Enact Holdings, Inc. (ACT) - Q2 2026 10-Q Summary
Business Context and Reporting Period
This report covers the quarterly period ended June 30, 2026. Enact Holdings, Inc. is a subsidiary of Genworth Financial, Inc., engaged in writing and assuming residential mortgage guaranty insurance. The company operates in a single segment, primarily insuring prime-based residential mortgage loans to enable borrowers to purchase homes with down payments of less than 20%. The company is a large accelerated filer listed on the Nasdaq Stock Market.
Key Financial Metrics
| Metric | Q2 2026 (3 Months) | Q2 2025 (3 Months) | YTD 2026 (6 Months) | YTD 2025 (6 Months) |
|---|---|---|---|---|
| Net Earned Premiums | $244.7 million | $245.3 million | $487.5 million | $490.1 million |
| Net Investment Income | $73.2 million | $65.9 million | $144.1 million | $128.9 million |
| Net Income | $174.8 million | $167.8 million | $342.6 million | $333.6 million |
| Diluted EPS | $1.25 | $1.11 | $2.42 | $2.20 |
| Loss Ratio | 14% | 10% | 14% | 11% |
| Expense Ratio | 21% | 22% | 21% | 21% |
| Cash and Equivalents | $448.4 million | $613.0 million (End Q2 2025) | $448.4 million | $613.0 million |
| Total Investments | $6.21 billion | $6.05 billion (End Q2 2025) | $6.21 billion | $6.05 billion |
| Long-Term Borrowings | $745.2 million | $744.5 million (End Q2 2025) | $745.2 million | $744.5 million |
Material Changes vs. Prior Period
- Profitability: Net income increased 4% quarter-over-quarter and 3% year-over-year (YTD), driven primarily by a 11% increase in net investment income due to higher yields and average invested assets.
- Loss Experience: The loss ratio increased to 14% in Q2 2026 from 10% in Q2 2025. While both periods benefited from favorable reserve releases ($37 million in Q2 2026 vs. $48 million in Q2 2025), current period primary delinquencies increased to 12,299 (contributing $68 million in loss expense) compared to 11,567 in the prior year.
- Premiums: Net earned premiums remained relatively flat, with slight decreases offset by insurance in-force growth and assumed premium growth.
- Investment Portfolio: Total investments grew to $6.21 billion. The portfolio experienced net unrealized losses of $51.3 million YTD 2026, largely attributed to interest rate fluctuations rather than credit deterioration.
- Capital Returns: The company increased its quarterly dividend to $0.24 per share in Q2 2026. Share repurchases totaled $186.5 million YTD 2026, compared to $150.1 million in the prior year.
Guidance, Outlook, and Risks
- Outlook: Management expects new insurance written with strong credit profiles to positively contribute to future profitability. The company anticipates maintaining capital sufficiency well in excess of Private Mortgage Insurer Eligibility Requirements (PMIERs).
- Market Conditions: The macroeconomic environment remains volatile with elevated inflation (3.5% YoY) and mortgage rates. Housing affordability remains challenged, though house price growth has slowed.
- Key Risks:
- Regulatory: Inability to maintain PMIERs or restrictions imposed by GSEs (Fannie Mae/Freddie Mac).
- Economic: Deterioration in economic conditions, decline in home prices, or severe recession impacting loss severity.
- Operational: Uncertainty in loss reserve estimates, delinquency cure rates, and foreclosure timing.
- Investment: Fluctuations in interest rates and credit spreads affecting the fair value of the fixed maturity portfolio.
- Unusual Items: The company recorded favorable reserve adjustments of $76 million YTD 2026 on prior accident years, driven by cure performance and loss mitigation.
Investor Verification Checklist
- Loss Reserve Adequacy: Verify the assumptions behind the $76 million favorable reserve release and the impact of rising delinquencies on future loss ratios.
- Investment Portfolio Quality: Review the composition of the $144.7 million in gross unrealized losses to confirm they are interest-rate driven and not indicative of credit impairment.
- PMIERs Compliance: Confirm the sufficiency ratio of 161% remains robust against updated GSE asset standards phasing in through September 2026.
- Capital Allocation: Assess the sustainability of the increased dividend ($0.24/share) and ongoing share repurchases ($374.7 million remaining authorization) given the elevated loss ratio.
- Delinquency Trends: Monitor the 2.59% delinquency rate and the concentration of delinquencies in judicial foreclosure states (e.g., Florida, New York) which may extend loss severity.