Essent Group (ESNT) 2026年第三季度业绩电话会：房贷保险继续率与5亿美元回购

核心要点

• Essent Group Limited公布2026年第三季度净利润为1.63亿美元，摊薄后每股收益为1.82美元，相比之下，2026年第二季度为2.08美元，2025年第三季度为1.67美元。年化平均净资产收益率约为12%。
• 生效抵押贷款保额达到2501亿美元，环比增加3.42亿美元，同比增加13亿美元。在利率环境的支撑下，保单继续率保持在83.3%的高位。
• 抵押贷款保险违约率从上一季度的2.53%上升至2.75%。赔款及理赔费用准备金提存增至5170万美元，部分反映出平均贷款余额的增加。
• 受财产及意外再保险业务扩张的推动，今年迄今再保险净签单保费从上年同期的4900万美元增至3.30亿美元。该板块第三季度的综合成本率为84.7%。
• 董事会批准了一项新的5亿美元股票回购计划，并宣布2026年第四季度普通股每股股息为0.35美元。截至10月31日，Essent在2026年已斥资约4.75亿美元回购了近800万股股票。
• 管理层的长期指引框架包括：保单继续率在80%左右，最终赔付率在2%至3%之间，抵押贷款保险综合成本率在35%至45%之间。

关键财务数据

业务与经营表现

抵押贷款保险仍是Essent的核心现金流来源。该投资组合的加权平均信用评分为747，加权平均原始贷款价值比为93%。管理层表示，生效保单组合中蕴含的大量房屋净值有助于限制最终理赔规模。约95%的生效保额享有再保险保护。

保单继续率保持高位，主要因为超过一半的生效保单组合房贷利率在6%或以下。然而，由于住房负担能力制约了抵押贷款发放量，管理层预计生效保额的增长将继续受限。公司表示，随着保单流失与新承保额基本保持平衡，该组合规模或将大体保持平稳。

抵押贷款保险准备金提存的增加反映出平均贷款规模的扩大，而非准备金计提方法的改变。管理层表示，在过去的18个月中，平均投保贷款余额已从约30万美元增加至约40万美元。

再保险业务的增长主要由非抵押类的财产及意外险业务带动。今年迄今已赚净保费达到1.37亿美元，高于2025年同期的4600万美元。然而，第三季度税前承保利润仍主要来自于GSE及其他抵押贷款风险分担业务，财产及意外险业务的贡献并不重大。

投资收益受益于规模达65亿美元的现金及投资组合。其他投资资产收益为1070万美元，低于第二季度的1940万美元，但高于上年同期的180万美元，这反映出有利的公允价值调整。

管理层业绩指引

管理层预计2026年财产及意外再保险签单保费约为3.20亿美元，综合成本率处于90%高位区间。公司仍专注于逐步构建该平台，并表示不会单纯为了追求业务规模而扩张。

在抵押贷款保险的长期模型预测方面，管理层指出保单继续率接近80%，最终赔付率为2%至3%，综合成本率为35%至45%。管理层还将抵押贷款保险定义为常态下收益率在12%至15%的业务，这与公司对战略投资和Essent Re设定的回报门槛一致。

管理层预计未来的有效税率约为17%至18%，这反映了将资金从美国转移至百慕大所涉及的5%预扣成本等因素。

风险与关注要点

随着资产组合账龄增长，抵押贷款保险违约率正在趋于常态化。管理层表示，与2022年之前表现异常强劲的资产组合相比，2023至2025年份的保单组合更能代表正常的信贷表现，同时较大的贷款余额可能会增加案均赔偿严重度以及报告的准备金金额。

管理层认为失业率是决定最终抵押贷款保险理赔的最重要驱动因素。本季度内，公司并未按地区、贷款机构或贷后服务机构观察到显著恶化，但指出在经济下行周期中，贷后服务机构的表现将至关重要。

如果房地产市场活动持续低迷，生效保额的增长可能会继续受限。管理层还预计2021年份保单的退保流失规模将增加，并可能在2028年或2029年左右见顶。

财产及意外再保险仍处于早期增长阶段。管理层指出，鉴于市场上资本充裕，且与劳合社参与者的协同契合程度不一，公司在续保前将保持审慎甄选态度。

分析师问答亮点

• 保单继续率与退保：管理层预计在更常态化的环境下，保单继续率将在80%左右。本季度大多数借款人自付抵押贷款保险的终止是由于本金摊还，而非借款人主动申请取消。
• 竞争与市场份额：Essent表示，公司继续将单笔业务效益置于市场份额之上。其Essent Edge信贷引擎负责评估原始信用数据，并支持跨定价、地区和贷款机构的测试。
• 替代信用评分：VantageScore在Essent新发放业务中的占比不到5%。管理层表示，更广泛的应用可能会带来适度的定价压力，但如果部分FHA借款人转向常规贷款，也可能会扩大常规抵押贷款保险市场。
• 资本配置：Essent在第三季度斥资7400万美元回购了110万股股票，并在10月份斥资5080万美元进一步回购了80.2万股。管理层表示，股票回购活动应按全年周期进行评估，而非按季度孤立考量。
• 再保险策略：公司在无杠杆基础上对抵押贷款保险进行定价，不会利用成本更低的再保险来压低前端定价。管理层认为，过剩资本是宝贵的储备资金，既可用于防御性保护，也可在市场动荡期间把握投资机遇。
• 其他收益：抵押贷款保险其他收益的季度增长反映了一笔保险连接票据交易的终止，该交易将一项内嵌衍生负债释放计入收益。管理层表示，预计这一规模的收益不会在每个季度重现。

财报电话会完整实录

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完整财报电话会议逐字稿

管理层陈述

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.

分析师问答

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.