Essent Group Ltd. (NYSE:ESNT) Q2 2022 Earnings Conference Call August 5, 2022 10:00 AM ET

Company Participants

Philip Stefano - Vice President of Investor Relations

Mark Casale - Chief Executive Officer

David Weinstock - Interim Chief Financial Officer

Chris Curran - President of Essent Guaranty, Inc.

Conference Call Participants

Mark DeVries - Barclays

Rick Shane - JPMorgan

Doug Harter - Credit Suisse

Bose George - KBW

Mihir Bhatia - Bank of America

Ryan Gilbert - BTIG

Geoffrey Dunn - Dowling & Partners

Operator

Good day and welcome to the Essent Second Quarter 2022 Earnings Conference Call. Please note today's conference is being recorded. [Operator Instructions]

At this time, I would like to turn the conference over to Phil Stefano, Vice President of Investor Relations. Mr. Stefano, you may begin your conference.

Philip Stefano

Thank you, Erica. Good morning, everyone and welcome to our call. Joining me today are Mark Casale, Chairman and CEO; and David Weinstock, Interim Chief Financial Officer. Also, on hand, for the Q&A portion of the call is Chris Curran, President of Essent Guaranty.

Our press release which contains Essent's financial results for the second quarter of 2022 was issued earlier today and is available on our website at essentgroup.com. Prior to getting started, I would like to remind participants that today's discussions are being recorded and will include the use of forward-looking statements. These statements are based on current expectations, estimates, projections and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially. For a discussion of these risks and uncertainties, please review the cautionary language regarding forward-looking statements in today's press release. The risk factors included in our Form 10-K filed with the SEC on February 16, 2022 and any other reports and registration statements filed with the SEC which are also available on our website.

Now, let me turn the call over to Mark.

Mark Casale

Thanks, Phil and good morning, everyone. Today, we released our quarterly financial results which continue to reflect the favorable credit performance of our in-force portfolio. For the second quarter of 2022, we reported net income of $232 million as compared to $160 million a year ago. Similar to last quarter, our results benefited from the release of COVID reserves associated with defaults from the second and third quarters of 2020.

On a diluted per share basis, we earned $2.16 for the second quarter compared to $1.42 a year ago and our annualized return on average equity was 22%. From a macro standpoint, our long-term structural outlook for the housing market is positive despite near-term headwinds. Rising rates in response to inflation and home price appreciation have pressured affordability resulting in a slowdown in housing activity and mortgage production. However, the undersupply of housing and a strong labor market should continue to support home prices and credit performance in the short term. Longer term, we believe that demographic trends are favorable and should continue to bolster housing demand.