Enact Holdings Inc ((ACT)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Enact Holdings Inc. Reports Robust Financial Performance Amid Challenges
The recent earnings call of Enact Holdings Inc. reflected a generally positive sentiment with the company celebrating record achievements in operating income, strong capital returns, and credit rating upgrades. These milestones underscore a solid financial standing despite some setbacks such as increased delinquency rates due to natural disasters and a decline in GAAP net income. Strategic execution and disciplined expense management were highlighted as key contributors to the positive outlook.
Record High Adjusted Operating Income
The company reported a record high adjusted operating income of $718 million for the full year, equating to $4.56 per diluted share. This marks a 9% increase compared to the previous year, showcasing the company’s ability to enhance its financial performance significantly.
Strong Capital Returns
Enact Holdings returned $354 million to shareholders in 2024, surpassing the high end of the capital return guidance. This indicates the company’s commitment to providing value to its shareholders through strategic financial management.
Insurance in Force Growth
The company achieved a record insurance in force of $269 billion, which supports approximately 140,000 families in homeownership. This growth reflects Enact’s expanding influence in the insurance market and its contribution to homeownership.
Credit Rating Upgrades
Enact Holdings received credit rating upgrades from major agencies, with S&P elevating its rating from BBB+ to A- and Fitch upgrading from A- to A. These upgrades are indicative of a strong financial position and increased confidence from credit rating agencies.
Expense Management
Despite inflationary pressures, Enact successfully reduced expenses by 2% when excluding restructuring costs. This demonstrates the company’s effective cost management strategies and operational efficiencies.
Dividend and Share Buybacks
In the fourth quarter of 2024, the company paid out $28 million in dividends and repurchased 2.1 million shares for $74 million. These actions highlight Enact’s focus on rewarding its shareholders through dividends and share buybacks.
Impact of Natural Disasters
Natural disasters led to a 6% increase in new delinquencies, raising the total delinquency count to 23,600. This rise in delinquencies underscores the challenges faced by the company due to unforeseen events.
Decline in GAAP Net Income
The company’s GAAP net income for Q4 2024 was $163 million, down from $1.15 per diluted share in Q3 2024, reflecting some financial pressure despite overall strong performance.
Forward-Looking Guidance
Enact Holdings provided optimistic forward-looking guidance, emphasizing its record-high adjusted operating income of $718 million and $4.56 per diluted share, a 9% year-over-year increase. The company also reported an adjusted return on equity of 15% and a $34.16 adjusted book value per share, up 12% annually. Strategic capital allocation, operational efficiencies, and robust balance sheet management are expected to continue driving the company’s growth.
In conclusion, Enact Holdings Inc.’s earnings call revealed a robust financial performance marked by record achievements and strategic successes, despite certain challenges such as natural disasters impacting delinquency rates. The company’s dedication to shareholder value, operational efficiency, and strategic growth paints a promising picture for the future.
