Essent Group Ltd (ESNT) 2023 Q4 法說會逐字稿

Thank you for standing by. My name is Eric, and I will be your conference operator today. At this time, I would like to welcome everyone to the Essent Group Limited fourth quarter 2023 earnings call. (Operator Instructions) I would now like to turn the call over to Phil Stefano, Investor Relations. Please go ahead.

謝謝你的支持。我叫艾瑞克，今天我將擔任你們的會議操作員。此時此刻，我謹歡迎大家參加 Essent Group Limited 2023 年第四季財報電話會議。（操作員指示）我現在想將電話轉給投資者關係部門的 Phil Stefano。請繼續。

Thank you, Eric, and good morning, everyone, and welcome to our call. Joining me today are Mark Casale, Chairman and CEO; and David Weinstock, Chief Financial Officer. Also, on hand for the Q&A portion of the call is Chris Curran, President of Essent Guaranty.

謝謝你，埃里克，大家早上好，歡迎撥打我們的電話。今天與我一起出席的還有董事長兼執行長馬克‧卡薩萊 (Mark Casale)；財務長大衛溫斯托克 (David Weinstock)。此外，Essent Guaranty 總裁 Chris Curran 也出席了電話會議的問答部分。

Our press release, which contains Essent's financial results for the fourth quarter and full year 2023 was issued earlier today and is available on our website at essentgroup.com. Our press release includes non-GAAP financial measures that may be discussed during today's call. A complete description of these measures and reconciliation to GAAP may be found in Exhibit O of our press release.

我們的新聞稿今天稍早發布，其中包含 Essent 第四季和 2023 年全年的財務業績，可在我們的網站 essentgroup.com 上取得。我們的新聞稿包括可能在今天的電話會議中討論的非公認會計準則財務指標。這些措施的完整描述以及與 GAAP 的協調可以在我們新聞稿的附件 O 中找到。

Prior to getting started, I would like to remind participants that today's discussions are being recorded and will include the use of forward-looking statements. These statements are based on current expectations, estimates, projections, and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially.

在開始之前，我想提醒與會者，今天的討論正在記錄中，並將包括前瞻性陳述的使用。這些陳述是基於目前的預期、估計、預測和假設，這些預期、估計、預測和假設存在風險和不確定性，可能導致實際結果有重大差異。

For a discussion of these risk and uncertainties, please review the cautionary language regarding forward-looking statements in today's press release. The risk factors included in our Form 10-K filed with the SEC on February 17, 2023, and any other reports and registration statements filed with the SEC, which are also available on our website.

有關這些風險和不確定性的討論，請查看今天新聞稿中有關前瞻性陳述的警示性語言。我們於 2023 年 2 月 17 日向 SEC 提交的 10-K 表格以及向 SEC 提交的任何其他報告和註冊聲明中包含的風險因素，也可在我們的網站上取得。

Now let me turn the call over to Mark.

現在讓我把電話轉給馬克。

Thanks, Phil, and good morning, everyone. Earlier today, we released our fourth quarter and full year 2023 financial results. Strong credit quality and resilience in the housing and labor markets continue to drive favorable credit performance while higher interest rates drove investment income growth and elevated persistency during the year.

謝謝菲爾，大家早安。今天早些時候，我們發布了 2023 年第四季和全年財務業績。住房和勞動力市場的強勁信貸品質和彈性繼續推動良好的信貸表現，而較高的利率則推動了投資收入的成長和年內持續性的提高。

Heading into 2024, we remain constructive on a long-term outlook for housing as the supply and demand imbalance and favorable demographic trends should provide foundational support to home prices. Even a sentiment has improved for a soft landing on the back of strong employment and consumer spending, we continue to manage our business for a range of economic scenarios.

進入 2024 年，我們對住房的長期前景仍持建設性態度，因為供需失衡和有利的人口趨勢將為房價提供基本支撐。即使在強勁的就業和消費者支出的支持下軟著陸的情緒有所改善，我們仍繼續針對一系列經濟情景來管理我們的業務。

Given the strength of our balance sheet and our buy, manage, and distribute operating model, we believe Essent is well positioned. And now for our results.

鑑於我們的資產負債表實力以及我們的購買、管理和分銷營運模式，我們相信 Essent 處於有利地位。現在我們的結果。

For the fourth quarter of 2023, we reported net income of $175 million compared to $147 million a year ago. On a diluted per-share basis, we earned $1.64 for the fourth quarter compared to $1.37 a year ago. For the full year, we earned $696 million or $6.50 per diluted share, while our return on average equity was 15%.

2023 年第四季度，我們的淨利潤為 1.75 億美元，而去年同期為 1.47 億美元。以攤薄每股計算，我們第四季的獲利為 1.64 美元，而去年同期為 1.37 美元。全年我們的獲利為 6.96 億美元，即稀釋後每股收益 6.50 美元，而平均股本回報率為 15%。

As of December 31, our book value per share was $47.87, an increase of 16% from a year ago. As of December 31, our mortgage -- US mortgage insurance in force was $239 billion, a 5% increase versus a year ago. Our 12-month persistency on December 31 was 87% and nearly 75% of our in-force portfolio has a note rate of 5.5% or lower. Despite the recent shift lowering rates, we expect persistency will remain elevated in 2024.

截至 12 月 31 日，我們的每股帳面價值為 47.87 美元，比去年同期成長 16%。截至 12 月 31 日，我們的抵押貸款保險（美國有效抵押貸款保險）規模為 2,390 億美元，比一年前增長 5%。截至 12 月 31 日，我們的 12 個月持續率為 87%，我們有效投資組合中近 75% 的票據利率為 5.5% 或更低。儘管近期輪班率有所下降，但我們預計 2024 年持久性仍將維持在高水準。

The credit quality of our insurance-in-force remained strong with a weighted average FICO of 746 and a weighted average original LTV at 93%. Regulatory guard rails implemented after the global financial crisis have significantly improved industry credit quality and performance, while embedded home equity in our insurance portfolio should mitigate potential claims.

我們有效保險的信用品質依然強勁，加權平均 FICO 為 746，加權平均原始 LTV 為 93%。全球金融危機後實施的監管護欄顯著提高了行業信用品質和績效，而我們的保險投資組合中嵌入的房屋淨值應能減少潛在的索賠。

During 2023, in light of higher mortgage rates and lower mortgage origination volume, we continue to focus on supporting our customers while expanding our franchise. Despite the challenging environment, we successfully activated 108 new customers and continued deleverage EssentEDGE to optimize our unit economics and deliver our best rates to borrowers.

2023 年，鑑於抵押貸款利率上升和抵押貸款發放量下降，我們將繼續專注於為客戶提供支持，同時擴大我們的特許經營權。儘管環境充滿挑戰，我們還是成功啟動了 108 個新客戶，並繼續對 EssentEDGE 進行去槓桿化，以優化我們的單位經濟效益並向借款人提供最優惠的利率。

Our Bermuda-based reinsurance entity, Essent Re, had another strong year performance riding high credit -- high-quality GSE risk share business and expanding its fee-based MDA services. Essent Re ended the year with annual third-party revenues of approximately $80 million, while our third-party risk in force was $2.2 billion.

我們位於百慕達的再保險實體 Essent Re 憑藉高信用——高品質的 GSE 風險分擔業務以及擴展其收費的 MDA 服務，今年業績再次強勁。截至年底，Essent Re 的年度第三方收入約為 8,000 萬美元，而我們有效的第三方風險為 22 億美元。

Our title operations incurred a pretax loss of approximately $4 million in the fourth quarter similar to last quarter. We remain focused on integrating title while implementing risk controls and improving operational efficiency. The Essent ventures team continues to invest in funds gaining insights to improve our core business while enhancing financial returns.

我們的產權業務在第四季度產生了約 400 萬美元的稅前虧損，與上一季類似。我們仍專注於整合產權，同時實施風險控制並提高營運效率。Essent Ventures 團隊繼續投資於獲得見解的基金，以改善我們的核心業務，同時提高財務回報。

As of December 31, the carrying value of other invested assets is $277 million, and ever to date, these investments have created $74 million of value. Cash and investments as of December 31 were $5.7 billion, and our new money yield in the fourth quarter remained over 5%.

截至12月31日，其他投資資產的帳面價值為2.77億美元，迄今為止，這些投資已創造了7,400萬美元的價值。截至12月31日，現金和投資為57億美元，第四季的新資金殖利率仍維持在5%以上。

For the full year 2023, our investment yield was 3.5% compared to 2.6% in 2022. Net investment income was $186 million from 2023, up approximately 50% from 2022. New money yields in our investment portfolio, continue to run ahead of our book yields, which should contribute to future revenue growth.

2023 年全年，我們的投資報酬率為 3.5%，而 2022 年為 2.6%。2023年起淨投資收益為1.86億美元，較2022年成長約50%。我們投資組合中的新資金收益率繼續領先於我們的帳面收益率，這應該有助於未來的收入成長。

As of December 31, we are in a position of strength with $5.1 billion in GAAP equity, access to $1.4 million in excess of loss reinsurance, and over $1 billion of available holding company liquidity. For the full year 2023, operating cash flow of $763 million and a mortgage insurance underwriting margin of 77%. Our franchise remains well positioned from an earnings, cash flow, and balance sheet perspective.

截至 12 月 31 日，我們處於有利地位，擁有 51 億美元的 GAAP 股本、超過 140 萬美元的損失再保險以及超過 10 億美元的可用控股公司流動資金。2023 年全年營運現金流為 7.63 億美元，抵押貸款保險承保利潤率為 77%。從收益、現金流量和資產負債表的角度來看，我們的特許經營權仍然處於有利地位。

As evidence of this, in January, S&P upgraded the financial strength ratings of our two primary operating entities, Essent Guaranty and Essent Re to single A-minus. With this upgrade, we reached a milestone of single A-minus or higher financial strength ratings by all rating agencies that cover Essent Guaranty and Essent Re.

作為證據，一月份，標準普爾將我們兩個主要營運實體 Essent Guaranty 和 Essent Re 的財務實力評級提升至單一 A-。透過此次升級，我們達到了一個里程碑，即涵蓋 Essent Guaranty 和 Essent Re 的所有評級機構均給予我們單一 A- 或更高的財務實力評級。

During the year, we continue to execute our diversified and programmatic reinsurance strategy, while retiring the majority of two season Radnor Re ILN deals that no longer provide an economic or regulatory capital credit.

今年，我們繼續執行多元化和程序化的再保險策略，同時退出大部分不再提供經濟或監管資本信貸的兩季 Radnor Re ILN 交易。

In the fourth quarter, we closed an excess of loss reinsurance transaction covering our 2023 NIW. At year end 2023, approximately 93% of our portfolio is reinsured. Our strong financial performance and capital position enable us to take a measured approach between capital retention, investment, and distribution.

在第四季度，我們完成了涵蓋 2023 年國家利益豁免的超額損失再保險交易。到 2023 年底，我們約 93% 的投資組合獲得了再保險。我們強大的財務表現和資本狀況使我們能夠在資本保留、投資和分配之間採取審慎的方法。

In 2023, we repurchased approximately 1.5 million shares for $66 million. Further, I'm pleased to announce that our Board has approved a 12% increase in our quarterly dividend of $0.28 per share.

2023 年，我們以 6,600 萬美元回購了約 150 萬股股票。此外，我很高興地宣布，我們的董事會已批准將季度股息增加 12%，即每股 0.28 美元。

Looking forward, we will continue to review our common dividend annually. We believe paying a dividend is a meaningful demonstration of the confidence we have in the stability of our cash flows and the strength of our operating model.

展望未來，我們將繼續每年審查我們的普通股息。我們相信，支付股利有意義地表明了我們對現金流的穩定性和營運模式的實力的信心。

Now let me turn the call over to Dave.

現在讓我把電話轉給戴夫。

Thanks, Mark, and good morning, everyone. Let me review our results for the quarter in a little more detail. For the fourth quarter, we earned $1.64 per diluted share compared to $1.66 last quarter, and $1.37 in the fourth quarter a year ago.

謝謝，馬克，大家早安。讓我更詳細地回顧一下我們本季的業績。第四季度，我們每股攤薄收益為 1.64 美元，上一季為 1.66 美元，去年同期為 1.37 美元。

Our US mortgage insurance portfolio ended 2023 with insurance in force of $239.1 billion, an increase of $417 million from September 30, and an increase of $12 billion or 5% compared to $227.1 billion at December 31, 2022. Persistency at December 31, 2023, increased to 86.9% compared to 86.6% at the end of the third quarter.

截至2023 年，我們的美國抵押貸款保險投資組合的有效保險金額為2,391 億美元，較9 月30 日增加了4.17 億美元，較2022 年12 月31 日的2,271 億美元增加了120 億美元，增幅為5%。截至 2023 年 12 月 31 日，持久性從第三季末的 86.6% 增加到 86.9%。

The net premium yield for fourth quarter 2023 -- net premium earned for fourth quarter 2023 was $246 million and included $17.2 million of premiums earned by Essent Re, our third-party business and $17.4 million of premiums earned by the title operations. The average based premium rate for the US mortgage insurance portfolio for the fourth quarter was 40 basis points, and the net average premium rate was 35 basis points in the fourth quarter of 2023 with both consistent to last quarter. We expect that the average base premium rate for the full year 2024 will be largely unchanged from the fourth quarter rate of 40 basis points.

2023 年第四季的淨保費收益率－2023 年第四季賺取的淨保費為2.46 億美元，其中包括我們的第三方業務Essent Re 賺取的1,720 萬美元保費以及產權業務賺取的1,740萬美元保費。2023年第四季美國抵押貸款保險組合的平均基礎保費率為40個基點，淨平均保費率為35個基點，兩者與上季一致。我們預計 2024 年全年平均基本保費率將與第四季 40 個基點基本持平。

Net income increased $3.5 million or 7% in the fourth quarter of 2023 compared to last quarter, due primarily to an increase in yield on new investments and higher yields on cash and cash equivalents. Other income in the fourth quarter was $6.4 million compared to $5.6 million last quarter. The largest component of the increase was the change in fair value of embedded derivatives in certain of our third-party reinsurance agreements.

與上一季相比，2023 年第四季的淨利潤增加了 350 萬美元，即 7%，這主要是由於新投資收益率的增加以及現金和現金等價物收益率的提高。第四季其他收入為 640 萬美元，上一季為 560 萬美元。成長的最大組成部分是我們某些第三方再保險協議中嵌入衍生性商品的公允價值變化。

In the fourth quarter, we recorded a $412,000 increase in the fair value of these embedded derivatives compared to an $898,000 decrease recorded last quarter.

第四季度，這些嵌入式衍生性商品的公允價值增加了 412,000 美元，而上個季度則減少了 898,000 美元。

The provision for loss and loss adjustment expenses was $19.6 million in the fourth quarter of 2023 compared to $10.8 million in the third quarter of 2023 and $4.1 million in the fourth quarter a year ago.

2023 年第四季的損失和損失調整費用撥備為 1,960 萬美元，而 2023 年第三季為 1,080 萬美元，一年前第四季為 410 萬美元。

At December 31, the default rate on the US mortgage insurance portfolio was 1.8%, up 18 basis points from 1.62% at September 30, 2023.

截至12月31日，美國抵押貸款保險組合違約率為1.8%，較2023年9月30日的1.62%上升18個基點。

For the full year 2023, we recorded a net provision of approximately $32 million as the increase in new defaults was materially offset by favorable reserve development from strong cure activity.

2023 年全年，我們記錄了約 3,200 萬美元的淨撥備，因為新違約的增加被強有力的補救活動帶來的有利儲備發展所抵消。

Other underwriting and operating expenses in the fourth quarter were $55.2 million and include $11.6 million of total expenses. Expenses for the fourth quarter also include title premiums retained by agents of $11.5 million, which are reported separately on our consolidated income statement.

第四季的其他承保和營運費用為 5,520 萬美元，其中總費用為 1,160 萬美元。第四季的費用還包括代理人保留的 1,150 萬美元的產權保費，這些費用在我們的合併損益表中單獨報告。

Our consolidated expense ratio was 27% this quarter. Our consolidated expense ratio, excluding titles, which is a non-GAAP measure, was 19% this quarter. A description of our consolidated expense ratio, excluding title and the reconciliation to GAAP may be found in Exhibit O of our press release. We estimate that other underwriting and operating expenses excluding Title Operations, will be approximately $180 million for the full year 2024.

本季我們的綜合費用率為 27%。本季我們的綜合費用率為 19%，不包括非 GAAP 衡量標準的書籍費用。我們的合併費用率（不包括所有權和 GAAP 調整表）的描述可以在我們新聞稿的附件 O 中找到。我們估計 2024 年全年除產權營運外的其他承保和營運費用約為 1.8 億美元。

The effective tax rate for full year 2023 was 15.4%. Income tax expense for the fourth quarter includes a $2.7 million net benefit associated with the recognition of a deferred tax asset for unrealized losses on the investment portfolios of Essent Group and Essent Re upon the enactment of the Bermuda corporate income tax. For 2024, we estimate that the annual effective tax rate will be approximately 15.5%, excluding the impact of any discrete items.

2023年全年的有效稅率為15.4%。第四季的所得稅費用包括與百慕達企業所得稅頒布後 Essent Group 和 Essent Re 投資組合的未實現虧損確認遞延稅資產相關的 270 萬美元淨收益。對於 2024 年，我們估計年度有效稅率約為 15.5%，不包括任何離散項目的影響。

As Mark noted, our holding company liquidity remains strong and includes $400 million of undrawn revolver capacity under our committed credit facility. At December 31, we had $425 million of term loan outstanding with a weighted average interest rate of 7.11%, up from 7.07% at September 30.

正如馬克所指出的那樣，我們的控股公司流動性仍然強勁，包括我們承諾的信貸安排下未提取的 4 億美元的左輪手槍容量。截至 12 月 31 日，我們的未償還定期貸款為 4.25 億美元，加權平均利率為 7.11%，高於 9 月 30 日的 7.07%。

At December 31, 2023, our debt to capital ratio was 8%. At December 31, Essent Guaranty's PMIERs sufficiency ratio was strong at 170% with $1.4 billion in excess available assets. Excluding the 0.3 COVID factor, the PMIERs sufficiency ratio remained strong at 165% with $1.3 billion in excess of available assets.

截至2023年12月31日，我們的負債與資本比率為8%。截至 12 月 31 日，Essent Guaranty 的 PMIER 充足率高達 170%，擁有 14 億美元的超額可用資產。排除 0.3 的新冠病毒因素，PMIER 充足率維持在 165% 的強勁水平，可用資產超額 13 億美元。

At quarter end, the combined US mortgage insurance business statutory capital was $3.4 billion with a risk to capital ratio of 10.2:1. Note that statutory capital includes $2.3 billion of contingency reserves at December 31. Over the last 12 months, US mortgage insurance business has grown statutory capital by $198 million.

截至季末，美國抵押貸款保險業務法定資本總額為 34 億美元，創投比為 10.2:1。請注意，截至 12 月 31 日，法定資本包括 23 億美元的緊急準備金。過去 12 個月，美國抵押貸款保險業務法定資本增加了 1.98 億美元。

During the fourth quarter and full year 2023, Essent Guaranty paid dividends of $55 million and $295 million, respectively, to its US holding company. For 2024, the US mortgage insurance companies can pay ordinary dividends of $304 million. During the fourth quarter, Essent Re paid a dividend of $60 million to Essent Group. Also in the quarter, Essent Group paid cash dividends totaling $26.4 million to shareholders, and we repurchased 302,000 shares for $15 million under the authorization approved by our Board in May 2022.

2023年第四季和全年，Essent Guaranty分別向其美國控股公司支付了5,500萬美元和2.95億美元的股息。到2024年，美國抵押貸款保險公司可以支付3.04億美元的普通股息。第四季度，Essent Re 向 Essent Group 支付了 6,000 萬美元的股息。同樣在本季度，Essent Group 向股東支付了總計 2,640 萬美元的現金股息，並根據董事會 2022 年 5 月批准的授權，以 1,500 萬美元的價格回購了 302,000 股股票。

Now, let me turn the call back over to Mark.

現在，讓我把電話轉回給馬克。

Thanks, Dave. And closing, we are pleased with our fourth quarter and full year 2023 financial results, which continue to reflect the strength of our operating model. Our high credit quality portfolio, combined with resilience in housing and employment, continues to translate to strong credit performance, while our franchise benefited from the impact of higher rates on investment income and persistency.

謝謝，戴夫。最後，我們對 2023 年第四季和全年財務表現感到滿意，這繼續反映了我們營運模式的優勢。我們的高信用品質投資組合，加上住房和就業方面的彈性，繼續轉化為強勁的信用表現，而我們的特許經營權則受益於較高利率對投資收入和持久性的影響。

Our strong operating performance continue to generate excess capital, which we will approach in a measured manner between retention, investment, and distribution to our shareholders. We believe this approach is in the best long-term interest of Essent and our stakeholders, while Essent continues to play an integral role in supporting affordable and sustainable homeownership.

我們強勁的經營業績持續產生過剩資本，我們將在保留、投資和向股東分配之間謹慎對待這些資本。我們相信，這種方法符合 Essent 和我們的利益相關者的最佳長期利益，同時 Essent 將繼續在支持負擔得起和可持續的住房所有權方面發揮不可或缺的作用。

Now let's get to your questions. Operator.

現在讓我們來回答您的問題。操作員。

(Operator Instructions) Rick Shane, JPMorgan.

（操作員指令）Rick Shane，摩根大通。

Hey, Mark. Thanks for taking my questions and I appreciate your enthusiasm for taking the questions this morning. I suspect that's from my peers, not for me that you're so excited, you want to use the question --

嘿，馬克。感謝您回答我的問題，也感謝您今天早上熱情地回答我的問題。我懷疑這是我的同齡人提出的，而不是我的，所以你很興奮，你想用這個問題--

You were first on the list, got us excited.

你是名單上的第一名，讓我們很興奮。

Oh, there you go, that's a rough day, Mark. So, it's a kind of a high-level question. I was on a call yesterday where the theme of the call was rate higher for longer and we're clearly at a crossroads and I don't think anybody really knows what's going to happen.

哦，你看，今天真是艱難的一天，馬克。所以，這是一個高級問題。昨天我參加了一次電話會議，會議的主題是利率持續走高，我們顯然正處於十字路口，我認為沒有人真正知道會發生什麼。

One of the things that I'm really wrestling with is when I think of Essent and when I think of this sector. What are the scenarios that you think are the best? And what are the scenarios that you think are the worst?

我真正糾結的一件事是當我想到 Essent 和這個行業時。您認為最好的場景是什麼？您認為最糟糕的情況是什麼？

I mean, it can't be heads, I win, tails, I win scenario. What are you worried about and what's the ideal path forward from here?

我的意思是，不可能出現正面，我贏，反面，我贏的情況。您擔心什麼？接下來的理想前進道路是什麼？

Well, remember, Rick, I mean, taking a step back, right? Rates get all of the press, but really credit is what drives our performance longer term. So if you just think through and forecast out our business over the next three to five years, the real expenses are we manage them well, and you can kind of see where the insurance in force is going to grow relative to the industry. Investment income that'll ebb and flow depending on, kind of where rates are to provision, which really has the most volatility in it.

好吧，記住，里克，我的意思是，退後一步，對嗎？利率受到了所有媒體的關注，但真正推動我們長期業績的因素是信用。因此，如果你仔細思考並預測我們未來三到五年的業務，真正的費用是我們管理得好，你可以看到現行保險相對於行業的成長情況。投資收入的波動取決於提供利率的情況，這實際上具有最大的波動性。

So, when I think of kind of 2024, it's hard to tell with rates in terms of where the market's gone, I'm not sure it's -- everyone said it was higher for longer until the Fed spoke in December, then it became rates are going lower, I think from an asset perspective, right? I think we're well positioned in that -- we're probably levered a bit positively to rates going down. If they don't -- and the reason why is 45% of our book rate is still in that 2021 [vintage] which is -- it's a little bit over 3%, so it's not really going anywhere.

因此，當我想到 2024 年時，很難用利率來判斷市場走向何方，我不確定——每個人都說利率會持續較高的時間，直到 12 月美聯儲發表講話，然後利率就變成了利率我認為從資產角度來看，價格正在走低，對嗎？我認為我們在這方面處於有利地位——我們可能對利率下降有一些積極的槓桿作用。如果他們不這樣做——我們的 45% 的圖書率仍然是 2021 年的[年份]——它略高於 3%，所以它不會真正發生任何變化。

So, if rates go down and IW increases, I'm not sure the persistency goes down in tandem away kind of now normal head just because of the unusual kind of a lock-in effect of that portfolio.

因此，如果利率下降而 IW 增加，我不確定持久性會同時下降，而現在正常的頭只是因為該投資組合的不尋常的鎖定效應。

If rates stay higher for longer, yields stay high, cash -- the persistency in the books stays higher, we continue to generate cash flow. And the important thing for investors is we continue to grow book value per share, right? So, I've heard a lot of things around growth. We're growing book value per share.

如果利率維持在高水準的時間較長，收益率保持在較高水平，現金帳簿的持續性保持在較高水平，我們將繼續產生現金流。對投資者來說，重要的是我們每股帳面價值的持續成長，對嗎？所以，我聽到了很多關於成長的事情。我們的每股帳面價值正在成長。

And if you just think about investment income for a second, Rick, we grew that $60 million year-over-year. If you were to equate that to insurance-in-force, it's close to like a $20 billion increase in insurance in force. Let's say, $20 billion at 40 basis points base yield at a 35% combined ratio, which again, just shows you there's different avenues for us to grow at Essent versus just kind of looking at the insurance in force.

如果你想一下投資收入，Rick，我們的收入年增了 6000 萬美元。如果將其等同於有效保險，那麼有效保險將增加近 200 億美元。比方說，200 億美元，基礎收益率為 40 個基點，綜合比率為 35%，這再次表明，我們在 Essent 上有不同的成長途徑，而不是只關注有效的保險。

So, I'm not going to say there's a heads, we win, tails, we win scenario, I would just say from a -- what are we concerned about? It's still credit, it's always credit. I'm not too worried about rates because I think a lot of this is going to balance out. Credit is what we have our eye on. And I think there long as employment stays strong, I think we're on relatively good shape going into 2024.

所以，我不會說有正面，我們贏，反面，我們贏的情況，我只想說──我們擔心什麼？仍然是信用，永遠是信用。我不太擔心利率，因為我認為其中許多都會得到平衡。信用是我們所關注的。我認為只要就業保持強勁，我認為進入 2024 年我們就會處於相對良好的狀態。

Got it. Okay, very helpful. Thanks, Mark.

知道了。好的，非常有幫助。謝謝，馬克。

Sure.

當然。

Bose George, KBW.

博斯·喬治，KBW。

Hey, good morning, everyone. This is actually Alex on for Bose. Firstly, just wanted to get a little more color surrounding why the cure rate of 28% was lower this quarter. It looked like it had been trending down from 90% in fourth quarter last year to 62% in 3Q. Is there anything specific that led that to decline sharply this quarter?

嘿，大家早安。這實際上是 Alex 為 Bose 所做的。首先，我只是想了解為什麼本季 28% 的治癒率較低。看起來它已經從去年第四季的 90% 下降到第三季的 62%。有什麼具體因素導致本季大幅下降嗎？

No, Alex and again, I would caution investors to dig too far into new default rates, cure rates, percentage growth. We've seen, I mean, we've heard a lot of the questions. And just big picture, Alex, we're at 14,000 defaults on 820,000 policies and we've been relatively consistent around falls. There's a lot of noise in the defaults in the claims -- more in the default side because of the effect of forbearance, right?

不，亞歷克斯，我再次提醒投資者不要深入研究新的違約率、治癒率和成長率。我的意思是，我們已經看到了很多問題。亞歷克斯，從大局來看，我們的 820,000 份保單中有 14,000 項違約，而且我們在跌幅方面的表現相對穩定。索賠中的違約有很多噪音——由於寬容的影響，違約方面更多，對嗎？

So, to take a look at forbearance, really the frictionless forbearance just ended a month ago. So, what you're seeing is, you're seeing defaults come in, there's certain strategic defaulters that they're getting a year extra on forbearance and then they're curing.

所以，看一下忍，真的是一個月前剛結束的無摩擦忍。所以，你看到的是，你看到違約出現，某些策略性違約者獲得了額外一年的寬容，然後他們就得到了治癒。

So, there's a lot of noise between the curation of the fall rates -- that is what it really is noise. And now that there is a more of a friction with forbearance in terms of what borrowers have to show. I would expect that to normalize in the coming kind of 12-ish months to 18 months.

因此，在下降率的策劃之間存在著許多噪音——這才是真正的噪音。現在，就借款人必須展示的內容而言，與寬容之間存在更多的摩擦。我預計這種情況會在未來 12 個月到 18 個月內恢復正常。

It remains to be seen. But I think the message for investors is defaults are still the absolute level of defaults, and even the default rate is it's pretty low, I think it's 1.8 at the end of the fourth quarter. It was 1.6 something the quarter before, but still relatively good. And I think that the credit performance continues to be strong.

它還有待觀察。但我認為向投資者傳達的訊息是違約仍然是違約的絕對水平，即使違約率也相當低，我認為第四季末為 1.8。上一季為 1.6 左右，但仍相對較好。我認為信貸表現持續強勁。

Got it. That makes sense on maybe just one more. I'm wondering if you could provide any updated color on pricing in the industry. I know you mentioned earlier that you all expect the base [growth] to be stable over the course of the year. But in the event, the economy does have a soft landing and remained strong, is there any chance we see some downside pressure on premiums are not really?

知道了。也許還有一個是有道理的。我想知道您是否可以提供有關行業定價的任何更新的顏色。我知道你們之前提到，你們都希望今年的基數（成長）能保持穩定。但如果經濟確實軟著陸並保持強勁，我們是否有可能看到保費確實面臨一些下行壓力？

No. I wouldn't expect that. I think, again, given the flexibility of the pricing engines, it really has given the entire industry again, I think I mentioned this last quarter. A lot of pricing power per se has moved to the industry versus the lenders, right? In the old rate cards, it was -- the lender had a lot of control, whether it was bid bidding things out or allocating based on other service, which is now it's really the best rate for each borrower.

不。我沒想到會這樣。我認為，考慮到定價引擎的靈活性，它確實再次為整個行業帶來了好處，我想我在上個季度提到過這一點。很多定價權本身已經轉移到行業而不是貸方，對吧？在舊的費率卡中，貸方擁有很大的控制權，無論是競標還是根據其他服務進行分配，現在這實際上是每個借款人的最佳利率。

All the MIs have picked their spots. And given where some of the pricing engines and data that we get in the industry, we can see a lot of the movements and the percentages. And I think everyone else can too. So we all have a pretty good bead on it. And I think we price for unit economics and the industry kind of reached a pretty low point in early '22.

所有的軍事情報部門都已選好自己的位置。考慮到我們在行業中獲得的一些定價引擎和數據，我們可以看到很多變動和百分比。我認為其他人也可以。所以我們都有一個很好的珠子。我認為我們對單位經濟效益和產業的定價在 22 年初達到了相當低的點。

Pricing came up and we generally look at 12%-ish to 15% returns on a unit economic basis. I would say they're probably closer to the upper end now. It's pretty good. But I think it's well priced given kind of the nature of the risks. So I wouldn't in a small market -- relatively smaller market we see pretty consistent pricing.

定價出現後，我們通常認為單位經濟回報率為 12% 至 15%。我想說他們現在可能更接近高端了。這個很不錯。但我認為考慮到風險的性質，它的定價很合理。所以我不會在一個小市場——相對較小的市場，我們看到相當一致的定價。

I'm not sure as the industry starts to -- if there is a soft landing and the market starts to grow, I wouldn't see a lot change in pricing. In fact, it's rarely a discussion point anymore even at the lender level because it's -- that used to be all about pricing because they saw it. They don't really see if they're focusing on other things that are -- like I said, it really allows Essent and the rest of the industry to price on risk, delivering our best rates to borrowers.

我不確定該行業是否會開始軟著陸並且市場開始成長，我不會看到定價發生太大變化。事實上，即使在貸方層面，這也很少成為一個討論點，因為這過去都是關於定價的，因為他們看到了這一點。他們並沒有真正看到他們是否正在關注其他事情——就像我說的那樣，它確實允許 Essent 和行業的其他公司對風險定價，為借款人提供最好的利率。

And it's kind of removed that a little bit from the equation around from our standpoint.

從我們的角度來看，它從等式中刪除了一點。

Great. Thanks for taking the questions, Mark. I appreciate it.

偉大的。感謝您提出問題，馬克。我很感激。

Sure.

當然。

(Operator Instructions)

（操作員說明）

Doug Harter, UBS.

道格·哈特，瑞銀集團。

Thanks. Mark, kind of hearing what you said about the risk of reading too much into kind of one quarter, but can you just talk about how kind of the recent vintages are performing and how delinquencies and those trends are performing versus kind of more historical vintages?

謝謝。馬克，聽到你所說的關於對一個季度進行過多解讀的風險，但你能談談最近年份的表現如何，以及與歷史悠久的年份相比，拖欠和這些趨勢的表現如何嗎？

Again, I think there's a lot a lot of noise, Doug, with kind of the forbearance.

再說一次，我認為有很多噪音，道格，帶著某種克制。

We don't see -- I'll give you -- I'll tell you one thing that we see, early payment defaults, right? Early payment defaults post-COVID are higher than they were pre-COVID. We assigned most of that to forbearance because a lot of us are all curing and they're not going to claim.

我們沒有看到——我會給你——我會告訴你我們看到的一件事，提前付款違約，對吧？新冠疫情之後的提前付款違約情況比新冠疫情之前還要高。我們將其中大部分歸因於忍耐，因為我們很多人都在治愈，但他們不會要求。

So it's back to what I said earlier about that frictionless cost or ease of forbearance is really creating some noise in the numbers. But again, step-back, Doug, our insurance-in-force average FICO was 746. I mean, and I know you cover a lot of different businesses, especially finance, 746 is a pretty strong credit score.

因此，這又回到了我之前所說的，即無摩擦成本或輕鬆的寬容確實在數字中產生了一些噪音。但道格，我們的保險有效平均 FICO 是 746。我的意思是，我知道您涉及很多不同的業務，尤其是金融業，746 是一個相當不錯的信用評分。

And also, I would like to point out just in the context of time, right? if you think about that when the GSEs really start -- the modern-day GSE started in right around the early 90s, right? That's when DU and LP started the process, and you had the standardization of the mortgage business.

另外，我想指出的是時間上的情況，對吧？如果你想一想，當 GSE 真正開始時——現代的 GSE 大約在 90 年代初開始，對嗎？就在那時，DU 和 LP 開始了這個流程，抵押貸款業務就標準化了。

So if you go back from, say, 1990 to 2023, 33 years, Doug, and you look at losses on GSE mortgages, generally outside of the '05 to '07 vintage, they're less than 100 basis points. So in the context of time, and this is what we ensure every day. And then remember, post crisis, you have the advent of QM, you had the strengthening of the model, you had stronger QC, you had forbearance. You brought on PMIERs, which is good capital standards for the MI industry. We insure boring GSC mortgages.

因此，如果你回溯到 1990 年到 2023 年，即 33 年，Doug，你會看到 GSE 抵押貸款的損失，通常在 05 年到 07 年之外，它們的損失不到 100 個基點。所以在時間範圍內，這就是我們每天所確保的。然後記住，危機過後，品質管理的出現，模型的加強，品質控制的加強，寬容。你們引進了PMIER，這是MI 產業良好的資本標準。我們為無聊的 GSC 抵押貸款提供保險。

It's and it's a boring business. And it's great. And we like that way. But that's why when people are looking at these type of quarter-to-quarter trends, it is a little bit more of a specialty finance type approach to the business in terms of the questions. And I would argue that we're more like a specialty insurer. And our specialty happens to be mortgage, now that's our expertise.

這確實是一件無聊的事。這很棒。我們喜歡這樣。但這就是為什麼當人們查看這些類型的季度趨勢時，就問題而言，這更像是一種專業金融類型的業務方法。我認為我們更像是一家專業保險公司。我們的專長恰好是房貸，現在這就是我們的專業知識。

But we're really a portfolio business. It's driven by the portfolio. And again, just when you think about the topline, that's being driven off the business and just the stability of the credit, and I forgot to add that we've hedged a lot of the credit out too. So there's that added layer of protection. Again, bigger picture of these -- I think we've said in the script, over $700 million of operating cash flow.

但我們確實是一家投資組合企業。它是由投資組合驅動的。再說一次，當你想到營收時，你會發現，這正在影響業務和信貸的穩定性，我忘了補充一點，我們也對沖了很多信貸。因此，增加了一層保護。再說一次，更大的圖景——我想我們在劇本中已經說過，營運現金流超過 7 億美元。

The issue for the MI industry the next few years isn't going to be the performance or the portfolio or growth or any of those sort of things, it's really going to be allocation of capital. There's a lot of capital being generated by Essent, and others. And certain MIs have allocated one way and certain MIs will do it the other way. But that's really going to be the differentiator and the business longer term from an investor perspective. So hopefully that gives you some color.

未來幾年，MI 產業的問題將不再是績效、投資組合、成長或任何此類問題，而是資本配置。Essent 和其他公司正在產生大量資本。某些 MI 會以一種方式進行分配，而某些 MI 則會以另一種方式進行分配。但從投資者的角度來看，這確實將成為差異化因素和長期業務。希望這能給你一些色彩。

I appreciate it, Mark. Thank you.

我很感激，馬克。謝謝。

I'll now turn the call back over to the management for closing remarks. Please go ahead.

現在我將把電話轉回給管理層以供結束語。請繼續。

Yeah. Thank you, everyone, for your time today and have a great weekend.

是的。謝謝大家今天抽出寶貴的時間，祝週末愉快。

Ladies and gentlemen, that concludes today's call. Thank you for joining, and you may now disconnect.

女士們、先生們，今天的電話會議到此結束。感謝您加入，您現在可以斷開連接。