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    ACT
    Earnings call· Mar 2026(Q1 FY26)

    Enact Holdings Q1 FY26 earnings call ACT

    May 6, 2026 Source

    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

    5

    • 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

    3

    • 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

    3
    CategoryTargetConfidence
    Operating expenses (excluding reorganization costs)
    $215 million to $220 million
    medium materiality
    High
    Total capital return
    approximately $500 million
    high materiality
    High
    Base premium rate
    flattish
    medium materiality
    Medium

    Operational metrics

    30
    Adjusted operating income
    $172 million
    Q1 FY26

    Compared to $1.10 per diluted share in Q1 FY25 and $1.23 per diluted share in Q4 FY25.

    Adjusted return on equity
    13%
    Q1 FY26

    Adjusted operating return on equity was 12.9%.

    New insurance written (NIW)
    $13 billiondown 11% sequentially, up 30% year-over-year
    Q1 FY26

    Reflects rate trends and seasonal dynamics.

    Total insurance in force (IIF)
    $272 billiondown $1 billion sequentially, up $4 billion (2%) year-over-year
    Q1 FY26

    Primary Insurance-in-Force.

    Persistency
    80%flat sequentially, down 4 points year-over-year
    Q1 FY26

    Impacted by lower prevailing mortgage rates.

    Loans in portfolio with rates below 6%
    58%
    Q1 FY26

    Provides continued support for elevated persistency.

    Loans in portfolio with rates at least 50 bps above March's average of 6.2%
    21%
    Q1 FY26

    Provides support for continued elevated persistency.

    Risk-weighted average FICO score
    746
    Q1 FY26

    For the Insurance-in-Force portfolio.

    Risk-weighted average loan-to-value ratio
    93%
    Q1 FY26

    For the Insurance-in-Force portfolio.

    Layered risk as % of risk in-force
    1.2%
    Q1 FY26

    For the Insurance-in-Force portfolio.

    Total delinquencies
    24,700decreased sequentially from 24,900
    Q1 FY26

    Consistent with seasonal trends.

    Delinquency rate
    2.6%flat sequentially
    Q1 FY26

    Overall delinquency rate.

    New delinquencies
    13,600decreased sequentially from 13,700
    Q1 FY26

    Consistent with seasonal trends.

    New delinquency rate
    1.5%flat sequentially, increased 20 basis points from Q1 FY25
    Q1 FY26

    Consistent with pre-pandemic levels.

    Cure rate
    54%increased 3 percentage points sequentially
    Q1 FY26

    Remains well above pre-pandemic levels.

    Claim rate on new delinquencies
    8%maintained
    Q1 FY26

    Consistent with prior period, indicating strong credit performance.

    Net reserve release
    $39 million
    Q1 FY26

    From favorable cure performance and loss mitigation activities. Compares to $60 million in Q4 FY25 and $47 million in Q1 FY25.

    Loss ratio
    15%
    Q1 FY26

    Compared to 7% in Q4 FY25 and 12% in Q1 FY25.

    Operating expenses
    $49 milliondown from $59 million sequentially, down from $53 million year-over-year
    Q1 FY26

    Expenses are typically higher in the back half of the year.

    Expense ratio
    20%down from 24% sequentially, down from 21% year-over-year
    Q1 FY26

    Reflects prudent expense management.

    PMIER sufficiency ratio
    162%
    Q1 FY26

    Provides significant financial flexibility, $1.9 billion above PMIERs requirements.

    PMIERs capital credit from CRT program
    $1.9 billion
    Q1 FY26

    Provided by the third-party CRT program.

    Investment income
    $71 millionup $2 million (3%) sequentially, up $8 million (12%) year-over-year
    Q1 FY26

    Contributed to by new money investment yield.

    New money investment yield
    5%
    Q1 FY26

    Contributed to an increase in average portfolio book yield.

    Average portfolio book yield
    4.5%
    Q1 FY26

    For the quarter.

    Base premium rate
    39.4 basis pointsdown 0.2 basis points sequentially
    Q1 FY26

    Impacted by several factors and tends to modestly fluctuate.

    Net earned premium rate
    34.3 basis pointsdown 0.5 basis points sequentially
    Q1 FY26

    Primarily driven by higher ceded premiums.

    Shares repurchased
    2.3 million
    Q1 FY26

    Part of capital allocation strategy.

    Additional shares repurchased
    0.7 million
    through April 30

    Repurchased after Q1 FY26 close.

    Quarterly dividend increase
    14%
    Q1 FY26

    Approved by the Board of Directors, payable June 18, 2026. Marks the fourth consecutive year of dividend increases.

    Industry KPIs

    1
    MetricValueDetails
    Capital returns$123MUSD

    Risks & headwinds

    4
    Mortgage rate volatility and its impact on activityQ1 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 pressuresQ1 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 upFuture 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 guidanceOngoing

    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

    5

    Delinquency rate trend

    next quarter
    Current2.6%
    TargetMonitor 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.

    Q&A highlights

    5

    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 read5 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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.

    04

    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.

    05

    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.

    AI-generated summary of the company’s earnings call. Not investment advice.