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Essent Group (ESNT) Q4 Earnings, Revenues Miss, Dividend Up
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Essent Group Ltd. (ESNT - Free Report) reported fourth-quarter 2022 operating net income per share of $1.37, which missed the Zacks Consensus Estimate by 13.8%. The bottom line declined 16.5% year over year.
The quarter witnessed lower revenues attributable to lower net premiums earned. Losses and expenses increased attributable to provision for losses and loss adjustment expense (LAE). There was a decline in the percentage of loans in default during the reported quarter.
Total revenues of $230 million declined 10.5% year over year, attributable to lower net premiums earned. The bottom line also missed the consensus estimate by 12.5%.
New insurance written dropped 20.7% year over year to $13 billion.
As of Dec 31, 2022, insurance in force climbed 9.6% year over year to $227.1 billion.
As of Dec 31, 2022, the percentage of loans in default was 1.66%, a decline from 2.16% at the year-ago level.
Total losses and expenses of $57 million increased 42.9% year over year due to provision for losses and LAE against benefits for losses and LAE in the year-ago quarter, higher other underwriting and operating expenses as well as interest expense.
The combined ratio came in at 24.6, which deteriorated 720 bps year over year. The loss ratio was 2 against (1.6) in the year-ago quarter. The expense ratio deteriorated 360 bps year over year to 22.6 in the quarter under review.
Full-Year Highlights
Operating net income per share of $7.72 improved 26.4% year over year.
Total revenues of $1 billion decreased 2.7% year over year. Net premiums written increased 1.6% to $820 million.
The loss ratio was (20.7) against 3.6 in 2020.
Financial Update
Essent Group exited 2022 with a cash balance of $81.2 million, down 0.3% from the 2021-end level. As of Dec 31, 2022, total stockholders' equity of $4.5 billion increased 5.3% from the figure at 2021 end.
Book value per share came in at $41.44 as of Dec 31, 2022, up 7% from the year-ago end level.
Annualized return on average equity in 2022 expanded 230 bps year over year to 19.1%.
Across the U.S. mortgage insurance business encompassing statutory capital for both Essent Guaranty, Inc. and Essent Guaranty of PA, Inc., the combined risk-to-capital ratio came in at 10.2:1 versus 10.4:1 in 2021.
Dividend Update
The board of directors approved an increase in the quarterly dividend to 25 cents per share compared with the prior payout of 23 cents. The increased dividend will be paid out on Mar 20 to shareholders of record as of Mar 10.
Zacks Rank
Essent Group currently carries a Zacks Rank #4 (Sell).
Radian Group Inc. (RDN - Free Report) reported fourth-quarter 2022 adjusted operating income of $1.05 per share, which beat the Zacks Consensus Estimate by 20.6%. The bottom line decreased 1.8% year over year. Operating revenues decreased 8.2% year over year to $307.9 million due to lower net premiums earned, services revenues and other income. Net premiums earned were $232.8 million, down 10.9% year over year.
MI New Insurance Written decreased 45.8% year over year to $12.8 billion.
Primary mortgage insurance in force was $261 billion as of Dec 31, 2022, up 6.1% year over year. Primary delinquent loans were 21,913 as of Dec 31, 2022, down 24.6% year over year. The expense ratio was 27.3, a deterioration of 170 bps from the year-ago quarter.
MGIC Investment Corporation (MTG - Free Report) reported fourth-quarter 2022 operating net income per share of 64 cents, which beat the Zacks Consensus Estimate by 8.5% and our estimate of 59 cents. The reported figure increased 4.9% year over year. MGIC Investment recorded total operating revenues of $291 million, which decreased 0.6% year over year on lower premiums earned. The top line missed the consensus mark by 12.9% and our estimate of $334.1 million. Net premiums written decreased 2.8% year over year to $231.4 million. The figure was lower than our estimate of $260.1 million.
Insurance in force increased 7.6% from the prior-year quarter to $295.3 billion. The figure was higher than our estimate of $294.9 billion. The insurer witnessed a 20.7% decrease in primary delinquency to 26,387 loans. New insurance written was $12.9 billion, down 52.4% year over year due to a decline in origination markets. For the quarter under review, the loss ratio was (12.8%) compared with (9.9%) for the fourth quarter of 2021.
MetLife, Inc. (MET - Free Report) reported fourth-quarter 2022 adjusted operating earnings of $1.55 per share, which missed the Zacks Consensus Estimate of $1.74 and our estimate of $1.77. The bottom line declined 29% year over year. Adjusted operating revenues of MetLife amounted to $15,836 million, which decreased 21.6% year over year. The top line missed the consensus mark of $16,996 million and our estimate of $16,303.1 million.
Adjusted premiums, fees and other revenues, excluding pension risk transfer (PRT), were $11,375 million, down 1% year over year. MetLife expects pre-tax variable investment income of $2 billion for 2023. Corporate & Other adjusted losses are expected to be $650-$750 million for the year. The effective tax rate is likely to be 22-24%. MET expects its MetLife Holdings’ adjusted premiums, fees and other revenues to decline 12-14% in 2023 and then 6-8% per annum. It expects to generate adjusted earnings of $1-$1.2 billion in 2023 from this segment.
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Essent Group (ESNT) Q4 Earnings, Revenues Miss, Dividend Up
Essent Group Ltd. (ESNT - Free Report) reported fourth-quarter 2022 operating net income per share of $1.37, which missed the Zacks Consensus Estimate by 13.8%. The bottom line declined 16.5% year over year.
The quarter witnessed lower revenues attributable to lower net premiums earned. Losses and expenses increased attributable to provision for losses and loss adjustment expense (LAE). There was a decline in the percentage of loans in default during the reported quarter.
Essent Group Ltd. Price and EPS Surprise
Essent Group Ltd. price-eps-surprise | Essent Group Ltd. Quote
Operational Update
Total revenues of $230 million declined 10.5% year over year, attributable to lower net premiums earned. The bottom line also missed the consensus estimate by 12.5%.
New insurance written dropped 20.7% year over year to $13 billion.
As of Dec 31, 2022, insurance in force climbed 9.6% year over year to $227.1 billion.
As of Dec 31, 2022, the percentage of loans in default was 1.66%, a decline from 2.16% at the year-ago level.
Total losses and expenses of $57 million increased 42.9% year over year due to provision for losses and LAE against benefits for losses and LAE in the year-ago quarter, higher other underwriting and operating expenses as well as interest expense.
The combined ratio came in at 24.6, which deteriorated 720 bps year over year. The loss ratio was 2 against (1.6) in the year-ago quarter. The expense ratio deteriorated 360 bps year over year to 22.6 in the quarter under review.
Full-Year Highlights
Operating net income per share of $7.72 improved 26.4% year over year.
Total revenues of $1 billion decreased 2.7% year over year. Net premiums written increased 1.6% to $820 million.
The loss ratio was (20.7) against 3.6 in 2020.
Financial Update
Essent Group exited 2022 with a cash balance of $81.2 million, down 0.3% from the 2021-end level. As of Dec 31, 2022, total stockholders' equity of $4.5 billion increased 5.3% from the figure at 2021 end.
Book value per share came in at $41.44 as of Dec 31, 2022, up 7% from the year-ago end level.
Annualized return on average equity in 2022 expanded 230 bps year over year to 19.1%.
Across the U.S. mortgage insurance business encompassing statutory capital for both Essent Guaranty, Inc. and Essent Guaranty of PA, Inc., the combined risk-to-capital ratio came in at 10.2:1 versus 10.4:1 in 2021.
Dividend Update
The board of directors approved an increase in the quarterly dividend to 25 cents per share compared with the prior payout of 23 cents. The increased dividend will be paid out on Mar 20 to shareholders of record as of Mar 10.
Zacks Rank
Essent Group currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Finance Sector Releases
Radian Group Inc. (RDN - Free Report) reported fourth-quarter 2022 adjusted operating income of $1.05 per share, which beat the Zacks Consensus Estimate by 20.6%. The bottom line decreased 1.8% year over year. Operating revenues decreased 8.2% year over year to $307.9 million due to lower net premiums earned, services revenues and other income. Net premiums earned were $232.8 million, down 10.9% year over year.
MI New Insurance Written decreased 45.8% year over year to $12.8 billion.
Primary mortgage insurance in force was $261 billion as of Dec 31, 2022, up 6.1% year over year. Primary delinquent loans were 21,913 as of Dec 31, 2022, down 24.6% year over year. The expense ratio was 27.3, a deterioration of 170 bps from the year-ago quarter.
MGIC Investment Corporation (MTG - Free Report) reported fourth-quarter 2022 operating net income per share of 64 cents, which beat the Zacks Consensus Estimate by 8.5% and our estimate of 59 cents. The reported figure increased 4.9% year over year. MGIC Investment recorded total operating revenues of $291 million, which decreased 0.6% year over year on lower premiums earned. The top line missed the consensus mark by 12.9% and our estimate of $334.1 million. Net premiums written decreased 2.8% year over year to $231.4 million. The figure was lower than our estimate of $260.1 million.
Insurance in force increased 7.6% from the prior-year quarter to $295.3 billion. The figure was higher than our estimate of $294.9 billion. The insurer witnessed a 20.7% decrease in primary delinquency to 26,387 loans. New insurance written was $12.9 billion, down 52.4% year over year due to a decline in origination markets. For the quarter under review, the loss ratio was (12.8%) compared with (9.9%) for the fourth quarter of 2021.
MetLife, Inc. (MET - Free Report) reported fourth-quarter 2022 adjusted operating earnings of $1.55 per share, which missed the Zacks Consensus Estimate of $1.74 and our estimate of $1.77. The bottom line declined 29% year over year. Adjusted operating revenues of MetLife amounted to $15,836 million, which decreased 21.6% year over year. The top line missed the consensus mark of $16,996 million and our estimate of $16,303.1 million.
Adjusted premiums, fees and other revenues, excluding pension risk transfer (PRT), were $11,375 million, down 1% year over year. MetLife expects pre-tax variable investment income of $2 billion for 2023. Corporate & Other adjusted losses are expected to be $650-$750 million for the year. The effective tax rate is likely to be 22-24%. MET expects its MetLife Holdings’ adjusted premiums, fees and other revenues to decline 12-14% in 2023 and then 6-8% per annum. It expects to generate adjusted earnings of $1-$1.2 billion in 2023 from this segment.