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Hello, and welcome to Enact's First Quarter Earnings Call. Please be advised that today's call -- conference call is being recorded. I would now like to hand the conference over to your first speaker, David Kohl, Vice President of Finance. You may begin.

Thank you, and good morning. Welcome to our first quarter earnings call. Joining me today are Rohit Gupta, President and Chief Executive Officer; and Dean Mitchell, Chief Financial Officer and Treasurer. Rohit will provide an overview of our business performance and progress against our strategy. Dean will then discuss the details of our quarterly results before turning the call back to Rohit for closing remarks. We will then take your questions.

The earnings materials we issued after market close yesterday contain our financial results for the quarter, along with a comprehensive set of financial and operational metrics. These are available on the Investor Relations section of our website. Today's call is being recorded and will include the use of forward-looking statements. These statements are based on current assumptions, estimates, expectations and projections as of today's date.

Additionally, they are subject to risks and uncertainties, which may cause actual results to be materially different, and we undertake no obligation to update or revise such statements as a result of new information. For a discussion of these risks and uncertainties, please review the cautionary language regarding forward-looking statements in today's press release as well as in our filings with the SEC, which will be available on our website.

Please keep in mind the earnings materials and management's prepared remarks today will include certain non-GAAP measures. Reconciliations of these measures to the most relevant GAAP metrics can be found in the press release, our earnings presentation and our upcoming SEC filings on our website.

With that, I'll turn the call over to Rohit.

Thank you, Daniel. Good morning, everyone. Enact delivered a strong start to 2026 amid a volatile rate environment. This performance was underpinned by the disciplined execution of our strategy, resilient credit performance and our clear focus on long-term value creation. For the first quarter, we reported adjusted operating income of $172 million or $1.21 per diluted share. 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.

The housing market remained dynamic with mortgage rate volatility impacting mortgage activity in the quarter. Overall, purchase application volumes followed seasonal trends, while lower rates early in the quarter supported elevated refinance applications. Additionally, recent loan vintages with lower embedded equity have contributed to increased mortgage insurance penetration in refinance activity. Conversely, as rates increased during March and April, the refinance trend slowed, but we have seen the impact of the spring selling season on purchase applications.

Against this backdrop, persistency remained elevated at 80% in the first quarter. Additionally, across our portfolio, 58% of loans in our book have rates below 6%, providing continued support for elevated persistency. While the macro environment remains uncertain and inflationary pressures accelerated as gas prices have risen, the consumer continues to show resilience. Overall, labor market conditions remain supportive and credit performance remains healthy. Importantly, we are not seeing any meaningful impact within our credit portfolio and overall credit trends remain in line with our expectations.

We will continue to monitor these dynamics closely and believe that the underlying credit fundamentals of our business remain strong. 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 layered risk was 1.2% of risk in-force. Pricing remained constructive in the quarter, and our dynamic risk-adjusted pricing engine, Rate360, is enabling us to prudently target the right risk for the right price at a granular level with changing market conditions.

Turning to losses. Total delinquencies were down 1% sequentially, with new delinquencies down 1% and cures up 13%, both consistent with seasonal trends. Our strong cure performance was driven by favorable credit trends and our effective loss mitigation efforts. This drove a net reserve release of $39 million in the quarter, and our resulting loss ratio was 15%. Credit performance continues to be strong, and we are well reserved for a range of scenarios.

Turning to expenses. We delivered another quarter of prudent expense management, putting us on track to achieve our 2026 expense guidance range of $215 million to $220 million, excluding reorganizational costs. We continue to execute against our capital allocation priorities, including maintaining a strong and resilient balance sheet to support existing policyholders, investing in our business to drive organic growth and operating efficiencies, funding attractive new business opportunities and returning excess capital to shareholders.

At the end of the quarter, our PMIERs sufficiency ratio was 162%, providing significant financial flexibility and our credit and investment portfolios are in excellent shape. Our strong capital position is further reinforced by our CRT program and the backing of our undrawn credit facility. We continue to execute on our growth and diversification efforts. Our growth efforts in Enact Re continued to deliver consistent and strong performance in the first quarter, generating attractive risk-adjusted returns.

Enact Re remains a long-term growth and diversification opportunity that is both capital and expense efficient. Our strong performance supported robust capital returns to our shareholders. During the first quarter, we returned $123 million through share repurchases and dividends and are pleased to announce that our Board of Directors approved a 14% increase to our dividend from $0.21 to $0.24 per share, which also marks the fourth year that we have increased our quarterly dividend payment. We continue to expect to deliver capital returns in 2026 of approximately $500 million.

Turning to recent housing policy announcements. We applaud the FHFA and the GSEs for their thoughtful approach to credit modernization through the announced limited rollout of VantageScore 4.0. Enact supports ongoing efforts to modernize credit evaluation in ways that responsibly expand access to sustainable homeownership. We remain committed to supporting our customers and to staying operationally aligned as the GSEs advance this initiative and provide additional information.

Overall, we have had a great start in 2026 that positions Enact for long-term success. I want to thank our entire team for their relentless commitment and outstanding performance.

With that, I will now hand the call over to Dean.

Thanks, Rohit, and good morning, everyone. We began 2026 with another quarter of strong results. Adjusted operating income was $172 million or $1.21 per diluted share compared to $1.10 per diluted share in the same period last year and $1.23 per diluted share in the fourth quarter of 2025. Adjusted operating return on equity was 12.9%. A detailed reconciliation of GAAP net income to adjusted operating income can be found in our earnings release.

Turning to revenue drivers. New insurance written was $13 billion in the first quarter, down 11% sequentially and up 30% year-over-year as rate trends and seasonal dynamics played out across the period. Persistency was 80% in the quarter, flat sequentially and down 4 points year-over-year on lower prevailing mortgage rates. While rates were volatile over the quarter, only 21% of mortgages in our portfolio have rates at least 50 basis points above March's average of 6.2%, providing support for continued elevated persistency.

Primary Insurance-in-Force was $272 billion in the quarter, down $1 billion from the fourth quarter of 2025 and up $4 billion or approximately 2% year-over-year. Total net premiums earned were $243 million, down $3 million sequentially and down $2 million year-over-year, primarily driven by higher ceded premiums. Our base premium rate of 39.4 basis points was down 0.2 basis points sequentially, in line with our expectations. As a reminder, our base premium rate is impacted by several factors and tends to modestly fluctuate from quarter-to-quarter.

Our net earned premium rate was 34.3 basis points, down 0.5 basis points sequentially, driven by higher ceded premiums. Investment income in the first quarter was $71 million, up $2 million or 3% sequentially and up $8 million or 12% year-over-year. Our new money investment yield of 5% contributed to an increase in the average portfolio book yield of 4.5% for the quarter. While we typically hold investments to maturity, we may selectively pursue income enhancement opportunities. During the quarter, we sold certain assets that will allow us to recoup realized losses through future higher net investment income.

Turning to credit. We continue to see strong loss performance across our overall portfolio. 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. 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.

Additionally, our cure rate increased sequentially 3 percentage points to 54% and remains well above pre-pandemic levels. We maintained our claim rate on new delinquencies at 8%. Total delinquencies in the first quarter decreased sequentially to 24,700 from 24,900 and the delinquency rate was flat sequentially at 2.6%. Losses in the first quarter of 2026 were $37 million, and the loss ratio was 15% compared to $18 million and 7%, respectively, in the fourth quarter of 2025 and $31 million and 12% in the first quarter of 2025.

The current quarter reserve release of $39 million from favorable cure performance and loss mitigation activities compares to a net reserve release of $60 million, inclusive of our claim rate reduction from 9% to 8% in the fourth quarter of 2025 and $47 million in the first quarter of 2025. Operating expenses in the first quarter of 2026 were $49 million and the expense ratio was 20% compared to $59 million and 24%, respectively, in the fourth quarter of 2025 and $53 million and 21% in the first quarter of 2025.

As a reminder, our expenses are typically higher in the back half of the year. For full year 2026, we continue to anticipate operating expenses in the range of $215 million to $220 million, excluding any reorganization costs as we prudently manage our expense base balancing our ongoing focus on driving further efficiencies across the business with continuing to invest in our growth initiatives. We continue to operate from a strong capital and liquidity position, underpinned by our robust PMIERs sufficiency and the successful execution of our diversified CRT program.

Our PMIERs 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.

Turning now to capital allocation. During the quarter, we paid out $30 million or $0.21 per share through our quarterly dividend and bought back 2.3 million shares at an average price of $40.66 for $93 million. Through April 30, we have repurchased an additional 0.7 million shares for $30 million as well. Yesterday, we announced a 14% increase to our quarterly dividend from $0.21 per share to $0.24 per share payable June 18, 2026. The increased dividend is consistent with our commitment to returning capital to shareholders and reflects the continued strength of our financial position and confidence in our business.

As Rohit mentioned earlier, our 2026 total capital return guidance remains unchanged at approximately $500 million. As in the past, the final amount and form of capital returned to shareholders will ultimately depend on business performance, market conditions and regulatory approvals. Overall, we are pleased with our start to 2026 and believe we remain well positioned to prudently manage risk, maintain a strong balance sheet and deliver solid returns for our shareholders.

With that, let me turn the call back to Rohit.

Thanks, Dean. Our mission to responsibly help more people achieve the dream of homeownership guides everything we do. Looking ahead, we remain encouraged by the long-term fundamentals in the housing market and are confident that Enact's strategy and durable business model position us to generate compelling performance and attractive returns while continuing to navigate a dynamic operating environment. We appreciate your interest in Enact and your continued support.

Operator, we are now ready for Q&A.

[Operator Instructions]

Our first question comes from the line of Bose George with KBW.

So just wanted to start on credit. Credit looks solid. I'm just curious if there are markets where you're keeping an eye on in terms of home prices and have you had to adjust anything in terms of pricing or your exposures based on home price expectations?

Yes, Bose, this is Dean. Thanks for the question. I'd agree with your general assessment at the macro level, we think overall credit performance remains very strong, both in terms of delinquency development and cure activity. And as you would expect, we continue to assess performance across borrower loan attributes. We really haven't seen any material deviation from our pricing expectations when we set price and ultimately onboard risk. That doesn't mean that there aren't differentiations across different attributes.

And certainly, your question about geographies is on point. In terms of geography, there are areas where housing supply has increased and home prices have moderated or even declined in some parts of the country. We've called out the Sunbelt and particularly markets like Florida and Texas as areas where this dynamic is going on. There's other geographies, obviously, where housing supply remains low and home prices continue to appreciate. The Northeast corridor is a good example of that.

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. So what that means is we charge incremental premium when we feel markets are more likely to pull back for the higher risk of the potential for claim, and that's really aligned with our principle of the right risk at the right price.

So the bottom line, from my perspective, Bose, is while there are differences in home prices across geographies and they do affect performance. We really haven't seen performance differ from our pricing expectations in any material market. And again, we still believe we've onboarded the right risk at the right price across geographies based on performance to date.

Okay. Great. And then actually switching over to the VantageScore rollout. Actually, a couple of things there. One, since PMIERs incorporates FICO into setting your capital standards, does PMIERs have to be revisited as part of this whole process as well? And then how do you -- when you're sort of providing mortgage insurance, make the adjustments since, I guess, FICO is kind of the key driver for you guys as well, I would think.

This is Rohit. So thank you for the question. Absolutely, as you mentioned, that PMIERs on classic FICO is the foundation of how we think about one of the pricing regimes that governs our returns. So just given that fact, as we think about Vantage, I first want to say that, as I said in my prepared remarks, we are fully supportive of initiatives that qualify more home-ready consumers to prudently get into homes.

And from an implementation perspective, we have been working very constructively with the FHFA and the GSEs to be operationally ready and we stand ready today to operationally implement VantageScore 4.0. 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.

And our broader mindset, as we have talked about our risk appetite and the way we price is to always have this principle of charging the right price for the right risk at a very granular level. So aligned with that intent, as we get PMIERs for VantageScore 4.0, we would basically take that PMIERs guidance and incorporate that into our return calculation for loan cohorts across our Rate360 engine, and that would generate pricing for a VantageScore loan versus a classic FICO loan.

And down the road, as FICO 10 gets rolled out, our mindset would be the same. So essentially, the intent here is to support these initiatives, but at the same time, charge the right price for the right risk across any score that is coming to us from lenders.

Our next question comes from the line of Mihir Bhatia with Bank of America.

I wanted to start with just on credit and the delinquency rate expectations going forward. Just any comments on that, just how you expect delinquency rate to trend? Is there upward pressure from portfolio seasoning, et cetera? So just things we should be keeping in mind as we build our models and think about the credit outlook?

Yes. Mihir, it's Dean again. Thanks for the question. Very good question. I think in terms of delinquency rate, it's a little bit hard to project as there's a lot that goes into that. It's going to be dependent upon, of course, the macroeconomic environment and changes in its potential trajectory would have a meaningful impact on delq rate. But it also is impacted by things like NIW levels. So to the extent we write more new insurance written, that could suppress what would otherwise be the delq rate.

And then, of course, it's impacted by claim timing. And as we've seen this quarter and we've seen in prior quarters, that's been de minimis to date. I think that makes it difficult to predict with precision. At the same time and trying to be responsive to your question, I think given some of the aging that we're seeing in the newer purchase heavy books, those books having slightly higher risk attributes, LTV, DTI and a little bit lower FICO. 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 and et cetera. But I think it could tick up from the 2.6% that you see in the first quarter.

Got it. And then just if you talk about the premium yield expectations for the rest of the year? Just any call-outs we should keep in mind even quarter-over-quarter. And then maybe just also use the opportunity to talk about competitive intensity that you're seeing.

Yes. So I'll start that off, Mihir, on base premium rate and turn it over to Rohit on the competitive environment. So as we've talked about in prior quarters, base premium rate is affected by a lot of different variables NIW levels, NIW price. This quarter, very importantly, the mix of purchase and refi, which obviously impacts NIW price and other things such as lapse, where that lapse is coming from and things that you might not even consider in the calculation of base premium rate like delinquency premium accruals.

I think at the end of the day, we've guided towards a flattish base premium rate over the quarter, acknowledging that -- over the full year, rather, acknowledging that quarter-to-quarter, you could see some volatility. Some of the volatility that you saw on the sequential quarter basis is what I mentioned, the refi purchase mix. We had an increase in refi mix this quarter. I think if we had normalized that to the prior period, you would have seen that [ 2/10 ] of a basis point decline be something closer to [ 1/10 ] of a basis point decline. So there is going to be quarter-to-quarter volatility, but I think we're still very comfortable with the guidance of flattish base premium rate over the course of the full year 2026.

Yes, Mihir. The second part of your question in terms of market dynamics, I would say, as I said in my prepared remarks, we found pricing to be attractive in the quarter. We believe the market remains constructive. And we like the NIW we wrote almost $13 billion of NIW we wrote in the first quarter and the returns we are getting on that NIW. 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. So I hope that provides you some kind of construct and color on the market.

No, that's helpful. And then just the last question, just I wanted to touch on Washington, specifically on the GSEs. Are you seeing any shifts in GSE behavior? I know you talked about Vantage a little bit, but just in general, any shifts in the housing credit GSE behavior that could affect MI eligibility or volumes? Just anything we should be keeping an eye on?

There, I would say at a macro level, nothing that would actually think of us changing the MI volume or MI penetration. I would say, while the market size numbers are still not finalized, we actually believe that there was a little bit of an uptick in MI penetration in Q1 -- in the Q1 NIW, so [ asserted ] loans, and that was driven by the GSE execution in Q1 being better than FHA execution and that benefiting the MI industry also.

But I would say, outside of that, from a policy perspective, GSE risk appetite continues to stay relatively stable. GSEs continue to look at loan performance, credit characteristics and continue to make kind of minor adjustments to their appetite as they always do, but nothing beyond that in terms of any meaningful changes to report.

Our next question comes from the line of Rick Shane from JPMorgan.

Look, we've had, in the past couple of quarters, a few windows of lower rates. And obviously, at some point, we all expect rates to fall, though that seems to be getting pushed out. I'm curious what insights you can gather from those windows in terms of what we should anticipate for activity. Obviously, we see refis pick up. But I'm curious how that impacts the risk within the portfolio? Are there certain cohorts either that are riskier or less risky that are refinancing at faster rates during those windows? And what types of purchase loans are you seeing? Are they in sort of your risk spectrum? I'm curious to think about what we might see going forward when we get into a real lower rate environment.

Sure, Rick. This is Rohit. I'll get started and then Dean will chime in, in terms of adding color. So I would say a very good point in terms of we have had a few refi windows, as you called it, in the market and those refi windows, although they were short, they've given us insights into how borrower behavior and lender behavior has worked in the last 6, 7 months. I would say these windows have primarily been in time frames when the purchase market just seasonally is not expected to be super large because that's not when people are planning to buy homes.

So we have seen, obviously, more reaction from the refinance part of the market. And what I would kind of share with you is the activity has been very much in line with expectations that the books that were more in the money during those windows, so you would expect post 2022 midyear books to be more in the money when rates fall because July 2022 onwards, we've had higher rates. So consumers who originated their loans in that high rate environment are more likely to refinance when the rates come down to closer to that 6% level.

So that's exactly what we have seen both in Q4 and in Q1 that when rates come to that level, we basically see consumers -- lenders and consumers take advantage of those short refi opportunities to get into a better economic condition. And I would say the impact on lapse has been on those books. So '23 book, 2024 book have been the ones that actually see more lapse. From a risk attribute perspective, as Dean mentioned earlier, those books do have more purchase activity originally with slightly higher LTVs, slightly moderate FICOs and slightly higher debt to income. So as refi activity happens, obviously, that composition changes.

One upside that we see in this business cycle is normally, our refinance penetration in the market is about 4% of every 100 loans that go in the market. Given the fact that some of these books have lower embedded equity, when consumers are refinancing, a good number of times, those consumers are not below 80 LTV. So as a result, they end up refinancing back into MI. So we have seen MI penetration go from that 4% number closer to 6% to 7%, and we see a boost in MI market even coming through the refinance portion of the market.

So that's basically a little bit of color on the refinance side, and I'll quickly pivot to the purchase side. I would simply say that when rates drop during kind of not purchasing season, we see less activity because it's not that consumers can suddenly go and buy a home because rates drop for a 15-day window. So refinance loans can take advantage of that, purchase loans can't. If rates were to drop in the purchase selling season, we do believe that there is a significant amount of pent-up demand on the sidelines that you could see those consumers come to market and that would benefit homeownership rates and that would benefit MI market. But let me pause there and just ask Dean to chime in on anything I left out.

Yes. Rohit, that was -- I agree with everything you said. That was really comprehensive. I don't have much to add to that.

Rohit, it was a great answer. I really do appreciate it. If I can ask a quick follow-up. When you think about that refi activity that we've seen in those windows, do you think it over indexes, under indexes or sort of pari-passu indexes to the layered risk within the portfolio?

Yes. So just naturally, what I would expect, I don't have any specific numbers from the last 6 months, and I can get that to you off-line. But my general take would be, Rick, consumers who are in better credit position when rates are lower are more likely to refinance than consumers who are not. I think that's just kind of how the market is structured. So if you started off as a consumer who was at 720 FICO, but over the last 6 months or over the last 2 years, your FICO has risen to 780 because you manage your credit well, then you are just going to get a better execution when you come to refinance in the market versus if you started with 720 and you drifted down to 640 because when you come back to market, you're going to see an impact of loan level price adjustments in your North rate, so you're less likely to refinance. So I would say it over indexes on lower risk attributes in terms of possibility of refinancing a loan.

Our next question comes from the line of Brian Meredith of UBS.

It's actually Marissa Lobo on for Brian today. With tariffs creating some uncertainty in the labor market, what assumptions are embedded in your reserves around unemployment, HPA and cure rates? And have any of those assumptions changed since the Q4 call?

Marissa, it's Dean. I think our actuarial methods really aren't econometrically driven. So I can't give you expressed macroeconomic assumptions embedded in our reserving, more traditional reserving techniques, chain ladder, things along those lines looking at performance trends through time. What I can say is from a claim rate perspective, we maintained our claim rate at 8%. So we still continue to believe that credit performance is holding up well and that a consistent number, 8 out of every 100 new delinquencies will roll to claim.

Obviously, commensurate with the reserve release that we took, $39 million this quarter, we continue to see on prior period reserves cure performance above our expectations. And as a result, we're -- we have in the past and we did this quarter released a certain portion of reserves on prior period delinquencies given that elevated cure activity. But really, as it relates to the assumptions of booking reserves on new delinquencies, we didn't make any changes this quarter.

Yes. And Marissa, just to add a little bit of color to Dean's point, when it comes to a loan already being delinquent, unemployment level at a macro level or at a geographical level has less impact on that loan. So the assumptions that you did mention are incorporated in our conditional pricing view. So we are incorporating an assumption on unemployment rate, home price appreciation into our pricing that we are charging on net new loans for that month, for that week. And that's how we think about implementing a conditional view into our business.

Got it. That's very helpful. And on Rate360, it's clearly been a differentiator. Can you give us a sense of how it's influencing your NIW mix, pricing outcomes and what you plan to invest in for the next generation?

Yes. Very good question, Marissa. So as I've said in the past, Rate360 continues to iterate in terms of our innovation, our level of analytics and always kind of this desire to find the next new attribute that can actually give us more predictive power. So we've been investing in that tool for possibly last 7 years or so. And we've gone through 4 or 5 versions of the pricing engine by this time.

I think in terms of talking about the capabilities and what it is capable of delivering in the market, just given the commercial nature of our pricing and the fact that we operate in an opaque market, I wouldn't want to talk about any specifics, but I would say that we continue to invest in that tool, continue to invest in the modeling and the research that it takes to derive what basically causes a consumer or loan to go delinquent versus another loan not to go delinquent.

So all of those kind of drivers and outcomes are where we continue to invest, and we are very happy with where our journey has been and where it's going. Moving forward, we continue to incorporate all kinds of technologies, including machine learning and artificial intelligence to make sure that those are guiding the pricing we deploy in the market every single day.

And I think from a risk principle perspective, only 2 things I'll mention is the right price for the right risk. That is always our intent that down to the granularity of every single loan, we can charge the right price and then making sure that when it comes to layered risk, we are willing to take single attribute risk. But when it comes to layered risk, we try to make sure that we are pricing in the loans where we can expect the stress scenario, but not the loans where basically the multiple levels of risk could be -- make the loan performance unpredictable.

I'm showing no further questions at this time. I would now like to turn the call back to Rohit Gupta for closing remarks.

Thank you, Rory, and thank you, everyone. We appreciate your interest in Enact, and we look forward to seeing many of you in New York at BTIG's Housing Ecosystem Conference on May 7 or virtually at KBW's Real Estate Finance and Technology Conference on May 19. Thank you.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Hello, and thank you for standing by. Welcome to Enact's Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Daniel Kohl. You may begin.

Thank you, and good morning. Welcome to our fourth quarter earnings call. Joining me today are Rohit Gupta, President and Chief Executive Officer; and Dean Mitchell, Chief Financial Officer and Treasurer. Rohit will provide an overview of our business performance and progress against our strategy. Dean will then discuss the details of our quarterly results before turning the call back to Rohit for closing remarks. We will then take your questions.

The earnings materials we issued after market closed yesterday contain our financial results for the quarter, along with a comprehensive set of financial and operational metrics. These are available on the Investor Relations section of our website. Today's call is being recorded and will include the use of forward-looking statements. These statements are based on current assumptions, estimates, expectations and projections as of today's date. Additionally, they are subject to risks and uncertainties, which may cause actual results to be materially different, and we undertake no obligation to update or revise such statements as a result of new information.

For a discussion of these risks and uncertainties, please review the cautionary language regarding the forward-looking statements in today's press release as well as in our filings with the SEC, which will be available on our website. Please keep in mind the earnings materials and management's prepared remarks today include certain non-GAAP measures. Reconciliations of these measures to the most relevant GAAP metrics can be found in the press release, our earnings presentation and our upcoming SEC filing on our website.

With that, I'll turn the call over to Rohit.

Thank you, Daniel. Good morning, everyone. Enact delivered a very strong finish to 2025 that reflected the disciplined execution of our strategy, robust credit performance and our commitment to shareholder value creation. For the full year, we reported adjusted operating income of $688 million or $4.61 per diluted share. We returned over $500 million of capital to shareholders and the year-end adjusted book value per share increased 11% to $37.87.

Before discussing the quarter, I want to take a moment to highlight some of our accomplishments in 2025. In a complex housing environment, we helped over 134,000 borrowers buy a home and over 16,000 borrowers keep their home. We continue to innovate our risk selection and pricing capabilities, leveraging advanced modeling and machine learning to deploy the latest version of our pricing engine, Rate360. We generated $52 billion of new insurance written and ended the year with record insurance in-force of $273 billion. We maintained our commitment to expense discipline with full year operating expenses at $217 million, excluding restructuring charges.

We delivered record levels of capital returns to our shareholders, and we enhanced our financial flexibility by entering a new $435 million revolving credit facility and protected our forward books at attractive cost of capital through new CRT deals. Our execution continued to be recognized by the market, evidenced by receiving multiple credit ratings upgrades. Finally, Enact received multiple industry and local awards, a testament to our commitment to excellence and providing an exceptional employee experience. Taken together, these accomplishments underscore the progress we made in 2025 and reinforce our confidence in Enact's long-term strategy.

Turning to our fourth quarter results. We reported adjusted operating income of $179 million or $1.23 per diluted share, while adjusted return on equity was 13.5%, and we generated robust new insurance written of over $14 billion, driven by an increase in refinance originations as mortgage rates declined. However, 59% of loans in our book have rates below 6%, providing support for continued elevated persistency. The long-term drivers of housing demand remain strong, and we are confident that mortgage insurance will continue to play an essential role for both buyers and lenders. Pricing remained constructive in the quarter, and our dynamic risk-adjusted pricing engine, Rate360 is enabling us to prudently price risk with discipline as market conditions continue to evolve.

Our insurance in-force portfolio remains resilient with risk-weighted average FICO score of 746. The risk-weighted average loan-to-value ratio was 93% and layered risk was 1.2% of risk in-force. Cure performance continues to outperform our expectations, driven by favorable credit performance and effective loss mitigation efforts. This resulted in a net reserve release of $60 million in the quarter, partially driven by a claim rate reduction from 9% to 8%. Dean will touch more on this shortly. We also continue to advance our capital allocation priorities of supporting existing policyholders by maintaining a strong balance sheet, investing in our business to drive organic growth and efficiencies, funding attractive new business opportunities and returning excess capital to shareholders.

At the end of the quarter, our PMIERs sufficiency ratio was 162%, providing significant financial flexibility and our credit and investment portfolios are in excellent shape. Our strong capital position is further reinforced by the effective implementation of our CRT program and the backing of our credit facility. We continue to make steady progress against our strategic initiatives, advancing innovation in the MI business and continuing to expand into attractive adjacencies. Enact Re continued to perform well and participated in attractive GSE single and multifamily deals in the quarter while maintaining strong underwriting standards and generating attractive risk-adjusted returns.

Enact Re remains a long-term growth opportunity that is both capital and expense efficient. Finally, as it relates to capital returns, during the fourth quarter, we returned $157 million to shareholders through share repurchases and dividends. We remain committed to our capital allocation priorities, and we are pleased to announce our 2026 capital return expectations of approximately $500 million. Additionally, we issued a press release last night announcing that our Board of Directors authorized a new share repurchase program that is the largest in Enact's history.

In closing, we believe we are well positioned to continue navigating the uncertain macro environment, supporting our customers and delivering sustainable value for shareholders, none of which would be possible without the hard work and talent of our employees, and I would like to take a moment to thank them for their continued efforts and contributions.

With that, I will now hand the call over to Dean.

Thanks, Rohit, and good morning, everyone. We are pleased with the very strong results we delivered in the fourth quarter of 2025, which concluded an excellent year for Enact. Adjusted operating income was $179 million or $1.23 per diluted share compared to $1.09 per diluted share in the same period last year and $1.12 per diluted share in the third quarter of 2025. Adjusted operating return on equity was 13.5%. For the full year, adjusted operating income totaled $688 million or $4.61 per diluted share compared to $718 million or $4.56 per diluted share in 2024.

A detailed reconciliation of GAAP net income to adjusted operating income can be found in our earnings release. Turning to the fourth quarter. New insurance written was $14 billion for the fourth quarter, up 2% sequentially and up 8% year-over-year. This new business is well priced, has a strong credit risk profile and is comprised of loans that are well underwritten to prudent market standards. Persistency was 80% in the fourth quarter, down 3 points sequentially and down 2 points year-over-year on lower prevailing mortgage rates. While mortgage rates have fallen recently, only 22% of our mortgages in our portfolio have rates at least 50 basis points above December's average of 6.2%, providing support for continued elevated persistency.

The combination of solid new insurance written and lower but still elevated persistency drove primary insurance in-force of $273 billion in the fourth quarter, up $1 billion from the third quarter of 2025 and $4 billion or approximately 1% year-over-year. Total net premiums earned were $246 million, up $1 million sequentially and flat year-over-year. Our base premium rate of 39.6 basis points was down 0.1 basis point sequentially, in line with our expectations. As a reminder, our base premium rate is impacted by several factors and tends to modestly fluctuate from quarter-to-quarter. Given our current expectations for the MI market size and mortgage rates, we anticipate our base premium rate in 2026 to be relatively flat versus 2025.

Our net earned premium rate was 34.8 basis points, down slightly sequentially, driven by higher ceded premiums. Investment income in the fourth quarter was $69 million, flat sequentially and up $6 million or 10% year-over-year. Our new money investment yield of approximately 5% contributed to an increase in the weighted average portfolio book yield of 4.4% for the quarter. While we typically hold investments to maturity, we may selectively pursue income enhancement opportunities. During the quarter, we sold certain assets that will allow us to recoup realized losses through future higher net investment income.

Turning to credit. We continue to see strong loss performance across our overall portfolio. New delinquencies increased sequentially to 13,700 in the quarter from 13,000 in the third quarter of 2025, in line with expected seasonal trends. Our new delinquency rate for the quarter remained consistent with pre-pandemic levels at 1.5%, an increase of 10 basis points from the third quarter of 2025 and flat versus the fourth quarter of 2024. Total delinquencies in the fourth quarter increased sequentially to 24,900 from 23,400 as news outpaced cures and the delinquency rate increased 10 basis points sequentially to 2.6%.

Losses in the fourth quarter of 2025 were $18 million, and the loss ratio was 7% compared to $36 million and 15%, respectively, in the third quarter of 2025 and $24 million and 10%, respectively, in the fourth quarter of 2024. We reduced our claim rate in the quarter for new and recent delinquencies from 9% to 8% after factoring in the continued strong cure performance sustained throughout 2025. We believe the 8% claim rate is well aligned with the current macroeconomic uncertainties and remains consistent with our measured and prudent reserve philosophy.

The net reserve release of $60 million in the fourth quarter was driven by favorable cure performance, our loss mitigation activities and the reduction in our claim rate assumption. This compares to reserve releases of $45 million and $56 million in the third quarter of 2025 and fourth quarter of 2024, respectively. We maintain our focus on disciplined cost management in 2025. Operating expenses for the fourth quarter of 2025 were $59 million, and the expense ratio was 24% compared to $53 million and 22%, respectively, in the third quarter of 2025 and $57 million and 24%, respectively, in the fourth quarter of 2024. For the full year, our operating expenses of $218 million or $217 million, excluding reorganization costs, were favorable to our updated guidance of approximately $219 million.

For 2026, we anticipate an operating expense range of $215 million to $220 million, excluding any reorganization costs as we continue to prudently manage our expense base, balancing our continued focus to drive further efficiencies in our business while also investing in our growth initiatives. We continue to operate from a strong capital and liquidity position reinforced by our robust PMIERs sufficiency and the successful execution of our diversified CRT program. Our PMIERs sufficiency was 162% or $1.9 billion above PMIERs requirements at the end of the fourth quarter. And as of December 31, 2025, our third-party CRT program provides $1.9 billion of PMIERs capital credit.

Turning now to capital allocation. During the quarter, we paid out $30 million or $0.21 per share through our quarterly dividend, and we bought back 3.4 million shares at an average price of $37.66 for $127 million. For the full year 2025, we returned $503 million to shareholders. $121 million through our quarterly dividends, and we repurchased 10.5 million shares at an average price of $36.25 for a total of $382 million. Through January 30, we have repurchased an additional 0.8 million shares for $31 million.

For 2026, we expect capital returns of approximately $500 million. As in the past, the ultimate amount and form of capital return to shareholders will be dependent on business performance, market conditions and regulatory approvals. As we announced yesterday, the Board has authorized a new $500 million share repurchase program and declared a quarterly dividend of $0.21 per common share payable March 19. Overall, we are pleased with our performance in 2025, and we believe we are well positioned for another strong year in 2026. We remain focused on prudently managing risk, maintaining a strong balance sheet and delivering solid returns for our shareholders.

With that, let me turn the call back to Rohit.

Thanks, Dean. Looking ahead to 2026, our strong balance sheet, the portfolio's significant embedded equity and our disciplined operating approach position us to effectively navigate uncertainty and capitalize on long-term opportunities. Additionally, demographic tailwinds, particularly among first-time homebuyers, support long-term demand for housing and for private mortgage insurance.

Finally, as housing affordability and supply constraints shape policy discussions, we continue to actively engage with our lending partners, the GSEs, the FHFA and the administration and believe we remain well positioned to navigate and adapt to an evolving policy environment. We remain committed to helping people responsibly achieve the dream of homeownership and deliver long-term value for all our stakeholders.

Operator, we are now ready for Q&A.

[Operator Instructions] Our first question comes from the line of Doug Harter with UBS.

Appreciate the guidance on the capital return. In the past couple of years, you were able to exceed your initial capital return goal. Like how do you think about the sensitivities to that capital return goal for 2026? And what could cause that to come in better? Or what would be the factors that might cause you to need to slow it down?

Yes, Doug, it's Dean. Thanks for the question. Yes, we're -- much like we said in our prepared remarks, we set a capital return guidance for the beginning of the -- at the beginning of the year. We're very confident in delivering $500 million back to shareholders. But we'll continue to evaluate dynamics in the marketplace, namely our business performance, how the business continues to perform, how we continue to grow the business and certainly loss performance during 2026. We're also going to be looking at the macroeconomic environment.

Obviously, we're looking at the prevailing macroeconomic environment, the uncertainties that exist today and still feel confident in our ability to return $500 million, but we're going to look and see how that evolves over the course of the remainder of the year, and that can have an effect. And then lastly, and maybe a little bit less in this market right now is the regulatory environment. Is there anything going on either in the context of PMIERs or with the state regulatory environments or otherwise that would cause us to rethink and adjust our planned $500 million capital return in 2026? But we're confident that right now, given those dynamics, we're confident in the ability to return $500 million to shareholders in 2026.

Our next question comes from the line of Mihir Bhatia with Bank of America.

I wanted to start actually where you ended that last answer, Dean, just about regulatory environment. Obviously, I think everyone has been hearing about a potential for an FHA rate cut, affordability agenda and other such things. Are there a few things that you guys are particularly paying attention to from a regulatory or government action standpoint that maybe are worth highlighting for investors that we should just keep an eye out for?

Mihir, thank you for the question. This is Rohit. I would say we remain actively engaged with the new administration, and that includes treasury, FHFA, the GSEs as well as policymakers. And our focus continues to be on the topics that are in discussions. So on the most macro basis, we are talking about limited inventory challenges as well as affordability challenges. So as ideas come up, we actually provide our input on the pros and cons of those ideas, but also equally important in our market, we provide input on implementation of those ideas and what that entails.

So the ideas like credit scores come up, what are the pros and cons of different credit score ideas, all the way to some of the recent ideas that are being discussed on the announcement of GSEs buying mortgage-backed securities, and on institutional investors buying single-family homes. So I would say those ideas are more in the water table as already announced. Any future ideas that come up, and there's a list of ideas that you mentioned that are in discussion, we are actively engaged on all those places. I wouldn't call out any specific idea which is high up on the list from an execution perspective. I think it's just a list of ideas right now. So that's how I would frame it.

Okay. And then maybe just like a little bit more just from 2026 thoughts. What type of mortgage market are you planning for in 2026? What does that mean for NIW or insurance in-force? I think you talked about premium rate and OpEx, but just like what are you assuming for the mortgage market and NIW in that scenario?

Yes. Yes, Mihir, thank you for the question. So I would say in this environment, when there is a good amount of rate volatility and mortgage rate volatility, specifically, it's tough to forecast originations. So I'll just give you that caveat upfront. But with that being said, we look at external originations forecast to figure out what the market originations are, overall mortgage originations are and just to kind of index the market on the purchase origination side. So our take is that 90-plus percent of the market in 2025 was -- for MI market size was purchase origination.

And if you look at 2026 purchase originations forecast in the market between Fannie Mae, MBA, Moody's, you see a range of an 8% increase all the way to a 24% increase between those 3 external parties. So as we think about those external forecasts and convert that to a mortgage insurance market, we can see an increase of approximately 10% to 15% from 2025 to 2026. Again, with the caveat being that that's based on our current forecast of mortgage rate expectations, affordability expectations, but that environment continues [ to be ] dynamic. So as the environment evolves, we will come back and update that forecast. But at this point of time, that feels like the most updated view for us.

Right. No, that's quite helpful. And just one last one for me, and then I'll get back in queue. Just on default rates, where do you think they trend from here? Is it just like you read stability and seasonality from here? Anything we should be keeping in mind, whether from a vintage seasoning, vintage size type of view?

Yes, Mihir, it's Dean again. From a delq rate perspective, I think we're seeing what we would expect to see. So just in terms of vintage contribution to delq rates, you continue to see book years age up their loss development pattern. And so as newer books season or age towards higher parts of the loss development patterns, they're contributing more delinquencies as you would expect to the overall delq rate. I think the portfolio now stands at about 4 years, about 4.1 years on a weighted average basis. That's kind of towards that plateauing of the loss development pattern, the normal loss development pattern.

So I think what we'd expect heading into -- before we get to '26, what we saw in '25 is kind of in line with what we expected. We expected year-over-year change in new delinquencies to slow. From '23 to '24, it was in the mid-teens. When you went from '24 to '25, it was in the mid-single digits. So very much in line with expectations. I think as we think about going from '25 to '26, we could still see it continue to moderate. So might still increase in terms of new delinquencies year-over-year, but moderating from its current level, recognizing that year-over-year, there were only 2,000 incremental new delinquencies. So we're dealing with pretty small numbers.

Our next question comes from the line of Rick Shane with JPMorgan.

Look, in some ways, you guys have 2 books. You have the sort of pre-'22 legacy book with credit that's going to be sort of best in a generation. You have a subsequent book that I think is evolving to be in line to better with your sort of underwritten expectations. As you look at the second part of that book, the front book, I am curious if you can sort of put credit performance in some terms versus your expectations, how are things tracking? But specifically, are there things that you are seeing within certain cohorts, whether it's DTI, LTV, geography that are stand out in terms of elevated risks?

Yes, Rick, it's Dean. Thanks for the question. If we think about vintage performance, I'd probably start off by saying it's kind of redundant to your question a little bit. But let me start off by saying all of our recent book years have been performing in line with or better than our pricing expectations. Obviously, to your -- a little bit underpinning your question, our newer books, so I think 2022 through 2024 have been originated in primarily a purchase market, which tend to have higher risk attributes like a little bit higher LTV, a little bit higher DTI than refi market.

And in addition to that, they have had much more modest home price appreciation and in certain instances, depreciation depending on the geography compared to prior book years. We price for those attributes. So we price for our view of risk. We price for our future view of home prices, all in an objective to achieve an attractive return on equity. So on new vintages, we haven't seen performance differ from our pricing expectations that we established at policy inception. And we still believe we're onboarding the right risk at the right price, if you will, across vintages, across book years based on vintage performance to date.

Yes, are there differences across attributes? Of course, risk attributes matter, geographies matter. Again, we factor that in our price, and we haven't seen anything that worked against our expectations and created negative variation.

Got it. And anything going forward that you're going to be -- and I realize you have to be sensitive about this from a competitive perspective. But any areas that you would highlight where you're being a little bit more circumspect about risk?

Yes. I mean we don't want to go into our pricing schema, if you will. But let me just -- I mean, I think it's the things that you would expect, Rick. So there are certainly areas of the country where housing supply has increased and home prices have either moderated or declined. I think parts of the Sunbelt, particularly kind of Florida, Texas, California, Arizona, I don't think those are states that would surprise you as having pulled back a little bit in terms of home prices. That's in contrast to the Northeast, where you still have low housing supply and home prices continue to appreciate pretty meaningfully.

So we're monitoring housing markets as an example of something that we're keeping our eye on for affordability, supply-demand dynamics, and we'll continue to consider that as we think about how to, again, crystallize our philosophy of the right risk at the right price.

And Rick, just to add to Dean's point, we have talked about this in the past and also mentioned it in our prepared remarks on the call. We have very deep analytics and a lot of capabilities even from a forecasting perspective to incorporate those views in our pricing, and we have the ability to make those pricing changes on a very frequent basis when we think those are appropriate. So to Dean's point, not only historically speaking, but also looking forward, we continue to incorporate that view of risk, performance, geographic differences or risk attributes at a loan level into our pricing. And now we have the mechanism to charge that price at a very granular level.

Our next question comes from the line of Bose George with KBW.

Actually, on expenses, you guys continue to do a good job there, kept it flat now for a few years and it seems to be the case again in '26. Is technology the main driver? And then longer term, could we see the expense ratio continue to decline as expenses stay flattish or at least increase by less than revenues?

Yes. Thank you, Bose. I appreciate your question. So I would say from an expense perspective, you are correct. We have actually not only kept our expenses flat in the last year -- 2 years, but since our IPO, our expenses are -- on a dollar basis are probably down $30-plus million on an annualized run rate basis. So we continue to invest in technology, invest in different amounts of innovation to drive that improvement. And that is meant to drive all aspects of our business, drive productivity, drive better customer experience and drive smarter decisions.

So when you think about our expenses in 2025 coming in below our original guidance, that is driven by us actually harvesting those benefits, harvesting those gains from our investments, and we see the same thing happening in 2026. Now in terms of long-term expectations on expense ratio, I think it's tougher to give that guidance. Our aspiration is to always be prudent managers of expenses. So yes, we will always try to actually improve our expense ratio, both through growing our premiums by actually getting to a larger, more profitable book and at the same time, getting the right efficiencies from the business.

But how those premiums play out and how those expense dollars play out are difficult to forecast beyond 2026. So yes, directionally, you're absolutely correct. And then as we navigate through '26 and get to '27, we'll provide updated guidance.

Okay. Great. And then just on the reinsurance transactions that you guys did, can you just talk about the attachment and detachment points? And then how is the pricing on that market, just the trend in pricing?

Yes, Bose, we -- so let me start with the pricing, and then I'll go to the nature of the agreement. From a pricing perspective, we're seeing a tremendous amount of demand in the traditional reinsurance market for mortgage credit default risk. That has benefited the terms of our -- some of our most recent reinsurance transactions going all the way back to the coverage we've secured on both the 2026 book as well as now the 2-year forward 2027 book. So we've typically talked about that in low to mid-single digits cost of capital. If you go prior to those transactions, we were probably on the higher end of that cost range.

In these most recent transactions, we're on the lower end of that continuum from a cost range perspective. From an attachment and detachment perspective, our objective with our CRT program and certainly our CRT transactions is twofold. It's to provide cost-efficient capital relief and also obviously to protect the balance sheet from a volatility perspective. If we think about that first objective, what that means for our XOLs is we secure coverage inside the PMIERs tier. And so we typically attach around the 3%.

It's not always 3% of our risk in-force, but it's generally in that ballpark and then detach within PMIERs, and that's typically, again, PMIERs requirements on new business are generally around that 7%. So you can see our transactions evolve through time. But generally, in broad strokes, attachment and detachment around those points that I just gave you, Bose.

Ladies and gentlemen, I'm showing no further questions in the queue. I would now like to turn the call back over to Rohit for closing remarks.

Thank you, Towanda, and thank you, everyone. We appreciate your interest in Enact, and I look forward to seeing many of you this quarter in Florida at UBS' Financial Services Conference on February 9 and at Bank of America's Financial Conference on February 10. We also plan to attend the RBC Capital Markets Global Financial Institutions Conference in New York on March 11. With that, we will wrap up the call. Thank you.

Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect.

Hello, and welcome to Enact's Third Quarter 2025 Earnings Call. Please be advised that today's conference is being recorded. [Operator Instructions]

I would now like to hand the conference over to your first speaker, Daniel Kohl, Vice President of Investor Relations. You may begin.

Thank you, and good morning. Welcome to our third quarter earnings call. Joining me today are Rohit Gupta, President and Chief Executive Officer; and Dean Mitchell, Chief Financial Officer and Treasurer. Rohit will provide an overview of our business performance and progress against our strategy. Dean will then discuss the details of our quarterly results before turning the call back to Rohit for closing remarks. We will then take your questions.

The earnings materials we issued after market close yesterday contain our financial results for the quarter, along with a comprehensive set of financial and operational metrics. These are available on the Investor Relations section of our website. Today's call is being recorded and will include the use of forward-looking statements. These statements are based on current assumptions, estimates, expectations and projections as of today's date. Additionally, they are subject to risks and uncertainties, which may cause actual results to be materially different and we undertake no obligation to update or revise such statements as a result of new information. For a discussion of these risks and uncertainties, please review the cautionary language regarding forward-looking statements in today's press release as well as in our filings with the SEC, which will be available on our website.

Please keep in mind the earnings materials and management's prepared remarks today include certain non-GAAP measures. Reconciliations of these measures to the most relevant GAAP metrics can be found in the press release, our earnings presentation and our upcoming SEC filing on our website.

With that, I'll turn the call over to Rohit.

Thank you, Daniel. Good morning, everyone. I am pleased to report that Enact delivered another strong quarter of performance, reflecting the continued disciplined execution of our strategy and the strength of our operating model. Our results demonstrate the strength of our business and our ongoing commitment to creating long-term value for our shareholders. To that end, we are pleased to announce our updated 2025 capital return expectation of approximately $500 million, up from prior guidance of $400 million.

Additionally, we entered a new $435 million revolving credit facility with favorable terms, providing additional financial flexibility with which to manage our business and execute our strategy. Dean will discuss both in more detail.

For the third quarter, we reported adjusted operating income of $166 million or $1.12 per diluted share. Additionally, adjusted return on equity was 13%, while insurance in-force increased 2% year-over-year to $272 billion, and we generated robust new insurance written of over $14 billion.

We continue to navigate a dynamic macroeconomic environment with discipline and focus. The U.S. economy continues to be supported by steady consumer spending, moderating inflation and a resilient labor market even as hiring momentum cools. On a national level, steady wage growth, lower mortgage rate and generally stable home prices have driven modest improvements to affordability. However, given broader macro uncertainties, consumers are more cautious and many buyers are still waiting for the right conditions, leading to an increase in housing supply in certain geographies.

Overall, our business remains underpinned by strong demographic tailwinds, particularly from prospective first-time homebuyers entering the market. We remain optimistic about the long-term health of the U.S. housing market and confident in our ability to deliver through economic cycles. Against this backdrop, our capital position and credit performance remain key strengths. During the quarter, we executed against our CRT program with a new quota share agreement that will cover new insurance written in 2027.

In addition, after quarter end, we closed on a new forward excess-of-loss agreement that will provide approximately $170 million of coverage on a portion of our 2027 book.

Our PMIERs sufficiency ratio was 162%, providing significant financial flexibility, and our credit and investment portfolios are in excellent shape. Our insurance in-force portfolio remains resilient with a risk-weighted average FICO score of the portfolio at 746. The risk-weighted average loan-to-value ratio was 93% and layered risk was 1.2% of risk in-force.

Pricing was constructive again in the quarter, and we maintained our commitment to prudent underwriting standards. Our pricing engine, Rate360, dynamically delivers competitive risk-adjusted pricing by factoring in actual and projected housing market rents at a detailed geographic level.

Total delinquencies were up 6% sequentially with new delinquencies up 12% and cures down 1%, both consistent with seasonal trends. We had a reserve release of $45 million, and our resulting loss ratio for the quarter was 15%. Credit performance continues to be strong, and we remain well reserved for a range of scenarios.

We delivered another quarter of strong expense management, with expenses that were down year-over-year, despite the ongoing inflationary environment. We are pleased with our disciplined cost management year-to-date and Dean will discuss the improved expectations for the remainder of 2025.

We continue to advance against our capital allocation priorities, support existing policyholders by maintaining a strong balance sheet, invest in our business to drive organic growth and efficiencies, fund attractive new business opportunities and return excess capital to shareholders. Regarding our first priority, I've already discussed our strong capital position, underscored by a robust PMIERs buffer as well as the ongoing execution of our CRT program and new credit facility.

I'm also pleased to note that during the quarter, we received our fourth ratings upgrade from Moody's since going public in 2021, upgrading MX rating to A2 from A3 and Enact Holdings' ratings to Baa2 from Baa3, while A.M. Best moved our outlook to positive.

In relation to our second priority, we continue to invest in initiatives to drive growth in our core MI business, including pursuing opportunities to deepen our existing relationships with lenders through technology enhancements, increasing customer engagement and improving the efficiency of our operations. In addition, Enact Re continues to perform well and participate in attractive GSE single and multifamily deals, while maintaining strong underwriting standards and generating attractive risk-adjusted returns. Enact Re remains a long-term growth opportunity that is both capital and expense efficient.

Finally, as it relates to capital returns, during the third quarter, we returned $136 million to shareholders through share repurchases and dividends. And as I mentioned earlier, we are increasing our expected capital returns to approximately $500 million for the year. This represents our highest capital return since the IPO, while also maintaining a very strong balance sheet and investing in our future. This upward revision reflects the strength of our business model and the current levels of mortgage originations. Overall, we are pleased with our performance in the third quarter and through the first 9 months of 2025.

We continue to navigate a complex and evolving environment from a position of strength, supported by robust new insurance written with excellent credit quality, a strong balance sheet and prudent expense management. As always, we are actively engaged with our lending partners, the GSEs and the administration to ensure we remain well positioned to adapt to an evolving environment.

With that, I will now hand it over to Dean to walk through our financial results in more detail.

Thanks, Rohit. Good morning, everyone. Adjusted operating income was $166 million or $1.12 per diluted share compared to $1.16 per diluted share in the same period last year, and $1.15 per diluted share in the second quarter of 2025. Adjusted operating return on equity was 13%. A detailed reconciliation of GAAP net income to adjusted operating income can be found in our earnings release.

Turning to revenue drivers. New insurance written was $14 billion, up 6% sequentially and up 3% year-over-year. Persistency was 83% in the third quarter, up 1 point sequentially and flat year-over-year, continuing its trend above historical norms. While mortgage rates have fallen recently, our portfolio remains resilient with 21% of mortgages having rates at least 50 basis points above September's average of 6.4%. Historically, persistency has varied in relation to mortgage rates. As rates continue to change, we may see persistency shift from its current level.

The combination of solid new insurance written and elevated persistency drove primary insurance in-force of $272 billion in the third quarter, up $2 billion or approximately 1% from the second quarter of 2025 and $4 billion or approximately 2% year-over-year.

Total net premiums earned were $245 million, flat sequentially and down modestly year-over-year. The year-over-year decrease was primarily driven by higher ceded premiums. Our base premium rate of 39.7 basis points was down 0.1 basis point sequentially, aligned with our expectation for base premium rate in 2025 to approximate 2024 levels. As a reminder, our base premium rate is impacted by several factors and tends to modestly fluctuate from quarter-to-quarter. Our net earned premium rate was 34.9 basis points, down slightly sequentially, driven by higher ceded premiums.

Investment income in the third quarter was $69 million, up $3 million or 4% sequentially and up $8 million or 12% year-over-year. Our new money investment yield continues to exceed 5%, lifting our overall portfolio book yield. As we noted in the past, while we typically hold investments to maturity, we may selectively pursue income enhancement opportunities. During the quarter, we sold certain assets that will allow us to recoup realized losses through future higher net investment income.

Turning to credit. We continue to see stable credit performance across our overall portfolio. New delinquencies increased sequentially to 13,000 in the quarter from 11,600 in the second quarter of 2025, in line with expected seasonal trends. Our new delinquency rate continues to remain consistent with pre-pandemic levels for the quarter at 1.4%, an increase of 20 basis points compared to 1.2% in the second quarter of 2025 and flat to the 1.4% in the third quarter of 2024. We assess our claims rate on a regular basis and maintain our claim rate on new delinquencies at 9%.

Total delinquencies in the third quarter increased sequentially to 23,400 and from 22,100 as news outpaced cures and the delinquency rate increased 20 basis points sequentially to 2.5%.

Losses in the third quarter of 2025 were $36 million and the loss ratio was 15% compared to $25 million and 10%, respectively, in the second quarter of 2025 and $12 million and 5%, respectively, in the third quarter of 2024. The current quarter's reserve release of $45 million from favorable cure performance and loss mitigation activities compares to a reserve release of $48 million and $65 million in the second quarter of 2025 and third quarter of 2024, respectively.

Turning to our continued prudent expense management. Operating expenses for the third quarter of 2025 were $53 million and the expense ratio was 22%, consistent with the second quarter of 2025 and lower than the $56 million and 22%, respectively, in the third quarter of 2024. Based on our performance and fourth quarter outlook, we now forecast 2025 expenses, excluding reorganization costs, at approximately $219 million, lower than our previous range of $220 million to $225 million despite inflationary headwinds.

We continue to operate from a strong capital and liquidity position, reinforced by our robust PMIERs sufficiency and the successful execution of our diversified CRT program. Our PMIERs sufficiency was 162% or $1.9 billion above PMIERs requirements at the end of the third quarter. During the quarter, we entered into a new forward quota share reinsurance agreement, which ceded approximately 34% of our 2027 new insurance written to a broad panel of highly rated reinsurers. Subsequent to the end of the quarter, we secured approximately $170 million of additional excess of loss reinsurance coverage for a portion of our 2027 book by a broad panel of highly rated reinsurers. These transactions demonstrate our commitment to disciplined risk management while providing certainty of coverage at favorable market terms.

As of September 30, 2025, our third-party CRT program provides $1.9 billion of PMIERs capital credit.

During the quarter, Moody's upgraded the insurance financial strength rating for our flagship insurance subsidiary Enact Mortgage Insurance Corporation to A2 from A3. Moody's also upgraded Enact Holdings, Inc.'s long-term issuer rating and senior unsecured debt rating to Baa2 from Baa3, and the outlook for the ratings is stable. This marks the fourth upgrade since our IPO in 2021 from Moody's. Also, A.M. Best raised our ratings outlook from stable to positive.

Additionally, we entered into a new $435 million 5-year senior unsecured revolving credit facility at favorable terms, expanding our borrowing capacity, extending our maturity profile and providing greater flexibility and liquidity to support our operations. In addition, our conservative debt-to-capital ratio of 12% provides additional financial flexibility.

Turning now to capital allocation. During the quarter, we paid out $31 million or $0.21 per share through our quarterly dividend. Today, we announced our third quarter dividend of $0.21 per common share payable December 11. In addition, we bought 2.8 million shares for $105 million in the third quarter of 2025. Through October 31, we repurchased an additional 1.2 million shares for $42 million.

As Rohit mentioned earlier, we are increasing our 2025 total capital return guidance to approximately $500 million, recognizing our ongoing strong business performance and current mortgage origination levels. As always, the final amount and form of capital return to shareholders will depend on business performance, market conditions and regulatory approvals.

Overall, we are pleased with our performance in 2025 to date, and we believe we are well positioned for a strong end to the year. We remain focused on prudently managing risk, maintaining a strong balance sheet and delivering solid returns for our shareholders.

With that, let me turn the call back to Rohit.

Thanks, Dean. Looking ahead, while the external environment remains dynamic, our strong balance sheet, embedded equity and disciplined operating approach positions us well to navigate uncertainty and capitalize on long-term opportunities. I want to thank our entire team for their continued dedication and exceptional execution. Their commitment to our mission of helping people responsibly achieve the dream of homeownership is what drives our success. We continue to remain focused on delivering long-term value for all of our stakeholders, and we are confident in our ability to continue building on our strong history of consistent performance.

Operator, we are now ready for Q&A.

[Operator Instructions] The first question comes from Bose George with KBW.

I first wanted to just ask about the expectation for delinquency trends. Can you talk about where you think delinquencies will peak on portfolios as they're fully seasoned? Can we look at books that are closer to being fully seasoned like maybe 2021 or as a way to gauge where the newer books will season?

Yes, Bose, thanks for the question. From a credit perspective, very much in line with what we said in our prepared remarks, credit performance remains very strong through the third quarter. It's certainly supported by a lot of different factors, kind of chief among them, the resilient macroeconomic environment, coupled with the embedded home price appreciation across our portfolio.

I think from a vintage perspective, getting to that part of your question, we -- as we disaggregate the portfolio, we really don't see any variance to expectations across variables across the portfolio, and that includes book years. Obviously, there's book years with different mixes of risk variables. More recently, the 2022 and forward book years have a higher concentration to a purchase origination market, which tends to have higher concentration in high LTV, high DTIs. But when you consider those risk attributes mix, we really see good alignment between our actual performance and our expectations when we onboard that business from the onset. So I think certainly, credit performance is going to be very dependent on the macroeconomic environment. And if we continue to see the resiliency that we've seen to date, we would expect credit performance to stay in that very -- aligned with the very strong credit performance that we've seen to date.

Okay. Great. And is the typical seasoning sort of 4 years, 5 years? Is that when they're fully seasoned?

Yes. From an aging of the of the overall portfolio, we've talked about the normal loss development curve and the progression up that curve towards a plateau at around years 3 to 4. It's not a point. It's kind of a plateauing and that plateau happens in between years 3 and 4 and maybe another 12 months thereafter. What we've seen, what we talked about our expectation heading into 2025 was given the aging of that portfolio up in that 3- to 4-year time period that we would see some slowing in the delinquency development from a year-over-year change perspective. And I think that's actually what we've seen.

So when you look back '23 to '24, you saw kind of mid-teens percentage change in increase in new delinquencies. This year, you see more kind of mid-single digits, 5%, 6% change year-over-year. And I think that has a lot to do with the aging of the portfolio and the development or the progression of the normal loss development curve.

Okay, great. And then just actually one clarification on the expense. The year-over-year increase, obviously, is very modest, but just in terms of the quarterly trends, the last couple of quarters, I guess, were a little lighter than '24. So this year, I guess, is the 4Q just a little more back-end heavy versus the other quarters?

Yes, Bose, we've talked about this in the past that our expenses aren't level throughout a calendar year. We typically have higher variable performance-based incentive comp over the last -- second half of the year. I think that's going to have a more meaningful impact in the last quarter of this year. But if you look back at prior year experience as well, you see that in the third and fourth quarters of just going back to like 2024. So yes, similar driver and a little bit more disproportionate in the fourth quarter of this year.

[Operator Instructions] The next question comes from Rick Shane with JPMorgan.

Really a couple of things. One, you've provided favorable guidance on expenses. One of the questions that I think everybody is wrestling with is how technology, particularly AI is transforming different businesses. Can you talk a little bit about what's driving your favorable expense guidance, but also longer term, how you see AI transforming your business?

Absolutely, Rick. So I would say in terms of favorable performance of expenses, as Dean talked about it in his prepared remarks, we are always prudent in our expense management as a company, and you have seen that play out since our IPO. During 2021, our expenses were close to $240 million, I would say, low $240 million range. And since that time, despite inflationary pressures, we have actually reduced our expenses close to $25 million.

And last 3 years, we basically have our expenses trending flat in terms of total expense dollars. So I think that's just our general mindset that when we think about our expenses, we are very mindful of the environment where we are making investments, how do we make our existing processes more efficient, whether it comes to our underwriting processes, whether running rest of the business, we are making technology investments on an ongoing basis to harvest benefits from those investments. Now that being said, we also make technology investments to make smarter decisions.

In the past, I've talked about investments in our Rate360 engine, where 6, 7 years ago, we started investments in our data. Then we started investments in machine learning. And as a result, we believe we have a very granular risk-based pricing system in Rate360 that allows us to make decisions and changes at a more granular level and in a more agile way in the market so we can respond to market changes.

And lastly, I would say that we also spend time and investments in customer experience. So in places where we can improve customer experience and that allows us to have a bigger footprint in the market. We are proud of our customer base in terms of number of customers we do business with on an active basis. That continues to be close to 1,600 lenders in the country as well as doing business with all top 20 originators in the country. So I would say that's our technology strategy.

When it comes to AI, I've said in the past that we continue to invest on that front both for efficiency reasons and making smarter and more granular decisions. So that's basically how we see that playing out for our business.

Got it. Okay. That's helpful. And then just if we can think about a little bit in terms of -- you've increased your return of capital allocation for the year 25%. It's risen steadily throughout the year. This was a strong quarter in line roughly, I think, with at least Street expectations. Is it just that you guys sort of as you move through the year and gather more information, feel more confident in terms of setting your capital return expectations? It's -- I don't think this year is way out of whack with your expectations, and I don't think third quarter or fourth quarter outlook seems radically different. What drives a 25% increase in capital return outlook?

Yes, Rick, it's Dean. I appreciate the question. I think you hit on a lot of the points. When we set our return of capital plans at the beginning of the year, we're thinking about our expectations around business performance. We're thinking about the current and prospective macroeconomic environment, and we're thinking about the regulatory landscape to determine kind of what the appropriate level of capital return is given the intersection of those 3 considerations. I think as we go through the year, we both make assessments how we're doing relative to our original expectations. And then to your point, we're gaining more and more confidence in those drivers as we progress through the year.

From my perspective, the increase from $400 million to $500 and even if you go back a quarter, the increase from $350 million to $500 million, I think it reflects both the favorable business performance year-to-date and also certainly an indication of the current level of mortgage originations that are in the market today. I think it's really the combination of those 2 things that has caused us to come back and revise our return of capital guidance upwards.

Got it. And so if I were to summarize that, year has manifested potentially better than your conservative expectations, but this is really about the confidence interval on that performance narrowing to the higher end as we sort of move into fourth quarter.

Yes, Rick, I'm not sure if I would call it conservative expectations. I would just say we operate in an uncertain environment. So we always keep that in mind. You see that in our commentary in our prepared remarks that we are running the business with a mindset that we need to be confident in our actions. And as we gain that confidence with actual performance coming through, we continue to update it along the year. So I think it's just the nature of how we actually manage the business and how we make sure that we can deliver on our promises consistently.

Got it. Fair point that uncertainty has been mitigated as we move through this year in general. That's a fair point.

This concludes our question-and-answer session. I would like to turn the conference back over to Rohit Gupta for any closing remarks.

Thank you, Drew. Thank you, everyone. We appreciate your interest in Enact. And once again, I would like to wrap up the call by thanking all of our employees for their hard work and dedication in fulfilling our mission to help people buy a house and keep it their home. Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Hello, and welcome to Enact second quarter earnings conference call. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker, Daniel Kohl, Vice President of Investor Relations. You may begin.

Thank you, and good morning. Welcome to our second quarter earnings call. Joining me today are Rohit Gupta, President and Chief Executive Officer; and Dean Mitchell, Chief Financial Officer and Treasurer. Rohit will provide an overview of our business performance and progress against our strategy. Dean will then discuss the details of our quarterly results before turning the call back to Rohit for closing remarks. We will then take your questions. The earnings materials we issued after market close yesterday contain our financial results for the quarter, along with a comprehensive set of financial and operational metrics. These are available on the Investor Relations section of our website. Today's call is being recorded and will include the use of forward-looking statements. These statements are based on current assumptions, estimates, expectations and projections as of today's date.

Additionally, they are subject to risks and uncertainties, which may cause actual results to be materially different, and we undertake no obligation to update or revise such statements as a result of new information. For a discussion of these risks and uncertainties, please review the cautionary language regarding forward-looking statements in today's press release as well as in our filings with the SEC, which will be available on our website. Please keep in mind the earnings materials and management's prepared remarks today include certain non-GAAP measures. Reconciliations of these measures to the most relevant GAAP metrics can be found in the press release, our earnings presentation and our upcoming SEC filing on our website. With that, I'll turn the call over to Rohit.

Thank you, Daniel. Good morning, everyone. Enact closed out the first half of the year with another strong quarter. Our results continue to reflect the disciplined execution of our strategy, robust credit performance and our ongoing commitment to creating long-term value for our shareholders. To that end, we are pleased to announce a meaningful increase in our expected capital returns for 2025 to approximately $400 million, which we will discuss in more detail later. For the second quarter, we reported adjusted operating income of $174 million, while adjusted earnings per diluted share was $1.15. Additionally, adjusted return on equity was over 13%. Insurance in force increased 1% year-over-year to $270 billion, and we generated robust new insurance written of over $13 billion.

We continue to successfully navigate a complex macroeconomic environment. While certain indicators such as labor market resilience, moderating wage growth and the overall health of our borrowers remain strong, uncertainties persist. In particular, the lack of near-term clarity around trade policy and the potential implementation of reciprocal tariffs has introduced additional volatility to the outlook. Affordability continues to be challenged. And while home inventories have started to build up in certain geographies, there are more buyers than sellers at the national level. Having said that, our business is supported by strong demographic trends, especially within the historical first-time homebuyer segment. Overall, we continue to remain optimistic about the long-term health of the U.S. housing market. Against this backdrop, our capital position and credit performance remain key strengths.

At quarter end, we reported PMIERs sufficiency ratio of 165%, providing significant financial flexibility and our credit portfolio remains in excellent shape. At the end of the second quarter, approximately 7% of our insurance in force had mortgage rates at least 50 basis points above June's average mortgage rate of 6.8% and the credit quality of our insured portfolio remains strong. The risk-weighted average FICO score of the portfolio was 746. The risk-weighted average loan-to-value ratio was 93% and layered risk was 1.2% of risk in force. Pricing was again constructive in the quarter, and we maintained our commitment to prudent underwriting standards. Our pricing engine, Rate 360, allows us to deliver competitive pricing on a risk-adjusted basis, and we continue to prudently underwrite and select risk. We saw favorable delinquency and cure performance during the quarter that followed typical seasonal sequential trends.

Total delinquencies were down 1% sequentially, with new delinquencies also decreasing by 5%. Strong embedded equity, combined with our effective loss mitigation efforts helped drive robust cure performance with a cure rate of 52%. This drove a reserve release of $48 million, and our resulting loss ratio for the quarter was 10%. Credit performance remains strong, and we are well reserved for a range of scenarios. On the expense front, we maintained our disciplined approach to expense management while investing in technologies and processes that improve customer experience and our business operations. Despite the ongoing inflationary environment, our expenses, excluding restructuring charges were flat year-over-year. We continue to advance on all capital allocation priorities to support existing policyholders by maintaining a strong balance sheet, invest in our business to drive organic growth and efficiencies, fund attractive new business opportunities to diversify our platform and return excess capital to shareholders.

As it relates to diversification, Enact Re continues to build momentum as we participate in single and multifamily GSE CRT transactions. Enact Re remains capital and expense efficient and is contributing to our long-term earnings profile. As it relates to capital returns, during the second quarter, we returned $116 million to shareholders through share repurchases and dividends. And as I mentioned earlier, we are increasing our expected capital returns to approximately $400 million for the year. Before handing the call over to Dean, I wanted to take a moment to recognize our culture and our people. For the third year, Enact was recognized as one of the best places to work by Triangle Business Journal. We take pride in fostering an environment where our teams can thrive and do their best work in the service of our customers and stakeholders and are very pleased to have received this recognition.

Overall, we are pleased with our performance through the first half of 2025. We are navigating a complex environment from a position of strength supported by robust new insurance written with excellent credit quality, a strong balance sheet and prudent expense management. Additionally, we are working closely with our lending partners, the GSEs and the administration to ensure we are well positioned to adapt to any regulatory changes. We were excited to see that MI premiums have become tax deductible again. With the support of a highly engaged team, we are focused on executing our strategy and maximizing value for our shareholders. With that, I will now hand it over to Dean to walk through our financial results in more detail.

Thanks, Rohit. Good morning, everyone. Adjusted operating income was $174 million or $1.15 per diluted share compared to $1.27 per diluted share in the same period last year and $1.10 per diluted share in the first quarter of 2025. Adjusted operating return on equity was 13.4%. A detailed reconciliation of GAAP net income to adjusted operating income can be found in our earnings release. Turning to revenue drivers. New insurance written was $13 billion, up 35% sequentially and down 3% year-over-year. The sequential increase was primarily driven by mortgage origination seasonality from the spring selling season. Persistency was 82% in the second quarter, down 2 points sequentially and down 1 point year-over-year. Our portfolio remains resilient with 7% of our mortgages having rates at least 50 basis points above June's average of 6.8%.

We expect elevated persistency will continue to help offset the potential impact of higher mortgage rates on the origination market. Given the combination of solid new insurance written and elevated persistency, primary insurance in force was $270 billion in the second quarter, up $2 billion or 1% from the first quarter of 2025 and $4 billion or approximately 1% year-over-year. Total net premiums earned were $245 million, flat sequentially and up modestly year-over-year. The year-over-year increase was primarily driven by premium growth from attractive adjacencies and the growth of our mortgage insurance portfolio, mostly offset by higher ceded premiums. Our base premium rate of 39.8 basis points was down 0.3 basis points sequentially, aligned with our expectation for base premium rate in 2025 to stabilize around 2024 levels. As a reminder, our base premium rate is impacted by several factors and tends to modestly fluctuate from quarter-to-quarter.

Our net earned premium rate was 35.2 basis points, relatively flat sequentially. Investment income in the second quarter was $66 million, up $3 million or 5% sequentially and up $6 million or 10% year-over-year. Our new money investment yield continued to exceed 5%, lifting our overall portfolio book yield. As previously stated, while we typically hold investments to maturity, we may selectively pursue income enhancement opportunities. During the quarter, we sold certain assets that will allow us to recoup realized losses through future higher net investment income. Turning to credit performance. New delinquencies decreased sequentially to 11,600 in the quarter from 12,200 in the first quarter of 2025, in line with expected seasonal trends. Our new delinquency rate remained consistent with pre-pandemic levels and for the quarter at 1.2%, a decrease of 10 basis points compared to the 1.3% in the first quarter of 2025 and 1.1% in the second quarter of 2024.

The year-over-year increase was primarily driven by higher new delinquencies from the normal loss development pattern of newer books. We maintained our claim rate on new delinquencies at 9%. Total delinquencies and the delinquency rate of 2.3% in the second quarter were flat sequentially as cures kept pace with news. Losses in the second quarter of 2025 were $25 million and the loss ratio was 10% compared to $31 million and 12%, respectively, in the first quarter of 2025 and negative $17 million and negative 7%, respectively, in the second quarter of 2024. The current quarter's reserve release was $48 million, driven by ongoing favorable cure performance and loss mitigation activities.

Turning to operating expenses. Operating expenses for the second quarter of 2025 were $53 million, and the expense ratio was 22% compared to $53 million and 21%, respectively, in the first quarter of 2025 and $56 million and 23%, respectively, in the second quarter of 2024. For 2025 operating expenses, we continue to anticipate a range of $220 million to $225 million, excluding reorganization costs. We continue to operate from a strong capital and liquidity position, reinforced by our robust PMIERs sufficiency and the successful execution of our diversified CRT program. PMIERs sufficiency was 165% or $2 billion above PMIERs requirements at the end of the second quarter. As of June 30, 2025, our third-party CRT program provides $1.9 billion of PMIERs capital credit. Let me now turn to capital allocation. During the quarter, we paid out $31 million or $0.21 per share through our quarterly dividend.

Today, we announced a third quarter dividend of $0.21 per common share payable September 8. In addition, we bought 2.4 million shares for $85 million in the second quarter of 2025. Through July 25, we repurchased an additional 0.8 million shares for $30 million. As Rohit mentioned earlier, we are increasing our 2025 total capital return guidance to approximately $400 million. As in the past, the final amount and form of capital return to shareholders will depend on business performance, market conditions and regulatory approvals. Overall, we are pleased with our performance in the first half of 2025, and we believe we are well positioned for the second half. We remain focused on prudently managing risk, maintaining a strong balance sheet and delivering solid returns for our shareholders. With that, let me turn the call back over to Rohit.

Thanks, Dean. Looking ahead, we are confident in our ability to navigate complex and evolving macroeconomic environments. Our strong balance sheet, disciplined risk management and thoughtful approach to capital deployment provide meaningful flexibility as we execute our strategy. We remain grounded in our mission to help people responsibly achieve the dream of homeownership, which continues to guide how we serve our customers, support our communities and create long-term value for all our stakeholders. Operator, we are now ready for Q&A.

[Operator Instructions] The first question comes from the line of Doug Harter with UBS.

I was hoping you could talk about the seasoning of the recent origination vintages and how you might -- how you think some of the regional home price weakness might affect the seasoning of those newer vintages?

Doug, this is Rohit. I will have Dean start on the performance of the recent vintages, and then I'll add color on the regional home price declines.

Yes. So Doug, just lifting up real quick, I'd say overall credit performance remains very strong through the second quarter. Lots of reasons for that, meaningful embedded HPA across our insured portfolio is certainly one of the reasons, but also we're operating in a pretty resilient economy. And the U.S. consumer remains pretty strong, whether it's employment, wage growth, balance sheet and the like. So credit -- that backdrop of credit performance being strong, I think, should cover any evaluation of loss performance for the quarter. I think in terms of geographies, certainly at a national level, very similar to what I said in terms of credit performance, very good performance. Home inventories remain healthy with housing supply, I think, at about 4.5 months. That's below the 6-month a level that we consider as an equilibrium.

I would say there are some markets where inventories have risen and created some softness in a particular market. I think the most notable example given the Wall Street Journal article from a couple of weeks ago is Cape Coral, where inventories have risen sharply and supply is outpacing demand. I think in this particular instance, Cape Coral makes up a very small part of our overall portfolio. But maybe thinking about that more broadly, in geographies where supply has grown or is trending higher, we adjust our pricing to reflect the impact of not just current home prices, but future home prices into our pricing equation. Our risk-based pricing approach applies what we believe is the right price for the right risk for both credit attributes and macroeconomic assumptions, including future home prices, again, embedded into our pricing levels given our assessment of any particular market.

And Doug, I would just add to Dean's comment, I agree with everything that Dean said that as you think about consumers and the way they value shelter or homeownership, that continues to be very high. So we don't see a high correlation on a slight home price decline in a certain geography suddenly leading to consumers actually defaulting on their home. While there could be some performance differential between a market that has significant home price appreciation versus the market that's slightly declining, we still continue to see in our borrowers that borrowers are prioritizing mortgage payments over every other payment. So we still think that given the labor market is strong, given that consumer balance sheets for our borrowers continue to be resilient that, that is going to be indicated in our performance.

Our next question comes from the line of Rick Shane with JPMorgan.

Look, Doug, I think, covered probably the most important and salient issue for the space at the moment. But I would like to talk about the addressable market. We're now halfway through 2025. And at least versus our expectations, new insurance written for the industry is coming in a little bit lower. We won't know until everybody reports if it's market share shift or it's TAM just being a little bit smaller. When you look at your numbers, what do you think is going on there? Is market share shifting? Or is there a little bit less demand, and that's what we're seeing in terms of NIW.

Thank you for your question. So at the beginning of the year in February, when I provided our view on MI market size for 2025, I gave guidance that we expect MI market size to be generally similar to 2024. MI market size in 2024, just for context, was around $300 billion. Our view even right now is that, that statement is true, although we might have gotten there in a slightly different way than we expected. I think mortgage rates continuing to remain high, have probably suppressed purchase origination market compared to our original estimates. So that could be some headwinds in one direction. But then on the flip side, we have seen consumers continue to use private mortgage insurance in a meaningful way. So we still see that 2025 will be similar to 2024. And I would say the 2 things that we are keeping an eye on are definitely mortgage rates because that drives consumer affordability.

So when mortgage rates are hovering close to 7% for a 30-year fixed mortgage, consumers are trying to figure out if they can afford that home in a prudent and safe way. The second thing that we continue to hear from our lending partners is the uncertainty in the environment related to tariffs and any cascading impact on corporations or consumers. We saw a similar behavior back in middle of 2022. It actually reflected both in originations volume and even home prices flattening for a short period of time. And when that uncertainty abated, then consumers came back to the market. So I would say short answer, relatively similar levels through 2024. And then the things that we are keeping an eye on are consumers basically coming back to the market as the uncertainty around tariffs abate.

Got it. And when you think about your capital planning, and obviously, the offset to that is that when NIW is a little bit softer, it tends to be correlated with higher persistency. Does that sort of what you've seen so far and potentially how it impacts your outlook impact your capital return plans? Does that contribute to the increase? Or is it really just driven by the higher ROEs?

Yes. Thank you, Rick. So our capital return guidance is indicative of our actual performance, but we do take into account the macro environment, both today and prospectively. And as we always do, we will continue to evaluate the amount based on business performance, prospective market conditions and also on an opportunistic basis, our share price. So as you saw in our results, we continue to see strong credit performance, as Dean articulated, strong performance in our bottom line results, and that led us to increasing our full year return of capital guidance to approximately $400 million. The final amount and the form of capital return to shareholders will depend on how business performs from here on out. But I would say, as a reminder, since our IPO, we have returned over $1.3 billion to shareholders, and we continue to think in a very balanced way on our capital priorities, first allocating capital to our insurance in force and thinking about allocating capital to investing in the business and looking at adjacencies and lastly, making sure that we are always focused on returning capital to shareholders.

Your next question comes from the line of Mihir Bhatia with Bank of America.

I wanted to just start with the delinquency outlook. I appreciate what you said about the credit fundamentals for housing credit still appear to be quite supportive. But maybe a 2-part question there. The first is, are you seeing -- the headlines obviously talk a little bit more about home prices not being so great, and you talked a little bit about supply. But I guess, compared to 6 months ago or a year ago, are you seeing the -- are you seeing any kind of change in the -- has your view on housing credit changed? Are you -- is the headlines that we are seeing actually showing up in your data in any way in terms of stress for homeowners?

So as we think about the outlook for delinquencies, is that something we should keep in mind? Because it looks like things have just been moving with typical seasonality. And on that point, just given the different vintage sizes, typically, you see an increase of about 20 basis points in delinquencies, I think, in new notices in the third quarter. Is that -- should we expect something similar here? Or is there something going on with the large vintage sizes entering peak loss years that we should keep in mind?

Mihir, thank you for your question. Some of your -- the last part of your question might be too precise for me, so I'll hand it off to Dean. But let me start on kind of how we think about the 2 main points you talked about. First thing I would start off with just is consumers. And I would say, as I said in my prepared remarks, we still see the labor market being strong and balance sheets for our borrowers continue to be resilient in this environment. While there is uncertainty in the economy about impacts of tariffs on corporations and consumers, we have not seen any meaningful impact of that on our borrowers yet.

And Mir, just in terms of how we think about resiliency of our borrower and our portfolio, we actually run reports on a quarterly basis, taking a sample of our insurance in force to see what we think of consumer credit grid. And at the end of second quarter, we continue to see that metric actually perform well. So that tells us that right now, our borrower on our insurance in force is in good shape. So that's why when you listen to our comments on consumers being strong, that's what's driving it in addition to the data we shared on our new delinquencies and our new delinquency trends being in line with past seasonal trends. I would say I'm very focused on talking about our borrowers because we do acknowledge that in nonprime space, we have seen stress in different asset classes all the way from credit cards to autos and even mortgages.

But in the prime space, in the conventional space and our borrowers, we continue to see good performance. The second thing you talked about was regional home price decline. So to Dean's previous comments, I would say we have seen some regional home price depreciation in April and May. So if you think about a rolling kind of home price trend on a 3-month basis, you see flat home prices. But again, if you think about this slowdown from an HPA perspective, it's very comparable to what we saw in summer of 2022, which was also a time where we saw economic uncertainty being heightened and consumers being actually more mindful of making big purchases. We still believe that demographic trend from a housing perspective is robust, and there are definitely certain unique factors today, trade policy uncertainty and any implications of that on labor market, but we continue to be optimistic about household balance sheets and demographic trends that are supportive of our sector. Now let me turn it over to Dean on the seasonal trends on performance.

Yes. So Mihir, thanks for the question. And I -- some of this is going to echo points that Rohit made but let me see if I can add some color. First of all, just in terms of new delinquency development, our new deliq rates are very consistent with pre-pandemic levels. I think that's driven by that strong labor market, wage growth and the like that Rohit made reference to. And then from a cure performance, we continue to see elevated cures relative to expectations. I think that's driven largely by the meaningful amount of embedded HPA across our insured portfolio. Just in terms of what we're seeing maybe more recently in terms of new delinquency accident quarters and speaking about this particular quarter itself, we continue to see meaningful embedded home price appreciation on new delinquencies that are developing this quarter.

Our performance experience shows that HPA is a significant mitigant to loss. It increases the probability to cure. It reduces the probability of rolling the claim. And in HPA, again, based on our experience, the impact of that is really linear. So every point of embedded HPA helps to reduce the probability of ultimately rolling the claim. Obviously, more is better, higher is better. We do put some stats in our earnings presentation about how much of our portfolio and how much of our delinquencies have at least 10% embedded equity in their respective portfolios. And I think that's just a nice amount of cushion to protect against some of the softness that's developing in local markets that Rohit made reference to earlier.

Got it. both your comments were quite helpful there. Maybe just -- I'll get in queue after this again, but maybe just any update on the Washington front. Obviously, we hear a lot of, I guess, a lot of news, a lot of tweets, but anything on the ground changing from a regulatory standpoint that's impacting your business in a meaningful way?

Yes, Mihir. So we are very engaged on the Washington front. As I've said in previous calls, we have very strong relationships with the GSEs, FHFA and then across the housing ecosystem and with key legislators. So we continue to engage in the dialogue on all the topics being discussed. So whether it's guideline changes or any changes to the programs that exist with the GSEs as those announcements happen or as those initiatives start, we are actively engaged in making sure that we are continuing to create a housing finance system where we are supporting well-qualified consumers achieve the dream of homeownership. So as we think about specific initiatives, we can talk about any of these offline. But we are definitely in the actual working groups either directly or through trade associations. So that continues to be a productive dialogue.

[Operator Instructions] The next question comes from Bose George with KBW.

Actually, Dean, just a quick follow-up on the comments you made about the embedded HPA this quarter. Just when you look at the trend on that the HPA on new notices, has there a change in that over the last, say, year or so?

Yes. I think it's -- Bose, thanks for the question. I mean it's definitely -- HPA overall has slowed. And in some markets, as we've been talking about, it's declined. So you have seen some slowing, let's say, over the last 12 to maybe even 18 months. At the same time, when you look at it in the aggregate over the course or over the total of the new delinquencies that were reported in the current quarter, it's still substantial. And still, we believe, serves as a meaningful mitigant to the probability of ultimately going to claim.

Okay. Great. And then actually, in terms of the default to claim, can you talk about the sort of the actual default to claim levels that you're seeing relative to that 9% that you're going to book it on new notices?

Yes. So you correctly referenced, we do have a 9% claim rate on new delinquencies. I think we've stated this in the past, Bose, that, that 9% claim rate really isn't aligned with current performance trends. It's more a nod to the fact that we're operating in an environment of heightened economic uncertainty, and that uncertainty could ultimately impact the performance trajectory of delinquencies rolling the claim on a go-forward basis. That uncertainty has ebbed and flowed through time. But I still think today, we're operating with a high degree of uncertainty in the current environment.

I think from a performance perspective, obviously, we've seen performance meaningfully better than that 9% claim rate. It's really been the underpinning of the reserve releases that we did in the current quarter, obviously, $48 million in the second quarter. But also if you look back over the course of the last 3 years, there's about roughly $250 million of annual reserve release over those 3 years. So we continue to see performance better than 9%, but we still believe the 9% is prudent in line with our prudent and measured approach to reserving, and appropriate for the here and now. What would change that go forward, Bose, is us looking at the future macroeconomic environment and saying that uncertainty has abated. That would cause us to come back and take a look at the appropriateness of that 9% and potentially make a change.

This concludes the question-and-answer session. I'd now like to turn the call back to Rohit Gupta for closing remarks.

Thank you, Kathy, and thank you, everyone. We appreciate your interest in Enact, and I look forward to seeing many of you at the virtual JPM Future of Financials Forum on August 13. Thank you.

Thank you for your participation in today's conference. This does conclude the program, and you may now disconnect.