10-Q: Enact Holdings Q1 2026 Earnings: Revenue Steady, Investment Income Up

Enact Holdings reported steady Q1 2026 revenues with a notable increase in net investment income, while managing a slight rise in losses incurred.

Summary

• Enact Holdings reported total revenues of $312.1 million for the first quarter of 2026, a 2% increase from the prior year, driven by higher net investment income.
• Net income for the quarter was $167.8 million, a slight increase of 1% compared to $165.8 million in the first quarter of 2025.
• Losses incurred increased by 22% to $37.2 million, while acquisition and operating expenses decreased by 6% to $47.0 million.
• New insurance written (NIW) increased significantly by 30% to $12.8 billion, largely due to higher refinance volume.
• The company's risk-to-capital ratio remained strong at 10.0:1, well below the regulatory maximum of 25:1.
• Enact Holdings announced an increase in its quarterly dividend to $0.24 per common share, payable in June 2026, and has $467.9 million remaining under its share repurchase program.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this as a positive report, with strong growth in new business and investment income, alongside a commitment to shareholder returns through dividends and buybacks, despite a slight increase in losses.

Positives

• Net investment income increased by 12% to $70.9 million, driven by higher yields and increased invested assets.
• New insurance written (NIW) saw a substantial 30% increase to $12.8 billion, indicating strong market demand and effective sales strategies.
• Acquisition and operating expenses decreased by 6% to $47.0 million, contributing to improved operational efficiency.
• The company maintained a strong capital position with a risk-to-capital ratio of 10.0:1, well within regulatory limits.
• Enact Holdings announced a 14% increase in its quarterly dividend to $0.24 per share, signaling confidence in future performance and commitment to shareholder returns.
• The company has a substantial $467.9 million remaining under its share repurchase program, providing flexibility for capital return.

Negatives

• Losses incurred increased by 22% to $37.2 million, primarily due to higher current accident year losses and a smaller reserve release compared to the prior year.
• The persistency rate decreased to 80% from 84% in the prior year, largely due to mortgage rate volatility and increased refinance activity leading to policy lapses.
• Net earned premiums decreased modestly by 1% to $242.9 million, impacted by higher ceded premiums and lapse-driven rate declines.

Risks

• Deterioration in economic conditions, including a decline in home prices or a severe recession, could materially impact the U.S. housing markets and the company's business.
• Uncertainty around loan delinquency duration, forbearance programs, and foreclosure timing can affect loss reserve estimates.
• Changes to the charters or practices of the GSEs (Fannie Mae and Freddie Mac) could impact the use of private mortgage insurance.
• Lenders or investors seeking alternatives to private mortgage insurance could reduce market demand.
• Failure of risk management or loss mitigation strategies could lead to increased losses.
• Risks related to emerging and changing technologies, including artificial intelligence, could impact operations.
• Fluctuations in interest rates can affect investment portfolio values and mortgage market dynamics.
• Limited availability of capital or reinsurance could hinder growth or operational flexibility.
• Adverse actions by rating agencies could impact financial standing and borrowing costs.
• Competition with government-owned enterprises and GSEs presents ongoing market challenges.
• Disruption in mortgage servicing or poor servicer performance can lead to increased claims.
• Inadequacy of premiums charged to cover incurred losses remains a potential risk.
• Adverse changes in regulatory requirements or the inability to maintain sufficient regulatory capital could impact operations.
• Risks associated with the continuing relationship with Genworth Financial, Inc. could affect the company.
• Changes in tax laws could impact financial results.
• Litigation, regulatory investigations, or other legal actions pose potential financial and reputational risks.
• Inability to attract and retain key employees is a risk to operational continuity and strategic execution.
• Failure or compromise of computer systems, disaster recovery, or business continuity plans, and data breaches, pose significant operational and reputational risks.
• Occurrence of natural or man-made disasters or public health emergencies, including pandemics and climate change-related events, could disrupt business operations.

Future Outlook

The company expects its new insurance written, with its strong credit profile and attractive pricing, to positively contribute to future profitability and return on equity. Future dividend payments and share repurchases will be opportunistic and depend on various factors including market conditions, capital availability, and regulatory requirements. The company expects to hold capital sufficiency well in excess of updated PMIERs requirements.

Management Comments

• We see the market and underwriting conditions, including the pricing environment, as being within our risk-adjusted return appetite enabling us to write new business at attractive returns.
• Ultimately, we expect our new insurance written with its strong credit profile and attractive pricing to positively contribute to our future profitability and return on equity.
• Returning capital to shareholders, balanced with our growth and risk management priorities, remains a priority as we look to drive shareholder value through time.

Industry Context

StockSavvy.ai notes that Enact Holdings operates in the highly competitive U.S. private mortgage insurance industry. The company's performance is closely tied to macroeconomic conditions, regulatory developments from entities like the FHFA and GSEs, and the overall health of the U.S. housing market. The recent increase in refinance activity, driven by mortgage rate volatility, has positively impacted new insurance written, a key growth driver for the sector.

Comparison to Industry Standards

• Enact Holdings' loss ratio of 15% for Q1 2026 is higher than the 12% reported in Q1 2025, indicating a slight increase in claims relative to net earned premiums. This trend warrants monitoring against industry averages for mortgage insurers.
• The company's delinquency rate of 2.61% in Q1 2026 is slightly up from 2.34% in Q1 2025. This rate should be compared to industry benchmarks to assess relative performance in loan default management.
• The risk-to-capital ratio of 10.0:1 is a strong indicator of financial solvency, generally considered robust within the insurance industry, and significantly below the typical regulatory maximum of 25:1.
• The company's PMIERs sufficiency ratio of 162% exceeds the required 100%, demonstrating a strong buffer against potential future losses and meeting stringent regulatory requirements for GSE-eligible loans, a standard benchmark for mortgage insurers.

Legal Proceedings

• The company is not subject to any pending material legal proceedings.

Related Party Transactions

• Agreements with Genworth for reimbursement of administrative and operating expenses, including IT, finance, HR, and employee benefits.
• Genworth serves as the primary investment manager for the insurance subsidiaries' investment portfolios, with fees charged for these services.
• Employees participate in Genworth-sponsored benefit plans and share-based compensation plans.
• Enact Holdings paid dividends to Genworth totaling $24.1 million in Q1 2026 and $22.8 million in Q1 2025.
• Enact Holdings paid Genworth $75.4 million and $53.0 million related to shares repurchased in Q1 2026 and Q1 2025, respectively.
• A tax sharing agreement is in place with Genworth for consolidated U.S. income tax filing.

Stakeholder Impact

• Shareholders: Benefit from increased quarterly dividend and ongoing share repurchase program, signaling confidence in future profitability.
• Lenders and Investors: Benefit from the continued availability of private mortgage insurance, facilitating the sale of low down payment mortgage loans in the secondary market.
• Employees: Continue to participate in Genworth-sponsored benefit plans and share-based compensation.
• Regulators: The company maintains strong capital ratios (Risk-to-Capital and PMIERs sufficiency) well above regulatory requirements, ensuring compliance and stability.

Next Steps

• Continue to monitor macroeconomic conditions and their impact on the housing market and company performance.
• Evaluate the impact of updated PMIERs requirements on capital and operations.
• Manage risk and loss mitigation strategies effectively to control incurred losses.
• Execute share repurchase program opportunistically.
• Review and approve future dividend payments based on business performance and market conditions.

Key Dates

Recommendation

The company demonstrates stable revenue growth, increased investment income, and strong capital adequacy. The increase in new insurance written is a positive sign. However, the rise in losses incurred and a decrease in persistency rate warrant a cautious approach. The dividend increase and share repurchase program are positive, but the overall economic uncertainty and competitive landscape suggest a 'hold' rating until further clarity on loss trends and sustained growth.

Keywords

Enact Holdings, Form 10-Q, Quarterly Report, Mortgage Insurance, Financial Statements, Results of Operations, Investment Income, Loss Reserves, New Insurance Written, Risk-to-Capital Ratio, Dividend, Share Repurchase