Enact Holdings, Inc. (ACT) - 2025 Annual Report Summary
Business Context and Reporting Period
This summary covers the fiscal year ended December 31, 2025. Enact Holdings, Inc. is a leading private mortgage insurance (PMI) company operating in all 50 U.S. states and the District of Columbia. The company provides credit protection to lenders for low down payment loans, facilitating secondary market sales to Government-Sponsored Enterprises (GSEs) like Fannie Mae and Freddie Mac. Enact operates primarily through its subsidiary, Enact Mortgage Insurance Corporation (EMICO), and utilizes a Credit Risk Transfer (CRT) program to manage volatility and capital requirements.
Key Financial Metrics
| Metric | 2025 | 2024 | 2023 |
|---|---|---|---|
| Net Income | $674 million | $688 million | $666 million |
| Adjusted Operating Income | $688 million | $718 million | $676 million |
| Total Revenues | $1.236 billion | $1.202 billion | $1.154 billion |
| Premiums Earned | $981 million | $980 million | $957 million |
| Net Investment Income | $266 million | $241 million | $207 million |
| Losses Incurred | $110 million | $39 million | $27 million |
| Loss Ratio | 11% | 4% | 3% |
| Expense Ratio | 22% | 23% | 23% |
| New Insurance Written (NIW) | $51.5 billion | $51.0 billion | $53.1 billion |
| Primary Insurance in-Force (IIF) | $273.1 billion | $268.8 billion | $262.9 billion |
| Primary Risk in-Force (RIF) | $71.4 billion | $70.0 billion | $67.6 billion |
| Investment Portfolio (Fair Value) | $6.05 billion | $5.62 billion | $5.27 billion |
| Cash and Cash Equivalents | $582 million | $599 million | $616 million |
| Long-Term Borrowings | $744 million | $743 million | N/A |
Material Changes vs. Prior Period
- Loss Experience: The loss ratio increased to 11% in 2025 from 4% in 2024. This was driven by higher incurred losses from current period delinquencies ($299 million in 2025 vs. $287 million in 2024) and a reduction in favorable reserve releases ($200 million in 2025 vs. $252 million in 2024). Despite the increase, the company recorded a net reserve release of $200 million due to strong cure performance.
- Revenue Growth: Total revenues increased 3% year-over-year, primarily driven by an 11% increase in net investment income due to higher yields and average invested assets. Premiums remained relatively flat.
- Portfolio Metrics: New Insurance Written (NIW) increased 1% to $51.5 billion. Primary persistency decreased slightly to 82% from 83% in 2024, though it remains elevated due to the high interest rate environment. The delinquency rate rose to 2.62% from 2.45%.
- Capital Position: The PMIERs sufficiency ratio decreased to 162% ($1.92 billion above requirements) from 167% in 2024, though the company remains well-capitalized. The Risk-to-Capital (RTC) ratio improved to 10.1:1 from 10.5:1.
Guidance, Outlook, and Risks
Management Commentary: Management views the current market and underwriting conditions as within their risk-adjusted return appetite. They expect new insurance written with strong credit profiles to contribute positively to future profitability. The company continues to prioritize capital allocation to support policyholders, grow the business, and return capital to shareholders.
Capital Returns: The company increased its quarterly dividend to $0.21 per share in 2025. In 2025, the company repurchased $382 million of common stock. Subsequent to year-end, a new $500 million share repurchase program was authorized.
Key Risks and Contingencies:
- Regulatory Compliance: Continued eligibility to write business with GSEs depends on meeting Private Mortgage Insurer Eligibility Requirements (PMIERs). Updated PMIERs standards regarding asset quality and liquidity are phasing in through 2026.
- Economic Sensitivity: Deterioration in economic conditions, rising unemployment, or a decline in home prices could adversely affect loss experience and increase delinquencies.
- Interest Rates: Rising rates reduce origination volume but increase persistency. Declining rates could increase refinancing and cancellations, reducing premiums earned.
- Genworth Relationship: Genworth Financial, Inc. owns approximately 80% of Enact's common stock, limiting Enact's ability to raise capital via common stock issuance and creating potential reputational or financial linkages.
Investor Verification Checklist
- Loss Reserve Adequacy: Verify the assumptions used for claim rates and severity, noting the $200 million reserve release in 2025 and the sensitivity of reserves to economic changes.
- PMIERs Compliance: Confirm the company's ability to maintain the 162% sufficiency ratio under the new PMIERs asset standards phasing in through 2026.
- Delinquency Trends: Monitor the 2.62% delinquency rate and the composition of new defaults, particularly in judicial foreclosure states (e.g., Florida, New York) which have higher severity.
- Investment Portfolio: Review the $6.05 billion investment portfolio for credit quality (99% investment grade) and the impact of interest rate fluctuations on unrealized gains/losses.
- Customer Concentration: Note that the largest customer accounted for 22% of NIW and 12% of total revenues in 2025.