Enact's Q1 2025 Earnings Call: Navigating Contradictions in Reinsurance, Pricing, and Market Dynamics

Reinsurance business and capital deployment, performance of 2023 vintage, market share and pricing dynamics, pricing strategy and market response, and Enact's underwriting and pricing strategy are the key contradictions discussed in Enact's latest 2025Q1 earnings call.



Strong Financial Performance:
- Enact reported adjusted operating income of $169 million for the first quarter of 2025, up 2% year-over-year.
- Adjusted earnings per share was $1.10, up 6% year-over-year.
- The increase was driven by robust credit performance, continued execution against strategic priorities, and a meaningful dividend increase.

Capital Allocation and Shareholder Returns:
- Enact's Board of Directors authorized a new $350 million share repurchase program and approved a 14% increase to its dividend, from $0.185 to $0.21 per share.
- The company returned over $94 million to shareholders through share buybacks and the quarterly dividend.
- This reflects the company's financial strength and confidence in its business prospects.

Credit Performance and Reserves:
- Enact's credit performance remained strong, with a reserve release of $47 million in the first quarter due to favorable cure performance and loss mitigation efforts.
- The company maintained a low loss ratio of 12%, highlighting its prudent capital and reserve management.
- The strong capital position and underwriting standards supported the company's financial stability.

Market Dynamics and Pricing Strategy:
- Enact's base premium rate remained relatively flat at 40.1 basis points, aligning with guidance for 2025.
- The company leveraged its Rate360 capabilities to adjust pricing in response to market uncertainty, strengthening its pricing strategy.
- The strategy is aimed at maintaining competitive risk-adjusted pricing while ensuring prudent risk selection.