What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-02-28 compared with 2022-02-28 · 402 added, 392 removed, 1220 unchanged (39% of the section changed)

2 unchanged sentences

Audited Financial Statements

Report of Independent Registered Public Accounting Firm ( KPMG LLP , Richmond, Virginia , Auditor Firm ID:

Report of Independent Registered Public Accounting Firm ( KPMG LLP , Raleigh, North Carolina , Auditor Firm ID:

Consolidated Balance Sheets as of December 31, 202 2 and 20 21

5 unchanged sentences

Supplemental Schedules:

Supplemental Schedule I, Su mm ary of Invest ments - Other than Investments in Related Parties

Supplemental Schedule I I , Fina ncial Statements of Enact Holdings, Inc.

(Parent Company O nl y)

Supplemental Schedule I, Summary of Investments- Other than Investments in Related Parties

Supplemental Schedule II, Financial Statements of Enact Holdings, Inc.

(Parent Company Only)

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 28, 2023 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

1 unchanged sentence

Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

10 unchanged sentences

Loss reserves

As described in Notes 2 and 5 to the consolidated financial statements, the Company estimates the liabilities for losses on insured mortgage loans (loss reserves) by estimating the number of loans in their inventory of delinquent loans that will result in a claim payment, which is referred to as the claim rate, and further estimating the amount of the claim payment, which is referred to as claim severity.

rate, and further estimating the amount of the claim payment, which is referred to as claim severity.

The estimates are determined using a factor-based approach, in which assumptions of claim rates for loans in default and the average amount paid for loans that result in a claim are calculated using traditional actuarial techniques.

15 unchanged sentences

(Amounts in thousands, except par value per share amount) 2022 2021

Fixed maturity securities available-for-sale, at fair value (amortized cost $ 5,160,174 and $ 4,781,916 at December 31, 2021 and 2020, respectively)

Fixed maturity securities available-for-sale, at fair value (amortized cost $ 5,371,673 and $ 5,160,174 as of December 31, 2022 and 2021, respectively)

$ 4,884,760 $ 5,266,339

Short term investments 3,047 —

Total investments 4,887,807 5,266,339

Cash and cash equivalents 513,775 425,828

1 unchanged sentence

Deferred acquisition costs 26,121 27,220

Premiums receivable (net of allowance for credit losses of $ 893 as of December 31, 2021)

Premiums receivable (net of allowance for credit losses of $ 873 and $ 893 as of December 31, 2022 and 2021, respectively)

41,738 42,266

Other assets 76,391 73,059

Deferred tax asset 127,473 —

$ 5,709,149 $ 5,865,773

9 unchanged sentences

600,000 shares authorized;

162,840 shares issued and outstanding

162,779 and 162,840 shares issued and outstanding as of December 31, 2022 and 2021, respectively

$ 1,628 $ 1,628

22 unchanged sentences

196,824 422,639 634,041

Income before income taxes and change in fair value of unconsolidated affiliate

Income before income taxes

898,222 695,216 472,418

Provision for income taxes 194,065 148,531 101,997

Income before change in fair value of unconsolidated affiliate

$ 704,157 $ 546,685 $ 370,421

Change in fair value of unconsolidated affiliate, net of tax — — 115,290

$ 546,685 $ 370,421 $ 677,628

Net income per common share:

9 unchanged sentences

Net income $ 704,157 $ 546,685 $ 370,421

Other comprehensive income, net of taxes:

Other comprehensive income (loss), net of taxes:

Net unrealized gains (losses) on securities ( 466,484 ) ( 125,071 ) 114,947

Foreign currency translation 159 ( 7 ) —

Other comprehensive income ( 125,078 ) 114,947 119,953

Total comprehensive income $ 421,607 $ 485,368 $ 797,581

Other comprehensive income (loss) ( 466,325 ) ( 125,078 ) 114,947

Total comprehensive income (loss) $ 237,832 $ 421,607 $ 485,368

See Notes to Consolidated Financial Statements

16 unchanged sentences

$ 1,628 $ 2,368,699 $ 208,378 $ 1,303,106 $ 3,881,811

Cumulative effect of change in accounting, net of taxes — — 281 ( 281 ) —

Comprehensive income:

1 unchanged sentence

Other comprehensive income, net of taxes — — ( 125,078 ) — ( 125,078 )

Stock-based compensation expense and exercises and other — 2,259 — ( 763 ) 1,496

Dividends to Genworth — — — ( 200,294 ) ( 200,294 )

2 unchanged sentences

$ 1,628 $ 2,371,861 $ 83,581 $ 1,648,453 $ 4,105,523

Cumulative effect of change in accounting, net of taxes — — 281 ( 281 ) —

Comprehensive income:

1 unchanged sentence

Other comprehensive income, net of taxes — — ( 466,325 ) — ( 466,325 )

Repurchase of common stock — ( 1,532 ) — — ( 1,532 )

Stock-based compensation expense and exercises and other — 11,739 — ( 1,878 ) 9,861

Dividends — — — ( 250,776 ) ( 250,776 )

Capital contributions from Genworth — 903 — — 903

Balance December 31, 2022

13 unchanged sentences

Deferred income taxes ( 2,298 ) ( 1,424 ) 11,133

Change in fair value of investment in unconsolidated affiliate, excluding cash dividend — — ( 85,491 )

Stock-based compensation expense 9,883 1,496 —

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Maturities of fixed maturity securities available-for-sale 470,842 712,955 527,070

Proceeds from sale of investment in unconsolidated affiliate — — 510,247

Net cash provided by (used in) investing activities ( 398,782 ) ( 1,136,912 ) 175,987

Change in short-term investments ( 3,077 ) — —

Net cash used in investing activities ( 220,255 ) ( 398,782 ) ( 1,136,912 )

Cash flows from financing activities:

Proceeds from the issuance of long-term debt — — 737,651

Repurchase of common stock ( 1,532 ) — —

Dividends paid ( 250,776 ) ( 200,294 ) ( 437,353 )

Net cash provided by (used in) financing activities ( 252,308 ) ( 200,294 ) 300,298

Effect of exchange rate changes on cash and cash equivalents ( 7 ) — —

Net (decrease) increase in cash and cash equivalents 87,947 ( 26,966 ) ( 132,264 )

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All of the share and per share information presented in the consolidated financial statements, notes to the consolidated financial statements and supplemental schedules to the financial statements has been adjusted to reflect the share exchange on a retroactive basis for all periods and as of all dates presented.

On November 29, 2019, Genworth completed a holding company reorganization whereby Genworth contributed 100% of the issued and outstanding voting securities of the Company to Genworth Holdings.

Post-contribution, we were a direct, wholly owned subsidiary of Genworth Holdings, and Genworth Holdings is still a direct, wholly owned subsidiary of Genworth.

We are engaged in the business of writing and assuming residential mortgage guaranty insurance.

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We also selectively enter into insurance transactions with lenders and investors, under which we insure a portfolio of loans at or after origination.

We operate our business through our primary insurance subsidiary, Genworth Mortgage Insurance Corporation (“GMICO”), with operations in all 50 states and the District of Columbia.

GMICO is an approved insurer by the Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“Freddie Mac”).

We operate our business through our primary insurance subsidiary, Enact Mortgage Insurance Corporation, (“EMICO”), formerly known as Genworth Mortgage Insurance Corporation, with operations in all 50 states and the District of Columbia.

We completed name changes to some of our subsidiary legal entities, including EMICO, during the first quarter of 2022.

EMICO is an approved insurer by the Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“Freddie Mac”).

Fannie Mae and Freddie Mac are government-sponsored enterprises, and we refer to them collectively as the “GSEs.”

We also perform fee-based contract underwriting services for mortgage lenders.

The provision of underwriting services by mortgage insurers eliminates the duplicative lender and mortgage insurer underwriting activities and expedites the approval process.

ENACT HOLDINGS, INC.

1 unchanged sentence

Years Ended December 31, 2022, 2021 and 2020

We also perform fee-based contract underwriting services for mortgage lenders.

The provision of underwriting services by mortgage insurers eliminates the duplicative lender and mortgage insurer underwriting activities and expedites the approval process.

We operate our business in a single segment, which is how our chief operating decision maker (who is our Chief Executive Officer) reviews our financial performance and allocates resources.

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Certain prior year amounts have been reclassified to conform to the current year presentation.

Potential impacts, risks and uncertainties of the coronavirus pandemic (“COVID-19”) may include declines in investment valuations and impairments, deferred acquisition cost (“DAC”) or intangible assets impairments or the acceleration of amortization, deferred tax recoverability and increases to loss reserves, among other matters.

Our consolidated financial statements have been prepared on a standalone basis and were derived from the consolidated financial statements and accounting records of Genworth.

Our consolidated financial statements have been prepared on a standalone basis.

The consolidated financial statements include the accounts of EHI, its subsidiaries and those entities required to be consolidated under the applicable accounting standards.

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The consolidated financial statements include allocations of certain Genworth expenses.

The allocated expenses relate to various services that have historically been provided to us by Genworth, including investment management, information technology services and administrative services (such as finance, human resources, employee benefit administration and legal).

These allocations were made on a direct usage basis when identifiable, with the remainder allocated on the basis of equity, proportional effort or other relevant measures.

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For monthly insurance contracts, we report premiums as revenue over the period that coverage is provided.

For single premium mortgage insurance contracts, we report premiums over the estimated policy life in accordance with the expected pattern of risk emergence as further described in our

ENACT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2021, 2020 and 2019

accounting policy for unearned premiums.

For single premium mortgage insurance contracts, we report premiums over the estimated policy life in accordance with the expected pattern of risk emergence as further described in our accounting policy for unearned premiums.

In addition, we refund post-delinquent premiums received to the insured party if the delinquent loan goes to claim.

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Investment income is recognized when earned.

Income or loss upon call or prepayment of available-for-sale fixed maturity securities is recognized in net investment income, except for hybrid securities where the income or loss upon call is recognized in net investment gains and losses.

Income or loss upon call or prepayment of available-for-sale fixed maturity securities is recognized in net investment income, except for hybrid securities

ENACT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2022, 2021 and 2020

where the income or loss upon call is recognized in net investment gains and losses.

Investment gains and losses are calculated on the basis of specific identification on the trade date.

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Underwriting fee revenue is recognized at the point in time when the service obligation is satisfied.

Our investment portfolio is managed by Genworth.

The investment portfolios of our subsidiaries are managed by Genworth.

We conduct the purchases, sales and related investment management decisions with the advice of Genworth.

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Refer to Note 11 for further details.

Investments held at EHI are managed by a third party.

Fixed maturity securities classified as available-for-sale are reported in our consolidated balance sheets at fair value.

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The guidance requires entities to recognize an allowance equal to its estimate of lifetime expected credit losses and applies to most debt instruments not measured at fair value.

The new guidance retains most of the existing impairment guidance for available-for-sale fixed maturity securities but amends the presentation of credit losses to be presented as an allowance as opposed to a write-down and permits the reversal of credit losses when reassessing changes in the credit losses each reporting period.

The guidance retained most of the existing impairment guidance for available-for-sale fixed maturity securities but amends the presentation of credit losses to be presented as an allowance as opposed to a write-down and permits the reversal of credit losses when reassessing changes in the credit losses each reporting period.

Available-for-sale fixed maturity securities in an unrealized loss position are evaluated to determine whether the decline in fair value is related to credit losses or other factors.

In making this assessment, we consider the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency/agencies and adverse conditions specifically

ENACT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2021, 2020 and 2019

related to the security, among other factors.

If a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security.

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Estimating the cash flows expected to be collected is a quantitative and qualitative process that incorporates information received from third-party sources along with internal assumptions and judgments.

When developing the estimate of cash flows expected to be collected, we utilize an analytical model that provides for various loss scenarios and consider the industry sector, current levels of subordination, geographic location and other relevant characteristics of the security or underlying assets, as well as reasonable and supportable forecasts.

When developing the estimate of cash flows expected to be collected, we utilize an analytical

ENACT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2022, 2021 and 2020

model that provides for various loss scenarios and consider the industry sector, current levels of subordination, geographic location and other relevant characteristics of the security or underlying assets, as well as reasonable and supportable forecasts.

Losses are written off against the allowance when deemed uncollectible or when we intend to sell or expect we will be required to sell a security prior to recovering our amortized cost.

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Net other-than-temporary impairments recorded in net income (loss) represented the credit loss on the other-than-temporarily impaired securities with the offset recognized as an adjustment to the amortized cost to determine the new amortized cost basis of the securities.

For securities that were deemed to be other-than-temporarily impaired and a non-credit loss was recorded in OCI, the amount recorded as an unrealized gain (loss) represented the difference between

For securities that were deemed to be other-than-temporarily impaired and a non-credit loss was recorded in OCI, the amount recorded as an unrealized gain (loss) represented the difference between the current fair value and the new amortized cost for each period presented.

The unrealized gain (loss) on an other-than-temporarily impaired security was recorded as a separate component in OCI until the security was sold or until we recorded an other-than-temporary impairment where we intended to sell the security or were required to sell the security prior to recovery.

ENACT HOLDINGS, INC.

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Years Ended December 31, 2022, 2021 and 2020

the current fair value and the new amortized cost for each period presented.

To estimate the amount of other-than-temporary impairment attributed to credit losses on debt securities where we did not intend to sell the security and it was not more likely than not that we would be required to sell the security prior to recovery, we determined our best estimate of the present value of the cash flows expected to be collected from a security using the effective yield on the security prior to recording any other-than-temporary impairment.

required to sell the security prior to recovery, we determined our best estimate of the present value of the cash flows expected to be collected from a security using the effective yield on the security prior to recording any other-than-temporary impairment.

If the present value of the discounted cash flows was lower than the amortized cost of the security, the difference between the present value and amortized cost represented the credit loss associated with the security with the remaining difference between fair value and amortized cost recorded as a non-credit other-than-temporary impairment in OCI.

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Investments in which we are deemed to exert significant influence, but not control, are accounted for using the equity method of accounting except in cases where the fair value option has been elected.

For such investments where we have elected the fair value option, the election is irrevocable and is applied on an investment by investment basis at initial recognition.

The change in fair value of such investments is included within change in fair value of unconsolidated affiliate in the consolidated statements of income.

Equity method investments not carried at fair value, which are not material as of December 31, 2022, are recorded in other assets on the consolidated balance sheets with their related income recorded within other income in the consolidated statements of income.

8 unchanged sentences

• Level 1—Quoted prices for identical instruments in active markets.

ENACT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2021, 2020 and 2019

• Level 2—Quoted prices for similar instruments in active markets;

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These models are primarily industry-standard models that consider various inputs, such as interest rate, credit spread and foreign exchange rates for the underlying financial instruments.

All significant inputs are observable, or derived from observable, information in the marketplace or are supported by observable levels at which transactions are executed in the marketplace.

All significant inputs are observable, or derived from observable,

ENACT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2022, 2021 and 2020

information in the marketplace or are supported by observable levels at which transactions are executed in the marketplace.

Financial instruments in this category primarily include:

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Accrued Investment Income

Accrued investment income consists primarily of interest.

Accrued investment income consists primarily of interest earned on available-for-sale securities.

Interest is recognized on an accrual basis, and dividends are recorded as earned on the ex-dividend date.

Interest income is not recorded on fixed maturity securities in default and fixed maturity securities delinquent more than 90 days or where collection of interest is improbable.

Deferred Acquisition Costs

Deferred Acquisition Costs (“DAC”)

Acquisition costs include costs that are directly related to the successful acquisition of new insurance contracts.

3 unchanged sentences

The use of different assumptions may have a significant effect on the amortization of deferred acquisition costs.

ENACT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2021, 2020 and 2019

Deferred acquisition costs were $ 26.1 million and $ 27.2 million as of December 31, 2022 and 2021, respectively.

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The calculation of premium deficiency reserves requires the use of significant judgments and estimates to determine the present value of future premium and present value of expected losses and expenses in our business.

The differences between the actual results and our estimates could vary materially.

ENACT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2022, 2021 and 2020

differences between the actual results and our estimates could vary materially.

We completed a PDR analysis as of December 31, 2022 and 2021 and determined that no PDR was required.

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Over time, as the status of the underlying delinquent loans moves toward foreclosure and the

ENACT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2021, 2020 and 2019

likelihood of the associated claim loss increases, the amount of the loss reserves associated with the potential claims may also increase.

Over time, as the status of the underlying delinquent loans moves toward foreclosure and the likelihood of the associated claim loss increases, the amount of the loss reserves associated with the potential claims may also increase.

Management monitors actual experience, and where circumstances warrant, will revise its assumptions.

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Premiums written on single premium policies and annual premium policies are initially deferred as unearned premium reserve and earned over the policy life.

A portion of the revenue from single premium policies is recognized in premiums earned in the current period, and the remaining portion is deferred as unearned premiums and earned over the estimated expiration of risk of the policy.

A portion of the revenue from single premium

ENACT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2022, 2021 and 2020

policies is recognized in premiums earned in the current period, and the remaining portion is deferred as unearned premiums and earned over the estimated expiration of risk of the policy.

If single premium policies are cancelled and the premium is non-refundable, then the remaining unearned premium related to each cancelled policy is recognized to earned premiums upon notification of the cancellation.

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These reviews include the consideration of recent and projected loss and policy cancellation experience, and adjustments to the estimated earnings patterns are made, if warranted.

Our most recent review resulted in an increase in earned premiums of $ 13.7 million for the year ended December 31, 2019.

Share-Based Compensation

Certain of our employees participate in Genworth’s incentive plans, under which our employees may be granted share-based awards, including stock options.

Compensation expense is recognized based on a grant date fair value, adjusted for expected forfeitures, through the income statement over the respective vesting period of the awards.

Prior to our IPO, certain of our employees participated in Genworth’s incentive plans, under which our employees were granted share-based awards, including stock options.

In 2021, we approved an incentive compensation plan that allows EHI to grant share-based awards to its employees and directors.

For grants from both of these plans, compensation expense is recognized based on a grant date fair value, adjusted for expected forfeitures, through the income statement over the respective vesting period of the awards.

See Note 10 for additional information related to share-based compensation.

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Valuation allowances on deferred tax assets are estimated based on our assessment of the realizability of such amounts.

ENACT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2021, 2020 and 2019

We have elected to participate in a single U.S.

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GAAP, and, accordingly, we evaluate the VIE to determine whether we are the primary beneficiary and are required to consolidate the assets and liabilities of the entity.

The primary beneficiary of a VIE is the enterprise that has the power to direct the activities of a VIE that most significantly impacts the VIE’s economic performance and has the obligation to absorb losses or receive benefits that could potentially be significant to the VIE.

ENACT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2022, 2021 and 2020

potentially be significant to the VIE.

The determination of the primary beneficiary for a VIE can be complex and requires management judgment regarding the expected results of the entity and how those results are absorbed by variable interest holders, as well as which party has the power to direct activities that most significantly impact the performance of the VIEs.

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The right-of-use asset and the lease liability are included in other assets and other liabilities, respectively.

Our remaining lease terms ranged from less than 1 years to 6 years and had a weighted-average remaining lease term of 6.0 years and 7.0 years as of December 31, 2021, and 2020, respectively.

The implicit rate of our lease agreements was not readily determinable;

therefore, we utilized our incremental borrowing rate to discount future lease payments.

The weighted-average discount rate was 7.1 % as of December 31, 2021 and 2020.

Accounting Pronouncements Adopted

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The new guidance further requires that expected credit losses on premiums receivable are measured in accordance with the credit loss requirements for financial instruments measured at amortized cost.

ENACT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2021, 2020 and 2019

to the short-term nature of our premiums receivable, we consider lifetime expected credit losses on premiums receivable to be consistent with our current allowance and as a result the new accounting guidance did not have an impact on premiums receivable upon adoption.

Due to the short-term nature of our premiums receivable, we consider lifetime expected credit losses on premiums receivable to be consistent with our current allowance and as a result the new accounting guidance did not have an impact on premiums receivable upon adoption.

The allowance for credit losses on premiums receivable is not material.

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Fair Value Disclosures

On January 1, 2020, we adopted new accounting guidance related to fair value disclosure requirements as part of the FASB’s disclosure framework project.

On January 1, 2020, we adopted new accounting guidance related to fair value disclosure requirements as part of the Financial Accounting Standards Board’s (the “FASB”) disclosure framework project.

The guidance adds, eliminates and modifies certain disclosure requirements for fair value measurements.

The guidance includes new disclosure requirements related to changes in unrealized gains and losses included in other comprehensive income (loss) for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted-average of significant unobservable inputs used to develop Level 3 fair value measurements.

The guidance includes new disclosure requirements related to changes in unrealized gains and losses included in other comprehensive income (loss) for recurring Level 3 fair value

ENACT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2022, 2021 and 2020

measurements held at the end of the reporting period and the range and weighted-average of significant unobservable inputs used to develop Level 3 fair value measurements.

We adopted this new accounting guidance using the prospective method for disclosures related to changes in unrealized gains and losses included in other comprehensive income (loss) for recurring Level 3 fair value measurements held at the end of the reporting period, the range and weighted-average of significant unobservable inputs used to develop Level 3 fair value measurements and the narrative description of measurement uncertainty and the retrospective method for all other disclosures.

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We adopted this guidance prospectively and it did not have a significant impact on our consolidated financial statements or disclosures.

However, the amendments in this guidance may be elected over time through December 31, 2022, as reference rate reform activities occur and therefore, this guidance may impact our procedures as we implement measures to transition away from LIBOR.

However, the amendments in this guidance may be elected over time, as reference rate reform activities occur and therefore, this guidance may impact our procedures as we implement measures to transition away from LIBOR.

In December 2019, the FASB issued new accounting guidance related to simplifying the accounting for income taxes.

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We early adopted this new accounting guidance on January 1, 2021, using the retrospective method or modified retrospective method for certain changes and prospective method for all other changes, which did not have a significant impact on our consolidated financial statements and disclosures.

ENACT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2021, 2020 and 2019

Accounting Pronouncements Not Yet Adopted

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Fixed maturity securities available-for-sale $ 153,649 $ 146,587 $ 136,143

Cash and cash equivalents 74 2,180 3,881

Cash, cash equivalents and short-term investments 7,167 74 2,180

Gross investment income before expenses and fees 160,816 146,661 138,323

1 unchanged sentence

Net investment income $ 155,311 $ 141,189 $ 132,843

ENACT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2022, 2021 and 2020

Net Investment Gains (Losses)

8 unchanged sentences

Net investment gains (losses) $ ( 2,036 ) $ ( 2,124 ) $ ( 3,324 )

Unrealized Investment Gains and Losses

Net unrealized gains and losses on available-for-sale securities reflected as a separate component of accumulated other comprehensive income (loss) were as follows as of December 31:

Unrealized Investment Gains (Losses)

Net unrealized gains and losses on available-for-sale securities reflected as a separate component of accumulated other comprehensive income ("AOCI”) were as follows as of December 31:

(Amounts in thousands) 2022 2021 2020

1 unchanged sentence

Fixed maturity securities $ ( 486,913 ) $ 106,165 $ 264,680

Short-term investments ( 30 ) — —

Unrealized gains (losses) on investment securities ( 486,943 ) 106,165 264,680

Income taxes 104,047 ( 22,577 ) ( 56,302 )

Net unrealized investment gains (losses) $ ( 382,896 ) $ 83,588 $ 208,378

ENACT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2021, 2020 and 2019

The change in net unrealized gains (losses) on available-for-sale securities reported in accumulated other comprehensive income (loss) was as follows as of and for the years ended December 31:

The change in net unrealized gains (losses) on available-for-sale securities reported in accumulated other comprehensive income was as follows as of and for the years ended December 31:

(Amounts in thousands) 2022 2021 2020

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Ending balance $ ( 382,896 ) $ 83,588 $ 208,378

Amounts reclassified out of accumulated other comprehensive income (loss) to net investment gains (losses) include realized gains (losses) on sales of securities, which are determined on a specific identification basis.

Amounts reclassified out of accumulated other comprehensive income to net investment gains (losses) include realized gains (losses) on sales of securities, which are determined on a specific identification basis.

ENACT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2022, 2021 and 2020

Fixed Maturity Securities Available-For-Sale

The amortized cost, gross unrealized gains (losses) and fair value of our fixed maturity securities classified as available-for-sale were as follows as of December 31:

(Amounts in thousands) 2021

As of December 31, 2022, the amortized cost, gross unrealized gains (losses) and fair value of our investment securities were as follows:

(Amounts in thousands) Amortized

cost Gross unrealized gains Gross unrealized losses Fair value

4 unchanged sentences

corporate 716,333 158 ( 63,647 ) 652,844

Residential mortgage-backed 11,162 — ( 119 ) 11,043

Other asset-backed 1,185,048 462 ( 85,474 ) 1,100,036

Total fixed maturity securities available-for-sale $ 5,371,673 $ 3,849 $ ( 490,762 ) $ 4,884,760

ENACT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2021, 2020 and 2019

(Amounts in thousands) 2020

Short-term investments $ 3,077 $ — $ ( 30 ) $ 3,047

Total investments $ 5,374,750 $ 3,849 $ ( 490,792 ) $ 4,887,807

As of December 31, 2021, the amortized cost, gross unrealized gains (losses) and fair value of our investment securities were as follows:

(Amounts in thousands) Amortized

cost Gross unrealized Gains Gross unrealized losses Fair value

6 unchanged sentences

Total fixed maturity securities available-for-sale $ 5,160,174 $ 135,931 $ ( 29,766 ) $ 5,266,339

There was no allowance for credit losses recorded on fixed maturity securities classified as available-for-sale as of December 31, 2022 or December 31, 2021.

Gross Unrealized Losses and Fair Values of Fixed Maturity Securities Available-For-Sale

The following tables present the gross unrealized losses and fair values of our fixed maturity securities, aggregated by investment type and length of time that individual fixed maturity securities have been in a continuous unrealized loss position, as of December 31, 2021:

The following table presents the gross unrealized losses and fair values of our fixed maturity securities for which an allowance for credit losses has not been recorded, aggregated by investment type and length of time that individual fixed maturity securities have been in a continuous unrealized loss position, as of December 31, 2022:

ENACT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2022, 2021 and 2020

Less than 12 months 12 months or more Total

As of December 31, 2021

(Amounts in thousands)

10 unchanged sentences

corporate 486,117 ( 35,515 ) 125 155,345 ( 28,132 ) 27 641,462 ( 63,647 ) 152

Residential mortgage-backed 11,043 ( 119 ) 6 — — — 11,043 ( 119 ) 6

Other asset-backed 655,525 ( 31,684 ) 217 375,810 ( 53,790 ) 71 1,031,335 ( 85,474 ) 288

Total for fixed maturity securities in an unrealized loss position $ 3,434,023 $ ( 241,056 ) 877 $ 1,305,006 $ ( 249,706 ) 238 $ 4,739,029 $ ( 490,762 ) 1,115

We did not recognize any other-than-temporary impairments on securities in an unrealized loss position.

Based on a qualitative and quantitative review of the issuers of the securities, we believe the decline in fair value is largely due to recent market volatility and is not indicative of other-than-temporary impairment.

We did not recognize an allowance for credit losses on securities in an unrealized loss position included in the table above.

Based on a qualitative and quantitative review of the issuers of the securities, we believe the decline in fair value is largely due to rising interest rates and recent market volatility and is not indicative of credit losses.

The issuers continue to make timely principal and interest payments.

For all securities in an unrealized loss position, we expect to recover the amortized cost based on our estimate of the amount and timing of cash flows to be collected.

For all securities in an unrealized loss position without an allowance for credit losses, we expect to recover the amortized cost based on our estimate of the amount and timing of cash flows to be collected.

We do not intend to sell, nor do we expect that we will be required to sell, these securities prior to recovering our amortized cost.

ENACT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2021, 2020 and 2019

The following table presents the gross unrealized losses and fair values of our fixed maturity securities, aggregated by investment type and length of time that individual fixed maturity securities have been in a continuous unrealized loss position, as of December 31, 2021:

Less than 12 months 12 months or more Total

As of December 31, 2020

(Amounts in thousands)

(Amounts in thousands) Fair

losses Number of

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Total for fixed maturity securities in an unrealized loss position $ 1,555,842 $ ( 27,962 ) 247 $ 29,917 $ ( 1,804 ) 5 $ 1,585,759 $ ( 29,766 ) 252

ENACT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2022, 2021 and 2020

Contractual Maturities of Fixed Maturity Securities Available-For-Sale

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Actual maturities may differ from contractual maturities because issuers of securities may have the right to call or prepay obligations with or without call or prepayment penalties.

(Amounts in thousands)

(Amounts in thousands) Amortized

cost Fair value

Due in one year or less $ 237,164 $ 240,048

Due one year or less $ 184,483 $ 183,091

Due after one year through five years 2,241,657 2,104,796

2 unchanged sentences

Subtotal 4,175,463 3,773,681

Residential mortgage-backed 11,162 11,043

Other asset-backed 1,185,048 1,100,036

Total fixed maturity securities available-for-sale $ 5,371,673 $ 4,884,760

As of December 31, 2021, securities issued by finance and insurance, consumer—non-cyclical and technology and communications industry groups represented approximately 29 %, 16 % and 13 %, respectively, of our domestic and foreign corporate fixed maturity securities portfolio.

As of December 31, 2022, securities issued by the finance and insurance, technology and communications, consumer-non-cyclical and utilities industry groups represented approximately 32 %, 14 %, 11 % and 10 % respectively, of our domestic and foreign corporate fixed maturity securities portfolio.

No other industry group comprised more than 9% of our investment portfolio.

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government, which exceeded 10% of equity.

As of December 31, 2021 and 2020, $ 22.9 million and $ 27.8 million, respectively, of securities were on deposit with various state insurance commissioners in order to comply with relevant insurance regulations.

As of December 31, 2022 and 2021, $ 25.1 million and $ 22.9 million, respectively, of securities in our portfolio were on deposit with various state insurance commissioners in order to comply with relevant insurance regulations.

Equity Method Investments

Prior to December 31, 2020, we held 14.1 million, or approximately 16.4 %, of the outstanding common shares of Genworth MI Canada Inc.

(“Genworth Canada”), a publicly traded company on the Toronto Stock Exchange.

We concluded that we had significant influence over Genworth Canada primarily due to board representation, and therefore, we classified our investment in Genworth Canada as an equity method investment.

We elected to account for the investment in Genworth Canada under the fair value option because the investment had a readily determinable fair value.

ENACT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2021, 2020 and 2019

On December 12, 2019, we completed the sale of our investment in Genworth Canada to an affiliate of Brookfield Business Partners L.P.

and received approximately $ 501.8 million in net cash proceeds.

We also received cash proceeds from the sale of common shares of Genworth Canada of $ 8.4 million in 2019 related to share repurchases by Genworth Canada.

The pre-tax change in fair value of the investment in Genworth Canada, including dividends and the sale of common shares, was $ 127.4 million in 2019.

This was included within change in fair value of unconsolidated affiliate in the consolidated statements of income, net of provision for income taxes of $ 12.1 million in 2019.

The following table presents summarized statement of income information from January 1, 2019, to December 12, 2019, the period we held an equity method investment in Genworth Canada:

(Amounts in thousands)

Revenue $ 585,066

Expense $ 197,889

In November 2021, we completed the acquisition of Genworth Financial Mauritius Holdings Limited from Genworth Financial International Holdings, a subsidiary of Genworth, for $ 27 million, its estimated fair value.

The primary asset of the entity is a minority ownership interest in a mortgage guarantee business in India.

We invested an additional $ 6.5 million during 2022.

Based on our ownership percentage, we have concluded that we have significant influence over the entity and have classified our interest as an equity method investment which is recorded within other assets.

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Recurring Fair Value Measurements

Fixed Maturity Securities Measured at Fair Value

We have fixed maturity securities, which are carried at fair value.

The fair value of fixed maturity securities is estimated primarily based on information derived from third-party pricing services (“pricing services”), internal models and/or broker quotes, which use a market approach, income approach or a combination of the market and income approach depending on the type of instrument and availability of information.

We hold fixed maturity securities and short-term investments, which are carried at fair value.

The fair value of fixed maturity securities and short-term investments are estimated primarily based on information derived from third-party pricing services (“pricing services”), internal models and/or broker quotes, which use a market approach, income approach or a combination of the market and income approach depending on the type of instrument and availability of information.

In general, a market approach is utilized if there is readily available and relevant market activity for an individual security.

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When market information is not available for a specific security (or similar securities) or is available but such information is less relevant or reliable, an income approach or a combination of a market and income approach is utilized.

For securities with optionality, such as call or prepayment features (including asset-backed securities), an income approach may be used.

In addition, a combination of the results from market and income approaches may be used to estimate fair value.

For securities with optionality, such as call or prepayment features (including asset-backed securities), an income or combination approach may be used.

These valuation techniques may change from period to period, based on the relevance and availability of market data.

Further, while we consider the valuations provided by pricing services and broker quotes to be of high quality, management determines the fair value of its investment securities after considering all relevant and available information.

In general, we first obtain valuations from pricing services.

If prices are unavailable for public securities, it obtains broker quotes.

For all securities, excluding certain private fixed maturity securities, if neither a pricing service nor broker quotes valuation is available, we determine fair value using internal models.

For certain private fixed maturity securities where we do not obtain valuations from pricing services, we utilize an internal model to determine fair value since transactions for similar securities are not readily observable and these securities are not typically valued by pricing services.

ENACT HOLDINGS, INC.

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Years Ended December 31, 2022, 2021 and 2020

Further, while we consider the valuations provided by pricing services and broker quotes to be of high quality, management determines the fair value of our investment securities after considering all relevant and available information.

In general, we first obtain valuations from pricing services.

If prices are unavailable for public securities, we obtain broker quotes.

For all securities, excluding certain private fixed maturity securities, if neither a pricing service nor broker quotes valuation is available, we determine fair value using internal models.

Given our understanding of the pricing methodologies and procedures of pricing services, the securities valued by pricing services are typically classified as Level 2 unless we determine the valuation process for a security or group of securities utilizes significant unobservable inputs, which would result in the valuation being classified as Level 3.

Broker quotes are typically based on an income approach given the lack of available market data.

As the valuation typically includes significant unobservable inputs, we classify the securities where fair value is based on its consideration of broker quotes as Level 3 measurements.

As the valuation typically includes significant unobservable inputs, we classify the securities where fair value is based on our consideration of broker quotes as Level 3 measurements.

For private fixed maturity securities, we utilize an income approach where we obtain public bond spreads and utilize those in an internal model to determine fair value.

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Accordingly, the valuations are typically classified as Level 3.

Our assessment of whether or not there were significant unobservable inputs related to fixed maturity securities was based on its observations obtained through the course of managing its investment portfolio, including interaction with other market participants, observations related to the availability and consistency of pricing and/or rating, and understanding of general market activity such as new issuance and the level of secondary market trading for a class of securities.

Additionally, we considered data obtained from pricing services to determine whether its estimated values incorporate significant unobservable inputs that would result in the valuation being classified as Level 3.

A summary of the inputs used for our fixed maturity securities based on the level in which instruments are classified is included below.

Our assessment of whether or not there were significant unobservable inputs related to fixed maturity securities was based on our observations obtained through the course of managing our investment portfolio, including interaction with other market participants, observations related to the availability and consistency of pricing and/or rating, and understanding of general market activity such as new issuance and the level of secondary market trading for a class of securities.

Additionally, we considered data obtained from pricing services to determine whether our estimated values incorporate significant unobservable inputs that would result in the valuation being classified as Level 3.

A summary of the inputs used for our fixed maturity securities and short-term investments based on the level in which instruments are classified is included below.

We have combined certain classes of instruments together as the nature of the inputs is similar.

Level 1 measurements

We had no fixed maturity securities classified as Level 1 as of December 31, 2021 and 2020.

There were no fixed maturity securities classified as Level 1 as of December 31, 2022 and 2021.

ENACT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2022, 2021 and 2020

Level 2 measurements

Fixed maturity securities:

Third-party pricing services

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These third-party pricing vendors maximize the use of publicly available data inputs to generate valuations for each asset class.

Priority and type of inputs used may

ENACT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2021, 2020 and 2019

change frequently as certain inputs may be more direct drivers of valuation at the time of pricing.

Priority and type of inputs used may change frequently as certain inputs may be more direct drivers of valuation at the time of pricing.

Examples of significant inputs incorporated by pricing services may include sector and issuer spreads, seasoning, capital structure, security optionality, collateral data, prepayment assumptions, default assumptions, delinquencies, debt covenants, benchmark yields, trade data, dealer quotes, credit ratings, maturity and weighted-average life.

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corporate $ 481,706 Multi-dimensional attribute-based modeling systems, OAS-based models, price quotes from market makers Benchmark yields, trade prices, broker quotes, comparative transactions, issuer spreads, bid-offer spread, market research publications, third-party pricing sources

Other asset-backed $ 1,010,942 Multi-dimensional attribute-based modeling systems, spread matrix priced to swap curves, price quotes from market makers, internal models Spreads to daily updated swaps curves, spreads derived from trade prices and broker quotes, bid side prices, new issue data, collateral performance, analysis of prepayment speeds, cash flows, collateral loss analytics, historical issue analysis, trade data from market makers, TRACE reports

ENACT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2022, 2021 and 2020

Residential mortgage-backed $ 11,043 OAS-based models, single factor binomial models, internally priced Prepayment and default assumptions, aggregation of bonds with similar characteristics, including collateral type, vintage, tranche type, weighted-average life, weighted-average loan age, issuer program and delinquency ratio, pay up and pay down factors, TRACE reports

Other asset-backed $ 1,096,555 Multi-dimensional attribute-based modeling systems, spread matrix priced to swap curves, price quotes from market makers Spreads to daily updated swap curves, spreads derived from trade prices and broker quotes, bid side prices, new issue data, collateral performance, analysis of prepayment speeds, cash flows, collateral loss analytics, historical issue analysis, trade data from market makers, TRACE reports

Internal models

A portion of our U.S.

A portion of our Level 2 U.S.

corporate and non-U.S.

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The fair value of these fixed maturity securities was $ 179.9 million and $ 76.0 million, respectively, as of December 31, 2022.

Internally modeled securities are primarily private fixed maturity securities where we use market observable inputs such as an interest rate yield curve, published credit spreads for similar

ENACT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2021, 2020 and 2019

securities based on the external ratings of the instrument and related industry sector of the issuer.

Internally modeled securities are primarily private fixed maturity securities where we use market observable inputs such as an interest rate yield curve, published credit spreads for similar securities based on the external ratings of the instrument and related industry sector of the issuer.

Additionally, we may apply certain price caps and liquidity premiums in the valuation of private fixed maturity securities.

Price caps and liquidity premiums are established using inputs from market participants.

Short-term investments:

The fair value of short-term investments classified as Level 2 is determined after considering prices obtained by pricing services.

Level 3 measurements

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A portion of our U.S.

corporate, non-U.S.

corporate and other asset-backed securities are valued using internal models.

corporate and non-U.S.

corporate securities are valued using internal models.

The primary inputs to the valuation of the bond population include quoted prices for identical assets, or similar assets in markets that are not active, contractual cash flows, duration, call provisions, issuer rating, benchmark yields and credit spreads.

2 unchanged sentences

Price caps are established using inputs from market participants.

For structured securities, the primary inputs to the valuation include quoted prices for identical assets, or similar assets in markets that are not active, contractual cash flows, weighted-average coupon, weighted-average maturity, issuer rating, structure of the security, expected prepayment speeds and volumes, collateral type, current and forecasted loss severity, average delinquency rates, vintage of the loans, geographic region, debt service coverage ratios, payment priority with the tranche, benchmark yields and credit spreads.

ENACT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2022, 2021 and 2020

ratios, payment priority with the tranche, benchmark yields and credit spreads.

The fair value of our Level 3 fixed maturity securities priced using internal models was $ 312.6 million as of December 31, 2022.

8 unchanged sentences

corporate 652,844 — 557,690 95,154

Residential mortgage-backed 11,043 — 11,043 —

Other asset-backed 1,100,036 — 1,096,555 3,481

Total fixed maturity securities 4,884,760 — 4,565,499 319,261

Short-term investments 3,047 — 3,047 —

Total $ 4,887,807 $ — $ 4,568,546 $ 319,261

ENACT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2021, 2020 and 2019

(Amounts in thousands)

7 unchanged sentences

Other asset-backed 1,035,165 — 1,010,942 24,223

Total fixed maturity securities 5,046,596 — 4,817,691 228,905

Total $ 5,266,339 $ — $ 4,937,719 $ 328,620

We had no liabilities recorded at fair value as of December 31, 2022 and 2021.

ENACT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2022, 2021 and 2020

The following tables present additional information about assets measured at fair value on a recurring basis and for which we have utilized significant unobservable (Level 3) inputs to determine fair value as of or for the dates indicated:

in thousands)

Total realized and unrealized gains (losses) Balance

(Amounts in thousands) Beginning balance

Total realized and unrealized gains (losses) Ending balance

December 31, 2022

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income Included

in OCI Purchases Sales Issuance Settlement Transfers

in OCI Purchases Sales Settlements Transfer

Included in net income Included in OCI

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Total $ 328,620 $ ( 381 ) $ ( 48,099 ) $ 105,951 $ ( 5,000 ) $ ( 11,272 ) $ 11,615 $ ( 62,173 ) $ 319,261 $ ( 381 ) $ ( 45,558 )

_______________

(1) The transfers into and out of Level 3 for fixed maturity securities were related to changes in the primary pricing source and changes in the observability of external information used in determining the fair value, such as external ratings or credit spreads.

Total realized and unrealized gains (losses) Balance

Beginning balance

Total realized and unrealized gains (losses) Ending balance

December 31, 2021

(losses) attributable to assets still held

in thousands)

(Amounts in thousands) Included

income Included

in OCI Purchases Sales Issuance Settlement Transfers

in OCI Purchases Sales Settlements Transfer

Included in net income Included in OCI

6 unchanged sentences

ENACT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2021, 2020 and 2019

Total realized and unrealized gains (losses) Balance

December 31, 2020

in thousands)

(losses) attributable to assets still held

(Amounts in thousands) Included

income Included

in OCI Purchases Sales Issuance Settlement Transfers

in OCI Purchases Sales Settlements Transfer

Included in net income Included in OCI

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Purchases, sales, issuances and settlements represent the activity that occurred during the period that results in a change of the asset but does not represent changes in fair value for the instruments held at the beginning of the period.

Such activity consists of purchases, sales and settlements of fixed maturity securities.

Purchases, sales and settlements represent the activity that occurred during the period that results in a change of the asset but does not represent changes in fair value for the instruments held at the beginning of the period.

The amount presented for realized and unrealized gains (losses) included in net income for fixed maturity securities primarily represents amortization and accretion of premiums and discounts on certain fixed maturity securities recorded within net investment income.

ENACT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2022, 2021 and 2020

The following table presents a summary of the significant unobservable inputs used for certain asset fair value measurements that are based on internal models and classified as Level 3 as of December 31, 2022:

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Liabilities not required to be carried at fair value

The following table provides fair value information for financial instruments that are reflected in the accompanying consolidated financial statements at amounts other than fair value.

We have certain financial instruments that are not recorded at fair value, including cash and cash equivalents and accrued investment income, the carrying value of which approximate fair value due to the short-term nature of these instruments and are not included in this disclosure.

ENACT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2021, 2020 and 2019

The following represents our estimated fair value of financial liabilities not required to be carried at fair value, classified as Level 2, as of December 31, 2021 and 2020:

As of December 31,

The following represents our estimated fair value of financial liabilities that are not required to be carried at fair value, classified as Level 2, as of the dates indicated:

(Amounts in thousands) Carrying amount Fair value Carrying amount Fair value

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(1) Losses and LAE incurred and paid exclude losses related to our run-off business.

ENACT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2022, 2021 and 2020

Losses incurred related to insured events of the current accident year relate to defaults that occurred in that year and represent the estimated ultimate amount of losses to be paid on such defaults.

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Such adjustments, reflecting any variety of new and adverse trends, could possibly be significant and result in future increases to reserves by amounts that could be material to our results of operations, financial condition and liquidity.

In 2021, losses and LAE incurred of $ 141.2 million related to insured events of the current accident year was primarily attributable to new delinquencies, a portion of which was from borrowers participating in deferred or reduced payments (“forbearance”) as a result of COVID-19.

When establishing loss reserves for borrowers in forbearance, we assume a lower rate of delinquencies becoming active claims, which has the effect of producing a lower reserve compared to delinquencies that are not in forbearance.

ENACT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2021, 2020 and 2019

In 2022, losses and LAE incurred of $ 219.5 million related to insured events of the current accident year was primarily attributable to new delinquencies coupled with $ 46 million of reserve strengthening on current year delinquencies.

Due to uncertainty in the current economic environment, we increased the expected claim rate on new delinquencies in 2022, which contributed to these amounts.

A portion of new delinquencies in the periods presented were from borrowers participating in deferred or reduced payments (“forbearance”) as a result of COVID-19.

Through the third quarter of 2022, when establishing loss reserves for borrowers in forbearance, we assumed a lower rate of delinquencies becoming active claims, which has the effect of producing a lower reserve compared to delinquencies that are not in forbearance.

Historical experience with localized natural disasters, such as hurricanes, indicates a higher cure rate for borrowers in forbearance.

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Given this difference, we initially leveraged our prior hurricane experience and have recently layered in cure activity from COVID-19 related delinquencies as considerations in the establishment of an appropriate claim rate estimate for new delinquencies in forbearance plans that have emerged as a result of COVID-19.

Loss reserves recorded on these new delinquencies have a high degree of estimation due to the level of uncertainty regarding whether delinquencies in forbearance will ultimately cure or result in claim payments.

During 2022, we experienced favorable reserve development of $ 313.7 million in incurred losses attributable to prior years, primarily from better-than-expected cure performance on COVID-19 delinquencies from 2020 and 2021.

The change was almost exclusively attributable to $ 314 million in favorable reserves adjustments.

During 2021, we experienced favorable reserve development of $ 15.8 million in incurred losses attributable to prior years, primarily from lower expected claim rates on pre-COVID-19 delinquencies.

Included within this decrease to incurred losses attributable to prior years, we recorded $ 22 million in favorable reserves adjustments.

Included within this decrease to incurred losses attributable to prior years, we recorded $ 22.0 million in favorable reserve adjustments.

In 2020, losses and LAE incurred of $ 364.5 million related to insured events of the current accident year was primarily attributable to a significant increase in the number of new delinquencies driven mostly by borrower forbearance as a result of COVID-19.

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Included within this increase to incurred losses attributable to prior years, we recorded $ 28.4 million in unfavorable reserves adjustments, primarily associated with higher expected, future claim rates, partially offset by a $ 12.2 million decrease, primarily due to higher-than-expected delinquency cures.

During 2019, we experienced favorable reserve development of $ 55.9 million in incurred losses attributable to prior years, primarily from lower actual and expected claim rates due to improvements in the overall housing market.

Included within these reductions to incurred losses attributable to prior years, we recorded $ 22.7 million favorable reserves adjustments in 2019, primarily associated with lower expected claim rates.

The remaining reduction of $ 33.2 million in 2019 was primarily the result of higher than expected delinquency cures.

ENACT HOLDINGS, INC.

39 unchanged sentences

2021 — — — — — — — — 237 2,192

2022 — — — — — — — — — 352

Total paid $ 1,143,241

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The difference of $ 43.6 million between written premiums of $ 895.9 million and earned premiums of $ 939.5 million represents the decrease in unearned premiums for the year ended December 31, 2022.

The decrease in unearned premiums was mainly the result of an increase in policy cancellations in our single premium mortgage insurance product driven by low interest rates and higher mortgage refinancing which resulted in lower persistency in 2021.

Insurance-linked notes excess of loss reinsurance treaties

On September 2, 2021, we obtained $ 371.5 million of excess of loss reinsurance coverage from Triangle Re 2021-3 Ltd.

(“Triangle Re 2021-3”) on a portfolio of existing mortgage insurance policies written from January 2021 through June 2021.

In connection with entering into the reinsurance agreement with Triangle Re 2021-3, we believe that the risk transfer requirements for reinsurance accounting were met as Triangle Re 2021-3 is assuming significant insurance risk and a reasonable possibility of significant loss.

At closing, we retain the first layer of aggregate losses up to $ 303.5 million.

Triangle Re 2021-3 provides 72 % reinsurance coverage for losses above our retained layer up to $ 371.5 million.

On April 16, 2021, we obtained $ 302.7 million of excess of loss reinsurance coverage from Triangle Re 2021-2 Ltd.

(“Triangle Re 2021-2”) on a portfolio of existing mortgage insurance policies written from September 2020 through December 2020.

In connection with entering into the reinsurance agreement

ENACT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2021, 2020 and 2019

with Triangle Re 2021-2, we believe that the risk transfer requirements for reinsurance accounting were met as Triangle Re 2021-2 is assuming significant insurance risk and a reasonable possibility of significant loss.

For the reinsurance coverage, we retain the first layer of aggregate losses up to $ 188.6 million.

Triangle Re 2021-2 provides 76 % reinsurance coverage for losses above our retained first layer up to $ 302.7 million.

On March 2, 2021, we obtained $ 495 million of excess of loss reinsurance coverage from Triangle Re 2021-1 Ltd.

(“Triangle Re 2021-1”) on a portfolio of existing seasoned mortgage insurance policies written from January 2014 through December 2018 and from October 2019 through December 2019.

In connection with entering into the reinsurance agreement with Triangle Re 2021-1, we believe that the risk transfer requirements for reinsurance accounting were met as Triangle Re 2021-1 is assuming significant insurance risk and a reasonable possibility of significant loss.

Triangle Re 2021-1 reinsurance coverage is derived by applying a reinsurance cession percentage to the MI coverage for each loan to get to an Aggregate Exposed Principal Balance (“AEPB”).

This AEPB accounts for any existing reinsurance and ensures we retain a minimum 5 % vertical risk retention on each loan.

For the reinsurance coverage, we retain the first layer of aggregate losses up to $ 212.1 million.

Triangle Re 2021-1 provides 100.0 % reinsurance coverage for losses above our retained first layer up to $ 495.0 million.

On October 22, 2020, we obtained $ 349.6 million of excess of loss reinsurance coverage from Triangle Re 2020-1 on a portfolio of existing mortgage insurance policies written from January 2020 through August 2020.

In connection with entering into the reinsurance agreement with Triangle Re 2020-1, we concluded that the risk transfer requirements for reinsurance accounting were met as Triangle Re 2020-1 is assuming significant insurance risk and a reasonable possibility of significant loss.

For the reinsurance coverage, we retain the first layer of aggregate losses up to $ 521.8 million.

Triangle Re 2020-1 provides 67.0 % reinsurance coverage for losses above our retained first layer up to $ 349.6 million.

On November 25, 2019, we obtained $ 302.8 million of excess of loss reinsurance coverage with Triangle Re 2019-1, on a portfolio of existing mortgage insurance policies written from January 2019 through September 2019.

In connection with entering into the reinsurance agreement with Triangle Re 2019-1, we concluded that the risk transfer requirements for reinsurance accounting were met as Triangle Re 2019-1 is assuming significant insurance risk and a reasonable possibility of significant loss.

For the reinsurance coverage, we retain the first layer of aggregate losses up to $ 237.7 million.

Triangle Re 2019-1 provides 63.7 % reinsurance coverage for losses above our retained first layer up to $ 302.8 million.

Other excess of loss reinsurance treaties

On February 4, 2021, we executed an excess of loss reinsurance transaction with a panel of reinsurers, which will provide up to $ 205.8 million of reinsurance coverage on a portion of current and expected new insurance written for the 2021 book year, effective January 1, 2021.

Effective April 1, 2020, we executed an excess of loss reinsurance transaction with a panel of reinsurers covering a portion of the loss tier on subject loans written between book years 2009 and 2019 to help mitigate higher levels of delinquencies as a result of COVID-19.

Effective January 1, 2020, we executed an excess of loss reinsurance transaction with a panel of reinsurers covering a portion of the loss tier on the then current and expected new insurance written for the 2020 book year.

We also entered into excess of loss reinsurance agreements with other external panels of reinsurers covering our 2016 through 2019 books of business.

Subsequent to year end, on January 27, 2022 we executed an excess of loss reinsurance transaction with a panel of reinsurers, which will provide up to $ 294 million of reinsurance coverage on a portion of current and expected new insurance written for the 2022 book year, effective January 1, 2022.

The decrease in unearned premiums was mainly the result of policy cancellations in our single premium mortgage insurance product.

Assumed premium as a percentage of net premium earned is 0.0 % for the years ended December 31, 2022, 2021 and 2020.

Excess-of-loss reinsurance

We engage in excess-of-loss (“XOL”) insurance transactions either through a panel of traditional reinsurance providers or through collateralized reinsurance with unaffiliated special purpose insurers (“Triangle Re Entities”).

During the respective coverage periods of these agreements, EMICO retains the first layer of aggregate loss exposure on covered policies while the reinsurer provides the second layer of coverage, up to the defined reinsurance coverage amount.

EMICO retains losses in excess of the respective reinsurance coverage amount.

The Triangle Re Entities fully collateralize their coverage by issuing insurance-linked notes (“ILNs”) to eligible capital market investors in unregistered private offerings.

Traditional reinsurance providers collateralize a portion of their coverage by holding funds in trust.

We believe that the risk transfer

ENACT HOLDINGS, INC.

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Years Ended December 31, 2022, 2021 and 2020

requirements for reinsurance accounting were met as these excess of loss insurance transactions assume significant insurance risk and a reasonable possibility of significant loss.

EMICO has rights to terminate the ILNs or traditional XOL reinsurance agreements upon the occurrence of certain events.

The following table presents the issue date, policy dates, initial and current first layer retained aggregate loss and initial and current reinsurance coverage amount under each reinsurance transaction.

Current amounts are presented as of December 31, 2022:

Mortgage insurance-linked notes

(Amounts in millions) Issue date Policy dates Initial first layer retained loss Current first layer retained loss Initial reinsurance coverage Current reinsurance coverage

Triangle Re 2020-1 Ltd.

10/22/2020 1/01/2020 - 8/31/2020 $ 522 $ 522 $ 350 $ 65

Triangle Re 2021-1 Ltd.

3/02/2021 1/01/2014 - 12/31/2018, 10/01/2019 - 12/31/2019 $ 212 $ 212 $ 495 $ 147

Triangle Re 2021-2 Ltd.

4/16/2021 9/01/2020 - 12/31/2020 $ 189 $ 189 $ 303 $ 248

Triangle Re 2021-3 Ltd.

9/02/2021 1/01/2021 - 6/30/2021 $ 304 $ 303 $ 372 $ 346

Traditional excess-of-loss reinsurance

(Amounts in millions) Issue date Policy dates Initial first layer retained loss Current first layer retained loss Initial reinsurance coverage Current reinsurance coverage

2020 XOL 1/01/2020 1/01/2020 - 12/31/2020 $ 691 $ 691 $ 168 $ 54

2021 XOL 2/04/2021 1/01/2021 - 12/31/2021 $ 671 $ 671 $ 206 $ 192

2022-1 XOL 1/27/2022 1/01/2022 - 12/31/2022 $ 462 $ 462 $ 196 $ 196

2022-2 XOL 1/27/2022 1/01/2022 - 12/31/2022 $ 385 $ 385 $ 25 $ 25

2022-3 XOL 3/24/2022 7/01/2021 - 12/31/2021 $ 317 $ 317 $ 289 $ 282

2022-4 XOL 3/24/2022 7/01/2021 - 12/31/2021 $ 264 $ 264 $ 36 $ 36

2022-5 XOL 9/15/2022 1/01/2022 - 6/30/2022 $ 256 $ 256 $ 201 $ 193

(7) Borrowings

6 unchanged sentences

On August 21, 2020, we issued $ 750 million in aggregate principal amount of 6.5 % senior notes due in 2025.

We incurred $ 12.6 million of borrowing costs that were deferred and were netted against the principal amount of the notes.

Interest on the notes is payable semi-annually in arrears on February 15 and August 15 of each year, commencing on February 15, 2021.

These notes mature on August 15, 2025.

We may redeem the notes in whole or in part at any time prior to February 15, 2025, at our option by paying a make-whole premium plus accrued and unpaid interest, if any.

At any time on or after February 15, 2025, we may redeem the notes in whole or in part at our option at 100 % of the principal amount plus accrued and unpaid interest.

The notes mature on August 15, 2025, but at any time on or after February 15, 2025, we may redeem the notes in whole or in part at our option at 100 % of the principal amount plus accrued and unpaid interest.

The notes contain customary events of default which, subject to certain notice and cure conditions, can result in the acceleration of the principal and accrued interest on the outstanding notes if we breach the terms of the indenture.

We committed to retain $ 300 million of the net proceeds from the issuance of these notes that can be drawn down exclusively for our debt service or to contribute to GMICO to meet its regulatory capital needs.

The current balance of the 2025 Senior Notes proceeds required to be held by the holding company is approximately $ 252 million.

We committed to retain $ 300 million of the net proceeds from the issuance of these notes that can be drawn down exclusively for our debt service or to contribute to EMICO to meet its regulatory capital needs.

As of December 31, 2022, the balance of the 2025 Senior Notes proceeds required to be held by the holding company was approximately $ 203 million.

ENACT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2022, 2021 and 2020

Revolving Credit Agreement

On June 30, 2022, we entered into a credit agreement with a syndicate of lenders that provides for a five-year , unsecured revolving credit facility (the “Facility”) in the initial aggregate principal amount of $ 200 million, including the ability for EHI to increase the commitments under the Facility, on an uncommitted basis, by an additional aggregate principal amount of up to $ 100 million.

Borrowings under the Facility will accrue interest at a floating rate tied to a standard short-term borrowing index, selected at EHI’s option, plus an applicable margin.

The applicable margins are based on the ratings established by certain debt rating agencies for EHI’s senior unsecured debt.

We may use borrowings under the Facility for working capital needs and general corporate purposes, including the execution of dividends to our shareholders and capital contributions to our insurance subsidiaries.

The Facility contains several covenants, including financial covenants relating to minimum net worth, capital and liquidity levels, maximum debt to capitalization level and PMIERs compliance.

We are in compliance of all covenants of the Facility and the Facility remained undrawn as of December 31, 2022.

(8) Income taxes

Income before income taxes and change in fair value of unconsolidated affiliate of $ 695.1 million, $ 472.4 million and $ 718.2 million in 2021, 2020 and 2019, respectively, was domestic.

Income before income taxes of $ 898.2 million, $ 695.1 million and $ 472.4 million in 2022, 2021 and 2020, respectively, was domestic.

The total provision for income taxes was as follows for the years ended December 31:

7 unchanged sentences

Total provision for income taxes $ 194,065 $ 148,531 $ 101,997

We had current income taxes receivable of $ 1.1 million and $ 5.4 million as of December 31, 2021 and 2020.

We had current income taxes payable of $ 9.1 million as of December 31, 2022 which was recorded in other liabilities.

We had current income taxes receivable of $ 1.1 million as of December 31, 2021 which was recorded in other assets.

We paid federal taxes of $ 182.2 million and state taxes of $ 4.0 million for the year ended December 31, 2022;

1 unchanged sentence

and federal taxes of $ 55.4 million and state taxes of $ 1.6 million for the year ended December 31, 2020.

ENACT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2021, 2020 and 2019

The reconciliation of the federal statutory tax rate to the effective income tax rate was as follows for the years ended December 31:

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_______________

(1) “Other, net” is comprised primarily nondeductible expenses offset by prior year true-ups and tax exempt income.

(1) “Other, net” is comprised primarily of nondeductible expenses, prior year true-ups and tax-exempt income.

ENACT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2022, 2021 and 2020

The components of the deferred income taxes were as follows as of December 31:

1 unchanged sentence

Accrued commissions and general expenses $ 12,162 $ 8,670

Net operating loss carry forwards — 850

Net unrealized losses on investment securities 104,047 —

Unearned premium and loss reserves 33,576 35,331

10 unchanged sentences

Net deferred income tax asset (liability) $ 127,473 $ ( 1,586 )

The above valuation allowance of $ 6.3 million and $ 6.4 million as of December 31, 2021 and 2020, respectively, related to state deferred tax assets.

The above valuation allowances of $ 7.3 million and $ 6.3 million as of December 31, 2022 and 2021, respectively, related to state deferred tax assets.

The state deferred tax assets related primarily to the future deductions associated with non-insurance and insurance net operating loss (“NOL”) carryforwards.

1 unchanged sentence

federal NOL carryforwards.

There was no unrecognized tax benefits as of December 31, 2021 and 2020.

Except as discussed above with regard to our state deferred tax assets, we have not established a valuation allowance with respect to any other deferred tax assets as of December 31, 2022, based primarily upon projections of future taxable income.

With respect to deferred tax assets associated with unrealized losses on investment securities, management has the ability and intent to execute tax planning strategies, including to hold those investment assets to recovery or maturity.

We have determined that such strategies are prudent and feasible, and would be implemented, if necessary, to ensure recognition of the deferred tax asset.

After consideration of all available evidence, we concluded that it is more likely than not that these deferred tax assets will be realized.

If our actual results do not validate the current projections of pre-tax income, we may be required to record an additional valuation allowance which could have a material impact on our consolidated financial statements in future periods.

There were no unrecognized tax benefits as of December 31, 2022 and 2021.

We recognize accrued interest and penalties related to unrecognized tax benefits as components of the provision for income taxes.

3 unchanged sentences

We have a tax sharing agreement in place and all intercompany balances related to this agreement are settled at least annually.

With possible exceptions, we are no longer subject to U.S.

federal tax examinations for years through 2017.

Any exposure with respect to these pre-2018 years has been sufficiently recorded in the financial statements.

Potential state

We are not currently subject to any significant examinations by federal or state income tax authorities.

Generally, we are no longer subject to federal or state income tax examinations for years prior to 2019.

We are part of the 2021 Amended and Restated Tax Allocation Agreement (“TAA”) between Genworth and certain of our subsidiaries.

The TAA was approved by state insurance regulators and our

ENACT HOLDINGS, INC.

1 unchanged sentence

Years Ended December 31, 2022, 2021 and 2020

and local examinations for those years are generally restricted to results that are based on closed U.S.

federal examinations.

We are part of the 2021 Amended and Restated Tax Allocation Agreement “TAA” between Genworth and certain of our subsidiaries.

The TAA was approved by state insurance regulators and our Board of Directors.

Board of Directors.

The tax allocation methodology is based on the separate return liabilities with offsets for losses and credits utilized to reduce the current consolidated tax liability as allowed by applicable law and regulation.

1 unchanged sentence

corporate income tax return.

Additionally, Genworth Mortgage Insurance Corporation, Enact Mortgage Reinsurance Corporation, Genworth Mortgage Insurance Corporation of North Carolina and Enact Financial Assurance Corporation (collectively, the “MI Group”), were parties to a supplemental tax sharing agreement that allowed them to accelerate the utilization of benefits as if they filed a stand-alone MI Group federal income tax return, even if those benefits had not been utilized in the consolidated federal return (“deemed used losses”).

Additionally, Enact Mortgage Insurance Corporation, Enact Mortgage Reinsurance Corporation, Enact Mortgage Insurance Corporation of North Carolina and Enact Financial Assurance Corporation (collectively, the “MI Group”), were parties to a supplemental tax sharing agreement that allowed them to accelerate the utilization of benefits as if they filed a stand-alone MI Group federal income tax return, even if those benefits had not been utilized in the consolidated federal return (“deemed used losses”).

If any deemed used losses are subsequently actually used in a consolidated return, the members of the MI Group which received the benefit for such deemed used losses would not receive a second benefit for such losses.

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Employees are vested in the plan after three years of service.

Expenses associated with the qualified defined contribution pension plan were $ 2.1 million in 2021, and $ 2.7 million in 2020 and 2019.

Expenses associated with the qualified defined contribution pension plan were $ 2.1 million, $ 2.1 million, and $ 2.7 million in 2022, 2021 and 2020, respectively.

In addition, certain employees also participate in non-qualified defined contribution plans and qualified and non-qualified defined benefit pension plans sponsored by Genworth.

Expenses associated with non-

Expenses associated with non-qualified defined contribution plans were $ 1.2 million, $ 1.0 million and $ 0.8 million for 2022, 2021 and 2020, respectively.

Expenses allocated to us for qualified and non-qualified defined benefit pension plans were $ 0.3 million, $ 0.4 million, and $ 0.3 million in 2022, 2021 and 2020, respectively.

ENACT HOLDINGS, INC.

1 unchanged sentence

Years Ended December 31, 2022, 2021 and 2020

qualified defined contribution plans were $ 1.0 million, $ 0.8 million and $ 0.6 million for 2021, 2020 and 2019, respectively.

Expenses allocated to us for qualified and non-qualified defined benefit pension plans were $ 0.4 million in 2021, and $ 0.3 million in 2020 and 2019.

Genworth provides retiree health benefits to our employees hired prior to January 1, 2005, who meet certain service requirements.

18 unchanged sentences

EHI share-based compensation

In connection with our initial public offering in 2021, share based awards were granted to employees and directors including restricted stock units (“RSUs”) for employees and deferred stock units (“DSUs) to directors.

In 2021 Enact Holdings, Inc.

Beginning with our initial public offering in 2021, we offer share-based awards to employees and directors including restricted stock units (“RSUs”) and performance stock units (“PSUs”) for employees and deferred stock units (“DSUs”) to directors.

In 2021, the Enact Holdings, Inc.

2021 Omnibus Incentive Plan (the “2021 Omnibus Plan”) was adopted and approved by EHI’s stockholders.

Under the 2021 Omnibus incentive Plan, EHI was authorized to grant a maximum number of shares of Common Stock for issuance not to exceed 4 million shares.

Share-based compensation expense under the 2021 Omnibus Plan was $ 1.5 million, for the year ended December 31, 2021 and was included with acquisition and operating expenses, net of deferrals in the consolidated statement of income.

Share-based compensation expense under the 2021 Omnibus Plan was $ 9.9 million and $ 1.5 million, for the years ended December 31, 2022 and 2021, respectively, and is recorded with acquisition and operating expenses, net of deferrals in the consolidated statement of income.

Stock-based compensation expense was recognized evenly on a straight-line attribution method over the awards’ respective vesting period.

2 unchanged sentences

Years Ended December 31, 2022, 2021 and 2020

During 2021, the Company issued RSUs to our employees with average restriction periods of three years , with a fair value of $ 19.00 and $ 21.17 , which were measured at the market price of a share of the Company’s Class A Common Stock on the grant date.

In connection with our special cash dividend paid in the fourth quarter of 2021, dividend equivalent shares were issued to RSU and DSU holders as of the dividend date.

The grant date fair value was $ 21.25 per share, or $ 0.8 million, which was paid in December 2021.

During 2022 and 2021, the Company issued RSUs to our employees with average restriction periods of three years and a weighted average fair value of $ 22.18 and $ 19.02 , respectively.

Each grant was measured at the fair value of a share of the Company’s Class A Common Stock on the grant date.

The PSUs granted in 2022 have a three-year measurement period starting on January 1, 2022, going through December 31, 2024.

The performance metrics are based on Enact’s consolidated book value per share growth at the end of the performance period, calculated as the increase in book value divided by the number of shares outstanding from January 1, 2022 to December 31, 2024.

The PSUs were granted at fair value as of the approval date by Enact Holdings’ Board of Directors.

In connection with cash dividends paid in 2022 and the fourth quarter of 2021, dividend equivalent shares were issued to RSU, PSU and DSU holders as of the dividend date.

The declaration and payment of future dividends to holders of our common stock will be at the discretion of our board of directors.

6 unchanged sentences

Balance as of December 31, 2021 654 $ 19.02 — $ — 17 $ 20.87

As of December 31, 2021, total unrecognized share-based compensation expense related to non-vested awards not yet recognized was $ 11.0 million.

This expense is expected to be recognized over a weighted-average period of approximately three years .

Granted 322 $ 22.18 156 $ 22.15 78 $ 22.02

Dividend equivalents 62 $ 24.00 10 $ 24.00 5 $ 23.98

Exercised ( 3 ) $ 19.00 — $ — — $ —

Terminated ( 26 ) $ 19.73 — $ — — $ —

Balance as of December 31, 2022 1,009 $ 20.07 166 $ 22.15 100 $ 21.81

As of December 31, 2022 and December 31, 2021, total unrecognized share-based compensation expense related to non-vested awards not yet recognized was $ 12.6 million and $ 11.0 million, respectively.

This expense is expected to be recognized over a weighted-average period of approximately two years .

Genworth share-based compensation

8 unchanged sentences

The 2004 Omnibus Incentive Plan together with the 2012 Omnibus Incentive Plan and the 2018 Omnibus Incentive Plan are referred to collectively as the “Omnibus Incentive Plans.”

Share-based compensation expense under the Omnibus Incentive Plans was $ 5.5 million, $ 4.4 million and $ 2.9 million for the years ended December 31, 2021, 2020 and 2019, respectively, and was included within acquisition and operating expenses, net of deferrals in the consolidated statements of income.

Share-based compensation expense under the Omnibus Incentive Plans was $ 3.9 million, $ 5.5 million and $ 4.4 million for the years ended December 31, 2022, 2021 and 2020, respectively, and was

ENACT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2022, 2021 and 2020

included within acquisition and operating expenses, net of deferrals in the consolidated statements of income.

For awards issued prior to January 1, 2006, share-based compensation expense was recognized on a graded vesting attribution method over the awards’ respective vesting schedule.

2 unchanged sentences

However, no SARs or stock options were granted during 2022, 2021 or 2020 and therefore the Black-Scholes Model was not used in those respective years.

The Black-Scholes Model requires the input of certain assumptions that involve

ENACT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2021, 2020 and 2019

The Black-Scholes Model requires the input of certain assumptions that involve judgment.

Circumstances may change, and additional data may become available over time, which could result in changes to these assumptions and methodologies.

During 2021 and 2020, Genworth issued RSUs to our employees with average restriction periods of three years , with a fair value of $ 3.31 and $ 3.53 , respectively, which were measured at the market price of a share of Genworth’s Class A Common Stock on the grant date.

During 2021, 2020 and 2019,we granted performance stock units (“PSUs”) with a weighted-average fair value of $ 3.45 , $ 3.03 and $ 4.61 , respectively.

During 2021 and 2020, we granted PSUs with a weighted-average fair value of $ 3.45 and $ 3.03 , respectively.

The PSUs were granted at market price as of the approval date by Genworth’s Board of Directors.

2 unchanged sentences

The performance metrics are based on Genworth’s consolidated adjusted operating income and its stockholder return relative to certain of its peer companies as of the grant date.

The grant-date fair value for the adjusted operating income performance measure was $ 3.31 .

The grant date fair value for total relative stockholder return performance metric was $ 4.18 , which was calculated using the Monte Carlo simulation with the following valuation assumptions.

Valuation assumptions:

Valuation-Date Stock Price $ 3.31

Volatility 65.0 %

Dividends Yield — %

Risk-Free Rate 0.3 %

Value Cap 800 % of the grant date stock price

The PSUs granted in 2020 have a three-year measurement period starting on January 1, 2020, going through December 31, 2022.

1 unchanged sentence

Mortgage Insurance and Australia Mortgage Insurance segments and gross incremental annual premiums in Genworth’s long-term care insurance business, defined as approved weighted-average premium rate increases multiplied by the annualized in-force premiums.

The PSUs granted in 2019 have a three-year measurement period starting on January 1, 2019 going through December 31, 2021.

The performance metric is based on consolidated Genworth’s adjusted operating income.

For all PSU awards granted, the compensation committee of Genworth’s Board of Directors determines and approves no later than March 15, following the end of the three-year performance period for each applicable performance period, the number of units earned and vested for each distinct performance period.

Expense associated with our PSUs was $ 1.3 million in 2021 and less than $ 1.0 million in years 2020 and 2019.

Expense associated with our PSUs was less than $ 1.0 million in 2022, $ 1.3 million in 2021 and less than $ 1.0 million in 2020.

In 2021 and 2020, Genworth granted cash awards with a fair value of $ 1.00 .

10 unchanged sentences

Granted — 3,569

Performance adjustment 261 —

Vested ( 1,178 ) ( 2,324 )

6 unchanged sentences

Balance as of December 31, 2021

Granted — 4,330

Performance adjustment 449 83

Employee transfer — 556

Vested — ( 3,600 )

1 unchanged sentence

Balance as of December 31, 2022

The following table summarizes stock option activity as of December 31, 2021, 2020 and 2019:

The following table summarizes stock option activity as of December 31, 2020:

(Shares in thousands) Shares subject

5 unchanged sentences

Expired and forfeited ( 78 ) $ 14.18

Balance as of January 1, 2020

Granted — $ —

Exercised — $ —

Expired and forfeited ( 78 ) $ 14.18

Balance as of December 31, 2020 — $ —

Granted — $ —

Exercised — $ —

Expired and forfeited — $ —

Balance as of December 31, 2021

Exercisable as of December 31, 2021

There was no stock option activity for the periods ended December 31, 2022 and 2021 and no stock options outstanding as of December 31, 2022.

ENACT HOLDINGS, INC.

1 unchanged sentence

Years Ended December 31, 2022, 2021 and 2020

There were no stock options outstanding as of December 31, 2021.

The following table summarizes the status of other equity-based awards as of December 31, 2022, 2021 and 2020:

14 unchanged sentences

Granted 316 $ 3.31 303 $ 3.45 — $ —

Employee transfer — $ — — $ — 18 $ 2.77

Exercised ( 90 ) $ 3.44 — $ — — $ —

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Granted — $ — — $ — — $ —

Performance adjustment — $ — 135 $ 4.61 — $ —

Employee transfer 32 $ 5.13 — $ — 49 $ 2.71

4 unchanged sentences

As of December 31, 2022, and 2021, total unrecognized share-based compensation expense related to non-vested awards not yet recognized was $ 1.1 million and $ 2.5 million, respectively.

This expense is expected to be recognized over a weighted-average period of approximately two years and less than one year , respectively.

This expense is expected to be recognized over a weighted-average period of approximately one year and less than one year , respectively.

In 2022 and 2021, there was no cash received from stock options exercised in each year.

3 unchanged sentences

Related Party Transactions

We have various agreements with Genworth that provide for reimbursement to and from Genworth of certain administrative and operating expenses that include, but are not limited to, information technology services and administrative services (such as finance, human resources, employee benefit administration and legal).

These agreements provide for an allocation of corporate expenses to all Genworth businesses or subsidiaries.

We incurred costs for these services of $ 30.4 million, $ 44.5 million and $ 50.3 million in 2022, 2021 and 2020, respectively.

Our investment portfolio is managed by Genworth.

The investment portfolios of our insurance subsidiaries are managed by Genworth.

Under the terms of the investment management agreement, we are charged a fee by Genworth.

8 unchanged sentences

We charged Genworth $ 0.7 million, $ 0.3 million and $ 1.3 million for these services in 2022, 2021 and 2020, respectively.

We previously held an investment in common shares of Genworth Canada.

Genworth Canada was consolidated within Genworth until its sale on December 12, 2019.

We received dividends from Genworth Canada of $ 41.9 million in 2019, which is included within change in fair value of unconsolidated affiliate, net of tax in the consolidated statements of income.

In November 2021, we completed the acquisition of Genworth Financial Mauritius Holdings Limited from Genworth Financial International Holdings.

1 unchanged sentence

We paid cash dividends of $ 204.6 million, $ 163.4 million and $ 437.4 million to Genworth in 2022, 2021 and 2020, respectively.

The amount and timing of future dividends will depend on the economic recovery from COVID-19, among other factors.

The amount and timing of future dividends will be based upon the prevailing and prospective macro-economic conditions, regulatory landscape and business performance and remain subject to required approvals.

Refer to Note 15 for further details on dividend restrictions.

8 unchanged sentences

(12) Commitments and contingencies

We lease certain office facilities, equipment and automobiles under operating leases.

Our operating leases consist predominantly of office space.

Operating lease right-of-use assets of $ 13.6 million and $ 15.5 million as of December 31, 2022 and 2021, respectively, were recorded in other assets on the consolidated balance sheets.

1 unchanged sentence

Operating lease expenses were approximately $ 3.4 million, $ 3.9 million and $ 4.0 million for the years ended December 31, 2022, 2021 and 2020, respectively.

Our remaining lease terms ranged from less than 4 years to 5 years and had a weighted-average remaining lease term of 5 years and 6 years as of December 31, 2022, and 2021, respectively.

The implicit rate of our lease agreements was not readily determinable;

therefore, we utilized our incremental borrowing rate to discount future lease payments.

The weighted-average discount rate was 7.1 % as of

ENACT HOLDINGS, INC.

1 unchanged sentence

Years Ended December 31, 2022, 2021 and 2020

Note 2 for additional information related to operating leases.

December 31, 2022 and 2021.

The following table presents future minimum rent payments under operating leases as of December 31, 2022:

12 unchanged sentences

Moreover, even if we ultimately prevail in the litigation, regulatory action or investigation, we could suffer significant reputational harm, which could have an adverse effect on our business, financial condition or results of operations.

(13) Stockholders’ Equity

Share Repurchase Program

On November 1, 2022, our board of directors approved a share repurchase program authorizing the Company to spend up to $ 75 million, excluding commissions, to repurchase EHI common stock in the open market or in privately negotiated transactions, based on market and business conditions, stock price and other factors.

EHI generally operates its share repurchase programs pursuant to a trading plan under Rule 10b5-1 of the Exchange Act, which permits the Company to purchase shares, at predetermined price targets, when it may otherwise be precluded from doing so.

During the year ended December 31, 2022, the Company purchased 63,571 shares at an average price of $ 24.10 per share, including commissions.

As of December 31, 2022, $ 73.5 million remained available under this program.

All treasury stock has been constructively retired as of December 31, 2022.

Subsequent to year end, the Company purchased 253,689 shares at an average price of $ 24.13 through January 31, 2023.

ENACT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2022, 2021 and 2020

Cash Dividends

In the second, third, and fourth quarters of 2022, we paid quarterly cash dividends of $ 0.14 per share.

On December 6, 2022, we paid a special cash dividend of $ 1.12 per share, totaling approximately $ 183 million.

(14) Accumulated other comprehensive income (loss)

The following table presents a roll-forward of accumulated other comprehensive income (loss), net of taxes:

(Amounts in thousands) Net unrealized gains (losses) on investments Foreign currency translation Total

Balance January 1, 2020, net of tax

$ 93,431 $ — $ 93,431

Other comprehensive income (loss) before reclassifications 112,307 — 112,307

Amounts reclassified from other comprehensive income (loss) 2,640 — 2,640

Total other comprehensive income (loss) 114,947 — 114,947

Balance January 1, 2021, net of tax

208,378 — 208,378

Cumulative effect of changes in accounting 281 — 281

Other comprehensive income (loss) before reclassifications ( 124,908 ) ( 7 ) ( 124,915 )

Amounts reclassified from other comprehensive income (loss) ( 163 ) — ( 163 )

Total other comprehensive income (loss) and other adjustments ( 124,790 ) ( 7 ) ( 124,797 )

Balance December 31, 2021, net of tax

83,588 ( 7 ) 83,581

Other comprehensive income (loss) before reclassifications ( 468,229 ) 159 ( 468,070 )

Amounts reclassified from other comprehensive income (loss) 1,745 — 1,745

Total other comprehensive income (loss) ( 466,484 ) 159 ( 466,325 )

Balance December 31, 2022, net of tax

$ ( 382,896 ) $ 152 $ ( 382,744 )

The following table presents the effect of the reclassification of significant items out of accumulated other comprehensive income (loss) on the respective line items of the consolidated statements of income:

Amounts reclassified

from accumulated other comprehensive income (loss) Affected line item in consolidated

statement of income

(Amounts in thousands) 2022 2021 2020

Net unrealized gains (losses) on investments $ ( 2,209 ) $ 206 $ ( 3,342 ) Net investment gains (losses)

Benefit (expense) for income taxes 464 ( 43 ) 702 Provision for income taxes

ENACT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2022, 2021 and 2020

(15) Statutory information

6 unchanged sentences

GAAP basis include:

(a) Under SSAP, mortgage insurance companies are required each year to establish a special contingency reserve in their statutory financial statements to provide for losses in the event of

ENACT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2021, 2020 and 2019

significant economic declines.

(a) Under SSAP, mortgage insurance companies are required each year to establish a special contingency reserve in their statutory financial statements to provide for losses in the event of significant economic declines.

Annual additions to the statutory contingency reserve must be at least 50% of net earned premiums earned in such year.

9 unchanged sentences

GAAP changes in deferred tax assets and liabilities, except for changes in unrealized gains and losses on available-for-sale securities, are recorded as a component of income tax expense.

(d) Under SSAP, investment grade fixed-maturity investments are valued at amortized cost and below-investment grade securities are carried at the lower of amortized cost or market value.

GAAP, those investments that we do not have the ability or intent to hold to maturity are considered to be either available for sale or trading securities and are recorded at fair value, with the unrealized gain or loss recognized, net of tax, as an increase or decrease to equity or current operations, as applicable.

(d) Under SSAP, most of our fixed maturity investments are recorded at amortized cost while securities with certain NAIC designations are carried at the lower of amortized cost or market value.

GAAP, our fixed maturity securities are classified as available-for-sale and are recorded at fair value, with the unrealized gain or loss recognized, net of tax, as an increase or decrease to accumulated other comprehensive income.

(e) Under SSAP, certain assets, designated as non-admitted assets, are charged directly against statutory surplus.

6 unchanged sentences

Contingency reserve $ 3,551,022 $ 3,042,117 $ 2,518,194

ENACT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2022, 2021 and 2020

Statutory Capital Requirements

7 unchanged sentences

Each approved mortgage insurer is required to provide the GSEs with an annual certification and a quarterly report as to its compliance with PMIERs.

ENACT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2021, 2020 and 2019

During 2020, the GSEs issued several amendments to PMIERs.

The December 4, 2020 version extended the application of reduced PMIERs capital factors to each non-performing loan that has an initial missed monthly payment occurring on or after March 1, 2020 and prior to April 1, 2021 and capital preservation period from March 31, 2021 to June 30, 2021.

Since its adoption in 2015, PMIERs has been amended on several occasions, including as a result of COVID-19 (as amended, the “PMIERs Amendment”).

The PMIERs include financial requirements for mortgage insurers under which a mortgage insurer’s “Available Assets” (generally only the most liquid assets of an insurer) must meet or exceed “Minimum Required Assets” (which are based on an insurer’s risk-in-force (“RIF”) and are calculated from tables of factors with several risk dimensions and are subject to a floor amount) and otherwise generally establish when a mortgage insurer is qualified to issue coverage that will be acceptable to the respective GSE for acquisition of high loan-to-value (“LTV”) mortgages.

The GSEs may amend or waive PMIERs at their discretion, impose additional conditions or restrictions on us and also have broad discretion to interpret PMIERs, which could impact the calculation of our “Available Assets” and/or “Minimum Required Assets.” The amount of capital that GMICO may be required in the future to maintain the “Minimum Required Assets” as defined in PMIERs, and operate our business is dependent upon, among other things:

(i) the way PMIERs are applied and interpreted by the GSEs and the Federal Housing Finance Agency (“FHFA”) as and after they are implemented;

(ii) the future performance of the housing market, including as a result of COVID-19 and the length and speed of recovery;

The GSEs may amend or waive PMIERs at their discretion, impose additional conditions or restrictions on us and also have broad discretion to interpret PMIERs, which could impact the calculation of our “Available Assets” and/or “Minimum Required Assets.” The amount of capital that EMICO may be required in the future to maintain the “Minimum Required Assets” as defined in PMIERs, and operate our business is dependent upon, among other things:

(i) the way PMIERs are applied and interpreted by the GSEs and the Federal Housing Finance Agency (“FHFA”);

(ii) the future performance of the housing market;

(iii) our generation of earnings in our business, “Available Assets” and “Minimum Required Assets,” reducing RIF and reducing delinquencies as anticipated, and writing anticipated amounts and types of new mortgage insurance business;

3 unchanged sentences

We may be unable to increase premium rates for various reasons, principally due to competition.

Our inability, on the other hand, to increase the capital as required in the anticipated timeframes and on the anticipated terms, and to realize the anticipated benefits, could have a material adverse impact on our business, results of operations and financial condition.

Our inability, to increase the capital as required in the anticipated timeframes and on the anticipated terms, and to realize the anticipated benefits, could have a material adverse impact on our business, results of operations and financial condition.

More particularly, our ability to continue to meet the PMIERs financial requirements and maintain a prudent amount of capital in excess of those requirements, given the dynamic nature of asset valuations and requirement changes over time, is dependent upon, among other things:

1 unchanged sentence

The PMIERs Amendment implemented both permanent and temporary revisions to PMIERs.

For loans that became non-performing due to a COVID-19 hardship, PMIERs was temporarily amended with respect to each non-performing loan that (i) had an initial missed monthly payment occurring on or after March 1, 2020 and prior to April 1, 2021 or (ii) is subject to a forbearance plan granted in response to a financial hardship related to COVID-19, the terms of which are materially consistent with terms of forbearance plans offered by the GSEs.

The risk-based required asset amount factor for the non-performing loan will be the greater of (a) the applicable risk-based required asset amount factor for a performing loan were it not delinquent, and (b) the product of a 0.30 multiplier and the applicable risk-based required asset amount factor for a non-performing loan.

In the case of (i) above, absent the loan being subject to a forbearance plan described in (ii) above, the 0.30 multiplier will be applicable for no longer than three calendar months beginning with the month in which the loan became a non-performing loan due to having missed two monthly payments.

Loans subject to a forbearance plan described in (ii) above include those that are either in a repayment plan or loan modification trial period following the forbearance plan unless reported to the approved insurer that the loan is no longer in such forbearance plan, repayment plan, or loan modification trial period.

The PMIERs Amendment also imposes temporary capital preservation provisions through June 30, 2021, that require an approved insurer to obtain prior written GSE approval before paying any dividends, pledging or transferring assets to an affiliate or entering into any new, or altering any existing, arrangements under tax sharing and intercompany

For loans that became non-performing due to a COVID-19 hardship, PMIERs was amended with respect to each non-performing loan that (i) had an initial missed monthly payment occurring on or after March 1, 2020 and prior to April 1, 2021 or (ii) is subject to a forbearance plan granted in response to a financial hardship related to COVID-19, the terms of which are materially consistent with terms of forbearance

ENACT HOLDINGS, INC.

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Years Ended December 31, 2022, 2021 and 2020

expense-sharing agreements, even if such insurer has a surplus of available assets.

Therefore, the PMIERs Amendment may restrict or prevent GMICO from paying us dividends.

The PMIERs Amendment additionally imposes permanent revisions to the risk-based required asset amount factor for non-performing loans for properties located in future Federal Emergency Management Agency (“FEMA”)-Declared Major Disaster Areas eligible for individual assistance.

plans offered by the GSEs.

The risk-based required asset amount factor for a non-performing loan is the greater of (a) the applicable risk-based required asset amount factor for a performing loan were it not delinquent, and (b) the product of a 0.30 multiplier and the applicable risk-based required asset amount factor for a non-performing loan.

The PMIERs Amendment additionally made permanent revisions to the risk-based required asset amount factor for non-performing loans for properties located in future Federal Emergency Management Agency (“FEMA”)-Declared Major Disaster Areas eligible for individual assistance.

Our assessment of PMIERs compliance is based on a number of factors, including our understanding of the GSEs’ interpretation of the PMIERs financial requirements.

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As of December 31, 2022, we had available assets of $ 5,206 million against $ 3,156 million net required assets under PMIERs, compared to available assets of $ 5,077 million against $ 3,074 million net required assets as of December 31, 2021.

The sufficiency above the published PMIERs financial requirements as of December 31, 2021, was $ 2,003 million, compared to $ 1,229 million above the published PMIERs requirements as of December 31, 2020, resulting in a PMIERs sufficiency ratio of 165 % and 137 % as of December 31, 2021 and 2020, respectively, which in each case, was above the requirement imposed by the GSE Restrictions that required us to maintain a PMIERs sufficiency ratio of 115 % in 2020.

The sufficiency above the published PMIERs financial requirements as of December 31, 2022, was $ 2,050 million, compared to $ 2,003 million above the published PMIERs requirements as of December 31, 2021, resulting in a PMIERs sufficiency ratio of 165 % as of both December 31, 2022 and 2021, which in each case, was above the requirement imposed by the GSE Restrictions that required us to maintain a PMIERs sufficiency ratio of 120 % in 2022 and 115 % in 2021.

In addition, our PMIERs required assets as of December 31, 2022 and December 31, 2021, benefited from the application of a 0.30 multiplier applied to the risk-based required asset amount factor for certain non-performing loans.

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mortgage insurance subsidiaries are subject to review and potential disapproval by the North Carolina Commissioner of Insurance (the “Commissioner”).

Within that general regulatory right of review process, there are three (3) minor procedural variances depending on (i) the amount of the dividend or distribution as well as (ii) the source thereof.

As regards amount, dividends and distributions may be classified as either “ordinary” or “extraordinary.” (1) The review standard for an “ordinary” dividend or distribution is that notice must be given to the Commissioner 30 days in advance of the proposed payment date, during which period the Commissioner may disapprove the proposed dividend or distribution.

An “extraordinary dividend or distribution” is defined by statute as one, which combined with all others made in the preceding 12 months, exceeds the greater of (i) 10% of the insurer’s surplus as regards policyholders as of the preceding December 31, or (ii) net income, excluding realized capital gains, for the 12-month period ending the preceding December 31.

(2) The review standard for an “extraordinary” dividend or distribution is effectively the same as that for an “ordinary” dividend or distribution that the insurer must give 30 days’

Within that general regulatory right of review process, there are three (3) minor procedural variances depending on (i) the amount of the dividend or distribution as well as (ii) the source

ENACT HOLDINGS, INC.

1 unchanged sentence

Years Ended December 31, 2022, 2021 and 2020

notice and the Commissioner has not disapproved the proposal in that 30-day period.

(2) The review standard for an “extraordinary” dividend or distribution is effectively the same as that for an “ordinary” dividend or distribution that the insurer must give 30 days’ notice and the Commissioner has not disapproved the proposal in that 30-day period.

For both “ordinary” and “extraordinary” dividends, the Commissioner has the option to affirmatively grant approval prior to the expiration of the 30-day notice period.

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Based on estimated statutory results as of December 31, 2022, in accordance with applicable dividend restrictions, our insurance subsidiaries could pay dividends of approximately $ 292 million from unassigned surplus in 2023 without obtaining prior regulatory approval, although notice of the intent to pay must be provided to the Commissioner 30 days in advance thereof during which period the Commissioner may review the dividend pursuant to statutory standards.

(14) Accumulated other comprehensive income (loss)

The following table presents a roll-forward of accumulated other comprehensive income (loss):

(Amounts in thousands) Net unrealized gains (losses) on investments Foreign currency translation Total

Balance January 1, 2019, net of tax

$ ( 26,522 ) $ — $ ( 26,522 )

Other comprehensive income (loss) before reclassifications 120,505 — 120,505

Amounts reclassified (from) to other comprehensive income (loss) ( 552 ) — ( 552 )

Total other comprehensive income (loss) 119,953 — 119,953

Balance January 1, 2020, net of tax

93,431 — 93,431

Other comprehensive income (loss) before reclassifications 112,307 — 112,307

Amounts reclassified (from) to other comprehensive income (loss) 2,640 — 2,640

Total other comprehensive income (loss) 114,947 — 114,947

Balance December 31, 2020, net of tax

208,378 — 208,378

Cumulative effect of changes in accounting 281 — 281

Other comprehensive income (loss) before reclassifications ( 124,908 ) ( 7 ) ( 124,915 )

Amounts reclassified (from) to other comprehensive income (loss) ( 163 ) — ( 163 )

Total other comprehensive income (loss) and other adjustments ( 124,790 ) ( 7 ) ( 124,797 )

Balance December 31, 2021, net of tax

$ 83,588 $ ( 7 ) $ 83,581

Amounts reclassified

from accumulated other comprehensive income (loss) Affected line item in consolidated

statement of income

(Amounts in thousands) 2021 2020 2019

Net unrealized gains (losses) on investments $ 206 $ ( 3,342 ) $ 698 Net investment gains (losses)

Benefit (expense) for income taxes ( 43 ) 702 ( 147 ) Provision for income taxes

ENACT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2021, 2020 and 2019

(16) Earnings per share

The basic earnings per share computation is based on the weighted average number of shares of common stock outstanding.

For the year ended December 31, 2021, the calculation of dilutive weighted average shares considers the impact of restricted stock units issued to employees as well deferred stock units issued to our directors.

For the years ended December 31, 2020 and 2019, we had no instruments outstanding that would be dilutive to earnings per share.

For the years ended December 31, 2022 and December 31, 2021, the calculation of dilutive weighted average shares considers the impact of restricted stock units and performance stock units issued to employees as well deferred stock units issued to our directors.

For the year ended December 31, 2020, we had no instruments outstanding that would be dilutive to earnings per share.

The following table presents the computation of earnings per share for the years ended December 31:

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(Amounts in thousands) Amortized cost Fair value Carrying value

Fixed maturity securities:

government, agencies and GSEs $ 46,319 $ 44,769 $ 44,769

3 unchanged sentences

corporate 716,333 652,844 652,844

Residential mortgage-backed 11,162 11,043 11,043

Other asset-backed 1,185,048 1,100,036 1,100,036

Total $ 5,160,174 $ 5,266,339 $ 5,266,339

Total fixed maturity securities $ 5,371,673 $ 4,884,760 $ 4,884,760

Short-term investments $ 3,077 $ 3,047 $ 3,047

Total investments $ 5,374,750 $ 4,887,807 $ 4,887,807

See Report of Independent Registered Public Accounting Firm

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Investments in subsidiaries $ 4,402,529 $ 4,597,088

Fixed maturity securities available-for-sale, at fair value (amortized cost $ 246,680 as of December 31, 2022)

Short-term investments 3,047 —

Total investments 4,649,144 4,597,088

Cash and cash equivalents 206,428 264,207

Accrued investment income 1,683 —

Other assets 5,233 3,731

35 unchanged sentences

Net income $ 704,157 $ 546,685 $ 370,421

Other comprehensive income, net of taxes:

Other comprehensive income (loss), net of taxes:

Net unrealized gains (losses) on securities ( 466,484 ) ( 125,071 ) 114,947

Foreign currency translation 159 ( 7 ) —

Other comprehensive income ( 125,078 ) 114,947 119,953

Total comprehensive income $ 421,607 $ 485,368 $ 797,581

Other comprehensive income (loss) ( 466,325 ) ( 125,078 ) 114,947

Total comprehensive income (loss) $ 237,832 $ 421,607 $ 485,368

See Notes to Schedule II

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Dividends from subsidiaries 484,500 230,000 —

Stock compensation expense 1,496 — —

Amortization of fixed maturity securities discounts and premiums ( 1,191 ) — —

Stock-based compensation expense 9,883 1,496 —

Amortization of debt issuance costs 2,414 2,254 —

Other ( 22 ) 67 —

Change in certain assets and liabilities:

Accrued investment income ( 1,683 ) — —

Other assets ( 803 ) 94 ( 3,832 )

2 unchanged sentences

Cash flows from investing activities:

Purchases of fixed maturity securities available-for-sale ( 249,141 ) — —

Purchase of equity interest — ( 27,304 ) —

Net cash provided by investing activities ( 27,304 ) — —

Proceeds from maturities of fixed maturity securities 3,612 — —

Change in short-term investments ( 3,077 ) — —

Contributions to subsidiaries ( 7,150 ) — —

Net cash used in investing activities ( 255,756 ) ( 27,304 ) —

Cash flows from financing activities:

Proceeds from the issuance of long-term debt — — 737,651

Repurchase of common stock ( 1,532 ) — —

Dividends paid ( 250,776 ) ( 200,294 ) ( 437,353 )

Net cash provided by (used in) financing activities ( 252,308 ) ( 200,294 ) 300,298

Effect of exchange rate changes on cash and cash equivalents ( 7 ) — —

Net increase in cash and cash equivalents 300,315 —

Net increase (decrease) in cash and cash equivalents ( 57,779 ) ( 36,111 ) 300,315

Cash and cash equivalents at beginning of year 264,207 300,318 3

11 unchanged sentences

Enact Holdings, Inc.

(“EHI”) has been a subsidiary of Genworth since EHI’s incorporation in Delaware in 2012.

(“EHI,” “we,” or “our”) has been a subsidiary of Genworth since EHI’s incorporation in Delaware in 2012.

On May 3, 2021, EHI amended its certificate of incorporation to change its name from Genworth Mortgage Holdings, Inc.

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On November 29, 2019, Genworth completed a holding company reorganization whereby Genworth contributed 100% of the issued and outstanding voting securities of EHI to Genworth Holdings, Inc.

(“Genworth Holdings”).

Post-contribution, EHI was a direct, wholly owned subsidiary of Genworth Holdings, and Genworth Holdings is still a direct, wholly owned subsidiary of Genworth.

EHI is a holding company whose subsidiaries offer U.S.

mortgage insurance products.

In November 2021, we completed the acquisition of Genworth Financial Mauritius Holdings Limited from Genworth Financial International Holdings.

Refer to Note 3 for further details.

Refer to Note 3 in our audited consolidated financial statements for further details.

(2) Summary of significant accounting policies

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On August 21, 2020, EHI issued $ 750.0 million in aggregate principal amount of 6.5 % senior notes due in 2025.

EHI incurred $ 12.60 million of borrowing costs that were deferred and were netted against the principal amount of the notes.

Interest on the notes is payable semi-annually in arrears on February 15 and August 15 of each year, commencing on February 15, 2021.

These notes mature on August 15, 2025.

EHI may redeem the notes in whole or in part at any time prior to February 15, 2025, at EHI’s option by paying a make-whole premium plus accrued and unpaid interest, if any.

These notes mature on August 15, 2025, but EHI may redeem the notes in whole or in part at any time prior to February 15, 2025, at EHI’s option by paying a make-whole premium plus accrued and unpaid interest, if any.

At any time on or after February 15, 2025, EHI may redeem the notes in whole or in part at its option at 100 % of the principal amount plus accrued and unpaid interest.

Per the GSE Restrictions, EHI committed to retain $ 300 million of the net proceeds from the issuance of these notes that can be drawn down exclusively for its debt service or to contribute to EMICO to meet its regulatory capital needs.

As of December 31, 2022, the balance of the 2025 Senior Notes proceeds required to be held by the holding company was approximately $ 203 million.

ENACT HOLDINGS, INC.

(PARENT COMPANY ONLY)

EHI committed to retain $ 300 million of the net proceeds from the issuance of these notes that can be drawn down exclusively for its debt service or to contribute to GMICO to meet its regulatory capital needs.

The current balance of the 2025 Senior Notes proceeds required to be held by the holding company is approximately $ 252 million.

Revolving Credit Agreement

Borrowings under the Facility will accrue interest at a floating rate tied to a standard short-term borrowing index, selected at EHI’s option, plus an applicable margin.

The applicable margins are based on the ratings established by certain debt rating agencies for EHI’s senior unsecured debt.

The Facility contains several covenants, including financial covenants relating to minimum net worth, capital and liquidity levels, maximum debt to capitalization level and PMIERS compliance.

We are in compliance of all covenants of the Facility and the Facility remained undrawn as of December 31, 2022.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data