Enact Holdings, Inc. 10-K

Item 8. Financial Statements and Supplementary Data INDEX OF CONSOLIDATED FINANCIAL STATEMENTS Page Audited Financial Statements Report of Independent Registered Public Accounting Firm ( KPMG LLP , Chicago, Illinois , Auditor Firm ID: 185 ) 98 Consolidated Balance Sheets as of December 31, 2024 and 20 23 100 Consolidated Statements of Income for the years ended December 31, 2024, 2023 and 20 2 2 101 Consolidated Statements of Comprehensive Income for the years ended December 31, 2024, 2023 and 20 2 2 102 Consolidated Statements of Changes in Equity for the years ended December 31, 2024, 2023 and 20 2 2 103 Consolidated Statements of Cash Flows for the years ended December 31, 2024, 2023 and 20 2 2 104 Notes to the Consolidated Financial Statements 105 Supplemental Schedules: Supplemental Schedule I, Summary of Investments- Other than Investments in Related Parties 144 Supplemental Schedule II, Financial Statements of Enact Holdings, Inc. (Parent Company Only) 145 97 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and Board of Directors Enact Holdings, Inc.: Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Enact Holdings, Inc. and subsidiaries (the Company) as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for each of the years in the three-year period ended December 31, 2024, and the related notes and financial statement schedules I to II (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 28, 2025 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Loss reserves As described in Notes 2 and 5 to the consolidated financial statements, the Company estimates the liabilities for losses on insured mortgage loans (loss reserves) by estimating the number of loans in their inventory of delinquent loans that will result in a claim payment, which is referred to as the claim 98 rate, and further estimating the amount of the claim payment, which is referred to as claim severity. The estimates are determined using a factor-based approach, in which assumptions of claim rates for loans in default and the average amount paid for loans that result in a claim are calculated using traditional actuarial techniques. The Company’s loss reserves were $525 million as of December 31, 2024. We identified the assessment of the valuation of loss reserves to be a critical audit matter. Specifically, the claim severity and claim rate assumptions used to estimate reserves required especially subjective auditor judgment. Additionally, the audit effort to assess the valuation of loss reserves required the involvement of professionals with specialized knowledge and experience. The following are the primary procedures we performed to address the critical audit matter. With the assistance of actuarial professionals, we evaluated the design and tested the operating effectiveness of certain internal controls related to the valuation of loss reserves. This included controls related to the review and approval of the claim severity and claim rate reserve factors used in the estimate for loss reserves. We included actuarial professionals with specialized knowledge and experience, who assisted in: • Assessing the Company’s reserving methodology by comparing to accepted actuarial methodologies; and • Developing an independent estimate and range for a portion of the loss reserves, using the Company’s underlying historical claims and delinquency data and independently developed models and assumptions and assessing the position in the range and the year-over-year movements of the Company’s recorded loss reserves within the developed independent range. /s/ KPMG LLP We have served as the Company’s auditor since 1989. Raleigh, North Carolina February 28, 2025 99 ENACT HOLDINGS, INC. CONSOLIDATED BALANCE SHEETS December 31, (Amounts in thousands, except per share amounts) 2024 2023 Assets Fixed maturity securities available-for-sale, at fair value (amortized cost $ 5,876,502 and $ 5,559,886 as of December 31, 2024 and 2023, respectively) $ 5,624,773 $ 5,266,141 Short-term investments 3,367 20,219 Total investments 5,628,140 5,286,360 Cash and cash equivalents 599,432 615,683 Accrued investment income 49,595 41,559 Deferred acquisition costs 23,771 25,006 Premiums receivable 53,031 45,070 Other assets 102,549 88,306 Deferred tax asset 65,013 88,489 Total assets $ 6,521,531 $ 6,190,473 Liabilities and equity Liabilities: Loss reserves $ 524,715 $ 518,191 Unearned premiums 114,680 149,330 Other liabilities 142,990 145,189 Long-term borrowings 743,050 745,416 Total liabilities 1,525,435 1,558,126 Equity: Common stock, $ 0.01 par value; 600,000 shares authorized; 152,318 and 159,344 shares issued and outstanding as of December 31, 2024 and 2023, respectively 1,523 1,593 Additional paid-in capital 2,076,788 2,310,891 Accumulated other comprehensive income ( 207,455 ) ( 230,400 ) Retained earnings 3,125,240 2,550,263 Total equity 4,996,096 4,632,347 Total liabilities and equity $ 6,521,531 $ 6,190,473 See Notes to Consolidated Financial Statements 100 ENACT HOLDINGS, INC. CONSOLIDATED STATEMENTS OF INCOME Years ended December 31, (Amounts in thousands, except per share amounts) 2024 2023 2022 Revenues: Premiums $ 980,104 $ 957,075 $ 939,462 Net investment income 240,564 207,369 155,311 Net investment gains (losses) ( 22,807 ) ( 14,022 ) ( 2,036 ) Other income 3,913 3,264 2,309 Total revenues 1,201,774 1,153,686 1,095,046 Losses and expenses: Losses incurred 38,657 27,165 ( 94,221 ) Acquisition and operating expenses, net of deferrals 213,310 212,491 226,941 Amortization of deferred acquisition costs and intangibles 9,659 10,654 12,405 Interest expense 51,157 51,867 51,699 Loss on debt extinguishment 10,930 — — Total losses and expenses 323,713 302,177 196,824 Income before income taxes 878,061 851,509 898,222 Provision for income taxes 189,993 185,998 194,065 Net income $ 688,068 $ 665,511 $ 704,157 Net income per common share: Basic $ 4.40 $ 4.14 $ 4.32 Diluted $ 4.37 $ 4.11 $ 4.31 Weighted average common shares outstanding: Basic 156,277 160,870 162,838 Diluted 157,554 161,847 163,294 See Notes to Consolidated Financial Statements 101 ENACT HOLDINGS, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Years ended December 31, (Amounts in thousands) 2024 2023 2022 Net income $ 688,068 $ 665,511 $ 704,157 Other comprehensive income (loss), net of taxes: Net unrealized gains (losses) on securities 22,932 152,340 ( 466,484 ) Foreign currency translation 13 4 159 Other comprehensive income (loss) 22,945 152,344 ( 466,325 ) Total comprehensive income (loss) $ 711,013 $ 817,855 $ 237,832 See Notes to Consolidated Financial Statements 102 ENACT HOLDINGS, INC. CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Amounts in thousands) Common stock Additional paid-in capital Accumulated other comprehensive income (loss) Retained earnings Total equity Balance December 31, 2021 $ 1,628 $ 2,371,861 $ 83,581 $ 1,648,453 $ 4,105,523 Comprehensive income: Net income — — — 704,157 704,157 Other comprehensive income, net of taxes — — ( 466,325 ) — ( 466,325 ) Repurchase of common stock — ( 1,532 ) — — ( 1,532 ) Stock-based compensation expense and exercises and other — 11,739 — ( 1,878 ) 9,861 Dividends — — — ( 250,776 ) ( 250,776 ) Balance December 31, 2022 $ 1,628 $ 2,382,068 $ ( 382,744 ) $ 2,099,956 $ 4,100,908 Comprehensive income: Net income — — — 665,511 665,511 Other comprehensive income, net of taxes — — 152,344 — 152,344 Repurchase of common stock ( 36 ) ( 87,726 ) — — ( 87,762 ) Stock-based compensation expense and exercises and other 1 16,549 — ( 2,240 ) 14,310 Dividends — — — ( 212,964 ) ( 212,964 ) Balance December 31, 2023 $ 1,593 $ 2,310,891 $ ( 230,400 ) $ 2,550,263 $ 4,632,347 Comprehensive income: Net income — — — 688,068 688,068 Other comprehensive income, net of taxes — — 22,945 — 22,945 Repurchase of common stock ( 76 ) ( 243,892 ) — — ( 243,968 ) Stock-based compensation expense and exercises and other 6 9,789 — ( 1,372 ) 8,423 Dividends — — — ( 111,719 ) ( 111,719 ) Balance December 31, 2024 $ 1,523 $ 2,076,788 $ ( 207,455 ) $ 3,125,240 $ 4,996,096 See Notes to Consolidated Financial Statements 103 ENACT HOLDINGS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS Years ended December 31, (Amounts in thousands) 2024 2023 2022 Cash flows from operating activities: Net income $ 688,068 $ 665,511 $ 704,157 Adjustments to reconcile net income to net cash provided by operating activities: Net (gains) losses on investments 22,807 14,022 2,036 Amortization of fixed maturity securities discounts and premiums ( 11,603 ) ( 6,530 ) ( 3,163 ) Amortization of deferred acquisition costs and intangibles 9,659 10,654 12,405 Acquisition costs deferred ( 5,758 ) ( 6,109 ) ( 6,678 ) Deferred income taxes 4,464 ( 1,832 ) ( 2,298 ) Stock-based compensation expense 18,774 15,279 9,883 Amortization of debt issuance costs 1,954 2,586 2,414 Loss on debt extinguishment 10,930 — — Other — — ( 21 ) Change in certain assets and liabilities: Accrued investment income ( 8,036 ) ( 5,715 ) ( 4,783 ) Premiums receivable ( 7,961 ) ( 3,332 ) 528 Other assets 1,462 1,214 ( 2,297 ) Loss reserves 6,524 ( 817 ) ( 122,317 ) Unearned premiums ( 34,650 ) ( 53,387 ) ( 43,602 ) Other liabilities ( 10,372 ) 494 14,246 Net cash provided by operating activities 686,262 632,038 560,510 Cash flows from investing activities: Purchases of fixed maturity securities available-for-sale ( 1,605,661 ) ( 1,018,406 ) ( 1,216,234 ) Purchase of equity interest ( 5,512 ) — ( 6,516 ) Proceeds from sales of fixed maturity securities available-for-sale 553,957 423,373 534,730 Maturities of fixed maturity securities available-for-sale 735,444 396,207 470,842 Change in short-term investments 16,849 ( 16,651 ) ( 3,077 ) Other ( 15,591 ) ( 13,927 ) — Net cash used in investing activities ( 320,514 ) ( 229,404 ) ( 220,255 ) Cash flows from financing activities: Proceeds from the issuance of long-term debt 749,648 — — Debt issuance costs ( 7,398 ) — — Redemption of long-term debt ( 757,500 ) — — Repurchase of common stock ( 243,968 ) ( 87,762 ) ( 1,532 ) Dividends paid ( 111,719 ) ( 212,964 ) ( 250,776 ) Other ( 11,062 ) — — Net cash used in financing activities ( 381,999 ) ( 300,726 ) ( 252,308 ) Net increase (decrease) in cash and cash equivalents ( 16,251 ) 101,908 87,947 Cash and cash equivalents at beginning of year 615,683 513,775 425,828 Cash and cash equivalents at end of year $ 599,432 $ 615,683 $ 513,775 Supplementary disclosure of cash flow information: Income taxes paid $ 188,544 $ 181,972 $ 186,152 Interest paid $ 62,946 $ 49,177 $ 49,090 See Notes to Consolidated Financial Statements 104 ENACT HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years Ended December 31, 2024, 2023 and 2022 (1) Nature of business and organization structure Nature of Business Enact Holdings, Inc. (“EHI,” together with its subsidiaries, the “Company,” “we,” “us,” or “our”) (formerly known as Genworth Mortgage Holdings, Inc.) was a wholly owned subsidiary of Genworth Financial, Inc. (“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 are engaged in the business of writing and assuming residential mortgage guaranty insurance. The insurance protects lenders and investors against certain losses resulting from nonpayment of loans secured by mortgages, deeds of trust, or other instruments constituting a lien on residential real estate. We offer private mortgage insurance products predominantly insuring prime-based, individually underwritten residential mortgage loans (“primary mortgage insurance”). Our primary mortgage insurance enables borrowers to buy homes with a down payment of less than 20% of the home’s value. Primary mortgage insurance also facilitates the sale of these low down payment mortgage loans in the secondary mortgage market, most of which are sold to government sponsored enterprises. We also selectively enter into insurance transactions with lenders and investors, under which we insure a portfolio of loans at or after origination. We operate our business through our primary insurance subsidiary, Enact Mortgage Insurance Corporation, (“EMICO”), formerly known as Genworth Mortgage Insurance Corporation, with operations in all 50 states and the District of Columbia. EMICO is an approved insurer by the Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“Freddie Mac”). Fannie Mae and Freddie Mac are government-sponsored enterprises, and we refer to them collectively as the “GSEs.” We have a broad customer base of mortgage lenders diversified by size, type and geography that includes large money center banks, non-bank lenders, national and local mortgage bankers, community banks and credit unions. Our largest customer accounted for approximately $ 133 million or 11 % of our total revenues for the year ended December 31, 2024, and $ 118 million, or 10 % of our total revenues for the year ended December 31, 2023. No other customer accounted for 10% or more of total revenues for the year ended December 31, 2024 or 2023 and no customer accounted for 10% or more of total revenues for the year ended December 31, 2022. We also offer mortgage-related insurance and reinsurance through our wholly owned Bermuda-based subsidiary, Enact Re Ltd. ("Enact Re"). We contributed $ 500 million into Enact Re during 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. Additionally, we perform fee-based contract underwriting services for mortgage lenders. The provision of underwriting services by mortgage insurers eliminates the duplicative lender and mortgage insurer underwriting activities and expedites the approval process. EMICO also includes a run-off insurance block with reference properties in Mexico (“run-off business”), which is immaterial to our consolidated financial statements. (2) Summary of significant accounting policies Basis of Presentation Our consolidated financial statements have been prepared on the basis of United States generally accepted accounting principles (“U.S. GAAP”). Preparing financial statements in conformity with U.S. 105 ENACT HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years Ended December 31, 2024, 2023 and 2022 GAAP requires us to make estimates and assumptions that affect reported amounts and related disclosures. Actual results could differ from those estimates. Certain prior year amounts have been reclassified to conform to the current year presentation. Our consolidated financial statements have been prepared on a standalone basis. The consolidated financial statements include the accounts of EHI, its subsidiaries and those entities required to be consolidated under the applicable accounting standards. All intercompany transactions and balances have been eliminated. The consolidated financial statements include allocations of certain Genworth expenses. The allocated expenses relate to various services that have historically been provided to us by Genworth, including investment management, information technology services and administrative services (such as finance, human resources and employee benefit administration). These allocations were made on a direct usage basis when identifiable, with the remainder allocated on the basis of equity, proportional effort or other relevant measures. Expenses allocated to us are not necessarily representative of the amounts that would have been incurred had we operated independently of Genworth. See Note 11 for further information regarding the allocation of Genworth expenses. Premiums For monthly insurance contracts, we report premiums as revenue over the period that coverage is provided. For single premium mortgage insurance contracts, we report premiums over the estimated policy life in accordance with the expected pattern of risk emergence as further described in our accounting policy for unearned premiums. In addition, we refund post-delinquent premiums received to the insured party if the delinquent loan goes to claim. We record a liability for premiums received on the delinquent loans consistent with our expectations of ultimate claim rates. Net Investment Income and Net Investment Gains and Losses Investment income is recognized when earned. Income or loss upon call or prepayment of available-for-sale fixed maturity securities is recognized in net investment income, except for hybrid securities where the income or loss upon call is recognized in net investment gains and losses. Investment gains and losses are calculated on the basis of specific identification on the trade date. Investment income on asset-backed securities is initially based upon yield, cash flow and prepayment assumptions at the date of purchase. Subsequent revisions in those assumptions are recorded using the retrospective or prospective method. Under the retrospective method used for asset-backed securities of high credit quality (ratings equal to or greater than “AA” or that are backed by a U.S. agency) which cannot be contractually prepaid in such a manner that we would not recover a substantial portion of the initial investment, amortized cost of the security is adjusted to the amount that would have existed had the revised assumptions been in place at the date of purchase. The adjustments to amortized cost are recorded as a charge or credit to net investment income. Under the prospective method, which is used for all other asset-backed securities, future cash flows are estimated, and interest income is recognized going forward using the new internal rate of return . Other Income Other income primarily includes underwriting fee revenue and other revenue. Underwriting fee revenue is earned for underwriting services provided on a per-unit or per-diem basis, as defined in the underwriting agreements. Underwriting fee revenue is recognized at the point in time when the service obligation is satisfied. Investments The investment portfolios of our insurance subsidiaries are managed by Genworth. We conduct the purchases, sales and related investment management decisions with the advice of Genworth. As part of 106 ENACT HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years Ended December 31, 2024, 2023 and 2022 these services, we are charged an investment management fee, as agreed between both parties. These fees are charged to investment expense and are included in net investment income in the consolidated statements of income. Refer to Note 11 for further details. Investments held at EHI are managed by a third party. Fixed maturity securities classified as available-for-sale are reported in our consolidated balance sheets at fair value. Our portfolio of fixed maturity securities comprises primarily investment grade securities. Changes in the fair value of available-for-sale fixed maturity securities, net of deferred income taxes, are reflected as unrealized investment gains or losses in a separate component of accumulated other comprehensive income (“OCI”). Allowance for Credit Losses on Available-For-Sale Securities Available-for-sale fixed maturity securities in an unrealized loss position are evaluated to determine whether the decline in fair value is related to credit losses or other factors. In making this assessment, we consider the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency/agencies and adverse conditions specifically related to the security, among other factors. If a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, an allowance for credit losses is recorded, limited by the amount that the fair value is less than the amortized cost basis. Estimating the cash flows expected to be collected is a quantitative and qualitative process that incorporates information received from third-party sources along with internal assumptions and judgments. When developing the estimate of cash flows expected to be collected, we utilize an analytical model that provides for various loss scenarios and considers the industry sector, current levels of subordination, geographic location and other relevant characteristics of the security or underlying assets, as well as reasonable and supportable forecasts. Losses are written off against the allowance when deemed uncollectible or when we intend to sell or expect we will be required to sell a security prior to recovering our amortized cost. We exclude accrued interest related to available-for-sale fixed maturity securities from the estimate of allowance for credit losses. Accrued interest is included in accrued investment income in our condensed consolidated balance sheet. We do not measure an allowance for credit losses related to accrued interest as uncollectible accrued interest related to our available-for-sale fixed maturity securities is written off after 90 days and once collectability is determined to be uncertain and not probable. Amounts written off related to accrued interest are recorded as a credit loss expense included in net investment gains (losses). Equity Method Investments Investments in which we are deemed to exert significant influence, but not control, are accounted for using the equity method of accounting. Equity method investments, which are not material as of December 31, 2024, are recorded in other assets on the consolidated balance sheets with their related income recorded within other income in the consolidated statements of income. Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. We have fixed maturity securities and short-term investments, which are carried at fair value. Fair value measurements are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our view of market assumptions in the absence of observable market information. We utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. 107 ENACT HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years Ended December 31, 2024, 2023 and 2022 All assets and liabilities carried at fair value are classified and disclosed in one of the following three categories: • Level 1—Quoted prices for identical instruments in active markets. • Level 2—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations for which inputs are observable or where those significant value drivers are observable. • Level 3—Instruments for which significant value drivers are unobservable. Level 1 primarily consists of financial instruments whose value is based on quoted market prices such as equity securities and actively traded mutual fund investments. Level 2 includes those financial instruments that are valued using industry-standard pricing methodologies, models or other valuation methodologies. These models are primarily industry-standard models that consider various inputs, such as interest rate, credit spread and foreign exchange rates for the underlying financial instruments. All significant inputs are observable, or derived from observable, information in the marketplace or are supported by observable levels at which transactions are executed in the marketplace. Financial instruments in this category primarily include: certain public and private corporate fixed maturity securities; government or agency securities; and certain asset-backed securities. Level 3 comprises financial instruments whose fair value is estimated based on industry-standard pricing methodologies and internally developed models utilizing significant inputs not based on, nor corroborated by, readily available market information. In certain instances, this category may also utilize non-binding broker quotes. This category primarily consists of certain less liquid fixed maturity securities where we cannot corroborate the significant valuation inputs with market observable data. As of each reporting period, all assets and liabilities recorded at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability, such as the relative impact on the fair value as a result of including a particular input. We review the fair value hierarchy classifications each reporting period. Changes in the observability of the valuation attributes may result in a reclassification of certain financial assets or liabilities. Such reclassifications are reported as transfers in and out of Level 3 at the beginning fair value for the reporting period in which the changes occur. See Note 4 for additional information related to fair value measurements. Cash and Cash Equivalents Certificates of deposit, money market funds and other highly liquid investments with original maturities of three months or less are considered cash equivalents in the consolidated balance sheets and consolidated statements of cash flows. Items with maturities greater than three months but less than one year at the time of acquisition are generally considered short-term investments. Accrued Investment Income Accrued investment income consists primarily of interest earned on available-for-sale securities. Interest is recognized on an accrual basis, and dividends are recorded as earned on the ex-dividend date. Interest income is not recorded on fixed maturity securities in default and fixed maturity securities delinquent more than 90 days or where collection of interest is improbable. Deferred Acquisition Costs (“DAC”) Acquisition costs include costs that are directly related to the successful acquisition of new insurance contracts. Acquisition costs are deferred and amortized to the extent they are recoverable from future profits. Acquisition costs primarily consist of underwriting costs and are amortized in proportion to 108 ENACT HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years Ended December 31, 2024, 2023 and 2022 estimated gross profit. Judgment is used in evaluating these estimates and the assumptions upon which they are based. The use of different assumptions may have a significant effect on the amortization of deferred acquisition costs. Deferred acquisition costs were $ 23.8 million and $ 25.0 million as of December 31, 2024 and 2023, respectively. Amortization of DAC was $ 7.0 million, $ 7.2 million and $ 7.8 million for the years ended December 31, 2024, 2023 and 2022, respectively, and was included within amortization of deferred acquisition costs and intangibles in the consolidated statements of income. Premium Deficiency Reserves (“PDR”) Premium deficiency reserves are established, if necessary, when the present value of expected future losses and expenses exceeds the present value of expected future premium and already established reserves. The discount rate used in the calculation is based upon our pretax investment yield. We do not utilize anticipated investment income on our assets when evaluating the need for a PDR. The calculation of premium deficiency reserves requires the use of significant judgments and estimates to determine the present value of future premium and present value of expected losses and expenses in our business. The differences between the actual results and our estimates could vary materially. We completed a PDR analysis as of December 31, 2024 and 2023 and determined that no PDR was required. Reinsurance Premium revenue, losses and acquisition and operating expenses, net of deferrals, are reported net of the amounts relating to reinsurance ceded to other companies. The cost of reinsurance is accounted for over the terms of the related treaties using assumptions consistent with those used to account for the underlying reinsured policies. See Note 6 for details. Loss Reserves 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: (a) losses that have been reported to the insurer; (b) losses related to insured events that have occurred but that have not been reported to the insurer as of the date the liability is estimated; and (c) loss adjustment expenses (“LAE”). Loss adjustment expenses include costs incurred in the claim settlement process such as legal fees and costs to record, process and adjust claims. Consistent with U.S. GAAP and industry accounting practices, we do not establish loss reserves for future claims on insured loans that are not in default or believed to be in default. 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. 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. 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. Small changes in assumptions or small deviations of actual experience from assumptions can have, and in the past have had, material impacts on our reserves, results of operations and financial condition. We establish reserves to recognize the estimated liability for losses and LAE related to defaults on insured mortgage loans. Loss reserves are established by estimating the number of loans in our inventory of delinquent loans that will result in a claim payment, which is referred to as the claim rate, and further 109 ENACT HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years Ended December 31, 2024, 2023 and 2022 estimating the amount of the claim payment, which is referred to as claim severity. The estimates are determined using a factor-based approach, in which assumptions of claim rates for loans in default and the average amount paid for loans that result in a claim are calculated using traditional actuarial techniques. Over time, as the status of the underlying delinquent loans moves toward foreclosure and the likelihood of the associated claim loss increases, the amount of the loss reserves associated with the potential claims may also increase. Management monitors actual experience, and where circumstances warrant, will revise its assumptions. Our liability for loss reserves is reviewed regularly, with changes in our estimates of future claims recorded through net income. Estimation of losses are based on historical claim and cure experience and covered exposures and is inherently judgmental. Future developments may result in losses greater or less than the liability for loss reserves provided. Unearned Premiums Premiums written on single premium policies and annual premium policies are initially deferred as unearned premium reserve and earned over the policy life. A portion of the revenue from single premium policies is recognized in premiums earned in the current period, and the remaining portion is deferred as unearned premiums and earned over the estimated expiration of risk of the policy. 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. We periodically review our premium earnings recognition models with any adjustments to the estimates reflected as a cumulative adjustment on a retrospective basis in current period net income. 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. Share-Based Compensation Prior to our IPO, certain of our employees participated in Genworth’s incentive plans, under which our employees were granted share-based awards, including stock options. In 2021, we approved an incentive compensation plan that allows EHI to grant share-based awards to its employees and directors. For grants from both of these plans, compensation expense is recognized based on a grant date fair value, adjusted for expected forfeitures, through the income statement over the respective vesting period of the awards. See Note 10 for additional information related to share-based compensation. Employee Benefit Plans Our employees are provided a number of Genworth employee benefits. Genworth, as sponsor of these employee benefit plans, is ultimately responsible for maintenance of these plans in compliance with applicable laws. The plans are accounted for by Genworth in accordance with relevant accounting guidance. We account for these employee benefit plans as multiemployer benefit plans. Accordingly, we do not record an asset or liability to recognize the funded status of the employee benefit plans. Expenses related to employee benefits are included within acquisition and operating expenses, net of deferrals in the consolidated statements of income. See Note 9 for additional information related to employee benefits. Income Taxes We determine deferred tax assets and/or liabilities by multiplying the differences between the financial reporting and tax reporting bases for assets and liabilities by the enacted tax rates expected to be in effect when such differences are recovered or settled if there is no change in law. The effect on 110 ENACT HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years Ended December 31, 2024, 2023 and 2022 deferred taxes of a change in tax rates is recognized in net income (loss) in the period that includes the enactment date. Valuation allowances on deferred tax assets are estimated based on our assessment of the realizability of such amounts. We have elected to participate in a single U.S. consolidated income tax return filing (the “Genworth consolidated return”). All Genworth companies domesticated in the United States are included in the Genworth consolidated return as allowed by the tax law and regulations. We have a tax sharing agreement in place and all intercompany balances related to this agreement are settled at least annually. Refer to Note 8 for further details. Variable Interest Entities We are involved in certain entities that are considered variable interest entities (“VIEs”) as defined under U.S. GAAP, and, accordingly, we evaluate the VIE to determine whether we are the primary beneficiary and are required to consolidate the assets and liabilities of the entity. The primary beneficiary of a VIE is the enterprise that has the power to direct the activities of a VIE that most significantly impacts the VIE’s economic performance and has the obligation to absorb losses or receive benefits that could potentially be significant to the VIE. The determination of the primary beneficiary for a VIE can be complex and requires management judgment regarding the expected results of the entity and how those results are absorbed by variable interest holders, as well as which party has the power to direct activities that most significantly impact the performance of the VIEs. Our involvement with VIEs consists of excess-of-loss reinsurance agreements with special purpose insurers domiciled in Bermuda. These entities finance the reinsurance coverage by issuing mortgage insurance-linked notes to unaffiliated investors. The assets of the VIEs are deposited in reinsurance trusts for our benefit that will be the source of reinsurance claim payments. Our involvement with these VIEs does not result in the unilateral power to direct the activities that most significantly affect the VIEs’ economic performance or result in the obligation to absorb losses or the right to receive benefits. Accordingly, consolidation of the VIEs is not required. See Note 6 f or details. Leases Our leased assets are classified as operating leases and consist of office space in two locations in the United States. Lease payments included in the calculation of our lease liability include fixed amounts contained within each rental agreement and variable lease payments that are based upon an index or rate. We have elected to combine lease and non-lease components, as permitted under the accounting guidance, and as a result, non-lease components are included in the calculation of our lease liability as opposed to being separated and accounted for as consideration under revenue recognition accounting. The right-of-use asset and the lease liability are included in other assets and other liabilities, respectively. Accounting Pronouncements Adopted Segment Reporting For our reporting as of December 2024, we have adopted guidance under ASC 280 related to segment reporting disclosures. The update requires incremental disclosure around significant segment expenses, measures of segment profit or loss used by the chief operating decision maker (“CODM”) and the CODM’s use of these metrics. The guidance also requires segment disclosures for entities with a single reportable segment. See Note 17 for our added disclosure. Accounting Pronouncements Not Yet Adopted Income Tax Disclosure In December 2023, the Financial Accounting Standards Board (“FASB”) issued new accounting guidance to improve income tax disclosures. The guidance requires annual disclosure of specific categories in the income tax rate reconciliation, separate disclosure of additional information related to 111 ENACT HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years Ended December 31, 2024, 2023 and 2022 reconciling items that meet a quantitative threshold and additional disclosures about income taxes paid, among other qualitative and quantitative disclosure improvements. This guidance is effective for us for annual reporting periods beginning on January 1, 2025 using the prospective method, with early adoption permitted, which we do not intend to elect. The guidance will have no impact on our consolidated financial statements but will require expanded annual disclosures. We are currently evaluating the impact the guidance may have on our processes, controls and disclosures. Income Statement Disaggregation In November 2024, the FASB issued new accounting guidance to require disaggregated disclosures in the notes to the financial statements of certain categories of expenses included in our consolidated statements of income, including employee compensation, depreciation and intangible asset amortization. This guidance is effective for us for annual reporting periods beginning on January 1, 2027 and interim periods beginning on January 1, 2028 using the prospective or retrospective method, with early adoption permitted. We are currently evaluating the impact the guidance may have on our processes, controls and disclosures. (3) Investments Net Investment Income Sources of net investment income were as follows for the year ended December 31: (Amounts in thousands) 2024 2023 2022 Fixed maturity securities available-for-sale $ 214,647 $ 180,955 $ 153,649 Cash, cash equivalents and short-term investments 33,363 32,713 7,167 Gross investment income before expenses and fees 248,010 213,668 160,816 Investment expenses and fees ( 7,446 ) ( 6,299 ) ( 5,505 ) Net investment income $ 240,564 $ 207,369 $ 155,311 Net Investment Gains (Losses) The following table sets forth net investment gains (losses) for the years ended December 31: (Amounts in thousands) 2024 2023 2022 Fixed maturity securities available-for-sale: Gross realized gains $ 1,058 $ 42 $ 1,997 Gross realized (losses) ( 20,950 ) ( 14,064 ) ( 4,206 ) Net realized gains (losses) ( 19,892 ) ( 14,022 ) ( 2,209 ) Write-down of available-for-sale fixed maturity securities ( 2,757 ) — — Change in allowance for credit losses on commitment ( 158 ) — 173 Net investment gains (losses) $ ( 22,807 ) $ ( 14,022 ) $ ( 2,036 ) 112 ENACT HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years Ended December 31, 2024, 2023 and 2022 Unrealized Investment Gains (Losses) Net unrealized gains and losses on available-for-sale securities reflected as a separate component of accumulated other comprehensive income ("AOCI”) were as follows as of December 31: (Amounts in thousands) 2024 2023 2022 Net unrealized gains (losses) on investment securities: Fixed maturity securities $ ( 251,729 ) $ ( 293,745 ) $ ( 486,913 ) Short-term investments ( 3 ) — ( 30 ) Unrealized gains (losses) on investment securities ( 251,732 ) ( 293,745 ) ( 486,943 ) Income taxes 44,108 63,189 104,047 Net unrealized investment gains (losses) $ ( 207,624 ) $ ( 230,556 ) $ ( 382,896 ) The change in net unrealized gains (losses) on available-for-sale securities reported in accumulated other comprehensive income was as follows as of and for the years ended December 31: (Amounts in thousands) 2024 2023 2022 Beginning balance $ ( 230,556 ) $ ( 382,896 ) $ 83,588 Unrealized gains (losses) arising during the period: Unrealized gains (losses) on investment securities 19,364 179,177 ( 595,317 ) Provision for income taxes ( 14,325 ) ( 37,914 ) 127,088 Change in unrealized gains (losses) on investment securities 5,039 141,263 ( 468,229 ) Reclassification adjustments to net investment (gains) losses, net of taxes of $( 4,756 ), $( 2,945 ) and $( 464 ), respectively 17,893 11,077 1,745 Change in net unrealized investment gains (losses) 22,932 152,340 ( 466,484 ) Ending balance $ ( 207,624 ) $ ( 230,556 ) $ ( 382,896 ) Amounts reclassified out of accumulated other comprehensive income to net investment gains (losses) include realized gains (losses) on sales of securities, which are determined on a specific identification basis. 113 ENACT HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years Ended December 31, 2024, 2023 and 2022 Fixed Maturity Securities Available-For-Sale As of December 31, 2024, the amortized cost, gross unrealized gains (losses) and fair value of our investment securities were as follows: (Amounts in thousands) Amortized cost Gross unrealized gains Gross unrealized losses Fair value U.S. government, agencies and GSEs $ 281,858 $ 590 $ ( 5,085 ) $ 277,363 State and political subdivisions 541,715 1,388 ( 75,627 ) 467,476 Non-U.S. government 85,566 94 ( 1,858 ) 83,802 U.S. corporate 2,943,900 11,363 ( 129,584 ) 2,825,679 Non-U.S. corporate 800,141 2,533 ( 30,050 ) 772,624 Residential mortgage-backed 8,394 27 ( 57 ) 8,364 Other asset-backed 1,214,928 4,716 ( 30,179 ) 1,189,465 Total fixed maturity securities available-for-sale $ 5,876,502 $ 20,711 $ ( 272,440 ) $ 5,624,773 Short-term investments 3,370 1 ( 4 ) 3,367 Total investments $ 5,879,872 $ 20,712 $ ( 272,444 ) $ 5,628,140 As of December 31, 2023, the amortized cost, gross unrealized gains (losses) and fair value of our investment securities were as follows: (Amounts in thousands) Amortized cost Gross unrealized Gains Gross unrealized losses Fair value U.S. government, agencies and GSEs $ 194,824 $ 1,196 $ ( 891 ) $ 195,129 State and political subdivisions 511,906 2,091 ( 75,783 ) 438,214 Non-U.S. government 12,338 16 ( 887 ) 11,467 U.S. corporate 2,858,445 19,839 ( 154,554 ) 2,723,730 Non-U.S. corporate 725,163 4,288 ( 39,788 ) 689,663 Residential mortgage-backed 10,781 38 ( 64 ) 10,755 Other asset-backed 1,246,429 2,848 ( 52,094 ) 1,197,183 Total fixed maturity securities available-for-sale $ 5,559,886 $ 30,316 $ ( 324,061 ) $ 5,266,141 Short-term investments 20,219 1 ( 1 ) 20,219 Total investments $ 5,580,105 $ 30,317 $ ( 324,062 ) $ 5,286,360 There was no allowance for credit losses recorded on fixed maturity securities classified as available-for-sale as of December 31, 2024 or December 31, 2023. Gross Unrealized Losses and Fair Values of Fixed Maturity Securities Available-For-Sale The following table presents the gross unrealized losses and fair values of our fixed maturity securities for which an allowance for credit losses has not been recorded, aggregated by investment type 114 ENACT HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years Ended December 31, 2024, 2023 and 2022 and length of time that individual fixed maturity securities have been in a continuous unrealized loss position, as of December 31, 2024: Less than 12 months 12 months or more Total (Amounts in thousands) Fair value Gross unrealized losses Number of securities Fair value Gross unrealized losses Number of securities Fair value Gross unrealized losses Number of securities Fixed maturity securities: U.S. government, agencies and GSEs $ 157,596 $ ( 4,704 ) 32 $ 19,998 $ ( 381 ) 9 $ 177,594 $ ( 5,085 ) 41 State and political subdivisions 48,280 ( 2,366 ) 17 396,638 ( 73,261 ) 84 444,918 ( 75,627 ) 101 Non-U.S. government 56,631 ( 1,236 ) 76 9,692 ( 622 ) 1 66,323 ( 1,858 ) 77 U.S. corporate 881,643 ( 20,844 ) 265 1,379,860 ( 108,740 ) 264 2,261,503 ( 129,584 ) 529 Non-U.S. corporate 195,648 ( 4,015 ) 102 385,508 ( 26,035 ) 74 581,156 ( 30,050 ) 176 Residential mortgage-backed 3,313 ( 31 ) 3 2,822 ( 26 ) 4 6,135 ( 57 ) 7 Other asset-backed 101,549 ( 1,168 ) 49 527,531 ( 29,011 ) 130 629,080 ( 30,179 ) 179 Total for fixed maturity securities in an unrealized loss position $ 1,444,660 $ ( 34,364 ) 544 $ 2,722,049 $ ( 238,076 ) 566 $ 4,166,709 $ ( 272,440 ) 1,110 We did not recognize an allowance for credit losses on securities in an unrealized loss position included in the table above. Based on a qualitative and quantitative review of the issuers of the securities, we believe the unrealized losses are largely due to changes in interest rates and recent market volatility and are not indicative of credit losses. The issuers continue to make timely principal and interest payments. For all securities in an unrealized loss position without an allowance for credit losses, we expect to recover the amortized cost based on our estimate of the amount and timing of cash flows to be collected. We do not intend to sell, nor do we expect that we will be required to sell, these securities prior to recovering our amortized cost. The following table presents the gross unrealized losses and fair values of our fixed maturity securities, aggregated by investment type and length of time that individual fixed maturity securities have been in a continuous unrealized loss position, as of December 31, 2023: Less than 12 months 12 months or more Total (Amounts in thousands) Fair value Gross unrealized losses Number of securities Fair value Gross unrealized losses Number of securities Fair value Gross unrealized losses Number of securities Fixed maturity securities: U.S. government, agencies and GSEs $ 6,259 $ ( 55 ) 3 $ 27,942 $ ( 836 ) 13 $ 34,201 $ ( 891 ) 16 State and political subdivisions 1,457 ( 3 ) 2 411,133 ( 75,780 ) 85 412,590 ( 75,783 ) 87 Non-U.S. government — — — 9,575 ( 887 ) 1 9,575 ( 887 ) 1 U.S. corporate 146,268 ( 4,236 ) 37 2,019,843 ( 150,318 ) 408 2,166,111 ( 154,554 ) 445 Non-U.S. corporate 19,369 ( 102 ) 5 521,442 ( 39,686 ) 121 540,811 ( 39,788 ) 126 Residential mortgage-backed 2,060 ( 2 ) 1 5,044 ( 62 ) 4 7,104 ( 64 ) 5 Other asset-backed 102,544 ( 424 ) 41 806,521 ( 51,670 ) 192 909,065 ( 52,094 ) 233 Total for fixed maturity securities in an unrealized loss position $ 277,957 $ ( 4,822 ) 89 $ 3,801,500 $ ( 319,239 ) 824 $ 4,079,457 $ ( 324,061 ) 913 115 ENACT HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years Ended December 31, 2024, 2023 and 2022 Contractual Maturities of Fixed Maturity Securities Available-For-Sale The scheduled maturity distribution of fixed maturity securities as of December 31, 2024, is set forth below. Actual maturities may differ from contractual maturities because issuers of securities may have the right to call or prepay obligations with or without call or prepayment penalties. (Amounts in thousands) Amortized cost Fair value Due one year or less $ 329,477 $ 328,172 Due after one year through five years 1,808,389 1,724,875 Due after five years through ten years 2,063,157 1,936,802 Due after ten years 452,157 437,095 Subtotal 4,653,180 4,426,944 Residential mortgage-backed 8,394 8,364 Other asset-backed 1,214,928 1,189,465 Total fixed maturity securities available-for-sale $ 5,876,502 $ 5,624,773 As of December 31, 2024, securities issued by the finance and insurance, utilities, technology and communications, consumer-non-cyclical and energy industry groups represented approximately 32 %, 13 %, 11 %, 11 %, and 10 % respectively, of our domestic and foreign corporate fixed maturity securities portfolio. No other industry group comprised more than 9% of our investment portfolio. As of December 31, 2024 and 2023, we did not hold any fixed maturity securities in any single issuer, other than securities issued or guaranteed by the U.S. government, which exceeded 10% of equity. As of December 31, 2024 and 2023, $ 25.7 million of securities in our portfolio were on deposit with various state insurance commissioners in order to comply with relevant insurance regulations. In connection with its reinsurance activities, the Company is required to maintain assets in trusts for the benefit of its contractual counterparties. The fair value of the assets on deposit in these trusts was $ 141.9 million as of December 31, 2024, and $ 77.9 million as of December 31, 2023. During 2024, the Company entered into an agreement to invest in a limited partnership with an expected term of ten years . As of December 31, 2024, there are no balances outstanding related to this limited partnership, but we have committed to fund approximately $ 10 million over the life of the fund. (4) Fair Value Recurring Fair Value Measurements We hold fixed maturity securities and short-term investments, which are carried at fair value. The fair value of fixed maturity securities and short-term investments are estimated primarily based on information derived from third-party pricing services (“pricing services”), broker quotes and/or internal models, which use a market approach, income approach or a combination of the market and income approach depending on the type of instrument and availability of information. In general, a market approach is utilized if there is readily available and relevant market activity for an individual security. In certain cases where market information is not available for a specific security but is available for similar securities, that security is valued using market information for similar securities, which is also a market approach. When market information is not available for a specific security (or similar securities) or is available but such information is less relevant or reliable, an income approach or a combination of a market and income approach is utilized. For securities with optionality, such as call or prepayment features (including asset-backed securities), an income or combination approach may be used. These valuation techniques may change from period to period, based on the relevance and availability of market data. 116 ENACT HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years Ended December 31, 2024, 2023 and 2022 Further, while we consider the valuations provided by pricing services and broker quotes to be of high quality, management determines the fair value of our investment securities after considering all relevant and available information. In general, we first obtain valuations from pricing services. If prices are unavailable for public securities, we obtain broker quotes. For all securities, excluding certain private fixed maturity securities, if neither a pricing service nor broker quotes valuation is available, we determine fair value using internal models. For certain private fixed maturity securities where we do not obtain valuations from pricing services, we utilize an internal model to determine fair value since transactions for similar securities are not readily observable and these securities are not typically valued by pricing services. Given our understanding of the pricing methodologies and procedures of pricing services, the securities valued by pricing services are typically classified as Level 2 unless we determine the valuation process for a security or group of securities utilizes significant unobservable inputs, which would result in the valuation being classified as Level 3. Broker quotes are typically based on an income approach given the lack of available market data. As the valuation typically includes significant unobservable inputs, we classify the securities where fair value is based on our consideration of broker quotes as Level 3 measurements. For private fixed maturity securities, we utilize an income approach where we obtain public bond spreads and utilize those in an internal model to determine fair value. Other inputs to the model include rating and weighted-average life, as well as sector which is used to assign the spread. We then add an additional premium, which represents an unobservable input, to the public bond spread to adjust for the liquidity and other features of our private placements. We utilize the estimated market yield to discount the expected cash flows of the security to determine fair value. We utilize price caps for securities where the estimated market yield results in a valuation that may exceed the amount that would be received in a market transaction. When a security does not have an external rating, we assign the security an internal rating to determine the appropriate public bond spread that should be utilized in the valuation. While we generally consider the public bond spreads by sector and maturity to be observable inputs, we evaluate the similarities of our private placement with the public bonds, any price caps utilized, liquidity premiums applied, and whether external ratings are available for our private placements to determine whether the spreads utilized would be considered observable inputs, leading to a classification of Level 2. We classify private securities without an external rating or public bond spread as Level 3. In general, a significant increase (decrease) in credit spreads would have resulted in a significant decrease (increase) in the fair value for our fixed maturity securities as of December 31, 2024. For remaining securities priced using internal models, we determine fair value using an income approach. We maximize the use of observable inputs but typically utilize significant unobservable inputs to determine fair value. Accordingly, the valuations are typically classified as Level 3. Our assessment of whether or not there were significant unobservable inputs related to fixed maturity securities was based on our observations obtained through the course of managing our investment portfolio, including interaction with other market participants, observations related to the availability and consistency of pricing and/or rating, and understanding of general market activity such as new issuance and the level of secondary market trading for a class of securities. Additionally, we considered data obtained from pricing services to determine whether our estimated values incorporate significant unobservable inputs that would result in the valuation being classified as Level 3. A summary of the inputs used for our fixed maturity securities and short-term investments based on the level in which instruments are classified is included below. We have combined certain classes of instruments together as the nature of the inputs is similar. Level 1 measurements There were no fixed maturity securities classified as Level 1 as of December 31, 2024 and 2023. 117 ENACT HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years Ended December 31, 2024, 2023 and 2022 Level 2 measurements Fixed maturity securities: Third-party pricing services In estimating the fair value of fixed maturity securities, approximately 91 % of our portfolio was priced using third-party pricing services as of December 31, 2024. These pricing services utilize industry-standard valuation techniques that include market-based approaches, income-based approaches, a combination of market-based and income-based approaches or other proprietary, internally generated models as part of the valuation processes. These third-party pricing vendors maximize the use of publicly available data inputs to generate valuations for each asset class. Priority and type of inputs used may change frequently as certain inputs may be more direct drivers of valuation at the time of pricing. Examples of significant inputs incorporated by pricing services may include sector and issuer spreads, seasoning, capital structure, security optionality, collateral data, prepayment assumptions, default assumptions, delinquencies, debt covenants, benchmark yields, trade data, dealer quotes, credit ratings, maturity and weighted-average life. We conduct regular meetings with our pricing services for the purpose of understanding the methodologies, techniques and inputs used by the third-party pricing providers. The following table presents a summary of the significant inputs used by our pricing services for certain fair value measurements of fixed maturity securities that are classified as Level 2 as of December 31, 2024: (Amounts in thousands) Fair value Primary methodologies Significant inputs U.S. government, agencies and GSEs $ 277,363 Price quotes from trading desk, broker feeds Bid side prices, trade prices, Option Adjusted Spread (“OAS”) to swap curve, Bond Market Association OAS, Treasury Curve, Agency Bullet Curve, maturity to issuer spread State and political subdivisions $ 467,476 Multi-dimensional attribute-based modeling systems, third-party pricing vendors Trade prices, material event notices, Municipal Market Data benchmark yields, broker quotes Non-U.S. government $ 83,802 Matrix pricing, spread priced to benchmark curves, price quotes from market makers Benchmark yields, trade prices, broker quotes, comparative transactions, issuer spreads, bid-offer spread, market research publications, third-party pricing sources U.S. corporate $ 2,422,075 Multi-dimensional attribute-based modeling systems, broker quotes, price quotes from market makers, internal models, OAS-based models Bid side prices to Treasury Curve, Issuer Curve, which includes sector, quality, duration, OAS percentage and change for spread matrix, trade prices, comparative transactions, Trade Reporting and Compliance Engine (“TRACE”) reports Non-U.S. corporate $ 652,427 Multi-dimensional attribute-based modeling systems, OAS-based models, price quotes from market makers Benchmark yields, trade prices, broker quotes, comparative transactions, issuer spreads, bid-offer spread, market research publications, third-party pricing sources 118 ENACT HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years Ended December 31, 2024, 2023 and 2022 Residential mortgage-backed $ 8,364 OAS-based models, single factor binomial models, internally priced Prepayment and default assumptions, aggregation of bonds with similar characteristics, including collateral type, vintage, tranche type, weighted-average life, weighted-average loan age, issuer program and delinquency ratio, pay up and pay down factors, TRACE reports Other asset-backed $ 1,187,263 Multi-dimensional attribute-based modeling systems, spread matrix priced to swap curves, price quotes from market makers Spreads to daily updated swap curves, spreads derived from trade prices and broker quotes, bid side prices, new issue data, collateral performance, analysis of prepayment speeds, cash flows, collateral loss analytics, historical issue analysis, trade data from market makers, TRACE reports Internal models A portion of our Level 2 U.S. corporate and non-U.S. corporate securities are valued using internal models. The fair value of these fixed maturity securities was $ 180.8 million and $ 63.6 million, respectively, as of December 31, 2024. Internally modeled securities are primarily private fixed maturity securities where we use market observable inputs such as an interest rate yield curve, published credit spreads for similar securities based on the external ratings of the instrument and related industry sector of the issuer. Additionally, we may apply certain price caps and liquidity premiums in the valuation of private fixed maturity securities. Price caps and liquidity premiums are established using inputs from market participants. Short-term investments: The fair value of short-term investments classified as Level 2 is determined after considering prices obtained by pricing services. Level 3 measurements Broker quotes A portion of our non-U.S. corporate and other asset-backed securities are valued using broker quotes. Broker quotes are obtained from third-party providers that have current market knowledge to provide a reasonable price for securities not routinely priced by pricing services. Brokers utilized for valuation of assets are reviewed annually. The fair value of our Level 3 fixed maturity securities priced by broker quotes was $ 12.5 million as of December 31, 2024. Internal models A portion of our U.S. corporate and non-U.S. corporate securities are valued using internal models. The primary inputs to the valuation of the bond population include quoted prices for identical assets, or similar assets in markets that are not active, contractual cash flows, duration, call provisions, issuer rating, benchmark yields and credit spreads. Certain private fixed maturity securities are valued using an internal model using market observable inputs such as the interest rate yield curve, as well as published credit spreads for similar securities, which includes significant unobservable inputs. Additionally, we may apply certain price caps and liquidity premiums in the valuation of private fixed maturity securities. Price caps are established using inputs from market participants. For structured securities, the primary inputs to the valuation include quoted prices for identical assets, or similar assets in markets that are not active, contractual cash flows, weighted-average coupon, weighted-average maturity, issuer rating, structure of the security, expected prepayment speeds and volumes, collateral type, current and forecasted loss severity, average delinquency rates, vintage of the loans, geographic region, debt service coverage 119 ENACT HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years Ended December 31, 2024, 2023 and 2022 ratios, payment priority with the tranche, benchmark yields and credit spreads. The fair value of our Level 3 fixed maturity securities priced using internal models was $ 269.1 million as of December 31, 2024. The following tables set forth our assets by class of instrument that are measured at fair value on a recurring basis as of December 31: 2024 (Amounts in thousands) Total Level 1 Level 2 Level 3 Fixed maturity securities: U.S. government, agencies and GSEs $ 277,363 $ — $ 277,363 $ — State and political subdivisions 467,476 — 467,476 — Non-U.S. government 83,802 — 83,802 — U.S. corporate 2,825,679 — 2,602,893 222,786 Non-U.S. corporate 772,624 — 716,071 56,553 Residential mortgage-backed 8,364 — 8,364 — Other asset-backed 1,189,465 — 1,187,263 2,202 Total fixed maturity securities 5,624,773 — 5,343,232 281,541 Short-term investments 3,367 — 3,367 — Total $ 5,628,140 $ — $ 5,346,599 $ 281,541 2023 (Amounts in thousands) Total Level 1 Level 2 Level 3 Fixed maturity securities: U.S. government, agencies and GSEs $ 195,129 $ — $ 195,129 $ — State and political subdivisions 438,214 — 438,214 — Non-U.S. government 11,467 — 11,467 — U.S. corporate 2,723,730 — 2,476,525 247,205 Non-U.S. corporate 689,663 — 608,342 81,321 Residential mortgage-backed 10,755 — 10,755 — Other asset-backed 1,197,183 — 1,194,225 2,958 Total fixed maturity securities 5,266,141 — 4,934,657 331,484 Short-term investments 20,219 — 20,219 — Total $ 5,286,360 $ — $ 4,954,876 $ 331,484 We had no liabilities recorded at fair value as of December 31, 2024 and 2023. 120 ENACT HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years Ended December 31, 2024, 2023 and 2022 The following tables present additional information about assets measured at fair value on a recurring basis and for which we have utilized significant unobservable (Level 3) inputs to determine fair value as of or for the dates indicated: (Amounts in thousands) Beginning balance as of January 1, 2024 Total realized and unrealized gains (losses) Ending balance as of December 31, 2024 Total gains (losses) attributable to assets still held Included in net income Included in OCI Purchases Sales Settlements Transfer into Level 3 (1) Transfer out of Level 3 (1) Included in net income Included in OCI Fixed maturity securities: U.S. corporate $ 247,205 $ ( 7,295 ) $ 9,136 $ — $ ( 1,739 ) $ ( 15,580 ) $ 4,651 $ ( 13,592 ) $ 222,786 $ 307 $ ( 485 ) Non-U.S. corporate 81,321 ( 3,958 ) 1,551 6,000 ( 17,946 ) ( 7,421 ) — ( 2,994 ) 56,553 ( 2,699 ) ( 168 ) Other asset-backed 2,958 34 266 23,183 — ( 333 ) — ( 23,906 ) 2,202 34 29 Total $ 331,484 $ ( 11,219 ) $ 10,953 $ 29,183 $ ( 19,685 ) $ ( 23,334 ) $ 4,651 $ ( 40,492 ) $ 281,541 $ ( 2,358 ) $ ( 624 ) _______________ (1) The transfers into and out of Level 3 for fixed maturity securities were related to changes in the primary pricing source and changes in the observability of external information used in determining the fair value, such as external ratings or credit spreads. Beginning balance as of January 1, 2023 Total realized and unrealized gains (losses) Ending balance as of December 31, 2023 Total gains (losses) attributable to assets still held (Amounts in thousands) Included in net income Included in OCI Purchases Sales Settlements Transfer into Level 3 (1) Transfer out of Level 3 (1) Included in net income Included in OCI Fixed maturity securities: U.S. corporate $ 220,626 $ ( 36 ) $ 9,266 $ 39,001 $ ( 6,901 ) $ ( 14,751 ) $ — $ — $ 247,205 $ ( 31 ) $ 8,156 Non-U.S. corporate 95,154 ( 703 ) 3,323 6,759 ( 3,543 ) ( 23,598 ) 11,377 ( 7,448 ) 81,321 30 2,232 Other asset-backed 3,481 32 ( 67 ) 13,696 ( 1 ) ( 176 ) — ( 14,007 ) 2,958 19 ( 11 ) Total $ 319,261 $ ( 707 ) $ 12,522 $ 59,456 $ ( 10,445 ) $ ( 38,525 ) $ 11,377 $ ( 21,455 ) $ 331,484 $ 18 $ 10,377 _______________ (1) The transfers into and out of Level 3 for fixed maturity securities were related to changes in the primary pricing source and changes in the observability of external information used in determining the fair value, such as external ratings or credit spreads. Beginning balance as of January 1, 2022 Total realized and unrealized gains (losses) Ending balance as of December 31, 2022 Total gains (losses) attributable to assets still held (Amounts in thousands) Included in net income Included in OCI Purchases Sales Settlements Transfer into Level 3 (1) Transfer out of Level 3 (1) Included in net income Included in OCI Fixed maturity securities: U.S. corporate $ 220,733 $ ( 54 ) $ ( 35,762 ) $ 54,969 $ ( 5,000 ) $ ( 850 ) $ — $ ( 13,410 ) $ 220,626 $ ( 54 ) $ ( 35,390 ) Non-U.S. corporate 83,664 ( 330 ) ( 10,341 ) 24,687 — ( 10,422 ) 11,615 ( 3,719 ) 95,154 ( 329 ) ( 10,049 ) Other asset-backed 24,223 3 ( 1,996 ) 26,295 — — — ( 45,044 ) 3,481 2 ( 119 ) Total $ 328,620 $ ( 381 ) $ ( 48,099 ) $ 105,951 $ ( 5,000 ) $ ( 11,272 ) $ 11,615 $ ( 62,173 ) $ 319,261 $ ( 381 ) $ ( 45,558 ) _______________ (1) The transfers into and out of Level 3 for fixed maturity securities were related to changes in the primary pricing source and changes in the observability of external information used in determining the fair value, such as external ratings or credit spreads. Purchases, sales and settlements represent the activity that occurred during the period that results in a change of the asset but does not represent changes in fair value for the instruments held at the beginning of the period. The amount presented for realized and unrealized gains (losses) included in net income for fixed maturity securities primarily represents amortization and accretion of premiums and discounts on certain fixed maturity securities recorded within net investment income. 121 ENACT HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years Ended December 31, 2024, 2023 and 2022 The following table presents a summary of the significant unobservable inputs used for certain asset fair value measurements that are based on internal models and classified as Level 3 as of December 31, 2024: (Dollar amounts in thousands) Valuation technique Fair value (1) Unobservable input Range (bps) Weighted-average (2) (bps) Fixed maturity securities: U.S. corporate Internal models $ 222,786 Credit spreads 14 - 151 91 Non-U.S. corporate Internal models $ 46,267 Credit spreads 81 - 123 101 _______________ (1) Certain classes of instruments classified as Level 3 are excluded as a result of not being material or due to limitations in being able to obtain the underlying inputs used by certain third-party sources, such as broker quotes, used as an input in determining fair value. (2) Unobservable inputs weighted by the relative fair value of the associated instrument. Liabilities not required to be carried at fair value We have certain financial instruments that are not recorded at fair value, including cash and cash equivalents and accrued investment income, the carrying value of which approximate fair value due to the short-term nature of these instruments and are not included in this disclosure. The following represents our estimated fair value of financial liabilities that are not required to be carried at fair value, classified as Level 2, as of the dates indicated: December 31, 2024 2023 (Amounts in thousands) Carrying amount Fair value Carrying amount Fair value Long-term borrowings $ 743,050 $ 764,070 $ 745,416 $ 748,785 (5) Loss reserves Our reserve for losses and loss adjustment expenses (“LAE”) consisted of the following as of the dates indicated: (Amounts in thousands) December 31, 2024 December 31, 2023 Domestic mortgage insurance $ 520,032 $ 517,515 Other reserves and run-off 4,683 676 Total loss reserves $ 524,715 $ 518,191 122 ENACT HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years Ended December 31, 2024, 2023 and 2022 Activity for the liability for domestic mortgage insurance loss reserves is summarized as follows: (Amounts in thousands) 2024 2023 2022 Loss reserves, beginning of year $ 517,515 $ 518,330 $ 640,644 Reinsurance recoverable, beginning of year ( 1,294 ) — — Net loss reserves, beginning of year 516,221 518,330 640,644 Losses incurred related to current accident year 289,482 275,418 219,461 Losses incurred related to prior accident years ( 258,180 ) ( 248,214 ) ( 313,652 ) Total incurred (1) 31,302 27,204 ( 94,191 ) Losses paid related to current accident year ( 216 ) 150 ( 352 ) Losses paid related to prior accident years ( 30,184 ) ( 29,463 ) ( 27,771 ) Total paid (1) ( 30,400 ) ( 29,313 ) ( 28,123 ) Net loss reserves, end of year 517,123 516,221 518,330 Reinsurance recoverable, end of year 2,909 1,294 — Loss reserves, end of year $ 520,032 $ 517,515 $ 518,330 _______________ (1) Losses and LAE incurred related to our domestic mortgage insurance. The liability for loss reserves 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 be significant and result in future increases to reserves by amounts that could be material to our results of operations, financial condition and liquidity. Losses incurred related to insured events of the current accident year relate to defaults that occurred in that year and represent the estimated ultimate amount of losses to be paid on such defaults. Losses incurred related to insured events of prior accident years represent the (favorable) or unfavorable development of reserves as a result of actual claim rates and claim amounts being different than those we estimated when originally establishing the reserves. Such estimates are based on our historical experience which we believe is representative of expected future losses at the time of estimation. As a result of the extended period of time that may exist between the reporting of a delinquency and the claim payment, as well as changes in economic conditions and the real estate market, significant uncertainty and variability exist on amounts ultimately paid. We recorded losses and LAE incurred of $ 289.5 million, $ 275.4 million and $ 219.5 million related to the current accident year for the years ended December 2024, 2023 and 2022, respectively. Losses related to insured events of the current accident year in all periods presented were primarily attributable to new delinquencies. Losses in 2022 were also impacted by $ 46 million of reserve strengthening on current year delinquencies. A portion of delinquencies in the periods presented were from borrowers participating in deferred or reduced payments (“forbearance”) as a result of COVID-19. When establishing loss reserves for borrowers in forbearance from 2020 to 2022, we assumed a lower rate of delinquencies becoming active claims, which had the effect of producing a lower reserve compared to delinquencies that were not in forbearance. Historical experience with localized natural disasters, such as hurricanes, indicates a higher cure rate for borrowers in forbearance. Loss reserves recorded on these new delinquencies had a high degree of estimation due to the level of uncertainty regarding whether delinquencies in forbearance would ultimately cure or result in claim payments as well as the timing and severity of those payments. During 2024, we experienced favorable reserve development of $ 258 million in incurred losses primarily on prior accident year reserves, as a result of strong cure performance and loss mitigation 123 ENACT HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years Ended December 31, 2024, 2023 and 2022 efforts. The change was primarily attributable to $ 252 million in favorable reserve adjustments, which almost exclusively related to prior periods. During 2023, we experienced favorable reserve development of $ 248 million primarily driven by cure performance of delinquencies from 2022 and earlier, including those related to COVID-19 as well as delinquencies from early 2022. The change was primarily attributable to $ 241 million in favorable reserve adjustments, which almost exclusively related to prior periods. During 2022, we experienced favorable reserve development of $ 314 million in incurred losses attributable to prior years, primarily from better-than-expected cure performance on COVID-19 delinquencies from 2020 and 2021. The change was almost exclusively attributable to $ 314 million in favorable reserve adjustments. The following table sets forth information about incurred claims, as well as cumulative number of reported delinquencies and the total of incurred-but-not-reported (“IBNR”) liabilities plus expected development on reported claims included within the net incurred claims as of December 31, 2024. The information about the incurred claims development for the years ended December 31, 2015 to 2024, is presented as supplementary information. (Dollar amounts in thousands) Incurred claims and allocated loss adjustment expenses, net of reinsurance (2) Total IBNR liabilities including expected development on reported claims as of December 31, 2024 Number of reported delinquencies (3) For the years ended December 31, Accident year (1) 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Unaudited 2015 $ 235,251 $ 208,149 $ 186,077 $ 180,923 $ 179,650 $ 179,599 $ 179,258 $ 178,664 $ 177,938 $ 177,522 $ 88 15,400 2016 — 198,121 161,041 138,784 136,381 136,754 136,258 135,199 133,566 132,008 114 13,970 2017 — — 170,713 120,568 101,755 105,079 103,565 101,419 98,700 96,725 126 15,097 2018 — — — 116,842 83,959 84,138 78,367 73,164 69,525 65,707 125 11,269 2019 — — — — 105,734 111,089 97,490 71,053 58,876 51,641 118 11,883 2020 — — — — — 364,547 362,347 107,337 49,020 34,833 281 38,863 2021 — — — — — — 141,225 119,364 36,628 19,617 194 12,585 2022 — — — — — — — 219,461 137,164 44,196 439 14,329 2023 — — — — — — — — 275,417 161,580 872 15,851 2024 — — — — — — — — — 289,481 34,697 18,847 Total incurred $ 1,073,310 $ 37,054 _______________ (1) Represents the year in which first monthly mortgage payments have been missed by the borrower. (2) Incurred claims and allocated LAE related to domestic mortgage insurance. (3) Represents reported and outstanding delinquencies less actual cures as of December 31 for each respective accident year. 124 ENACT HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years Ended December 31, 2024, 2023 and 2022 The following table sets forth paid claims development, net of reinsurance, for the year ended December 31, 2024, and a reconciliation to our total loss reserves as of December 31, 2024. The information about paid claims development for the years ended December 31, 2015 to 2024, is presented as supplementary information. (Amounts in thousands) Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance (2) Accident year (1) For the years ended December 31, 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Unaudited 2015 $ 12,688 $ 84,706 $ 145,362 $ 167,458 $ 172,825 $ 174,561 $ 175,513 $ 176,433 $ 176,820 $ 176,965 2016 — 9,593 63,585 109,793 123,800 126,893 128,160 129,267 130,475 130,833 2017 — — 5,733 45,879 77,297 87,272 89,896 92,079 93,576 94,155 2018 — — — 3,134 31,625 48,183 55,267 59,046 62,010 62,745 2019 — — — — 1,871 17,595 30,728 38,283 43,425 45,502 2020 — — — — — 1,104 8,268 12,854 19,403 23,979 2021 — — — — — — 237 2,192 7,310 10,374 2022 — — — — — — — 352 4,276 12,349 2023 — — — — — — — — ( 150 ) 7,748 2024 — — — — — — — — — 217 Total paid $ 564,867 Total incurred $ 1,073,310 Total paid 564,867 All outstanding liabilities before 2015, net of reinsurance 8,680 Net loss reserves $ 517,123 _______________ (1) Represents the year in which first monthly mortgage payments have been missed by the borrower. (2) Cumulative paid claims and allocated claim adjustment expenses related to domestic mortgage insurance. The following table sets forth our average payout of incurred claims by age as of December 31, 2024: Average annual percentage payout of incurred claims, net of reinsurance, by age (unaudited) (1) Years 1 2 3 4 5 6 7 8 9 10 Percentage of payout 3.4 % 26.8 % 26.2 % 13.3 % 6.2 % 2.5 % 1.0 % 0.7 % 0.2 % 0.1 % _______________ (1) Relates to domestic mortgage insurance. (6) Reinsurance We reinsure a portion of our policy risks to third parties in order to reduce our ultimate losses, diversify our exposures and comply with regulatory requirements. We also assume certain policy risks written by other companies. Reinsurance does not relieve us from our obligations to policyholders. In the event that the reinsurers are unable to meet their obligations, we remain liable for the reinsured claims. We monitor both the financial condition of individual reinsurers and risk concentrations arising from similar geographic regions, activities and economic characteristics of reinsurers to lessen the risk of default by such reinsurers. 125 ENACT HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years Ended December 31, 2024, 2023 and 2022 The following table sets forth the effects of reinsurance on premiums written and earned for the years ended December 31: (Amounts in thousands) 2024 2023 2022 Net premiums written: Direct $ 1,040,954 $ 988,491 $ 975,351 Assumed 19,182 1,809 259 Ceded ( 114,682 ) ( 86,611 ) ( 79,750 ) Net premiums written $ 945,454 $ 903,689 $ 895,860 Net premiums earned: Direct $ 1,075,604 $ 1,041,877 $ 1,018,953 Assumed 19,182 1,809 259 Ceded ( 114,682 ) ( 86,611 ) ( 79,750 ) Net premiums earned $ 980,104 $ 957,075 $ 939,462 The difference of $ 34.7 million between written premiums of $ 945.5 million and earned premiums of $ 980.1 million represents the decrease in unearned premiums for the year ended December 31, 2024. The decrease in unearned premiums was mainly the result of premiums recognized via the earnings curve and low originations related to our single-premium product. Assumed premium as a percentage of net premium earned is 2.0 %, 0.2 % and 0.0 % for the years ended December 31, 2024, 2023, and 2022, respectively. Excess-of-loss reinsurance We engage in excess-of-loss (“XOL”) insurance transactions either through a panel of traditional reinsurance providers or through collateralized reinsurance with unaffiliated special purpose insurers (“Triangle Re Entities”). During the respective coverage periods of these agreements, EMICO retains the first layer of aggregate loss exposure on covered policies while the reinsurer provides the second layer of coverage, up to the defined reinsurance coverage amount. EMICO retains losses in excess of the respective reinsurance coverage amount. The Triangle Re Entities fully collateralize their coverage by issuing insurance-linked notes (“ILNs”) to eligible capital market investors in unregistered private offerings. Traditional reinsurance providers collateralize a portion of their coverage by holding funds in trust. We believe that the risk transfer requirements for reinsurance accounting were met as these XOL insurance transactions assume significant insurance risk and a reasonable possibility of significant loss. EMICO has rights to terminate the ILNs or traditional XOL reinsurance agreements upon the occurrence of certain events. 126 ENACT HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years Ended December 31, 2024, 2023 and 2022 The following table presents the issue date, policy dates, initial and current first layer retained aggregate loss and initial and current reinsurance coverage amount under each reinsurance transaction. Current amounts are presented as of December 31, 2024: Mortgage insurance-linked notes (Amounts in millions) Issue date Policy dates Initial first layer retained loss Current first layer retained loss Initial reinsurance coverage Current reinsurance coverage Triangle Re 2021-2 Ltd. 4/16/2021 9/01/2020 - 12/31/2020 $ 189 $ 187 $ 303 $ 118 Triangle Re 2021-3 Ltd. 9/02/2021 1/01/2021 - 6/30/2021 $ 304 $ 301 $ 372 $ 180 Triangle Re 2023-1 Ltd. 11/15/2023 7/01/2022 - 6/30/2023 $ 244 $ 244 $ 248 $ 232 Total $ 530 Traditional excess-of-loss reinsurance (Amounts in millions) Issue date Policy dates Initial first layer retained loss Current first layer retained loss Initial reinsurance coverage Current reinsurance coverage 2021 XOL 2/04/2021 1/01/2021 - 12/31/2021 $ 671 $ 665 $ 206 $ 91 2022-1 XOL 1/27/2022 1/01/2022 - 12/31/2022 $ 462 $ 454 $ 196 $ 170 2022-2 XOL 1/27/2022 1/01/2022 - 12/31/2022 $ 385 $ 377 $ 25 $ 25 2022-3 XOL 3/24/2022 7/01/2021 - 12/31/2021 $ 317 $ 313 $ 289 $ 163 2022-4 XOL 3/24/2022 7/01/2021 - 12/31/2021 $ 264 $ 260 $ 36 $ 36 2022-5 XOL 9/15/2022 1/01/2022 - 6/30/2022 $ 256 $ 251 $ 201 $ 162 2023-1 XOL 3/08/2023 1/01/2023 - 12/31/2023 $ 360 $ 359 $ 180 $ 180 2024-1 XOL 1/30/2024 1/01/2024 - 12/31/2024 $ 362 $ 362 $ 270 $ 270 2024-2 XOL 6/25/2024 7/01/2023 -12/31/2023 $ 134 $ 134 $ 90 $ 90 Total $ 1,187 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 coverage of approximately $ 225 million and $ 260 million, respectively. Quota Share Reinsurance EMICO engages in quota share reinsurance agreements with a panel of third-party reinsurers. Under the agreements, we cede a percentage of premiums earned, claims and claims expenses on eligible policies. The agreements also include a specific ceding commission and a profit commission determined based on ceded claims. EMICO has rights to terminate the reinsurance agreements upon the occurrence of certain events. Reinsurance recoverables are recorded in Other assets on the consolidated balance sheets. Agreement Issue date Policy dates Ceding percentage Ceding commission Profit commission QS 2023-1 6/30/2023 1/01/2023 - 12/31/2023 16.125 % 20 % up to 55 % QS 2024-1 1/03/2024 1/01/2024 - 12/31/2024 21.225 % 20 % up to 55 % QS 2025-1 11/26/2024 1/01/2025 - 12/31/2025 27.15 % 20 % up to 62 % QS 2026-1 11/26/2024 1/01/2026 - 12/31/2026 27.00 % 20 % up to 61 % (7) Borrowings In May 2024, we issued $ 750 million aggregate principal amount of Senior Notes due 2029 (the “2029 Notes”). The 2029 Notes are the Company’s unsecured senior obligations. The 2029 Notes pay interest 127 ENACT HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years Ended December 31, 2024, 2023 and 2022 semi-annually on May 28 and November 28 at a rate of 6.25 % per year, beginning on November 28, 2024, and will mature on May 28, 2029. At any time, or from time to time, prior to April 28, 2029 (the “Par Call Date”), the Company may redeem the 2029 Notes in whole or in part, at its option, at a redemption price equal to the greater of (i) the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted to the redemption date (assuming the 2029 Notes matured on the Par Call Date) on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 30 basis points less interest accrued to the redemption date, and (ii) 100 % of the principal amount of the 2029 Notes to be redeemed, plus, in either case, accrued and unpaid interest thereon to, but excluding, the redemption date. At any time on or after the Par Call Date, the Company may redeem the 2029 Notes in whole or in part, at any time and from time to time, at a redemption price equal to 100 % of the principal amount of the 2029 Notes to be redeemed, plus accrued and unpaid interest thereon to, but excluding, the redemption date. 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 following table sets forth long-term borrowings as of December 31: (Amounts in thousands) 2024 2023 6.25 % Senior Notes, due 2029 $ 750,000 $ — 6.5 % Senior Notes, due 2025 — 750,000 Deferred borrowing charges ( 6,950 ) ( 4,584 ) Total $ 743,050 $ 745,416 Redemption of Senior Notes due 2025 In June 2024, we exercised our right to redeem all $ 750 million of the outstanding aggregate principal amount of our 6.5 % senior notes due 2025 (“2025 Notes”) at a price of 101 % of the principal amount. We funded the redemption primarily through the proceeds of the 2029 Notes. The redemption resulted in a loss on debt extinguishment of $ 10.9 million. Revolving Credit Agreement On June 30, 2022, we entered into a credit agreement with a syndicate of lenders that provides for a five-year , unsecured revolving credit facility (the “Facility”) in the initial aggregate principal amount of $ 200 million, including the ability for EHI to increase the commitments under the Facility, on an uncommitted basis, by an additional aggregate principal amount of up to $ 100 million. Borrowings under the Facility will accrue interest at a floating rate tied to a standard short-term borrowing index, selected at EHI’s option, plus an applicable margin. The applicable margins are based on the ratings established by certain debt rating agencies for EHI’s senior unsecured debt. The Facility matures in June 2027, but under certain conditions EHI may need to repay any outstanding amounts and terminate the Facility earlier than the maturity date. We may use borrowings under the Facility for working capital needs and general corporate purposes, including the execution of dividends to our shareholders and capital contributions to our insurance subsidiaries. The Facility contains several covenants, including financial covenants relating to minimum net worth, capital and liquidity levels, maximum debt to capitalization level and PMIERs compliance. We are in compliance with all covenants of the Facility and the Facility has remained undrawn through December 31, 2024. 128 ENACT HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years Ended December 31, 2024, 2023 and 2022 (8) Income taxes Income before income taxes of $ 878.1 million, $ 851.5 million and $ 898.2 million in 2024, 2023 and 2022, respectively, was domestic. The total provision for income taxes was as follows for the years ended December 31: (Amounts in thousands) 2024 2023 2022 Current federal income taxes $ 181,433 $ 181,685 $ 192,191 Deferred federal income taxes 4,224 ( 1,600 ) ( 1,971 ) Total federal income taxes 185,657 180,085 190,220 Current state income taxes 4,096 6,146 4,171 Deferred state income taxes 240 ( 233 ) ( 326 ) Total state income taxes 4,336 5,913 3,845 Total provision for income taxes $ 189,993 $ 185,998 $ 194,065 We had current income taxes payable of $ 11.9 million and $ 14.9 million as of December 31, 2024 and 2023, respectively, which were recorded in other liabilities. We paid federal taxes of $ 184.0 million and state taxes of $ 4.5 million for the year ended December 31, 2024; federal taxes of $ 176.7 million and state taxes of $ 5.3 million for the year ended December 31, 2023; and federal taxes of $ 182.2 million and state taxes of $ 4.0 million for the year ended December 31, 2022. The reconciliation of the federal statutory tax rate to the effective income tax rate was as follows for the years ended December 31: 2024 2023 2022 Statutory U.S. federal income tax rate 21.0 % 21.0 % 21.0 % Increase (reduction) in rate resulting from: State income tax, net of federal income tax effect 0.4 0.5 0.3 Other, net (1) 0.2 0.3 0.3 Effective rate 21.6 % 21.8 % 21.6 % _______________ (1) “Other, net” is comprised primarily of nondeductible expenses, prior year true-ups and tax-exempt income. 129 ENACT HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years Ended December 31, 2024, 2023 and 2022 The components of the deferred income taxes were as follows as of December 31: (Amounts in thousands) 2024 2023 Assets: Accrued commissions and general expenses $ 8,963 $ 12,658 Capital loss carry forwards 5,149 2,723 Net unrealized losses on investment securities 54,108 63,189 Unearned premium and loss reserves 31,861 32,952 State income taxes 9,038 9,027 Other 2,212 2,825 Gross deferred income tax assets 111,331 123,374 Valuation allowance ( 18,021 ) ( 7,770 ) Total deferred income tax assets 93,310 115,604 Liabilities: Deferred acquisition costs 4,960 5,218 Investments 19,734 18,893 Other 3,603 3,004 Total deferred income tax liabilities 28,297 27,115 Net deferred income tax asset (liability) $ 65,013 $ 88,489 As of December 31, 2024, the capital loss carryforward was $ 24.5 million and, if unused, will expire in 2028. There were no U.S. federal NOL carryforwards. Our valuation allowance as of December 31, 2024 and 2023 was $ 18.0 million and $ 7.8 million, respectively. Given the change in our unrealized gains (losses) on our fixed maturity securities for the Company and consolidated tax group in 2024 due to rising interest rates and the corresponding reduction in the amount of unrealized capital gains expected to be available in the future to offset our capital loss carryforwards and other capital deferred tax assets, we recorded a valuation allowance of $ 10 million during 2024 through accumulated other comprehensive income (loss) related to deferred tax assets that would produce capital losses. The remainder of the valuation allowance as of December 31, 2024 and 2023 is related to state deferred tax assets. The state deferred tax assets related primarily to the future deductions associated with non-insurance and insurance net operating loss (“NOL”) carryforwards. Except as discussed above, we have not established a valuation allowance with respect to any other deferred tax assets as of December 31, 2024, based primarily upon projections of future taxable income. With respect to deferred tax assets associated with unrealized losses on investment securities, management has the ability and intent to execute tax planning strategies, including to hold those investment assets to recovery or maturity. We have determined that such strategies are prudent and feasible, and would be implemented, if necessary, to ensure recognition of the deferred tax asset. After consideration of all available evidence, we concluded that it is more likely than not that these deferred tax assets will be realized. If our actual results do not validate the current projections of pre-tax income, we may be required to record an additional valuation allowance which could have a material impact on our consolidated financial statements in future periods. There were no unrecognized tax benefits as of December 31, 2024 and 2023. We recognize accrued interest and penalties related to unrecognized tax benefits as components of the provision for income taxes. We have recorded $ 0 of benefits related to interest and penalties for 2024, 2023 and 2022. As previously discussed, we have elected to participate in the Genworth consolidated return. All Genworth companies domesticated in the United States are included in the Genworth consolidated return 130 ENACT HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years Ended December 31, 2024, 2023 and 2022 as allowed by the tax law and regulations. We have a tax sharing agreement in place and all intercompany balances related to this agreement are settled at least annually. We are not currently subject to any significant examinations by federal or state income tax authorities. Generally, we are no longer subject to federal or state income tax examinations for years prior to 2021. We are part of the 2022 Amended and Restated Tax Allocation Agreement (“TAA”) between Genworth and certain of our subsidiaries. The TAA was approved by state insurance regulators and our Board of Directors. The tax allocation methodology is based on the separate return liabilities with offsets for losses and credits utilized to reduce the current consolidated tax liability as allowed by applicable law and regulation. Our policy is to settle intercompany tax balances quarterly, with a final settlement after filing of Genworth’s federal consolidated U.S. corporate income tax return. Additionally, Enact Mortgage Insurance Corporation, Enact Residential Insurance Corporation, Enact Mortgage Insurance Corporation of North Carolina and Enact Financial Assurance Corporation (collectively, the “MI Group”), were parties to a supplemental tax sharing agreement that allowed them to accelerate the utilization of benefits as if they filed a stand-alone MI Group federal income tax return, even if those benefits had not been utilized in the consolidated federal return (“deemed used losses”). If any deemed used losses are subsequently actually used in a consolidated return, the members of the MI Group which received the benefit for such deemed used losses would not receive a second benefit for such losses. Also, if any member of the MI Group received benefit for any deemed used losses and leaves the consolidated group before such deemed used losses are actually used in a consolidated return, such member will repay such benefit received. Any benefits generated by the MI Group after January 1, 2021 will follow the TAA mentioned above, which does not allow for an acceleration when utilizing benefits. The TAA prevents any allocation of tax to a separate company that is greater than the tax incurred on a separate company basis, subject to consolidated loss carry-forward adjustments. The total tax refund allocated to the MI Group, therefore, may exceed the consolidated tax refund received. Separate Return Method If during the year ended December 31, 2024, we had computed taxes using the separate return method, the unaudited pro forma provision for income taxes would increase by $ 5 million due to capital losses with respect to which a valuation allowance would be established on a separate return basis. If during the years ending December 31, 2023 and 2022, we had computed taxes using the separate return method, the unaudited pro forma provision for income taxes would remain unchanged. (9) Employee benefits As a consolidated company within Genworth, our employees are generally provided a number of Genworth employee benefits. Genworth, as sponsor of the plans described below (collectively, “Shared Plans”), is ultimately responsible for maintenance of these plans in compliance with applicable laws. Our obligation results from an allocation of our share of expenses from Genworth’s plans based on benefits eligible earnings. Benefits eligible earnings include base pay, overtime, annual incentives and sales commissions. We account for such Shared Plans as multiemployer benefit plans. Accordingly, we do not record an asset or liability to recognize the funded status of the Shared Plans. We recognize a liability only for any required contributions to the Shared Plans that are accrued and unpaid at the balance sheet date, which is included within other liabilities in the consolidated balance sheets. Pension and Retiree Health and Life Insurance Benefit Plans Most of our employees are enrolled in a qualified defined contribution pension plan sponsored by Genworth. The plan is 100 % funded by Genworth. Genworth makes annual contributions to each employee’s pension plan account based on the employee’s age, service and eligible pay. Employees are 131 ENACT HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years Ended December 31, 2024, 2023 and 2022 vested in the plan after three years of service. Expenses associated with the qualified defined contribution pension plan were $ 2.0 million, $ 2.2 million, and $ 2.1 million in 2024, 2023 and 2022, respectively. In addition, certain employees also participate in non-qualified defined contribution plans and qualified and non-qualified defined benefit pension plans sponsored by Genworth. Expenses associated with non-qualified defined contribution plans were $ 1.5 million, $ 1.4 million and $ 1.2 million for 2024, 2023 and 2022, respectively. Expenses allocated to us for qualified and non-qualified defined benefit pension plans were $ 0.3 million, for each of the years ended December 31, 2024, 2023 and 2022. Genworth provides retiree health benefits to our employees hired prior to January 1, 2005, who meet certain service requirements. Under this plan, retirees over 65 years of age receive a subsidy towards the purchase of a Medigap policy, and retirees under 65 years of age receive medical benefits similar to our employees’ medical benefits. In December 2009, Genworth announced that eligibility for retiree medical benefits will be limited to associates who were within 10 years of retirement eligibility as of January 1, 2010. Genworth also provides retiree life and long-term care insurance benefits. Expenses allocated to us for retiree health and life insurance benefits plans were $ 0.5 million for each of the years ended December 31, 2024, 2023 and 2022. Savings Plans Our employees participate in qualified and non-qualified defined contribution savings plans that allow employees to contribute a portion of their pay to the plan on a pre-tax basis. Genworth makes matching contributions equal to 100 % of the first 4 % of pay deferred by an employee and 50 % of the next 2 % of pay deferred by an employee so that our matching contribution does not exceed 5 % of an employee’s pay. Employees do not vest immediately in Genworth matching contributions but fully vest in the matching contributions after two complete years of service. One option available to employees in the defined contribution savings plan is the ClearCourse ® variable annuity option offered by certain of Genworth’s life insurance subsidiaries. Our cost associated with these plans was $ 3.3 million, $ 3.3 million and $ 3.2 million for the years ended December 31, 2024, 2023 and 2022, respectively. Health and Welfare Benefits for Active Employees We provide health and welfare benefits to our employees, including health, life, disability dental and long-term care insurance, among others. Our long-term care insurance is provided through Genworth’s long-term care insurance products. (10) Share-based compensation EHI share-based compensation Beginning with our initial public offering in 2021, we offer share-based awards to employees and directors including restricted stock units (“RSUs”) and performance stock units (“PSUs”) for employees and deferred stock units (“DSUs”) to directors. In 2021, the Enact Holdings, Inc. 2021 Omnibus Incentive Plan (the “2021 Omnibus Plan”) was adopted and approved by EHI’s stockholders. Under the 2021 Omnibus incentive Plan, EHI was authorized to grant a maximum number of shares of Common Stock for issuance not to exceed 4 million shares. Share-based compensation expense under the 2021 Omnibus Plan was $ 18.8 million, $ 15.3 million, $ 9.9 million for the years ended December 31, 2024, 2023 and 2022, respectively, and is recorded within acquisition and operating expenses, net of deferrals in the consolidated statements of income. Stock-based compensation expense was recognized evenly on a straight-line attribution method over the awards’ respective vesting period. 132 ENACT HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years Ended December 31, 2024, 2023 and 2022 During 2024, 2023, and 2022 the Company issued RSUs to our employees with average restriction periods of three years and a weighted average fair value of $ 27.64 , $ 24.26 , and $ 22.18 , respectively. Each grant was measured at the fair value of a share of the Company’s Common Stock on the grant date. The PSUs granted in 2024, 2023 and 2022 have a three-year measurement period starting on January 1, 2024, 2023 and 2022, respectively, going through December 31, 2026, 2025 and 2024, respectively. The performance metrics are based on Enact’s consolidated book value per share growth at the end of the performance period, calculated as the increase in book value divided by the average number of shares outstanding during the measurement period. The PSUs were granted at fair value as of the approval date by Enact Holdings’ Board of Directors. In connection with cash dividends paid in 2024, 2023 and 2022, dividend equivalent shares were issued to RSU, PSU and DSU holders as of the dividend date. The declaration and payment of future dividends to holders of our common stock will be at the discretion of our board of directors. The following table summarizes the status of the equity-based awards as of December 31, 2024: RSUs PSUs DSUs Awards in thousands Number of awards Weighted-average grant date fair value Number of awards Weighted-average grant date fair value Number of awards Weighted-average grant date fair value Balance as of January 1, 2022 654 $ 19.02 — $ — 17 $ 20.87 Granted 322 $ 22.18 156 $ 22.15 78 $ 22.02 Dividend equivalents 62 $ 24.00 10 $ 24.00 5 $ 23.98 Exercised ( 3 ) $ 19.00 — $ — — $ — Terminated ( 26 ) $ 19.73 — $ — — $ — Balance as of December 31, 2022 1,009 $ 20.07 166 $ 22.15 100 $ 21.81 Granted 294 $ 24.26 157 $ 24.23 58 $ 23.80 Dividend equivalents 59 $ 26.82 16 $ 26.82 8 $ 26.97 Exercised ( 125 ) $ 21.84 — $ — — $ — Terminated ( 23 ) $ 20.61 — $ — — $ — Balance as of December 31, 2023 1,214 $ 20.94 339 $ 23.16 166 $ 22.54 Granted 266 $ 27.64 250 $ 27.19 46 $ 31.53 Dividend equivalents 25 $ 32.05 13 $ 32.45 5 $ 26.92 Exercised ( 903 ) $ 20.02 — $ — — $ — Terminated ( 22 ) $ 23.99 — $ — — $ — Balance as of December 31, 2024 580 $ 25.39 602 $ 24.87 217 $ 24.47 As of December 31, 2024 and December 31, 2023, total unrecognized share-based compensation expense related to non-vested awards not yet recognized was $ 14.5 million and $ 13.3 million, respectively. This expense is expected to be recognized over a weighted-average period of approximately two years . The actual tax benefit realized for the tax deductions from the exercise of EHI share-based awards was $ 3.6 million for the year ended December 31, 2024. Genworth share-based compensation Prior to May 2012, share-based awards were granted to employees and directors, including stock options, stock appreciation rights (“SARs”) and RSUs under the 2004 Genworth Financial, Inc. Omnibus Incentive Plan (the “2004 Omnibus Incentive Plan”). In May 2012, the 2012 Genworth Financial, Inc. Omnibus Incentive Plan (the “2012 Omnibus Incentive Plan”) was approved by Genworth’s stockholders. 133 ENACT HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years Ended December 31, 2024, 2023 and 2022 Under the 2012 Omnibus Incentive Plan, Genworth was authorized to grant 16 million equity awards, plus a number of additional shares not to exceed 25 million underlying awards outstanding under the 2004 Omnibus Incentive Plan. In December 2018, the 2018 Genworth Financial, Inc. Omnibus Incentive Plan (the “2018 Omnibus Incentive Plan”) was approved by Genworth’s stockholders. Under the 2018 Omnibus Incentive Plan, Genworth is authorized to grant 25 million equity awards, plus a number of additional shares not to exceed 20 million underlying awards outstanding under the prior Plans. The 2004 Omnibus Incentive Plan together with the 2012 Omnibus Incentive Plan and the 2018 Omnibus Incentive Plan are referred to collectively as the “Omnibus Incentive Plans.” Share-based compensation expense under the Omnibus Incentive Plans was $ 0.5 million, $ 2.6 million and $ 3.9 million for the years ended December 31, 2024, 2023 and 2022, respectively, and was included within acquisition and operating expenses, net of deferrals in the consolidated statements of income. For awards issued prior to January 1, 2006, share-based compensation expense was recognized on a graded vesting attribution method over the awards’ respective vesting schedule. For awards issued after January 1, 2006, share-based compensation expense was recognized evenly on a straight-line attribution method over the awards’ respective vesting period. For all PSU awards granted, the compensation committee of Genworth’s Board of Directors determines and approves no later than March 15, following the end of the three-year performance period for each applicable performance period, the number of units earned and vested for each distinct performance period. Expense associated with our PSUs was less than $ 1.0 million in 2024, 2023, and 2022. Genworth has time-based cash awards, which vest over three years , with a third of the payout occurring per year as determined by the vesting period, beginning on the first anniversary of the grant date. The following table summarizes time-based cash award activity as of December 31, 2024, 2023 and 2022: (Number of awards in thousands) Time-based cash awards Balance as of January 1, 2022 6,947 Granted — Employee transfer 556 Vested ( 3,600 ) Forfeited ( 115 ) Balance as of December 31, 2022 3,788 Granted — Vested ( 2,400 ) Forfeited ( 111 ) Balance as of December 31, 2023 1,277 Granted — Vested ( 1,267 ) Forfeited ( 10 ) Balance as of December 31, 2024 — 134 ENACT HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years Ended December 31, 2024, 2023 and 2022 The following table summarizes the status of other equity-based awards as of December 31, 2024, 2023 and 2022: RSUs PSUs SARs Awards in thousands Number of awards Weighted- average grant date fair value Number of awards Weighted- average grant date fair value Number of awards Weighted- average grant date fair value Balance as of January 1, 2022 450 $ 3.36 572 $ 3.63 476 $ 2.70 Granted — $ — — $ — — $ — Performance adjustment — $ — 135 $ 4.61 — $ — Employee transfer 32 $ 5.13 — $ — 49 $ 2.71 Exercised ( 195 ) $ 3.37 ( 270 ) $ 4.61 — $ — Terminated — $ — — $ — ( 160 ) $ 2.54 Balance as of December 31, 2022 287 $ 3.55 437 $ 3.32 365 $ 2.77 Granted — $ — — $ — — $ — Performance adjustment — $ — 117 $ 3.03 — $ — Employee transfer — $ — — $ — — $ — Exercised ( 161 ) $ 3.56 ( 251 ) $ 3.03 — $ — Terminated — $ — — $ — ( 180 ) $ 2.47 Balance as of December 31, 2023 126 $ 3.78 303 $ 3.45 185 $ 3.06 Granted — $ — — $ — — $ — Performance adjustment — $ — 303 $ 3.45 — $ — Employee transfer — $ — — $ — — $ — Exercised ( 116 ) $ 3.60 ( 606 ) $ 3.45 — $ — Terminated — $ — — $ — ( 185 ) $ 3.06 Balance as of December 31, 2024 10 $ 6.45 — $ — — $ — As of December 31, 2024, there was no unrecognized share-based compensation as all expense has been amortized. As of December 31, 2023, total unrecognized share-based compensation expense related to non-vested awards not yet recognized was $ 1.1 million. In 2024, there was no cash received from stock options exercised. New shares were issued to settle all exercised awards. The actual tax benefit realized for the tax deductions from the exercise of Genworth share-based awards was $ 0.3 million as of December 31, 2024. (11) Related party transactions Related Party Transactions We have various agreements with Genworth that provide for reimbursement to and from Genworth of certain administrative and operating expenses that include, but are not limited to, information technology services and administrative services (such as finance, human resources and employee benefit administration). These agreements provide for an allocation of corporate expenses to all Genworth businesses or subsidiaries. We incurred costs for these services of $ 11.2 million, $ 17.7 million and $ 30.4 million in 2024, 2023 and 2022, respectively. The investment portfolios of our insurance subsidiaries are primarily managed by Genworth. Under the terms of the investment management agreement, we are charged a fee by Genworth. All fees paid to Genworth are charged to investment expense and are included in net investment income in the consolidated statements of income. The total investment expenses paid to Genworth were $ 7.1 million, $ 5.7 million and $ 5.5 million for the years ended December 31, 2024, 2023 and 2022, respectively. 135 ENACT HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years Ended December 31, 2024, 2023 and 2022 Our employees participate in certain benefit plans sponsored by Genworth and certain share-based compensation plans that utilize shares of Genworth common stock and other incentive plans. See Note 9 and Note 10 for further information. In prior periods, we provided certain information technology and administrative services (such as facilities and maintenance) to Genworth. We charged Genworth $ 0.5 million and $ 0.7 million for these services in 2023 and 2022, respectively. We paid cash dividends of $ 90.8 million, $ 173.7 million and $ 204.6 million to Genworth in 2024, 2023 and 2022, respectively. The amount and timing of future dividends will be based upon the prevailing and prospective macro-economic conditions, regulatory landscape and business performance and remain subject to required approvals. Refer to Note 15 for further details on dividend restrictions. We paid Genworth $ 197.8 million, $ 71.5 million, and $ 1.3 million related to share repurchases in 2024, 2023 and 2022, respectively. We have a tax sharing agreement in place with Genworth, such that we participate in a single U.S. consolidated income tax return filing. All intercompany balances related to this agreement are settled at least annually. Refer to Note 8 for further details. The consolidated financial statements include the following amounts due to and from Genworth relating to recurring service and expense agreements as of December 31: (Amounts in thousands) 2024 2023 Amounts payable to Genworth $ 8,197 $ 8,186 Amounts receivable from Genworth $ 199 $ 215 (12) Commitments and contingencies Leases Our operating leases consist predominantly of office space. Operating lease right-of-use assets of $ 8.8 million and $ 11.3 million as of December 31, 2024 and 2023, respectively, were recorded in other assets on the consolidated balance sheets. Operating lease liabilities of $ 10.6 million and $ 13.5 million as of December 31, 2024 and 2023, respectively, were recorded in other liabilities on the consolidated balance sheets. Operating lease expenses were approximately $ 3.4 million for each of the years ended December 31, 2024, 2023 and 2022. Our remaining lease terms ranged from less than 2 years to 3 years and had a weighted-average remaining lease term of 3 years and 4 years as of December 31, 2024 and 2023, respectively. The implicit rate of our lease agreements was not readily determinable; therefore, we utilized our incremental borrowing rate to discount future lease payments. The weighted-average discount rate was 7.1 % as of 136 ENACT HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years Ended December 31, 2024, 2023 and 2022 December 31, 2024 and 2023. The following table presents future minimum rent payments under operating leases as of December 31, 2024: (Amounts in thousands) Future minimum payments under operating leases 2025 $ 3,885 2026 3,890 2027 3,936 2028 — 2029 — 2030 and thereafter — Total lease payments 11,711 Imputed interest ( 1,134 ) Operating lease liabilities $ 10,577 Litigation and Regulatory Matters We face the risk of litigation and regulatory investigations and actions in the ordinary course of operating our business and are also subject to litigation arising out of our general business activities, such as our contractual and employment relationships. Past legal and regulatory actions include proceedings specific to us and others generally applicable to business practices in the mortgage insurance industry in which we operate. We have been, or may become, subject to lawsuits or regulatory investigations alleging, among other things, issues relating to violations of the Real Estate Settlement and Procedures Act of 1974 (“RESPA”) or related state anti-inducement laws, mortgage insurance policy rescissions and curtailments, pricing structures and general business practices, and breaching duties related to the privacy and information security of customer information. Plaintiffs in lawsuits against us may seek very large or indeterminate amounts which may remain unknown for substantial periods of time. In addition, we are also subject to various regulatory inquiries, such as information requests, subpoenas, books and record examinations and market conduct and financial examinations from state and federal regulators and other authorities. A substantial legal liability or a significant regulatory action against us could have an adverse effect on our business, financial condition and results of operations. Moreover, even if we ultimately prevail in the litigation, regulatory action or investigation, we could suffer significant reputational harm, which could have an adverse effect on our business, financial condition or results of operations. (13) Stockholders’ Equity Share Repurchase Program On November 1, 2022, our board of directors approved a share repurchase program authorizing the Company to spend up to $ 75 million, excluding commissions, to repurchase EHI common stock in the open market or in privately negotiated transactions, based on market and business conditions, stock price and other factors. On August 1, 2023 and May 1, 2024, we announced repurchase authorizations that allowed for the purchase of $ 100 million and $ 250 million of EHI’s common stock, respectively. EHI generally operates its share repurchase programs pursuant to a trading plan under Rule 10b5-1 of the Exchange Act, which permits the Company to purchase shares, at predetermined price targets, when it may otherwise be precluded from doing so. During the year ended December 31, 2024, the Company purchased 7,605,106 shares at an average price of $ 31.95 per share, excluding commissions, compared to 3,520,052 shares at an average price of $ 24.89 per share, excluding commissions, for the year ended 137 ENACT HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years Ended December 31, 2024, 2023 and 2022 December 31, 2023. As of December 31, 2024, $ 92.9 million remained available under the program. All treasury stock has been retired or constructively retired as of December 31, 2024. Subsequent to year end, the Company purchased 591,363 shares at an average price of $ 32.60 per share through January 31, 2025. Cash Dividends The following table presents the amount of dividends declared and paid, on a per share basis, for each quarter and annual period. Quarter Ended 2024 2023 2022 March 31 $ 0.16 $ 0.14 $ — June 30 0.185 0.16 0.14 September 30 0.185 0.16 0.14 December 31 1, 2 0.185 0.87 1.26 Total dividends per common share declared and paid $ 0.715 $ 1.33 $ 1.54 1 Quarter ended December 31, 2023, activity includes special cash dividend of $ 0.71 per share paid on December 5, 2023 2 Quarter ended December 31, 2022, activity includes special cash dividend of $ 1.12 per share paid on December 6, 2022 (14) Accumulated other comprehensive income (loss) The following table presents a roll-forward of accumulated other comprehensive income (loss), net of taxes: (Amounts in thousands) Net unrealized gains (losses) on investments Foreign currency translation Total Balance January 1, 2022, net of tax $ 83,588 $ ( 7 ) $ 83,581 Other comprehensive income (loss) before reclassifications ( 468,229 ) 159 ( 468,070 ) Amounts reclassified from other comprehensive income (loss) 1,745 — 1,745 Total other comprehensive income (loss) ( 466,484 ) 159 ( 466,325 ) Balance December 31, 2022, net of tax ( 382,896 ) 152 ( 382,744 ) Other comprehensive income (loss) before reclassifications 141,263 4 141,267 Amounts reclassified from other comprehensive income (loss) 11,077 — 11,077 Total other comprehensive income (loss) and other adjustments 152,340 4 152,344 Balance December 31, 2023, net of tax ( 230,556 ) 156 ( 230,400 ) Other comprehensive income (loss) before reclassifications 5,039 13 5,052 Amounts reclassified from other comprehensive income (loss) 17,893 — 17,893 Total other comprehensive income (loss) 22,932 13 22,945 Balance December 31, 2024, net of tax $ ( 207,624 ) $ 169 $ ( 207,455 ) 138 ENACT HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years Ended December 31, 2024, 2023 and 2022 The following table presents the effect of the reclassification of significant items out of accumulated other comprehensive income (loss) on the respective line items of the consolidated statements of income: Amounts reclassified from accumulated other comprehensive income (loss) Affected line item in consolidated statement of income (Amounts in thousands) 2024 2023 2022 Net unrealized gains (losses) on investments $ ( 22,649 ) $ ( 14,022 ) $ ( 2,209 ) Net investment gains (losses) Benefit (expense) for income taxes 4,756 2,945 464 Provision for income taxes (15) Statutory information Statutory Accounting Principles We prepare our statutory financial statements in accordance with the accounting practices required or permitted, if applicable, by the insurance departments of the respective states of domicile of our insurance subsidiaries. These statements of statutory accounting principles (“SSAP”) are established by a variety of National Association of Insurance Commissioners ("NAIC") publications, as well as state laws, regulations and general administrative rules. In addition, insurance departments have the right to permit other specific practices that may deviate from prescribed practices. As of December 31, 2024, we did not have any prescribed or permitted statutory accounting practices that resulted in reported statutory surplus or risk-to-capital ratios being different from what would have been reported had NAIC statutory accounting practices been followed. The key areas where SSAP financial statements differ from financial statements presented on a U.S. GAAP basis include: (a) Under SSAP, mortgage insurance companies are required each year to establish a special contingency reserve in their statutory financial statements to provide for losses in the event of significant economic declines. Annual additions to the statutory contingency reserve must be at least 50% of net earned premiums earned in such year. Such amount must be maintained in the contingency reserve for 10 years, after which time it is released to unassigned surplus. Prior to 10 years, the contingency reserve may be reduced with regulatory approval to the extent that losses in any calendar year exceed 35% of earned premiums for such year. (b) Under SSAP, insurance policy acquisition costs are charged against operations in the year incurred. Under U.S. GAAP, such costs are deferred and amortized. (c) Under SSAP, income tax expense is calculated on the basis of amounts currently payable. Generally, deferred tax assets are recognized under both SSAP and U.S. GAAP when it is more likely than not that the deferred tax asset will be realized. However, SSAP standards impose additional admissibility requirements whereby deferred tax assets are only recognized to the extent they are expected to be recovered within a one- to three-year period subject to a capital and surplus limitation. Changes in deferred tax assets and liabilities are recognized as a direct benefit or charge to unassigned surplus, whereas under U.S. GAAP changes in deferred tax assets and liabilities, except for changes in unrealized gains and losses on available-for-sale securities, are recorded as a component of income tax expense. (d) Under SSAP, most of our fixed maturity investments are recorded at amortized cost while securities with certain NAIC designations are carried at the lower of amortized cost or market value. Under U.S. GAAP, our fixed maturity securities are classified as available-for-sale and are recorded at fair value, with the unrealized gain or loss recognized, net of tax, as an increase or decrease to accumulated other comprehensive income. 139 ENACT HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years Ended December 31, 2024, 2023 and 2022 (e) Under SSAP, certain assets, designated as non-admitted assets, are charged directly against statutory surplus. Such assets are reflected in our U.S. GAAP financial statements. The table below presents statutory net income, statutory policyholders’ surplus and contingency reserve for the combined mortgage insurance subsidiaries as of and for the years ended December 31: (Amounts in thousands) 2024 2023 2022 Statutory net income $ 626,326 $ 665,078 $ 747,150 Statutory policyholders’ surplus $ 886,817 $ 1,084,754 $ 1,135,797 Contingency reserve $ 4,335,702 $ 3,959,716 $ 3,551,022 Statutory Capital Requirements Mortgage insurers are not subject to the NAIC’s risk-based capital (“RBC”) requirements, but certain states and other regulators impose another form of capital requirement on mortgage insurers requiring maintenance of a risk-to-capital ratio not to exceed 25:1. Our mortgage insurance subsidiaries are domiciled in North Carolina. Fifteen other states maintain similar risk-to-capital requirements. As of December 31, 2024 and 2023, the risk-to-capital ratio for our combined mortgage insurance subsidiaries under the current regulatory framework as established under North Carolina law and enforced by the North Carolina Department of Insurance (“NCDOI”) was approximately 10.5 :1 and 11.6 :1, respectively. Each of our mortgage insurance subsidiaries met its respective capital requirement as of 2024 and 2023. PMIERs Regulatory Requirements Mortgage insurers must meet the private mortgage insurer eligibility requirements (“PMIERs”) as set forth by each GSE in order to remain eligible to insure loans that are purchased by the GSEs. Each approved mortgage insurer is required to provide the GSEs with an annual certification and a quarterly report as to its compliance with PMIERs. Since its adoption in 2015, PMIERs has been amended on several occasions, including as a result of COVID-19 (as amended, the “PMIERs Amendment”). The PMIERs include financial requirements for mortgage insurers under which a mortgage insurer’s “Available Assets” (generally only the most liquid assets of an insurer) must meet or exceed “Minimum Required Assets” (which are based on an insurer’s risk-in-force (“RIF”) and are calculated from tables of factors with several risk dimensions and are subject to a floor amount) and otherwise generally establish when a mortgage insurer is qualified to issue coverage that will be acceptable to the respective GSE for acquisition of high loan-to-value (“LTV”) mortgages. The GSEs may amend or waive PMIERs at their discretion, impose additional conditions or restrictions on us and also have broad discretion to interpret PMIERs, which could impact the calculation of our “Available Assets” and/or “Minimum Required Assets.” The amount of capital that EMICO may be required to maintain the “Minimum Required Assets” as defined in PMIERs, and operate our business is dependent upon, among other things: (i) the way PMIERs are applied and interpreted by the GSEs and the FHFA; (ii) future PMIERs amendments; (iii) the future performance of the housing market; (iv) our generation of earnings in our business, “Available Assets” and “Minimum Required Assets,” reducing RIF and reducing delinquencies as anticipated, and writing anticipated amounts and types of new mortgage insurance business; and (v) our overall financial performance, capital and liquidity levels. Depending on our actual experience, the amount of capital required under PMIERs may be higher than currently anticipated. In the absence of a premium increase for new business, if we hold more capital relative to insured loans, our returns will be lower. We may be unable to increase premium rates for various reasons, principally due to competition. Our inability to increase the capital as required in the anticipated timeframes and on the anticipated terms, and to realize the anticipated benefits, could have a material adverse impact on our business, results of operations and financial condition. More particularly, our ability to continue to meet the PMIERs financial requirements and maintain a prudent amount of capital in excess of those requirements, given the dynamic nature of asset valuations and requirement changes over time, is dependent upon, among other things: (i) our 140 ENACT HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years Ended December 31, 2024, 2023 and 2022 ability to complete credit risk transfer (“CRT”) transactions on our anticipated terms and timetable, which, as applicable, are subject to market conditions, third-party approvals and other actions (including approval by the GSEs), and other factors that are outside of our control and (ii) our ability to contribute holding company cash or other sources of capital to satisfy the portion of the financial requirements that are not satisfied through these transactions. The PMIERs Amendment implemented both permanent and temporary revisions to PMIERs. For loans that became non-performing due to a COVID-19 hardship, PMIERs was amended with respect to each non-performing loan that (i) had an initial missed monthly payment occurring on or after March 1, 2020 and prior to April 1, 2021 or (ii) is subject to a forbearance plan granted in response to a financial hardship related to COVID-19, the terms of which are materially consistent with terms of forbearance plans offered by the GSEs. The risk-based required asset amount factor for a non-performing loan is the greater of (a) the applicable risk-based required asset amount factor for a performing loan were it not delinquent, and (b) the product of a 0.30 multiplier and the applicable risk-based required asset amount factor for a non-performing loan. In the case of (i) above, absent the loan being subject to a forbearance plan described in (ii) above, the 0.30 multiplier will be applicable for no longer than three calendar months beginning with the month in which the loan became a non-performing loan due to having missed two monthly payments. Loans subject to a forbearance plan described in (ii) above include those that are either in a repayment plan or loan modification trial period following the forbearance plan unless reported to the approved insurer that the loan is no longer in such forbearance plan, repayment plan, or loan modification trial period. Per guidance released by the GSEs in the third quarter of 2024, use of the multiplier will be discontinued effective March 31, 2025. Our assessment of PMIERs compliance is based on a number of factors, including our understanding of the GSEs’ interpretation of the PMIERs financial requirements. The GSEs require our mortgage insurance subsidiaries 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. Both GSEs reserved the right to periodically review the reinsurance transactions for treatment under PMIERs. If we are unable to continue to meet the requirements mandated by PMIERs, or any additional restrictions which may be imposed on us by the GSEs, we may not be eligible to write new insurance on loans acquired by the GSEs, which would have a material adverse effect on our business, results of operations and financial condition. We have met all PMIERs reporting requirements as required by the GSEs. As of December 31, 2024, we had 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 above the PMIERs financial requirements as of December 31, 2024, was $ 2,052 million, compared to $ 1,887 million above PMIERs requirements as of December 31, 2023, resulting in a PMIERs sufficiency ratio of 167 % and 161 % as of December 31, 2024 and 2023, respectively. 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. 141 ENACT HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years Ended December 31, 2024, 2023 and 2022 Dividend Restrictions The majority of our investments are held by our regulated U.S. mortgage insurance subsidiaries which may be limited in their ability to pay dividends or make distributions to a holding company in the future due to restrictions related to their capital levels. Our U.S. mortgage insurance subsidiaries are required to maintain minimum capital on a statutory basis, as well as pursuant to the PMIERs promulgated by the GSEs. Moreover, even where such dividends or distributions would not cause capital to fall below the minimum levels required by state insurance regulators and the GSEs, the ability of our regulated insurance operating subsidiaries to pay dividends and distributions to us is restricted by certain provisions of North Carolina insurance laws. Our insurance subsidiaries may pay dividends only from unassigned surplus; payments made from sources other than unassigned surplus, such as paid-in and contributed surplus, are categorized as distributions. Notice of all dividends must be submitted to the Commissioner of the NCDOI (the “Commissioner”) within 5 business days after declaration of the dividend, and at least 30 days before payment thereof. No dividend may be paid until 30 days after the Commissioner has received notice of the declaration thereof and (i) has not within that period disapproved the payment or (ii) has approved the payment within the 30-day period. Any distribution, regardless of amount, requires that same 30-day notice to the Commissioner, but also requires the Commissioner’s affirmative approval before being paid. Based on estimated statutory results as of December 31, 2024, in accordance with applicable dividend restrictions, our insurance subsidiaries could pay dividends of approximately $ 153 million from unassigned surplus in 2025 without obtaining prior regulatory approval, although notice of the intent to pay must be provided to the Commissioner 30 days in advance thereof during which period the Commissioner may review the dividend pursuant to statutory standards. (16) Earnings per share The basic earnings per share computation is based on the weighted average number of shares of common stock outstanding. For the years ended December 31, 2024, 2023 and 2022, the calculation of dilutive weighted average shares considers the impact of restricted stock units and performance stock units issued to employees as well as deferred stock units issued to our directors. The following table presents the computation of earnings per share for the years ended December 31: (Amounts in thousands, except per share amounts) 2024 2023 2022 Net income available to EHI common stockholders $ 688,068 $ 665,511 $ 704,157 Net income per common share: Basic $ 4.40 $ 4.14 $ 4.32 Diluted $ 4.37 $ 4.11 $ 4.31 Weighted average common shares outstanding: Basic 156,277 160,870 162,838 Diluted 157,554 161,847 163,294 (17) Segment Reporting We operate our business in a single reportable segment, Mortgage Insurance, which is how our CODM, who is our Chief Executive Officer, reviews our financial performance and allocates resources. We derive revenue primarily through writing and assuming residential mortgage guaranty insurance in the United States. We manage our single segment on a consolidated basis, and our reported measure of segment profit or loss is consolidated net income. The CODM uses net income to evaluate income generated from segment assets in deciding how to reinvest profits into the core business, or into other parts of the entity, such as new business initiatives or 142 ENACT HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years Ended December 31, 2024, 2023 and 2022 to return capital to shareholders. Net income is also considered in our competitive analysis and financial planning processes. Our significant segment expenses are those disclosed on our consolidated income statement and our measure of segment assets are those reported on the consolidated balance sheet. 143 SCHEDULE I ENACT HOLDINGS, INC. Summary of Investments—Other Than Investments in Related Parties As of December 31, 2024, the amortized cost, fair value and carrying value of our invested assets were as follows: (Amounts in thousands) Amortized cost Fair value Carrying value Fixed maturity securities: U.S. government, agencies and GSEs $ 281,858 $ 277,363 $ 277,363 State and political subdivisions 541,715 467,476 467,476 Non-U.S. government 85,566 83,802 83,802 U.S. corporate 2,943,900 2,825,679 2,825,679 Non-U.S. corporate 800,141 772,624 772,624 Residential mortgage-backed 8,394 8,364 8,364 Other asset-backed 1,214,928 1,189,465 1,189,465 Total fixed maturity securities $ 5,876,502 $ 5,624,773 $ 5,624,773 Short-term investments 3,370 3,367 3,367 Total investments $ 5,879,872 $ 5,628,140 $ 5,628,140 See Report of Independent Registered Public Accounting Firm 144 SCHEDULE II ENACT HOLDINGS, INC. (PARENT COMPANY ONLY) BALANCE SHEETS December 31, (Amounts in thousands) 2024 2023 Assets Investments in subsidiaries $ 5,198,595 $ 4,935,514 Fixed maturity securities available-for-sale, at fair value (amortized cost of $ 295,930 and $ 291,962 as of December 31, 2024 and 2023, respectively) 297,545 293,589 Short-term investments — 10,326 Total investments 5,496,140 5,239,429 Cash and cash equivalents 242,752 151,611 Accrued investment income 3,130 2,289 Other assets 4,042 4,205 Total assets $ 5,746,064 $ 5,397,534 Liabilities and equity Liabilities: Other liabilities $ 6,918 $ 19,771 Long-term borrowings 743,050 745,416 Total liabilities 749,968 765,187 Equity: Common stock 1,523 1,593 Additional paid-in capital 2,076,788 2,310,891 Accumulated other comprehensive income ( 207,455 ) ( 230,400 ) Retained earnings 3,125,240 2,550,263 Total equity 4,996,096 4,632,347 Total liabilities and equity $ 5,746,064 $ 5,397,534 See Notes to Schedule II See Report of Independent Registered Public Accounting Firm 145 SCHEDULE II ENACT HOLDINGS, INC. (PARENT COMPANY ONLY) STATEMENTS OF INCOME Years ended December 31, (Amounts in thousands) 2024 2023 2022 Revenues: Net investment income $ 27,655 $ 23,998 $ 8,412 Net investment gains (losses) ( 7 ) ( 238 ) — Total revenues 27,648 23,760 8,412 Expenses: Acquisition and operating expenses, net of deferrals 11,054 11,493 10,532 Interest expense 51,157 51,867 51,699 Loss on debt extinguishment 10,930 — — Total expenses 73,141 63,360 62,231 Loss before income taxes and equity in income of subsidiaries ( 45,493 ) ( 39,600 ) ( 53,819 ) Benefit for income taxes ( 9,633 ) ( 8,427 ) ( 11,343 ) Loss before equity in income of subsidiaries ( 35,860 ) ( 31,173 ) ( 42,476 ) Equity in income of subsidiaries 723,928 696,684 746,633 Net income $ 688,068 $ 665,511 $ 704,157 See Notes to Schedule II See Report of Independent Registered Public Accounting Firm 146 SCHEDULE II ENACT HOLDINGS, INC. (PARENT COMPANY ONLY) STATEMENTS OF COMPREHENSIVE INCOME Years ended December 31, (Amounts in thousands) 2024 2023 2022 Net income $ 688,068 $ 665,511 $ 704,157 Other comprehensive income (loss), net of taxes: Net unrealized gains (losses) on securities 22,932 152,340 ( 466,484 ) Foreign currency translation 13 4 159 Other comprehensive income (loss) 22,945 152,344 ( 466,325 ) Total comprehensive income (loss) $ 711,013 $ 817,855 $ 237,832 See Notes to Schedule II See Report of Independent Registered Public Accounting Firm 147 SCHEDULE II ENACT HOLDINGS, INC. (PARENT COMPANY ONLY) STATEMENTS OF CASH FLOWS Years ended December 31, (Amounts in thousands) 2024 2023 2022 Cash flows from operating activities: Net income $ 688,068 $ 665,511 $ 704,157 Adjustments to reconcile net income to net cash provided by operating activities: Net (gains) losses on investments 7 238 — Equity in income from subsidiaries ( 723,928 ) ( 696,684 ) ( 746,633 ) Dividends from subsidiaries 490,000 312,500 484,500 Amortization of fixed maturity securities discounts and premiums ( 4,605 ) ( 4,859 ) ( 1,191 ) Stock-based compensation expense 18,774 15,279 9,883 Amortization of debt issuance costs 1,954 2,586 2,414 Loss on debt extinguishment 10,930 — — Other — — ( 22 ) Change in certain assets and liabilities: Accrued investment income ( 841 ) ( 606 ) ( 1,683 ) Other assets 163 328 ( 803 ) Other liabilities ( 12,138 ) ( 290 ) ( 337 ) Net cash provided by operating activities 468,384 294,003 450,285 Cash flows from investing activities: Purchases of fixed maturity securities available-for-sale ( 94,372 ) ( 95,202 ) ( 249,141 ) Proceeds from sales of fixed maturity securities available-for-sale 8,847 23,382 — Maturities of fixed maturity securities available-for-sale 86,155 30,709 3,612 Change in short-term investments 10,326 ( 6,758 ) ( 3,077 ) Contributions to subsidiaries ( 6,200 ) ( 225 ) ( 7,150 ) Net cash used in investing activities 4,756 ( 48,094 ) ( 255,756 ) Cash flows from financing activities: Proceeds from the issuance of long-term debt 749,648 — — Debt issuance costs ( 7,398 ) — — Redemption of long-term debt ( 757,500 ) — — Repurchase of common stock ( 243,968 ) ( 87,762 ) ( 1,532 ) Dividends paid ( 111,719 ) ( 212,964 ) ( 250,776 ) Other ( 11,062 ) — — Net cash used in financing activities ( 381,999 ) ( 300,726 ) ( 252,308 ) Net increase (decrease) in cash and cash equivalents 91,141 ( 54,817 ) ( 57,779 ) Cash and cash equivalents at beginning of year 151,611 206,428 264,207 Cash and cash equivalents at end of year $ 242,752 $ 151,611 $ 206,428 Supplementary disclosure of cash flow information: Non-cash capital contributions to subsidiaries $ — $ 195 $ — See Notes to Schedule II See Report of Independent Registered Public Accounting Firm 148 SCHEDULE II ENACT HOLDINGS, INC. (PARENT COMPANY ONLY) NOTES TO SCHEDULE II Years Ended December 31, 2024, 2023 and 2022 (1) Organization and purpose Enact Holdings, Inc. (“EHI,” together with its subsidiaries, the “Company,” “we,” “us,” or “our”) (formerly known as Genworth Mortgage Holdings, Inc.) was a wholly owned subsidiary of Genworth Financial, Inc. (“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. (2) Summary of significant accounting policies The accompanying EHI financial statements have been prepared on the same basis and using the same accounting policies as described in the consolidated financial statements included herein. These financial statements should be read in conjunction with our consolidated financial statements and the accompanying notes thereto. EHI includes equity in the income of subsidiaries in its statements of income, which represents the net income of each of its consolidated subsidiaries. (3) Borrowings In May 2024, we issued $ 750 million aggregate principal amount of Senior Notes due 2029 (the “2029 Notes”). The 2029 Notes are the Company’s unsecured senior obligations. The 2029 Notes pay interest semi-annually on May 28 and November 28 at a rate of 6.25 % per year, beginning on November 28, 2024, and will mature on May 28, 2029. At any time, or from time to time, prior to April 28, 2029 (the “Par Call Date”), the Company may redeem the 2029 Notes in whole or in part, at its option, at a redemption price equal to the greater of (i) the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted to the redemption date (assuming the 2029 Notes matured on the Par Call Date) on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 30 basis points less interest accrued to the redemption date, and (ii) 100 % of the principal amount of the 2029 Notes to be redeemed, plus, in either case, accrued and unpaid interest thereon to, but excluding, the redemption date. At any time on or after the Par Call Date, the Company may redeem the 2029 Notes in whole or in part, at any time and from time to time, at a redemption price equal to 100 % of the principal amount of the 2029 Notes to be redeemed, plus accrued and unpaid interest thereon to, but excluding, the redemption date. 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 following table sets forth long-term borrowings as of December 31: (Amounts in thousands) 2024 2023 6.25 % Senior Notes, due 2029 $ 750,000 $ — 6.5 % Senior Notes, due 2025 — 750,000 Deferred borrowing charges ( 6,950 ) ( 4,584 ) Total $ 743,050 $ 745,416 Redemption of Senior Notes due 2025 In June 2024, we exercised our right to redeem all $ 750 million of the outstanding aggregate principal amount of our 6.5 % senior notes due 2025 (“2025 Notes”) at a price of 101 % of the principal amount. We 149 SCHEDULE II ENACT HOLDINGS, INC. (PARENT COMPANY ONLY) funded the redemption primarily through the proceeds of the 2029 Notes. The redemption resulted in a loss on debt extinguishment of $ 10.9 million. Revolving Credit Agreement On June 30, 2022, we entered into a credit agreement with a syndicate of lenders that provides for a five-year, unsecured revolving credit facility (the “Facility”) in the initial aggregate principal amount of $ 200 million, including the ability for EHI to increase the commitments under the Facility, on an uncommitted basis, by an additional aggregate principal amount of up to $ 100 million. Borrowings under the Facility will accrue interest at a floating rate tied to a standard short-term borrowing index, selected at EHI’s option, plus an applicable margin. The applicable margins are based on the ratings established by certain debt rating agencies for EHI’s senior unsecured debt. The Facility matures in June 2027, but under certain conditions EHI may need to repay any outstanding amounts and terminate the Facility earlier than the maturity date. We may use borrowings under the Facility for working capital needs and general corporate purposes, including the execution of dividends to our shareholders and capital contributions to our insurance subsidiaries. The Facility contains several covenants, including financial covenants relating to minimum net worth, capital and liquidity levels, maximum debt to capitalization level and PMIERs compliance. We are in compliance with all covenants of the Facility and the Facility has remained undrawn through December 31, 2024. 150 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure None.