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    ACT
    Earnings call· Jun 2026(Q2 FY26)

    Enact Holdings Q2 FY26 earnings call ACT

    Aug 6, 2026 Source

    Executive summary

    Enact Q2 FY26 — Increased Capital Return and Strong Credit Performance

    Enact Holdings delivered a strong Q2 FY26, marked by an upward revision in capital return expectations to $550 million-$600 million and resilient credit performance. The company continues to leverage technology with the launch of ELLA, an AI-powered underwriting tool, to enhance risk selection and operational efficiency. Despite a dynamic housing market with elevated rates and affordability pressures, Enact maintains a disciplined underwriting approach and strong capital position, positioning it for long-term success.

    Highlights

    5

    • Updated 2026 capital return expectations to $550 million-$600 million, up from prior guidance of $500 million.

    • Adjusted operating income of $177 million or $1.26 per diluted share.

    • Generated strong new insurance written (NIW) of $15 billion, up 19% sequentially and 15% year-over-year.

    • Primary insurance in force (IIF) of $274 billion, up $1 billion or 1% sequentially and $4 billion or 2% year-over-year.

    • PMIERs sufficiency ratio was 151% or $1.9 billion above requirements.

    Concerns

    4

    • Persistency was 80%, flat sequentially and down 2 points year-over-year on lower prevailing mortgage rates.

    • Base premium rate of 39.1 basis points, down 0.3 basis points sequentially.

    • Operating expenses in Q2 FY26 were $52 million, up from $49 million sequentially.

    • New delinquency rate increased 10 basis points from Q2 FY25, though consistent with pre-pandemic levels.

    Guidance & targets

    3
    CategoryTargetConfidence
    Total Capital Return
    $550 million to $600 million
    high materiality
    High
    Operating Expenses
    $205 million to $210 million
    medium materiality
    High
    Base Premium Rate
    relatively flat versus 2025
    medium materiality
    Medium

    Operational metrics

    33
    Adjusted Operating Income
    $177 million
    Q2 FY26

    Rohit stated $1.06 per diluted share, while Dean Mitchell stated $1.26 per diluted share for the same $177 million adjusted operating income. Dean's figure is used for EPS.

    Adjusted Diluted EPS
    $1.26up from $1.21 in Q1 FY26, up from $1.15 in Q2 FY25
    Q2 FY26

    Dean Mitchell stated $1.26 per diluted share, while Rohit Gupta stated $1.06 per diluted share for the same $177 million adjusted operating income. Dean's figure is used.

    Adjusted Return on Equity
    13.2%
    Q2 FY26

    Rohit stated 13%, Dean stated 13.2%.

    New Insurance Written
    $15 billionup 19% sequentially, up 15% year-over-year
    Q2 FY26

    Strong performance despite elevated rates and seasonal dynamics.

    Primary Insurance In Force
    $274 billionup $1 billion (1%) from Q1 FY26, up $4 billion (2%) year-over-year
    Q2 FY26

    Portfolio remains resilient with risk-weighted average credit score of 746 and LTV of 93%.

    Persistency
    80%flat sequentially, down 2 points year-over-year
    Q2 FY26

    Impacted by lower prevailing mortgage rates.

    Net Premiums Earned
    $245 millionup $2 million sequentially, flat year-over-year
    Q2 FY26

    Sequential increase driven by premium growth from attractive adjacencies and growth in primary insurance in force.

    Base Premium Rate
    39.1down 0.3 bps sequentially
    Q2 FY26

    Impacted by several factors including macro factors driving refinancing activity, tends to modestly fluctuate.

    Net Earned Premium Rate
    34.1down 0.2 bps sequentially
    Q2 FY26

    Aligned with the decrease in base premium rate.

    Investment Income
    $73 millionup $2 million (3%) sequentially, up $7 million (11%) year-over-year
    Q2 FY26

    New money investment yield over 5% contributed to average portfolio book yield of 4.6%.

    Average Portfolio Book Yield
    4.6%
    Q2 FY26

    Benefited from new money investment yield over 5%.

    New Delinquencies
    12,300down from 13,500 in Q1 FY26
    Q2 FY26

    In line with expected seasonal trends.

    New Delinquency Rate
    1.3%down 20 bps from Q1 FY26, up 10 bps from Q2 FY25
    Q2 FY26

    Consistent with pre-pandemic levels.

    Cure Rate
    50%decreased 4 percentage points sequentially
    Q2 FY26

    In line with seasonal trends and remains elevated.

    Claim Rate on Delinquencies
    8%
    Q2 FY26

    Maintained at 8%.

    Total Delinquencies
    24,300decreased sequentially from 24,700
    Q2 FY26

    Overall decline in delinquencies.

    Delinquency Rate (Total)
    2.6%flat sequentially
    Q2 FY26

    Overall delinquency rate remained stable.

    Losses
    $33 millionvs $37 million in Q1 FY26, vs $25 million in Q2 FY25
    Q2 FY26

    Reflects strong credit performance.

    Loss Ratio
    14%vs 15% in Q1 FY26, vs 10% in Q2 FY25
    Q2 FY26

    Driven by reserve release and favorable credit trends.

    Reserve Release
    $37 millionvs $39 million in Q1 FY26, vs $48 million in Q2 FY25
    Q2 FY26

    From favorable share performance and loss mitigation activity.

    Operating Expenses
    $52 millionvs $49 million in Q1 FY26, vs $53 million in Q2 FY25
    Q2 FY26

    Includes a $1 million reorganization charge excluded from adjusted operating income.

    Expense Ratio
    21%vs 20% in Q1 FY26, vs 22% in Q2 FY25
    Q2 FY26

    Reflects prudent expense management.

    Reorganization Charge
    $1 million
    Q2 FY26

    Excluded from adjusted operating income.

    PMIERs Sufficiency Ratio
    151%
    Q2 FY26

    Provides significant financial flexibility.

    Third-Party CRT Program Capital Credit
    $1.5 billion
    Q2 FY26

    Reinforces strong capital position.

    Dividends Paid
    $34 million
    Q2 FY26

    Part of capital return to shareholders.

    Shares Repurchased
    2.2 million
    Q2 FY26

    Part of capital return to shareholders.

    Shares Repurchased
    0.7 millionadditional to Q2
    July 2026

    Additional repurchases after quarter end.

    Third Quarter Dividend
    $0.24
    Q3 FY26

    Announced for Q3 FY26.

    Mortgage Rates in Portfolio
    57%
    Q2 FY26

    Indicates resilience of portfolio to rate changes.

    Mortgage Rates in Portfolio
    12%
    Q2 FY26

    Indicates resilience of portfolio to rate changes.

    Delinquencies with 10%+ Mark-to-Market Equity
    88%
    Q2 FY26

    Underpins ongoing strong core performance.

    Expense Base Reduction
    15%
    since IPO

    Reflects disciplined approach to expense management.

    Industry KPIs

    1
    MetricValueDetails
    Capital returns$550 million to $600 millionUSD

    Product announcements

    1
    ProductTypeDetails
    Enact Loan Level Assistant (ELLA)launch

    Risks & headwinds

    4
    Dynamic Macro and Housing EnvironmentOngoing

    Elevated interest rates, geopolitical developments, and policy uncertainty continued to contribute to market volatility.

    Mitigation: Disciplined execution of strategy, resilient credit performance, focus on long-term sustainable value creation.

    Housing Affordability PressureOngoing

    Combination of home prices staying elevated and interest rates doubling coming out of COVID has created affordability pressure for 3-3.5 years.

    Mitigation: Focus on the relationship between wage growth and home price appreciation; potential relief from lower interest rates (e.g., 6% range for 30-year fixed mortgage) could bring consumers back.

    Seasonal Increase in DelinquenciesSecond half of 2026

    Reasonable to expect an uptick in Del grade from at least first half levels in the short term.

    Mitigation: Company prices for risk when onboarding; strong embedded HPA in existing delinquencies (88% with 10%+ equity).

    Increased Delinquencies from Newer VintagesAs newer books age

    More recent books having aged through a more moderate home price appreciation path and originated in a purchase-heavy market (modestly higher risk characteristics, higher LTVs, DTIs) are expected to produce more new delinquencies as they age up their normal loss development curve.

    Mitigation: Risk was priced for when onboarded; no material deviation from pricing expectations to date.

    What to watch in Q3 FY26

    4

    Delinquency Rate Trend

    Next quarter (Q3 FY26)
    CurrentNew delinquency rate 1.3% (down 20 bps sequentially, up 10 bps YoY); total delinquency rate 2.6% (flat sequentially).
    TargetObserve if the expected seasonal uptick in delinquency rates materializes in H2 2026.

    Why it matters

    Delinquency trends are a key indicator of credit quality and portfolio health, especially with newer vintages aging and seasonal patterns.

    I think it's reasonable to expect an uptick in Del grade from at least first half levels in the short term from a del grade perspective.

    Q&A highlights

    8

    Asked about the expected trend of the base premium yield for the rest of the year, given recent slight declines, and commentary on competitive intensity.

    Dean stated that the base premium rate outlook remains consistent with the initial 2026 guidance of 'relatively flat versus 2025,' possibly with a slight downward tilt. Rohit added that the MI market is dynamic but constructive, with competitive pricing still reflecting economic uncertainty and attractive risk-adjusted returns.

    “I would say despite the modest first half pressure, our base premium rate outlook really remains consistent with our 2026 guidance that we gave at the beginning of the year that we expect it to be relatively flat versus 2025.”

    asked by Mihir Bhatia · answered by Hardin Mitchell

    2 min read7 chapters

    Detailed Narrative

    01

    Strong Q2 Performance and Capital Allocation

    Enact reported a strong second quarter with adjusted operating income of $177 million and an adjusted return on equity of 13.2%. The company increased its 2026 capital return expectations to $550 million-$600 million, reflecting robust financial health and a commitment to shareholder returns. Capital allocation priorities include maintaining a strong balance sheet, investing in organic growth and efficiencies, funding new business opportunities, and returning excess capital to shareholders.

    02

    Resilient Housing and Credit Environment

    Despite dynamic macro conditions with elevated interest rates and geopolitical uncertainty🌐, the U.S. economy and housing market showed resilience, supported by a healthy labor market. Underlying demand fundamentals for housing remain strong, and the company's insurance in force portfolio is performing well, with a risk-weighted average credit score of 746 and a risk-weighted average loan-to-value ratio of 93%.

    03

    Innovation in Underwriting with ELLA

    Enact launched its Loan Level Assistant (ELLA), an internal underwriting innovation utilizing generative AI. ELLA helps underwriters by reviewing loan documents, identifying inconsistencies, and surfacing insights, thereby improving risk selection and operational efficiency. Adoption has been rapid, and ELLA is expected to form a strong foundation for future efficiency improvements.

    04

    Credit Performance and Loss Mitigation

    The portfolio exhibited strong credit performance, with new delinquencies down 9% and cures also down 9% sequentially, consistent with seasonal trends. Total delinquencies declined 1%. This led to a reserve release of $37 million and a low loss ratio of 14%. The company remains well-reserved across various scenarios, with 88% of delinquencies having mark-to-market equity of 10% or more.

    05

    Expense Management and Efficiency

    Enact demonstrated prudent expense management, with operating expenses down year-over-year despite inflationary pressures. The company forecasts 2026 expenses, excluding reorganization costs, to be in the range of $205 million to $210 million, reflecting a continued focus on efficiency and a 15% reduction in the expense base since its IPO, which is 30% when adjusted for inflation.

    06

    VantageScore Adoption and Policy Alignment

    Enact supports FHFA and GSE efforts to modernize credit evaluation and began participating in the limited rollout of VantageScore 4. While the financial impact was immaterial in Q2, the company is operationally aligned to support customers as these initiatives scale. They are also preparing for the rollout of FICO 10T to support future market changes.

    07

    Affordability and Market Dynamics

    The discussion highlighted the complex interplay of home prices, interest rates, and wage growth on housing affordability. While elevated rates and prices create challenges, the company notes that pent-up demand exists, and consumers re-enter the market when 30-year fixed mortgage rates approach the 6% range. The company's underwriting for temporary rate buydowns has proven resilient, as consumers were qualified at fully indexed rates.

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