10-K: Enact Holdings Reports Steady 2025 Amid Market Volatility

Enact Holdings, a leading private mortgage insurer, reported a slight dip in 2025 net income and adjusted operating income, alongside increased capital returns and rating upgrades.

Summary

• Net income for 2025 was $674 million, a decrease from $688 million in 2024 and an increase from $666 million in 2023.
• Adjusted operating income for 2025 was $688 million, down from $718 million in 2024 and up from $676 million in 2023.
• New insurance written (NIW) increased slightly to $51.5 billion in 2025, up 1% from $51.0 billion in 2024, but down from $53.1 billion in 2023.
• Primary insurance in-force (IIF) grew by 2% to $273.1 billion as of December 31, 2025, from $268.8 billion in 2024.
• The company's PMIERs sufficiency ratio was 162% ($1,919 million above requirements) as of December 31, 2025, compared to 167% ($2,052 million above requirements) in 2024.
• The loss ratio increased to 11% in 2025 from 4% in 2024, primarily due to lower favorable reserve adjustments compared to the prior year and normal loss development patterns.
• The company paid quarterly dividends of $0.185 per share in Q1 2025, increasing to $0.21 per share for Q2, Q3, and Q4 2025.
• Share repurchases totaled $382 million in 2025, following $244 million in 2024.
• Fitch upgraded EMICO's financial strength rating to 'A' on January 17, 2025, and Moody's upgraded it to 'A2' on August 6, 2025.

Sentiment

Score: 6

Explanation: StockSavvy.ai views this as moderately positive. While net income and adjusted operating income saw a slight decline and the loss ratio increased, the company demonstrated strong capital management through increased dividends and new share repurchase authorizations, coupled with positive rating upgrades, indicating underlying financial health and a commitment to shareholder value despite market challenges.

Positives

• Net investment income increased by 11% to $266.1 million in 2025, driven by higher investment yields and increased average invested assets.
• The company maintained a strong capital position, with PMIERs available assets of $5,015 million against $3,096 million net required assets, resulting in a 162% sufficiency ratio.
• Favorable reserve adjustments of $200 million were recorded in 2025 due to strong cure performance and loss mitigation efforts, though lower than the $252 million in 2024.
• Quarterly dividends increased from $0.185 per share to $0.21 per share in April 2025, demonstrating a commitment to shareholder returns.
• A new share repurchase program of up to $350 million was authorized on April 30, 2025, and a further $500 million program was authorized on February 3, 2026, indicating robust capital management.
• Fitch Ratings upgraded EMICO's financial strength rating from Ato A on January 17, 2025, and Moody's upgraded it from A3 to A2 on August 6, 2025, enhancing market confidence.
• The company entered into a new five-year, $435 million unsecured revolving credit facility on September 30, 2025, replacing a smaller facility and remaining undrawn, providing enhanced liquidity and financial flexibility.

Negatives

• Net income decreased by 2% to $674 million in 2025 from $688 million in 2024.
• Adjusted operating income decreased by 4% to $688 million in 2025 from $718 million in 2024.
• Losses incurred significantly increased by 183% to $109.5 million in 2025 from $38.7 million in 2024, primarily due to lower favorable reserve adjustments compared to the prior year and normal loss development patterns on newer books.
• The loss ratio rose to 11% in 2025 from 4% in 2024.
• The primary persistency rate slightly decreased to 82% in 2025 from 83% in 2024, indicating a faster rate of policy cancellations.
• The weighted average mortgage interest rate on outstanding primary IIF increased to 5.21% as of December 31, 2025, from 3.12% in 2021, which could impact future refinancing activity and persistency.
• The company's largest customer accounted for 22% of total NIW and 12% of total revenues in 2025, indicating a notable customer concentration risk.

Risks

• Inability to meet PMIERs requirements or additional restrictions imposed by GSEs could materially adversely affect business, results of operations, and financial condition.
• A deterioration in economic conditions, a severe recession, or a decline in home prices may adversely affect loss experience, increasing default likelihood and claim severity.
• Inaccurate models or differences in loss development compared to model estimates and actuarial assumptions could materially adversely affect business, results of operations, and financial condition.
• Intense competition within the mortgage insurance industry could lead to loss of market share, customers, lower premiums, or wider credit guidelines.
• Changes to GSE charters or practices, including actions to decrease or discontinue the use of mortgage insurance, could adversely affect business.
• The amount of mortgage insurance written could decline significantly if alternatives to private mortgage insurance are used or lower coverage levels are selected.
• Changes in business composition or undue concentration by customer or geographic region may increase exposure to loss or adverse performance.
• Risk management programs may not be effective in identifying or adequate in controlling or mitigating all risks faced by the company.
• Changes in interest rates could materially adversely affect business, results of operations, and financial condition, impacting new originations, refinances, and investment portfolio values.
• Inability to maintain or increase capital needed in a timely manner, including through CRT transactions or securities offerings, could have a material adverse impact.
• Credit Risk Transfer (CRT) transactions may not be available, affordable, or adequate to protect against losses, and expose the company to counterparty credit risk.
• Adverse rating agency actions may result in a loss of business and adversely affect financial condition.
• Ineffective management of risks in the investment portfolio could adversely affect business, results of operations, and financial condition.
• Servicers failing to adhere to appropriate servicing standards or experiencing business disruptions could increase losses.
• The delegated underwriting program may subject the mortgage insurance business to unanticipated claims if customers do not follow guidelines.
• Premium rates charged may not adequately compensate for the risks and costs associated with coverage, as rates cannot be adjusted after issuance.
• A decrease in Low Down Payment Loan originations or an increase in mortgage insurance cancellations could result in a decline in revenue.
• Actual or perceived failure to protect consumer information and data or respect user privacy could damage reputation and adversely affect business.
• Extensive regulation and changes in regulation may reduce profitability and limit growth, including new NAIC model laws and federal regulations.
• Inability to maintain sufficient regulatory capital (e.g., RTC ratios, PMIERs) could result in restrictions on doing business or impact financial strength ratings.
• Changes in regulations that adversely affect insurance markets, such as FHA/VA policies or GSE capital frameworks (e.g., Basel III Endgame), could reduce demand for products.
• Genworth Financial, Inc.'s continued majority ownership (at least 80%) allows it to exert significant influence over corporate decisions and limits the company's ability to raise capital by issuing common stock to third parties.
• The company is jointly and severally liable for any U.S. federal income taxes owed by the Genworth Consolidated Group for periods in which it is a member.
• Leaving the Genworth Consolidated Group could require the company to pay more income tax in the future due to unified loss rules.
• As a holding company, the company depends on its subsidiaries' ability to pay dividends and make other payments to meet its obligations, which are subject to regulatory and contractual restrictions.
• Deficiencies in disclosure controls and procedures or internal control over financial reporting could adversely impact the business.
• Losses in connection with litigation, regulatory proceedings, or other actions could result in financial losses and reputational harm.
• Inability to attract, onboard, retain, and motivate qualified employees or senior management may adversely impact business.
• Reliance on third-party vendors who may be unable or unwilling to meet obligations poses a risk.
• Computer system failures or compromises, and unanticipated problems with disaster recovery/business continuity plans, could damage reputation and impair business.
• Risks related to emerging and changing technology, including artificial intelligence, could impact results of operations or financial condition.
• Natural or man-made disasters or public health emergencies (including those exacerbated by climate change) could materially adversely affect business, results of operations, and financial condition.
• Exclusive forum provisions in the certificate of incorporation could limit stockholders' ability to choose judicial forums for disputes.
• No assurance can be given that the company will be able to return capital to shareholders via dividends or share repurchases in the future at current levels or at all, as it is subject to board approval, Genworth consent, and regulatory/debt restrictions.

Future Outlook

The company expects to hold capital sufficiency well in excess of the updated PMIERs requirements, with no material impact anticipated from these updates. It intends to continue paying regular quarterly cash dividends and pursuing opportunistic share repurchases, balancing capital returns with growth and risk management priorities. The ultimate impact of the Basel III Endgame rule on financial institutions and the mortgage insurance market remains uncertain, as the proposal has been withdrawn and will be re-proposed with significant revisions. The implementation of VantageScore 4.0 by GSEs also presents an uncertain future impact on business, processes, and financial results.

Management Comments

• Our objective is to support our mission to help people buy a house and keep it their home, while leveraging our competitive strengths to maximize value for our stockholders.
• We have a rigorous approach to writing new insurance risk based on decades of loan-level data and experience in the mortgage insurance industry.
• Our balance sheet is well capitalized to manage through macroeconomic uncertainty and maintain compliance with private mortgage insurer eligibility requirements (PMIERs) and state regulatory standards of compliance.
• We believe our CRT program is a material component of our strategy and helps to protect future business performance and stockholder capital under stress scenarios.
• We believe our risk management framework is appropriately designed to manage volatility in our business performance and protect our balance sheet.
• Our goal is to keep borrowers in their homes.
• 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 key commitment as we look to drive shareholder value through time.

Industry Context

StockSavvy.ai notes that Enact Holdings operates in a highly competitive U.S. private mortgage insurance market, competing with five other active private mortgage insurers (Arch Capital Group Ltd., Essent Group Ltd., MGIC Investment Corporation, NMI Holdings, Inc., and Radian Group Inc.) as well as government agencies like the FHA (35% market share in Q1-Q3 2025) and VA (26% market share). The industry is significantly influenced by GSE requirements (PMIERs) and broader macroeconomic factors, including interest rates and housing affordability. The company's slight increase in NIW in 2025, despite a generally slow purchase mortgage origination market, suggests effective competitive positioning. The increase in the loss ratio and delinquencies reflects broader industry trends influenced by economic conditions, though Enact's strong capital position and favorable reserve adjustments indicate resilience. The ongoing regulatory uncertainty surrounding the Basel III Endgame rule and the adoption of new credit scoring models (VantageScore 4.0) highlights the dynamic environment for mortgage insurers.

Comparison to Industry Standards

• Enact's market share has historically ranged between 12.0% and 20.4% per quarter of the private mortgage insurance market by NIW, based on Inside Mortgage Finance data, positioning it as a significant player among the six active private mortgage insurers.
• The company's financial strength ratings (A2 from Moody's, A from Fitch, Afrom S&P, Afrom A.M. Best) are noted as 'relatively consistent with our competitors,' indicating a strong standing within the industry.
• Enact's PMIERs sufficiency ratio of 162% as of December 31, 2025, demonstrates a robust capital buffer, exceeding the requirements set by government-sponsored enterprises like Fannie Mae and Freddie Mac, which is a key industry benchmark for eligibility.
• The weighted average FICO score of 753 for new insurance written in 2025 and 746 for insurance in-force as of December 31, 2025, indicates a focus on insuring loans from borrowers with strong credit profiles, aligning with or exceeding typical prime mortgage insurance standards.
• The weighted average LTV of 92% for new insurance written in 2025 and 93% for insurance in-force as of December 31, 2025, reflects the company's core business of insuring Low Down Payment Loans, a segment critical to the U.S. housing finance system.

Corporate Governance

Legal Proceedings

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

Related Party Transactions

• The company has various agreements with Genworth Financial, Inc. for reimbursement of administrative and operating expenses, including investment management, information technology, and human resources services. Costs incurred for these services were $9.4 million in 2025, $11.2 million in 2024, and $17.7 million in 2023.
• Investment management fees paid to Genworth were $7.8 million in 2025, $7.1 million in 2024, and $5.7 million in 2023.
• Employees participate in certain Genworth-sponsored benefit plans and share-based compensation plans.
• The company paid cash dividends of $98.0 million to Genworth in 2025, $90.8 million in 2024, and $173.7 million in 2023.
• The company paid Genworth $309.5 million in 2025, $197.8 million in 2024, and $71.5 million in 2023 related to share repurchases.
• A tax sharing agreement is in place with Genworth, where the company participates in a single U.S. consolidated income tax return filing, with intercompany tax balances settled at least annually.

Stakeholder Impact

• **Shareholders:** Positive impact from increased quarterly dividends and new share repurchase authorizations, indicating a commitment to returning capital. However, a slight decrease in net income and adjusted operating income, and an increased loss ratio, could be a concern.
• **Employees:** Benefit from share-based compensation plans (RSUs, PSUs, DSUs) and comprehensive benefits packages. Amendments to severance plans provide enhanced protections in certain termination scenarios.
• **Customers (Mortgage Lenders):** Benefit from the company's strong financial strength ratings and capital position, ensuring reliability as a mortgage insurer. The focus on technology and customized solutions aims to enhance customer experience.
• **Policyholders:** Protected by the company's strong capital levels and rigorous risk management, ensuring claims-paying ability. The mission to help people buy and keep homes aligns with policyholder interests.
• **Regulators:** The company maintains compliance with PMIERs and state regulatory standards, including a healthy risk-to-capital ratio, demonstrating adherence to oversight requirements. Rating upgrades also reflect regulatory confidence.

Next Steps

• Continue to pay regular quarterly cash dividends, with a declared dividend of $0.21 per share for Q1 2026.
• Execute opportunistic share repurchases under the newly authorized $500 million program.
• Monitor and adapt to the ultimate impact of the re-proposed Basel III Endgame rule on financial institutions and the mortgage insurance market.
• Evaluate and prepare for the implementation details and timelines for the acceptance of VantageScore 4.0 for mortgages delivered to Fannie Mae and Freddie Mac.
• Continue to utilize Credit Risk Transfer (CRT) programs, including future excess-of-loss reinsurance transactions, to manage risk and optimize capital.

Key Dates

Recommendation

Enact Holdings demonstrates a solid financial foundation with strong capital levels, evidenced by its PMIERs sufficiency and favorable risk-to-capital ratio, and recent rating upgrades. The company's commitment to shareholder returns through increased dividends and substantial share repurchase programs is a positive signal. However, the slight decline in net income and adjusted operating income, coupled with a notable increase in the loss ratio in 2025, suggests some operational headwinds or normalization of loss experience. While the long-term strategy appears sound, the current environment presents a mixed picture. A 'hold' recommendation is appropriate as investors should monitor how the company manages its loss experience and adapts to evolving macroeconomic conditions and regulatory changes, such as the uncertain impact of the Basel III Endgame and VantageScore 4.0 implementation, before making further investment decisions.

Keywords

Mortgage Insurance, Private Mortgage Insurance, SEC Filing, Financial Results, Capital Management, Risk Management, Share Repurchase, Dividends, PMIERs, GSEs, Credit Risk Transfer, Reinsurance, Underwriting, Housing Market, Financial Strength Ratings, Corporate Governance, Delinquency Rates, Investment Portfolio, Regulatory Compliance, Genworth Financial