How will the VantageScore rollout affect PMIERs capital standards, and how will Enact adjust its mortgage insurance pricing?

Enact supports initiatives to qualify more home-ready consumers and is operationally ready for VantageScore 4.0 implementation. However, further guidance from GSEs is needed regarding PMIERs, as classic FICO is currently the foundation. Once PMIERs guidance for VantageScore is available, Enact will incorporate it into its Rate360 engine to generate appropriate pricing for VantageScore loans, similar to how it would handle FICO 10 in the future. “As we think about the next step, I think it's items like PMIERs where we just need further guidance and we are waiting for GSEs to provide that guidance and look forward to actually serving the market as that becomes available.”

What are the expectations for delinquency rate trends, considering portfolio seasoning and other factors?

Projecting delinquency rates is difficult due to macroeconomic environment, new insurance written (NIW) levels, and claim timing. However, given the aging of newer purchase-heavy books which have slightly higher risk attributes (LTV, DTI, lower FICO), it is reasonable to expect the delinquency rate could tick up from the Q1 level of 2.6%, assuming all other factors remain equal. “I think it's reasonable to expect the delinquency rate could tick up from the Q1 levels, again, got to be caveated with all things being equal, macroeconomic, NIW claims, et cetera. But I think it could tick up from the $2.6 million that you see in the first quarter.”

What are the expectations for premium yield for the rest of the year, and what is the competitive environment like?

The base premium rate is expected to be flattish for the full year 2026, though quarter-to-quarter volatility is anticipated due to factors like NIW levels, price, and the mix of purchase/refi. The market remains constructive, and pricing was attractive in Q1, with Enact writing $13 billion of NIW at good returns. Enact continues to price for economic uncertainty and ensures adequate compensation for conditional views across geographies and risk attributes. “I would say that we continue to price for some uncertainty, economic uncertainty in the market in our pricing, as Dean said in his previous response, when it comes to geographical markets or some risk attributes, we continue to make sure that we are getting adequately paid for the conditional view that we have down to each geographical area.”

ACT

Enact (ACT) Q1 FY26 earnings call: guidance and Q&A

Earnings call· Mar 2026 (Q1 FY26)· Financials· May 6, 2026

Source: earnings call transcript

Executive summary

Enact Q1 FY26 — Strong Start with Resilient Credit and Increased Capital Returns

Enact delivered a strong start to the fiscal year, navigating a volatile rate environment with resilient credit performance and disciplined strategy execution. The company reported robust profitability and capital returns, including a dividend increase, while maintaining a strong balance sheet. Management continues to focus on dynamic risk-adjusted pricing and operational efficiencies, positioning the company for long-term success despite macroeconomic uncertainties.

Highlights

Adjusted operating income of $172 million or $1.21 per diluted share, up from $1.10 per diluted share in Q1 FY25.
Generated strong new insurance written of $13 billion, up 30% year-over-year.
Adjusted return on equity was 13%.
Net reserve release of $39 million driven by favorable cure performance and loss mitigation.
Board approved a 14% increase to the quarterly dividend, from $0.21 to $0.24 per share.

Concerns

Mortgage rate volatility impacted mortgage activity, with refinance trends slowing as rates increased in March and April.
New delinquency rate increased 20 basis points year-over-year to 1.5%.
Base premium rate decreased 0.2 basis points sequentially to 39.4 basis points, and net earned premium rate decreased 0.5 basis points sequentially to 34.3 basis points.

Guidance & targets

Category	Target	Timeline	Confidence
Operating expenses (excluding reorganization costs)	$215 million to $220 million medium materiality	Full-year 2026 · FY26	High
Total capital return	approximately $500 million high materiality	Full-year 2026 · FY26	High
Base premium rate	flattish medium materiality	Full-year 2026 · FY26	Medium

ACT operating KPIs by quarter

ACT operating KPIs stated on its earnings calls, by fiscal quarter
KPI	This call Mar 2026 Q1 FY26	Jun 2026 Q2 FY26	Change vs prior quarter
New insurance written	$13B Adjusted return on equity was 13%, and we generated strong new insurance written of $13 billion, resulting in total insurance in force of $272 billion. Source: earnings call transcript	$15B Adjusted return on equity was 13%, and we generated strong new insurance written of $15 billion, resulting in insurance in force of $274 million. Source: earnings call transcript	+15.4%
Risk-weighted average FICO score	746 In fact, our Insurance-in-Force portfolio remains resilient with a risk-weighted average FICO score of 746, risk-weighted average loan-to-value ratio of 93% and and layered risk was 1.2% of risk in-force. Source: earnings call transcript	746 Our insurance in force portfolio remains resilient with a risk-weighted average credit score of 746 and a risk-weighted average loan-to-value ratio of 93%. Source: earnings call transcript	0%
Risk-weighted average loan-to-value ratio	93% In fact, our Insurance-in-Force portfolio remains resilient with a risk-weighted average FICO score of 746, risk-weighted average loan-to-value ratio of 93% and and layered risk was 1.2% of risk in-force. Source: earnings call transcript	93% Our insurance in force portfolio remains resilient with a risk-weighted average credit score of 746 and a risk-weighted average loan-to-value ratio of 93%. Source: earnings call transcript	0 pt
PMIER sufficiency ratio	162% At the end of the quarter, our PMIER sufficiency ratio was 162%, providing significant financial flexibility and our credit and investment portfolios are in excellent shape. Source: earnings call transcript	151% At the end of the quarter, our PMIERs sufficiency ratio was 151%, providing significant financial flexibility and our credit and investment portfolios were in excellent shape. Source: earnings call transcript	-11 pt
Base premium rate	39.4 basis points Our base premium rate of 39.4 basis points was down 0.2 basis points sequentially, in line with our expectations. Source: earnings call transcript	39.1 basis points Our base premium rate of 39.1 basis points was down 0.3 basis points sequentially. Source: earnings call transcript	-0.8%
Net earned premium rate	34.3 basis points Our net earned premium rate was 34.3 basis points, down 0.5 basis points sequentially, driven by higher ceded premiums. Source: earnings call transcript	34.1 basis points Our net earned premium rate was 34.1 basis points, down 0.2 basis points sequentially and aligned with the decrease in base premium rate. Source: earnings call transcript	-0.6%
Average portfolio book yield	4.5% Our new money investment yield of 5% contributed to an increase in the average portfolio book yield of 4.5% for the quarter. Source: earnings call transcript	4.6% Our new money investment yield was over 5% and contributed to an increase in the average portfolio book yield to 4.6% for the quarter. Source: earnings call transcript	+0.1 pt
New delinquencies	13.6K New delinquencies decreased sequentially to 13,600 in the quarter from 13,700 in the fourth quarter of 2025, in line with expected seasonal trends. Source: earnings call transcript	12.3K New delinquencies decreased sequentially to 12,300 in the quarter from 13,500 in the first quarter of 2026, in line with expected seasonal trends. Source: earnings call transcript	-9.6%
New delinquency rate	1.5% Our new delinquency rate for the quarter remained consistent with pre-pandemic levels at 1.5%, flat from the fourth quarter of 2025 and an increase of 20 basis points from the first quarter of 2025. Source: earnings call transcript	1.3% Our new delinquency rate for the quarter remained consistent with prepandemic levels at 1.3%, down 20 basis points from the first quarter of 2026 and an increase of 10 basis points from the second quarter of 2025. Source: earnings call transcript	-0.2 pt
Total delinquencies	24.7K Total delinquencies in the first quarter decreased sequentially to 24,700 from 24,900 and the delinquency rate was flat sequentially at 2.6%. Source: earnings call transcript	24.3K Total delinquencies in the second quarter decreased sequentially to 24,300 from 24,700 and the delinquency rate was flat sequentially at 2.6%. Source: earnings call transcript	-1.6%
Delinquency rate	2.6% Total delinquencies in the first quarter decreased sequentially to 24,700 from 24,900 and the delinquency rate was flat sequentially at 2.6%. Source: earnings call transcript	2.6% Total delinquencies in the second quarter decreased sequentially to 24,300 from 24,700 and the delinquency rate was flat sequentially at 2.6%. Source: earnings call transcript	0 pt
PMIERs capital credit Third-party CRT program	$1.9B Our PMIER sufficiency was 162% or $1.9 billion above PMIERs requirements, and our third-party CRT program provides $1.9 billion of PMIERs capital credit at the end of the first quarter. Source: earnings call transcript	$1.5B Our PMIER sufficiency was 151% or $1.9 billion above PMIERs requirements, and our third-party CRT program, provides $1.5 billion of PMIERs capital credit at the end of the quarter. Source: earnings call transcript	-21.1%

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Risks & headwinds

Mortgage rate volatility and its impact on activity Q1 FY26

Refinance trend slowed as rates increased during March and April.

Mitigation:Dynamic risk-adjusted pricing engine (Rate360) to prudently target risk and price.

Macroeconomic uncertainty and inflationary pressures Q1 FY26

Inflationary pressures accelerated as gas prices have risen.

Mitigation:Continued monitoring of dynamics; underlying credit fundamentals remain strong.

Potential for delinquency rate to tick up Future quarters

Delinquency rate could tick up from Q1 levels (2.6%).

Mitigation:Acknowledged as a possibility due to seasoning of newer purchase-heavy books with slightly higher risk attributes (LTV, DTI, lower FICO).

VantageScore 4.0 rollout requires further PMIERs guidance Ongoing

Need further guidance on PMIERs impact for VantageScore 4.0.

Mitigation:Working constructively with FHFA and GSEs to be operationally ready; will incorporate guidance into pricing engine once available.

What to watch in Q2 FY26

Delinquency rate trend

next quarter

Current 2.6%

Target Monitor for potential increase

Why it matters

Management indicated a potential for the delinquency rate to tick up due to portfolio seasoning, which could impact credit performance.

I think it's reasonable to expect the delinquency rate could tick up from the Q1 levels, again, got to be caveated with all things being equal, macroeconomic, NIW claims, et cetera. But I think it could tick up from the $2.6 million that you see in the first quarter.

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Q&A highlights

Are there specific markets being monitored for home price trends, and have pricing or exposure adjustments been made based on home price expectations?

Credit performance remains strong overall. While some markets (e.g., Sunbelt, Florida, Texas) have seen moderated or declined home prices, and others (e.g., Northeast) continue to appreciate, Enact's Rate360 engine prices across over 300 metropolitan statistical areas based on future home price views. Incremental premium is charged for markets more likely to pull back, aligning with the 'right risk at the right price' principle. Performance has not materially differed from pricing expectations.

“I think in terms of how we handle that, just as a reminder, inside our proprietary pricing engine, Rate360, we have the ability to price across over 300 metropolitan statistical areas, and we price based on our view of the market's future home prices.”

asked by Bose George · answered by Hardin Mitchell

2 min read 5 chapters

Detailed narrative

Credit Performance and Portfolio Quality

Enact reported resilient credit performance with total delinquencies down 1% sequentially and new delinquencies down 1%, consistent with seasonal trends. Cures were up 13% sequentially. The company maintained its claim rate on new delinquencies at 8%. The Insurance-in-Force portfolio boasts a risk-weighted average FICO score of 746 and a risk-weighted average loan-to-value ratio of 93%, with layered risk at 1.2% of risk in-force.

A net reserve release of $39 million was recorded due to favorable cure performance and loss mitigation efforts.

Mortgage Market Dynamics and Persistency

The housing market remained dynamic, influenced by mortgage rate volatility. Purchase application volume followed seasonal trends, while lower rates early in the quarter supported elevated refinance applications. Persistency remained elevated at 80% in Q1, flat sequentially but down 4 points year-over-year.

Notably, 58% of loans in Enact's book have rates below 6%, providing continued support for high persistency. Only 21% of mortgages in the portfolio have rates at least 50 basis points above March's average of 6.2%, further supporting persistency.

Capital Management and Shareholder Returns

Enact maintains a strong capital position, with a PMIER sufficiency ratio of 162%, providing $1.9 billion above requirements. The third-party CRT program contributes $1.9 billion in PMIERs capital credit. The company returned $123 million to shareholders in Q1 through $30 million in dividends and $93 million in share repurchases.

An additional $30 million in share repurchases (0.7 million shares) occurred through April 30. The Board approved a 14% increase in the quarterly dividend to $0.24 per share, marking the fourth consecutive year of dividend increases. Full-year 2026 capital return guidance remains at approximately $500 million.

Rate360 and Dynamic Pricing

Enact's proprietary dynamic risk-adjusted pricing engine, Rate360, continues to enable prudent targeting of risk at a granular level. The engine considers over 300 metropolitan statistical areas and incorporates views on future home prices, charging incremental premium for higher-risk markets. Management stated that pricing remained constructive in the quarter, and the tool is continuously iterated with investments in modeling, research, and advanced technologies like machine learning and AI to ensure optimal risk-adjusted returns.

Housing Policy and VantageScore Rollout

Enact supports FHFA and GSE initiatives to modernize credit evaluation, including the limited rollout of VantageScore 4.0. The company has been working constructively with FHFA and GSEs to be operationally ready for implementation. However, further guidance is needed regarding the impact of VantageScore on PMIERs capital standards.

Enact intends to incorporate PMIERs guidance for VantageScore into its Rate360 engine to ensure appropriate pricing for loans under the new scoring model, maintaining its principle of charging the right price for the right risk.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.