Enact Holdings Inc

Previous wording

The following discussion and analysis of our consolidated financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes for the nine months ended September 30, 2024 and 2023, and our audited consolidated financial statements and related notes for the years ended December 31, 2023 and 2022 within our Annual Report on Form 10-K for the fiscal year ending December 31, 2023 (the “Annual Report”).

Current wording

The following discussion and analysis of our consolidated financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes for the three months ended March 31, 2025 and 2024, and our audited consolidated financial statements and related notes for the years ended December 31, 2024 and 2023 within our Annual Report on Form 10-K for the fiscal year ending December 31, 2024 (the “Annual Report”).

Previous wording

In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties and assumptions that could cause actual results to differ materially from management’s expectations. Factors that could cause such differences are discussed in the sections entitled “Cautionary Note Regarding Forward-Looking Statements” above and Part I, Item 1A “Risk Factors” in our Annual Report. Future results could differ significantly from the historical results presented in this section. References to “EHI,” “Enact,” “Enact Holdings,” the “Company,” “we” or “our” herein are, unless the context otherwise requires, to EHI on a consolidated basis.

Current wording

In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties and assumptions that could cause actual results to differ materially from management’s expectations. Factors that could cause such differences are discussed in the sections entitled “Cautionary Note Regarding Forward-Looking Statements” above and Part I, Item 1A “Risk Factors” in our Annual Report. We are not undertaking any obligation to update any forward-looking statements or other statements we may make in the following discussion or elsewhere in this document even though these statements may be affected by events or circumstances occurring after the forward-looking statements or other statements were made. Future results could differ significantly from the historical results presented in this section. References to “EHI,” “Enact,” “Enact Holdings,” the “Company,” “we” or “our” herein are, unless the context otherwise requires, to EHI on a consolidated basis.

Previous wording

The Bureau of Labor Statistics reported in September 2024 that the Consumer Price Index (“CPI”) was 2.4% year-over-year compared to 3.0% year-over-year in June 2024. Despite CPI improvement, inflationary pressures have remained a challenge. The Federal Reserve took an aggressive approach towards addressing inflation throughout 2022 and into 2023. After a period of no interest rate changes in late 2023 and early 2024, the Federal Reserve decreased interest rates by 50 basis points in September 2024. Mortgage rates remain elevated but have declined compared to highs in late 2023.

Current wording

The Bureau of Labor Statistics reported in March 2025 that Consumer Price Index (“CPI”) inflation was 2.4% year-over-year compared to 2.9% year-over-year in December 2024. Elevated inflation remains a challenge for the Federal Open Market Committee as it navigates heightened uncertainty. Mortgage rates remain elevated as well.

Previous wording

Mortgage origination activity has increased modestly in 2024 but remains relatively slow in response to elevated mortgage rates and sustained low housing supply. Over the past few years, housing affordability has deteriorated as elevated mortgage rates and home price appreciation outpaced median family income according to the National Association of Realtors Housing Affordability Index. National house prices continued to rise into 2024 according to the Federal Housing Finance Agency (“FHFA”) Monthly Purchase-Only House Price Index.

Current wording

Mortgage origination remained slow in the first quarter of 2025 in response to elevated mortgage rates and sustained low housing supply. Over the past few years, housing affordability has deteriorated as elevated mortgage rates and home price appreciation outpaced median family income according to the National Association of Realtors Housing Affordability Index. National house prices continued to rise into 2025 according to the Federal Housing Finance Agency (“FHFA”) Monthly Purchase-Only House Price Index (Seasonally Adjusted).

Previous wording

The unemployment rate as of September 30, 2024, was 4.1%, flat from June 30, 2024. As of September 30, 2024, the number of unemployed Americans stood at approximately 6.8 million and the number of long-term unemployed Americans (over 26 weeks out of the workforce) was approximately 1.6 million.

Current wording

The unemployment rate as of March 31, 2025, was 4.2%, relatively consistent with December 31, 2024. As of March 31, 2025, the number of unemployed Americans stood at approximately 7.1 million and the number of long-term unemployed Americans (over 26 weeks out of the workforce) was approximately 1.5 million.

Previous wording

On October 24, 2022, the FHFA announced the validation and approval of both the FICO 10T credit score model and the VantageScore 4.0 credit score model for anticipated use by the GSEs as well as proposing to change the requirement that lenders provide credit reports from all three nationwide consumer reporting agencies and instead only requiring credit reports from two of the three nationwide credit reporting agencies. The validation of the new credit scores is currently expected to require lenders to deliver both credit scores for each loan sold to the GSEs. In February 2024, the FHFA announced preliminary implementation in the fourth quarter of 2025. Implementation will require system and process updates along with coordination across stakeholders of the industry.

Current wording

On October 24, 2022, the FHFA announced the validation and approval of both the FICO 10T credit score model and the VantageScore 4.0 credit score model for anticipated use by the GSEs as well as proposing to change the requirement that lenders provide credit reports from all three nationwide consumer reporting agencies and instead only requiring credit reports from two of the three nationwide credit reporting agencies. The validation of the new credit scores is currently expected to require lenders to deliver both credit scores for each loan sold to the GSEs. Implementation, which has been delayed beyond 2025, will require system and process updates along with coordination across stakeholders of the industry.

Previous wording

Our portfolio. New insurance written (“NIW”) of $13.6 billion in the third quarter of 2024 decreased 6% compared to the third quarter of 2023 driven by lower estimated market share. Our primary persistency rate was 83% during the third quarter of 2024 and 84% for the third quarter of 2023. The persistency rate remains higher than historical levels driven by a large percentage of our in-force policies with mortgage rates below current mortgage rates. Elevated persistency has continued to offset lower new insurance written, leading to an increase in primary insurance in-force (“IIF”) of approximately $5.1 billion since December 31, 2023.

Current wording

Our portfolio. New insurance written (“NIW”) of $9.8 billion in the first quarter of 2025 decreased 7% compared to the first quarter of 2024 driven primarily by lower estimated market share. Our primary persistency rate was 84% during the first quarter of 2025 and 85% for the first quarter of 2024. The persistency rate remains higher than historical levels driven by a large percentage of our in-force policies with mortgage rates below current mortgage rates.

Previous wording

Net earned premiums increased approximately 2% in the third quarter of 2024 compared to the third quarter of 2023 primarily as a result of insurance in-force growth and higher assumed premiums, consisting primarily of Enact Re’s GSE credit risk transfer participation, partially offset by higher ceded premiums.

Current wording

Net earned premiums increased approximately 2% in the first quarter of 2025 compared to the first quarter of 2024 primarily as a result of higher assumed premiums and insurance in-force growth, partially offset by higher ceded premiums.

Previous wording

Loss experience. Our loss ratio for the three months ended September 30, 2024, was 5% as compared to 7% for the three months ended September 30, 2023. Both periods were impacted by favorable reserve development. In the third quarter of 2024, we released $65 million of reserves, driven by cure performance of delinquencies from 2023 and prior. This compares to the third quarter of 2023, where we recorded a $55 million reserve release primarily related to favorable cure performance on delinquencies from 2022 and earlier, including those as a result of COVID-19.

Current wording

Loss experience. Our loss ratio for the three months ended March 31, 2025, was 12% as compared to 8% for the three months ended March 31, 2024. Both periods were impacted by favorable reserve development. In the first quarter of 2025, we released $47 million of reserves, driven by cure performance of delinquencies from early 2024 and prior. This compares to the first quarter of 2024, where we recorded a $54 million reserve release primarily on delinquencies from early 2023 and prior.

Previous wording

New delinquencies in the third quarter of 2024 increased compared to the third quarter of 2023 due to aging of our large, newer books. Current period primary delinquencies of 12,964 contributed $75 million of loss expense in the third quarter of 2024. We incurred $72 million of losses from 11,107 delinquencies that were reported in the third quarter of 2023. In determining the loss expense estimate, considerations were given to recent cure and claim experience and the prevailing and prospective economic conditions.

Current wording

New delinquencies in the first quarter of 2025 increased compared to the first quarter of 2024 due primarily to aging of our large, newer books. Current period primary delinquencies of 12,237 contributed $75 million of loss expense in the first quarter of 2025. We incurred $74 million of losses from 11,395 delinquencies that were reported in the first quarter of 2024. In determining the loss expense estimate, considerations were given to recent cure and claim experience and the prevailing and prospective economic conditions.

Previous wording

The severity of loss on loans that go to claim may be negatively impacted by the extended forbearance and foreclosure timelines, the associated elevated expenses and the higher loan amount of the recent new delinquencies. These negative influences on loss severity could be mitigated, in part, by embedded home price appreciation. For loans insured on or after October 1, 2014, our mortgage insurance policies limit the number of months of unpaid interest and associated expenses that are included in the mortgage insurance claim amount to a maximum of 36 months.

Current wording

The severity of loss on loans that go to claim may be negatively impacted by extended forbearance and foreclosure timelines, the associated elevated expenses and the higher loan amount of the recent new delinquencies. These negative influences on loss severity could be mitigated, in part, by embedded home price appreciation. The majority of our mortgage insurance policies limit the number of months of unpaid interest and associated expenses that are included in the mortgage insurance claim amount to a maximum of 36 months.

Previous wording

Capital requirements and ratings. As of September 30, 2024, EMICO’s risk-to-capital ratio under North Carolina law and enforced by the North Carolina Department of Insurance (“NCDOI”), EMICO’s domestic insurance regulator, was approximately 10.4:1, compared with a risk-to-capital ratio of 11.6:1 as of both December 31, 2023, and September 30, 2023, respectively. EMICO’s risk-to-capital ratio remains below the NCDOI’s maximum risk-to-capital ratio of 25:1. North Carolina’s calculation of risk-to-capital excludes the risk in-force for delinquent loans given the established loss reserves against all delinquencies. EMICO’s ongoing risk-to-capital ratio will depend principally on the magnitude of future losses incurred by EMICO, the effectiveness of ongoing loss mitigation activities, new business volume and profitability, the impact of quota share reinsurance, the amount of policy lapses and the amount of additional capital that is generated or distributed by the business.

Current wording

Capital requirements and ratings. As of March 31, 2025, EMICO’s estimated risk-to-capital ratio under North Carolina law and enforced by the North Carolina Department of Insurance (“NCDOI”), EMICO’s domestic insurance regulator, was 10.5:1, compared with risk-to-capital ratios of 10.5:1 and 11.2:1 as of December 31, 2024, and March 31, 2024, respectively. EMICO’s risk-to-capital ratio remains below the NCDOI’s maximum risk-to-capital ratio of 25:1. North Carolina’s calculation of risk-to-capital excludes the risk in-force for delinquent loans given the established loss reserves against all delinquencies. EMICO’s ongoing risk-to-capital ratio will depend principally on the magnitude of future losses incurred by EMICO, the effectiveness of ongoing loss mitigation activities, new business volume and profitability, the impact of quota share reinsurance, the amount of policy lapses and the amount of additional capital that is generated or distributed by the business.

Previous wording

Under PMIERs, we are subject to operational and financial requirements that private mortgage insurers must meet in order to remain eligible to insure loans that are purchased by the GSEs. As of September 30, 2024, we had estimated available assets of $5,194 million against $3,004 million net required assets under PMIERs compared to available assets of $5,024 million against $2,967 million net required assets as of June 30, 2024. The sufficiency ratio as of September 30, 2024, was 173%, or $2,190 million, above the PMIERs requirements, compared to 169%, or $2,057 million, above the PMIERs requirements as of June 30, 2024. Our PMIERs required assets benefited from a reinsurance credit of $1,807 million and $1,756 million related to third-party reinsurance as of September 30, 2024, and June 30, 2024, respectively. Our PMIERs required assets as of September 30, 2024, and June 30, 2024, also benefited from the application of a 0.30 multiplier applied to the risk-based required asset amount factor for certain non-performing loans as defined under PMIERs. The application of the 0.30 multiplier to all eligible delinquencies provided $28 million of benefit to our September 30, 2024 PMIERs required assets compared to $31 million of benefit as of June 30, 2024. These amounts are gross of any incremental reinsurance benefit from the elimination of the 0.30 multiplier. Per guidance released by the GSEs in the third quarter of 2024, use of the multiplier will be discontinued effective March 31, 2025.

Current wording

Under PMIERs, we are subject to operational and financial requirements that private mortgage insurers must meet in order to remain eligible to insure loans that are purchased by the GSEs. As of March 31, 2025, we had estimated available assets of $4,999 million against $3,033 million net required assets under PMIERs compared to available assets of $5,095 million against $3,043 million net required assets as of December 31, 2024. The sufficiency ratio as of March 31, 2025, was 165%, or $1,966 million, above the PMIERs requirements, compared to 167%, or $2,052 million, above the PMIERs requirements as of December 31, 2024. Our PMIERs required assets benefited from a reinsurance credit of $1,880 million and $1,885 million related to third-party reinsurance as of March 31, 2025, and December 31, 2024, respectively. Our PMIERs required assets as of December 31, 2024, benefited from the application of a 0.30 multiplier applied to the risk-based required asset amount factor for certain non-performing loans as defined under PMIERs. The application of the 0.30 multiplier to all eligible delinquencies provided $28 million of benefit to our PMIERs required assets as of December 31, 2024. Use of the multiplier was discontinued effective March 31, 2025.

Previous wording

On August 21, 2024, the GSEs and the FHFA released updated PMIERs requirements that will be phased in between March 31, 2025 and September 30, 2026. The updated standards differentiate between bonds based on credit quality and liquidity. The updates also establish limits for assets backed by residential mortgages or commercial real estate to mitigate the impact if such assets lose value during periods of housing stress. We expect to hold capital sufficiency well in excess of these requirements and do not expect the impact of these updates to be material to our sufficiency. The ultimate impact of the PMIERs changes will be influenced by investment portfolio maturities, dispositions, reinvestments, and overall business and economic performance between today and the phase-in dates.

Current wording

On August 21, 2024, the GSEs and the FHFA released updated PMIERs requirements phasing in a revision to available asset standards between March 31, 2025 and September 30, 2026. The updated standards differentiate between bonds based on credit quality and liquidity. The updates also establish limits for assets backed by residential mortgages or commercial real estate to mitigate the impact if such assets lose value during periods of housing stress. We expect to hold capital sufficiency well in excess of these requirements and do not expect the impact of these updates to be material to our sufficiency.

Previous wording

On January 8, 2024, S&P Global Ratings upgraded the long-term financial strength and issuer credit ratings of EMICO from BBB+ to A-.

Current wording

On January 17, 2025, Fitch upgraded the long-term financial strength and issuer credit ratings of EMICO from A- to A.

Previous wording

Capital returns. In March 2024, our primary mortgage insurance operating company, EMICO, completed a distribution to EHI that supports our ability to pay a quarterly dividend. We paid a dividend of $0.16 per common share during the first quarter of 2024. On May 1, 2024, we also announced an increase to our quarterly dividend to $0.185 per common share which was paid in June and September 2024. Future dividend payments are subject to quarterly review and approval by our Board of Directors and Genworth and will be targeted to be paid in the third month of each quarter.

Current wording

Subsequent to quarter end we announced an increase of our quarterly dividend to $0.21 per common share. Future dividend payments are subject to quarterly review and approval by our Board of Directors and Genworth and will be targeted to be paid in the third month of each quarter.

Previous wording

On May 1, 2024, we announced the authorization of a share repurchase program that allows for the repurchase of up to $250 million of EHI’s common stock. Under the program, share repurchases may be made at our discretion from time to time in open market transactions in compliance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended, privately negotiated transactions, or by other means, including through Rule 10b5-1 trading plans. In conjunction with this authorization, we have entered into an agreement with Genworth Holdings, Inc. to repurchase its EHI shares on a pro rata basis as part of the program. The share repurchase program is not expected to materially change Genworth’s ownership interest in Enact post-completion. We expect the timing and amount of any future share repurchases will be opportunistic and will depend on a variety of factors, including EHI’s share price, capital availability, business and market conditions, regulatory requirements, and debt covenant restrictions. The program does not obligate EHI to acquire any amount of common stock, it may be suspended or terminated at any time at the Company’s discretion without prior notice, and it does not have a specified expiration date.

Current wording

On May 1, 2024, we announced the authorization of a share repurchase program that allows for the repurchase of up to $250 million of EHI’s common stock. On April 30, 2025, we announced the authorization of a new share repurchase program that allows for the repurchase of an additional $350 million of EHI’s common stock. Under the programs, share repurchases may be made at our discretion from time to time in open market transactions in compliance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended, privately negotiated transactions, or by other means, including through Rule 10b5-1 trading plans. In support, Enact has entered into an agreement with Genworth Holdings, Inc. to repurchase its Enact shares as part of the program to maintain Genworth’s current ownership interest in Enact. We expect the timing and amount of any future share repurchases will be opportunistic and will depend on a variety of factors, including EHI’s share price, capital availability, business and market conditions, regulatory requirements, and debt covenant restrictions. The programs do not obligate EHI to acquire any amount of common stock, it may be suspended or terminated at any time at the Company’s discretion without prior notice, and it does not have a specified expiration date.

Previous wording

Premiums increased for the three months ended September 30, 2024, compared to the three months ended September 30, 2023, primarily as a result of insurance in-force growth and increased assumed premiums, consisting primarily of Enact Re’s GSE credit risk transfer participation, partially offset by higher ceded premiums. The net earned premium rate was 0.36% for the three months ended September 30, 2024, down slightly from 0.37% for the three months ended September 30, 2023.

Current wording

Premiums increased for the three months ended March 31, 2025, compared to the three months ended March 31, 2024, primarily as a result of increased assumed premiums and insurance in-force growth, partially offset by higher ceded premiums. The net earned premium rate was 0.35% for the three months ended March 31, 2025, down slightly from 0.36% for the three months ended March 31, 2024.

Previous wording

Net investment income increased for the three months ended September 30, 2024, compared to the three months ended September 30, 2023, primarily due to higher yields as a result of elevated interest rates coupled with higher average invested assets.

Current wording

Net investment income increased for the three months ended March 31, 2025, compared to the three months ended March 31, 2024, primarily due to higher yields as a result of elevated interest rates and higher average invested assets.

Previous wording

Net investment losses in the third quarter of 2024 and 2023 were driven by realized losses on the sale of fixed maturity securities.

Current wording

Net investment losses in the first quarter of 2025 and 2024 were driven primarily by realized losses on the sale of fixed maturity securities.

Previous wording

Losses incurred during the third quarter of 2024 and 2023 were both impacted by prior year development. In the third quarter of 2024, we recorded a reserve release of $65 million, driven by cure performance of delinquencies from 2023 and prior. In the third quarter of 2023, we recorded a reserve release of $55 million primarily related to better than expected cure performance on delinquencies from 2022 and earlier, including a portion of those as a result of COVID-19. A component of the reserve release also related to delinquencies from 2022, as uncertainty in the economic environment had not negatively impacted cure performance to the extent initially expected. Current period primary delinquencies of 12,964 contributed $75 million of loss expense in the three months ended September 30, 2024. This compares to $72 million of loss expense from 11,107 primary delinquencies in the third quarter of 2023.

Current wording

Losses incurred during the first quarter of 2025 and 2024 were both impacted by prior year development. In the first quarter of 2025, we recorded a reserve release of $47 million, driven by cure performance of delinquencies from early 2024 and prior years. In the first quarter of 2024, we recorded a reserve release of $54 million primarily related to delinquencies from early 2023 and prior years. Current period primary delinquencies of 12,237 contributed $75 million of loss expense in the three months ended March 31, 2025. This compares to $74 million of loss expense from 11,395 primary delinquencies in the first quarter of 2024.

Previous wording

The following table shows incurred losses for domestic mortgage insurance related to current and prior accident years for the three months ended September 30,:

Current wording

The following table shows incurred losses for domestic mortgage insurance related to current and prior accident years for the periods indicated:

Previous wording

The effective tax rate was 21.6% and 22.0% for the nine months ended September 30, 2024 and 2023, respectively, consistent with the United States corporate federal income tax rate.

Current wording

The effective tax rate was 21.6% and 21.8% for the three months ended March 31, 2025 and 2024, respectively.

Previous wording

We use a non-U.S. GAAP (“non-GAAP”) financial measure entitled “adjusted operating income.” This non-GAAP financial measure aligns with the way our business performance is evaluated by both management and our Board of Directors. This measure has been established in order to increase transparency for the purposes of evaluating our core operating trends and enabling more meaningful comparisons with our peers. Although “adjusted operating income” is a non-GAAP financial measure, for the reasons discussed above we believe this measure aids in understanding the underlying performance of our operations. Our senior management, including our chief operating decision maker (who is our Chief Executive Officer), use “adjusted operating income” as the primary measure to evaluate the fundamental financial performance of our business and to allocate resources.

Current wording

We use a non-U.S. GAAP (“non-GAAP”) financial measure entitled “adjusted operating income.” This non-GAAP financial measure is additionally evaluated by both management and our Board of Directors. Management also uses adjusted operating income (loss) as a basis for determining awards and compensation for senior management and to evaluate performance on a basis comparable to that used by analysts. This measure has been established in order to increase transparency for the purposes of evaluating our core operating trends and enabling more meaningful comparisons with our peers. Although “adjusted operating income” is a non-GAAP financial measure, for the reasons discussed above we believe this measure aids in understanding the underlying performance of our operations.

Previous wording

Adjusted operating income increased for the nine months ended September 30, 2024, as compared to September 30, 2023, primarily due to premium and net investment income growth, partially offset by higher losses.

Current wording

Adjusted operating income increased for the three months ended March 31, 2025, as compared to March 31, 2024, primarily due to increases in net investment income and earned premiums, partially offset by higher losses.

Previous wording

Management reviews the key metrics included within this section when analyzing the performance of our business. The metrics provided in this section are on a direct basis and exclude activity related to our run-off business, which is immaterial to our consolidated results of operations.

Current wording

Management reviews the key metrics included within this section when analyzing the performance of our business. The metrics provided in this section are on a direct basis related to our domestic mortgage insurance portfolio.

Previous wording

LTV ratio is calculated by dividing the original loan amount, excluding financed premium, by the property’s acquisition value or fair market value at the time of origination. The following table presents primary NIW by LTV ratio for the periods indicated:

Current wording

Loan-to-value (“LTV”) ratio is calculated by dividing the original loan amount, excluding financed premium, by the property’s acquisition value or fair market value at the time of origination. The following table presents primary NIW by LTV ratio for the periods indicated:

Previous wording

DTI ratio is calculated by dividing the borrower’s total monthly debt obligations by total monthly gross income. The following table presents primary NIW by DTI ratio for the periods indicated:

Current wording

Debt-to-income (“DTI”) ratio is calculated by dividing the borrower’s total monthly debt obligations by total monthly gross income. The following table presents primary NIW by DTI ratio for the periods indicated:

Previous wording

IIF increased as a result of NIW. Elevated interest rates and the low refinance market leading to lower lapse and cancellations during the third quarter of 2024 drove continued elevated persistency. The primary persistency rate was 83% and 84% for the three months ended September 30, 2024 and 2023, respectively. RIF increased primarily as a result of higher IIF.

Current wording

IIF decreased since December 31, 2024, as policy lapse and cancellations outpaced NIW. The primary persistency rate was 84% and 85% for the three months ended March 31, 2025 and 2024, respectively. RIF decreased since December 31, 2024 primarily as a result of lower IIF.

Previous wording

The total reserves as a percentage of RIF as of September 30, 2024, has decreased compared to December 31, 2023, as we have seen cures among long-term delinquencies with higher reserves and have reduced the expected claim rate on new delinquencies.

Current wording

The total reserves as a percentage of RIF as of March 31, 2025, has increased slightly compared to December 31, 2024, as a result of fewer newer delinquencies that have a lower expected claim rate.

Previous wording

Loss reserves in policy years 2008 and prior are outsized compared to their representation of RIF. The size of these policy years at origination, particularly 2005 through 2008, combined with the significant decline in home prices led to significant losses in policy years prior to 2009. Although uncertainty remains with respect to the ultimate losses we will experience on these policy years, they have become a smaller percentage of our total mortgage insurance portfolio. The concentration of loss reserves has shifted to newer book years in line with changes in RIF. As of September 30, 2024, our 2017 and newer policy years represented approximately 96% of our primary RIF and 81% of our total direct primary case reserves.

Current wording

Loss reserves in policy years 2008 and prior are outsized compared to their representation of RIF. The size of these policy years at origination, particularly 2005 through 2008, combined with the significant decline in home prices led to significant losses in policy years prior to 2009. Although uncertainty remains with respect to the ultimate losses we will experience on these policy years, they have become a smaller percentage of our total mortgage insurance portfolio. The concentration of loss reserves has shifted to newer book years in line with changes in RIF. As of March 31, 2025, our 2018 and newer policy years represented approximately 95% of our primary RIF and 81% of our total direct primary case reserves.

Previous wording

•Continuous monitoring of investment quality, duration, and liquidity;

Current wording

•Continuous monitoring of investment quality, duration, and liquidity; and

Previous wording

As of September 30, 2024, and December 31, 2023, 99% and 98% of our investment portfolio was rated investment grade, respectively. The following table presents the security ratings of our fixed maturity securities as of the dates indicated:

Current wording

As of March 31, 2025, and December 31, 2024, 99% and 99% of our investment portfolio was rated investment grade, respectively. The following table presents the security ratings of our fixed maturity securities as of the dates indicated:

Previous wording

Our most significant source of operating cash flows is from premiums received from our insurance policies, while our most significant uses of operating cash flows are generally for claims paid on our insured policies and our operating expenses. Net cash provided by operating activities increased largely due to higher net investment income and premiums. Cash flows from operations were also impacted by changes in reserves and unearned premiums and the timing of tax payments.

Current wording

Our most significant source of operating cash flows is from premiums received from our insurance policies, while our most significant uses of operating cash flows are generally for claims paid on our insured policies and our operating expenses. Net cash provided by operating activities increased largely due to higher net investment income and premiums and the timing of tax payments. Cash flows from operations were also impacted by net investment losses and changes in reserves and unearned premiums.

Previous wording

Investing activities are primarily related to purchases, sales and maturities of our investment portfolio. Net cash used in investing activities increased as a result of purchases of fixed maturity securities outpacing maturities and sales in the current year due to the deployment of operating cash flows.

Current wording

Investing activities are primarily related to purchases, sales and maturities of our investment portfolio. Net cash used in investing activities increased primarily as a result of purchases of fixed maturity securities outpacing maturities and sales in the current year due to the deployment of operating cash flows.

Previous wording

During the nine months ended September 30, 2024, our cash flows from financing activities included the issuance of our 2029 Notes and the redemption of our 2025 Notes. Financing activities for the nine months ended September 30, 2024, also included dividends paid of $83 million and share repurchases of $169 million. The amount and timing of future dividends is discussed within “—Trends and Conditions” as well as below. During the nine months ended September 30, 2023, our cash flows from financing activities included dividends paid of $74 million and share repurchases of $70 million.

Current wording

During the three months ended March 31, 2025, our cash flows from financing activities included dividends paid of $28 million and share repurchases of $65 million. The amount and timing of future dividends is discussed within “—Trends and Conditions” as well as below. During the three months ended March 31, 2024, our cash flows from financing activities included dividends paid of $25 million and share repurchases of $50 million.

Previous wording

The ability of our regulated insurance operating subsidiaries to pay dividends and distributions to us is restricted by certain provisions of North Carolina insurance laws. Our insurance subsidiaries may pay dividends only from unassigned surplus; payments made from sources other than unassigned surplus, such as paid-in and contributed surplus, are categorized as distributions. Notice of all dividends must be submitted to the Commissioner of the NCDOI (the “Commissioner”) within 5 business days after declaration of the dividend, and at least 30 days before payment thereof. No dividend may be paid until 30 days after the Commissioner has received notice of the declaration thereof and (i) has not within that period disapproved the payment or (ii) has approved the payment within the 30-day period. Any distribution, regardless of amount, requires that same 30-day notice to the Commissioner, but also requires the Commissioner’s affirmative approval before being paid. Based on our estimated statutory results and in accordance with applicable dividend restrictions, our insurance subsidiaries have the capacity to pay dividends from unassigned surplus of $223 million as of September 30, 2024, with 30-day advance notice to the Commissioner of the intent to pay. In addition to dividends and distributions, alternative mechanisms, such as share repurchases, subject to any requisite regulatory approvals, may be utilized from time to time to upstream surplus.

Current wording

The ability of our regulated insurance operating subsidiaries to pay dividends and distributions to us is restricted by certain provisions of North Carolina insurance laws. Our insurance subsidiaries may pay dividends only from unassigned surplus; payments made from sources other than unassigned surplus, such as paid-in and contributed surplus, are categorized as distributions. Notice of all dividends must be submitted to the Commissioner of the NCDOI (the “Commissioner”) within 5 business days after declaration of the dividend, and at least 30 days before payment thereof. No dividend may be paid until 30 days after the Commissioner has received notice of the declaration thereof and (i) has not within that period disapproved the payment or (ii) has approved the payment within the 30-day period. Any distribution, regardless of amount, requires that same 30-day notice to the Commissioner, but also requires the Commissioner’s affirmative approval before being paid. Based on our estimated statutory results and in accordance with applicable dividend restrictions, our insurance subsidiaries have the capacity to pay dividends from unassigned surplus of $194 million as of March 31, 2025, with 30-day advance notice to the Commissioner of the intent to pay. In addition to dividends and distributions, alternative mechanisms, such as share repurchases, subject to any requisite regulatory approvals, may be utilized from time to time to upstream surplus.

Previous wording

In March 2024, EMICO completed a distribution of approximately $270 million that will primarily be used to support our ability to return capital to shareholders and bolster financial flexibility. We intend to continue to use future EMICO distributions for these purposes.

Current wording

In March 2025, EMICO completed a dividend of approximately $200 million that will primarily be used to support our ability to return capital to shareholders and bolster financial flexibility. We intend to continue to use future EMICO dividends and distributions for these purposes.

Previous wording

As of September 30, 2024, we maintained liquidity in the form of cash and cash equivalents of $673 million compared to $616 million as of December 31, 2023, and we also held significant levels of investment-grade fixed maturity securities and short-term investments that can be monetized should our cash and cash equivalents be insufficient to meet our obligations.

Current wording

As of March 31, 2025, we maintained liquidity in the form of cash and cash equivalents of $635 million compared to $599 million as of December 31, 2024, and we also held significant levels of investment-grade fixed maturity securities and short-term investments that can be monetized should our cash and cash equivalents be insufficient to meet our obligations.

Previous wording

The principal sources of liquidity in our business currently include insurance premiums, net investment income and cash flows from investment sales and maturities. We believe that the operating cash flows generated by our mortgage insurance subsidiary will provide the funds necessary to satisfy our claim payments, operating expenses and taxes in both the short term and long term. However, our subsidiaries are subject to regulatory and other capital restrictions with respect to the payment of dividends. We currently have no material financing commitments, such as lines of credit or guarantees, that are expected to affect our liquidity, other than the 2029 Notes and the Facility.

Current wording

The principal sources of liquidity in our business currently include insurance premiums, net investment income and cash flows from investment sales and maturities. We believe that our assets and the operating cash flows generated by our mortgage insurance subsidiary will provide the funds necessary to satisfy our claim payments, operating expenses and taxes in both the short term and long term. However, our subsidiaries are subject to regulatory and other capital restrictions with respect to the payment of dividends. We currently have no material financing commitments, such as lines of credit or guarantees, that are expected to affect our liquidity, other than the 2029 Notes and the Facility.