). Persistency—meaning the rate at which customers keep their mortgage insurance policies—was 85.8%. This high level of retention continues to support the company’s large portfolio of insurance in force, which stood at $246.8 billion as of Q2 2025, up 2.5% from June 30, 2024. Credit quality stayed high, with a weighted average FICO credit score of 746 across the portfolio as of Q2 2025. and an even higher score of 753 for new business.

The GAAP loss provision shifted meaningfully during the quarter. The provision for losses and loss adjustment expenses (GAAP) rose to $17.1 million after posting a net benefit in Q2 2024. This pushed the loss ratio in the core mortgage insurance segment to 6.6%, up from a negative 0.5% in Q2 2024, but was an improvement from Q1 2025’s loss ratio of 13.1% (GAAP). Loans in default ended at 17,255, up from 13,954 a year ago.

Other underwriting and operating expenses declined to $62.8 million from $66.2 million compared to Q2 2024, while GAAP interest expenses ticked up slightly. The company's capital buffer remained strong, with a 176% PMIERs sufficiency ratio and a risk-to-capital ratio of 9.2:1 at the insurance subsidiary as of Q2 2025. Management strengthened risk management by entering two new excess-of-loss reinsurance agreements, covering 20% of eligible policies written in calendar years 2025 and 2026. The quota share with its Bermuda-based reinsurer, Essent Reinsurance Ltd, was increased from 35% to 50%, effective and retroactive to January 1, 2025.

In its smaller title insurance segment, Essent Group earned $14.9 million in GAAP net premiums, showing the inherently cyclical and transactional nature of that business.

Another notable event was a credit ratings upgrade from Moody’s on August 6, 2025. On August 6, 2025, Moody's raised the financial strength rating of Essent Guaranty to A2 and the senior unsecured debt rating of Essent Group to Baa2, with outlooks moved to stable.

Essent Group maintained its quarterly dividend at $0.31 per share. Share repurchases were robust: $387 million in buybacks through July 31, 2025, reduced the average share count, helping per-share metrics even as GAAP net income fell 4.1% compared to Q2 2024. $260 million remained under the repurchase program authorized earlier in the year as of July 31, 2025.

Looking Ahead: Outlook and Investor Considerations

Management did not offer formal financial guidance for the coming quarter or full year. Comments from the earnings release and recent conferences signal a focus on maintaining capital strength, credit quality, and continued shareholder returns.

Investors should keep watch on new insurance written trends, as flat growth in this metric—$12.5 billion in both Q2 2025 and Q2 2024—indicates a sluggish origination environment. The uptick in loss provision and lowered cure rates will bear close monitoring, as these could test asset quality if conditions worsen. The results suggest no immediate threat to profitability or capital.

ESNT pays a quarterly dividend and maintained this at $0.31 per share.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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