First Quarter 2024 Financial Results

May 1, 2024

Cautionary Note Regarding Forward-Looking Statements

This communication contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act. These forward-looking statements may address, among other things, our expected financial and operational results, the related assumptions underlying our expected results, and the quotations of management. These forward-looking statements are distinguished by use of words such as "will," "may," "would," "anticipate," "expect," "believe," "designed," "plan," "predict," "project," "target," "could," "should," or "intend," the negative of these terms, and similar references to future periods. These views involve risks and uncertainties that are difficult to predict and, accordingly, our actual results may differ materially from the results discussed in our forward-looking statements. Our forward-looking statements contained herein speak only as of the date of this press release. Factors or events that we cannot predict, including risks related to an economic downturn or recession in the United States and in other countries around the world; changes in political, business, regulatory, and economic conditions; changes in or to Fannie Mae and Freddie Mac (the "GSEs"), whether through Federal legislation, restructurings or a shift in business practices; failure to continue to meet the mortgage insurer eligibility requirements of the GSEs; competition for customers; lenders or investors seeking alternatives to private mortgage insurance; an increase in the number of loans insured through Federal government mortgage insurance programs, including those offered by the Federal Housing Administration; and other factors described in the risk factors contained in our Annual Report on Form 10-K and other filings with the Securities and Exchange Commission, may cause our actual results to differ from those expressed in forward-looking statements. Although Enact believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, Enact can give no assurance that its expectations will be achieved and it undertakes no obligation to update publicly any forward-looking statements as a result of new information, future events, or otherwise, except as required by applicable law.

Non-GAAP1 And Other Items

All financial results are as of March 31, 2024, unless otherwise noted. For additional information, please see Enact's first quarter 2024 earnings release and financial supplement posted at ir.enactmi.com.

For important information regarding the use of non-GAAP and selected operating performance measures, see the Appendix.

Unless otherwise noted, all references in this presentation to net income (loss), net income (loss) per share, adjusted operating income (loss) and adjusted operating income (loss) per share should be read as net income (loss) available to Enact's common stockholders, net income (loss) available to Enact's common stockholders per diluted share, adjusted operating income (loss) available to Enact's common stockholders and adjusted operating income (loss) available to Enact's common stockholders per diluted share, respectively.

2

  • U.S. Generally Accepted Accounting Principles

Key Takeaways

Insurance in-force reached a new record of $264B, driven by NIW of $11B and persistency of 85%

Strong cure performance as cures outpaced new delinquencies, delinquency rate at 2.0% consistent with pre- pandemic levels

Expenses decreased 10% Q/Q and 2% Y/Y as we continue to focus on cost discipline

New $250M share buyback program announced and increased quarterly dividend 16% to $0.185 per share; expect full year total capital return similar to 2023 levels

Capital and liquidity positions remained strong with low financial leverage; robust PMIERs sufficiency of $1.9B or 163%

Enact helped ~28,800 households achieve homeownership and ~4,000 households stay in their homes

3

About Us

Leading private mortgage insurance company helping millions of families achieve the dream of sustainable home ownership

Dynamic platform uniquely positioned with innovative approach, strong balance sheet, 40+ year track record and cycle-tested leadership team

Drive Profitable Growth

Maximize Value and Efficiency

Maintain Strong Capital

Drive an Exceptional

and Purposefully Invest to

Levels and Financial

Employee Experience

in Operations

Differentiate Enact

Flexibility

Deliver best-in-class underwriting and attractive risk- adjusted returns; leverage core competencies and expertise to extend to attractive adjacencies

4

Innovate to enhance decision- making and drive efficiency; focus on strict cost discipline

Maintain strong capital position, robust underwriting standards, and a diversified CRT program; maximize value creation through a disciplined capital allocation

Continuously enhance capabilities and skillsets to drive innovation and growth

Financial Highlights

Primary Insurance in-Force

Up $1B Q/Q

Net Income

Up 2% Q/Q

Diluted Net Income Per Share

Up 3% Q/Q

Return on Equity

Flat Q/Q

PMIERs Sufficiency ($)4

Flat Q/Q

Delinquency Rate

Down 0.1 points Q/Q

$264

billion

$161

million

$1.01

13.8%

$1.9

billion

2.0%

New Insurance Written

Up 1% Q/Q

Adjusted Operating Income1

Up 5% Q/Q

Diluted Adj Operating Income Per Share

Up 6% Q/Q

Adj Operating Return on Equity2

Up 0.3 points Q/Q

PMIERs Sufficiency (%)5

Up 2 points Q/Q

New Delinquency Rate6

Flat Q/Q

$10.5

billion

$166

million

$1.04

14.2%

163%

1.2%

Net Premiums Earned

Up $1M Q/Q

Net Investment Income

Up 2% Q/Q

Operating Expenses

Down 10% Q/Q

Expense Ratio3

down 3 points Q/Q

Losses Incurred

Down 20% Q/Q

Loss Ratio7

Down 2 points Q/Q

$241

million

$57

million

$53

million

22%

$20

million

8%

  • Adjusted operating income is a non-GAAP measure. Please see appendix for a reconciliation; 2 Calculated as annualized adjusted operating income for the period indicated divided by the average of current 5 period and prior periods' ending total stockholders' equity; 3 The ratio of acquisition and operating expenses, net of deferrals, and amortization of deferred acquisition costs and intangibles to net earned
    premiums; 4 Calculated as total available assets less net required assets, based on PMIERs then in effect; 5 Calculated as total available assets divided by net required assets, based on PMIERs then in effect; 6 The ratio of new delinquencies divided by total policies in-force that are not delinquent; 7 The ratio of losses incurred to net earned premiums.

Driving Continued Book Value Accretion

Book value per share excluding AOCI1 + cumulative dividends

6

  • Book value per share excluding Accumulated Other Comprehensive Income "AOCI" is a non-GAAP measure. Please see appendix for a reconciliation

Market and Industry Dynamics

Complex market with favorable

underpinnings

  • The housing market remains slow in the near-term given elevated interest rates and cumulative home price appreciation
  • Tight housing supply remains supportive of home prices
  • Strong labor market and generally healthy household balance sheets continue to support credit performance
  • Long-termdemand dynamics remain favorable driven by strong FTHB1 demographics

7

Industry well positioned to navigate

market conditions

  • High quality credit portfolio and strong manufacturing quality
  • Increased risk-based capital standards and robust sufficiency levels
  • Ability to adapt to market changes with granular risk-based pricing models
  • Enhanced credit protections from robust and diversified CRT2 programs
  • Elevated persistency caused by higher rates offsets pressure on originations

1 First Time Homebuyers; 2 Credit Risk Transfer

Strong & Comprehensive Risk Management

FICO (Risk in-force "RIF")1

LTV (RIF)1

8

Significant decrease in layered risk

# of High-Risk

4Q07

1Q23

2Q23

3Q23

4Q23

1Q24

Layers2

LTV >

+0

4.6%

0.6%

0.6%

0.6%

0.6%

0.6%

95%

+1

7.9%

0.6%

0.6%

0.6%

0.6%

0.6%

&

+2

2.5%

0.2%

0.1%

0.1%

0.1%

0.1%

FICO <

680

+3 or >

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

Total

15.0%

1.4%

1.3%

1.3%

1.3%

1.3%

  • Minimal number of high-risk layers within portfolio
  • High credit quality portfolio is driven by granular risk- based pricing and disciplined approach
  • Layered Risk decreased ~8bps from 1Q23
  • Metrics derived from underlying characteristics at the time the loan was originated. Borrowers without a FICO score included in the 660-679 category; 2 High-risk layers defined as loans that have a single borrower, debt-to-income > 45%, cash-out refinances or investor-owned properties; may not foot due to rounding

Primary Insurance in-Force (IIF) Growth

NIW ($B), IIF ($B) and Persistency Rate1

Mortgage Rate IIF Concentration2

4%

18%

12%

14%

78%

52%

  • NIW increased 1% sequentially and decreased 20% versus the prior year on lower MI market and estimated lower share
  • Benefit of higher persistency helps offset impact of higher mortgage rates on production

9

  • 4% of portfolio had mortgage rates at least 50 basis points above prevailing market rate, as of March 31, 2024
  • 78% of policies in-force have an interest rate less than 6% providing support for continued elevated persistency

1 May not foot due to rounding; 2 Represents percentage of policies with mortgage rates at origination

Portfolio Premium Yield & Premiums

In-force primary portfolio premium yield

Primary direct & ceded premiums1 ($M)

1Q23

2Q23

3Q23

4Q23

1Q24

Base Premium Rate (bps)

40.4

40.3

40.2

40.1

40.1

Single Cancellations

0.3

0.3

0.3

0.2

0.2

Ceded Premium

(3.2)

(3.3)

(3.2)

(3.9)

(4.0)

Net Premium Rate (bps)

37.5

37.3

37.3

36.4

36.3

Average IIF ($B)

250

255

260

262

263

Persistency

85%

84%

84%

86%

85%

  • Base premium rate continued to stabilize in line with expectations
  • Lower base premium rate year-over-year driven by the continued lapse of older, higher-priced policies as compared to lower-priced new insurance written in addition to quarter-to-quarter variations in persistency, mix, and premium refund estimates

10

  • Primary premiums flat sequentially as the primary insurance in-force growth offset by increase in ceded premiums
  • Premiums up 2% year-over-year driven by insurance in- force growth partially offset by higher ceded premiums and the lapse of older, higher priced policies

1 Total Net Earned Premiums are $235, $239, $243, $240, and $241 million as of 1Q23, 2Q23, 3Q23, 4Q23 and 1Q24, respectively

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Disclaimer

Enact Holdings Inc. published this content on 01 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 02 May 2024 10:43:07 UTC.