Essent Group (NYSE:ESNT) reported fourth-quarter and full-year 2025 results that management said were driven by positive credit trends and the benefit of higher interest rates through persistency and investment income. On the company’s earnings call, Chairman and CEO Mark Casale highlighted earnings strength, continued capital returns, and a measured expansion of Essent Re’s third-party reinsurance activities, including entry into the Lloyd’s market.
Fourth-quarter and full-year performance
Essent reported fourth-quarter 2025 net income of $155 million, or $1.60 per diluted share. For full-year 2025, the company earned $690 million, or $6.90 per diluted share, and generated a 12% return on average equity, Casale said.
Mortgage insurance trends: premium, defaults, and expenses
CFO David Weinstock said mortgage insurance in force ended the fourth quarter at $248.4 billion, down $452 million from Sept. 30 but up $4.7 billion (or 1.9%) from Dec. 31, 2024. Persistency at Dec. 31, 2025 was 85.7%, compared with 86% at Sept. 30.
Mortgage insurance net premium earned was $213 million in the fourth quarter. The average base premium rate for the portfolio was 41 basis points, consistent with the prior quarter, while the average net premium rate was 34 basis points, down 1 basis point from the prior quarter. Weinstock said Essent expects the average base premium rate for full-year 2026 to be approximately 40 basis points.
On credit, Casale emphasized the strength of the in-force book, citing a weighted average FICO of 747 and weighted average original LTV of 93%. Weinstock reported the mortgage insurance default rate was 2.5% at Dec. 31, up 21 basis points from 2.29% at Sept. 30, with a modest quarter-over-quarter increase that Casale attributed to normal seasonality and an aging book. The company’s mortgage insurance provision for losses and loss adjustment expenses was $55.2 million in the fourth quarter, up from $44.2 million in the third quarter and $37.2 million a year earlier. For the full year, Essent recorded a net provision of approximately $145 million, which Weinstock said reflected higher defaults as the portfolio seasons.
Mortgage insurance operating expenses were $34.3 million in the quarter, with an expense ratio of 16.1%, compared with $31.2 million and 14.4% in the prior quarter. Full-year 2025 operating expenses for the segment were $140 million, and Weinstock said the company expects approximately $145 million of mortgage insurance segment operating expenses for full-year 2026.
Reinsurance and Essent Re’s Lloyd’s expansion
Management said outward reinsurance remains central to operations. Casale stated that at the end of 2025, 98% of Essent’s mortgage insurance portfolio was subject to some form of reinsurance. During the fourth quarter, the company entered into a quota share transaction with “a panel of highly rated reinsurers” to provide forward protection for its 2027 business.
Casale also discussed Essent Re’s role as a capital deployment and earnings platform. He said Essent Re earned nearly $80 million in third-party net income in 2025 and ended the year with $2.3 billion in risk. During the fourth quarter, Essent Re entered into quota share reinsurance agreements backed by funds at Lloyd’s to reinsure certain property and casualty risks, effective in the first quarter of 2026. Casale said Essent expects $100 million to $150 million of written premium from these agreements, with approximately two-thirds earned in 2026, and a combined ratio “consistent with a diversified P&C reinsurance company.”
In the Q&A, Casale described the move into Lloyd’s as the result of a longer process and framed it as an “S&P expansion” rather than a “new line of business.” He cited higher investment yields, potential asset leverage in P&C relative to mortgage insurance, S&P capital rule changes that can provide diversification benefits, and reduced correlation to consumer credit as factors behind the strategy. He characterized the approach as “very measured” and “not transformational.”
Capital, liquidity, and shareholder returns
Essent ended 2025 with $6.6 billion of consolidated cash and investments, with an aggregate yield of 3.9% for the year. Casale said new money yields on the core portfolio in the fourth quarter were “nearly 5%” and have held largely stable over recent quarters.
Casale also outlined balance sheet and capital resources, including $5.8 billion of GAAP equity, $1.3 billion in excess-of-loss reinsurance, and $1.3 billion of cash and investments at the holding companies. Full-year 2025 operating cash flow was $856 million, he said.
On capital return, Casale said the company returned nearly $700 million to shareholders in 2025 through dividends and repurchases and repurchased nearly 10% of shares outstanding at the end of 2024. The board approved a 13% increase in the quarterly dividend to $0.35 per share, beginning in the first quarter of 2026.
Weinstock added that Essent repurchased 2 million shares for $125 million during the fourth quarter and, in January 2026, repurchased 713,000 shares for $44 million. He also noted holding company liquidity includes $500 million of undrawn revolver capacity, and that the company had $500 million of senior unsecured notes outstanding at year-end with a debt-to-capital ratio of 8%.
Within the operating entities, Weinstock said Essent Guaranty’s PMIERs sufficiency ratio was 169%, with $1.4 billion in excess available assets. Essent Guaranty paid a $280 million dividend to the U.S. holding company during the fourth quarter, and Essent Re paid a $100 million dividend to Essent Group.
Management’s outlook and key themes from Q&A
Casale reiterated that Essent expects near-term growth in earned premium and insurance in force to be modest given persistency and the rate environment, and he emphasized a focus on unit economics over market share. In response to questions about quarter-over-quarter changes in insurance in force and market share, he said investors should not read too much into short-term movements and characterized competition as “a price game,” arguing that the company would rather return capital than write business at “super low” premium levels.
When asked about credit performance across vintages, Casale said the company has not seen specific concentrations stand out across vintage, state, lender, or servicer, though he noted Florida was “a little higher” due to hurricanes. He emphasized that home equity embedded in the in-force portfolio should help mitigate ultimate claims and said unemployment is the key macro factor he watches.
In closing remarks, Casale described 2025 as demonstrating resilient performance in a challenging housing market, citing book value per share growth, return on equity, and substantial share repurchases, while noting that credit is “normalizing” but the portfolio remains positioned for a range of economic scenarios.
About Essent Group (NYSE:ESNT)
Essent Group Ltd. (NYSE: ESNT) is a publicly traded insurance holding company specializing in private mortgage insurance and mortgage reinsurance solutions. Through its primary subsidiary, Essent Guaranty, the company provides credit protection to mortgage lenders, helping mitigate the risk of borrower default on residential mortgage loans. Essent’s insurance policies enable lenders to offer low-down-payment programs, supporting homebuyers in achieving homeownership with reduced upfront equity requirements.
Beyond traditional mortgage insurance, Essent offers a suite of risk management and analytics services designed to help financial institutions monitor and manage mortgage portfolios.
