Release Details

30% Increase in Net Income versus First Quarter 2014

Essent Reinsurance, Ltd. Executes First Transaction

HAMILTON, Bermuda--(BUSINESS WIRE)-- Essent Group Ltd. (NYSE: ESNT) today reported net income for the quarter ended June 30, 2014 of $19.6 million or $0.23 per diluted share. As of June 30, 2014, Essent had primary insurance in force of $39.4 billion and consolidated stockholders’ equity of $768.0 million. Essent’s combined risk to capital ratio, which includes statutory capital for both Essent Guaranty, Inc. and Essent Guaranty of PA, Inc., was 16.2:1 as of June 30, 2014.

Essent also reported that subsequent to the end of the second quarter 2014 its Bermuda-based reinsurer, Essent Reinsurance, Ltd. (“Essent Re”), insured a portion of Freddie Mac’s most recent Agency Credit Insurance Structure (“ACIS”) transaction. Additionally, Essent reported that its domestic flagship mortgage insurer, Essent Guaranty, Inc., entered into a quota-share agreement with Essent Re to prospectively reinsure 25% of its GSE eligible new insurance written effective July 1, 2014. This agreement, which has received approval from both Freddie Mac and Fannie Mae, remains subject to approval from the Pennsylvania Insurance Department. During the third quarter, Essent Group Ltd. plans to contribute $100 million in capital to Essent Re in support of the affiliate quota share and current and future reinsurance transactions.

“Our strong earnings for the quarter reflect our success in increasing the number of customers doing business with Essent and the growth in our high credit quality insurance portfolio,” said Mark Casale, Chairman and Chief Executive Officer. "Also, we are pleased to have Essent Re execute its first transaction and we believe the affiliate quota share will improve our capital efficiency and provide incremental shareholder value. We remain very excited about Essent’s long term prospects.”

Financial Highlights:

• Insurance in force as of June 30, 2014 was $39.4 billion, compared to $34.8 billion as of March 31, 2014 and $22.6 billion as of June 30, 2013.
• New insurance written for the second quarter of 2014 was $5.9 billion, compared to $3.6 billion in the first quarter of 2014 and $5.9 billion in the second quarter of 2013.
• Income before taxes for the second quarter of 2014 was $29.7 million, compared to $23.5 million for the first quarter of 2014 and $13.4 million for the second quarter of 2013.
• Net premiums earned for the second quarter of 2014 were $50.3 million, compared to $44.8 million in the first quarter of 2014 and $27.5 million in the second quarter of 2013.
• The expense ratio for the second quarter of 2014 was 47.0%, compared to 52.4% for the first quarter of 2014 and 56.6% for the second quarter of 2013.
• The provision for losses and LAE for the second quarter of 2014 was $1.0 million, compared to $0.9 million for the first quarter of 2014 and $0.6 million for the second quarter of 2013.
• The percentage of loans in default as of June 30, 2014 was 0.13%, compared to 0.12% as of March 31, 2014 and 0.09% as of June 30, 2013.
• The combined ratio for the second quarter of 2014 was 48.9%, compared to 54.4% for the first quarter of 2014 and 58.7% for the second quarter of 2013.
• In July, through a competitive bidding process, Essent Guaranty, Inc. was selected by Fannie Mae to be the sole insurer on a pool of loans of approximately $1.5 billion.
• Essent had $171.0 million of net cash and investments at the holding company as of June 30, 2014.

Conference Call

Essent management will hold a conference call at 10:00 AM Eastern time today to discuss its results. The conference call will be broadcast live over the Internet at http://ir.essentgroup.com/investors/webcasts-and-presentations/event-calendar/default.aspx. The call may also be accessed by dialing 877-201-0168 inside the U.S., or 647-788-4901 for international callers, using passcode 76436919 or by referencing Essent.

A replay of the webcast will be available on the Essent website approximately two hours after the live broadcast ends for a period of one year. A replay of the conference call will be available approximately two hours after the call ends for a period of two weeks, using the following dial-in numbers and passcode: 855-859-2056 inside the U.S., or 404-537-3406 for international callers, passcode 76436919.

In addition to the information provided in the company's earnings news release, other statistical and financial information, which may be referred to during the conference call, will be available on Essent's website at http://ir.essentgroup.com/investors/financial-information/quarterly-financial-supplements/default.aspx.

Forward Looking Statements

This press release may include “forward-looking statements” which are subject to known and unknown risks and uncertainties, many of which may be beyond our control. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "plan," "seek," "comfortable with," "will," "expect," "intend," "estimate," "anticipate," "believe" or "continue" or the negative thereof or variations thereon or similar terminology. Actual events, results and outcomes may differ materially from our expectations due to a variety of known and unknown risks, uncertainties and other factors. Although it is not possible to identify all of these risks and factors, they include, among others, the following: changes in or to Fannie Mae and Freddie Mac (the “GSEs”), whether through Federal legislation, restructurings or a shift in business practices; failure to continue to meet the mortgage insurer eligibility requirements of the GSEs; competition for customers; lenders or investors seeking alternatives to private mortgage insurance; an increase in the number of loans insured through Federal government mortgage insurance programs, including those offered by the Federal Housing Administration; decline in new insurance written and franchise value due to loss of a significant customer; decline in the volume of low down payment mortgage originations; the definition of "Qualified Mortgage" reducing the size of the mortgage origination market or creating incentives to use government mortgage insurance programs; the definition of "Qualified Residential Mortgage" reducing the number of low down payment loans or lenders and investors seeking alternatives to private mortgage insurance; the implementation of the Basel III Capital Accord discouraging the use of private mortgage insurance; a decrease in the length of time that insurance policies are in force; uncertainty of loss reserve estimates; deteriorating economic conditions; non-U.S. operations becoming subject to U.S. Federal income taxation; becoming considered a passive foreign investment company for U.S. Federal income tax purposes; and other risks and factors described in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2013 filed with the Securities and Exchange Commission on March 10, 2014. Any forward-looking information presented herein is made only as of the date of this press release, and we do not undertake any obligation to update or revise any forward-looking information to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.

Non-GAAP Financial Measures

In presenting Essent Group Ltd.’s results, management has included financial measures, including adjusted book value per share, that are not calculated under standards or rules that comprise accounting principles generally accepted in the United States (“GAAP”). Such measures are referred to as “non-GAAP measures.” These non-GAAP measures may be defined or calculated differently by other companies. Management believes these measures allow for a more complete understanding of the underlying business. These measures are used to monitor our results and should not be viewed as a substitute for those determined in accordance with GAAP. Reconciliations of such measures to the most comparable GAAP figures are included in the attached financial supplement in accordance with Regulation G.

About the Company

Essent Group Ltd. (NYSE: ESNT) is a Bermuda-based holding company which, through its wholly-owned subsidiary Essent Guaranty, Inc., offers private mortgage insurance for single-family mortgage loans in the United States. Essent provides private capital to mitigate mortgage credit risk, allowing lenders to make additional mortgage financing available to prospective homeowners. Headquartered in Radnor, Pennsylvania, Essent Guaranty, Inc. is licensed to write mortgage insurance in all 50 states and the District of Columbia, and is approved by Fannie Mae and Freddie Mac. Additional information regarding Essent may be found at www.essentgroup.com.