What changed in this filing

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Item 1. Business

2025-02-28 compared with 2024-02-29 · 104 added, 141 removed, 525 unchanged (32% of the section changed)

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We have a rigorous approach to writing new insurance risk based on decades of loan-level data and experience in the mortgage insurance industry.

We believe our balance sheet is well capitalized to manage through macroeconomic uncertainty and maintain compliance with private mortgage insurer eligibility requirements (“PMIERs”) and state regulatory standards of compliance.

Our balance sheet is well capitalized to manage through macroeconomic uncertainty and maintain compliance with private mortgage insurer eligibility requirements (“PMIERs”) and state regulatory standards of compliance.

We utilize our credit risk transfer (“CRT”) program to mitigate future loss volatility and drive efficient capital management.

Our CRT program is a material component of our strategy, and we believe it helps to protect future business performance and stockholder capital under stress scenarios by transferring risk from our balance sheet to highly rated counterparties or to investors through collateralized transactions.

As of December 31, 2023, we had a PMIERs sufficiency ratio of 161%, representing $1,887 million of available assets above the PMIERs requirement and approximately 90% of our insured portfolio was covered by our CRT program.

Our Corporate Information

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(“EHI,” together with its subsidiaries, the “Company,” “we,” “us,” or “our”) was a wholly owned subsidiary of Genworth Financial, Inc.

(“Genworth”) since EHI’s incorporation in Delaware in 2012 until our initial public offering on September 20, 2021.

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

This amendment also authorized EHI to issue 600,000,000 shares of common stock, each having a par value of $0.01 per share.

Concurrently, we entered into a share exchange agreement with Genworth Holdings, Inc.

(“Genworth Holdings”), pursuant to which Genworth Holdings exchanged the 100 shares of our common stock owned by it, representing all of our issued and outstanding capital stock, for 162,840,000 newly issued shares of common stock, par value $0.01, of EHI.

On September 15, 2021, we priced our initial public offering (“IPO”) of common stock, which resulted in the issuance and sale of 13,310,400 shares of common stock at the IPO price of $19.00 per common share.

All shares were offered by the selling stockholder, our parent company, Genworth Holdings.

In addition to the shares sold in the IPO, 14,655,600 common shares were sold in a concurrent private sale (“Private Sale”) at a price per share of $17.86, which is equal to the IPO price less the underwriting discount share.

Genworth Holdings also granted the underwriters a 30-day option to purchase up to an additional 1,996,560 common shares (“Over-Allotment Option”) at the IPO price less the underwriting discount.

On September 16, 2021, the underwriters exercised their option to purchase all 1,996,560 common shares permitted under the terms of the underwriting agreement.

The IPO, Private Sale, and Over-Allotment Option (collectively the “Offering”) closed on September 20, 2021, and Genworth Holdings retained all net proceeds from the Offering.

(“Genworth”) since EHI’s incorporation in Delaware in 2012.

In September 2021, we completed a minority initial public offering (“IPO”) of 18.4% of EHI’s common stock.

We operate a majority of our business through our primary insurance subsidiary, Enact Mortgage Insurance Corporation (“EMICO”).

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("Enact Re").

We contributed $250 million into Enact Re in May 2023 and an additional $250 million in November 2023.

As of December 31, 2023, Enact Re provided excess-of-loss reinsurance relating to GSE risk share and reinsured EMICO’s new and existing insurance in-force under quota share reinsurance agreements.

We contributed $500 million into Enact Re in 2023.

As of December 31, 2024, Enact Re reinsured EMICO’s new and existing insurance in-force under quota share

reinsurance agreements and invests in new business opportunities for Enact, including assumption of excess of loss reinsurance relating to GSE risk share.

Our operations also include a run-off insurance block with reference properties in Mexico (“run-off business”), which is immaterial to our results.

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The GSE charters generally require credit enhancement for Low Down Payment Loans to be eligible for purchase by the GSEs.

Such credit enhancement can be satisfied if a loan is insured by a GSE-qualified insurer, the mortgage seller retains at least a 10% participation in the loan, or the seller agrees to repurchase or replace the loan in the event of a default.

Such credit enhancement can be satisfied if a loan is insured by a GSE-qualified insurer, the mortgage seller retains at least a 10% participation in the loan, or the seller

agrees to repurchase or replace the loan in the event of a default.

Private mortgage insurance satisfies the GSEs’ credit enhancement requirement and, historically, has been the preferred method lenders have utilized to meet this GSE charter requirement.

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The overall new business opportunity in the private mortgage insurance market is also reflective of the mix between purchase and refinancing originations.

Historically, due to the higher prevalence of Low

Down Payment Loans in purchase originations, mortgage insurance utilization has been meaningfully higher for purchase originations than for refinances.

Historically, due to the higher prevalence of Low Down Payment Loans in purchase originations, mortgage insurance utilization has been meaningfully higher for purchase originations than for refinances.

Our principal sources of competition are government (federal, state and local) agencies, such as the FHA and the United States Department of Veterans Affairs (“VA”) and other private mortgage insurers.

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As a result, we believe borrowers with lower Fair Isaac Company (“FICO”) scores are more likely to secure mortgage loans with coverage by public agencies and borrowers with higher FICO scores are more likely to secure mortgage loans with coverage by private mortgage insurers.

Mortgage insurance policies from government agencies are also generally non-cancellable, meaning that borrowers are obligated to pay for coverage through the life of their loan, whereas policies from private mortgage insurers are cancellable in certain circumstances as provided by the Homeowners Protection Act (“HOPA”), and under GSE guidelines when the loan-to-value (“LTV”) ratio of an underlying mortgage falls below 80%.

Mortgage insurance policies from government agencies are also generally non-cancellable, meaning that borrowers are obligated to pay for coverage through the life of their loan,

whereas policies from private mortgage insurers are cancellable in certain circumstances as provided by the Homeowners Protection Act of 1998 (“HOPA”), and under GSE guidelines when the loan-to-value (“LTV”) ratio of an underlying mortgage falls below 80%.

Private mortgage insurers also face limited competition from certain local and state housing finance agencies.

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We compete on pricing, underwriting guidelines, customer relationships, service levels, policy terms, loss mitigation practices, perceived financial strength (including comparative credit ratings), reputation, strength of management, product features and effective use and ease of technology.

There are currently six active mortgage insurers, including us.

There are currently six active private mortgage insurers, including us.

Private mortgage insurance competitors include Arch Capital Group Ltd., Essent Group Ltd., MGIC Investment Corporation, NMI Holdings, Inc.

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GSEs, Portfolio Lenders, Reinsurers and Other Capital Markets Participants

We have also experienced competition in recent years from various participants in the mortgage finance industry including the GSEs, portfolio lenders, reinsurers and other participants in the capital markets.

We have also experienced competition from various participants in the mortgage finance industry including the GSEs, portfolio lenders, reinsurers and other participants in the capital markets.

We compete with these participants primarily based on pricing, policy terms and perceived financial strength.

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Pool mortgage insurance transactions provide coverage on a finite set of individual loans identified by the pool policy.

potential aggregate liability for claims payments (known as a “stop loss”) or a combination of both provisions.

Pool policies contain coverage percentages and provisions limiting the insurer’s obligation to pay claims until a threshold amount is reached (known as a “deductible”) or capping the insurer’s potential aggregate liability for claims payments (known as a “stop loss”) or a combination of both provisions.

Pool mortgage insurance is typically used to provide additional credit enhancement for certain secondary market mortgage transactions.

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In 2021 and 2020, our portfolio was impacted by low persistency, a large origination market and commercial success in the market.

A period of higher persistency in 2022 and 2023 followed, leading to a more balanced concentration of IIF in recent years as the 2023, 2022 and 2021 book years represent 19%, 23% and 27%, respectively, of our primary IIF.

A period of higher persistency followed, leading to a more balanced concentration of IIF in recent years as the 2024, 2023 and 2022 book years represent 18%, 17% and 20%, respectively, of our primary IIF as of December 31, 2024.

Our primary exposures from legacy books originated prior to 2009 continue to resolve in an orderly fashion and represented 2% of both our primary IIF and primary RIF as of December 31, 2024.

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Generally, a higher LTV ratio has a higher likelihood of claim than a lower LTV loan, absent other mitigating loan characteristics, which we consider in our underwriting and pricing.

The weighted average LTV of our IIF as of December 31, 2023 was 93% and the weighted average LTV of our NIW was 93% in 2023 and 92% in 2022.

The weighted average LTV of our IIF as of December 31, 2024 was 93% and the weighted average LTV of our NIW was 93% in both 2024 and 2023.

The credit profile of our portfolio as represented by FICO score remains strong.

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Our customers are broadly diversified by size, type and geography and include large money center banks, non-bank lenders, national and local mortgage bankers, community banks and credit unions.

Our largest customer accounted for 19% of total NIW and 10% of our total revenues for the year ended December 31, 2023.

No other customer accounted for 10% or more of total revenues or NIW for the year ended December 31, 2023.

This customer also accounted for 18% and 14% of our total NIW during the years ended December 31, 2022 and 2021, respectively.

No customer accounted for more than 10% of our total revenues and no other customer accounted for more than 10% of NIW for the years ended December 31, 2022 or 2021.

Our largest customer accounted for 20% of total NIW and 11% of our total revenues for the year ended December 31, 2024 and 19% of total NIW and 10% of our total revenues for the year ended December 31, 2023.

This customer also accounted for 18% of our total NIW during the year ended December 31, 2022.

No other customer accounted for 10% or more of total revenues or NIW for the years ended December 31, 2024 or 2023.

No customer accounted for more than 10% of our total revenues in 2022 and no other customer accounted for more than 10% of NIW in 2022.

Our top five customers generated 34% of our NIW in 2024.

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Our sales and marketing efforts are designed to help us establish and maintain in-depth, quality customer relationships.

We distribute our mortgage insurance products through a dedicated sales force located throughout the United States, our home-based in-house sales representatives and a digital marketing program designed to expand our reach beyond our sales force.

Our sales force strives to build strong relationships across all areas of our customers’ operations to include loan origination, loan processing, underwriting, product development, secondary marketing, risk management, compliance, information technology and C-suite executives.

With a vast database of established individual contacts, the breadth and depth of relationships not only serves as a differentiator for our mortgage insurance platform but also enables us to form strategic partnerships with other mortgage service providers seeking to expand their distribution reach.

We distribute our mortgage insurance products through a dedicated sales force located throughout the United States, our inside sales representatives and a digital marketing program designed to expand our reach beyond our sales force.

The breadth and depth of relationships across all areas of our customers’ operations serves as a differentiator for our mortgage insurance platform and

also enables us to form strategic partnerships with other mortgage service providers seeking to expand their distribution reach.

We support our sales force and improve their effectiveness in acquiring new customers by raising our brand awareness through advertising and marketing campaigns, website enhancements, digital communication strategies and sponsorship of industry and educational events.

Our digital marketing capabilities position us to serve our decentralized market with targeted, personalized messages that help drive a preference for our offering.

Additionally, our marketing efforts include differentiators targeted to the needs of customers, in order to increase our brand affinity.

Finally, our consulting services provide customers with strategy and process consulting to help improve quality, reduce costs and grow their business.

We also offer a separate mortgage insurance policy underwritten by our wholly owned subsidiary, Enact Mortgage Insurance Corporation of North Carolina (“EMIC-NC”), to insure primary individually underwritten residential mortgage loans as well as portfolios of residential mortgage loans at or after origination that are not intended for sale to the GSEs.

Given that EMIC-NC is not a GSE approved insurer, it is not subject to the requirements mandated by PMIERs.

Accordingly, we are able to utilize EMIC-NC in a manner that provides us with greater flexibility with our master policies and in our ability to efficiently use the capital of our subsidiaries, each with customers who retain loans in their own portfolio.

We also believe utilizing EMIC-NC in this manner provides us strategic optionality if the private label MBS market increases.

Technology that supports connectivity with our customers is critical.

As an established private mortgage insurance provider, we have long-standing relationships with our customers’ technology organizations, as well as with the key pricing and loan origination/servicing platform providers.

we have an experienced technology integration team that allows us to quickly customize loan delivery solutions for our customers.

By providing customers an easy way to quote and order our mortgage insurance products, either through our award-winning ordering and rate quote website or directly within customers’ systems, we believe we make the transaction easy, allowing us to drive repeat volume.

As EMIC-NC is not a GSE approved insurer, it is not subject to the requirements mandated by PMIERs, providing us operating flexibility and strategic optionality if the private label MBS market increases.

Technology that supports connectivity with our customers is critical and we focus on our customer technology processes and integrations.

We have long-standing relationships with the mortgage industry’s technology platforms and service providers, along with a technology integration team that allows us to quickly customize loan delivery solutions for our customers.

Our customer technology program enables Enact to provide customers an easy way to quote and order our mortgage insurance products, either through our ordering and rate quote website or directly with their preferred systems.

Risk Management and Oversight

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Customers applying for a new master policy undergo a process that reviews their business and financial profile, licensing, management experience and track record of originating quality mortgages.

Customers applying for delegated underwriting authority receive training and are reviewed on initial and ongoing submissions for compliance to our guidelines.

Customers applying for delegated underwriting authority receive training and are reviewed on initial and ongoing submissions for compliance with our guidelines.

Policy Acquisition

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We regularly monitor national and local market conditions, the performance of our products and the performance of our customers against our expectations for mix and profitability.

We adjust our underwriting, pricing and risk selection strategies on a regular basis to ensure that our products remain competitive and consistent with our risk and profitability objectives.

We adjust our underwriting, pricing and risk selection strategies on a regular basis so that our products remain competitive and consistent with our risk and profitability objectives.

Quality Assurance

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We update our plan no less than annually to accommodate changes in business processes and third-party providers and test the plan regularly through tabletop exercises.

While we instituted a hybrid return to office staffing model in March 2022, we previously implemented a business continuity plan in response to COVID-19 and operated successfully with a remote workforce from March 2020 through March 2022.

We have used a decentralized team of underwriters and other key functional employees for many years and all employees are capable and equipped to work remotely so that we can continue providing service to our customers through prolonged absences from the office.

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Our guidelines require borrowers to have a verified capacity and willingness to support their obligation and a well-supported valuation of the collateral.

Our underwriting guidelines incorporate credit eligibility requirements that, among other things, limit our coverage to mortgages that meet our thresholds with respect to borrower FICO scores, maximum LTVs, documentation requirements and maximum Debt-to-Income (“DTI”) Ratio.

All loans must pass through our eligibility rules engine to screen out those outside of our guidelines.

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We generally accept the underwriting decisions and documentation requirements made by the GSEs’ underwriting systems, subject to our review as well as certain limitations and requirements.

Over the past few years, more customers have requested expedited underwriting services.

To meet customer demand, we invested in technologies, automation, data science and analytics to develop our proprietary mortgage insurance underwriting system.

Our mortgage insurance underwriting system enables the capability to meet customer demand in a timely manner without sacrificing the accuracy of our underwriting decisions.

Specifically, it has contributed to a substantial increase in our underwriters’ productivity, more than doubling the number of loans our underwriters have processed on a daily basis since 2015, while remaining within our quality control tolerances.

We believe our mortgage insurance underwriting system also differentiates us from the competition by allowing us to efficiently provide

customized turn times from submission of a loan package to an underwriting decision for our customers and perform fee-based contract underwriting services.

Our policies are issued through one of two underwriting programs:

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Our underwriting staff is dispersed throughout the United States, and we believe this allows us to make prompt, geographically based underwriting determinations across different time zones in a timely manner to best serve our diverse customer base.

In addition to our employees, we use domestically based, contract underwriters, as needed, to assist with underwriting capacity and drive efficiency.

In addition to our employees, we use contract underwriters, as needed, to assist with underwriting capacity and drive efficiency.

Delegated Underwriting

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To perform delegated underwriting, customers must be approved by our risk management team.

Some customers prefer to assume underwriting responsibility because it is more efficient within their loan origination process, and they are comfortable attesting that the data submitted is true and correct when making our insurance decision.

Some customers prefer to assume underwriting responsibility because it is more efficient within their loan origination process, and they are comfortable attesting that the data they submit to us is true and correct when we make our insurance decision.

We regularly perform quality assurance reviews on a statistically significant sample of delegated loans to assess compliance with our guidelines.

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Credit Risk Transfer

Our risk management framework and analytics inform our CRT strategy, which is designed to reduce the loss volatility of our in-force portfolio during stress scenarios by transferring risk from our balance sheet to highly rated counterparties or to investors through collateralized transactions.

sheet to highly rated counterparties or to investors through collateralized transactions.

Our CRT program also provides capital relief under PMIERs and state insurance capital requirements.

In normal market conditions, we believe our CRT program also enhances our return profile.

Given the volatility protection

and capital relief at attractive terms, CRT enables us to employ an “acquire, manage and distribute” strategy.

Given the volatility protection and capital relief at attractive terms, CRT enables us to employ an “acquire, manage and distribute” strategy.

We believe our CRT program is a material component of our strategy and helps to protect future business performance and stockholder capital under stress scenarios.

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Under our quota share reinsurance agreements, the reinsurer receives a premium in exchange for covering an agreed-upon portion of incurred losses.

Since 2015 and through December 31, 2023, we have executed $5.0 billion of excess of loss transactions across both traditional reinsurance arrangements and ILN transactions and $1.9 billion of ceded RIF through quota share transactions.

Our CRT program provided an estimated aggregate of $1.7 billion of PMIERs capital credit as of December 31, 2023.

The Company’s traditional reinsurance coverage is provided by a panel of reinsurance partners each currently rated “A-” or better by Moody’s, Standard & Poor’s (“S&P”) or A.M.

Best Company, Inc.

The Company’s traditional reinsurance coverage is provided by a panel of reinsurance partners each currently rated “A-” or better by Standard & Poor’s (“S&P”) or A.M.

Best Company, Inc., or “A3” or better by Moody’s.

These reinsurers are contractually required to collateralize a portion (typically 20 to 30%) of the reinsurance exposures consistent with PMIERs.

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The incidence of delinquency is affected by a variety of factors, including housing price appreciation or depreciation, unemployment, the level of borrower income, divorce, illness, interest rate levels, general borrower creditworthiness and macroeconomic conditions.

Risk Factors—Risks Relating to Our Business—A deterioration in economic conditions, a severe recession or a decline in home prices may adversely affect our loss experience.” Delinquencies that are not cured result in a claim.

Our loss mitigation and claims area is led by seasoned personnel who are supported by default tracking and claims processing capabilities within our integrated platform.

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With the COVID-19 pandemic, we experienced unprecedented use of forbearance plans nationwide to assist borrowers including the ability to extend forbearance beyond 12 months.

Historically, the use of forbearance plans was limited to 12 months and used for a natural disaster that impacted a region of the country.

At the conclusion of the forbearance term, a borrower could either bring the borrower’s loan current, defer any missed payments until the end of their loan, or the loan can be modified through a repayment plan or extension of the mortgage term.

Given the relative success of COVID-19 related forbearance plans, the industry has explored expanding forbearance as a

loss mitigation strategy.

In 2023, the GSEs announced and implemented new loss mitigation programs that allow for six-month payment deferrals for borrowers facing financial hardship.

Historically, the use of forbearance plans was limited to 12 months and primarily used for a natural disaster that impacted a region of the country.

At the conclusion of the forbearance term, a borrower could either bring the loan current, defer any missed payments until the end of their loan, pay missed payments through a repayment plan or have one or more terms of the original note modified via a loan modification.

Given the relative success of COVID-19 related forbearance plans, the industry continues to use forbearance as a loss mitigation strategy.

Our goal is to keep borrowers in their homes.

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Various factors affect the frequency and severity of claims, including LTV at the time of foreclosure, size and coverage percentage of a loan, property values, employment levels and interest rates.

Any delays in foreclosure, including foreclosure moratoriums imposed by state and local governments and the GSEs, such as those due to COVID-19, could cause our losses to increase as expenses accrue for longer periods or if the value of foreclosed homes decline during such foreclosure delays.

Any delays in foreclosure, including foreclosure moratoriums imposed by state and local governments and the GSEs, could cause our losses to increase as expenses accrue for longer periods or if the value of foreclosed homes decline during such foreclosure delays.

For loans insured on or after October 1, 2014, our mortgage insurance policies limit the number of months of unpaid interest and associated expenses that are included in the mortgage insurance claim amount to a maximum of 36 months.

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• Acquisition option—pay the full claim amount and acquire title to the property.

In 2023 and 2022, we settled over half of our claims through the third-party sale or acquisition options due largely to embedded home price appreciation.

Claim activity is not evenly spread across the coverage period of loans we insure.

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Information Technology

We develop and invest in technology in order to drive operational excellence, ensure a superior customer experience and support our overall business objectives.

We develop and invest in technology in order to drive operational excellence, promote a superior customer experience and support our overall business objectives.

Our business heavily relies upon information technology and a number of critical aspects are highly automated.

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Technology costs are managed by the continued automation of key business processes, reducing our application portfolio and using contract employees to scale resource capacity as needed.

In addition, we have a dedicated “AI, Innovation & Automation” team to ensure that we focus on using the latest technologies to further automate our business and differentiate our products and services.

Ratings with respect to the financial strength of operating subsidiaries are an important factor in establishing the competitive position of insurance companies.

Ratings are important to maintaining public confidence in us and our ability to market our products.

Rating organizations review the financial

performance and condition of most insurers and provide opinions regarding financial strength, operating performance and ability to meet obligations to policyholders.

As of February 29, 2024, EMICO, our principal U.S.

mortgage insurance subsidiary, was rated “A-” by S&P, “A3” by Moody’s, “A-” by Fitch Ratings, Inc.

(“Fitch”), and “A-” by A.M.

Best in terms of financial strength.

Rating organizations review the financial performance and condition of most insurers and provide opinions regarding financial strength, operating performance and ability to meet obligations to policyholders.

To review our current ratings, see “Item 7.

Management Discussion and Analysis of Financial Condition and Results of Operations - Financial Strength Ratings.”

Investment Portfolio

The investment portfolios of our insurance subsidiaries are directed by the Enact Investment Committee, a management-level committee, with Genworth serving as the investment manager.

Under the terms of our investment management agreement, the Company is charged an investment management fee by Genworth.

the terms of our investment management agreement, the Company is charged an investment management fee by Genworth.

The total investment expenses paid to Genworth were $7.1 million and $5.7 million for the years ended December 31, 2024 and 2023, respectively.

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Management’s Discussion and Analysis of Financial Condition and Results of Operations—Investment Portfolio.”

Our board-approved investment policy utilizes defined investment guidelines such as, but not limited to, asset sector, single issuer concentration and credit ratings to ensure compliance with risk management limits, regulatory requirements and applicable laws.

Further, the policy seeks to restrict assets correlated with the residential mortgage market.

Our board-approved investment policy utilizes defined investment guidelines such as, but not limited to, asset sector, single issuer concentration and credit ratings to maintain compliance with risk management limits, regulatory requirements and applicable laws.

Asset class mix and risks are regularly evaluated in the context of current and future capital market conditions, liability profiles and return objectives.

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Some of our key areas of focus include:

• Our compensation package, including salary, incentive bonus and long-term incentives, aligns employee and stockholder interests, as well as rewards our employees for serving all of our current and future customers.

• In addition to a competitive compensation program, we offer our employees benefits such as life and health insurance, paid time off, paid parental leave, childcare subsidies, retirement savings plans, financial planning services, an Employee Assistance Program and a broad fitness reimbursement program to support physical and mental health.

Our office building also houses an employee fitness center providing equipment, virtual classes, and massage therapy options on-site.

• We offer a multitude of professional development and career enrichment courses, including in the areas of leadership, professional skills, and industry-specific matters, as well as a mentor program and an extensive training program for future senior leaders.

• We offer a multitude of professional development and career enrichment opportunities, including in the areas of leadership, professional skills, and industry-specific matters, as well as a mentor program and bespoke training for future senior leaders.

We also offer tuition reimbursement benefits and student loan repayment options to aid career progression.

We routinely assess talent, engage in deep succession planning at all levels of the organization and provide feedback to our employees through a performance review process.

• Our employee-led Diversity, Equity & Inclusion Council helps to build an inclusive culture through company-wide events, participation in our recruitment efforts and by educating our employees on the experiences and perspectives of others.

We continue to focus on building a pipeline of talent to create more opportunities for workplace diversity and to support greater representation within our Company.

In addition to our internally focused efforts, we have a number of employee-led externally focused diversity, equity and inclusion initiatives.

• We champion civic engagement through paid volunteer time for employees, event sponsorship programs, employee-directed charitable gifts with a 100% company match, and through our commitment to environmental sustainability.

We routinely assess talent, engage in deep succession planning at all levels of the organization and provide feedback to our employees through a formal annual performance review process.

• Our employee-led council focused on our diverse employee population helps to build an inclusive culture through company-wide events and by educating our employees on the experiences and perspectives of others.

• We champion civic engagement through paid volunteer time for employees, event sponsorship programs, employee-directed charitable gifts with a 100% company match, the Enact Foundation, and through our commitment to environmental sustainability.

• We empower employees to share their unique perspectives by promoting initiatives that increase access to our Senior Leadership Team and encouraging open-door policies.

We value the voice of our employees and use a best-in-class third party approach to gather employee feedback.

• We celebrate our talent by showcasing employee achievements and expertise in industry publications, at events and conferences, and on social media.

• We celebrate our talent by showcasing employee achievements and expertise in industry and local publications, at events and conferences, and through our online presence.

Enact was recognized as an award winner by external organizations on five occasions throughout 2024.

As the severity of COVID-19 started to unfold at the beginning of 2020, our response included the implementation of policies to protect our employees.

In early March 2020, we closed our offices and implemented a complete work from home policy through March 2022, as well as providing additional financial, health and wellness resources.

We instituted a return to office plan in March 2022 that continues to operate as a hybrid working model for a majority of our Raleigh-based employees.

Our insurance operations are generally subject to extensive oversight and a wide variety of laws and regulations.

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The primary purpose of the U.S.

and Bermudian insurance laws and regulations regulating our insurance business is to protect our insureds, not our stockholders.

and Bermudian insurance laws and regulations regulating our insurance business is to protect our insureds.

These laws and regulations are regularly re-examined by insurance regulators and any changes to these laws or new laws may be more restrictive or otherwise adversely affect our operations.

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For example, state insurance laws and regulations typically govern the financial condition of insurers, including standards for solvency, types and concentrations of permissible investments, establishment and maintenance of reserves, credit for reinsurance, requirements for capital adequacy, and the business conduct of insurers, including marketing, sales practices and claims handling.

State insurance laws and regulations also usually require the licensing of insurers and agents, and the approval of policy forms and rates.

State insurance laws and regulations also usually require the licensing of

insurers and agents, and the approval of policy forms and rates.

In addition, states may require actuarial justification of rates on the basis of the insurer’s loss experience, expenses and future projections.

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In addition, jurisdictions may consider general default experience in the mortgage insurance industry in assessing the premium rates charged by mortgage guaranty insurers.

The state insurance laws and regulations of general applicability, along with certain additional state insurance laws and regulations that are applicable specifically to mortgage guaranty insurers, are described below.

Applicable state insurance laws and regulations, along with certain additional state insurance laws and regulations specific to mortgage guaranty insurers, are described below.

Insurance Holding Company Regulation

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State insurance laws and regulations also regulate transactions between insurers and their affiliates, sometimes mandating prior notice to the regulator and/or regulatory approval.

Generally, state insurance laws and regulations require that all transactions between an insurer and an affiliate be fair and reasonable, and that the insurer’s statutory surplus following such transaction be reasonable in relation to its outstanding liabilities and adequate to its financial needs.

Certain transactions may not be entered into unless the applicable regulator is given 30 days’ prior notification and does not disapprove the transaction during such 30-day period.

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In considering an application to acquire control of an insurer, the insurance commissioner generally considers factors such as the experience, competence and financial strength of the applicant, the integrity of the applicant’s board of directors and executive officers, the acquirer’s plans for the management and operation of the insurer, and any anti-competitive results that may arise from the acquisition.

Most jurisdictions also now require a person seeking to acquire control of an insurer licensed but not domiciled in that jurisdiction to make a filing prior to completing an acquisition if the acquirer and its affiliates and the target insurer and its affiliates have specified market shares in the same lines of insurance in that jurisdiction.

Most jurisdictions also require a person seeking to acquire control of an insurer licensed but not domiciled in that jurisdiction to make a filing prior to completing an acquisition if the acquirer and its affiliates and the target insurer and its affiliates have

specified market shares in the same lines of insurance in that jurisdiction.

These provisions may not require acquisition approval but can lead to imposition of conditions on an acquisition that could delay or prevent its consummation.

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The NAIC also provides standardized insurance industry accounting and reporting guidance through the NAIC Accounting Manual.

However, model insurance laws and regulations are only effective when adopted by the states, and NAIC Statutory Accounting Principles (“SAP”) may be superseded by individual state laws,

regulations and permitted practices.

However, model insurance laws and regulations are only effective when adopted by the states, and NAIC Statutory Accounting Principles (“SAP”) may be superseded by individual state laws, regulations and permitted practices.

Changes to the NAIC Accounting Manual or modifications by the various state insurance departments may affect the statutory capital and surplus of our insurance subsidiaries.

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Capital and Surplus Requirements

Insurance regulators have the discretionary authority, in connection with maintaining the licensing of our insurance subsidiaries, to limit or restrict insurers from issuing new policies, or to take other actions, if, in the regulators’ judgment, the insurer is not maintaining a sufficient amount of surplus or reserves, or is in a hazardous financial condition.

Insurance regulators have discretionary authority, in connection with the licensing of our insurance subsidiaries, to limit or restrict insurers from issuing new policies, or to take other actions, if, in the regulators’ judgment, the insurer is not maintaining a sufficient amount of surplus or reserves, or is in a hazardous financial condition.

We seek to maintain new business and capital management strategies to support meeting related regulatory requirements.

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Mortgage guaranty insurers are not subject to the NAIC’s risk-based capital (“RBC”) requirements, but certain states impose other forms of capital requirements on mortgage guaranty insurers, requiring maintenance of a risk-to-capital (“RTC”) ratio not to exceed 25:1.

Policyholder position is defined as surplus as regards policyholders plus contingency reserves, less ceded reinsurance.

In this Annual Report, we show policyholder position as statutory capital.

Statutory capital for purposes of the 25:1 1 RTC ratio limit is defined as surplus as regards policyholders plus contingency reserves, less ceded reinsurance.

In August 2023, the NAIC adopted amendments to the Mortgage Guaranty Insurance Model Act (the “MGI Model”) and is in the process of making conforming revisions to Statement of Statutory Accounting Principles No.

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or (iv) any changes to our operations that may be necessary to comply, any of which could have a material adverse effect on our business, results of operations and financial condition.

We also cannot predict whether other regulatory initiatives will be adopted and what impact, if any, such initiatives, if adopted as laws, may have on our business, results of operations and financial condition.

We also cannot predict whether other regulatory initiatives will be adopted and what

impact, if any, such initiatives, if adopted as laws, may have on our business, results of operations and financial condition.

Group Capital Requirements .

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The GCC provides regulators with an additional tool for conducting group-wide supervision and enhances transparency into how capital is allocated.

In December 2020, the NAIC adopted amendments to the Holding Company System Model Act and Regulation.

The amendments adopt a Group Capital Calculation Template and Instructions (“GCC Template and Instructions”) as well as an annual filing requirement for the GCC.

In December 2020, the NAIC adopted a Group Capital Calculation Template and Instructions, and it amended the Holding Company System Model Act and Regulation to implement an annual GCC filing requirement.

The amendments were adopted by Virginia, Genworth’s insurance holding company group’s lead state, in 2022.

In May 2022, the Group Capital Calculation Working Group of the NAIC adopted the 2022 GCC Instructions and Template, which is used by a number of states, including Delaware and Virginia, for year end 2022 filings.

The GCC also adopted guidance for insurance regulators to use in reviewing GCC submissions in the form of changes to the NAIC Financial Analysis Handbook.

It is unclear how the development of group capital measures by the NAIC will interact with existing capital requirements for U.S.

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However, approval by the NCDOI is required for contingency reserve releases when loss ratios exceed 35%.

The establishment of the statutory

contingency reserve is funded by premiums that would otherwise generate net earnings that would be reflected in policyholder surplus.

The establishment of the statutory contingency reserve is funded by premiums that would otherwise generate net earnings that would be reflected in policyholder surplus.

This deferral of premiums into the contingency reserve limits our mortgage insurance subsidiaries’ ability to pay dividends to stockholders until those contingency reserves are released back into surplus.

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As the largest purchasers of conventional mortgage loans, and therefore, the main beneficiaries of private mortgage insurance, the GSEs impose eligibility requirements that private mortgage insurers must satisfy in order to be approved to insure loans purchased by the GSEs.

Effective December 31, 2015, each GSE adopted the original PMIERs, which set forth operational and financial requirements that mortgage insurers must meet in order to remain eligible.

On September 27, 2018, the GSEs issued revisions to the PMIERs, which became effective March 31, 2019.

The PMIERs aim to ensure that approved insurers possess the financial and operational capacity to serve as strong counterparties to the GSEs throughout various market conditions.

The PMIERs are comprehensive, covering virtually all aspects of the business and operations of a private mortgage insurer of GSE loans, including internal risk management and quality controls, underwriting, claim processing and loss mitigation, among others.

In addition, the PMIERs require private mortgage insurers to obtain the prior consent of the GSEs before taking certain actions, which may include entering into various intercompany agreements and commuting or reinsuring risk, among others.

Effective December 31, 2015,

each GSE adopted the original PMIERs, which set forth operational and financial requirements that mortgage insurers must meet in order to remain eligible.

On September 27, 2018, the GSEs issued revisions to PMIERs, which became effective March 31, 2019.

PMIERs aims to ensure that approved insurers possess the financial and operational capacity to serve as strong counterparties to the GSEs throughout various market conditions.

PMIERs is comprehensive, covering virtually all aspects of the business and operations of a private mortgage insurer of GSE loans, including internal risk management and quality controls, underwriting, claim processing and loss mitigation, among others.

In addition, PMIERs require private mortgage insurers to obtain the prior consent of the GSEs before taking certain actions, which may include entering into various intercompany agreements and commuting or reinsuring risk, among others.

As of December 31, 2024, we met the PMIERs financial and operational requirements and currently hold capital in excess of the financial requirements.

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 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 LTV mortgages.

PMIERs includes 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 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 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 operational PMIERs requirements include standards that govern the relationship between the GSEs and approved insurers and are designed to ensure that approved insurers operate under uniform guidelines, such as claim processing timelines.

They include quality control requirements that are

designed to ensure that approved insurers have a strong internal risk management infrastructure and senior management oversight.

They include quality control requirements that are designed to ensure that approved insurers have a strong internal risk management infrastructure and senior management oversight.

During 2020 and 2021, the GSEs issued several amendments to PMIERs.

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In their respective letters approving credit for reinsurance against PMIERs financial requirements, the GSEs require our mortgage insurance subsidiary not to exceed a maximum statutory RTC ratio of 18:1 or they reserve the right to reevaluate the amount of PMIERs credit for reinsurance and other CRT transactions available under PMIERs indicated in their approval letters.

Freddie Mac has also imposed additional requirements on our option to commute these reinsurance agreements.

Freddie Mac has also imposed

additional requirements on our option to commute these reinsurance agreements.

Both GSEs reserved the right to periodically review the reinsurance transactions for treatment under PMIERs.

In September 2020, subsequent to the issuance of our 2025 Senior Notes, the GSEs imposed incremental restrictions (“GSE Restrictions”) with respect to capital on our business.

In May 2021, in connection with their conditional approval of the consummation of our IPO, the GSEs confirmed the GSE Restrictions would remain in effect until certain conditions (“GSE Conditions”) were met.

These conditions included required upgrades in EMICO’s ratings, certain liquidity requirements, restrictions on debt issuance and the use of proceeds from our debt, and limitations on dividends and distributions.

EMICO was also required to maintain 115% of PMIERs Minimum Required Assets through 2021, 120% during 2022 and 125% thereafter.

EMICO maintained the requisite ratings for two consecutive quarters prior to the end of 2022.

Beginning in 2023, we are no longer subject to the GSE Restrictions and Conditions.

As of December 31, 2024, we had estimated available assets of $5,095 million against $3,043 million net required assets under PMIERs compared to available assets of $5,006 million against $3,119 million net required assets as of December 31, 2023.

The sufficiency ratio as of December 31, 2023, was 161% or $1,887 million above the published PMIERs requirements, compared to 165% or $2,050 million above the published PMIERs requirements as of December 31, 2022.

Sufficiency was above the requirements imposed by the incremental GSE Restrictions that required us to maintain a PMIERs sufficiency ratio of 120% in 2022 and 115% in 2021.

The sufficiency ratio as of December 31, 2024, was 167% or $2,052 million above the PMIERs requirements, compared to 161% or $1,887 million above the PMIERs requirements as of December 31, 2023.

In addition, our PMIERs required assets as of December 31, 2024, benefited from the application of a 0.30 multiplier applied to the risk-based required asset amount factor for certain non-performing loans.

Per guidance released by the GSEs in the third quarter of 2024, use of the multiplier will be discontinued effective March 31, 2025.

On August 21, 2024, the GSEs and the FHFA released updated PMIERs requirements phasing in a revision to the available assets standards between March 31, 2025 and September 30, 2026.

The updated standards differentiate between bonds based on credit quality and liquidity.

The updates also establish limits for assets backed by residential mortgages or commercial real estate to mitigate the impact if such assets lose value during periods of housing stress.

We expect to hold capital sufficiency well in excess of these requirements and do not expect the impact of these updates to be material.

The ultimate impact of the PMIERs changes will be influenced by investment portfolio maturities, dispositions, reinvestments, and overall business and economic performance between today and the phase-in dates.

Other Federal Regulation

We and other private mortgage insurers are impacted by federal regulation of residential mortgage transactions with respect to mortgage originators and lenders, purchasers of mortgage loans such as Fannie Mae and Freddie Mac and governmental insurers such as the FHA and the VA.

Mortgage origination and servicing transactions are subject to compliance with various state and federal laws, including the Real Estate Settlement Procedures Act of 1974 (“RESPA”), HOPA, Fair Credit Reporting Act (“FCRA”), the Fair Housing Act, the Truth In Lending Act, the Gramm-Leach-Bliley Act of 1999 (the “GLB Act”), the Dodd-Frank Act and others, including those discussed in this section.

Mortgage origination and servicing transactions are subject to compliance with various state and federal laws, including but not limited to the Real Estate Settlement Procedures Act of 1974 (“RESPA”), HOPA, Fair Credit Reporting Act (“FCRA”), the Fair Housing Act, the Truth In Lending Act, the Gramm-Leach-Bliley Act of 1999 (the “GLB Act”) and the Dodd-Frank Act.

Among other things, these laws and their implementing regulations prohibit payments for referrals of settlement service business, require fairness and non-discrimination in granting or facilitating the granting of insurance, govern the circumstances under which companies may obtain and use consumer credit information and provide for other consumer protections.

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Although many states prohibit mortgage insurers from giving rebates, RESPA has been interpreted to cover many non-fee services as well.

Mortgage insurers and their customers are subject to the possible sanctions of this law, which may be enforced by the CFPB, state insurance departments, state attorneys general and other enforcement authorities.

Mortgage insurers and their customers are subject to the potential sanctions of this

law, which may be enforced by the CFPB, state insurance departments, state attorneys general and other enforcement authorities.

HOPA provides for the automatic termination, or cancellation upon a borrower’s request, of the borrower’s obligation to pay for private mortgage insurance upon satisfaction of certain conditions.

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FCRA imposes restrictions on the permissible use of credit report information and requires mortgage insurance companies to provide “adverse action” notices to consumers in the event an application for mortgage insurance is declined or offered at less than the best available rate for the loan program applied for due to information contained in a consumer’s credit report.

There has been past class action litigation over these FCRA adverse action notices involving the mortgage insurance industry, including court-approved settlements.

There has been class action litigation over these FCRA adverse action notices involving the mortgage insurance industry, including court-approved settlements.

The Fair Housing Act generally prohibits discrimination in the terms, conditions or privileges in residential real estate-related transactions on the basis of race, color, religion, sex, familial status or national origin.

Numerous courts have held that the Fair Housing Act prohibits discriminatory insurance

Numerous courts have held that the Fair Housing Act prohibits discriminatory insurance practices.

In addition, both the Department of Justice (the “DOJ”) and the CFPB have pursued claims under the Fair Housing Act on a disparate impact theory as well.

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A provision of the required loss mitigation procedures prohibits a loan holder or servicers from commencing foreclosure until 120 days after the borrower’s delinquency.

Since 2014, the CFPB has clarified those rules through subsequent rule makings and provided guidance on how servicers must apply them in certain circumstances, including recent clarifications as a result of COVID-19.

Since 2014, the CFPB has clarified those rules through subsequent rule makings and provided guidance on how servicers must apply them in certain circumstances.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law.

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The forbearance could be extended for an additional 180 days, up to a year in total, or shortened at the request of the borrower.

In addition, on February 25, 2021, the FHFA announced that borrowers with a mortgage backed by the GSEs who were in an active COVID-19 forbearance plan as of February 28, 2021, could request up to two additional forbearance extensions for a maximum of 18 months of total forbearance relief.

In addition, on February 25, 2021, the FHFA announced that borrowers with a mortgage backed by the GSEs who were

in an active COVID-19 forbearance plan as of February 28, 2021, could request up to two additional forbearance extensions for a maximum of 18 months of total forbearance relief.

In addition, the CARES Act provided that furnishers of credit reporting information, including servicers, should report a loan as current to credit reporting agencies if the loan is subject to a payment accommodation, such as forbearance, so long as the borrower abided by the terms of the accommodation.

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Regulation of Mortgage Origination

Private mortgage insurers are also indirectly impacted by federal law and regulation affecting mortgage originators and lenders, purchasers of mortgage loans and governmental insurers.

Private mortgage insurers are also indirectly impacted by federal laws and regulations affecting mortgage originators and lenders, purchasers of mortgage loans and governmental insurers.

Among the most significant of these laws and regulations are the Dodd-Frank Act QM and the ability-to-repay (“ATR”) requirement and the qualified residential mortgage (“QRM”) securitization risk retention provisions.

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HUD’s QM definition is less restrictive than the CFPB QM Rule in certain respects.

To the extent that other

government agencies guaranteeing residential mortgage loans may adopt definitions of a QM that are more favorable to lenders and mortgage holders than the CFPB QM Rule, our mortgage insurance business could also be negatively impacted.

To the extent that other government agencies guaranteeing residential mortgage loans may adopt definitions of a QM that are more favorable to lenders and mortgage holders than the CFPB QM Rule, our mortgage insurance business could also be negatively impacted.

The Dodd-Frank Act requires an originator or issuer to retain a specified percentage of the credit risk exposure on securitized mortgages that do not meet the definition of a QRM.

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In 2005, the Basel Committee issued Basel II, which, among other things, sets forth capital treatment of mortgage insurance purchased and held on balance sheet by banks in respect of their origination and securitization activities (including in bank regulation, the standards for a prudentially underwritten mortgage, with 50% risk weighting for high loan-to-value mortgages covered with mortgage insurance).

Following the financial crisis of 2008, the Basel Committee issued Basel III that established RBC and leverage capital requirements for most United States banking organizations (although banking organizations with less than $10 billion in total assets may now choose to comply with an alternative community bank leverage ratio framework established by the Federal Banking Agencies in 2019).

In 2013, the US federal banking regulators confirmed the role of mortgage insurance as a component of prudential bank regulation for high loan to value mortgages.

an alternative community bank leverage ratio framework established by the Federal Banking Agencies in 2019).

In 2013, the U.S.

federal banking regulators confirmed the role of mortgage insurance as a component of prudential bank regulation for high loan to value mortgages.

More recently, in July of 2023, the Federal Reserve, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency proposed for comment the Basel III Endgame rule.

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If adopted as proposed, this rule could decrease the demand for mortgage insurance.

The federal banking regulators are currently in the review process, and it remains unclear whether there will be changes to the final rule ahead of its planned implementation in 2025.

The federal banking regulators are currently in the review process, and with the change in Administration on January 20, 2025, the outcome, content and timing of the final rule are unclear.

Privacy of Consumer Information and Cybersecurity

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Furthermore, the issues surrounding data security and the safeguarding of consumers’ protected information are under increasing regulatory scrutiny by state and federal regulators, particularly in light of the number and severity of recent United States companies’ data breaches.

The Federal Trade Commission, the DOJ, the New York State Department of Financial

Services (“NYDFS”), the SEC and the NAIC have undertaken various studies, reports and actions regarding privacy and data security for entities under their respective supervision.

The Federal Trade Commission, the DOJ, the New York State Department of Financial Services (“NYDFS”), the SEC and the NAIC have undertaken various studies, reports and actions regarding privacy and data security for entities under their respective supervision.

Several states have recently enacted new privacy and information security requirements and new insurance laws that require certain regulated entities to implement and maintain comprehensive information security programs to safeguard the personal information of insureds and enrollees.

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Cybersecurity continues to be an area of significant and increasing focus of legislatures and regulators.

The NYDFS amended its cybersecurity regulation effective November 1, 2023, which,

along with subsequent guidance, requires all banks, insurance companies, and other financial services institutions and licensees regulated by the NYDFS, including several of our subsidiaries, to establish a cybersecurity program.

The NYDFS amended its cybersecurity regulation effective November 1, 2023, which, along with subsequent guidance, requires all banks, insurance companies, and other financial services institutions and licensees regulated by the NYDFS, including several of our subsidiaries, to establish a cybersecurity program.

The NYDFS cybersecurity regulation includes specific technical safeguards as well as requirements regarding governance, incident planning, training, encryption of nonpublic information, data management, system testing and regulator notification in the event of certain cybersecurity events.

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We anticipate that more states will begin adopting the Insurance Data Security Model Law, sometimes with state-specific modifications, in the near term, although it is not yet an accreditation standard.

The NAIC has also adopted a guidance document that sets forth twelve principles for effective insurance regulation of cybersecurity risks based on similar regulatory guidance adopted by the Securities Industry and Financial Markets Association and the “Roadmap for Cybersecurity Consumer Protections,” which describes the protections to which the NAIC believes consumers should be entitled from their insurance companies, agents and other businesses concerning the collection and maintenance of consumers’ personal information, as well as what consumers should expect when such information has been involved in a data breach.

of consumers’ personal information, as well as what consumers should expect when such information has been involved in a data breach.

We expect cybersecurity risk management, prioritization and reporting to continue to be an area of significant regulatory focus by such regulatory bodies and self-regulatory organizations.

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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 1. Business