What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-02-28 compared with 2024-02-29 · 164 added, 209 removed, 857 unchanged (30% of the section changed)

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Our mortgage insurance products provide credit protection to mortgage lenders, covering a portion of the unpaid principal balance of Low Down Payment Loans in the event of a default.

We believe we have built a leading platform based on long-tenured customer relationships, underwriting excellence and prudent risk and capital management practices.

Our business objective is to leverage our competitive strengths to drive market share, maintain our strong capitalization and strong earnings profile and deliver attractive risk-adjusted returns to our stockholders.

We generate revenues by providing mortgage credit protection to our customers in exchange for premiums, which we set based on our evaluation of the underlying risk we insure.

We also offer mortgage-related insurance and reinsurance through our wholly owned Bermuda-based subsidiary, Enact Re.

We primarily generate revenues by providing mortgage credit protection to our customers in exchange for premiums, which we set based on our evaluation of the underlying risk we insure.

Once the premium rate is established and coverage is activated, the premium rate remains unchanged for the first ten years of the policy;

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Our mortgage insurance coverage protects lenders against loss in the event of a borrower default by covering a portion of the outstanding principal balance of a loan.

In the event of a borrower default, our coverage reduces and, in certain instances eliminates, losses to the

insured by transferring the covered portion of the economic loss to us.

Borrower defaults are first reported to us as new delinquencies when the borrower fails to make two consecutive monthly mortgage payments.

In the event of a borrower default, our coverage reduces and, in certain instances eliminates, losses to the insured by transferring the covered portion of the economic loss to us.

Borrower defaults are first reported

to us as new delinquencies when the borrower fails to make two consecutive monthly mortgage payments.

Incurred losses are our estimate of future claims on these new delinquencies as well as any change in the prior estimates for previously existing delinquencies.

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Credit and Regulatory Environment

The level of private mortgage insurance market penetration (“market penetration”) and eventual market size is affected in part by actions taken by the GSEs and the United States government, including the FHA, the FHFA and Congress, that impact housing or housing finance policy.

The level of private mortgage insurance market penetration and eventual market size is affected in part by actions taken by the GSEs and the United States government, including the FHA, the FHFA and Congress, that impact housing or housing finance policy.

In the past, these actions have included announced changes, or potential changes, to underwriting standards, FHA pricing, GSE guaranty fees and loan limits, as well as low down payment programs available through the FHA or GSEs.

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Competitors include other private mortgage insurers that are eligible to write business for the GSEs.

comparative credit ratings), reputation, strength of management, product features and technology ease-of-use.

We compete with other private mortgage insurers based 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 technology ease-

We also compete with governmental agencies (principally the FHA and the VA) primarily based on price and underwriting guidelines.

Pricing is highly competitive in the mortgage insurance industry, with industry participants competing for market share, customer relationships and overall value.

Recent pricing trends have introduced an increasing number of loan, borrower, lender and property attributes, resulting in expanded granularity in pricing regimes and a shift from traditional published rate cards to dynamic pricing engines that better align price and risk.

Pricing trends have introduced an increasing number of loan, borrower, lender and property attributes, resulting in expanded granularity in pricing regimes in order to better align price and risk.

Our proprietary risk-based pricing engine evaluates returns and volatility under both the PMIERs capital framework and our internal economic capital framework, which is sensitive to economic cycles and current housing market conditions.

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Delinquency performance (new delinquency formation and cure behavior) is generally favorable in the first and second quarters of the year.

Therefore, we typically experience lower levels of losses resulting from favorable delinquency activity in the first and second quarters, as typically compared to the third and fourth quarters.

As a result of delinquencies from COVID-19 and subsequent cure activity, including the impact of forbearance policies on delinquency recognition and performance recent trends may not follow traditional seasonality.

Therefore, we typically experience lower levels of losses resulting from favorable delinquency activity in the first and second quarters, as compared to the third and fourth quarters.

The following table presents our NIW, number of cures and new delinquencies for primary policies, excluding our run-off insurance block with reference properties in Mexico, for the periods indicated:

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Because our insurance premiums are earned over the life of a policy, higher or lower persistency rates can have a significant impact on our profitability.

The rise of interest rates throughout 2022 and 2023 has significantly increased persistency in the portfolio, but this impact is partially offset by lower NIW.

Recent elevated interest rates have increased persistency in the portfolio, but this impact is partially offset by lower NIW.

Loan prepayment speeds and the relative mix of business between single premium policies and monthly premium policies also impact our profitability.

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Although these cancellations reduce IIF, assuming all other factors remain constant, the profitability of our single premium business increases when persistency rates are lower.

December 31, 2023 and 2022, single premium policies comprised 10% and 12% of primary IIF, respectively.

Our concentration of single premium policies has declined in recent years, as a result of elevated interest

As of December 31, 2024 and 2023, single premium policies comprised 9% and 10% of primary IIF, respectively.

Credit Quality

Improved analytics, stronger loan origination quality controls and the regulatory implementation of the QM Rule have resulted in a significant improvement in the credit quality for loans originated in the private mortgage insurance market over time.

Improved analytics, stronger loan origination quality controls and the regulatory developments have resulted in a significant improvement in the credit quality for loans originated in the private mortgage insurance market over time.

Additionally, private mortgage insurers and the GSEs have maintained strong credit standards over the past decade, with average FICO scores for NIW persisting at levels significantly above historical averages.

As a result, the industry is insuring loans from borrowers who should be better positioned to meet their mortgage obligations.

More recently, in response to FTHB demand, there has been modest credit expansion that accommodates LTV over 95% and higher DTI ratios.

Even after this expansion, private mortgage insurers and the GSEs have maintained strong credit standards well above historical norms.

Net Investment Income

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• deterioration of regional or national economic conditions leading to a reduction in borrowers’ income and thus their ability to make mortgage payments;

• legislative, regulatory, FHFA or GSE action, or executive orders permitting or mandating forbearance or a moratorium on foreclosures or evictions due to events such as natural disasters or COVID-19;

• a drop in housing values that could expose us to greater loss on resale of properties obtained through foreclosure proceedings and an adverse change in the effectiveness of loss mitigation actions that could result in an increase in the frequency of expected claim rates;

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When we enter into a CRT transaction, the reinsurer receives a premium and, in exchange, insures an agreed upon portion of incurred losses.

These arrangements have the impact of reducing our earned premiums but also provide capital relief under PMIERs in exchange for a negotiated ceded premium rate.

Under certain stress scenarios, our incurred losses are also reduced by any incurred losses ceded in accordance with our reinsurance agreements.

These arrangements have the impact of reducing our earned premiums and incurred losses, but also provide capital relief under PMIERs.

Operating Expenses

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Loss Reserves

Loss reserves represents the amount needed to provide for the estimated ultimate cost of settling claims relating to insured events that have occurred on or before the end of the respective reporting period.

Loss reserves represent the amount needed to provide for the estimated ultimate cost of settling claims relating to insured events that have occurred on or before the end of the respective reporting period.

The estimated liability includes requirements for future payments of:

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Estimates and actuarial assumptions used for establishing loss reserves involve the exercise of significant judgment, and changes in assumptions or deviations of actual experience from assumptions can have material impacts on our loss reserves and net income (loss).

Because these assumptions relate to factors that are not known in advance, change over time, are difficult to accurately predict and are

inherently uncertain, we cannot determine with precision the ultimate amounts we will pay for actual claims or the timing of those payments.

Because these assumptions relate to factors that are not known in advance, change over time, are difficult to accurately predict and are inherently uncertain, we cannot determine with precision the ultimate amounts we will pay for actual claims or the timing of those payments.

The sources of uncertainty affecting the estimates are numerous and include factors internal and external to us.

Internal factors include, but are not limited to, changes in the mix of exposures, loss mitigation activities and claim settlement practices.

Internal factors include, but are not limited to, changes in

the mix of exposures, loss mitigation activities and claim settlement practices.

Significant external influences include changes in home prices, unemployment, government housing policies, state foreclosure timeline, general economic conditions, interest rates, tax policy, credit availability and mortgage products.

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Future developments may result in losses greater or less than the liability for loss reserves provided.

Loss reserves as of December 31, 2023, were $518 million, a decrease of $1 million since December 31, 2022.

Loss reserves as of December 31, 2024, were $525 million, an increase of $7 million since December 31, 2023.

In considering the potential sensitivity of the factors underlying management’s best estimate of our loss reserve, it is possible that even a relatively small change in the estimated claim and severity rates could have a significant impact on loss reserves and, correspondingly, on results of operations.

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Estimates of fair values for fixed maturity securities are obtained primarily from industry-standard pricing methodologies utilizing market observable inputs.

For our less liquid securities,

such as our privately placed securities, we utilize independent market data to employ alternative valuation methods commonly used in the financial services industry to estimate fair value.

For our less liquid securities, such as our privately placed securities, we utilize independent market data to employ alternative valuation methods commonly used in the financial services industry to estimate fair value.

Based on the market observability of the inputs used in estimating the fair value, the pricing level is assigned.

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There is no recorded allowance for credit losses on available-for-sale securities as of December 31, 2024.

See Note 2 and 3 to our consolidated financial statements for additional information related to the allowance for credit losses on fixed maturity securities.

See Notes 2 and 3 to our consolidated financial statements for additional information related to the allowance for credit losses on fixed maturity securities.

Revenue Recognition

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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.

For borrower-paid mortgage insurance, coverage ceases at the earlier of prepayment, or when the original principal is amortized to a 78% loan-to-value ratio in accordance with the Homeowners Protection Act of 1998.

For borrower-paid mortgage insurance, coverage ceases at the earlier of prepayment, or when the original principal is amortized to a 78% loan-to-value ratio in accordance with HOPA.

Variation in cancellation rates and projected losses are inputs into our premium recognition models, causing uncertainty within our estimates.

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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.

Unearned premium was $149 million as of December 31, 2023, a decrease of $53 million compared to December 31, 2022.

Unearned premiums were $115 million as of December 31, 2024, a decrease of $35 million compared to December 31, 2023.

Changes in market conditions could cause a decline in mortgage originations, mortgage insurance penetration rates, persistency and our market share, all of which could impact new insurance written.

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Macroeconomic environment.

During 2023, the United States economy faced uncertainty due to continued but lessening inflationary pressure, the geopolitical environment and persistent concerns around a possible recession.

Inflationary pressures have moderated in 2023, with the Bureau of Labor Statistics reporting in December that the Consumer Price Index was down to 3.4% year-over-year.

The Federal Reserve has taken an aggressive approach towards addressing inflation through interest rate increases and a reduction of its balance sheet.

The Federal Reserve raised rates four times in 2023 following seven interest rate increases in 2022.

Mortgage rates continued to rise and reached more than 20-year highs during 2023.

Mortgage origination activity remained slow during 2023 in response to elevated mortgage rates and sustained low housing supply.

Housing affordability continued to deteriorate due to high interest rates and elevated home prices, only marginally offset by rising median family income according to the National Association of Realtors Housing Affordability Index.

National housing prices rose modestly throughout 2023, according to the FHFA Monthly Purchase-Only House Price Index.

During 2024, the United States economy continued to show positive signs, but faced lingering uncertainty due to inflationary pressure, the geopolitical environment and other macroeconomic concerns.

Inflationary pressures moderated in 2024, with the Bureau of Labor Statistics reporting in December that Consumer Price Index inflation was 2.9% year-over-year.

The Federal Reserve took an aggressive approach towards addressing inflation with policy rates reaching a cyclical peak in July 2023.

The Federal Open Market Committee began to lower policy rates in September 2024 with additional reductions in November and December 2024.

Mortgage rates remain elevated but have declined compared to highs in late 2023.

Mortgage origination activity increased modestly in 2024 but remained relatively slow in response to elevated mortgage rates and sustained low housing supply.

Over the past few years, housing affordability deteriorated as elevated mortgage rates and home price appreciation outpaced median family income according to the National Association of Realtors Housing Affordability Index.

National house prices continued to rise in 2024 according to the Federal Housing Finance Agency (“FHFA”) Monthly Purchase-Only House Price Index.

The unemployment rate was 4.1% as of December 31, 2024, compared to 3.7% in December 2023.

As of December 31, 2023, the number of unemployed Americans stands at approximately 6.3 million and the number of long term unemployed over 26 weeks was approximately 1.2 million.

Both metrics remain relatively in line with February 2020 levels.

As of December 31, 2024, the number of unemployed Americans was approximately 6.9 million and the number of long term unemployed over 26 weeks was approximately 1.6 million.

Forbearance and loss mitigation programs.

For mortgages insured by the federal government, including those purchased by Fannie Mae and Freddie Mac, COVID-19 forbearance allowed borrowers impacted by COVID-19 to temporarily suspend mortgage payments up to 18 months subject to certain limits.

However, the Biden Administration ended the national emergency for COVID-19 in April 2023, so the deadline for requesting a COVID-19 related forbearance under the CARES Act ended in August of 2023.

The GSEs retired their COVID-19 servicing-related policies including with respect to forbearance in November 2023 and reverted to standard forbearance policies as a loss mitigation option for borrowers that meet general hardship and program guidelines.

Further, in March 2023, the GSEs announced new loss mitigation programs that allow for six-month payment deferrals for borrowers facing financial hardship.

Servicers were encouraged to start evaluating borrowers for the new mitigation programs as early as July 1, 2023, but no later than October 1, 2023.

Even though most foreclosure moratoriums expired at the end of 2021, federal laws and regulations continue to require servicers to discuss loss mitigation options with borrowers before proceeding with foreclosures.

These requirements could further extend foreclosure timelines, which could negatively impact the severity of loss on loans that go to claim.

Borrowers’ ability to utilize extended forbearance timelines permitted through the CARES Act and GSE COVID-19 servicing-related policies ended in 2023.

Borrowers that meet general hardship and program guidelines continue to have access to standard forbearance policies as a loss mitigation option.

Additionally, in March 2023, the GSEs announced new loss mitigation programs that allow six-month payment deferrals for borrowers facing financial hardship.

Although it is difficult to predict the future level of reported forbearance and how many of the policies in a forbearance plan that remain current on their monthly mortgage payment will go delinquent, servicer-reported forbearances have generally declined.

As of December 31, 2024, approximately 1.1%, or 10,943, of our active primary policies were reported in a forbearance plan, of which approximately 34% were reported as delinquent.

The full impact of COVID-19 and its ancillary economic effects on our future business results are difficult to predict.

Given the maximum length of forbearance plans, the resolution of a delinquency in a plan still may not be known for several quarters or longer.

We continue to monitor regulatory and government actions and the resolution of forbearance delinquencies.

While the associated risks have moderated and delinquencies related to COVID-19 have declined, it is possible that ancillary economic effects of COVID-19 could have an adverse impact on our future results of operations and financial condition.

Approximately 9% of our primary new delinquencies in 2024 were subject to a forbearance plan as compared to 13% in 2023.

Regulatory developments.

The FHFA and the GSEs are focused on increasing the accessibility and affordability of homeownership, in particular for low- and moderate-income borrowers and underserved minority communities.

In June 2022, the FHFA announced the release of Fannie Mae’s and Freddie Mac’s respective Equitable Housing Finance Plans.

In April 2023, FHFA announced updates to Fannie Mae and Freddie Mac’s Equitable Housing Finance Plans which build upon the inaugural plans first announced in 2022 and make adjustments based on initial research and findings.

The proposals included many initiatives, including language discussing potential changes that could impact the mortgage insurance industry.

We will continue to work with the FHFA, the GSEs, and the broader housing finance industry as these proposals develop and to the extent they are implemented.

We cannot predict whether or when any new practices or programs will be implemented under the GSEs’ Equitable Housing Finance Plans or other affordability initiatives, and if so in what form, nor can we predict what effect, if any, such practices or programs may have on our business, results of operations or financial condition.

Private mortgage insurance market penetration and eventual market size are affected in part by actions that impact housing or housing finance policy taken by the GSEs and the U.S.

government, including but not limited to, the Federal Housing Administration and the FHFA.

government, including but not limited to, the Federal Housing Administration (“FHA”) and the FHFA.

In the past, these actions have included announced changes, or potential changes, to underwriting standards, including changes to the GSEs’ automated underwriting systems, FHA pricing, GSE guaranty fees, loan limits and alternative products.

On October 24, 2022, the FHFA announced two initiatives :

1) t argeted changes to the GSEs’ guarantee fee pricing by eliminating upfront fees for certain borrowers and affordable mortgage products, while implementing targeted increases to the upfront fees for most cash-out refinance loans;

and 2) the validation and approval of both the FICO 10T credit score model and the VantageScore 4.0 credit score model for use by the GSEs as well as changing the requirement that lenders provide credit reports from all three nationwide consumer reporting agencies and instead only requiring credit reports from two of the three nationwide credit reporting agencies.

The upfront fees were eliminated for certain first-time home buyers with income at or below area median income and certain other GSE affordable housing products.

The fee reductions went into effect in the fourth quarter of 2022, while the new fees on cash-out refinance loans began on February 1, 2023.

We have seen a limited impact from these price changes on the private mortgage insurance market.

The validation of the new credit scores requires lenders to deliver both credit scores for each loan sold to the GSEs.

The FHFA has announced preliminary implementation expectations, but this is expected to be a multiple year process that will require system and process updates along with coordination across stakeholders of the industry.

In January 2023, the FHFA announced additional updates to its upfront fee structure and a recalibration and reformatting of their entire pricing matrix.

The changes marked the third iteration of the FHFA’s ongoing pricing review since early 2022 and impact purchase and rate-term refinance loans.

Pricing grids are now broken out by loan purpose and are recalibrated to new credit score and loan-to-value ratio categories along with associated loan attributes.

The new pricing matrix initially included new upfront fees for loans with debt to income ratios greater than 40%, but those fees were rescinded prior to implementation.

The remaining changes became effective May 1, 2023.

On February 22, 2023, the Department of Housing and Urban Development announced a 30 basis point reduction of the annual insurance premium charged to borrowers with FHA-insured mortgages.

This action is designed to reduce the cost of borrowing for lower- and middle-class homebuyers who are eligible for the federal program.

The price reduction, which went into effect on March 20, 2023, is expected to have a negative impact on the private mortgage insurance market but will be partially offset by the effects of the recent FHFA pricing changes referenced above.

We do not believe this net impact has been or will be material.

On October 24, 2022, the FHFA announced the validation and approval of both the FICO 10T credit score model and the VantageScore 4.0 credit score model for anticipated use by the GSEs as well as proposing to change the requirement that lenders provide credit reports from all three nationwide consumer reporting agencies and instead only requiring credit reports from two of the three nationwide credit reporting agencies.

The validation of the new credit scores is currently expected to require lenders to deliver both credit scores for each loan sold to the GSEs.

Implementation, which has been delayed beyond 2025, will require system and process updates along with coordination across stakeholders of the industry.

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 to our sufficiency.

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.

Competitive environment.

private mortgage insurance industry is highly competitive.

Our market share is influenced by the execution of our go to market strategy, including but not limited to,

pricing competitiveness relative to our peers and our selective participation in forward commitment transactions.

Our market share is influenced by the execution of our go to market strategy, including but not limited to, pricing competitiveness relative to our peers and our selective participation in forward commitment transactions.

We continue to manage the quality of new business through pricing and our underwriting guidelines, which are modified from time to time when circumstances warrant.

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Our portfolio.

New insurance written of $53.1 billion in 2023 decreased 20% compared to 2022 primarily due to a smaller private mortgage insurance market in the current year as refinance and purchase originations were impacted by rising interest rates.

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 primary persistency rate increased to 85% during 2023 compared to 80% during 2022.

The increase in persistency was primarily driven by a decline in the percentage of our in-force policies with mortgage rates above current mortgage rates.

New insurance written of $51.0 billion in 2024 decreased 4% compared to 2023.

Changes in NIW are primarily impacted by the size of the mortgage insurance market and our market share.

Our primary persistency rate decreased to 83% during 2024 compared to 85% during 2023.

Persistency remains elevated due to high interest rates but decreased in 2024 due to rate volatility throughout the year.

Elevated persistency has continued to offset the decline in new insurance written, leading to an increase in primary insurance in-force of $5.9 billion or 2% since December 31, 2023.

Net earned premiums increased in 2023 compared to 2022 primarily as a result of insurance in-force growth, partially offset by the lapse of older, higher priced policies and a decrease in single premium cancellations.

The total number of delinquent loans has declined from the COVID-19 peak in the second quarter of 2020 as forbearance exits continue and new forbearances decline.

During this time and consistent with prior years, servicers continued the practice of remitting premiums during the early stages of default, and we refund the post-delinquent premiums to the insured party if the delinquent loan goes to claim.

We record a liability and a reduction to net earned premiums for the post-delinquent premiums we expect to refund.

The post-delinquent premium liability recorded since the beginning of COVID-19 in the second quarter of 2020 through the fourth quarter of 2023 was not significant to the change in earned premiums for those periods.

Net earned premiums increased $23 million in 2024 compared to 2023 as a result of higher average IIF and higher assumed premiums, consisting primarily of Enact Re’s GSE credit risk transfer participation and multifamily reinsurance.

This was partially offset by higher ceded premium.

Our largest customer accounted for 11% and 10% of our total revenues for the years ended December 31, 2024 and 2023, respectively.

This customer also accounted for 20%, 19% and 18% of our total NIW during the years ended December 31, 2024, 2023 and 2022, respectively.

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 and no other customer accounted for more than 10% of NIW for the year ended December 31, 2022.

Loss experience.

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Both periods were impacted by favorable reserve adjustments.

In 2023, we released $241 million of reserves primarily on delinquencies from prior years, related to favorable cure performance on delinquencies from 2022 and earlier, including a portion of those as a result of COVID-19.

During the peak of COVID-19, we experienced elevated new delinquencies subject to forbearance plans.

Those delinquencies have continued to cure at levels above our reserve expectations.

Another component of the reserve release related to delinquencies from 2022, as uncertainty in the economic environment has not negatively impacted cure performance to the extent initially expected.

This compares to 2022, where we recorded $314 million of reserve release primarily related to cure performance of 2020 delinquencies.

Losses during 2022 were also impacted by $46 million of reserve strengthening related to current accident year delinquencies due to uncertainty in the economic environment.

Borrowers who have experienced a financial hardship including, but not limited to, the loss of income due to the closing of a business or the loss of a job, continue to take advantage of available loss mitigation options, including forbearance programs, payment deferral options and other modifications.

Loss reserves recorded on these 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, as well as the timing and severity of those payments.

The severity of loss on loans that do go to claim may be negatively impacted by the extended forbearance and foreclosure timelines, the associated elevated expenses and the higher loan amount of the recent new delinquencies.

In 2024, we recorded a reserve release of $252 million, primarily on prior accident year reserves as a result of strong cure performance and loss mitigation efforts.

As part of the 2024 reserve adjustments, we decreased our claim rate assumptions for new and existing delinquencies as a result of sustained favorable cure performance and lessening uncertainty in the economic environment, which impacted reserves from current and prior accident years.

During 2023, we released reserves of $241 million primarily due to better than expected cure experience on delinquencies from 2022 and earlier, including a portion of those related to the emergence of COVID-19.

The severity of loss on loans that go to claim may be negatively impacted by the extended forbearance and foreclosure timelines, the associated elevated expenses and the higher loan amount of the recent new delinquencies.

These negative influences on loss severity could be mitigated, in part, by embedded home price appreciation.

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.

New delinquencies in 2023 increased compared to 2022 primarily due to the aging of large, new books of business.

New delinquencies in 2024 increased compared to 2023 primarily due to the aging of large, newer books of business.

Current period primary delinquencies of 48,537 contributed $287 million of loss expense in 2024.

We incurred $265 million of losses from 41,617 current period delinquencies in 2023.

In determining the loss expense estimate, considerations were given to recent cure and claim experience and the prevailing and prospective economic conditions.

Approximately 13% of our primary new delinquencies in 2023 were subject to a forbearance plan as compared to 21% in 2022.

Due to the declining number of new delinquencies in forbearance, we no longer differentiate the expected claim rates applied to new delinquencies in forbearance versus those not in forbearance.

determining the loss expense estimate, considerations were given to recent cure and claim experience and the prevailing and prospective economic conditions.

Capital requirements and ratings.

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EMICO’s ongoing risk-to-capital ratio will depend principally on the magnitude of future losses incurred by EMICO, the effectiveness of ongoing loss mitigation activities, new business volume and profitability, the impact of quota share reinsurance, the amount of policy lapses and the amount of additional capital that is generated or distributed by the business.

Under PMIERs, we are subject to operational and financial requirements that private mortgage insurers must meet in order to remain eligible to insure loans that are purchased by the GSEs.

Additionally, in September 2020, subsequent to the issuance of our senior notes due in 2025, the GSEs imposed certain restrictions (the “GSE Restrictions”) with respect to capital on our business.

In May 2021, in connection with their conditional approval of the then potential partial sale of EHI, the GSEs confirmed the GSE Restrictions would remain in effect until certain conditions (“GSE Conditions”) were met.

These conditions were met as of December 31, 2022, and Enact is no longer subject to 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 PMIERs requirements, compared to 165% or $2,050 million above the published PMIERs requirements as of December 31, 2022.

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.

Our PMIERs required assets benefited from the application of a 0.30 multiplier applied to the risk-based required asset amount factor for certain non-performing loans as defined under PMIERs.

The application of the 0.30 multiplier to all eligible delinquencies provided $28 million of benefit to our December 31, 2024, PMIERs required assets compared to $73 million of benefit as of December 31, 2023.

These amounts are gross of any incremental reinsurance benefit from the elimination of the 0.30 multiplier.

Our PMIERs required assets also benefited from a reinsurance credit of $1,885 million and $1,714 million related to third-party reinsurance as of December 31, 2024 and 2023, respectively.

On February 16, 2023, S&P Global Ratings upgraded the long-term financial strength and issuer credit ratings of EMICO from BBB to BBB+.

This rating was further upgraded to A- as of January 8, 2024.

Moody’s Investors Service also upgraded the insurance financial strength rating of EMICO from Baa1 to A3 on March 1, 2023.

On April 25, 2023, Fitch upgraded the insurance financial strength rating of EMICO

from BBB+ to A-.

These ratings reflect our continued strong performance including our credit profile, market position, profitability, capital adequacy and financial flexibility.

On August 1, 2023, A.M.

Best initiated public ratings of EMICO and Enact Re.

Both entities received A- ratings with stable outlooks.

These amounts are gross of any incremental reinsurance benefit from the elimination of the 0.30 multiplier.

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

On January 8, 2024, S&P Global Ratings upgraded the long-term financial strength and issuer credit ratings of EMICO from BBB+ to A-.

Subsequent to year end on January 17, 2025, Fitch upgraded the long-term financial strength and issuer credit ratings of EMICO from A- to A.

Recent transactions.

In May 2023, we contributed $250 million into Enact Re, our wholly owned Bermuda-based subsidiary.

Through this contribution, Enact Re was able to participate in the assumption of excess-of-loss reinsurance relating to GSE credit risk transfer and reinsured EMICO’s new and existing insurance in-force under quota share reinsurance agreements.

We contributed an additional $250 million in November 2023 which will support an increase to the ceding percentage of our previously announced affiliate quota share agreements from 7.5% to 12.5%, along with assumed new insurance written and new business opportunities, including the continued execution of GSE credit risk transfer.

On March 8, 2023, we executed an excess-of-loss reinsurance transaction with a panel of reinsurers, which provides up to $180 million of reinsurance coverage on a portion of current and expected new insurance written for the 2023 book year, effective January 1, 2023.

On June 30, 2023, we executed a quota share reinsurance contract with a panel of reinsurers.

Following a 3% increase in our ceding percentage during the fourth quarter of 2023, we cede 16.125% of a portion of NIW written from January 1, 2023, through December 31, 2023.

On November 15, 2023, we obtained $248 million of fully collateralized excess-of-loss reinsurance coverage from Triangle Re 2023-1 Ltd.

on a portfolio of existing mortgage insurance policies written from July 1, 2022 through June 30, 2023.

Subsequent to year end, on January 3, 2024, we entered into a quota share reinsurance agreement with a panel of third-party reinsurers.

Under the agreement, Enact will cede approximately 21% of a portion of its new insurance written from January 1, 2024, though December 31, 2024.

Subsequent to year end, on January 30, 2024, we executed an excess-of-loss reinsurance transaction with a panel of reinsurers, which provides up to $255 million of reinsurance coverage on a portion of current and expected new insurance written for the 2024 book year, effective January 1, 2024.

In November 2023, we contributed $250 million into Enact Re, our wholly owned Bermuda-based subsidiary.

This contribution supported the increase to the ceding percentage of our previously announced affiliate quota share agreements from 7.5% to 12.5% during the first quarter of 2024, and a new quota share reinsurance agreement that cedes 12.5% of EMICO’s 2024 new insurance written.

The contribution also supports new business opportunities, which primarily includes the continued execution of GSE credit risk transfer.

On January 3, 2024, we entered into a quota share reinsurance agreement with a panel of third-party reinsurers.

Under the agreement, EMICO will cede approximately 21% of a portion of its new insurance written from January 1, 2024, through December 31, 2024.

On January 30, 2024, we executed an excess-of-loss reinsurance transaction with a panel of reinsurers, which, following an amendment in December 2024, provides up to $270 million of reinsurance coverage on a portion of current and expected new insurance written for the 2024 book year, effective January 1, 2024.

On May 28, 2024, we issued our 2029 Notes for an aggregate principal amount of $750 million.

We used the proceeds from the issuance to redeem our 2025 Notes.

On June 25, 2024, we executed an excess-of-loss reinsurance transaction with a panel of reinsurers, which provides approximately $90 million of reinsurance coverage on a portion of existing mortgage insurance written from July 1, 2023, through December 31, 2023, effective June 1, 2024.

On November 26, 2024, we entered into two quota share reinsurance transactions with a panel of reinsurers.

Under the agreements, and subject to certain conditions, EMICO will cede approximately 27% of a portion of expected new insurance written for the period from January 1, 2025, through December 31, 2025, and will cede approximately 27% of a portion of expected new insurance written for the period from January 1, 2026, through December 31, 2026.

Subsequent to year end, in January 2025, we entered into two excess-of-loss reinsurance transactions that cover a portion of expected new insurance written from January 1, 2025, through December 31, 2025, and January 1, 2026, through December 31, 2026, and provide reinsurance coverage of approximately $225 million and $260 million, respectively.

Capital returns.

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We paid quarterly dividends of $0.14 per share in March of 2023 and May, September and December of 2022.

On May 1, 2023, we announced an increase of our quarterly dividend to $0.16 per share which was paid in June, September and December 2023.

In February of 2024, we announced our first quarter dividend of $0.16 per share.

Future dividend payments are subject to quarterly review and approval by our Board of Directors and Genworth and will be targeted to be paid in the third month of each subsequent quarter.

In April and November 2023, our primary mortgage insurance operating company, EMICO, completed distributions to EHI that supported our ability to pay dividends in 2023.

We intend to use these proceeds and future EMICO distributions to fund the quarterly dividend as well as to bolster our financial flexibility and potentially return additional capital to shareholders.

In December 2023, we paid a special cash dividend of $113 million, or $0.71 per share.

On August 1, 2023, we announced the authorization of a new share repurchase program which allows for the repurchase of up to an additional $100 million of EHI’s common stock.

Under the program, share repurchases may be made at our discretion from time to time in open market transactions, privately negotiated transactions, or by other means, including through Rule 10b5-1 trading plans.

We paid quarterly dividends of $0.16 per share in June, September and December 2023 and March 2024.

On May 1, 2024, we also announced an increase to our quarterly dividend to $0.185 per share which was paid in June, September and December 2024.

In November 2024 EMICO completed a distribution to EHI that supports our ability to pay a quarterly dividend.

Future dividend payments are subject to quarterly review and approval by our Board of Directors and Genworth and will be targeted to be paid in the third month of each quarter.

On May 1, 2024, we announced the authorization of a share repurchase program that allows for the repurchase of up to $250 million of EHI’s common stock.

Under this program, share repurchases may be made at our discretion from time to time in open market transactions, privately negotiated transactions, or by other means, including through Rule 10b5-1 and Rule 10b-18 trading plans.

In conjunction with this authorization, we have entered into an agreement with Genworth Holdings, Inc.

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The share repurchase program is not expected to change Genworth’s ownership interest in Enact post-completion.

We expect the timing and amount of any

future share repurchases will be opportunistic and will depend on a variety of factors, including EHI’s share price, capital availability, business and market conditions, regulatory requirements, and debt covenant restrictions.

We expect the timing and amount of any future share repurchases will be opportunistic and will depend on a variety of factors, including EHI’s share price, capital availability, business and market conditions, regulatory requirements, and debt covenant restrictions.

The program does not obligate EHI to acquire any amount of common stock, it may be suspended or terminated at any time at the Company’s discretion without prior notice, and it does not have a specified expiration date.

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Net investment income 240,564 207,369 155,311 33,195 16 % 52,058 34 %

Net investment gains (losses) (14,022) (2,036) (2,124) (11,986) 589 % 88 (4) %

Net investment gains (losses) (22,807) (14,022) (2,036) (8,785) 63 % (11,986) NM

Other income 3,913 3,264 2,309 649 20 % 955 41 %

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Interest expense 51,157 51,867 51,699 (710) (1) % 168 — %

Loss on debt extinguishment 10,930 — — 10,930 NM (4)

Total losses and expenses 323,713 302,177 196,824 10,606 4 % 105,353 54 %

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(2) Expense ratio is calculated by dividing acquisition and operating expenses, net of deferrals, plus amortization of DAC and intangibles by net earned premiums.

(3) Net earned premium rate is calculated by dividing earned premium by average primary IIF.

(3) Net earned premium rate is calculated by dividing direct earned premium less ceded premium, by average primary IIF.

(4) We define “NM” as not meaningful for increases or decreases greater than 300%.

Detailed discussions of our consolidated results of operations for the year ended December 31, 2022, including the year-over-year comparisons between 2023 and 2022, that are not included in this Annual Report on Form 10-K can be found in Item 7 in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 29, 2024.

Year Ended December 31, 2024 Compared to Year Ended December 31, 2023

Premiums increased mainly attributable to higher average IIF.

This was partially offset by lapse of our in-force portfolio as older, higher priced policies lapsed, lower single premium cancellations and higher ceded premium.

Earned premium rate decreased as a result of this lapse of higher priced policies and lower single premium cancellations.

Net investment income increased primarily due to higher investment yields due to interest rate increases during 2023 coupled with higher average invested assets.

Net investment losses during 2023 were primarily driven by the sale of fixed maturity securities as part of an investment strategy designed to optimize yield on our portfolio over time.

Net investment losses in the prior year were largely from net realized losses from the sale of fixed maturity securities.

Premiums increased mainly attributable to higher average IIF and higher assumed premiums, consisting primarily of Enact Re’s GSE credit risk transfer participation and multifamily reinsurance.

This was partially offset by higher ceded premium.

The net earned premium rate was 36 basis points, relatively consistent with 2023.

Net investment income increased primarily due to higher investment yields due to elevated interest rates coupled with higher average invested assets.

Net investment losses during 2024 and 2023 were primarily driven by realized losses on the sale of fixed maturity securities as part of our yield optimization strategy that allows us to reinvest sales proceeds and recoup higher investment income.

Our yield optimization strategy enables opportunistic security sales based on current and changing market conditions.

We had more sales in 2024 than 2023.

Other income includes underwriting fee revenue, equity method investment income and other revenue.

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Losses incurred in 2024 and 2023 were impacted by favorable reserve adjustments .

A component of the reserve release also related to delinquencies from 2022, as uncertainty in the economic environment has not negatively impacted cure performance to the extent initially expected.

During 2024, we released reserves of $252 million primarily on prior accident year reserves as a result of strong cure performance and loss mitigation efforts.

During 2023, we recorded $241 million of reserve releases.

Due to uncertainty in the economic environment, we increased the expected claim rate on new delinquencies in 2022 which contributed to reserve strengthening of $46 million on previous quarter delinquencies in 2022.

New primary delinquencies were 48,537 in 2024 compared to 41,617 in 2023, resulting in $287 million and $265 million of losses, respectively.

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(1) Excludes run-off business.

Acquisition and operating expenses, net of deferrals, decreased primarily attributable to the impact of our cost reduction initiatives, including the impact from our previously announced renegotiated shared services agreement with Genworth and our voluntary separation program executed in the fourth quarter of 2022.

Amortization of DAC and intangibles declined due to lower DAC amortization as a result of higher persistency, driven by rising mortgage rates.

The expense ratio decreased due to a decline in expenses and premium growth.

Interest expense was relatively flat in the current year and related primarily to our 2025 Senior Notes issued in August 2020.

Acquisition and operating expenses, net of deferrals, increased primarily attributable to the impact of our restructuring initiatives.

Amortization of DAC and intangibles declined due to lower DAC amortization as a result of elevated persistency, driven by high mortgage rates and lower software amortization.

The expense ratio was consistent due to growth in and premiums and expenses.

The loss on debt extinguishment relates to the expenses incurred associated with the redemption of our 2025 Notes.

Interest expense primarily relates to our 2025 Notes and 2029 Notes.

For additional details see Note 7 to our consolidated financial statements.

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We use a non-U.S.

GAAP (“non-GAAP”) financial measure entitled “adjusted operating income.” This non-GAAP financial measure aligns with the way our business performance is evaluated by both management and our Board of Directors.

GAAP (“non-GAAP”) financial measure entitled “adjusted operating income.” This non-GAAP financial measure is additionally evaluated by both management and our Board of Directors.

Management also uses adjusted operating income (loss) as a basis for determining awards and compensation for senior management and to evaluate performance on a basis comparable to that used by analysts.

This measure has been established in order to increase transparency for the purposes of evaluating our core operating trends and enabling more meaningful comparisons with our peers.

Although “adjusted operating income” is a non-GAAP financial measure, for the reasons discussed above we believe this measure aids in understanding the underlying performance of our operations.

Our senior management, including our chief operating decision maker (who is our Chief Executive Officer), use “adjusted operating income” as the primary measure to evaluate the fundamental financial performance of our business and to allocate resources.

“Adjusted operating income” is defined as U.S.

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(ii) Restructuring costs and infrequent or unusual non-operating items are also excluded from adjusted operating income if, in our opinion, they are not indicative of overall operating trends.

(iii) Gains (losses) on the extinguishment of debt are also excluded from adjusted operating income, as they are not indicative of overall operating trends.

In reporting non-GAAP measures in the future, we may make other adjustments for expenses and gains we do not consider reflective of core operating performance in a particular period.

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Costs associated with reorganization 4,652 (131) 3,461

Loss on debt extinguishment 10,930 — —

Taxes on adjustments (8,061) (2,917) (1,155)

Adjusted operating income $ 718,396 $ 676,485 $ 708,499

We recorded a pre-tax expense of $3.5 million for the year ended December 31, 2022, related to restructuring costs as we evaluated and appropriately sized our organizational needs and expenses.

Adjusted operating income decreased in 2023 compared to 2022 due primarily due to the higher losses in 2023, including a larger reserve release in 2022, partially offset by higher revenues and lower operating expenses during 2023.

Adjusted operating income increased in 2024 compared to 2023 primarily due to higher premiums and net investment income, partially offset by higher losses.

Management reviews the key metrics included within this section when analyzing the performance of our business.

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New insurance written

NIW for the year ended December 31, 2023 decreased 20% compared to 2022 primarily due to a smaller private mortgage insurance market as both refinancing and purchase originations were impacted by elevated mortgage rates.

NIW for the year ended December 31, 2024 decreased 4% compared to 2023.

Changes in NIW are primarily impacted by the size of the mortgage insurance market and our market share.

We manage the quality of new business through pricing and our underwriting guidelines, which we modify from time to time as circumstances warrant.

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Total $ 51,002 100 % $ 53,081 100 % $ 66,485 100 %

We have seen a decline in NIW on single policies as a result of a reduction in the market for single policies driven by higher mortgage rates.

The following table presents primary NIW by FICO score for the years ended December 31:

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Insurance in-force and Risk in-force

IIF increased largely from NIW and increased persistency in the current year, partially offset by lapses and cancellations.

IIF increased largely from NIW and elevated persistency in the current year, partially offset by lapses and cancellations.

Primary persistency rate was 83% and 85% for the years ended December 31, 2024 and 2023, respectively.

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(1) Direct primary case reserves exclude LAE, pool, IBNR and reinsurance reserves.

The total reserves as a percentage of RIF declined as of December 31, 2023, compared to December 31, 2022 as long-term delinquencies with higher reserves have continued to cure.

The number of loans that are delinquent for 12 months or more has decreased to be more in line with pre-COVID-19 levels.

Due to continued forbearance options, foreclosure moratoriums and the uncertainty around the lack of progression through the foreclosure process there is still uncertainty around the likelihood and timing of delinquencies going to claim.

The total reserves as a percentage of RIF declined as of December 31, 2024, compared to December 31, 2023 as we have experienced cures among long-term delinquencies with higher reserves and have reduced the expected claim rates on new delinquencies.

The ratio of the claim paid to the current risk in-force for a loan is referred to as “claim severity.” The current risk in-force is equal to the unpaid principal amount multiplied by the coverage percentage.

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Our average primary mortgage insurance claim severity was 99%, 97% and 94% for the years ended December 31, 2024, 2023 and 2022, respectively.

The 2023 average claim severity was impacted by low claim volumes and lifetime home price appreciation.

The average claim severities have been impacted by low claim volumes and lifetime home price appreciation.

These figures do not include the effects of agreements on non-performing loans.

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North Carolina 3 2 2.14 %

Washington 3 2 1.77 %

Pennsylvania 3 3 2.17 %

All other states (2)

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Michigan 4 3 1.94 %

North Carolina 3 3 1.59 %

Georgia 3 3 2.23 %

North Carolina 3 2 1.56 %

Washington 3 2 1.77 %

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Texas 8 7 2.12 %

Michigan 4 2 1.87 %

Arizona 4 2 1.78 %

Michigan 4 3 1.79 %

North Carolina 3 3 1.59 %

Pennsylvania (1)

Georgia 3 3 2.23 %

Washington 3 3 1.92 %

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New York, NY MD 2 6 3.53 %

Washington-Arlington, DC MD 2 2 2.01 %

Houston, TX MSA 2 3 3.58 %

Los Angeles-Long Beach, CA MD 2 2 2.39 %

Dallas, TX MD 2 2 2.38 %

Washington-Arlington, DC MD 2 2 2.03 %

Riverside-San Bernardino, CA MSA 2 3 3.25 %

Los Angeles-Long Beach, CA MD 2 2 2.65 %

Denver-Aurora-Lakewood, CO MSA 2 1 1.38 %

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By MSA or MD:

Chicago-Naperville, IL MD 3 % 5 % 2.84 %

Phoenix, AZ MSA 3 % 2 % 2.01 %

New York, NY MD 3 8 3.75 %

Chicago-Naperville, IL MD 3 4 2.88 %

Atlanta, GA MSA 3 3 2.40 %

New York, NY MD 2 7 3.60 %

Washington-Arlington, DC MD 2 2 2.01 %

Houston, TX MSA 2 3 2.67 %

Riverside-San Bernardino, CA MSA 2 2 2.89 %

Los Angeles-Long Beach, CA MD 2 2 2.39 %

Dallas, TX MD 2 2 1.92 %

Riverside-San Bernardino, CA MSA 2 3 2.83 %

Denver-Aurora-Lakewood, CO MSA 2 1 1.12 %

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Dallas, TX MD 2 1 1.86 %

Nassau County, NY MD 2 4 5.55 %

Denver-Aurora-Lakewood, CO MSA 2 1 1.12 %

All Other MSAs/MDs 77 71 2.00 %

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When our model identifies such a candidate, our loan workout specialists prioritize cases for loss mitigation based upon the likelihood that the loan will result in a claim.

Loss mitigation actions include loan modification, extension of credit to bring a loan current, foreclosure forbearance, pre-foreclosure sale and deed-in-lieu.

Loss mitigation actions include loan modification,

extension of credit to bring a loan current, foreclosure forbearance, pre-foreclosure sale and deed-in-lieu.

These loss mitigation efforts often are an effective way to reduce our claim exposure and ultimate payouts.

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Investment Portfolio

Our investment portfolio is affected by factors described below, each of which in turn may be affected by current macroeconomic conditions as noted above in “—Trends and Conditions.” 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.

The investment portfolio of EHI is directed by a separate management-level EHI Investment Committee with a third-party investment manager.

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• Our business outlook, including current and expected future investment conditions;

• Investments selection based on fundamental, research-driven strategies;

• Investment selection based on fundamental, research-driven strategies;

• Diversification across a mix of fixed income, low-volatility investments while actively pursuing strategies to enhance yield;

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Our most significant source of operating cash flows is from premiums received from our insurance policies, while our most significant uses of operating cash flows are generally for claims paid on our insured policies and our operating expenses.

Net cash from operating activities increased largely due higher net investment income and lower expenses.

Cash flows from operations were also impacted by changes in unearned premiums, net investment losses and stock-based compensation expense.

Net cash provided by operating activities increased largely due to higher net investment income and premiums.

Cash flows from operations were also impacted by changes in reserves and unearned premiums.

Investing activities are primarily related to purchases, sales and maturities of our investment portfolio.

We had cash outflows from investing activities as a result of continued fixed maturity security purchases driven by premium growth and lower losses paid.

Financing activities in 2023 included dividends paid of $213 million and share repurchases of $88 million.

Net cash used in investing activities increased as a result of purchases of fixed maturity securities outpacing maturities and sales in the current year due to the deployment of operating cash flows.

In 2024, our cash flows from financing activities included the issuance of our 2029 Notes and the redemption of our 2025 Notes.

Financing activities for 2024 also included dividends paid of $112 million and share repurchases of $244 million.

The amount and timing of future dividends is discussed within “—Trends and Conditions” as well as below.

During 2022, our cash flows from financing activities included dividends paid of $251 million and share repurchases of $2 million.

During 2023 and 2022, our cash flows used in financing activities included dividends paid of $213 million and $251 million, respectively, and share repurchases of $88 million and $2 million, respectively.

Capital Resources and Financing Activities

We issued our 2025 Senior Notes in 2020 with interest payable semi-annually in arrears on February 15 and August 15 of each year.

The 2025 Senior Notes mature on August 15, 2025.

We may redeem the 2025 Senior 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 2025 Senior Notes, in whole or in part, at our option, at 100% of the principal amount, plus accrued and unpaid interest.

The 2025 Senior 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 2025 Senior Notes if we breach the terms of the indenture.

We issued our 2029 Notes in the second quarter of 2024 with interest payable semi-annually in arrears in May and November of each year.

The 2029 Notes mature on May 28, 2029.

We may redeem the 2029 Notes, in whole or in part, at any time prior to April 28, 2029, at our option, by paying an additional premium.

At any time on or after April 28, 2029, we may redeem the 2029 Notes, in whole or in part, at our option, at 100% of the principal amount, plus accrued and unpaid interest.

The 2029 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.

The proceeds from our 2029 Notes, along with other available cash, were used to redeem our 2025 Notes during the second quarter of 2024.

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.

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In addition to dividends and distributions, alternative mechanisms, such as share repurchases, subject to any requisite regulatory approvals, may be utilized from time to time to upstream surplus.

Another consideration in the development of the dividend strategies for our regulated insurance operating subsidiaries is our expected level of compliance with PMIERs.

Prior to the satisfaction of the GSE Conditions, the GSE Restrictions also required EMICO to maintain 120% of PMIERs Minimum Required Assets through 2022, and 125% thereafter.

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

In addition, under PMIERs, EMICO is subject to other operational and financial requirements that approved insurers must meet in order to remain eligible to insure loans purchased by the GSEs.

In addition, we review multiple other considerations in parallel to determine a prospective dividend strategy for our regulated insurance operating subsidiaries.

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We estimate regulators would require a minimum policyholder surplus of approximately $300 million to meet their threshold standard.

Given (i) we are subject to statutory accounting requirements that establish a contingency reserve of at least 50% of net earned premiums annually for ten years, after which time it is released into policyholder surplus and (ii) that no material 10-year contingency reserve releases are scheduled before 2024, we expect modest growth in policyholder surplus through 2024.

As a result, minimum policyholder surplus could be a limitation on the future dividends of our regulated operating subsidiaries.

As mentioned above, another consideration in the development of the dividend strategies for our regulated insurance operating subsidiaries is our expected level of compliance with PMIERs.

Under PMIERs, EMICO is subject to operational and financial requirements that approved insurers must meet in order to remain eligible to insure loans purchased by the GSEs.

We are subject to statutory accounting requirements that establish a contingency reserve of at least 50% of net earned premiums annually for ten years, after which time it is released into policyholder surplus.

While we began 10-year contingency reserve releases during 2024, minimum policyholder surplus could be a limitation on the future dividends of our regulated operating subsidiaries.

Another consideration in the development of the dividend strategies for our regulated insurance operating subsidiaries is our expected level of compliance with PMIERs.

Under PMIERs, EMICO is

subject to operational and financial requirements that approved insurers must meet in order to remain eligible to insure loans purchased by the GSEs.

Our regulated insurance operating subsidiaries are also subject to statutory RTC requirements that affect the dividend strategies of our regulated operating subsidiaries.

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In addition, the dividend strategies of our regulated operating subsidiaries are made in consultation with Genworth.

During 2023, EMICO completed distributions of approximately $158 million and $185 million in April and November, respectively, that supported our ability to pay cash dividends.

During 2024, EMICO completed distributions of approximately $270 million and $230 million in March and November, respectively, that supported our ability to pay cash dividends.

We intend to use future EMICO distributions to fund the quarterly dividend as well as to bolster our financial flexibility at EHI and return additional capital to shareholders.

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Our net RIF represents RIF, net of reinsurance ceded, and excludes risk on policies that are currently delinquent and for which loss reserves have been established.

Statutory capital consists primarily of statutory policyholders’ surplus (which increases as a result of statutory net income and

decreases as a result of statutory net loss and dividends paid), plus the statutory contingency reserve.

Statutory capital consists primarily of statutory policyholders’ surplus (which increases as a result of statutory net income and decreases as a result of statutory net loss and dividends paid), plus the statutory contingency reserve.

The statutory contingency reserve is reported as a liability on the statutory balance sheet.

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While formulations of minimum capital vary in certain states, the most common measure applied allows for a maximum permitted RTC ratio of 25:1.

The following table presents the calculation of our RTC ratio for our combined insurance subsidiaries as of the dates indicated:

The following table presents the calculation of our RTC ratio for our combined mortgage insurance subsidiaries as of the dates indicated:

(Dollar amounts in millions)

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We believe that the operating cash flows generated by our mortgage insurance subsidiary will provide the funds necessary to satisfy our claim payments, operating expenses and taxes in both the short-term and long-term.

subsidiaries are subject to regulatory and other capital restrictions with respect to the payment of dividends.

We currently have no material financing commitments, such as lines of credit or guarantees, that are expected to affect our liquidity over the next five years, other than the 2025 Senior Notes and the Facility.

However, our subsidiaries are subject to regulatory and other capital restrictions with respect to the payment of dividends.

We currently have no material financing commitments, such as lines of credit or guarantees, that are expected to affect our liquidity, other than the 2029 Notes and the Facility.

Financial Strength Ratings

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The financial strength ratings of our operating companies are not designed to be, and do not serve as, measures of protection or valuation offered to our stockholders.

We cannot predict with any certainty the impact to us from any future disruptions in the credit markets or downgrades by one or more of the rating agencies of the financial strength ratings of our insurance company subsidiaries and/or the credit ratings of our holding company as a result of the impact of the COVID-19 pandemic, the ensuing economic uncertainty or otherwise.

We also cannot predict the impact on our ratings or future ratings of actions taken with respect to Genworth.

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Moody’s Investor Service, Inc.

A3 Stable Upgrade March 1, 2023

A3 Positive Affirm March 27, 2024

Fitch Ratings, Inc.

A- Stable Upgrade April 25, 2023

A Stable Upgrade January 17, 2025

S&P Global Ratings A- Stable Upgrade January 8, 2024

Best A- Stable Initial August 1, 2023

Best A- Stable Affirm

August 23, 2024

In August 2023, Enact Re was independently assigned a rating of A- by third-party rating organization A.M.

In August 2024, Enact Re was independently assigned a rating of A- by S&P Global Ratings.

Contractual Obligations and Commitments

We enter into agreements and other relationships with third parties in the ordinary course of our operations.

However, we do not believe that our cash flow requirements can be assessed based upon this analysis of these obligations, as the funding of these future cash obligations will be from future cash flows from premiums and investment income.

However, we do not believe that our cash flow requirements can be assessed based upon analysis of these obligations, as the funding of these future cash obligations will be from future cash flows from premiums and investment income.

Future cash outflows, whether they are contractual obligations or not, also will vary based upon our future needs.

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An example of obligations that will vary include insurance liabilities that depend on losses incurred.

Refer to Note 7 and Note 12 of our audited consolidated financial statements for discussion of borrowings and commitments in contingencies, respectively.

We continue to hold reserves as of December 31, 2023, related to delinquencies from borrower forbearance programs due to COVID-19.

We have seen COVID-19-related delinquencies cure above expectations, but reserves recorded related to borrower forbearance have a high degree of estimation.

Therefore, it is possible we could have higher contractual obligations related to these loss reserves if they do not perform as we expect.

Refer to Note 3, Note 7 and Note 12 of our audited consolidated financial statements for discussion of borrowings and commitments and contingencies.

The liability for loss reserves as of December 31, 2024, represents our current best estimate;

however, there may be future adjustments to this estimate and related assumptions.

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.

Refer to Note 5 in our audited consolidated financial statements for discussion of our loss reserves.

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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 7. Management’s Discussion and Analysis