Essent Group Ltd. (NYSE:ESNT) Q4 2019 Earnings Conference Call - Final Transcript

Feb 14, 2020 • 10:00 am ET


Essent Group Ltd. (NYSE:ESNT) Q4 2019 Earnings Conference Call - Final Transcript


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Ladies and gentlemen, thank you for standing by, and welcome to the Essent Group Limited Fourth Quarter and Full Year 2019 Earnings Conference Call. [Operator Instructions]

I would now like to hand the conference over to your speaker for today, Mr. Chris Curran, Senior Vice President of Investor Relations. Please go ahead.

Christopher G. Curran

Thank you, Amy. Good morning, everyone, and welcome to our call. Joining me today are Mark Casale, Chairman and CEO; and Larry McAlee, Chief Financial Officer.

Our press release, which contains Essent's financial results for the full-year and fourth quarter of 2019, was issued earlier today and is available on our website at in the Investors section. Our press release also includes non-GAAP financial measures that may be discussed during today's call. The complete description of these measures and the reconciliation to GAAP may be found in Exhibit M of our press release.

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 19th, 2019, 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 A. Casale

Thanks, Chris. Good morning, everyone, and thank you for joining us. I am pleased to report that Essent produced another strong quarter of financial results, as the operating environment remains favorable and credit continues to perform well. Also during the quarter, we were very pleased with Moody's upgrade of our financial strength rating to A3. We believe that this upgrade is a validation of our transition to a stronger operating model.

Specifically during the year, we continued reinsuring our portfolio and evolving our pricing engine. The utilization of these tools makes Essent a more sustainable franchise and is a long-term positive for policyholders, shareholders and employees. Our performance for the fourth quarter and full-year 2019 continue to benefit from strong secular and cyclical tailwinds. Affordable mortgage rates, low unemployment and first-time home buying by millennials continue to drive strong credit performance and elevated housing demand. As a franchise that is lever to U.S. housing, the economy and purchase mortgages. Our outlook on our business remains positive heading in the 2020.

Now, let me touch on our results. For the fourth quarter, we earned $147 million or $1.49 per diluted share, while on a full-year basis, we earned $556 million or $5.66 per diluted share. Also our return on equity for 2019 was 21%, and we grew adjusted book value per share of 22% to $29.66 at year-end 2019. As a reminder, senior management's long-term incentive compensation is driven by growth in book