ACT — Enact Holdings, Inc.

Summary of ACT Q1 2026 Earnings Call

1. Key Financial Results and Metrics

• Adjusted Operating Income: $172 million, or $1.21 per diluted share, up from $1.10 YoY but down from $1.23 QoQ.
• Adjusted Return on Equity: 13%.
• New Insurance Written (NIW): $13 billion, down 11% sequentially but up 30% YoY.
• Total Insurance in Force: $272 billion, down $1 billion QoQ but up $4 billion YoY.
• Persistency Rate: 80%, flat sequentially but down 4 points YoY.
• Loss Ratio: 15%, with total losses of $37 million, compared to 12% in Q1 2025.
• Net Reserve Release: $39 million due to favorable cure performance.
• Operating Expenses: $49 million, with an expense ratio of 20%, down from 24% in Q4 2025.
• Dividend Increase: 14% increase from $0.21 to $0.24 per share.

2. Strategic Updates and Business Highlights

• Enact is focusing on disciplined execution of its strategy amid a volatile rate environment, emphasizing long-term value creation.
• The company’s pricing engine, Rate360, is effectively managing risk and pricing across various geographical markets.
• Enact Re continues to perform well, contributing to growth and diversification.
• The company is operationally prepared for the rollout of VantageScore 4.0, supporting credit modernization initiatives.

3. Forward Guidance and Outlook

• Enact expects to achieve total capital returns of approximately $500 million in 2026.
• Operating expenses are projected to be between $215 million and $220 million for the full year, excluding reorganization costs.
• The company remains optimistic about the housing market fundamentals and its ability to navigate economic uncertainties.

4. Bad News, Challenges, or Points of Concern

• Market Volatility: The housing market remains dynamic with mortgage rate fluctuations impacting refinance activity.
• Delinquency Rate Outlook: Potential upward pressure on delinquency rates due to portfolio seasoning and macroeconomic factors.
• Credit Performance: While current credit performance is strong, there are concerns about future trends, particularly in certain geographical markets like Florida and Texas where home prices are moderating.
• Competitive Pressures: The company is facing competitive intensity, particularly in pricing strategies, which could affect margins.

5. Notable Q&A Insights

• Credit Monitoring: Enact is closely monitoring credit performance across different markets, with no significant deviations from pricing expectations noted.
• Refinance Activity: Insights from recent refinance windows indicate that borrowers with better credit profiles are more likely to refinance, which could impact the risk profile of the portfolio.
• GSE Behavior: No significant shifts in GSE behavior affecting MI eligibility or volumes were reported, although there was a noted uptick in MI penetration in Q1.
• Rate360's Role: The pricing engine continues to evolve, incorporating advanced analytics and machine learning to enhance risk assessment and pricing accuracy.

Overall, Enact's Q1 2026 performance reflects a strong start to the year, with solid financial metrics and strategic initiatives in place, though challenges remain in the form of market volatility and potential credit risks.