UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, ~~2022~~2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For transition period from to

Commission File Number 001-40399

Enact Holdings, Inc.

(Exact name of registrant as specified in its charter)


Delaware						46-1579166
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification Number)

8325 Six Forks Road

Raleigh, North Carolina 27615

(919) 846-4100

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock, par value $0.01 per share

ACT

The Nasdaq Stock Market

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐☒ No ☒☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐☒
Non-accelerated filer	☒☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No ☒

As of ~~November 1, 2022,~~October 30, 2023, there were ~~162,842,614~~159,703,377 shares of Common Stock, par value $0.01 per share, outstanding.

TABLE OF CONTENTS

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q, including Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act. These forward-looking statements may address, among other things, our expected financial and operational results, the related assumptions underlying our expected results and the quotations of management. These forward-looking statements are distinguished by use of words such as “will,” “would,” “anticipate,” “expect,” “believe,” “designed,” “plan,” or “intend,” the negative of these terms and similar references to future periods. These views involve risks and uncertainties that are difficult to predict and, accordingly, our actual results may differ materially from the results discussed in our forward-looking statements. Our forward-looking statements contained herein speak only as of the date of this quarterly report.

Although Enact Holdings, Inc. (the “Company”) believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, the Company can give no assurance that its expectations will be achieved and it undertakes no obligation to update publicly any forward-looking statements as a result of new information, future events, or otherwise, except as required by applicable law. Factors or events that we cannot predict, including the following, may cause our actual results to differ from those expressed in forward-looking statements:

•uncertainty around COVID-19 and its variants or the effects of government and other measures seeking to contain its spread, including risks related to an economic downturn or recession in the United States and in other countries around the world;

•inability to continue to maintain the private mortgage insurer eligibility requirements (“PMIERs”) or any other restrictions imposed on us by the Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“Freddie Mac”), government-sponsored enterprises collectively referred to as the “GSEs”;

•deterioration in economic conditions or a decline in home ~~prices;~~prices, including a severe recession;

•uncertainty around COVID-19 and the remaining effects of forbearance programs and foreclosure timing;

•uncertainty of our loss reserve estimates or inaccuracies in our models;

•competition for our customers or the loss of a significant customer;

•changes to the charters or practices of the GSEs, including actions or decisions to decrease or discontinue the use of mortgage insurance;

•lenders or investors seeking alternatives to private mortgage insurance;

•failure of our risk management or loss mitigation strategies;

•fluctuations and continued increases in interest rates;

•limited availability of capital or reinsurance;

•adverse actions by rating agencies;

•competition with government-owned enterprises and GSEs;

•failure to manage the risk in our investment portfolio;

•disruption in the servicing of mortgages covered by our insurance policies or poor servicer performance;

•unanticipated claims arising under and risks associated with our delegated underwriting program or contract underwriting program;

•inadequacy of the premiums we charge to compensate for the losses we incur;

•decrease in the volume of Low-Down Payment Loan originations;

•failure to protect our confidential customer information;

•adverse changes in regulatory requirements;

•inability to maintain sufficient regulatory capital;

•risks relating to our continuing relationship with our parent;

•changes in tax laws;

•litigation, regulatory investigations or other actions;

•changes in accounting principles or policies or in our application of such accounting principles or policies;

•inability to attract and retain key employees;

•failure or any compromise of the security of our computer systems, disaster recovery systems, business continuity plans and failures to safeguard or breaches of confidential information; and

•occurrence of natural or man-made disasters or public health emergencies, including pandemics and disasters caused or exacerbated by climate ~~change~~change.

We provide additional information regarding these and other risks and uncertainties in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021,~~2022, as filed with the U.S. Securities and Exchange Commission (“SEC”) on February 28, ~~2022, and in Part II. Item 1A Risk Factors of this report.~~2023. In addition, unlisted factors may present significant additional obstacles to the realization of forward-looking statements. We therefore caution you against relying on any forward-looking statements.

Part I. Financial Information

Item 1. Financial Statements

ENACT HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS


		September 30, 2022		December 31, 2021			September 30, 2023		December 31, 2022
(Amounts in thousands, except par value amount)	(Amounts in thousands, except par value amount)	(Unaudited)				(Amounts in thousands, except par value amount)	(Unaudited)
Assets	Assets					Assets

Fixed maturity securities available-for-sale, at fair value (amortized cost of $5,420,533 and $5,160,174 as of September 30, 2022 and December 31, 2021, respectively)		$	4,877,902	$	5,266,339
Fixed maturity securities available-for-sale, at fair value (amortized cost of $5,487,280 and $5,371,673 as of September 30, 2023, and December 31, 2022, respectively)						Fixed maturity securities available-for-sale, at fair value (amortized cost of $5,487,280 and $5,371,673 as of September 30, 2023, and December 31, 2022, respectively)	$	4,990,692	$	4,884,760
Short-term investments, at fair value	Short-term investments, at fair value	2,434		—		Short-term investments, at fair value	18,173		3,047
Total investments	Total investments	4,880,336		5,266,339		Total investments	5,008,865		4,887,807
Cash and cash equivalents	Cash and cash equivalents	535,775		425,828		Cash and cash equivalents	677,990		513,775
Accrued investment income	Accrued investment income	35,896		31,061		Accrued investment income	42,051��		35,844
Deferred acquisition costs	Deferred acquisition costs	26,310		27,220		Deferred acquisition costs	25,572		26,121
Premiums receivable (net of allowance for credit losses of $834 and $948 as of September 30, 2022 and December 31, 2021, respectively)		40,331		42,266
Premiums receivable (net of allowance for credit losses of $924 and $873 as of September 30, 2023, and December 31, 2022, respectively)						Premiums receivable (net of allowance for credit losses of $924 and $873 as of September 30, 2023, and December 31, 2022, respectively)	44,310		41,738
Other assets						Other assets	82,196		76,391
Deferred tax asset	Deferred tax asset	135,152		—		Deferred tax asset	119,704		127,473
Other assets		69,040		73,059
Total assets	Total assets	$	5,722,840	$	5,865,773	Total assets	$	6,000,688	$	5,709,149
Liabilities and equity	Liabilities and equity					Liabilities and equity
Liabilities:	Liabilities:					Liabilities:
Loss reserves	Loss reserves	$	510,237	$	641,325	Loss reserves	$	501,093	$	519,008
Unearned premiums	Unearned premiums	212,987		246,319		Unearned premiums	161,580		202,717
Other liabilities	Other liabilities	140,413		130,604		Other liabilities	136,057		143,686
Long-term borrowings	Long-term borrowings	742,211		740,416		Long-term borrowings	744,752		742,830
Deferred tax liability		—		1,586

Total liabilities	Total liabilities	1,605,848		1,760,250		Total liabilities	1,543,482		1,608,241
Equity:	Equity:					Equity:
Common stock ($0.01 par value, 600,000 shares authorized, 162,843 shares issued and outstanding)		1,628		1,628
Common stock ($0.01 par value; 600,000 shares authorized; 159,995 shares issued and outstanding as of September 30, 2023, and 162,779 shares issued and outstanding as of December 31, 2022)						Common stock ($0.01 par value; 600,000 shares authorized; 159,995 shares issued and outstanding as of September 30, 2023, and 162,779 shares issued and outstanding as of December 31, 2022)	1,600		1,628
Additional paid-in capital	Additional paid-in capital	2,379,576		2,371,861		Additional paid-in capital	2,322,622		2,382,068
Accumulated other comprehensive income	Accumulated other comprehensive income	(427,085)		83,581		Accumulated other comprehensive income	(400,349)		(382,744)
Retained earnings	Retained earnings	2,162,873		1,648,453		Retained earnings	2,533,333		2,099,956
Total equity	Total equity	4,116,992		4,105,523		Total equity	4,457,206		4,100,908
Total liabilities and equity	Total liabilities and equity	$	5,722,840	$	5,865,773	Total liabilities and equity	$	6,000,688	$	5,709,149

See Notes to Condensed Consolidated Financial Statements

ENACT HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)


		Three months ended September 30,				Nine months ended September 30,					Three months ended September 30,				Nine months ended September 30,
(Amounts in thousands, except per share amounts)	(Amounts in thousands, except per share amounts)	2022		2021		2022		2021		(Amounts in thousands, except per share amounts)	2023		2022		2023		2022
Revenues:	Revenues:									Revenues:
Premiums	Premiums	$	235,060	$	243,063	$	706,725	$	738,085	Premiums	$	243,346	$	235,060	$	716,974	$	706,725
Net investment income	Net investment income	39,493		35,995		110,415		105,943		Net investment income	54,952		39,493		151,208		110,415
Net investment gains (losses)	Net investment gains (losses)	(42)		580		(762)		(2,129)		Net investment gains (losses)	(23)		(42)		(13,146)		(762)
Other income	Other income	564		671		1,826		3,114		Other income	760		564		2,460		1,826
Total revenues	Total revenues	275,075		280,309		818,204		845,013		Total revenues	299,035		275,075		857,496		818,204
Losses and expenses:	Losses and expenses:									Losses and expenses:
Losses incurred	Losses incurred	(40,309)		34,124		(112,318)		119,501		Losses incurred	17,847		(40,309)		2,793		(112,318)
Acquisition and operating expenses, net of deferrals	Acquisition and operating expenses, net of deferrals	54,523		55,151		166,986		175,823		Acquisition and operating expenses, net of deferrals	52,339		54,523		155,931		166,986
Amortization of deferred acquisition costs and intangibles	Amortization of deferred acquisition costs and intangibles	3,338		3,669		9,658		11,104		Amortization of deferred acquisition costs and intangibles	2,803		3,338		8,088		9,658
Interest expense	Interest expense	12,879		12,756		38,441		38,238		Interest expense	12,941		12,879		38,919		38,441
Total losses and expenses	Total losses and expenses	30,431		105,700		102,767		344,666		Total losses and expenses	85,930		30,431		205,731		102,767
Income before income taxes	Income before income taxes	244,644		174,609		715,437		500,347		Income before income taxes	213,105		244,644		651,765		715,437
Provision for income taxes	Provision for income taxes	53,658		37,401		155,086		107,196		Provision for income taxes	48,910		53,658		143,562		155,086
Net income	Net income	$	190,986	$	137,208	$	560,351	$	393,151	Net income	$	164,195	$	190,986	$	508,203	$	560,351

Net income per common share:	Net income per common share:									Net income per common share:
Basic	Basic	$	1.17	$	0.84	$	3.44	$	2.41	Basic	$	1.03	$	1.17	$	3.15	$	3.44
Diluted	Diluted	$	1.17	$	0.84	$	3.43	$	2.41	Diluted	$	1.02	$	1.17	$	3.13	$	3.43
Weighted average common shares outstanding:	Weighted average common shares outstanding:									Weighted average common shares outstanding:
Basic	Basic	162,843		162,840		162,842		162,840		Basic	160,066		162,843		161,275		162,842
Diluted	Diluted	163,376		162,852		163,219		162,844		Diluted	161,146		163,376		162,165		163,219

See Notes to Condensed Consolidated Financial Statements

ENACT HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


		Three months ended September 30,				Nine months ended September 30,					Three months ended September 30,				Nine months ended September 30,
(Amounts in thousands)	(Amounts in thousands)	2022		2021		2022		2021		(Amounts in thousands)	2023		2022		2023		2022
Net income	Net income	$	190,986	$	137,208	$	560,351	$	393,151	Net income	$	164,195	$	190,986	$	508,203	$	560,351
Other comprehensive income (loss), net of taxes:	Other comprehensive income (loss), net of taxes:									Other comprehensive income (loss), net of taxes:
Net unrealized gains (losses) on securities without an allowance for credit losses	Net unrealized gains (losses) on securities without an allowance for credit losses	(134,102)		(25,899)		(510,803)		(74,704)		Net unrealized gains (losses) on securities without an allowance for credit losses	(55,118)		(134,102)		(17,608)		(510,803)
Net unrealized gains (losses) on securities with an allowance for credit losses		—		—		—		—

Foreign currency translation	Foreign currency translation	44		—		137		—		Foreign currency translation	12		44		3		137
Other comprehensive income (loss)	Other comprehensive income (loss)	(134,058)		(25,899)		(510,666)		(74,704)		Other comprehensive income (loss)	(55,106)		(134,058)		(17,605)		(510,666)
Total comprehensive income (loss)	Total comprehensive income (loss)	$	56,928	$	111,309	$	49,685	$	318,447	Total comprehensive income (loss)	$	109,089	$	56,928	$	490,598	$	49,685

See Notes to Condensed Consolidated Financial Statements

ENACT HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Unaudited)


		Three months ended September 30, 2022											Three months ended September 30, 2023
(Amounts in thousands)	(Amounts in thousands)	Common stock		Additional paid-in capital		Accumulated other comprehensive income (loss)		Retained earnings		Total equity		(Amounts in thousands)	Common stock		Additional paid-in capital		Accumulated other comprehensive income (loss)		Retained earnings		Total equity
Balances as of June 30, 2022		$	1,628	$	2,377,042	$	(293,027)	$	1,994,857	$	4,080,500
Balance as of June 30, 2023												Balance as of June 30, 2023	$	1,602	$	2,324,527	$	(345,243)	$	2,395,010	$	4,375,896

Comprehensive income (loss):	Comprehensive income (loss):											Comprehensive income (loss):
Net income	Net income	—		—		—		190,986		190,986		Net income	—		—		—		164,195		164,195
Other comprehensive loss, net of taxes		—		—		(134,058)		—		(134,058)
Other comprehensive income (loss), net of taxes												Other comprehensive income (loss), net of taxes	—		—		(55,106)		—		(55,106)

Repurchase of common stock												Repurchase of common stock	(2)		(6,290)		—		—		(6,292)
Stock-based compensation expense and exercises and other	Stock-based compensation expense and exercises and other	—		2,534		—		(172)		2,362		Stock-based compensation expense and exercises and other	—		4,385		—		(273)		4,112
Dividends	Dividends	—		—		—		(22,798)		(22,798)		Dividends	—		—		—		(25,599)		(25,599)
Balance as of September 30, 2022		$	1,628	$	2,379,576	$	(427,085)	$	2,162,873	$	4,116,992

Balance as of September 30, 2023												Balance as of September 30, 2023	$	1,600	$	2,322,622	$	(400,349)	$	2,533,333	$	4,457,206


		Three months ended September 30, 2021											Three months ended September 30, 2022
(Amounts in thousands)	(Amounts in thousands)	Common stock		Additional paid-in capital		Accumulated other comprehensive income (loss)		Retained earnings		Total equity		(Amounts in thousands)	Common stock		Additional paid-in capital		Accumulated other comprehensive income (loss)		Retained earnings		Total equity
Balances as of June 30, 2021		$	1,628	$	2,369,601	$	159,854	$	1,558,768	$	4,089,851
Balance as of June 30, 2022												Balance as of June 30, 2022	$	1,628	$	2,377,042	$	(293,027)	$	1,994,857	$	4,080,500

Comprehensive income (loss):	Comprehensive income (loss):											Comprehensive income (loss):
Net income	Net income	—		—		—		137,208		137,208		Net income	—		—		—		190,986		190,986
Other comprehensive income, net of taxes		—		—		(25,899)		—		(25,899)
Other comprehensive income (loss), net of taxes												Other comprehensive income (loss), net of taxes	—		—		(134,058)		—		(134,058)

Stock-based compensation expense and exercises and other	Stock-based compensation expense and exercises and other	—		221		—		—		221		Stock-based compensation expense and exercises and other	—		2,534		—		(172)		2,362
Dividends												Dividends	—		—		—		(22,798)		(22,798)

Balance as of September 30, 2021		$	1,628	$	2,369,822	$	133,955	$	1,695,976	$	4,201,381
Balance as of September 30, 2022												Balance as of September 30, 2022	$	1,628	$	2,379,576	$	(427,085)	$	2,162,873	$	4,116,992

See Notes to Condensed Consolidated Financial Statements


		Nine months ended September 30, 2022											Nine months ended September 30, 2023
(Amounts in thousands)	(Amounts in thousands)	Common stock		Additional paid-in capital		Accumulated other comprehensive income (loss)		Retained earnings		Total equity		(Amounts in thousands)	Common stock		Additional paid-in capital		Accumulated other comprehensive income (loss)		Retained earnings		Total equity
Balances as of December 31, 2021		$	1,628	$	2,371,861	$	83,581	$	1,648,453	$	4,105,523
Balance as of December 31, 2022												Balance as of December 31, 2022	$	1,628	$	2,382,068	$	(382,744)	$	2,099,956	$	4,100,908

Comprehensive income (loss):	Comprehensive income (loss):											Comprehensive income (loss):
Net income	Net income	—		—		—		560,351		560,351		Net income	—		—		—		508,203		508,203
Other comprehensive loss, net of taxes		—		—		(510,666)		—		(510,666)
Other comprehensive income (loss), net of taxes												Other comprehensive income (loss), net of taxes	—		—		(17,605)		—		(17,605)

Repurchase of common stock												Repurchase of common stock	(29)		(69,698)		—		—		(69,727)
Stock-based compensation expense and exercises and other	Stock-based compensation expense and exercises and other	—		7,715		—		(335)		7,380		Stock-based compensation expense and exercises and other	1		10,252		—		(769)		9,484
Dividends	Dividends	—		—		—		(45,596)		(45,596)		Dividends	—		—		—		(74,057)		(74,057)
Balance as of September 30, 2022		$	1,628	$	2,379,576	$	(427,085)	$	2,162,873	$	4,116,992

Balance as of September 30, 2023												Balance as of September 30, 2023	$	1,600	$	2,322,622	$	(400,349)	$	2,533,333	$	4,457,206

Nine months ended September 30, 2021
(Amounts in thousands)
Common
stock
Additional
paid-in
capital
Accumulated
other
comprehensive
income (loss)
Retained
earnings
Total
equity
Balances as of December 31, 2020 $ 1,628 $ 2,368,699 $ 208,378 $ 1,303,106 $ 3,881,811
Cumulative effect of change in accounting, net of taxes — — 281 (281) —
Comprehensive income (loss):
Net income — — — 393,151 393,151
Other comprehensive loss, net of taxes — — (74,704) — (74,704)
Stock-based compensation expense and exercises and other — 221 — — 221
Capital contributions from Genworth Financial, Inc. — 902 — — 902
Balances as of September 30, 2021 $ 1,628 $ 2,369,822 $ 133,955 $ 1,695,976 $ 4,201,381


	Nine months ended September 30, 2022
(Amounts in thousands)	Common stock		Additional paid-in capital		Accumulated other comprehensive income (loss)		Retained earnings		Total equity
Balance as of December 31, 2021	$	1,628	$	2,371,861	$	83,581	$	1,648,453	$	4,105,523

Comprehensive income (loss):
Net income	—		—		—		560,351		560,351
Other comprehensive income (loss), net of taxes	—		—		(510,666)		—		(510,666)


Stock-based compensation expense and exercises and other	—		7,715		—		(335)		7,380
Dividends	—		—		—		(45,596)		(45,596)

Balance as of September 30, 2022	$	1,628	$	2,379,576	$	(427,085)	$	2,162,873	$	4,116,992

See Notes to Condensed Consolidated Financial Statements

ENACT HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


		Nine months ended September 30,					Nine months ended September 30,
(Amounts in thousands)	(Amounts in thousands)	2022		2021		(Amounts in thousands)	2023		2022
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income	Net income	$	560,351	$	393,151	Net income	$	508,203	$	560,351
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:
Net investment losses		762		2,129
Net investment (gains) losses						Net investment (gains) losses	13,146		762
Amortization of fixed maturity securities discounts and premiums	Amortization of fixed maturity securities discounts and premiums	(1,992)		(6,884)		Amortization of fixed maturity securities discounts and premiums	(4,677)		(1,992)
Amortization of deferred acquisition costs and intangibles	Amortization of deferred acquisition costs and intangibles	9,658		11,104		Amortization of deferred acquisition costs and intangibles	8,088		9,658
Acquisition costs deferred	Acquisition costs deferred	(5,044)		(5,525)		Acquisition costs deferred	(4,896)		(5,044)
Deferred income taxes	Deferred income taxes	1,413		824		Deferred income taxes	(140)		1,413
Stock-based compensation expense	Stock-based compensation expense	7,401		221		Stock-based compensation expense	9,484		7,401
Amortization of debt issuance costs	Amortization of debt issuance costs	1,795		1,676		Amortization of debt issuance costs	1,922		1,795
Other	Other	(21)		908		Other	—		(21)
Change in certain assets and liabilities:	Change in certain assets and liabilities:					Change in certain assets and liabilities:
Accrued investment income	Accrued investment income	(4,835)		(2,162)		Accrued investment income	(6,207)		(4,835)
Premiums receivable	Premiums receivable	1,935		3,039		Premiums receivable	(2,572)		1,935
Other assets	Other assets	381		(4,666)		Other assets	2,377		381
Loss reserves	Loss reserves	(131,088)		92,686		Loss reserves	(17,915)		(131,088)
Unearned premiums	Unearned premiums	(33,332)		(52,139)		Unearned premiums	(41,137)		(33,332)
Other liabilities	Other liabilities	(5,313)		(23,280)		Other liabilities	(23,694)		(5,313)
Net cash provided by operating activities	Net cash provided by operating activities	402,071		411,082		Net cash provided by operating activities	441,982		402,071
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Purchases of fixed maturity securities available-for-sale	Purchases of fixed maturity securities available-for-sale	(1,069,759)		(1,192,098)		Purchases of fixed maturity securities available-for-sale	(802,128)		(1,069,759)
Purchases of short-term investments		(2,453)		(12,500)

Proceeds from sales of fixed maturity securities available-for-sale	Proceeds from sales of fixed maturity securities available-for-sale	451,285		292,697		Proceeds from sales of fixed maturity securities available-for-sale	394,148		451,285
Proceeds from maturities of fixed maturity securities available-for-sale	Proceeds from maturities of fixed maturity securities available-for-sale	374,399		499,607		Proceeds from maturities of fixed maturity securities available-for-sale	298,221		374,399
Net change in short-term investments						Net change in short-term investments	(14,617)		(2,453)
Other						Other	(9,607)		—
Net cash used in investing activities	Net cash used in investing activities	(246,528)		(412,294)		Net cash used in investing activities	(133,983)		(246,528)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:

Repurchase of common stock						Repurchase of common stock	(69,727)		—
Dividends paid	Dividends paid	(45,596)		—		Dividends paid	(74,057)		(45,596)
Net cash used in financing activities	Net cash used in financing activities	(45,596)		—		Net cash used in financing activities	(143,784)		(45,596)

Net increase (decrease) in cash and cash equivalents		109,947		(1,212)
Net increase in cash and cash equivalents						Net increase in cash and cash equivalents	164,215		109,947
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	425,828		452,794		Cash and cash equivalents at beginning of period	513,775		425,828
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	535,775	$	451,582	Cash and cash equivalents at end of period	$	677,990	$	535,775

See Notes to Condensed Consolidated Financial Statements

ENACT HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(1)Nature of ~~Business, Organization Structure~~business, organization structure and ~~Basis~~basis of ~~Presentation~~presentation

The accompanying unaudited condensed consolidated financial statements include, on a consolidated basis, the accounts of Enact Holdings, Inc. (“EHI,” together with its subsidiaries, the “Company,” “we,” “us” or “our”) (formerly known as Genworth Mortgage Holdings, Inc.). EHI is a subsidiary of Genworth Financial, Inc. (“Genworth” or “Parent”) and has been since EHI’s incorporation in Delaware in 2012. In September 2021, we completed a minority initial public offering (“IPO”) of 18.4% of EHI’s common stock.

We are engaged in the business of writing and assuming residential mortgage guaranty insurance. The insurance protects lenders and investors against certain losses resulting from nonpayment of loans secured by mortgages, deeds of trust, or other instruments constituting a lien on residential real estate.

On May 3, 2021, EHI amended its certificate of incorporation to change its name from Genworth Mortgage Holdings, Inc. This amendment also authorized EHI to issue 600,000,000 shares of common stock, each having a par value of $0.01 per share. Concurrently, we entered into a share exchange agreement with Genworth Holdings, Inc. (“Genworth Holdings”), pursuant to which Genworth Holdings exchanged its 100 shares of common stock, representing all of the previously issued and outstanding capital stock, for 162,840,000 newly-issued shares of common stock, par value $0.01, of EHI. All of the share and per share information presented in the condensed consolidated financial statements and notes to the condensed consolidated financial statements have been adjusted to reflect the share exchange on a retroactive basis for all periods and as of all dates presented.

On September 15, 2021, we priced our initial public offering (“IPO”) of common stock, which resulted in the issuance and sale of 13,310,400 shares of common stock at the IPO price of $19.00 per common share. All shares were offered by the selling stockholder, our parent company, Genworth Holdings. In addition to the shares sold in the IPO, 14,655,600 common shares were sold in a concurrent private sale (“Private Sale”) at a price per share of $17.86, which is equal to the IPO price less the underwriting discount share. Genworth Holdings also granted the underwriters a 30-day option to purchase up to an additional 1,996,560 common shares (“Over-Allotment Option”) at the IPO price less the underwriting discount. On September 16, 2021, the underwriters exercised their option to purchase all 1,996,560 common shares permitted under the terms of the underwriting agreement. The IPO, Private Sale and Over-Allotment Option (collectively the “Offering”) closed on September 20, 2021, and Genworth Holdings retained all net proceeds from the Offering. The gross proceeds of the Offering, before payment of underwriter fees and other expenses, were approximately $553 million. Costs directly related to the Offering, including underwriting fees and other expenses, were approximately $24 million.

We offer private mortgage insurance products predominantly insuring prime-based, individually underwritten residential mortgage loans (“primary mortgage insurance”). Our primary mortgage insurance enables borrowers to buy homes with a down payment of less than 20% of the home’s value. Primary mortgage insurance also facilitates the sale of these low down payment mortgage loans in the secondary mortgage market, most of which are sold to government sponsored enterprises. We also selectively enter into insurance transactions with lenders and investors, under which we insure a portfolio of loans at or after origination.

We also perform fee-based contract underwriting services for mortgage lenders. The provision of underwriting services by mortgage insurers eliminates the duplicative lender and mortgage insurer underwriting activities and expedites the approval process.

We operate our business through our primary insurance subsidiary, Enact Mortgage Insurance Corporation, (“EMICO”), formerly known as Genworth Mortgage Insurance Corporation, with operations in all 50 states and the District of Columbia. We completed name changes to some of our subsidiary legal entities during the first quarter of 2022. EMICO is an approved insurer by the Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“Freddie Mac”). Fannie Mae and Freddie Mac are government-sponsored enterprises, and we refer to them collectively as the “GSEs.”

~~ENACT HOLDINGS, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

We also ~~perform fee-based contract underwriting services for mortgage lenders. The provision~~offer mortgage-related insurance and reinsurance through our wholly owned Bermuda-based subsidiary, Enact Re Ltd. ("Enact Re"). We contributed $250 million into Enact Re during the second quarter of ~~underwriting services by mortgage insurers eliminates the duplicative lender~~2023. As of September 30, 2023, Enact Re provided excess of loss reinsurance relating to GSE risk share and ~~mortgage insurer underwriting activities~~reinsures EMICO’s new and ~~expedites the approval process.~~existing insurance in-force under quota share reinsurance agreements.

We operate our business in a single segment, which is how our chief operating decision maker (who is our Chief Executive Officer) reviews our financial performance and allocates resources. Our segment includes a run-off insurance block with reference properties in Mexico (“run-off business”), which is immaterial to our condensed consolidated financial statements.

The accompanying condensed consolidated financial statements are unaudited and have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). Preparing financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect reported amounts and related disclosures. Actual results could differ from those estimates. These unaudited condensed consolidated financial statements include all adjustments (including normal recurring adjustments) considered necessary by management to present a fair statement of the financial position, results of operations and cash flows for the periods presented. The results reported in these unaudited condensed consolidated financial statements should not be regarded as necessarily indicative of results that may be expected for the entire year. The unaudited condensed consolidated financial

ENACT HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

statements included herein should be read in conjunction with the audited consolidated financial statements and related notes for the years ended December 31, ~~2021~~2022 and ~~2020.~~

2021.

(2)Accounting ~~Changes~~changes

Accounting Pronouncements Recently Adopted

We have not adopted new accounting pronouncements in ~~2022.~~2023.

Accounting Pronouncements Not Yet Adopted

There are no significant new accounting pronouncements impacting our financial statements.

(3)Investments

Net Investment Income

Sources of net investment income were as follows for the periods indicated:

Three months ended
September 30, Nine months ended
September 30,
(Amounts in thousands) 2022 2021 2022 2021
Fixed maturity securities available-for-sale $ 38,450 $ 37,055 $ 111,794 $ 110,007
Cash, cash equivalents and short-term investments 2,423 13 2,854 65
Gross investment income before expenses and fees 40,873 37,068 114,648 110,072
Investment expenses and fees (1,380) (1,073) (4,233) (4,129)
Net investment income $ 39,493 $ 35,995 $ 110,415 $ 105,943

~~ENACT HOLDINGS, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~


	Three months ended September 30,				Nine months ended September 30,
(Amounts in thousands)	2023		2022		2023		2022
Fixed maturity securities available-for-sale	$	46,728	$	38,450	$	132,645	$	111,794
Cash, cash equivalents and short-term investments	9,665		2,423		23,240		2,854
Gross investment income before expenses and fees	56,393		40,873		155,885		114,648
Investment expenses and fees	(1,441)		(1,380)		(4,677)		(4,233)
Net investment income	$	54,952	$	39,493	$	151,208	$	110,415

Net Investment Gains (Losses)

The following table sets forth net investment gains (losses) for the periods indicated:


		Three months ended September 30,				Nine months ended September 30,					Three months ended September 30,				Nine months ended September 30,
(Amounts in thousands)	(Amounts in thousands)	2022		2021		2022		2021		(Amounts in thousands)	2023		2022		2023		2022
Fixed maturity securities available-for-sale:	Fixed maturity securities available-for-sale:									Fixed maturity securities available-for-sale:
Gross realized gains	Gross realized gains	$	573	$	839	$	1,214	$	1,423	Gross realized gains	$	—	$	573	$	20	$	1,214
Gross realized (losses)	Gross realized (losses)	(615)		(128)		(2,149)		(1,261)		Gross realized (losses)	(36)		(615)		(13,166)		(2,149)
Net realized gains (losses)	Net realized gains (losses)	(42)		711		(935)		162		Net realized gains (losses)	(36)		(42)		(13,146)		(935)
Net change in allowance for credit losses on fixed maturity securities available-for-sale		—		(131)		173		(2,291)
Net change in allowance for credit losses on commitment										Net change in allowance for credit losses on commitment	13		—		—		173

Net investment gains (losses)	Net investment gains (losses)	$	(42)	$	580	$	(762)	$	(2,129)	Net investment gains (losses)	$	(23)	$	(42)	$	(13,146)	$	(762)

There was no ~~recorded~~ allowance for credit losses ~~for~~recorded on fixed maturity securities classified as available-for-sale as of ~~and for the three and nine months ended~~ September 30, ~~2022. There was no recorded allowance for credit losses for fixed maturity securities available-for-sale as of and for the three months ended September 30, 2021.~~

~~The following table represents the allowance for credit losses aggregated by security type for fixed maturity available-for-sale securities as of and for~~2023, or December 31, 2022, or activity during the nine months ended September 30, ~~2021:~~
(Amounts in thousands) Beginning balance Cumulative effect of change in accounting Increase from securities without allowance in previous periods Securities sold Ending balance
Fixed maturity securities:
Non-U.S. corporate $ — $ 357 $ 2,157 $ (2,514) $ —
Total fixed maturity securities available-for-sale $ — $ 357 $ 2,157 $ (2,514) $ —
2023.

ENACT HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Unrealized Investment Gains (Losses)

Net unrealized gains and losses on available-for-sale securities reflected as a separate component of accumulated other comprehensive income (“AOCI”) were as follows as of the dates indicated:

(Amounts in thousands) September 30, 2022 December 31, 2021
Net unrealized gains (losses) on investment securities:
Fixed maturity securities $ (542,631) $ 106,165
Short-term investments (19) —
Unrealized gains (losses) on investment securities (542,650) 106,165
Income taxes 115,435 (22,577)
Net unrealized investment gains (losses) $ (427,215) $ 83,588

~~ENACT HOLDINGS, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~


(Amounts in thousands)	September 30, 2023		December 31, 2022
Net unrealized gains (losses) on investment securities:
Fixed maturity securities	$	(496,588)	$	(486,913)
Short-term investments	(12)		(30)
Unrealized gains (losses) on investment securities	(496,600)		(486,943)
Income taxes	96,096		104,047
Net unrealized investment gains (losses)	$	(400,504)	$	(382,896)

The change in net unrealized gains (losses) on available-for-sale securities reported in accumulated other comprehensive income was as follows as of and for the periods indicated:


		Three months ended September 30,					Three months ended September 30,
(Amounts in thousands)	(Amounts in thousands)	2022		2021		(Amounts in thousands)	2023		2022
Beginning balance	Beginning balance	$	(293,113)	$	159,854	Beginning balance	$	(345,386)	$	(293,113)

Unrealized gains (losses) arising during the period:	Unrealized gains (losses) arising during the period:					Unrealized gains (losses) arising during the period:
Unrealized gains (losses) on investment securities	Unrealized gains (losses) on investment securities	(170,400)		(32,185)		Unrealized gains (losses) on investment securities	(57,401)		(170,400)
Provision for income taxes	Provision for income taxes	36,265		6,848		Provision for income taxes	(345)		36,265
Change in unrealized gains (losses) on investment securities	Change in unrealized gains (losses) on investment securities	(134,135)		(25,337)		Change in unrealized gains (losses) on investment securities	(57,746)		(134,135)
Reclassification adjustments to net investment (gains) losses, net of taxes of $(9) and $149, respectively		33		(562)
Reclassification adjustments to net investment (gains) losses, net of taxes of $2,592 and $(9), respectively						Reclassification adjustments to net investment (gains) losses, net of taxes of $2,592 and $(9), respectively	2,628		33
Change in net unrealized investment gains (losses)	Change in net unrealized investment gains (losses)	(134,102)		(25,899)		Change in net unrealized investment gains (losses)	(55,118)		(134,102)
Ending balance	Ending balance	$	(427,215)	$	133,955	Ending balance	$	(400,504)	$	(427,215)

		Nine months ended September 30,					Nine months ended September 30,
(Amounts in thousands)	(Amounts in thousands)	2022		2021		(Amounts in thousands)	2023		2022
Beginning balance	Beginning balance	$	83,588	$	208,378	Beginning balance	$	(382,896)	$	83,588
Cumulative effect of change in accounting, net of taxes		—		281

Unrealized gains (losses) arising during the period:	Unrealized gains (losses) arising during the period:					Unrealized gains (losses) arising during the period:
Unrealized gains (losses) on investment securities	Unrealized gains (losses) on investment securities	(649,750)		(94,724)		Unrealized gains (losses) on investment securities	(22,802)		(649,750)
Provision for income taxes	Provision for income taxes	138,209		20,148		Provision for income taxes	(7,791)		138,209
Change in unrealized gains (losses) on investment securities	Change in unrealized gains (losses) on investment securities	(511,541)		(74,576)		Change in unrealized gains (losses) on investment securities	(30,593)		(511,541)
Reclassification adjustments to net investment (gains) losses, net of taxes of $(197) and $34, respectively		738		(128)
Reclassification adjustments to net investment (gains) losses, net of taxes of $(161) and $(197), respectively						Reclassification adjustments to net investment (gains) losses, net of taxes of $(161) and $(197), respectively	12,985		738
Change in net unrealized investment gains (losses)	Change in net unrealized investment gains (losses)	(510,803)		(74,704)		Change in net unrealized investment gains (losses)	(17,608)		(510,803)
Ending balance	Ending balance	$	(427,215)	$	133,955	Ending balance	$	(400,504)	$	(427,215)

Amounts reclassified out of accumulated other comprehensive income to net investment gains (losses) include realized gains (losses) on sales of securities, which are determined on a specific identification basis.

1312

ENACT HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Fixed Maturity Securities Available-For-Sale

As of September 30, 2023, the amortized cost, gross unrealized gains (losses) and fair value of our investment securities were as follows:


(Amounts in thousands)	Amortized cost		Gross unrealized gains		Gross unrealized losses		Fair value
U.S. government, agencies and GSEs	$	149,146	$	3	$	(2,041)	$	147,108
State and political subdivisions	505,703		1,018		(99,183)		407,538
Non-U.S. government	12,360		—		(1,237)		11,123
U.S. corporate	2,813,640		252		(256,412)		2,557,480
Non-U.S. corporate	719,919		36		(64,671)		655,284
Residential mortgage-backed	10,433		7		(207)		10,233
Other asset-backed	1,276,079		784		(74,937)		1,201,926
Total fixed maturity securities available-for-sale	$	5,487,280	$	2,100	$	(498,688)	$	4,990,692
Short-term investments	18,185		—		(12)		18,173
Total investments	$	5,505,465	$	2,100	$	(498,700)	$	5,008,865

As of December 31, 2022, the amortized cost, gross unrealized gains (losses) and fair value of our investment securities were as follows:


(Amounts in thousands)	(Amounts in thousands)	Amortized cost		Gross unrealized gains		Gross unrealized losses		Fair value		(Amounts in thousands)	Amortized cost		Gross unrealized gains		Gross unrealized losses		Fair value
U.S. government, agencies and GSEs	U.S. government, agencies and GSEs	$	46,322	$	66	$	(1,734)	$	44,654	U.S. government, agencies and GSEs	$	46,319	$	59	$	(1,609)	$	44,769
State and political subdivisions	State and political subdivisions	528,255		2,429		(98,455)		432,229		State and political subdivisions	515,935		1,815		(97,894)		419,856
Non-U.S. government	Non-U.S. government	10,643		—		(1,391)		9,252		Non-U.S. government	10,607		—		(1,258)		9,349
U.S. corporate	U.S. corporate	2,918,599		275		(279,690)		2,639,184		U.S. corporate	2,886,269		1,355		(240,761)		2,646,863
Non-U.S. corporate	Non-U.S. corporate	721,819		17		(74,773)		647,063		Non-U.S. corporate	716,333		158		(63,647)		652,844
Residential mortgage-backed	Residential mortgage-backed	11,941		—		(198)		11,743		Residential mortgage-backed	11,162		—		(119)		11,043
Other asset-backed	Other asset-backed	1,182,954		14		(89,191)		1,093,777		Other asset-backed	1,185,048		462		(85,474)		1,100,036
Total fixed maturity securities available-for-sale	Total fixed maturity securities available-for-sale	$	5,420,533	$	2,801	$	(545,432)	$	4,877,902	Total fixed maturity securities available-for-sale	$	5,371,673	$	3,849	$	(490,762)	$	4,884,760
Short-term investments	Short-term investments	2,453		—		(19)		2,434		Short-term investments	3,077		—		(30)		3,047
Total investments available-for-sale		$	5,422,986	$	2,801	$	(545,451)	$	4,880,336
Total investments										Total investments	$	5,374,750	$	3,849	$	(490,792)	$	4,887,807

~~As of December 31, 2021, the amortized cost, gross unrealized gains (losses) and fair value of our investment securities were as follows:~~

(Amounts in thousands)
Amortized
cost
Gross unrealized gains Gross unrealized losses
Fair
value
U.S. government, agencies and GSEs $ 56,547 $ 1,863 $ (2) $ 58,408
State and political subdivisions 531,927 10,982 (4,456) 538,453
Non-U.S. government 22,358 248 (190) 22,416
U.S. corporate 2,863,100 98,293 (16,090) 2,945,303
Non-U.S. corporate 652,503 17,556 (3,465) 666,594
Other asset-backed 1,033,739 6,989 (5,563) 1,035,165
Total fixed maturity securities available-for-sale $ 5,160,174 $ 135,931 $ (29,766) $ 5,266,339

~~There was no allowance for credit losses recorded fixed maturity securities classified as available-for-sale as of September 30, 2022 or December 31, 2021.~~

1413

ENACT HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Gross Unrealized Losses and Fair Values of Fixed Maturity Securities Available-For-Sale

The following table presents the gross unrealized losses and fair values of our fixed maturity securities for which an allowance for credit losses has not been recorded, aggregated by investment type and length of time that individual fixed maturity securities have been in a continuous unrealized loss position, as of September 30, ~~2022:~~2023:


		Less than 12 months					12 months or more					Total						Less than 12 months					12 months or more					Total
(Amounts in thousands)	(Amounts in thousands)	Fair value		Gross unrealized losses		Number of securities	Fair value		Gross unrealized losses		Number of securities	Fair value		Gross unrealized losses		Number of securities	(Amounts in thousands)	Fair value		Gross unrealized losses		Number of securities	Fair value		Gross unrealized losses		Number of securities	Fair value		Gross unrealized losses		Number of securities
Fixed maturity securities:	Fixed maturity securities:																Fixed maturity securities:
U.S. government, agencies and GSEs	U.S. government, agencies and GSEs	$	43,752	$	(1,724)	18	$	95	$	(10)	1	$	43,847	$	(1,734)	19	U.S. government, agencies and GSEs	$	116,661	$	(717)	28	$	30,208	$	(1,324)	14	$	146,869	$	(2,041)	42
State and political subdivisions	State and political subdivisions	315,865		(74,515)		63	84,279		(23,940)		26	400,144		(98,455)		89	State and political subdivisions	1,396		(60)		2	388,682		(99,123)		85	390,078		(99,183)		87
Non-U.S. government	Non-U.S. government	—		—		—	9,252		(1,391)		1	9,252		(1,391)		1	Non-U.S. government	1,845		(17)		1	9,278		(1,220)		1	11,123		(1,237)		2
U.S. corporate	U.S. corporate	2,289,613		(199,380)		522	347,057		(80,310)		56	2,636,670		(279,690)		578	U.S. corporate	532,245		(27,758)		160	2,000,352		(228,654)		435	2,532,597		(256,412)		595
Non-U.S. corporate	Non-U.S. corporate	540,135		(52,646)		136	101,487		(22,127)		18	641,622		(74,773)		154	Non-U.S. corporate	136,341		(6,277)		38	513,481		(58,394)		124	649,822		(64,671)		162
Residential mortgage-backed	Residential mortgage-backed	11,743		(198)		6	—		—		—	11,743		(198)		6	Residential mortgage-backed	3,867		(21)		3	5,281		(186)		3	9,148		(207)		6
Other asset-backed	Other asset-backed	906,744		(66,738)		261	162,110		(22,453)		33	1,068,854		(89,191)		294	Other asset-backed	237,667		(4,111)		97	838,758		(70,826)		208	1,076,425		(74,937)		305
Total for fixed maturity securities in an unrealized loss position	Total for fixed maturity securities in an unrealized loss position	$	4,107,852	$	(395,201)	1,006	$	704,280	$	(150,231)	135	$	4,812,132	$	(545,432)	1,141	Total for fixed maturity securities in an unrealized loss position	$	1,030,022	$	(38,961)	329	$	3,786,040	$	(459,727)	870	$	4,816,062	$	(498,688)	1,199

We did not recognize an allowance for credit losses on securities in an unrealized loss position included in the table above. Based on a qualitative and quantitative review of the issuers of the securities, we believe the ~~decline in fair value is~~unrealized losses are largely due to ~~rising~~changes in interest rates and recent market volatility and isare not indicative of credit losses. The issuers continue to make timely principal and interest payments.

For all securities in an unrealized loss position without an allowance for credit losses, we expect to recover the amortized cost based on our estimate of the amount and timing of cash flows to be collected. We do not intend to sell nor do we expect that we will be required to sell these securities prior to recovering our amortized cost.

ENACT HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following table presents the gross unrealized losses and fair values of our fixed maturity securities, aggregated by investment type and length of time that individual fixed maturity securities have been in a continuous unrealized loss position, as of December 31, ~~2021:~~2022:

Less than 12 months 12 months or more Total
(Amounts in thousands)
Fair
value
Gross unrealized losses Number of securities Fair value Gross unrealized losses Number of securities Fair value Gross unrealized losses Number of securities
Fixed maturity securities:
U.S. government, agencies and GSEs $ 103 $ (2) 1 $ — $ — — $ 103 $ (2) 1
State and political subdivisions 255,202 (4,456) 47 — — — 255,202 (4,456) 47
Non-U.S. government 10,560 (190) 1 — — — 10,560 (190) 1
U.S. corporate 649,927 (14,300) 94 26,181 (1,790) 4 676,108 (16,090) 98
Non-U.S. corporate 183,485 (3,465) 28 — — — 183,485 (3,465) 28
Other asset-backed 456,565 (5,549) 76 3,736 (14) 1 460,301 (5,563) 77
Total for fixed maturity securities in an unrealized loss position $ 1,555,842 $ (27,962) 247 $ 29,917 $ (1,804) 5 $ 1,585,759 $ (29,766) 252

~~ENACT HOLDINGS, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~


	Less than 12 months					12 months or more					Total
(Amounts in thousands)	Fair value		Gross unrealized losses		Number of securities	Fair value		Gross unrealized losses		Number of securities	Fair value		Gross unrealized losses		Number of securities
Fixed maturity securities:
U.S. government, agencies and GSEs	$	43,873	$	(1,600)	18	$	96	$	(9)	1	$	43,969	$	(1,609)	19
State and political subdivisions	203,752		(40,988)		43	196,235		(56,906)		46	399,987		(97,894)		89
Non-U.S. government	—		—		—	9,349		(1,258)		1	9,349		(1,258)		1
U.S. corporate	2,033,713		(131,150)		468	568,171		(109,611)		92	2,601,884		(240,761)		560
Non-U.S. corporate	486,117		(35,515)		125	155,345		(28,132)		27	641,462		(63,647)		152
Residential mortgage-backed	11,043		(119)		6	—		—		—	11,043		(119)		6
Other asset-backed	655,525		(31,684)		217	375,810		(53,790)		71	1,031,335		(85,474)		288
Total for fixed maturity securities in an unrealized loss position	$	3,434,023	$	(241,056)	877	$	1,305,006	$	(249,706)	238	$	4,739,029	$	(490,762)	1,115

Contractual Maturities of Fixed Maturity Securities Available-For-Sale

The scheduled maturity distribution of fixed maturity securities as of September 30, ~~2022,~~2023, is set forth below. Actual maturities may differ from contractual maturities because issuers of securities may have the right to call or prepay obligations with or without call or prepayment penalties.


(Amounts in thousands)	(Amounts in thousands)	Amortized cost		Fair value		(Amounts in thousands)	Amortized cost		Fair value
Due one year or less	Due one year or less	$	214,145	$	212,697	Due one year or less	$	324,880	$	319,740
Due after one year through five years	Due after one year through five years	2,154,780		2,013,369		Due after one year through five years	2,097,579		1,931,440
Due after five years through ten years	Due after five years through ten years	1,569,701		1,314,043		Due after five years through ten years	1,601,988		1,379,748
Due after ten years	Due after ten years	287,012		232,273		Due after ten years	176,321		147,605
Subtotal	Subtotal	4,225,638		3,772,382		Subtotal	4,200,768		3,778,533
Residential mortgage-backed	Residential mortgage-backed	11,941		11,743		Residential mortgage-backed	10,433		10,233
Other asset-backed	Other asset-backed	1,182,954		1,093,777		Other asset-backed	1,276,079		1,201,926
Total fixed maturity securities available-for-sale	Total fixed maturity securities available-for-sale	$	5,420,533	$	4,877,902	Total fixed maturity securities available-for-sale	$	5,487,280	$	4,990,692

As of September 30, ~~2022,~~2023, securities issued by the finance and insurance, technology and communications, consumer—non-cyclical, and ~~consumer—non-cyclical~~utilities industry groups represented approximately ~~32%~~34%, ~~14%~~13%, 11%, and ~~12%~~10%, respectively, of our domestic and foreign corporate fixed maturity securities portfolio. No other industry group comprised more than 9% of our investment portfolio.

As of September 30, ~~2022,~~2023, we did not hold any fixed maturity securities in any single issuer, other than securities issued or guaranteed by the U.S. government, which exceeded 10% of equity.

As of September 30, ~~2022~~2023, and December 31, ~~2021, $25.1~~2022, $25.2 million and ~~$22.9~~$25.1 million, respectively, of securities in our portfolio were on deposit with various state insurance commissioners in order to comply with relevant insurance regulations.

ENACT HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(4)Fair ~~Value~~value

Recurring ~~Fair Value Measurements~~fair value measurements

We hold fixed maturity securities and short-term investments, which are carried at fair value. The fair value of fixed maturity securities and short-term investments are estimated primarily based on information derived from third-party pricing services (“pricing services”), internal models and/or broker quotes, which use a market approach, income approach or a combination of the market and income approach depending on the type of instrument and availability of information. In general, a market approach is utilized if there is readily available and relevant market activity for an individual security. In certain cases where market information is not available for a specific security but is available for similar securities, that security is valued using market information for similar securities, which is also a market approach. When market information is not available for a specific security (or similar securities) or is available but such information is less relevant or reliable, an income approach or a combination of a market and income approach is utilized. For securities with optionality, such as call or prepayment features (including asset-backed securities), an income or combination approach may be used. These valuation techniques may change from period to period, based on the relevance and availability of market data.

Further, while we consider the valuations provided by pricing services and broker quotes to be of high quality, management determines the fair value of our investment securities after considering all relevant and available information.

~~ENACT HOLDINGS, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

In general, we first obtain valuations from pricing services. If prices are unavailable for public securities, we obtain broker quotes. For all securities, excluding certain private fixed maturity securities, if neither a pricing service nor broker quotes valuation is available, we determine fair value using internal models. For certain private fixed maturity securities where we do not obtain valuations from pricing services, we utilize an internal model to determine fair value since transactions for similar securities are not readily observable and these securities are not typically valued by pricing services.

Given our understanding of the pricing methodologies and procedures of pricing services, the securities valued by pricing services are typically classified as Level 2 unless we determine the valuation process for a security or group of securities utilizes significant unobservable inputs, which would result in the valuation being classified as Level 3.

Broker quotes are typically based on an income approach given the lack of available market data. As the valuation typically includes significant unobservable inputs, we classify the securities where fair value is based on our consideration of broker quotes as Level 3 measurements.

For private fixed maturity securities, we utilize an income approach where we obtain public bond spreads and utilize those in an internal model to determine fair value. Other inputs to the model include rating and weighted-average life, as well as sector which is used to assign the spread. We then add an additional premium, which represents an unobservable input, to the public bond spread to adjust for the liquidity and other features of our private placements. We utilize the estimated market yield to discount the expected cash flows of the security to determine fair value. We utilize price caps for securities where the estimated market yield results in a valuation that may exceed the amount that would be received in a market transaction. When a security does not have an external rating, we assign the security an internal rating to determine the appropriate public bond spread that should be utilized in the valuation. While we generally consider the public bond spreads by sector and maturity to be observable inputs, we evaluate the similarities of our private placement with the public bonds, any price caps utilized, liquidity premiums applied, and whether external ratings are available for our private placements to determine whether the spreads utilized would be considered observable inputs. We classify private securities without an external rating or public bond spread as Level 3. In general, a significant increase (decrease) in credit spreads

ENACT HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

would have resulted in a significant decrease (increase) in the fair value for our fixed maturity securities as of September 30, ~~2022.~~2023.

For remaining securities priced using internal models, we determine fair value using an income approach. We maximize the use of observable inputs but typically utilize significant unobservable inputs to determine fair value. Accordingly, the valuations are typically classified as Level 3.

Our assessment of whether or not there were significant unobservable inputs related to fixed maturity securities was based on our observations obtained through the course of managing our investment portfolio, including interaction with other market participants, observations related to the availability and consistency of pricing and/or rating, and understanding of general market activity such as new issuance and the level of secondary market trading for a class of securities. Additionally, we considered data obtained from pricing services to determine whether our estimated values incorporate significant unobservable inputs that would result in the valuation being classified as Level 3.

A summary of the inputs used for our fixed maturity securities and short-term investments based on the level in which instruments are classified is included below. We have combined certain classes of instruments together as the nature of the inputs is similar.

Level 1 measurements

There were no fixed maturity securities classified as Level 1 as of September 30, ~~2022,~~2023, and December 31, ~~2021.~~

~~ENACT HOLDINGS, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

2022.

Level 2 measurements

Fixed maturity securities:

Third-party pricing services

In estimating the fair value of fixed maturity securities, approximately 89% of our portfolio was priced using third-party pricing services as of September 30, ~~2022.~~2023. These pricing services utilize industry-standard valuation techniques that include market-based approaches, income-based approaches, a combination of market-based and income-based approaches or other proprietary, internally generated models as part of the valuation processes. These third-party pricing vendors maximize the use of publicly available data inputs to generate valuations for each asset class. Priority and type of inputs used may change frequently as certain inputs may be more direct drivers of valuation at the time of pricing. Examples of significant inputs incorporated by pricing services may include sector and issuer spreads, seasoning, capital structure, security optionality, collateral data, prepayment assumptions, default assumptions, delinquencies, debt covenants, benchmark yields, trade data, dealer quotes, credit ratings, maturity and weighted-average life. We conduct regular meetings with our pricing services for the purpose of understanding the methodologies, techniques and inputs used by the third-party pricing providers.

1817

ENACT HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following table presents a summary of the significant inputs used by our pricing services for certain fair value measurements of fixed maturity securities that are classified as Level 2 as of September 30, ~~2022:~~2023:

(Amounts in thousands)

Fair value

Primary methodologies

Significant inputs

U.S. government, agencies and GSEs

~~44,654~~147,108

Price quotes from trading desk, broker feeds

Bid side prices, trade prices, Option Adjusted Spread (“OAS”) to swap curve, Bond Market Association OAS, Treasury Curve, Agency Bullet Curve, maturity to issuer spread

State and political subdivisions

~~432,229~~407,538

Multi-dimensional attribute-based modeling systems, third-party pricing vendors

Trade prices, material event notices, Municipal Market Data benchmark yields, broker quotes

Non-U.S. government

~~9,252~~11,123

Matrix pricing, spread priced to benchmark curves, price quotes from market makers

Benchmark yields, trade prices, broker quotes, comparative transactions, issuer spreads, bid-offer spread, market research publications, third-party pricing sources

U.S. corporate

~~2,256,976~~2,149,559

Multi-dimensional attribute-based modeling systems, broker quotes, price quotes from market makers, internal models, OAS-based models

Bid side prices to Treasury Curve, Issuer Curve, which includes sector, quality, duration, OAS percentage and change for spread matrix, trade prices, comparative transactions, Trade Reporting and Compliance Engine (“TRACE”) reports

Non-U.S. corporate

~~476,784~~507,400

Multi-dimensional attribute-based modeling systems, OAS-based models, price quotes from market makers

Benchmark yields, trade prices, broker quotes, comparative transactions, issuer spreads, bid-offer spread, market research publications, third-party pricing sources

Residential mortgage-backed

~~11,743~~10,233

OAS-based models, single factor binomial models, internally priced

Prepayment and default assumptions, aggregation of bonds with similar characteristics, including collateral type, vintage, tranche type, weighted-average life, weighted-average loan age, issuer program and delinquency ratio, pay up and pay down factors, TRACE reports

Other asset-backed

~~1,086,134~~1,199,321

Multi-dimensional attribute-based modeling systems, spread matrix priced to swap curves, price quotes from market makers

Spreads to daily updated swap curves, spreads derived from trade prices and broker quotes, bid side prices, new issue data, collateral performance, analysis of prepayment speeds, cash flows, collateral loss analytics, historical issue analysis, trade data from market makers, TRACE reports

1918

ENACT HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Internal models

A portion of our Level 2 U.S. corporate and non-U.S. corporate securities are valued using internal models. The fair value of these fixed maturity securities was ~~$165.3~~$171.6 million and ~~$91.7~~$72.6 million, respectively, as of September 30, ~~2022.~~2023. Internally modeled securities are primarily private fixed maturity securities where we use market observable inputs such as an interest rate yield curve, published credit spreads for similar securities based on the external ratings of the instrument and related industry sector of the issuer. Additionally, we may apply certain price caps and liquidity premiums in the valuation of private fixed maturity securities. Price caps and liquidity premiums are established using inputs from market participants.

Short-term investments:

The fair value of short-term investments classified as Level 2 is determined after considering prices obtained by pricing services.

Level 3 measurements

Broker quotes

A portion of our U.S. corporate and other asset-backed securities are valued using broker quotes. Broker quotes are obtained from third-party providers that have current market knowledge to provide a reasonable price for securities not routinely priced by pricing services. Brokers utilized for valuation of assets are reviewed annually. The fair value of our Level 3 fixed maturity securities priced by broker quotes was ~~$10.8~~$14.9 million as of September 30, ~~2022.~~2023.

Internal models

A portion of our U.S. corporate and non-U.S. corporate securities are valued using internal models. The primary inputs to the valuation of the bond population include quoted prices for identical assets, or similar assets in markets that are not active, contractual cash flows, duration, call provisions, issuer rating, benchmark yields and credit spreads. Certain private fixed maturity securities are valued using an internal model using market observable inputs such as the interest rate yield curve, as well as published credit spreads for similar securities, which includes significant unobservable inputs. Additionally, we may apply certain price caps and liquidity premiums in the valuation of private fixed maturity securities. Price caps are established using inputs from market participants. For structured securities, the primary inputs to the valuation include quoted prices for identical assets, or similar assets in markets that are not active, contractual cash flows, weighted-average coupon, weighted-average maturity, issuer rating, structure of the security, expected prepayment speeds and volumes, collateral type, current and forecasted loss severity, average delinquency rates, vintage of the loans, geographic region, debt service coverage ratios, payment priority with the tranche, benchmark yields and credit spreads. The fair value of our Level 3 fixed maturity securities priced using internal models was ~~$292.3~~$299.3 million as of September 30, ~~2022.~~2023.

2019

ENACT HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following tables set forth our assets by class of instrument that are measured at fair value on a recurring basis as of the dates indicated:


		September 30, 2022									September 30, 2023
(Amounts in thousands)	(Amounts in thousands)	Total		Level 1		Level 2		Level 3		(Amounts in thousands)	Total		Level 1		Level 2		Level 3
Fixed maturity securities:	Fixed maturity securities:									Fixed maturity securities:
U.S. government, agencies and GSEs	U.S. government, agencies and GSEs	$	44,654	$	—	$	44,654	$	—	U.S. government, agencies and GSEs	$	147,108	$	—	$	147,108	$	—
State and political subdivisions	State and political subdivisions	432,229		—		432,229		—		State and political subdivisions	407,538		—		407,538		—
Non-U.S. government	Non-U.S. government	9,252		—		9,252		—		Non-U.S. government	11,123		—		11,123		—
U.S. corporate	U.S. corporate	2,639,184		—		2,422,247		216,937		U.S. corporate	2,557,480		—		2,321,156		236,324
Non-U.S. corporate	Non-U.S. corporate	647,063		—		568,447		78,616		Non-U.S. corporate	655,284		—		580,016		75,268
Residential mortgage-backed	Residential mortgage-backed	11,743		—		11,743		—		Residential mortgage-backed	10,233		—		10,233		—
Other asset-backed	Other asset-backed	1,093,777		—		1,086,134		7,643		Other asset-backed	1,201,926		—		1,199,321		2,605
Total fixed maturity securities	Total fixed maturity securities	4,877,902		—		4,574,706		303,196		Total fixed maturity securities	4,990,692		—		4,676,495		314,197
Short-term investments	Short-term investments	2,434		—		2,434		—		Short-term investments	18,173		—		18,173		—
Total	Total	$	4,880,336	$	—	$	4,577,140	$	303,196	Total	$	5,008,865	$	—	$	4,694,668	$	314,197


		December 31, 2021									December 31, 2022
(Amounts in thousands)	(Amounts in thousands)	Total		Level 1		Level 2		Level 3		(Amounts in thousands)	Total		Level 1		Level 2		Level 3
Fixed maturity securities:	Fixed maturity securities:									Fixed maturity securities:
U.S. government, agencies and GSEs	U.S. government, agencies and GSEs	$	58,408	$	—	$	58,408	$	—	U.S. government, agencies and GSEs	$	44,769	$	—	$	44,769	$	—
State and political subdivisions	State and political subdivisions	538,453		—		538,453		—		State and political subdivisions	419,856		—		419,856		—
Non-U.S. government	Non-U.S. government	22,416		—		22,416		—		Non-U.S. government	9,349		—		9,349		—
U.S. corporate	U.S. corporate	2,945,303		—		2,724,570		220,733		U.S. corporate	2,646,863		—		2,426,237		220,626
Non-U.S. corporate	Non-U.S. corporate	666,594		—		582,930		83,664		Non-U.S. corporate	652,844		—		557,690		95,154
Residential mortgage-backed										Residential mortgage-backed	11,043		—		11,043		—
Other asset-backed	Other asset-backed	1,035,165		—		1,010,942		24,223		Other asset-backed	1,100,036		—		1,096,555		3,481

Total fixed maturity securities										Total fixed maturity securities	4,884,760		—		4,565,499		319,261
Short-term investments										Short-term investments	3,047		—		3,047		—
Total	Total	$	5,266,339	$	—	$	4,937,719	$	328,620	Total	$	4,887,807	$	—	$	4,568,546	$	319,261

We had no liabilities recorded at fair value as of September 30, ~~2022,~~2023, and December 31, ~~2021.~~2022.

2120

ENACT HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following tables present additional information about assets measured at fair value on a recurring basis and for which we have utilized significant unobservable (Level 3) inputs to determine fair value as of or for the dates indicated:


		Beginning balance as of July 1, 2022		Total realized and unrealized gains (losses)				Purchases		Settlements				Transfer into Level 3 (1)				Transfer out of Level 3 (1)				Ending balance as of September 30, 2022					Total gains (losses) attributable to assets still held									Beginning balance as of July 1, 2023					Total realized and unrealized gains (losses)				Purchases			Sales				Settlements			Transfer into Level 3 (1)			Transfer out of Level 3 (1)		Ending balance as of September 30, 2023		Total gains (losses) attributable to assets still held
(Amounts in thousands)	(Amounts in thousands)			Included in net income		Included in OCI						Included in net income								Included in OCI				(Amounts in thousands)		Beginning balance as of July 1, 2023							Included in OCI								Purchases						Settlements							Included in net income			Included in OCI
Fixed maturity securities:	Fixed maturity securities:																																			Fixed maturity securities:
U.S. corporate	U.S. corporate	$	216,654	$	(14)	$	(9,292)	$	9,999			$	(410)			$	—			$	—			$	216,937				$	(14)					$	(9,293)		U.S. corporate	$	222,301			$	(7)	$	(3,625)		$	18,001	$	(2)				$	(344)		$	—	$	—	$	236,324	$	(7)	$	(3,627)
Non-U.S. corporate	Non-U.S. corporate	83,305		(86)		(2,498)		8,000		(10,105)				—				—				78,616					(86)				(2,501)			Non-U.S. corporate		72,724					6		(1,288)		2			—				(105)			11,377			(7,448)		75,268		6		(1,043)
Other asset-backed	Other asset-backed	15,054		—		(523)		7,823		—				—				(14,711)				7,643					—				(180)			Other asset-backed		10,952					14		(108)		1,655			(1)				(57)			—			(9,850)		2,605		6		(4)
Total	Total	$	315,013	$	(100)	$	(12,313)	$	25,822	$	(10,515)			$	—			$	(14,711)			$	303,196				$	(100)			$	(11,974)		Total		$	305,977				$	13	$	(5,021)	$	19,658		$	(3)			$	(506)		$	11,377		$	(17,298)	$	314,197	$	5	$	(4,674)

		Beginning balance as of July 1, 2021		Total realized and unrealized gains (losses)				Purchases		Settlements				Transfer into Level 3 (1)				Transfer out of Level 3 (1)				Ending balance as of September 30, 2021					Total gains (losses) attributable to assets still held									Beginning balance as of July 1, 2022					Total realized and unrealized gains (losses)				Purchases			Sales				Settlements			Transfer into Level 3 (1)			Transfer out of Level 3 (1)		Ending balance as of September 30, 2022		Total gains (losses) attributable to assets still held
(Amounts in thousands)	(Amounts in thousands)			Included in net income		Included in OCI						Included in net income								Included in OCI				(Amounts in thousands)		Beginning balance as of July 1, 2022							Included in OCI								Purchases						Settlements							Included in net income			Included in OCI
Fixed maturity securities:	Fixed maturity securities:																																			Fixed maturity securities:
U.S. corporate	U.S. corporate	$	129,613	$	(30)	$	(2,778)	$	53,000			$	(3,426)			$	4,318			$	(3,010)			$	177,687				$	(30)					$	(2,769)		U.S. corporate	$	216,654			$	(14)	$	(9,292)		$	9,999	$	—				$	(410)		$	—	$	—	$	216,937	$	(14)	$	(9,293)
Non-U.S. corporate	Non-U.S. corporate	91,157		958		(644)		6,000		(14,148)				3,010				—				86,333					(83)				235			Non-U.S. corporate		83,305					(86)		(2,498)		8,000			—				(10,105)			—			—		78,616		(86)		(2,501)
Other asset-backed	Other asset-backed	10,015		—		(170)		10,000		(1,459)				—				—				18,386					—				(146)			Other asset-backed		15,054					—		(523)		7,823			—				—			—			(14,711)		7,643		—		(180)
Total	Total	$	230,785	$	928	$	(3,592)	$	69,000	$	(19,033)			$	7,328			$	(3,010)			$	282,406				$	(113)			$	(2,680)		Total		$	315,013				$	(100)	$	(12,313)	$	25,822		$	—			$	(10,515)		$	—		$	(14,711)	$	303,196	$	(100)	$	(11,974)

______________

(1)The transfers into and out of Level 3 for fixed maturity securities were related to changes in the primary pricing source and changes in the observability of external information used in determining the fair value, such as external ratings or credit spreads.

ENACT HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


	Beginning balance as of January 1, 2023		Total realized and unrealized gains (losses)				Purchases		Sales		Settlements		Transfer into Level 3 (1)		Transfer out of Level 3 (1)		Ending balance as of September 30, 2023			Total gains (losses) attributable to assets still held
(Amounts in thousands)			Included in net income		Included in OCI														Included in net income			Included in OCI
Fixed maturity securities:
U.S. corporate	$	220,626	$	(28)	$	(3,622)	$	39,001	$	(6,901)	$	(12,752)	$	—	$	—	$	236,324		$	(23)		$	(4,720)
Non-U.S. corporate	95,154		(711)		170		3,761		(3,543)		(23,492)		11,377		(7,448)		75,268			22			(921)
Other asset-backed	3,481		19		(118)		11,646		(1)		(58)		—		(12,364)		2,605			11			(32)
Total	$	319,261	$	(720)	$	(3,570)	$	54,408	$	(10,445)	$	(36,302)	$	11,377	$	(19,812)	$	314,197		$	10		$	(5,673)

(Amounts in thousands)	Beginning balance as of January 1, 2022		Total realized and unrealized gains (losses)				Purchases		Sales		Settlements		Transfer into Level 3 (1)		Transfer out of Level 3 (1)		Ending balance as of September 30, 2022			Total gains (losses) attributable to assets still held
			Included in net income		Included in OCI														Included in net income			Included in OCI
Fixed maturity securities:
U.S. corporate	$	220,733	$	(42)	$	(39,462)	$	49,968	$	—	$	(850)	$	—	$	(13,410)	$	216,937		$	(42)		$	(38,970)
Non-U.S. corporate	83,664		(254)		(11,768)		21,009		—		(10,316)		—		(3,719)		78,616			(254)			(11,476)
Other asset-backed	24,223		—		(2,090)		22,820		—		—		—		(37,310)		7,643			—			(123)
Total	$	328,620	$	(296)	$	(53,320)	$	93,797	$	—	$	(11,166)	$	—	$	(54,439)	$	303,196		$	(296)		$	(50,569)

______________

ENACT HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Beginning
balance
as of
January 1,
2022
Total realized and
unrealized gains
(losses)
Purchases Settlements
Transfer
into
Level 3 (1)
Transfer
out of
Level 3 (1)
Ending
balance
as of
September 30, 2022
Total gains
(losses)
attributable to
assets still held
(Amounts in thousands)
Included
in net
income
Included
in OCI
Included
in net
income
Included
in OCI
Fixed maturity securities:
U.S. corporate $ 220,733 $ (42) $ (39,462) $ 49,968 $ (850) $ — $ (13,410) $ 216,937 $ (42) $ (38,970)
Non-U.S. corporate 83,664 (254) (11,768) 21,009 (10,316) — (3,719) 78,616 (254) (11,476)
Other asset-backed 24,223 — (2,090) 22,820 — — (37,310) 7,643 — (123)
Total $ 328,620 $ (296) $ (53,320) $ 93,797 $ (11,166) $ — $ (54,439) $ 303,196 $ (296) $ (50,569)
(Amounts in thousands) Beginning
balance
as of
January 1,
2021 Total realized and
unrealized gains
(losses) Purchases Settlements
Transfer
into
Level 3 (1)
Transfer
out of
Level 3 (1)
Ending
balance
as of
September 30, 2021 Total gains
(losses)
attributable to
assets still held
Included
in net
income Included
in OCI Included in net income Included in OCI
Fixed maturity securities:
U.S. corporate $ 119,373 $ (92) $ (3,750) $ 71,000 $ (8,914) $ 7,397 $ (7,327) $ 177,687 $ (92) $ (4,029)
Non-U.S. corporate 95,751 868 3,147 42,786 (25,044) 3,010 (34,185) 86,333 (168) (683)
Other asset-backed 13,781 — (104) 10,000 (2,723) — (2,568) 18,386 — (130)
Total $ 228,905 $ 776 $ (707) $ 123,786 $ (36,681) $ 10,407 $ (44,080) $ 282,406 $ (260) $ (4,842)

~~______________~~

~~(1)~~The transfers into and out of Level 3 for fixed maturity securities were related to changes in the primary pricing source and changes in the observability of external information used in determining the fair value, such as external ratings or credit spreads.

Purchases, sales, issuances and settlements represent the activity that occurred during the period that results in a change of the asset but does not represent changes in fair value for the instruments held at the beginning of the period. ~~Such activity consists of purchases, sales and settlements of fixed maturity securities.~~

The amount presented for realized and unrealized gains (losses) included in net income for fixed maturity securities primarily represents amortization and accretion of premiums and discounts on certain fixed maturity securities recorded within net investment income.

The following table presents a summary of the significant unobservable inputs used for certain asset fair value measurements that are based on internal models and classified as Level 3 as of September 30, ~~2022:~~2023:

(Amounts in thousands)

Valuation

technique

Fair value (1)

Unobservable

input

Range (bps)

Weighted-

average (2) (bps)

(Amounts in thousands)

Valuation

technique

Fair value (1)

Unobservable

input

Range (bps)

Weighted-

average (2) (bps)

Fixed maturity securities:

U.S. corporate

Internal models

213,731

Credit spreads

50 - 230

153

U.S. corporate

Internal models

234,263

Credit spreads

14 - 241

131

Non-U.S. corporate

Internal models

78,614

Credit spreads

91 - 242

159

Non-U.S. corporate

Internal models

65,052

Credit spreads

91 - 182

133

______________

(1)Certain classes of instruments classified as Level 3 are excluded as a result of not being material or due to limitations in being able to obtain the underlying inputs used by certain third-party sources, such as broker quotes, used as an input in determining fair value.

(2)Unobservable inputs weighted by the relative fair value of the associated instrument.

~~ENACT HOLDINGS, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~Liabilities Not Required to Be Carried at Fair Value~~

We have certain financial instruments that are not recorded at fair value, including cash and cash equivalents and accrued investment income, the carrying value of which approximate fair value due to the short-term nature of these ~~instruments and~~instruments. They are not included in this disclosure.

Liabilities not required to be carried at fair value

The following represents our estimated fair value of financial liabilities that are not required to be carried at fair value, classified as Level 2, as of the dates indicated:


		September 30, 2022				December 31, 2021					September 30, 2023				December 31, 2022
(Amounts in thousands)	(Amounts in thousands)	Carrying amount		Fair value		Carrying amount		Fair value		(Amounts in thousands)	Carrying amount		Fair value		Carrying amount		Fair value
Long-term borrowings	Long-term borrowings	$	742,211	$	719,213	$	740,416	$	821,033	Long-term borrowings	$	744,752	$	739,178	$	742,830	$	739,020

ENACT HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(5)Loss ~~Reserves~~reserves

Activity for the liability for loss reserves for the nine months ended September 30, is summarized as follows:


(Amounts in thousands)	(Amounts in thousands)	2022		2021		(Amounts in thousands)	2023		2022
Loss reserves, beginning balance	Loss reserves, beginning balance	$	641,325	$	555,679	Loss reserves, beginning balance	$	519,008	$	641,325
Reinsurance recoverable, beginning balance						Reinsurance recoverable, beginning balance	—		—
Run-off reserves	Run-off reserves	(681)		(654)		Run-off reserves	(678)		(681)
Net loss reserves, beginning balance	Net loss reserves, beginning balance	640,644		555,025		Net loss reserves, beginning balance	518,330		640,644

Losses and LAE incurred related to current accident year	Losses and LAE incurred related to current accident year	138,504		104,939		Losses and LAE incurred related to current accident year	198,732		138,504
Losses and LAE incurred related to prior accident years	Losses and LAE incurred related to prior accident years	(250,799)		14,468		Losses and LAE incurred related to prior accident years	(195,898)		(250,799)
Total incurred (1)	Total incurred (1)	(112,295)		119,407		Total incurred (1)	2,834		(112,295)

Losses and LAE paid related to current accident year	Losses and LAE paid related to current accident year	(1,005)		(1,574)		Losses and LAE paid related to current accident year	(697)		(1,005)
Losses and LAE paid related to prior accident years	Losses and LAE paid related to prior accident years	(17,772)		(25,194)		Losses and LAE paid related to prior accident years	(20,458)		(17,772)
Total paid (1)	Total paid (1)	(18,777)		(26,768)		Total paid (1)	(21,155)		(18,777)

Net loss reserves, ending balance	Net loss reserves, ending balance	509,572		647,664		Net loss reserves, ending balance	500,009		509,572
Reinsurance recoverable, ending balance						Reinsurance recoverable, ending balance	429		—
Run-off reserves	Run-off reserves	665		701		Run-off reserves	655		665
Loss reserves, ending balance	Loss reserves, ending balance	$	510,237	$	648,365	Loss reserves, ending balance	$	501,093	$	510,237

______________

(1)Losses and loss adjustment expenses (“LAE”) incurred and paid exclude losses related to our run-off business.

The liability for loss reserves represents our current best estimate; however, there may be future adjustments to this estimate and related assumptions. Such adjustments, reflecting any variety of new and adverse trends, could possibly be significant, and result in future increases to reserves by amounts that could be material to our results of operations, financial condition and liquidity.

Losses incurred related to insured events of the current accident year relate to defaults that occurred in that year and represent the estimated ultimate amount of losses to be paid on such defaults. Losses incurred related to insured events of prior accident years represent the (favorable) or unfavorable development of reserves as a result of the actual rates at which delinquencies go to claim (“claim rates”) and claim amounts being different than those we estimated when originally establishing the reserves.

~~ENACT HOLDINGS, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

Such estimates are based on our historical experience, which we believe is representative of expected future losses at the time of estimation. As a result of the extended period of time that may exist between the reporting of a delinquency and the claim payment, as well as changes in economic conditions and the real estate market, significant uncertainty and variability exist on amounts ultimately paid.

~~For the nine months ended September 30, 2022, losses and LAE incurred of $139 million related to insured events of the current accident year was primarily attributable to new delinquencies, a~~A portion of ~~which was~~delinquencies in the periods presented were from borrowers participating in deferred or reduced payments (“forbearance”) as a result of COVID-19. When establishing loss reserves for borrowers in forbearance from 2020 to 2022, we ~~assume~~assumed a lower rate of delinquencies becoming active claims, which ~~has~~had the effect of producing a lower reserve compared to delinquencies that ~~are~~were not in forbearance. Historical experience with localized natural disasters, such as hurricanes, indicates a higher cure rate for borrowers in forbearance. Unlike a hurricane where the natural disaster occurs at a point in time and the rebuild starts soon after, COVID-19 brought ongoing displacement to the mortgage insurance market, making it more difficult to determine the effectiveness of forbearance and the resulting claim rates for new delinquencies in forbearance plans. Given this difference, we initially leveraged our prior hurricane experience and have recently layered in cure activity from COVID-19 related delinquencies as considerations in the establishment of an appropriate claim rate estimate for new delinquencies in forbearance plans that have emerged as a result of COVID-19. Loss reserves recorded on these new delinquencies have a high

ENACT HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

degree of estimation due to the level of uncertainty regarding whether delinquencies in forbearance will ultimately cure or result in claim payments as well as the timing and severity of those payments. ~~Losses in~~

For the nine months ended September 30, 2023, losses and LAE incurred of $199 million related to insured events of the current accident year was primarily attributable to new delinquencies compared to $139 million for the nine months ended September 30, 2022. During the first nine months of September 2022, losses related to the current accident year were also impacted by $25 million of reserve strengthening due to uncertainty in the ~~current~~ economic environment.

We also recorded favorable reserve adjustments primarily on prior accident year reserves of ~~$251~~$188 million, which ~~was~~were driven primarily ~~driven~~ by cure performance of delinquencies from ~~2020 related to the emergence~~2022 and earlier, including a portion of those as a result of COVID-19. During the peak of COVID-19, we experienced elevated new delinquencies subject to forbearance plans. Those delinquencies have continued to ~~cure~~perform at levels above our reserve expectations. A component of the reserve release also related to delinquencies from 2022, as uncertainty in the economic environment has not negatively impacted cure performance to the extent initially expected. During the first nine months of ~~2021, existing~~2022, we released $251 million of reserves ~~were strengthened by $10 million~~ primarily ~~driven by slower early cure emergence patterns on pre-COVID-19 delinquencies.~~related to COVID-19 delinquencies from 2020.

(6)Reinsurance

We reinsure a portion of our policy risks in order to reduce our ultimate losses, diversify our exposures and comply with regulatory requirements. We also assume certain policy risks written by other companies.

Reinsurance does not relieve us from our obligations to policyholders. In the event that the reinsurers are unable to meet their obligations, we remain liable for the reinsured claims. We monitor both the financial condition of individual reinsurers and risk concentrations arising from similar geographic regions, activities and economic characteristics of reinsurers to lessen the risk of default by such reinsurers.

~~ENACT HOLDINGS, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

The following table sets forth the effects of reinsurance on premiums written and earned for the periods indicated:


		Three months ended September 30,				Nine months ended September 30,					Three months ended September 30,				Nine months ended September 30,
(Amounts in thousands)	(Amounts in thousands)	2022		2021		2022		2021		(Amounts in thousands)	2023		2022		2023		2022
Net premiums written:	Net premiums written:									Net premiums written:
Direct	Direct	$	243,655	$	252,719	$	732,079	$	738,848	Direct	$	250,044	$	243,655	$	736,143	$	732,079
Assumed	Assumed	64		78		198		249		Assumed	577		64		892		198
Ceded	Ceded	(20,453)		(18,500)		(58,884)		(53,150)		Ceded	(20,256)		(20,453)		(61,198)		(58,884)
Net premiums written	Net premiums written	$	223,266	$	234,297	$	673,393	$	685,947	Net premiums written	$	230,365	$	223,266	$	675,837	$	673,393

Net premiums earned:	Net premiums earned:									Net premiums earned:
Direct	Direct	$	255,449	$	261,485	$	765,411	$	790,986	Direct	$	263,025	$	255,449	$	777,280	$	765,411
Assumed	Assumed	64		78		198		249		Assumed	577		64		892		198
Ceded	Ceded	(20,453)		(18,500)		(58,884)		(53,150)		Ceded	(20,256)		(20,453)		(61,198)		(58,884)
Net premiums earned	Net premiums earned	$	235,060	$	243,063	$	706,725	$	738,085	Net premiums earned	$	243,346	$	235,060	$	716,974	$	706,725

The difference between written premiums of ~~$223.3~~$230.4 million and earned premiums of ~~$235.1~~$243.3 million represents the decrease in unearned premiums for the three months ended September 30, ~~2022.~~2023. The difference between written premiums of ~~$673.4~~$675.8 million and earned premiums of ~~$706.7~~$717.0 million represents the decrease in unearned premiums for the nine months ended September 30, ~~2022.~~2023. The decrease in

ENACT HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

unearned premiums ~~for each period~~ was primarily the result of ~~policy cancellations in~~premium earned over time coupled with low originations of our single premium mortgage insurance product.

~~Insurance-linked note~~Excess-of-loss reinsurance

We engage in excess-of-loss (“XOL”) insurance transactions either through a panel of traditional reinsurance providers or through collateralized reinsurance with unaffiliated special purpose insurers (“Triangle Re Entities”). During the respective coverage periods of these agreements, EMICO retains the first layer of aggregate loss exposure on covered policies while the reinsurer provides the second layer of coverage, up to the defined reinsurance coverage amount. EMICO retains losses in excess of ~~loss reinsurance treaties~~

~~On September 2, 2021, we obtained $371.5 million of excess of loss~~the respective reinsurance coverage ~~from~~amount.

The Triangle Re ~~2021-3 Ltd.~~Entities fully collateralize their coverage by issuing insurance-linked notes (“~~Triangle Re 2021-3”~~ILNs”) onto eligible capital market investors in unregistered private offerings. Traditional reinsurance providers collateralize a ~~portfolio~~portion of ~~existing mortgage insurance policies written from January 2021 through June 2021. In connection with entering into the reinsurance agreement with Triangle Re 2021-3, we~~their coverage by holding funds in trust. We believe that the risk transfer requirements for reinsurance accounting were met as ~~Triangle Re 2021-3 is assuming~~these XOL insurance transactions assume significant insurance risk and a reasonable possibility of significant loss. ~~At closing, we retain~~

EMICO has rights to terminate the ILNs or traditional XOL reinsurance agreements upon the occurrence of certain events.

The following table presents the issue date, policy dates, initial and current first layer ofretained aggregate ~~losses up to $303.5 million. Triangle Re 2021-3 provides 72%~~loss and initial and current reinsurance coverage ~~for losses above our retained layer up to $371.5 million.~~amount under each reinsurance transaction. Current amounts are presented as of September 30, 2023:

On April 16, 2021, we obtained $302.7 million of excess of loss reinsurance coverage from Triangle Re 2021-2 Ltd. (“Triangle Re 2021-2”) on a portfolio of existing mortgage insurance policies written from September 2020 through December 2020. In connection with entering into the reinsurance agreement with Triangle Re 2021-2, we believe that the risk transfer requirements for reinsurance accounting were met as Triangle Re 2021-2 is assuming significant insurance risk and a reasonable possibility of significant loss. For the reinsurance coverage, we retain the first layer of aggregate losses up to $188.6 million. Triangle Re 2021-2 provides 76% reinsurance coverage for losses above our retained first layer up to $302.7 million.

On March 2, 2021, we obtained $495.0 million of excess of loss reinsurance coverage from Triangle Re 2021-1 Ltd. (“Triangle Re 2021-1”) on a portfolio of existing seasoned mortgage insurance policies written from January 2014 through December 2018 and from October 2019 through December 2019. In connection with entering into the reinsurance agreement with Triangle Re 2021-1, we believe that the risk transfer requirements for reinsurance accounting were met as Triangle Re 2021-1 is assuming significant insurance risk and a reasonable possibility of significant loss. Triangle Re 2021-1 reinsurance coverage is derived by applying a reinsurance cession percentage to the mortgage insurance coverage for each loan


Mortgage insurance-linked notes
(Amounts in millions)	Issue date	Policy dates	Initial first layer retained loss	Current first layer retained loss	Initial reinsurance coverage	Current reinsurance coverage
Triangle Re 2021-1 Ltd.	3/02/2021	1/01/2014 - 12/31/2018, 10/01/2019 - 12/31/2019	$212	$211	$495	$85
Triangle Re 2021-2 Ltd.	4/16/2021	9/01/2020 - 12/31/2020	$189	$188	$303	$193
Triangle Re 2021-3 Ltd.	9/02/2021	1/01/2021 - 6/30/2021	$304	$303	$372	$278
Total						$556

Traditional excess-of-loss reinsurance
(Amounts in millions)	Issue date	Policy dates	Initial first layer retained loss	Current first layer retained loss	Initial reinsurance coverage	Current reinsurance coverage
2020 XOL	1/01/2020	1/01/2020 - 12/31/2020	$691	$690	$168	$26
2021 XOL	2/04/2021	1/01/2021 - 12/31/2021	$671	$670	$206	$148
2022-1 XOL	1/27/2022	1/01/2022 - 12/31/2022	$462	$462	$196	$196
2022-2 XOL	1/27/2022	1/01/2022 - 12/31/2022	$385	$385	$25	$25
2022-3 XOL	3/24/2022	7/01/2021 - 12/31/2021	$317	$316	$289	$250
2022-4 XOL	3/24/2022	7/01/2021 - 12/31/2021	$264	$263	$36	$36
2022-5 XOL	9/15/2022	1/01/2022 - 6/30/2022	$256	$256	$201	$193
2023-1 XOL	3/08/2023	1/01/2023 - 12/31/2023	$313	$313	$137	$137
Total						$1,011

ENACT HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

to get to an Aggregate Exposed Principal Balance (“AEPB”). This AEPB accounts for any existing reinsurance and ensures we retain a minimum 5% vertical risk retention on each loan. For the reinsurance coverage, we retain the first layer of aggregate losses up to $212.1 million. Triangle Re 2021-1 provides 100% reinsurance coverage for losses above our retained first layer up to $495.0 million.

~~Other excess of loss reinsurance treaties~~

On ~~September 15, 2022,~~March 8, 2023, we executed an excess of loss reinsurance transaction with a panel of reinsurers, which provides up to ~~$201 million of reinsurance coverage on a portfolio of existing mortgage insurance policies written from January 1, 2022 through June 30, 2022, effective September 1, 2022.~~

On March 24, 2022, we executed an excess of loss reinsurance transaction with a panel of reinsurers, which provides up to $325 million of reinsurance coverage on a portfolio of existing mortgage insurance policies written from July 1, 2021 through December 31, 2021, effective March 1, 2022.

~~On January 27, 2022, we executed an excess of loss reinsurance transaction with a panel of reinsurers, which provides up to $294~~$180 million of reinsurance coverage on a portion of current and expected new insurance written for the ~~2022~~2023 book year, effective January 1, ~~2022.~~2023.

Quota Share Reinsurance

On ~~February 4, 2021, we executed an excess of loss~~June 30, 2023, EMICO engaged in a quota share reinsurance ~~transaction~~agreement with a panel of ~~reinsurers, which provides up~~third-party reinsurers. Under the agreement, we cede premiums earned on all eligible policies in exchange for reimbursement of ceded claims and claims expenses on covered policies, a specific ceding commission and profit commission determined based on ceded claims. EMICO has rights to ~~$206 million~~terminate the reinsurance agreement upon the occurrence of ~~reinsurance coverage~~certain events. Reinsurance recoverables are recorded in Other assets on ~~a portion of current and expected new insurance written (“NIW”) for~~ the ~~2021 book year, effective January 1, 2021.~~consolidated balance sheets.

Agreement

Issue date

Policy dates

Ceding percentage

Ceding commission

Profit commission

QS 2023-1

6/30/2023

1/01/2023 - 12/31/2023

13.125%

20%

up to 55%

(7)Borrowings

In 2020, we issued $750 million aggregate principal amount of 6.5% senior notes due in 2025 (the “2025 Senior Notes”). Interest on the 2025 Senior Notes is payable semi-annually in arrears on February 15 and August 15 of each year. The 2025 Senior Notes mature on August 15, 2025.

The following table sets forth long-term borrowings as of the dates indicated:


(Amounts in thousands)	(Amounts in thousands)	September 30, 2022		December 31, 2021		(Amounts in thousands)	September 30, 2023		December 31, 2022
6.5% Senior Notes, due 2025	6.5% Senior Notes, due 2025	$	750,000	$	750,000	6.5% Senior Notes, due 2025	$	750,000	$	750,000
Deferred borrowing charges	Deferred borrowing charges	(7,789)		(9,584)		Deferred borrowing charges	(5,248)		(7,170)
Total	Total	$	742,211	$	740,416	Total	$	744,752	$	742,830

Revolving Credit Agreement

On June 30, 2022, we entered into a credit agreement with a syndicate of lenders that provides for a five-year, unsecured revolving credit facility (the “Facility”) in the initial aggregate principal amount of $200 million, including the ability for EHI to increase the commitments under the Facility, on an uncommitted basis, by an additional aggregate principal amount of up to $100 million. Borrowings under the Facility will accrue interest at a floating rate tied to a standard short-term borrowing index, selected at EHI’s option, plus an applicable margin. The applicable margin is based on the ratings established by certain debt rating agencies for EHI’s senior unsecured debt.

We may use borrowings under the Facility for working capital needs and general corporate purposes, including the execution of dividends to our shareholders and capital contributions to our insurance subsidiaries. The Facility contains several covenants, including financial covenants relating to minimum net worth, capital and liquidity levels, maximum debt to capitalization level and ~~PMIERS~~PMIERs compliance. We are in compliance with all covenants of the Facility and the Facility remained undrawn as of September 30, ~~2022.~~2023.

ENACT HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(8)Income ~~Taxes~~taxes

We compute the provision for income taxes on a separate return with benefits-for-loss method. If during the three- and nine-month periods ended September 30, ~~2022~~2023 and ~~2021,~~2022, we had computed taxes using the separate return method, the provision for income taxes would have been unchanged.

Our ability to realize deferred tax assets is largely dependent upon generating sufficient taxable income and capital gains in future years. We recorded a valuation allowance of $2.6 million through continuing operations and $10.0 million through accumulated other comprehensive income (loss) during the nine months ended September 30, 2023. These changes are due to realized losses on sales of securities and the increase in unrealized losses on fixed maturity securities available-for-sale in accumulated other comprehensive income for the Company and the consolidated tax group during the period.

(9)Related ~~Party Transactions~~party transactions

We have various agreements with Genworth that provide for reimbursement to and from Genworth of certain administrative and operating expenses that include, but are not limited to, information technology services and administrative services (such as finance, human resources and employee benefit ~~administration and legal)~~administration). These agreements provide for an allocation of corporate expenses to all Genworth businesses or subsidiaries. We incurred costs for these services of ~~$7.5~~$4.2 million and ~~$8.1~~$7.5 million for the three months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively. We incurred costs for these services of ~~$22.9~~$13.4 million and ~~$37.2~~$22.9 million for the nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively.

The investment portfolios of our insurance subsidiaries are managed by Genworth. Under the terms of the investment management agreement, we are charged a fee by Genworth. All fees paid to Genworth are charged to investment expense and are included in net investment income in the condensed consolidated statements of income. The total investment expenses paid to Genworth were ~~$1.4~~$1.1 million and ~~$1.3~~$1.4 million for the three months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively. The total investment expenses paid to Genworth were ~~$4.2~~$4.4 million and $4.2 million for the nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively.

Our employees participate in certain benefit plans sponsored by Genworth and certain share-based compensation plans that utilize shares of Genworth common stock and other incentive plans.

We provide certain information technology and administrative services (such as facilities and maintenance) to Genworth. We charged Genworth ~~$0.2~~$0.1 million and ~~$0.1~~$0.2 million for these services for the three months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively. We charged Genworth ~~$0.6~~$0.3 million and ~~$0.2~~$0.6 million for these services for the nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively.

We have a tax sharing agreement in place with Genworth, such that we participate in a single U.S. consolidated income tax return filing. All intercompany balances related to this agreement are settled at least annually.

The condensed consolidated financial statements include the following amounts due to and from Genworth relating to recurring service and expense agreements as of:


(Amounts in thousands)	(Amounts in thousands)	September 30, 2022		December 31, 2021		(Amounts in thousands)	September 30, 2023		December 31, 2022
Amounts payable to Genworth	Amounts payable to Genworth	$	12,082	$	8,316	Amounts payable to Genworth	$	9,949	$	9,291
Amounts receivable from Genworth	Amounts receivable from Genworth	$	14	$	133	Amounts receivable from Genworth	$	153	$	167

ENACT HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(10)Net ~~Income Per Common Share~~income per common share

The basic earnings per share computation is based on the weighted average number of shares of common stock outstanding. For the ~~three and~~ nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, the calculation of dilutive weighted average shares considers the impact of restricted stock units and performance stock units issued to employees as well as deferred stock units issued to our directors.

~~ENACT HOLDINGS, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

The calculation of basic and diluted net income per share is as follows:


		Three months ended September 30,				Nine months ended September 30,					Three months ended September 30,				Nine months ended September 30,
(Amounts in thousands, except per share amounts)	(Amounts in thousands, except per share amounts)	2022		2021		2022		2021		(Amounts in thousands, except per share amounts)	2023		2022		2023		2022
Net income available to EHI common stockholders	Net income available to EHI common stockholders	$	190,986	$	137,208	$	560,351	$	393,151	Net income available to EHI common stockholders	$	164,195	$	190,986	$	508,203	$	560,351
Net income per common share:	Net income per common share:									Net income per common share:
Basic	Basic	$	1.17	$	0.84	$	3.44	$	2.41	Basic	$	1.03	$	1.17	$	3.15	$	3.44
Diluted	Diluted	$	1.17	$	0.84	$	3.43	$	2.41	Diluted	$	1.02	$	1.17	$	3.13	$	3.43
Weighted average common shares outstanding:	Weighted average common shares outstanding:									Weighted average common shares outstanding:
Basic	Basic	162,843		162,840		162,842		162,840		Basic	160,066		162,843		161,275		162,842
Diluted	Diluted	163,376		162,852		163,219		162,844		Diluted	161,146		163,376		162,165		163,219

ENACT HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(11)Changes in ~~Accumulated Other Comprehensive Income~~accumulated other comprehensive income

The following tables present a roll forward of accumulated other comprehensive income for the three months indicated:

(Amounts in thousands)
Net unrealized
investment
gains (losses)
Foreign currency translation Total
Balance as of July 1, 2022, net of tax
$ (293,113) $ 86 $ (293,027)
Other comprehensive income (loss) before reclassifications (134,135) 44 (134,091)
Amounts reclassified from other comprehensive income (loss) 33 — 33
Total other comprehensive income (loss) (134,102) 44 (134,058)
Balance as of September 30, 2022, net of tax $ (427,215) $ 130 $ (427,085)
(Amounts in thousands) Net unrealized
investment
gains (losses) Foreign currency translation Total
Balance as of July 1, 2021, net of tax
$ 159,854 $ — $ 159,854
Other comprehensive income (loss) before reclassifications (25,337) — (25,337)
Amounts reclassified from other comprehensive income (loss) (562) — (562)
Total other comprehensive income (loss) (25,899) — (25,899)
Balance as of September 30, 2021, net of tax $ 133,955 $ — $ 133,955


(Amounts in thousands)	Net unrealized investment gains (losses)		Foreign currency translation		Total
Balance as of July 1, 2023, net of tax	$	(345,386)	$	143	$	(345,243)

Other comprehensive income (loss) before reclassifications	(57,746)		12		(57,734)
Amounts reclassified from other comprehensive income (loss)	2,628		—		2,628
Total other comprehensive income (loss)	(55,118)		12		(55,106)
Balance as of September 30, 2023, net of tax	$	(400,504)	$	155	$	(400,349)

(Amounts in thousands)	Net unrealized investment gains (losses)		Foreign currency translation		Total
Balance as of July 1, 2022, net of tax	$	(293,113)	$	86	$	(293,027)

Other comprehensive income (loss) before reclassifications	(134,135)		44		(134,091)
Amounts reclassified from other comprehensive income (loss)	33		—		33
Total other comprehensive income (loss)	(134,102)		44		(134,058)
Balance as of September 30, 2022, net of tax	$	(427,215)	$	130	$	(427,085)

2930

ENACT HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following tables present a roll forward of accumulated other comprehensive income for the nine months indicated:


(Amounts in thousands)								(Amounts in thousands)	Net unrealized investment gains (losses)		Foreign currency translation		Total
Balance as of January 1, 2023, net of tax								Balance as of January 1, 2023, net of tax	$	(382,896)	$	152	$	(382,744)

Other comprehensive income (loss) before reclassifications								Other comprehensive income (loss) before reclassifications	(30,593)		3		(30,590)
Amounts reclassified from other comprehensive income (loss)								Amounts reclassified from other comprehensive income (loss)	12,985		—		12,985
Total other comprehensive income (loss)								Total other comprehensive income (loss)	(17,608)		3		(17,605)
Balance as of September 30, 2023, net of tax								Balance as of September 30, 2023, net of tax	$	(400,504)	$	155	$	(400,349)

(Amounts in thousands)	(Amounts in thousands)	Net unrealized investment gains (losses)		Foreign currency translation		Total		(Amounts in thousands)	Net unrealized investment gains (losses)		Foreign currency translation		Total
Balance as of January 1, 2022, net of tax	Balance as of January 1, 2022, net of tax	$	83,588	$	(7)	$	83,581	Balance as of January 1, 2022, net of tax	$	83,588	$	(7)	$	83,581

Other comprehensive income (loss) before reclassifications	Other comprehensive income (loss) before reclassifications	(511,541)		137		(511,404)		Other comprehensive income (loss) before reclassifications	(511,541)		137		(511,404)
Amounts reclassified from other comprehensive income (loss)	Amounts reclassified from other comprehensive income (loss)	738		—		738		Amounts reclassified from other comprehensive income (loss)	738		—		738
Total other comprehensive income (loss)	Total other comprehensive income (loss)	(510,803)		137		(510,666)		Total other comprehensive income (loss)	(510,803)		137		(510,666)
Balance as of September 30, 2022, net of tax	Balance as of September 30, 2022, net of tax	$	(427,215)	$	130	$	(427,085)	Balance as of September 30, 2022, net of tax	$	(427,215)	$	130	$	(427,085)

(Amounts in thousands)		Net unrealized investment gains (losses)		Foreign currency translation		Total
Balance as of January 1, 2021, net of tax		$	208,378	$	—	$	208,378
Cumulative effective of change in accounting, net of taxes		281		—		281
Other comprehensive income (loss) before reclassifications		(74,576)		—		(74,576)
Amounts reclassified from other comprehensive income (loss)		(128)		—		(128)
Total other comprehensive income (loss)		(74,704)		—		(74,704)
Balance as of September 30, 2021, net of tax		$	133,955	$	—	$	133,955

The following table presents the effect of the reclassifications of significant items out of accumulated other comprehensive income on the respective line items of the consolidated statements of income, for the periods indicated:


		Amount reclassified from accumulated other comprehensive income								Affected line item in the condensed consolidated statements of income		Amount reclassified from accumulated other comprehensive income								Affected line item in the condensed consolidated statements of income
		Three months ended September 30,				Nine months ended September 30,						Three months ended September 30,				Nine months ended September 30,
(Amounts in thousands)	(Amounts in thousands)	2022		2021		2022		2021			(Amounts in thousands)	2023		2022		2023		2022
Net unrealized gains (losses) on investments	Net unrealized gains (losses) on investments	$	(42)	$	711	$	(935)	$	162	Net investment gains (losses)	Net unrealized gains (losses) on investments	$	(36)	$	(42)	$	(13,146)	$	(935)	Net investment gains (losses)
Benefit (expense) from income taxes	Benefit (expense) from income taxes	9		(149)		197		(34)		Provision for income taxes	Benefit (expense) from income taxes	(2,592)		9		161		197		Provision for income taxes

(12)Stockholders’ equity

Share Repurchase Program

On November 1, 2022, our Board of Directors approved a share repurchase program authorizing the Company to spend up to $75 million, excluding commissions, to repurchase EHI common stock in the open market or in privately negotiated transactions, based on market and business conditions, stock price and other factors. EHI generally operates its share repurchase programs pursuant to a trading plan under Rule 10b5-1 of the Exchange Act, which permits the Company to purchase shares, at predetermined price targets, when it may otherwise be precluded from doing so. In August 2023, we announced a new

ENACT HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

share repurchase authorization which allows for the purchase of an additional $100 million of EHI common stock.

During the three months ended September 30, 2023, the Company purchased 241,946 shares at an average price of $25.96 per share, excluding commissions. During the nine months ended September 30, 2023, the Company purchased 2,863,891 shares at an average price of $24.30 per share, excluding commissions. As of September 30, 2023, $103.9 million remained available under the share repurchase programs. All treasury stock has been retired as of September 30, 2023.

Subsequent to quarter end, the Company purchased 294,876 shares at an average price of $27.13 through October 31, 2023.

Cash Dividends

We paid a quarterly cash dividend of $0.16 per share in the third quarter and second quarter of 2023 and $0.14 in the first quarter of 2023. In each of the second and third quarter of 2022, we paid dividends of $0.14 per share.

Subsequent to quarter end, we announced our quarterly dividend of $0.16 per share along with a special cash dividend of $113 million, or $0.71 per share to be paid during the fourth quarter of 2023.

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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 and~~ nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, and our audited consolidated financial statements and related notes for the years ended December 31, ~~2021~~2022 and ~~2020~~2021 within our Annual Report on Form 10-K for the fiscal year ending December 31, ~~2021~~2022 (the “Annual Report”).

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 and Part II, Item 1A “Risk Factors” in this Quarterly~~ Report. Future results could differ significantly from the historical results presented in this section. References to ~~EHI, Enact, Enact~~“EHI,” “Enact,” “Enact Holdings,” the “Company,” “we” or “our” herein are, unless the context otherwise requires, to EHI on a consolidated basis.

Key Factors Affecting Our Results

There have been no material changes to the factors affecting our results, as compared to those disclosed in the Annual Report, other than the impact of items as discussed below in “—Trends and ~~Conditions”.~~Conditions.”

Trends and Conditions

During the third quarter of ~~2022,~~2023, the United States ~~and global economies experienced continued volatility~~economy faced uncertainty due to ~~high inflation,~~continued but lessening inflationary pressure, the geopolitical ~~uncertainty~~environment and ~~supply chain disruption.~~ persistent concerns around a possible recession.

Inflationary pressures ~~lessened~~have moderated in ~~the third quarter of 2022, but remain elevated~~2023, with the Bureau of Labor Statistics reporting in September that the Consumer Price Index was ~~8.2%~~down to 3.7% year-over-year. ~~As a result, the~~The Federal Reserve has ~~continued its~~taken an aggressive approach towards addressing inflation through interest rate increases and a reduction of its balance sheet. The Federal Reserve ~~approved an~~raised rates by 25 basis points in July 2023, between pauses on interest rate ~~increase of 0.75%~~hikes in November, ~~2022 following increases of 0.75% in~~ September ~~July~~ and June ~~2022, 0.50%~~2023. The Federal Reserve had previously announced 25 basis point increases in interest rates in both May ~~2022~~ and ~~0.25%~~March 2023 and eight interest rate increases in ~~the first quarter of~~ 2022. ~~Financial markets have reacted with increased volatility and~~Mortgage rates have ~~increased across the Treasury yield curve.~~

~~Mortgage origination activity~~ continued to ~~decline~~rise and reached more than 20-year highs during the third quarter of ~~2022~~2023.

Mortgage origination activity remained slow during the third quarter of 2023 in response to ~~rising~~elevated mortgage ~~rates.~~rates and sustained low housing supply. The refinance market is likely to remain ~~low as~~suppressed in the ~~Federal Reserve has signaled that it may make additional interest rate increases~~near to ~~address persistent inflationary pressure.~~mid-term. Housing affordability ~~remains challenged as of August 2022 compared~~continues to ~~the past few years~~deteriorate due to ~~sharply increasing~~high interest rates and ~~rising~~elevated home prices, ~~modestly~~only marginally offset by rising median family income according to the National Association of Realtors Housing Affordability Index. ~~Year-over-year~~After sustained periods of strong home price appreciation, ~~has slowed~~national housing prices began to decline in late 2022, but have recovered and continued to rise throughout ~~2022, and in July 2022, home prices declined for the first time in more than two years,~~2023, according to the FHFA Monthly Purchase-Only House Price Index.

The unemployment rate ~~ticked down~~as of September 30, 2023, was 3.8%, up slightly ~~to 3.5% in~~from June 30, 2023. As of September 2022 compared to 3.6% in June 2022, following a steady decline from its peak of 14.8% in April 2020, bringing unemployment in line with the pre-COVID-19 level of 3.5% in February 2020. In the third quarter of 2022,30, 2023, the number of unemployed Americans stands at approximately ~~5.8~~6.4 million and the number of long-term unemployed Americans (over 26 weeks out of the workforce) was approximately 1.2 million. Both metrics remain relatively in line with February 2020 metrics. Among the unemployed, those on temporary layoff remained at approximately 0.8 million, down significantly from a peak of 18 million in April 2020, and the number of permanent job losses remained at approximately 1.2 million. In addition, the number of long term unemployed over 26 weeks was approximately 1.1 million in September 2022.

The Federal Housing Finance Agency (“FHFA”) and the GSEs are focused on increasing the accessibility and affordability of homeownership, in particular for low- and moderate-income borrowers and underserved minority communities. In June 2022, the FHFA announced the release of Fannie Mae’s and Freddie Mac’s respective Equitable Housing Finance Plans. The proposals included many initiatives, including language discussing potential changes that could impact the mortgage insurance industry. These initiatives remain preliminary, and we will continue to work with the FHFA, the GSEs, and the broader housing finance industry as these proposals develop and to the extent they are implemented. We cannot predict whether or when any new practices or programs will be implemented under the GSEs’ Equitable Housing Finance Plans or other affordability initiatives, and if so in what form, nor can we predict what effect, if any, such practices or programs may have on our business, results of operations or financial condition.levels.

For mortgages insured by the federal government (including those purchased by Fannie Mae and Freddie Mac), forbearance ~~allows~~has allowed borrowers impacted by COVID-19 to temporarily suspend mortgage payments up to 18 months subject to certain limits. An initial forbearance period is typically up to six months and can be extended for another six months if requested by the borrower to its mortgage servicer. ~~For GSE loans~~However, the Biden Administration ended the national emergency for COVID-19 in ~~a COVID-19 forbearance plan as of February 28, 2021,~~April 2023,

so the ~~maximum forbearance can be up to 18 months. Currently, the GSEs do not have a~~ deadline for requesting ~~an initial forbearance.~~a COVID-19 related forbearance under the CARES Act ended in August of 2023. During the third quarter of 2023, the GSEs announced that their COVID-19 servicing-related policies with respect to forbearance would retire in November 2023.

Further, in March 2023 the GSEs announced new loss mitigation programs that would allow for six-month payment deferrals for borrowers facing financial hardship. Servicers were encouraged to start evaluating borrowers for the new mitigation programs as early as July 1, 2023, but no later than October 1, 2023. Even though most foreclosure moratoriums expired at the end of 2021, federal laws and regulations continue to require servicers to discuss loss mitigation options with borrowers before proceeding with foreclosures. These requirements could further extend the foreclosure timeline, which could negatively impact the severity of loss on loans that go to claim.

Although it is difficult to predict the future level of reported forbearance and how many of the policies in a forbearance plan that remain current on their monthly mortgage payment will go delinquent, servicer-reported forbearances have generally declined. ~~At the end~~As of ~~the third quarter of 2022~~September 30, 2023, approximately ~~1.5%~~1.2%, or ~~14,231,~~12,135, of our active primary policies were reported in a forbearance plan, of which approximately ~~34%~~30% were reported as delinquent. As of September 30, 2022, we have not experienced any material impact from the recent hurricane affecting the southeastern United States. We will continue to monitor the affected areas and support the measures enacted by the GSEs allowing forbearance, restricting foreclosure actions and providing other forms of mortgage relief for those dealing with damage.

Total delinquencies ~~decreased~~increased during the third quarter of ~~2022~~2023 as a result of ~~cures outpacing~~ new delinquencies ~~which decreased modestly during the quarter.~~outpacing cures. The ~~third quarter 2022~~ new delinquency rate for the third quarter of ~~1.0%~~2023 was 1.2%, up slightly from the second quarter of ~~2022 but remains in line with pre-COVID-19 levels.~~2023.

The full impact of COVID-19 and its ancillary economic effects on our future business results ~~are~~continue to be difficult to predict. Given the maximum length of forbearance plans, the resolution of a delinquency in a plan may not be known for several quarters. We continue to monitor regulatory and government actions and the resolution of forbearance delinquencies. While the associated risks have moderated and delinquencies have declined, it is possible that COVID-19 related forbearance programs could have an adverse impact on our future results of operations and financial condition.

The Federal Housing Finance Agency (“FHFA”) and the GSEs are focused on increasing the accessibility and affordability of homeownership, in particular for low- and moderate-income borrowers and underserved minority communities. In June 2022, the FHFA announced the release of Fannie Mae’s and Freddie Mac’s respective Equitable Housing Finance Plans. In April 2023, FHFA announced updates to Fannie Mae and Freddie Mac’s Equitable Housing Finance Plans which build upon the inaugural plans first announced last year and make adjustments based on initial research and findings. The proposals included many initiatives, including language discussing potential changes that could impact the mortgage insurance industry. We will continue to work with the FHFA, the GSEs, and the broader housing finance industry as these proposals develop and to the extent they are implemented. We cannot predict whether or when any new practices or programs will be implemented under the GSEs’ Equitable Housing Finance Plans or other affordability initiatives, and if so in what form, nor can we predict what effect, if any, such practices or programs may have on our business, results of operations or financial condition.

Private mortgage insurance market penetration and eventual market size are affected in part by actions that impact housing or housing finance policy taken by the GSEs and the U.S. government, including but not limited to, the Federal Housing Administration (“FHA”) and the FHFA. In the past, these actions have included announced changes, or potential changes, to underwriting standards, including changes to the GSEs’ automated underwriting systems, FHA pricing, GSE guaranty fees, loan limits and alternative products. On February 25, 2022, the FHFA finalized the rule for the Enterprise Capital Framework, which included technical corrections to their December 17, 2020 rule. Higher GSE capital requirements could lead to increased costs to borrowers of GSE loans, which in turn could shift the market away from the GSEs to the FHA or lender portfolios. Such a shift could potentially result in a smaller market for private mortgage insurance.

On October 24, 2022, the FHFA announced two initiatives: 1) targeted changes to the GSEs’ guarantee fee pricing by eliminating upfront fees for certain borrowers and affordable mortgage products, while implementing targeted increases to the upfront fees for most cash-out refinance loans; and 2) the validation and approval of both the FICO 10T credit score model and the VantageScore 4.0 credit score model for use by the GSEs as well as changing the requirement that lenders provide credit reports from

all three nationwide consumer reporting agencies and instead only ~~require~~requiring credit reports from two of the three nationwide credit reporting agencies.

The upfront fees ~~are~~were eliminated for certain first-time home buyers with income at or below area median income and certain other GSE affordable housing products. The fee reductions ~~are expected to go~~went into effect ~~“as soon as possible”~~in the fourth quarter of 2022, while the new fees on cash-out refinance loans ~~will begin~~began on February 1, 2023. We expect these price changes to be a net positive to the mortgage insurance ~~market.~~market, but we believe the impact is limited to date. The validation of the new credit scores requires lenders to deliver both credit scores for each loan sold to the GSEs. ~~There is currently no~~The FHFA has announced preliminary implementation ~~deadline,~~expectations, but this is expected to be a multiple year process that will require system and process updates along with coordination across stakeholders of the industry.

In January ~~2022,~~2023, the FHFA ~~introduced~~announced additional updates to its upfront fee structure and a recalibration and reformatting of their entire pricing matrix. The changes marked the third iteration of the FHFA’s ongoing pricing review since early last year and impact purchase and rate-term refinance loans. Pricing grids are now broken out by loan purpose and are recalibrated to new credit score and loan-to-value ratio categories along with associated loan attributes. The new pricing matrix initially included new upfront fees for ~~some high-balance and second-home~~ loans ~~sold~~with debt to ~~Fannie Mae and Freddie Mac. Upfront~~income (“DTI”) ratios greater than 40%, but those fees for high balance loans increased between 0.25% and 0.75%, tiered by loan-to-value ratio. For second home loans, the upfront fees increased between 1.125% and 3.875%, also tiered by loan-to-value ratio.were rescinded prior to implementation. The ~~new pricing framework~~remaining changes became effective ~~April~~May 1, ~~2022. To date, we have not experienced a significant impact to the mortgage insurance market or our projections based on this initiative.~~2023.

On ~~January 14, 2021,~~February 22, 2023, the ~~FHFA~~Department of Housing and ~~the Treasury Department agreed to amend the Preferred Stock Purchase Agreements (“PSPAs”) between the Treasury Department and each~~Urban Development announced a 30-basis point reduction of the ~~GSEs~~annual insurance premium charged to ~~increase~~borrowers with FHA-insured mortgages. This action is designed to reduce the ~~amount~~cost of ~~capital each GSE may retain. Among other things,~~borrowing for lower- and middle-class homebuyers who are eligible for the ~~amendments~~federal program. The price reduction, which went into effect on March 20, 2023, is expected to the PSPAs limit the number of certain mortgages the GSEs may acquire with two or more prescribed risk factors, including certain mortgages with combined loan-to-value (“LTV”) ratios above 90%. However,have a negative impact on ~~September 14, 2021,~~ the FHFA and Treasury Department suspended certain provisions of the amendments to the PSPAs, including the limit on the number of mortgages with two or more risk factors that the GSEs may acquire. Such suspensions terminate on the later of one year after September 14, 2021, or six months after the Treasury Department notifies the GSEs of termination. The limit on the number of mortgages with two or more risk factors was based on the market size at the time, and we do not expect any material impact to the private mortgage market.

~~New insurance written of $15.1 billion in the third quarter of 2022 decreased 37% compared to the third quarter of 2021 primarily due to a smaller estimated~~ private mortgage insurance market ~~including a decline in refinance originations due to rising mortgage rates.~~

~~Our largest customer accounted for a sizable percentage~~but will be partially offset by the effects of ~~our total NIW during~~ the ~~first nine months of 2022 and we expect~~recent FHFA pricing changes referenced above. We do not believe this customer to exceed 10% of our total estimated NIW for 2022. Our largest customer accounted for 14% of NIW for the year ended December 31, 2021. Additionally, no customer had earned premiums that accounted for more than 10% of our total revenues for the nine months ended September 2022,net impact has been or ~~the year ended December 31, 2021.~~

Our primary persistency increased to 82% during the third quarter of 2022 compared to 65% during the third quarter of 2021 and is in line with historic levels of approximately 80%. The increase in persistency was primarily driven by a decline in the percentage of our in-force policies with mortgage rates above current mortgage rates. The increase in persistency has offset the decline in new insurance written in the third quarter of 2022, leading to an increase in insurance in-force (“IIF”) of $15 billion since December 31, 2021. Low persistency impacted business performance trends in 2021 in several ways including, but not limited to, accelerating the recognition of earned premiums due to single premium policy cancellations, accelerating the amortization of our existing reinsurance transactions, and shifting the concentration of our primary IIF to more recent years of policy origination. As of September 30, 2022, our primary IIF has approximately 4% concentration in 2014 and prior book years. In contrast, our 2021 book

~~year represents 35% of our primary IIF concentration while our 2022 book year concentration is 20% as of September 30, 2022.~~will be material.

The U.S. private mortgage insurance industry is highly competitive. Our market share is influenced by the execution of our go to market strategy, including but not limited to, pricing competitiveness relative to our peers and our selective participation in forward commitment transactions. We continue to manage the quality of new business through pricing and our underwriting guidelines, which are modified from time to time when circumstances warrant. We see the market and underwriting conditions, including the pricing environment, as being within our risk-adjusted return appetite enabling us to write new business at attractive returns. Ultimately, we expect our new insurance written with its strong credit profile and attractive pricing to positively contribute to our future profitability and return on equity.

~~Net earned premiums declined~~New insurance written of $14.4 billion in the third quarter of ~~2022~~2023 decreased 4% compared to the third quarter of ~~2021~~2022 primarily due to a decline in originations driven by elevated mortgage rates. Our primary persistency rate was 84% during the third quarter of 2023 compared to 82% during the third quarter of 2022. The increase in persistency was primarily driven by a decline in the percentage of our in-force policies with mortgage rates above current mortgage rates. Elevated persistency has continued to offset the decline in new insurance written, leading to an increase in primary insurance in-force (“IIF”) of $13.8 billion since December 31, 2022.

Net earned premiums increased approximately 4% in the third quarter of 2023 compared to the third quarter of 2022 primarily as a result of insurance in-force growth, partially offset by the ~~continued~~ lapse of older, higher priced policies and a decrease in single premium cancellations. ~~This was partially offset by insurance in-force growth.~~ The total number of delinquent loans has declined from the COVID-19 peak in the second quarter of 2020 as forbearance exits continue and new forbearances ~~declined.~~decline. During this time and consistent with prior years, servicers continued the practice of remitting premiums during the early stages of default, and we refund the post-delinquent premiums to the insured party if the delinquent loan goes to claim. We record a liability and a reduction to net earned premiums for the post-delinquent premiums we expect to refund. The post-delinquent premium liability recorded since the beginning of COVID-19 in the second quarter of 2020 through the third quarter of ~~2022~~2023 was not significant to the change in earned premiums for those periods as a result of the high concentration of new delinquencies being subject to a servicer reported forbearance plan and the lower estimated rate at which delinquencies go to claim for these loans.periods.

Our loss ratio for the three months ended September 30, ~~2022,~~2023, was ~~(17)%~~7% as compared to ~~14%~~(17)% for the three months ended September 30, ~~2021. The decrease was due to~~2022. Both periods were impacted by favorable reserve ~~adjustments in~~adjustments. In the ~~current quarter. We~~third quarter of 2023, we released ~~$105~~$55 million of reserves primarily on delinquencies from prior years, ~~primarily~~ related to favorable cure performance on ~~COVID-19~~ delinquencies from ~~2020~~2022 and ~~early 2021.~~earlier, including a portion of those as a result of COVID-19. During the peak of COVID-19, we experienced elevated new delinquencies subject to forbearance plans. Those delinquencies have continued to cure at levels above our reserve ~~expectations, which led to~~expectations. Another component of the reserve release ~~of reserves in the third quarter of 2022. Reserves~~also related to delinquencies from 2022, as uncertainty in the economic environment has not negatively impacted cure performance to the extent initially expected. This compares to the third quarter of 2022, where we recorded a $105 million reserve release primarily related to cure performance of 2020 delinquencies. Losses during the third quarter of 2022 were ~~strengthened~~also impacted by $25 million of reserve strengthening related to current accident year delinquencies due to uncertainty in the ~~current~~ economic environment.

~~Our loss reserves continue to be impacted by COVID-19 and remain subject to uncertainty.~~ Borrowers who have experienced a financial hardship including, but not limited to, the loss of income due to the closing of a business or the loss of a job, continue to take advantage of available loss mitigation options, including forbearance programs, ~~and~~ payment deferral ~~options.~~options and other modifications. Loss reserves recorded on these ~~new~~ delinquencies have a high degree of estimation due to the level of uncertainty regarding whether delinquencies in forbearance will ultimately cure or result in claim payments, as well as the timing and severity of those payments.

The severity of loss on loans that do 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.

New delinquencies in the third quarter of ~~2022~~2023 increased compared to the third quarter of ~~2021.~~2022 primarily due to the aging of large, new books of business. Current period primary delinquencies of ~~9,121~~11,107 contributed ~~$39~~$72 million of loss expense in the third quarter of ~~2022.~~2023. We incurred ~~$33~~$39 million of losses from ~~7,427~~9,121 current period delinquencies in the third quarter of ~~2021.~~2022. In determining the loss expense estimate, considerations were given to ~~forbearance and non-forbearance delinquencies,~~ recent cure and claim experience and the prevailing and prospective economic conditions. Approximately ~~18%~~12% of our primary new delinquencies in the third quarter of ~~2022~~2023 were subject to a forbearance plan as compared to ~~36%~~18% in the third quarter of ~~2021.~~

2022. Due to the declining number of new delinquencies in forbearance, we no longer differentiate the expected claim rates applied to new delinquencies in forbearance versus those not in forbearance.

As of September 30, ~~2022,~~2023, EMICO’s risk-to-capital ratio under the current regulatory framework as established under North Carolina law and enforced by the North Carolina Department of Insurance (“NCDOI”), EMICO’s domestic insurance regulator, was approximately ~~12.3:~~11.6:1, compared with a risk-to-capital ratio of ~~12.3:~~12.9:1 and ~~11.9:~~12.3:1 as of December 31, ~~2021,~~2022, and September 30, ~~2021,~~2022, 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 or capital support provided.~~business.

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. ~~Since 2020, the GSEs have issued several amendments to PMIERs, which implemented both permanent and temporary revisions.~~

For loans that became non-performing due to a COVID-19 hardship, PMIERs was temporarily amended with respect to each non-performing loan that (i) had an initial missed monthly payment occurring on or after March 1, 2020, and prior to April 1, 2021, or (ii) is subject to a forbearance plan grantedAdditionally, in response to a financial hardship related to COVID-19, the terms of which are materially consistent with terms of forbearance plans offered by the GSEs. The risk-based required asset amount factor for the non-performing loan is the greater of (a) the applicable risk-based required asset amount factor for a performing loan were it not delinquent, and (b) the product of a 0.30 multiplier and the applicable risk-based required asset amount factor for a non-performing loan. In the case of (i) above, absent the loan being subject to a forbearance plan described in (ii) above, the 0.30 multiplier was applicable for no longer than three calendar months beginning with the month in which the loan became a non-performing loan due to having missed two monthly payments. Loans subject to a forbearance plan described in (ii) above include those that are either in a repayment plan or loan modification trial period following the forbearance plan unless reported to the approved insurer that the loan is no longer in such forbearance plan, repayment plan, or loan modification trial period. The PMIERs amendment dated June 30, 2021 further allows loans that enter a forbearance plan due to a COVID-19 hardship on or after April 1, 2021 to remain eligible for extended application of the reduced PMIERs capital factor for as long as the loan remains in forbearance. In addition, the PMIERs amendment imposed permanent revisions to the risk-based required asset amount factor for non-performing loans for properties located in future Federal Emergency Management Agency Declared Major Disaster Areas eligible for individual assistance.

In September 2020, subsequent to the issuance of our senior notes due in 2025, the GSEs imposed certain restrictions (the “GSE Restrictions”) with respect to capital on our business. In May 2021, in connection with their conditional approval of the then potential partial sale of EHI, the GSEs confirmed the GSE Restrictions ~~will~~would remain in effect until ~~the following collective~~certain conditions (“GSE Conditions”) are met for two consecutive quarters: (a) EMICO obtains “BBB+”/“Baa1” (or higher) rating from S&P, Moody’s or Fitch Ratings, Inc. and (b) Genworth achieves certain financial metrics. Genworth believes that they achieved their financial metrics for the quarter ended September 30, 2022, and expect to maintain compliance through December 31, 2022. If achieved, Enact would no longer be subject to GSE Restrictions and Conditions in early 2023, subject to GSE confirmation.

~~Prior to the satisfaction of the GSE Conditions, the GSE Restrictions require:~~

•~~EMICO to maintain 120% of PMIERs minimum required assets through 2022 and 125% thereafter;~~

•EHI to retain $300 million of net proceeds from the 2025 Senior Notes offering that can be drawn down exclusively for debt service of those notes or to contribute to EMICO to meet its regulatory capital needs including PMIERs; andwere met. These

3536

•~~written approval must be received from~~conditions were met as of December 31, 2022, and the GSEs ~~prior~~have confirmed that Enact is no longer subject to ~~any additional debt issuance by either EMICO or EHI.~~

~~Until the GSE Conditions imposed in connection with the~~ GSE Restrictions are met, our liquidity must not fall below 13.5% of its outstanding debt. In addition, Fannie Mae agreed to reconsider the GSE Restrictions if Genworth were to own 50% or less of EHI at any point prior to their expiration. We understand that Genworth’s current plans do not include a potential sale in which Genworth owns less than 80% of EHI. The current balance of the 2025 Senior Notes proceeds required to be held by our holding company is approximately $203 million.and Conditions.

As of September 30, ~~2022,~~2023, we had estimated available assets of ~~$5,292~~$5,268 million against ~~$3,043~~$3,251 million net required assets under PMIERs compared to available assets of ~~$5,147~~$5,093 million against ~~$3,100~~$3,135 million net required assets as of June 30, ~~2022.~~2023. The sufficiency ratio as of September 30, ~~2022,~~2023, was ~~174%~~162%, or ~~$2,249~~$2,017 million, above the ~~published~~ PMIERs requirements, compared to ~~166%~~162%, or ~~$2,047~~$1,958 million, above the ~~published~~ PMIERs requirements as of June 30, ~~2022. PMIERs sufficiency is based on the published requirements applicable to private mortgage insurers and does not give effect to the GSE Restrictions imposed on our business. The increase in the~~2023. PMIERs sufficiency for the quarter was ~~driven by a new XOL transaction, business cash flows, and lower delinquencies, partially offset by NIW and amortization of existing reinsurance transactions.~~flat as compared to June 30, 2023. Our PMIERs required assets as of September 30, ~~2022,~~2023, and June 30, ~~2022,~~2023, benefited from the application of a 0.30 multiplier applied to the risk-based required asset amount factor for certain non-performing ~~loans.~~loans as defined under PMIERs. The application of the 0.30 multiplier to all eligible delinquencies provided ~~$140~~$86 million of benefit to our September 30, ~~2022~~2023, PMIERs required assets compared to ~~$178~~$107 million of benefit as of June 30, ~~2022.~~2023. These amounts are gross of any incremental reinsurance benefit from the elimination of the 0.30 multiplier. Our PMIERs required assets also benefited from a reinsurance credit of $1,505 million and $1,524 million related to third-party reinsurance as of September 30, 2023, and June 30, 2023, respectively.

During the second quarter of 2023, we contributed $250 million into Enact Re Ltd. (“Enact Re”), our wholly owned Bermuda-based subsidiary. Enact Re is expected to create value by addressing the opportunity for compelling risk-adjusted returns in the GSE credit risk transfer market and leverage affiliate quota share reinsurance for ratings and capital efficiency. We expect Enact Re to have a minimal impact on our overall expense structure and to contribute to increasing statutory dividend capacity over time. As of September 30, 2023, Enact Re assumed excess of loss reinsurance relating to GSE risk share and reinsures EMICO’s new and existing insurance in-force under quota share reinsurance agreements.

On ~~July 21, 2022,~~February 16, 2023, S&P Global Ratings upgraded the long-term financial strength and issuer credit ratings of EMICO from BBB to BBB+. Moody’s Investors Service also upgraded the insurance financial strength rating of EMICO from Baa1 to ~~Baa1~~A3 on March 1, 2023. On April 25, 2023, Fitch upgraded the insurance financial strength rating of EMICO from ~~Baa2. The increase was driven by improvement in~~BBB+ to A-. These ratings reflect our ~~overall~~continued strong performance including our credit profile, ~~including~~ market position, profitability, capital adequacy and financial flexibility.

On ~~January 27, 2022,~~August 1, 2023, A.M. Best initiated public ratings of EMICO and Enact Re. Both entities received A- ratings with stable outlooks.

On March 8, 2023, we executed an excess of loss reinsurance transaction with a panel of reinsurers, which provides up to ~~$294~~$180 million of reinsurance coverage on a portion of current and expected new insurance written for the ~~2022~~2023 book year, effective January 1, ~~2022.~~2023.

On ~~March 24, 2022,~~June 30, 2023, we executed ~~an excess of loss~~a quota share reinsurance ~~transaction~~contract with a panel of ~~reinsurers, which provides up to $325 million~~reinsurers. Under the agreement, we cede 13.125% of ~~reinsurance coverage on~~ a ~~portfolio~~portion of ~~existing mortgage insurance policies written from July 1, 2021, through December 31, 2021, effective March 1, 2022.~~

On September 15, 2022, we executed an excess of loss reinsurance transaction with a panel of reinsurers, which provides up to $201 million of reinsurance coverage on a portfolio of existing mortgage insurance policiesNIW written from January 1, ~~2022,~~2023, through ~~June 30, 2022, effective September 1, 2022.~~

On June 30, 2022, we entered into a five-year, unsecured revolving credit facility (the “Facility”) with a syndicate of lenders in the initial aggregate principal amount of $200 million. The Facility may be used for working capital needs and general corporate purposes, including the execution of dividends to our shareholders and capital contributions to our insurance subsidiaries. The Facility remains undrawn as of September 30, 2022.December 31, 2023.

On April 26, 2022, our Board of Directors approved the initiation of a dividend program under which the Company intends to pay a quarterly cash ~~dividend. The inaugural~~dividend, subject to approval by our Board of Directors each quarter. We paid quarterly dividend for the second quarter of 2022 was $0.14 per share, and was paid on May 26, 2022. Our second quarterly dividend payment was also $0.14 per share and was paid on September 9, 2022, and we recently announced our quarterly dividenddividends of $0.14 per share in March of 2023 and May, September and December of 2022. On May 1, 2023, we announced an increase of our quarterly dividend to be$0.16 per share which was paid in ~~December, 2022.~~June and September 2023. 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 subsequent quarter. In April ~~2022,~~2023, our primary mortgage insurance operating company, EMICO, completed a distribution to EHI that supports our ability to pay a quarterly dividend. We ~~completed another such distribution in October 2022, subsequent to quarter end. We~~ intend

to use these proceeds and future EMICO distributions to fund the quarterly dividend as well as to bolster our financial flexibility and potentially return additional capital to shareholders.

~~Returning capital to shareholders, balanced with our growth and risk management priorities, remains a key commitment as~~On August 1, 2023, we ~~look to drive shareholder value through time. We believe~~announced the ~~initiation~~authorization of a quarterly dividend reflects meaningful progress towards that goal. Further, subsequent to quarter end we announced a special cash dividend of $183 million, or $1.12 per share, to be paid during the fourth quarter of 2022. We also announced the initiation of anew share repurchase program which ~~authorizes~~allows for the repurchase of up to ~~$75~~an additional $100 million of ~~the Company’s~~EHI’s common stock. Under the program,

share repurchases may be made at ~~the Company’s~~our discretion from time to time in open market transactions, privately negotiated transactions, or by other means, including through Rule 10b5-1 trading plans. In ~~support,~~conjunction with this authorization, we have entered into an agreement with Genworth Holdings, Inc. to repurchase its ~~Enact~~EHI shares on a pro rata basis as part of the program. The share repurchase program is not expected to 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 ~~Enact’s~~EHI’s share price, capital availability, business and market conditions, regulatory requirements, and debt covenant restrictions. The program does not obligate ~~Enact~~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.

Subsequent to quarter end on November 1, 2023, we announced our quarterly dividend of $0.16 per share along with a special cash dividend of $113 million, or $0.71 per share to be paid during the fourth quarter of 2023.

Returning capital to shareholders, balanced with our growth and risk management priorities, remains a key commitment as we look to drive shareholder value through time. Future return of capital will be shaped by our capital prioritization framework: supporting our existing policyholders, growing our mortgage insurance business, funding attractive new business opportunities and returning capital to shareholders. Our total return of capital will also be based on our view of the prevailing and prospective macroeconomic conditions, regulatory landscape and business performance.

3738

Results of Operations and Key Metrics

Results of Operations

Three months ended September 30, ~~2022,~~2023, compared to three months ended September 30, ~~2021~~2022

The following table sets forth our consolidated results for the periods indicated:


		Three months ended September 30,						Increase (decrease) and percentage change					Three months ended September 30,						Increase (decrease) and percentage change
(Amounts in thousands)	(Amounts in thousands)	2022			2021			2022 vs. 2021				(Amounts in thousands)	2023			2022			2023 vs. 2022
Revenues:	Revenues:											Revenues:
Premiums	Premiums	$	235,060		$	243,063		$	(8,003)	(3)	%	Premiums	$	243,346		$	235,060		$	8,286	4	%
Net investment income	Net investment income	39,493			35,995			3,498		10	%	Net investment income	54,952			39,493			15,459		39	%
Net investment gains (losses)	Net investment gains (losses)	(42)			580			(622)		(107)	%	Net investment gains (losses)	(23)			(42)			19		(45)	%
Other income	Other income	564			671			(107)		(16)	%	Other income	760			564			196		35	%
Total revenues	Total revenues	275,075			280,309			(5,234)		(2)	%	Total revenues	299,035			275,075			23,960		9	%
Losses and expenses:	Losses and expenses:											Losses and expenses:
Losses incurred	Losses incurred	(40,309)			34,124			(74,433)		(218)	%	Losses incurred	17,847			(40,309)			58,156		(144)	%
Acquisition and operating expenses, net of deferrals	Acquisition and operating expenses, net of deferrals	54,523			55,151			(628)		(1)	%	Acquisition and operating expenses, net of deferrals	52,339			54,523			(2,184)		(4)	%
Amortization of deferred acquisition costs and intangibles	Amortization of deferred acquisition costs and intangibles	3,338			3,669			(331)		(9)	%	Amortization of deferred acquisition costs and intangibles	2,803			3,338			(535)		(16)	%
Interest expense	Interest expense	12,879			12,756			123		1	%	Interest expense	12,941			12,879			62		—	%
Total losses and expenses	Total losses and expenses	30,431			105,700			(75,269)		(71)	%	Total losses and expenses	85,930			30,431			55,499		182	%
Income before income taxes	Income before income taxes	244,644			174,609			70,035		40	%	Income before income taxes	213,105			244,644			(31,539)		(13)	%
Provision for income taxes	Provision for income taxes	53,658			37,401			16,257		43	%	Provision for income taxes	48,910			53,658			(4,748)		(9)	%
Net income	Net income	$	190,986		$	137,208		$	53,778	39	%	Net income	$	164,195		$	190,986		$	(26,791)	(14)	%
Loss ratio (1)	Loss ratio (1)	(17)		%	14		%					Loss ratio (1)	7		%	(17)		%
Expense ratio (2)	Expense ratio (2)	25		%	24		%					Expense ratio (2)	23		%	25		%
Net earned premium rate (3)												Net earned premium rate (3)	0.37		%	0.39		%

_______________

(1)Loss ratio is calculated by dividing losses incurred by net earned premiums.

(2)Expense ratio is calculated by dividing acquisition and operating expenses, net of deferrals, plus amortization of deferred acquisition costs and intangibles by net earned premiums.

(3)Net earned premium rate is calculated by dividing earned premium by average primary IIF.

Revenues

Premiums ~~decreased mainly attributable~~increased for the three months ended September 30, 2023, compared to the ~~continued~~three months ended September 30, 2022, primarily as a result of insurance in-force growth, partially offset by the lapse of older, higher priced policies and a decrease in single premium cancellations. ~~This was~~The net earned premium rate decreased to 0.37% for the three months ended September 30, 2023, from 0.39% for the three months ended September 30, 2022, primarily as a result of this lapse of higher priced policies and lower single policy cancellations partially offset by ~~insurance in-force growth driven by increased persistency.~~the impact of ceded premiums.

Net investment income increased ~~from~~for the three months ended September 30, 2023, compared to the three months ended September 30, 2022, primarily due to higher ~~yield~~yields as a result of rising interest rates ~~and~~coupled with higher average invested ~~assets partially offset by lower income from bond calls.~~assets.

Net investment losses in the third quarter of 2023 and 2022 were driven by realized losses on ~~sales. Net investment gains from~~ the ~~third quarter~~sale of ~~2021 were driven by realized gains from sales.~~fixed maturity securities.

Losses and expenses

Losses incurred during the third quarter of 2023 and 2022 ~~decreased due to~~were both impacted by prior year ~~development, offset in part by current year~~development. In the third quarter of 2023, we recorded a reserve ~~strengthening. We continued~~release of $55 million primarily related to ~~experience~~ better than expected cure performance on delinquencies ~~primarily~~ from ~~2020~~2022 and ~~early 2021 related to COVID-19 contributing to~~earlier, including a

portion of those as a result of COVID-19. A component of the reserve release ~~of $105 million on prior years. Reserves~~also related to delinquencies from 2022, as uncertainty in the economic environment has not negatively impacted cure performance to the extent initially expected. In the third quarter of 2022, we recorded a $105 million reserve release primarily related to 2020 delinquencies. Losses from the third quarter of 2022 were ~~strengthened~~also impacted by $25 million ~~associated with~~of reserve strengthening related to current accident year delinquencies due to uncertainty in the ~~current~~ economic environment. Current period primary delinquencies of ~~9,121~~11,107 contributed ~~$39~~$72 million of loss expense in the three months ended September 30, ~~2022.~~2023. This compares to ~~$33~~$39 million of loss expense from ~~7,427 current period~~9,121 primary delinquencies in the third quarter of ~~2021.~~2022.

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


(Amounts in thousands)	(Amounts in thousands)	2022		2021		(Amounts in thousands)	2023		2022
Losses and LAE incurred related to current accident year	Losses and LAE incurred related to current accident year	$	62,942	$	33,343	Losses and LAE incurred related to current accident year	$	78,557	$	62,942
Losses and LAE incurred related to prior accident years	Losses and LAE incurred related to prior accident years	(103,241)		791		Losses and LAE incurred related to prior accident years	(60,532)		(103,241)
Total incurred (1)	Total incurred (1)	$	(40,299)	$	34,134	Total incurred (1)	$	18,025	$	(40,299)

_______________

(1)Excludes run-off business.

Acquisition and operating expenses, net of deferrals, ~~remained relatively flat~~decreased for the three months ended September 30, ~~2022, as declines~~2023, driven by the impact of our cost reduction initiatives, including the impact from our previously announced renegotiated shared services agreement with Genworth and our voluntary separation program executed in ~~variable costs were offset by higher general and administrative expenses.~~the fourth quarter of 2022.

The expense ratio ~~increased slightly~~decreased in the current quarter due to a ~~higher percentage~~ decline in ~~premiums than~~ expenses.

Interest expense primarily relates to our 2025 Senior Notes. For additional details see Note 7 to our unaudited condensed consolidated financial statements for the three months ended September 30, ~~2022~~2023 and ~~2021.~~2022.

Provision for income taxes

The effective tax rate was ~~21.9%~~23.0% and ~~21.4%~~21.9% for the three months ended September 30, 2023 and 2022, ~~and 2021, respectively, consistent~~respectively. The tax rate in the third quarter of 2023 was impacted by the valuation allowance against deferred tax assets associated with ~~the United States corporate federal income tax rate.~~

realized losses on fixed maturity securities during 2023.

3940

Nine months ended September 30, ~~2022,~~2023, compared to nine months ended September 30, ~~2021~~2022

The following table sets forth our consolidated results for the periods indicated:


		Nine months ended September 30,						Increase (decrease) and percentage change					Nine months ended September 30,						Increase (decrease) and percentage change
(Amounts in thousands)	(Amounts in thousands)	2022			2021			2022 vs. 2021				(Amounts in thousands)	2023			2022			2023 vs. 2022
Revenues:	Revenues:											Revenues:
Premiums	Premiums	$	706,725		$	738,085		$	(31,360)	(4)	%	Premiums	$	716,974		$	706,725		$	10,249	1	%
Net investment income	Net investment income	110,415			105,943			4,472		4	%	Net investment income	151,208			110,415			40,793		37	%
Net investment gains (losses)	Net investment gains (losses)	(762)			(2,129)			1,367		(64)	%	Net investment gains (losses)	(13,146)			(762)			(12,384)		1625	%
Other income	Other income	1,826			3,114			(1,288)		(41)	%	Other income	2,460			1,826			634		35	%
Total revenues	Total revenues	818,204			845,013			(26,809)		(3)	%	Total revenues	857,496			818,204			39,292		5	%
Losses and expenses:	Losses and expenses:											Losses and expenses:
Losses incurred	Losses incurred	(112,318)			119,501			(231,819)		(194)	%	Losses incurred	2,793			(112,318)			115,111		(102)	%
Acquisition and operating expenses, net of deferrals	Acquisition and operating expenses, net of deferrals	166,986			175,823			(8,837)		(5)	%	Acquisition and operating expenses, net of deferrals	155,931			166,986			(11,055)		(7)	%
Amortization of deferred acquisition costs and intangibles	Amortization of deferred acquisition costs and intangibles	9,658			11,104			(1,446)		(13)	%	Amortization of deferred acquisition costs and intangibles	8,088			9,658			(1,570)		(16)	%
Interest expense	Interest expense	38,441			38,238			203		1	%	Interest expense	38,919			38,441			478		1	%
Total losses and expenses	Total losses and expenses	102,767			344,666			(241,899)		(70)	%	Total losses and expenses	205,731			102,767			102,964		100	%
Income before income taxes	Income before income taxes	715,437			500,347			215,090		43	%	Income before income taxes	651,765			715,437			(63,672)		(9)	%
Provision for income taxes	Provision for income taxes	155,086			107,196			47,890		45	%	Provision for income taxes	143,562			155,086			(11,524)		(7)	%
Net income	Net income	$	560,351		$	393,151		$	167,200	43	%	Net income	$	508,203		$	560,351		$	(52,148)	(9)	%
Loss ratio (1)	Loss ratio (1)	(16)		%	16		%					Loss ratio (1)	—		%	(16)		%
Expense ratio (net earned premiums) (2)		25		%	25		%
Expense ratio (2)												Expense ratio (2)	23		%	25		%
Net earned premium rate (3)												Net earned premium rate (3)	0.37		%	0.40		%

_______________

(1)Loss ratio is calculated by dividing losses incurred by net earned premiums.

(2)Expense ratio (net earned premiums) is calculated by dividing acquisition and operating expenses, net of deferrals, plus amortization of DAC and intangibles by net earned premiums.

(3)Net earned premium rate is calculated by dividing earned premium by average primary IIF.

Revenues

Premiums ~~decreased mainly~~increased for the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022, primarily attributable to insurance in-force growth, partially offset by the continued lapse of older, higher priced policies and a decrease in single premium cancellations. ~~This was partially offset by insurance in-force growth driven by increased persistency.~~The net earned premium rate decreased to 0.37% for the nine months ended September 30, 2023 from 0.40% for the nine months ended September 30, 2022 as a result of this lapse of higher priced policies and lower single premium cancellations.

Net investment income increased for the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022, primarily ~~from higher average invested assets~~attributable to an increase in investment yields in the current year and ~~a small increase in investment yields, partially offset by lower income from bond calls in the current year.~~higher average invested assets.

Net investment losses in the current year were primarily driven by ~~realized losses from~~ the sale of fixed ~~maturity securities. Net~~income securities as part of an investment ~~losses in the prior year were mainly driven by credit losses related~~strategy designed to ~~non-US corporate fixed maturity securities and realized losses from the sale of fixed maturity securities.~~optimize yield on our portfolio over time.

4041

Losses and expenses

Losses incurred ~~decreased as a result~~during the first nine months of 2023 and 2022 were both impacted by favorable reserve adjustments. During the first nine months of 2023, we released reserves of $188 million primarily due to better than expected cure experience on delinquencies from 2022 and earlier, including a portion of those related to the emergence of COVID-19. A component of the reserve release also related to delinquencies from 2022, as uncertainty in the economic environment has not negatively impacted cure performance to the extent initially expected. During the first nine months of 2022, we recorded $251 million of reserve releases. Losses from the first nine months of 2022 were also impacted by $25 million of reserve strengthening related to current accident year delinquencies due to uncertainty in the economic environment. New primary delinquencies of ~~25,692~~29,911 contributed ~~$113~~$188 million of loss expense in the first nine months of ~~2022.~~2023. This compares to ~~$107~~$113 million of loss expense from ~~24,432~~25,692 new primary delinquencies in the first nine months of 2021. During the first nine months of 2022, we released reserves of $251 million on prior accident years reserves due to better than expected cure experience primarily on delinquencies from 2020 related to the emergence of COVID-19. This was partially offset by $25 million of reserve strengthening related to delinquencies from 2022 given uncertainty the current economic environment. In the prior year, existing reserves were strengthened by $10 million primarily driven by slower early cure emergence patterns on pre-COVID-19 delinquencies.2022.

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


(Amounts in thousands)	(Amounts in thousands)	2022		2021		(Amounts in thousands)	2023		2022
Losses and LAE incurred related to current accident year	Losses and LAE incurred related to current accident year	$	138,504	$	104,939	Losses and LAE incurred related to current accident year	$	198,732	$	138,504
Losses and LAE incurred related to prior accident years	Losses and LAE incurred related to prior accident years	(250,799)		14,468		Losses and LAE incurred related to prior accident years	(195,898)		(250,799)
Total incurred (1)	Total incurred (1)	$	(112,295)	$	119,407	Total incurred (1)	$	2,834	$	(112,295)

_______________

(1)Excludes run-off business.

Acquisition and operating expenses, net of deferrals, ~~increased~~decreased primarily attributable to ~~lower costs allocated by~~the impact of our ~~Parent, partially offset by higher general~~cost reduction initiatives, including the impact from our previously announced renegotiated shared services agreement with Genworth and ~~administrative expenses.~~our voluntary separation program executed in the fourth quarter of 2022.

The expense ratio ~~(net earned premiums) remained flat as we experienced~~decreased in the current quarter due to a decline in ~~both expenses and premiums during the period.~~expenses.

Interest expense primarily relates to our 2025 Senior Notes and increased as the notes were outstanding for only a portion of the nine months ended September 30, ~~2022.~~2023. For additional details see Note 7 to our unaudited condensed consolidated financial statements for the nine months ended September 30, ~~2022~~2023 and ~~2021.~~2022.

Provision for income taxes

The effective tax rate was ~~21.7%~~22.0% and ~~21.4%~~21.7% for the nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively, consistent with the United States corporate federal income tax rate.

Use of Non-GAAP Financial Measures

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.

“Adjusted operating income” is defined as U.S. GAAP net income excluding the effects of (i) net investment gains (losses) and (ii) restructuring costs and infrequent or unusual non-operating items.

(i)Net investment gains (losses)—The recognition of realized investment gains or losses can vary significantly across periods as the activity is highly discretionary based on the timing of individual securities sales due to such factors as market opportunities or exposure management. Trends in

the profitability of our fundamental operating activities can be more clearly identified without the fluctuations of these realized gains and losses. We do not view them to be indicative of our fundamental operating activities. Therefore, these items are excluded from our calculation of adjusted operating income.

(ii)Restructuring costs and infrequent or unusual non-operating items are also excluded from adjusted operating income if, in our opinion, they are not indicative of overall operating trends.

In reporting non-GAAP measures in the future, we may make other adjustments for expenses and gains we do not consider reflective of core operating performance in a particular period. We may disclose other non-GAAP operating measures if we believe that such a presentation would be helpful for investors to evaluate our operating condition by including additional information.

Adjusted operating income is not a measure of total profitability, and therefore should not be considered in isolation or viewed as a substitute for U.S. GAAP net income. Our definition of adjusted operating income may not be comparable to similarly named measures reported by other companies, including our peers.

Adjustments to reconcile net income to adjusted operating income assume a 21% tax rate (unless otherwise indicated).

The following table includes a reconciliation of net income to adjusted operating income for the periods indicated:

Three months ended
September 30,
(Amounts in thousands) 2022 2021
Net income $ 190,986 $ 137,208
Adjustments to net income:
Net investment (gains) losses 42 (580)
Costs associated with reorganization (156) 339
Taxes on adjustments 24 50
Adjusted operating income $ 190,896 $ 137,017


		Nine months ended September 30,					Three months ended September 30,
(Amounts in thousands)	(Amounts in thousands)	2022		2021		(Amounts in thousands)	2023		2022
Net income	Net income	$	560,351	$	393,151	Net income	$	164,195	$	190,986
Adjustments to net income:	Adjustments to net income:					Adjustments to net income:
Net investment (gains) losses	Net investment (gains) losses	762		2,129		Net investment (gains) losses	23		42
Costs associated with reorganization	Costs associated with reorganization	170		2,655		Costs associated with reorganization	3		(156)
Taxes on adjustments	Taxes on adjustments	(196)		(1,005)		Taxes on adjustments	(5)		24
Adjusted operating income	Adjusted operating income	$	561,087	$	396,930	Adjusted operating income	$	164,216	$	190,896

Adjusted operating income ~~increased~~decreased for the three months ended September 30, 2023, as compared to September 30, 2022, primarily due to the larger reserve release in the third quarter of 2022, partially offset by higher revenues and lower operating expenses during the third quarter of 2023.


	Nine months ended September 30,
(Amounts in thousands)	2023		2022
Net income	$	508,203	$	560,351
Adjustments to net income:
Net investment (gains) losses	13,146		762
Costs associated with reorganization	(539)		170
Taxes on adjustments	(2,647)		(196)
Adjusted operating income	$	518,163	$	561,087

Adjusted operating income decreased for the nine months ended September 30, ~~2022,~~2023, as compared to September 30, ~~2021,~~2022, primarily due to ~~decreased losses coupled with lower expenses and~~the larger reserve release in 2022, partially offset by higher revenues and lower ~~premiums.~~operating expenses during 2023.

Key Metrics

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

The following table sets forth selected operating performance measures on a primary basis as of or for the periods indicated:


		Three months ended September 30,					Three months ended September 30,
(Dollar amounts in millions)	(Dollar amounts in millions)	2022		2021		(Dollar amounts in millions)	2023		2022
New insurance written	New insurance written	$15,069		$23,972		New insurance written	$14,391		$15,069
Primary insurance in-force(1)	Primary insurance in-force(1)	$241,813		$222,464		Primary insurance in-force(1)	$262,014		$241,813
Primary risk in-force	Primary risk in-force	$61,124		$55,866		Primary risk in-force	$67,056		$61,124
Persistency rate	Persistency rate	82	%	65	%	Persistency rate	84	%	82	%
PIF (count)		949,052		936,934
Policies in-force (count)						Policies in-force (count)	977,832		949,052
Delinquent loans (count)	Delinquent loans (count)	18,856		28,904		Delinquent loans (count)	19,241		18,856
Delinquency rate	Delinquency rate	1.99	%	3.08	%	Delinquency rate	1.97	%	1.99	%

		Nine months ended September 30,					Nine months ended September 30, 2023
(Dollar amounts in millions)	(Dollar amounts in millions)	2022		2021		(Dollar amounts in millions)	2023		2022
New insurance written	New insurance written	$51,340		$75,563		New insurance written	$42,628		$51,340
Persistency rate	Persistency rate	79	%	61	%	Persistency rate	84	%	79	%

_______________

(1)Represents the aggregate unpaid principal balance for loans we insure.

New insurance written (“NIW”)

NIW for the three months ended September 30, ~~2022~~2023, decreased ~~37%~~4% compared to the three months ended September 30, ~~2021. NIW for the nine months ended September 30, 2022 decreased 32% compared to the nine months ended September 30, 2021.~~2022. The ~~decreases were~~decrease was primarily due to ~~a smaller market and~~ lower ~~mortgage refinancing~~ originations in the current period largely driven by ~~rising~~elevated mortgage rates. We manage the quality of new business through pricing and our underwriting guidelines, which we modify from time to time as circumstances warrant.

The following table presents NIW by product for the periods indicated:


		Three months ended September 30,								Nine months ended September 30,									Three months ended September 30,								Nine months ended September 30,
(Amounts in millions)	(Amounts in millions)	2022				2021				2022				2021				(Amounts in millions)	2023				2022				2023				2022
Primary	Primary	$	15,069	100	%	$	23,972	100	%	$	51,340	100	%	$	75,563	100	%	Primary	$	14,391	100	%	$	15,069	100	%	$	42,628	100	%	$	51,340	100	%
Pool	Pool	—		—		—		—		—		—		—		—		Pool	—		—		—		—		—		—		—		—
Total	Total	$	15,069	100	%	$	23,972	100	%	$	51,340	100	%	$	75,563	100	%	Total	$	14,391	100	%	$	15,069	100	%	$	42,628	100	%	$	51,340	100	%

4344

The following table presents primary NIW by underlying type of mortgage for the periods indicated:

Three months ended
September 30, Nine months ended
September 30,
(Amounts in millions) 2022 2021 2022 2021
Purchases $ 14,634 97 % $ 20,988 88 % $ 48,762 95 % $ 57,631 76 %
Refinances 435 3 2,984 12 2,578 5 17,932 24
Total $ 15,069 100 % $ 23,972 100 % $ 51,340 100 % $ 75,563 100 %


	Three months ended September 30,								Nine months ended September 30,
(Amounts in millions)	2023				2022				2023				2022
Purchases	$	14,073	98	%	$	14,634	97	%	$	41,554	97	%	$	48,762	95	%
Refinances	318		2		435		3		1,074		3		2,578		5
Total	$	14,391	100	%	$	15,069	100	%	$	42,628	100	%	$	51,340	100	%

The following table presents primary NIW by policy payment type for the periods indicated:


		Three months ended September 30,								Nine months ended September 30,									Three months ended September 30,								Nine months ended September 30,
(Amounts in millions)	(Amounts in millions)	2022				2021				2022				2021				(Amounts in millions)	2023				2022				2023				2022
Monthly	Monthly	$	14,138	94	%	$	21,475	90	%	$	47,378	92	%	$	69,720	92	%	Monthly	$	14,099	98	%	$	14,138	94	%	$	41,682	98	%	$	47,378	92	%
Single	Single	890		6		2,431		10		3,798		8		5,563		8		Single	269		2		890		6		868		2		3,798		8
Other	Other	41		—		66		—		164		—		280		—		Other	23		—		41		—		78		—		164		—
Total	Total	$	15,069	100	%	$	23,972	100	%	$	51,340	100	%	$	75,563	100	%	Total	$	14,391	100	%	$	15,069	100	%	$	42,628	100	%	$	51,340	100	%

We have seen a decline in NIW on single policies as a result of a reduction in the market for single policies driven by higher mortgage rates.

4445

The following table presents primary NIW by FICO score for the periods indicated:


		Three months ended September 30,									Three months ended September 30,
(Amounts in millions)	(Amounts in millions)	2022				2021				(Amounts in millions)	2023				2022
Over 760	Over 760	$	6,948	46	%	$	10,708	45	%	Over 760	$	6,679	46	%	$	6,948	46	%
740-759	740-759	2,554		17		3,830		16		740-759	2,438		17		2,554		17
720-739	720-739	2,106		14		3,177		13		720-739	1,928		13		2,106		14
700-719	700-719	1,531		10		2,702		11		700-719	1,422		10		1,531		10
680-699	680-699	1,085		7		1,875		8		680-699	974		7		1,085		7
660-679 (1)	660-679 (1)	527		3		1,010		4		660-679 (1)	592		4		527		3
640-659	640-659	234		2		504		2		640-659	282		2		234		2
620-639	620-639	79		1		166		1		620-639	74		1		79		1
<620	<620	5		—		—		—		<620	2		—		5		—
Total	Total	$	15,069	100	%	$	23,972	100	%	Total	$	14,391	100	%	$	15,069	100	%

											Nine months ended September 30,

		Nine months ended September 30,
(Amounts in millions)	(Amounts in millions)	2022				2021				(Amounts in millions)	2023				2022
Over 760	Over 760	$	23,288	45	%	$	32,990	44	%	Over 760	$	19,594	46	%	$	23,288	45	%
740-759	740-759	8,555		17		11,661		15		740-759	7,314		17		8,555		17
720-739	720-739	7,151		14		10,067		13		720-739	5,842		14		7,151		14
700-719	700-719	5,400		10		8,812		12		700-719	4,217		10		5,400		10
680-699	680-699	3,500		7		6,868		9		680-699	2,988		7		3,500		7
660-679 (1)	660-679 (1)	2,056		4		3,061		4		660-679 (1)	1,677		4		2,056		4
640-659	640-659	1,017		2		1,562		2		640-659	771		2		1,017		2
620-639	620-639	358		1		542		1		620-639	215		—		358		1
<620	<620	15		—		—		—		<620	10		—		15		—
Total	Total	$	51,340	100	%	$	75,563	100	%	Total	$	42,628	100	%	$	51,340	100	%

______________

(1)Loans with unknown FICO scores are included in the 660-679 category.

4546

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:


		Three months ended September 30,									Three months ended September 30,
(Amounts in millions)	(Amounts in millions)	2022				2021				(Amounts in millions)	2023				2022
95.01% and above	95.01% and above	$	1,741	11	%	$	3,396	14	%	95.01% and above	$	2,677	18	%	$	1,741	11	%
90.01% to 95.00%	90.01% to 95.00%	6,184		41		8,838		37		90.01% to 95.00%	5,431		38		6,184		41
85.01% to 90.00%	85.01% to 90.00%	5,094		34		7,454		31		85.01% to 90.00%	4,568		32		5,094		34
85.00% and below	85.00% and below	2,050		14		4,284		18		85.00% and below	1,715		12		2,050		14
Total	Total	$	15,069	100	%	$	23,972	100	%	Total	$	14,391	100	%	$	15,069	100	%

											Nine months ended September 30,
		Nine months ended September 30,
(Amounts in millions)	(Amounts in millions)	2022				2021				(Amounts in millions)	2023				2022
95.01% and above	95.01% and above	$	7,064	14	%	$	8,404	11	%	95.01% and above	$	7,475	17	%	$	7,064	14	%
90.01% to 95.00%	90.01% to 95.00%	20,324		39		29,049		39		90.01% to 95.00%	16,102		38		20,324		39
85.01% to 90.00%	85.01% to 90.00%	15,921		31		24,464		32		85.01% to 90.00%	13,711		32		15,921		31
85.00% and below	85.00% and below	8,031		16		13,646		18		85.00% and below	5,340		13		8,031		16
Total	Total	$	51,340	100	%	$	75,563	100	%	Total	$	42,628	100	%	$	51,340	100	%

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:


	Three months ended September 30,
(Amounts in millions)	2023				2022
45.01% and above	$	4,437	31	%	$	3,728	25	%
38.01% to 45.00%	4,936		34		5,681		38
38.00% and below	5,018		35		5,660		37
Total	$	14,391	100	%	$	15,069	100	%

	Nine months ended September 30,
(Amounts in millions)	2023				2022
45.01% and above	$	12,442	29	%	$	12,247	24	%
38.01% to 45.00%	15,090		35		18,478		36
38.00% and below	15,096		36		20,615		40
Total	$	42,628	100	%	$	51,340	100	%

We have seen an increase in concentrations of loans with higher DTI ratios. This is in line with market trends as rising mortgage rates and recent home price appreciation have put pressure on affordability. We believe the levels are in line with our current risk appetite as we consider layered risk across multiple risk attributes, pricing and our portfolio credit mix.

Three months ended
September 30,
(Amounts in millions) 2022 2021
45.01% and above $ 3,728 25 % $ 4,167 17 %
38.01% to 45.00% 5,681 38 7,949 33
38.00% and below 5,660 37 11,856 50
Total $ 15,069 100 % $ 23,972 100 %
Nine months ended
September 30,
(Amounts in millions) 2022 2021
45.01% and above $ 12,247 24 % $ 10,002 13 %
38.01% to 45.00% 18,478 36 25,899 34
38.00% and below 20,615 40 39,662 53
Total $ 51,340 100 % $ 75,563 100 %

Insurance in-force (“IIF”) and Risk in-force (“RIF”)

IIF increased as a result of NIW. Higher interest rates and the ~~declining~~low refinance market led to lower lapse and cancellations during the third quarter of ~~2022~~2023 driving ~~increased~~continued elevated persistency. ~~Primary~~The primary persistency rate was ~~82%~~84% and ~~65%~~82% for the three months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively. RIF increased primarily as a result of higher IIF.

The following table sets forth IIF and RIF as of the dates indicated:


(Amounts in millions)	(Amounts in millions)	September 30, 2022				December 31, 2021				September 30, 2021				(Amounts in millions)	September 30, 2023				December 31, 2022				September 30, 2022
Primary IIF	Primary IIF	$	241,813	100	%	$	226,514	100	%	$	222,464	100	%	Primary IIF	$	262,014	100	%	$	248,262	100	%	$	241,813	100	%
Pool IIF	Pool IIF	531		—		641		—		771		—		Pool IIF	451		—		505		—		531		—
Total IIF	Total IIF	$	242,344	100	%	$	227,155	100	%	$	223,235	100	%	Total IIF	$	262,465	100	%	$	248,767	100	%	$	242,344	100	%

Primary RIF	Primary RIF	$	61,124	100	%	$	56,881	100	%	$	55,866	100	%	Primary RIF	$	67,056	100	%	$	62,791	100	%	$	61,124	100	%
Pool RIF	Pool RIF	84		—		105		—		117		—		Pool RIF	70		—		79		—		84		—
Total RIF	Total RIF	$	61,208	100	%	$	56,986	100	%	$	55,983	100	%	Total RIF	$	67,126	100	%	$	62,870	100	%	$	61,208	100	%

The following table sets forth primary IIF and primary RIF by origination as of the dates indicated:


(Amounts in millions)	(Amounts in millions)	September 30, 2022				December 31, 2021				September 30, 2021				(Amounts in millions)	September 30, 2023				December 31, 2022				September 30, 2022
Purchases IIF	Purchases IIF	$	199,322	82	%	$	176,550	78	%	$	169,944	76	%	Purchases IIF	$	228,431	87	%	$	207,827	84	%	$	199,322	82	%
Refinances IIF	Refinances IIF	42,491		18		49,964		22		52,520		24		Refinances IIF	33,583		13		40,435		16		42,491		18
Total IIF	Total IIF	$	241,813	100	%	$	226,514	100	%	$	222,464	100	%	Total IIF	$	262,014	100	%	$	248,262	100	%	$	241,813	100	%

Purchases RIF	Purchases RIF	$	52,134	85	%	$	46,470	82	%	$	44,871	80	%	Purchases RIF	$	59,640	89	%	$	54,165	86	%	$	52,134	85	%
Refinances RIF	Refinances RIF	8,990		15		10,411		18		10,995		20		Refinances RIF	7,416		11		8,626		14		8,990		15
Total RIF	Total RIF	$	61,124	100	%	$	56,881	100	%	$	55,866	100	%	Total RIF	$	67,056	100	%	$	62,791	100	%	$	61,124	100	%

The following table sets forth primary IIF and primary RIF by product as of the dates indicated:


(Amounts in millions)	(Amounts in millions)	September 30, 2022				December 31, 2021				September 30, 2021				(Amounts in millions)	September 30, 2023				December 31, 2022				September 30, 2022
Monthly IIF	Monthly IIF	$	211,062	87	%	$	194,826	86	%	$	190,702	86	%	Monthly IIF	$	232,150	88	%	$	216,831	87	%	$	211,062	87	%
Single IIF	Single IIF	28,550		12		29,205		13		29,013		13		Single IIF	27,853		11		29,275		12		28,550		12
Other IIF	Other IIF	2,201		1		2,483		1		2,749		1		Other IIF	2,011		1		2,156		1		2,201		1
Total IIF	Total IIF	$	241,813	100	%	$	226,514	100	%	$	222,464	100	%	Total IIF	$	262,014	100	%	$	248,262	100	%	$	241,813	100	%

Monthly RIF	Monthly RIF	$	54,247	89	%	$	49,614	87	%	$	48,495	87	%	Monthly RIF	$	60,498	90	%	$	55,879	89	%	$	54,247	89	%
Single RIF	Single RIF	6,324		10		6,658		12		6,709		12		Single RIF	6,050		9		6,370		10		6,324		10
Other RIF	Other RIF	553		1		609		1		662		1		Other RIF	508		1		542		1		553		1
Total RIF	Total RIF	$	61,124	100	%	$	56,881	100	%	$	55,866	100	%	Total RIF	$	67,056	100	%	$	62,791	100	%	$	61,124	100	%

4748

The following table sets forth primary IIF by policy year as of the dates indicated:


(Amounts in millions)	(Amounts in millions)	September 30, 2022				December 31, 2021				September 30, 2021				(Amounts in millions)	September 30, 2023				December 31, 2022				September 30, 2022
2008 and prior	2008 and prior	$	6,849	3	%	$	8,196	3	%	$	8,963	4	%	2008 and prior	$	5,859	2	%	$	6,596	3	%	$	6,849	3	%
2009 to 2014		2,293		1		3,369		2		3,949		2
2015		3,133		1		4,488		2		5,087		2
2009 to 2015														2009 to 2015	3,819		1		5,025		2		5,426		2
2016	2016	6,772		3		8,997		4		10,082		4		2016	4,948		2		6,296		2		6,772		3
2017	2017	6,818		3		8,962		4		10,185		5		2017	5,582		2		6,495		3		6,818		3
2018	2018	7,133		3		9,263		4		10,568		5		2018	5,993		2		6,839		3		7,133		3
2019	2019	17,070		7		21,730		10		24,884		11		2019	14,372		6		16,352		7		17,070		7
2020	2020	58,497		24		69,963		31		75,785		34		2020	46,881		18		55,358		22		58,497		24
2021	2021	83,740		35		91,546		40		72,961		33		2021	73,141		28		81,724		33		83,740		35
2022	2022	49,508		20		—		—		—		—		2022	60,258		23		63,577		25		49,508		20
2023														2023	41,161		16		—		—		—		—
Total	Total	$	241,813	100	%	$	226,514	100	%	$	222,464	100	%	Total	$	262,014	100	%	$	248,262	100	%	$	241,813	100	%

The following table sets forth primary RIF by policy year as of the dates indicated:


(Amounts in millions)	(Amounts in millions)	September 30, 2022				December 31, 2021				September 30, 2021				(Amounts in millions)	September 30, 2023				December 31, 2022				September 30, 2022
2008 and prior	2008 and prior	$	1,764	3	%	$	2,112	3	%	$	2,309	4	%	2008 and prior	$	1,510	2	%	$	1,699	3	%	$	1,764	3	%
2009 to 2014		609		1		904		2		1,062		2
2015		840		1		1,197		2		1,355		2
2009 to 2015														2009 to 2015	1,004		2		1,341		2		1,449		2
2016	2016	1,805		3		2,388		4		2,676		5		2016	1,327		2		1,681		3		1,805		3
2017	2017	1,792		3		2,324		4		2,631		5		2017	1,471		2		1,708		3		1,792		3
2018	2018	1,806		3		2,330		4		2,656		5		2018	1,535		2		1,736		3		1,806		3
2019	2019	4,313		7		5,454		10		6,239		11		2019	3,676		5		4,143		7		4,313		7
2020	2020	14,891		25		17,574		31		18,965		34		2020	12,228		18		14,158		22		14,891		25
2021	2021	20,848		34		22,598		40		17,973		32		2021	18,524		28		20,418		32		20,848		34
2022	2022	12,456		20		—		—		—		—		2022	15,129		23		15,907		25		12,456		20
2023														2023	10,652		16		—		—		—		—
Total	Total	$	61,124	100	%	$	56,881	100	%	$	55,866	100	%	Total	$	67,056	100	%	$	62,791	100	%	$	61,124	100	%

4849

The following table presents the development of primary IIF for the periods indicated:


		Three months ended September 30,					Three months ended September 30,
(Amounts in millions)	(Amounts in millions)	2022		2021		(Amounts in millions)	2023		2022
Beginning balance	Beginning balance	$	237,563	$	217,477	Beginning balance	$	257,816	$	237,563
NIW	NIW	15,069		23,972		NIW	14,391		15,069
Cancellations, principal repayments and other reductions (1)	Cancellations, principal repayments and other reductions (1)	(10,819)		(18,985)		Cancellations, principal repayments and other reductions (1)	(10,193)		(10,819)
Ending balance	Ending balance	$	241,813	$	222,464	Ending balance	$	262,014	$	241,813

		Nine months ended September 30,					Nine months ended September 30,
(Amounts in millions)	(Amounts in millions)	2022		2021		(Amounts in millions)	2023		2022
Beginning balance	Beginning balance	$	226,514	$	207,947	Beginning balance	$	248,262	$	226,514
NIW	NIW	51,340		75,563		NIW	42,628		51,340
Cancellations, principal repayments and other reductions (1)	Cancellations, principal repayments and other reductions (1)	(36,041)		(61,046)		Cancellations, principal repayments and other reductions (1)	(28,876)		(36,041)
Ending balance	Ending balance	$	241,813	$	222,464	Ending balance	$	262,014	$	241,813

______________

(1)Includes the estimated amortization of unpaid principal balance of covered ~~loans~~loans.

The following table sets forth primary IIF by LTV ratio at origination as of the dates indicated:


(Amounts in millions)	(Amounts in millions)	September 30, 2022				December 31, 2021				September 30, 2021				(Amounts in millions)	September 30, 2023				December 31, 2022				September 30, 2022
95.01% and above	95.01% and above	$	38,099	16	%	$	35,455	16	%	$	34,259	15	%	95.01% and above	$	44,071	17	%	$	39,509	16	%	$	38,099	16	%
90.01% to 95.00%	90.01% to 95.00%	101,164		42		95,149		42		94,888		43		90.01% to 95.00%	109,019		42		103,618		42		101,164		42
85.01% to 90.00%	85.01% to 90.00%	69,803		29		64,549		28		63,349		28		85.01% to 90.00%	77,121		29		72,132		29		69,803		29
85.00% and below	85.00% and below	32,747		13		31,361		14		29,968		14		85.00% and below	31,803		12		33,003		13		32,747		13
Total	Total	$	241,813	100	%	$	226,514	100	%	$	222,464	100	%	Total	$	262,014	100	%	$	248,262	100	%	$	241,813	100	%

The following table sets forth primary RIF by LTV ratio at origination as of the dates indicated:


(Amounts in millions)	(Amounts in millions)	September 30, 2022				December 31, 2021				September 30, 2021				(Amounts in millions)	September 30, 2023				December 31, 2022				September 30, 2022
95.01% and above	95.01% and above	$	10,809	18	%	$	9,907	17	%	$	9,490	17	%	95.01% and above	$	12,595	19	%	$	11,136	18	%	$	10,809	18	%
90.01% to 95.00%	90.01% to 95.00%	29,379		48		27,608		49		27,509		49		90.01% to 95.00%	31,696		47		30,079		48		29,379		48
85.01% to 90.00%	85.01% to 90.00%	17,019		28		15,644		27		15,322		28		85.01% to 90.00%	18,945		28		17,621		28		17,019		28
85.00% and below	85.00% and below	3,917		6		3,722		7		3,545		6		85.00% and below	3,820		6		3,955		6		3,917		6
Total	Total	$	61,124	100	%	$	56,881	100	%	$	55,866	100	%	Total	$	67,056	100	%	$	62,791	100	%	$	61,124	100	%

4950

The following table sets forth primary IIF by FICO score at origination as of the dates indicated:


(Amounts in millions)	(Amounts in millions)	September 30, 2022				December 31, 2021				September 30, 2021				(Amounts in millions)	September 30, 2023				December 31, 2022				September 30, 2022
Over 760	Over 760	$	99,177	41	%	$	89,982	40	%	$	87,073	39	%	Over 760	$	109,701	42	%	$	102,467	41	%	$	99,177	41	%
740-759	740-759	38,731		16		35,874		16		35,177		16		740-759	42,899		16		40,097		16		38,731		16
720-739	720-739	33,874		14		31,730		14		31,374		14		720-739	36,889		14		34,916		14		33,874		14
700-719	700-719	28,384		12		27,359		12		27,371		12		700-719	29,818		12		28,867		12		28,384		12
680-699	680-699	21,294		9		21,270		9		21,458		10		680-699	21,993		9		21,554		9		21,294		9
660-679 (1)	660-679 (1)	10,842		4		10,549		5		10,309		5		660-679 (1)	11,351		4		10,926		4		10,842		4
640-659	640-659	6,115		3		6,124		3		6,009		3		640-659	6,166		2		6,095		3		6,115		3
620-639	620-639	2,663		1		2,783		1		2,787		1		620-639	2,548		1		2,630		1		2,663		1
<620	<620	733		—		843		—		906		—		<620	649		—		710		—		733		—
Total	Total	$	241,813	100	%	$	226,514	100	%	$	222,464	100	%	Total	$	262,014	100	%	$	248,262	100	%	$	241,813	100	%

______________

(1)Loans with unknown FICO scores are included in the 660-679 category.

The following table sets forth primary RIF by FICO score at origination as of the dates indicated:


(Amounts in millions)	(Amounts in millions)	September 30, 2022				December 31, 2021				September 30, 2021				(Amounts in millions)	September 30, 2023				December 31, 2022				September 30, 2022
Over 760	Over 760	$	24,965	41	%	$	22,489	40	%	$	21,767	39	%	Over 760	$	28,014	42	%	$	25,807	41	%	$	24,965	41	%
740-759	740-759	9,808		16		9,009		16		8,824		16		740-759	11,009		17		10,154		16		9,808		16
720-739	720-739	8,656		14		8,055		14		7,966		14		720-739	9,553		14		8,931		14		8,656		14
700-719	700-719	7,200		12		6,907		12		6,923		12		700-719	7,615		12		7,317		12		7,200		12
680-699	680-699	5,356		9		5,334		9		5,383		10		680-699	5,582		8		5,428		9		5,356		9
660-679 (1)	660-679 (1)	2,739		4		2,638		5		2,568		5		660-679 (1)	2,901		4		2,767		5		2,739		4
640-659	640-659	1,541		3		1,530		3		1,497		3		640-659	1,569		2		1,540		2		1,541		3
620-639	620-639	672		1		702		1		705		1		620-639	647		1		665		1		672		1
<620	<620	187		—		217		—		233		—		<620	166		—		182		—		187		—
Total	Total	$	61,124	100	%	$	56,881	100	%	$	55,866	100	%	Total	$	67,056	100	%	$	62,791	100	%	$	61,124	100	%

______________

(1)Loans with unknown FICO scores are included in the 660-679 category.

The following table sets forth primary IIF by DTI score at origination as of the dates indicated:


(Amounts in millions)	(Amounts in millions)	September 30, 2022				December 31, 2021				September 30, 2021				(Amounts in millions)	September 30, 2023				December 31, 2022				September 30, 2022
45.01% and above	45.01% and above	$	40,846	17	%	$	34,076	15	%	$	31,771	14	%	45.01% and above	$	51,810	20	%	$	43,831	18	%	$	40,846	17	%
38.01% to 45.00%	38.01% to 45.00%	85,226		35		79,147		35		78,303		35		38.01% to 45.00%	93,228		35		87,816		35		85,226		35
38.00% and below	38.00% and below	115,741		48		113,291		50		112,390		51		38.00% and below	116,976		45		116,615		47		115,741		48
Total	Total	$	241,813	100	%	$	226,514	100	%	$	222,464	100	%	Total	$	262,014	100	%	$	248,262	100	%	$	241,813	100	%

The following table sets forth primary RIF by DTI score at origination as of the dates indicated:


(Amounts in millions)	(Amounts in millions)	September 30, 2022				December 31, 2021				September 30, 2021				(Amounts in millions)	September 30, 2023				December 31, 2022				September 30, 2022
45.01% and above	45.01% and above	$	10,393	17	%	$	8,631	15	%	$	8,048	14	%	45.01% and above	$	13,369	20	%	$	11,176	18	%	$	10,393	17	%
38.01% to 45.00%	38.01% to 45.00%	21,603		35		19,974		35		19,773		36		38.01% to 45.00%	23,846		36		22,268		35		21,603		35
38.00% and below	38.00% and below	29,128		48		28,276		50		28,045		50		38.00% and below	29,841		44		29,347		47		29,128		48
Total	Total	$	61,124	100	%	$	56,881	100	%	$	55,866	100	%	Total	$	67,056	100	%	$	62,791	100	%	$	61,124	100	%

5051

Delinquent loans and claims

Our delinquency management process begins with notification by the loan servicer of a delinquency on an insured loan. “Delinquency” is defined in our master policies as the borrower’s failure to pay when due an amount equal to the scheduled monthly mortgage payment under the terms of the mortgage. Generally, the master policies require an insured to notify us of a delinquency if the borrower fails to make two consecutive monthly mortgage payments prior to the due date of the next mortgage payment. We generally consider a loan to be delinquent and establish required reserves after the insured notifies us that the borrower has failed to make two scheduled mortgage payments. Borrowers may cure delinquencies by making all of the delinquent loan payments, agreeing to a loan modification, or by selling the property in full satisfaction of all amounts due under the mortgage. In most cases, delinquencies that are not cured result in a claim under our policy.

The following table sets forth a roll forward of the number of primary loans in default for the periods indicated:


		Nine months ended September 30,			Nine months ended September 30,
(Loan count)	(Loan count)	2022	2021	(Loan count)	2023	2022
Number of delinquencies, beginning of period	Number of delinquencies, beginning of period	24,820	44,904	Number of delinquencies, beginning of period	19,943	24,820
New defaults	New defaults	25,692	24,342	New defaults	29,911	25,692
Cures	Cures	(31,254)	(39,697)	Cures	(30,158)	(31,254)
Claims paid	Claims paid	(384)	(620)	Claims paid	(429)	(384)
Rescissions and claim denials	Rescissions and claim denials	(18)	(25)	Rescissions and claim denials	(26)	(18)
Number of delinquencies, end of period	Number of delinquencies, end of period	18,856	28,904	Number of delinquencies, end of period	19,241	18,856

The following table sets forth changes in our direct primary case loss reserves for the periods indicated:


		Nine months ended September 30,					Nine months ended September 30,
(Amounts in thousands) (1)	(Amounts in thousands) (1)	2022		2021		(Amounts in thousands) (1)	2023		2022
Loss reserves, beginning of period	Loss reserves, beginning of period	$	606,102	$	516,863	Loss reserves, beginning of period	$	479,343	$	606,102
Claims paid	Claims paid	(18,776)		(21,603)		Claims paid	(21,155)		(18,777)
Change in reserve	Change in reserve	(111,263)		117,494		Change in reserve	1,728		(111,262)
Loss reserves, end of period	Loss reserves, end of period	$	476,063	$	612,754	Loss reserves, end of period	$	459,916	$	476,063

______________

(1)Direct primary case reserves exclude LAE, IBNR and reinsurance reserves.

The following tables set forth primary delinquencies, direct case reserves and RIF by aged missed payment status as of the dates indicated:


		September 30, 2022								September 30, 2023
(Dollar amounts in millions)	(Dollar amounts in millions)	Delinquencies	Direct case reserves (1)		Risk in-force		Reserves as % of risk in-force		(Dollar amounts in millions)	Delinquencies	Direct primary case reserves (1)		Risk in-force		Reserves as % of risk in-force
Payments in default:	Payments in default:								Payments in default:
3 payments or less	3 payments or less	7,446	$	48	$	401	12	%	3 payments or less	9,398	$	80	$	568	14	%
4 - 11 payments	4 - 11 payments	6,119	146		358		41	%	4 - 11 payments	6,381	192		426		45	%
12 payments or more	12 payments or more	5,291	282		295		96	%	12 payments or more	3,462	188		201		94	%
Total	Total	18,856	$	476	$	1,054	45	%	Total	19,241	$	460	$	1,195	38	%

5152


		December 31, 2021								December 31, 2022
(Dollar amounts in millions)	(Dollar amounts in millions)	Delinquencies	Direct case reserves (1)		Risk in-force		Reserves as % of risk in-force		(Dollar amounts in millions)	Delinquencies	Direct primary case reserves (1)		Risk in-force		Reserves as % of risk in-force
Payments in default:	Payments in default:								Payments in default:
3 payments or less	3 payments or less	6,586	$	35	$	340	10	%	3 payments or less	8,920	$	69	$	509	14	%
4 - 11 payments	4 - 11 payments	7,360	111		426		26	%	4 - 11 payments	6,466	166		390		43	%
12 payments or more	12 payments or more	10,874	460		643		72	%	12 payments or more	4,557	244		248		98	%
Total	Total	24,820	$	606	$	1,409	43	%	Total	19,943	$	479	$	1,147	42	%


		September 30, 2021								September 30, 2022
(Dollar amounts in millions)	(Dollar amounts in millions)	Delinquencies	Direct case reserves (1)		Risk in-force		Reserves as % of risk in-force		(Dollar amounts in millions)	Delinquencies	Direct primary case reserves (1)		Risk in-force		Reserves as % of risk in-force
Payments in default:	Payments in default:								Payments in default:
3 payments or less	3 payments or less	6,192	$	32	$	319	10	%	3 payments or less	7,446	$	48	$	401	12	%
4 - 11 payments	4 - 11 payments	9,021	128		529		24	%	4 - 11 payments	6,119	146		358		41	%
12 payments or more	12 payments or more	13,691	453		813		56	%	12 payments or more	5,291	282		295		96	%
Total	Total	28,904	$	613	$	1,661	37	%	Total	18,856	$	476	$	1,054	45	%

______________

(1)Direct primary case reserves exclude LAE, incurred but not reported and reinsurance reserves.

~~The total increase in reserves~~Reserves as a percentage of RIF as of September 30, 2023, decreased compared to December 31, 2022, ~~was primarily driven by the decrease in delinquent RIF. Delinquent RIF decreased mainly due~~and September 30, 2022 as long-term delinquencies with higher reserves have continued to ~~lower total delinquencies as cures outpaced new delinquencies in the first nine months of 2022, while reserves decreased due to our reserve releases. While the~~cure. The number of loans that are delinquent for 12 months or more has decreased ~~it remains elevated compared~~ to be more in line with pre-COVID-19 ~~levels due, in large part,~~levels. Due to ~~borrowers entering a~~continued forbearance ~~plan over a year ago driven by COVID-19.~~

~~Resolution of a delinquency in a forbearance plan, whether it ultimately results in a cure or a claim, remains difficult to estimate. In addition, due to~~options, foreclosure moratoriums and the uncertainty around the lack of progression through the foreclosure process there is still uncertainty around the likelihood and timing of delinquencies going to claim.

Primary insurance delinquency rates differ from region to region in the United States at any one time depending upon economic conditions and cyclical growth patterns. Delinquency rates are shown by region based upon the location of the underlying property, rather than the location of the lender.

5253

The table below sets forth our primary delinquency rates for the ten largest states by our primary RIF as of September 30, ~~2022:~~2023:


		Percent of RIF		Percent of direct primary case reserves		Delinquency rate			Percent of RIF		Percent of direct primary case reserves		Delinquency rate
By State:	By State:							By State:
California	California	12	%	10	%	2.02	%	California	13	%	12	%	2.10	%
Texas	Texas	8		7		2.10	%	Texas	8		8		2.12	%
Florida (1)	Florida (1)	8		8		1.93	%	Florida (1)	8		9		2.16	%
New York (1)	New York (1)	5		14		2.97	%	New York (1)	5		12		2.89	%
Illinois (1)	Illinois (1)	5		6		2.53	%	Illinois (1)	4		6		2.40	%
Arizona								Arizona	4		2		1.74	%
Michigan	Michigan	4		3		1.69	%	Michigan	4		3		1.72	%
Arizona		3		2		1.67	%
Georgia								Georgia	3		3		2.14	%
North Carolina	North Carolina	3		2		1.62	%	North Carolina	3		2		1.41	%
Georgia		3		3		2.26	%
Pennsylvania (1)		3		3		2.11	%
Washington								Washington	3		2		1.64	%
All other states (2)	All other states (2)	46		42		1.85	%	All other states (2)	45		41		1.84	%
Total	Total	100	%	100	%	1.99	%	Total	100	%	100	%	1.97	%

______________

(1)Jurisdiction predominantly uses a judicial foreclosure process, which generally increases the amount of time it takes for a foreclosure to be completed.

(2)Includes the District of Columbia.

The table below sets forth our primary delinquency rates for the ten largest states by our primary RIF as of December 31, ~~2021:~~2022:


		Percent of RIF		Percent of direct primary case reserves		Delinquency rate			Percent of RIF		Percent of direct primary case reserves		Delinquency rate
By State:	By State:							By State:
California	California	11	%	12	%	3.17	%	California	12	%	10	%	2.09	%
Texas	Texas	8		8		2.89	%	Texas	8		7		2.12	%
Florida (1)	Florida (1)	7		9		2.97	%	Florida (1)	8		8		2.54	%
New York (1)	New York (1)	5		12		3.80	%	New York (1)	5		13		2.95	%
Illinois (1)	Illinois (1)	5		6		3.09	%	Illinois (1)	5		6		2.54	%
Arizona								Arizona	4		2		1.78	%
Michigan	Michigan	4		2		1.87	%	Michigan	4		3		1.79	%
Arizona		4		2		2.31	%
North Carolina	North Carolina	3		2		2.18	%	North Carolina	3		3		1.59	%
Pennsylvania (1)		3		3		2.38	%
Georgia								Georgia	3		3		2.23	%
Washington	Washington	3		3		2.98	%	Washington	3		3		1.92	%
All other states (2)		47		41		2.46	%
All Other States (2)								All Other States (2)	45		42		1.94	%
Total	Total	100	%	100	%	2.65	%	Total	100	%	100	%	2.08	%

______________

(1)Jurisdiction predominantly uses a judicial foreclosure process, which generally increases the amount of time it takes for a foreclosure to be completed.

(2)Includes the District of Columbia.

5354

The table below sets forth our primary delinquency rates for the ten largest Metropolitan Statistical Areas (“MSA”) or Metro Divisions (“MD”) by our primary RIF as of September 30, ~~2022:~~2023:


		Percent of RIF		Percent of direct primary case reserves		Delinquency rate			Percent of RIF		Percent of direct primary case reserves		Delinquency rate
By MSA or MD:	By MSA or MD:							By MSA or MD:
Phoenix, AZ MSA								Phoenix, AZ MSA	3	%	2	%	1.77	%
Chicago-Naperville, IL MD	Chicago-Naperville, IL MD	3	%	4	%	2.85	%	Chicago-Naperville, IL MD	3		4		2.67	%
Phoenix, AZ MSA		3		2		1.71	%
Atlanta, GA MSA								Atlanta, GA MSA	3		3		2.32	%
New York, NY MD	New York, NY MD	3		9		3.88	%	New York, NY MD	2		8		3.62	%
Atlanta, GA MSA		2		3		2.47	%
Washington-Arlington, DC MD	Washington-Arlington, DC MD	2		2		1.79	%	Washington-Arlington, DC MD	2		2		1.75	%
Houston, TX MSA	Houston, TX MSA	2		3		2.74	%	Houston, TX MSA	2		3		2.69	%
Riverside-San Bernardino CA MSA		2		2		2.74	%
Los Angeles-Long Beach, CA MD	Los Angeles-Long Beach, CA MD	2		2		2.13	%	Los Angeles-Long Beach, CA MD	2		2		2.28	%
Riverside-San Bernardino, CA MSA								Riverside-San Bernardino, CA MSA	2		3		2.71	%
Dallas, TX MD	Dallas, TX MD	2		2		1.78	%	Dallas, TX MD	2		1		1.69	%
Nassau County, NY MD		2		4		3.83	%
Denver-Aurora-Lakewood, CO MSA								Denver-Aurora-Lakewood, CO MSA	2		1		1.07	%
All Other MSAs/MDs	All Other MSAs/MDs	77		67		1.85	%	All Other MSAs/MDs	77		71		1.88	%
Total	Total	100	%	100	%	1.99	%	Total	100	%	100	%	1.97	%

The table below sets forth our primary delinquency rates for the ten largest MSAs or MDs by our primary RIF as of December 31, ~~2021:~~2022:


		Percent of RIF		Percent of direct primary case reserves		Delinquency rate			Percent of RIF		Percent of direct primary case reserves		Delinquency rate
By MSA or MD:	By MSA or MD:							By MSA or MD:
Chicago-Naperville, IL MD	Chicago-Naperville, IL MD	3	%	4	%	3.68	%	Chicago-Naperville, IL MD	3	%	5	%	2.84	%
Phoenix, AZ MSA	Phoenix, AZ MSA	3		2		2.36	%	Phoenix, AZ MSA	3		2		1.83	%
New York, NY MD	New York, NY MD	3		8		5.32	%	New York, NY MD	3		8		3.75	%
Atlanta, GA MSA	Atlanta, GA MSA	2		3		3.28	%	Atlanta, GA MSA	2		3		2.42	%
Washington-Arlington, DC MD	Washington-Arlington, DC MD	2		2		2.96	%	Washington-Arlington, DC MD	2		2		1.85	%
Houston, TX MSA	Houston, TX MSA	2		3		3.61	%	Houston, TX MSA	2		3		2.60	%
Riverside-San Bernardino CA MSA		2		2		3.42	%
Riverside-San Bernardino, CA MSA								Riverside-San Bernardino, CA MSA	2		2		2.89	%
Los Angeles-Long Beach, CA MD	Los Angeles-Long Beach, CA MD	2		3		3.95	%	Los Angeles-Long Beach, CA MD	2		2		2.18	%
Dallas, TX MD	Dallas, TX MD	2		2		2.31	%	Dallas, TX MD	2		1		1.86	%
Nassau County, NY MD		2		4		5.55	%
Denver-Aurora-Lakewood, CO MSA								Denver-Aurora-Lakewood, CO MSA	2		1		1.12	%
All Other MSAs/MDs	All Other MSAs/MDs	77		67		2.44	%	All Other MSAs/MDs	77		71		2.00	%
Total	Total	100	%	100	%	2.65	%	Total	100	%	100	%	2.08	%

The frequency of delinquencies may not correlate directly with the number of claims received because delinquencies may cure. The rate at which delinquencies cure is influenced by borrowers’ financial resources and circumstances and regional economic differences. Whether a delinquency leads to a claim correlates highly with the borrower’s equity at the time of delinquency, as it influences the borrower’s willingness to continue to make payments, the borrower’s or the insured’s ability to sell the home for an amount sufficient to satisfy all amounts due under the mortgage loan and the borrower’s financial ability to continue making payments. When we receive notice of a delinquency, we use our proprietary model to determine whether a delinquent loan is a candidate for a modification. When our model identifies such a candidate, our loan workout specialists prioritize cases for loss mitigation based upon the likelihood that the loan will result in a claim. Loss mitigation actions include loan modification,

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extension of credit to bring a loan current, foreclosure forbearance, pre-foreclosure sale and deed-in-lieu. These loss mitigation efforts often are an effective way to reduce our claim exposure and ultimate payouts.

The following table sets forth the dispersion of primary RIF and direct primary case reserves by policy year and delinquency rates as of September 30, ~~2022:~~2023:


		Percent of RIF		Percent of direct primary case reserves		Delinquency rate		Cumulative delinquency rate (1)			Percent of RIF		Percent of direct primary case reserves		Delinquency rate		Cumulative delinquency rate (1)
Policy Year:	Policy Year:									Policy Year:
2008 and prior	2008 and prior	3	%	28	%	9.71	%	5.57	%	2008 and prior	2	%	20	%	8.67	%	5.56	%
2009 to 2014		1		4		5.00	%	0.70	%
2015		1		4		3.68	%	0.75	%
2009-2015										2009-2015	2		5		4.20	%	0.64	%
2016	2016	3		7		3.14	%	0.83	%	2016	2		4		3.07	%	0.68	%
2017	2017	3		8		3.75	%	1.03	%	2017	2		6		3.62	%	0.90	%
2018	2018	3		10		4.47	%	1.18	%	2018	2		6		4.18	%	0.99	%
2019	2019	7		12		2.65	%	0.94	%	2019	5		9		2.58	%	0.81	%
2020	2020	25		16		1.31	%	0.86	%	2020	18		15		1.53	%	0.84	%
2021	2021	34		10		0.92	%	0.83	%	2021	28		21		1.48	%	1.19	%
2022	2022	20		1		0.26	%	0.25	%	2022	23		13		1.28	%	1.20	%
2023										2023	16		1		0.25	%	0.24	%
Total portfolio	Total portfolio	100	%	100	%	1.99	%	4.26	%	Total portfolio	100	%	100	%	1.97	%	4.19	%

______________

(1)Calculated as the sum of the number of policies where claims were ever paid to date and number of policies for loans currently in default divided by policies ever in-force.

The following table sets forth the dispersion of primary RIF and loss reserves by policy year and delinquency rates as of December 31, ~~2021:~~2022:


		Percent of RIF		Percent of direct primary case reserves		Delinquency rate		Cumulative delinquency rate (1)			Percent of RIF		Percent of direct primary case reserves		Delinquency rate		Cumulative delinquency rate (1)
Policy Year:	Policy Year:									Policy Year:
2008 and prior	2008 and prior	3	%	24	%	10.54	%	5.59	%	2008 and prior	3	%	26	%	9.61	%	5.57	%
2009 to 2013		1		2		5.54	%	0.74	%
2014		1		3		5.51	%	0.99	%
2009-2014										2009-2014	1		4		5.01	%	0.69	%
2015	2015	2		5		4.24	%	1.04	%	2015	1		3		3.61	%	0.71	%
2016	2016	4		8		3.69	%	1.16	%	2016	3		6		3.17	%	0.81	%
2017	2017	4		10		4.78	%	1.56	%	2017	3		7		3.78	%	1.01	%
2018	2018	4		13		5.93	%	1.88	%	2018	3		9		4.63	%	1.18	%
2019	2019	10		19		3.89	%	1.68	%	2019	7		11		2.71	%	0.93	%
2020	2020	31		14		1.50	%	1.14	%	2020	22		17		1.47	%	0.92	%
2021	2021	40		2		0.37	%	0.36	%	2021	32		14		1.20	%	1.06	%
2022										2022	25		3		0.54	%	0.52	%
Total portfolio	Total portfolio	100	%	100	%	2.65	%	4.42	%	Total portfolio	100	%	100	%	2.08	%	4.26	%

______________

(1)Calculated as the sum of the number of policies where claims were ever paid to date and number of policies for loans currently in default divided by policies ever in-force.

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Loss reserves in policy years in 2008 and prior are outsized compared to their representation of RIF. The size of these policy years at origination combined with the significant decline in home prices led to significant losses in these policy years. 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 largest portion of loss~~Loss reserves has shifted to newer book years, ~~as a result of COVID-19~~largely 2020 and later, given their significant representation of RIF. As of September 30, ~~2022,~~2023, our ~~2015~~2016 and newer policy years represented approximately 96% of our primary RIF and ~~68%~~75% of our total direct primary case reserves.

Investment Portfolio

Our investment portfolio is affected by factors described below, each of which in turn may be affected by ~~COVID-19~~current macroeconomic conditions as noted above in “—Trends and Conditions.” The investment portfolios of our insurance subsidiaries are directed by ~~a newly formed~~the Enact Investment Committee, a management-level committee, with Genworth serving as the investment manager. The investment portfolio of EHI is directed by a separate ~~newly formed~~management-level EHI Investment Committee with a third-party investment manager. These parties, with oversight from our Board of Directors and our senior management team, are responsible for the execution of our investment strategy. Our investment portfolio is an important component of our consolidated financial results and represents our primary source of claims paying resources. Our investment portfolio primarily consists of a diverse mix of highly rated fixed income securities and is designed to achieve the following objectives:

•Meet policyholder obligations through maintenance of sufficient liquidity;

•Preserve capital;

•Generate investment income;

•Maximize statutory capital; and

•Increase shareholder value, among other objectives.

To achieve our portfolio objectives, our investment strategy focuses primarily on:

•Our business outlook, including current and expected future investment conditions;

•~~Investments~~Investment selection based on fundamental, research-driven strategies;

•Diversification across a mix of fixed income, low-volatility investments while actively pursuing strategies to enhance yield;

•Regular evaluation and optimization of our asset class mix;

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

•Regulatory capital requirements; and

•Restriction of investments correlated to the residential mortgage market.

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Fixed Maturity Securities Available-for-Sale

The following table presents the fair value of our fixed maturity securities available-for-sale as of the dates indicated:


		September 30, 2022				December 31, 2021					September 30, 2023				December 31, 2022
(Amounts in thousands)	(Amounts in thousands)	Fair value		% of total		Fair value		% of total		(Amounts in thousands)	Fair value		% of total		Fair value		% of total
U.S. government, agencies and government-sponsored enterprises		$	44,654	1	%	$	58,408	1	%
U.S. government, agencies and GSEs										U.S. government, agencies and GSEs	$	147,108	3	%	$	44,769	1	%
State and political subdivisions	State and political subdivisions	432,229		9		538,453		10		State and political subdivisions	407,538		8		419,856		9
Non-U.S. government	Non-U.S. government	9,252		—		22,416		—		Non-U.S. government	11,123		—		9,349		—
U.S. corporate	U.S. corporate	2,639,184		54		2,945,303		56		U.S. corporate	2,557,480		52		2,646,863		54
Non-U.S. corporate	Non-U.S. corporate	647,063		14		666,594		13		Non-U.S. corporate	655,284		13		652,844		13
Residential mortgage-backed	Residential mortgage-backed	11,743		—		—		—		Residential mortgage-backed	10,233		—		11,043		—
Other asset-backed	Other asset-backed	1,093,777		22		1,035,165		20		Other asset-backed	1,201,926		24		1,100,036		23
Total available-for-sale fixed maturity securities	Total available-for-sale fixed maturity securities	$	4,877,902	100	%	$	5,266,339	100	%	Total available-for-sale fixed maturity securities	$	4,990,692	100	%	$	4,884,760	100	%

Our investment portfolio did not include any direct residential real estate or whole mortgage loans as of September 30, ~~2022~~2023 or December 31, ~~2021.~~2022. We have no derivative financial instruments in our investment portfolio.

As of both September 30, ~~2022~~2023, and December 31, ~~2021,~~2022, 98% ~~and 97%~~ of our investment portfolio was rated investment ~~grade, respectively.~~grade. The following table presents the security ratings of our fixed maturity securities as of the dates indicated:


		September 30, 2022		December 31, 2021			September 30, 2023		December 31, 2022
AAA	AAA	10	%	9	%	AAA	11	%	10	%
AA	AA	16		17		AA	19		16
A	A	35		34		A	33		34
BBB	BBB	37		37		BBB	35		38
BB & below	BB & below	2		3		BB & below	2		2
Total	Total	100	%	100	%	Total	100	%	100	%

The table below presents the effective duration and investment yield on our investments available-for-sale, excluding cash and cash equivalents as of the dates indicated:


		September 30, 2022		December 31, 2021			September 30, 2023		December 31, 2022
Duration (in years)	Duration (in years)	3.7		3.9		Duration (in years)	3.5		3.6
Pre-tax yield (% of average investment portfolio assets)	Pre-tax yield (% of average investment portfolio assets)	3.0	%	2.7	%	Pre-tax yield (% of average investment portfolio assets)	3.5	%	3.1	%

We manage credit risk by analyzing issuers, transaction structures and any associated collateral. We also manage credit risk through country, industry, sector and issuer diversification and prudent asset allocation practices.

We primarily mitigate interest rate risk by employing a buy and hold investment philosophy that seeks to match fixed income maturities with expected liability cash flows in modestly adverse economic scenarios.

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Liquidity and Capital Resources

Cash Flows

The following table summarizes our consolidated cash flows for the periods indicated:


		Nine months ended September 30,					Nine months ended September 30,
(Amounts in thousands)	(Amounts in thousands)	2022		2021		(Amounts in thousands)	2023		2022
Net cash provided by (used in):	Net cash provided by (used in):					Net cash provided by (used in):
Operating activities	Operating activities	$	402,071	$	411,082	Operating activities	$	441,982	$	402,071
Investing activities	Investing activities	(246,528)		(412,294)		Investing activities	(133,983)		(246,528)
Financing activities	Financing activities	(45,596)		—		Financing activities	(143,784)		(45,596)

Net increase (decrease) in cash and cash equivalents		$	109,947	$	(1,212)
Net increase in cash and cash equivalents						Net increase in cash and cash equivalents	$	164,215	$	109,947

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 from operating activities ~~decreased~~increased largely due tohigher net investment income and lower ~~unearned premium declines from cancelled single premium policies.~~expenses. Cash flows from operations were also impacted by changes in reserves ~~timing of tax payments,~~and unearned premiums, net investment losses and stock-based compensation ~~expense and amortization of discounts and premiums on fixed maturity securities.~~expense.

Investing activities are primarily related to purchases, sales and maturities of our investment portfolio. Net cash used by investing activities ~~decreased~~increased as a result of ~~lower net~~ purchases of fixed maturity securities outpacing maturities and sales in the current year.

During the nine months ended September 30, 2023, our cash flows from financing activities included dividends paid of $74.1 million and share repurchases of $69.7 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, 2022, our cash flows from financing activities included dividends paid of $45.6 million. The amount and timing of future dividends is discussed within “—Trends and Conditions” as well as below. There were no dividends paid or other financing activity during the nine months ended September 30, 2021.

Capital Resources and Financing Activities

We issued our 2025 Senior Notes in 2020 with interest payable semi-annually in arrears on February 15 and August 15 of each year. The 2025 Senior Notes mature on August 15, 2025. We may redeem the 2025 Senior Notes, in whole or in part, at any time prior to February 15, 2025, at our option, by paying a make-whole premium, plus accrued and unpaid interest, if any. At any time on or after February 15, 2025, we may redeem the 2025 Senior Notes, in whole or in part, at our option, at 100% of the principal amount, plus accrued and unpaid interest. The 2025 Senior Notes contain customary events of default, which subject to certain notice and cure conditions, can result in the acceleration of the principal and accrued interest on the outstanding 2025 Senior Notes if we breach the terms of the indenture.

Pursuant to the GSE Restrictions, we were required to retain $300 million of the net proceeds from the 2025 Senior Notes offering that can be drawn down exclusively for our debt service or to contribute to EMICO to meet its regulatory capital needs including PMIERs. The current balance of the 2025 Senior Notes proceeds required to be held by our holding company is approximately $203 million. See “—Trends and Conditions” for additional information regarding the GSE Restrictions.

On June 30, 2022, we entered into a credit agreement with a syndicate of lenders that provides for a five-year, unsecured revolving credit facility (the “Facility”) in the initial aggregate principal amount of $200 million. We may use borrowings under the Facility for working capital needs and general corporate purposes, including the execution of dividends to our shareholders and capital contributions to our insurance subsidiaries. The Facility contains several covenants, including financial covenants relating to minimum net worth, capital and liquidity levels, maximum debt to capitalization level and ~~PMIERS~~

PMIERs compliance. We are in compliance with all covenants of the Facility and the Facility remained undrawn as of September 30, ~~2022.~~2023.

Restrictions on the Payment of Dividends

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 or distribution, 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, ~~EMICO has~~our insurance subsidiaries have the capacity to pay dividends from unassigned surplus of ~~$156~~$349 million as of September 30, ~~2022,~~2023, with ~~30 day~~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.

In addition, we review multiple other considerations in parallel to determine a prospective dividend strategy for our regulated insurance operating subsidiaries. Given the regulatory focus on the reasonableness of an insurer’s surplus in relation to its outstanding liabilities and the adequacy of its surplus relative to its financial needs for any dividend, our insurance subsidiaries consider the minimum amount of policyholder surplus after giving effect to any contemplated future dividends. Regulatory minimum policyholder surplus is not codified in North Carolina law and limitations may vary based on prevailing business conditions including, but not limited to, the prevailing and future macroeconomic conditions. We estimate regulators would require a minimum policyholder surplus of approximately $300 million to meet their threshold standard. Given (i) we are subject to statutory accounting requirements that establish a contingency reserve of at least 50% of net earned premiums annually for ten years, after which time it is released into policyholder surplus and (ii) that no material 10-year contingency reserve releases are scheduled before 2024, we expect modest growth in policyholder surplus through ~~2024.~~2024 before distributions. As a result, minimum policyholder surplus could be a limitation on the future dividends of our regulated operating subsidiaries.

Another consideration in the development of the dividend strategies for our regulated insurance operating subsidiaries is our expected level of compliance with PMIERs. Prior to the satisfaction of the GSE Conditions, the GSE Restrictions ~~also require~~required EMICO to maintain 120% of PMIERs Minimum Required Assets through ~~2022, and 125% thereafter.~~2022. In addition, under PMIERs, EMICO is subject to other operational and financial requirements that approved insurers must meet in order to remain eligible to insure loans purchased by the GSEs. Refer to “—Trends and Conditions” for recent updates related to these requirements.

Our regulated insurance operating subsidiaries are also subject to statutory “risk-to-capital” (“RTC”) requirements that affect the dividend strategies of our regulated operating subsidiaries. EMICO’s domiciliary regulator, the NCDOI, requires the maintenance of a statutory RTC ratio not to exceed 25:1. See “—Risk-to-Capital Ratio” for additional RTC trend analysis.

We consider potential future dividends compared to the prior year statutory net income in the evaluation of dividend strategies for our regulated operating subsidiaries. We also consider the dividend payout ratio, or the ratio of potential future dividends compared to the estimated U.S. GAAP net income, in the evaluation of our dividend strategies. In either case, we do not have prescribed target or maximum thresholds, but we do evaluate the reasonableness of a potential dividend relative to the actual or estimated income generated in the proceeding or preceding calendar year after giving consideration to

prevailing business conditions including, but not limited to the prevailing and future macroeconomic conditions. In addition, the dividend strategies of our regulated operating subsidiaries are made in consultation with our Parent.

In April ~~2022,~~2023, EMICO completed a distribution of approximately ~~$242~~$158 million ~~to EHI~~ that will primarily be used to support our ability to ~~pay a quarterly dividend. EMICO completed a similar distribution of $242 million~~return capital to ~~EHI subsequent to quarter end, in October 2022.~~shareholders and bolster financial flexibility. We intend to continue to use ~~these proceeds and~~ future EMICO distributions ~~to fund a quarterly dividend as well as to bolster our financial flexibility at EHI and return additional capital to shareholders.~~for these purposes.

The credit agreement entered into in connection with the Facility contains customary restrictions on EHI’s ability to pay cash dividends. Under the credit agreement, EHI is permitted to make cash distributions (1) so long as no Default or Event of Default (as each are defined in the credit agreement) has occurred and is continuing and EHI is in pro forma compliance with its financial covenants as described ~~in Note 7 to our unaudited condensed consolidated financial statements for the three months ended September 30, 2022 and 2021,~~below, at the time of and after giving effect to such payment, (2) within 60 days of declaration of any cash dividend so long as the payment was permitted under the credit agreement at the time of such declaration and (3) other customary exceptions as more fully set forth in the credit agreement.

The credit agreement requires EHI to maintain the following financial covenants: a minimum consolidated net worth equal to the sum of (i) 72.5% of EHI’s consolidated net worth as of June 30, 2022 (“the Closing Date”), (ii) 50% of EHI’s positive consolidated net income for each fiscal quarter after the Closing Date and (iii) 50% of any increase in EHI’s consolidated net worth after the Closing Date resulting from equity issuances or capital contributions; in respect of EMICO, a minimum total adjusted capital amount equal to 72.5% of EMICO’s total adjusted capital as of the Closing Date; a maximum debt-to-total capitalization ratio of 0.35 to 1.00; a minimum liquidity level of $25,000,000; and compliance with all applicable financial requirements under the Private Mortgage Insurer Eligibility Requirements published by the Federal Home Loan Mortgage Corporation and the Federal National Mortgage Association. For purposes of determining EHI’s compliance with the foregoing financial covenants, the consolidated net worth metric, total adjusted capital metric, debt-to-capitalization ratio and liquidity metric (including, in each case, any component thereof) are each calculated as set forth in the credit agreement.

In addition to the restrictions described above, all dividends from EHI are subject to Parent consent and EHI Board of Directors approval.

Risk-to-Capital Ratio

We compute our RTC ratio on a separate company statutory basis, as well as for our combined insurance operations. The RTC ratio is net RIF divided by policyholders’ surplus plus statutory contingency reserve. Our net RIF represents RIF, net of reinsurance ceded, and excludes risk on policies that are currently delinquent and for which loss reserves have been established. Statutory capital consists primarily of statutory policyholders’ surplus (which increases as a result of statutory net income and decreases as a result of statutory net loss and dividends paid), plus the statutory contingency reserve. The statutory contingency reserve is reported as a liability on the statutory balance sheet.

Certain states have insurance laws or regulations that require a mortgage insurer to maintain a minimum amount of statutory capital (including the statutory contingency reserve) relative to its level of RIF in order for the mortgage insurer to continue to write new business. While formulations of minimum capital vary in certain states, the most common measure applied allows for a maximum permitted RTC ratio of 25:1.

The following table presents the calculation of our RTC ratio for our combined insurance subsidiaries as of the dates indicated:


(Dollar amounts in millions)	(Dollar amounts in millions)	September 30, 2022		December 31, 2021		(Dollar amounts in millions)	September 30, 2023		December 31, 2022
Statutory policyholders’ surplus	Statutory policyholders’ surplus	$	1,348	$	1,397	Statutory policyholders’ surplus	$	1,134	$	1,136
Contingency reserves	Contingency reserves	3,424		3,042		Contingency reserves	3,923		3,551
Combined statutory capital	Combined statutory capital	$	4,772	$	4,439	Combined statutory capital	$	5,057	$	4,687
Adjusted RIF(1)	Adjusted RIF(1)	$	58,542	$	54,201	Adjusted RIF(1)	$	58,622	$	60,061
Combined risk-to-capital ratio	Combined risk-to-capital ratio	12.3		12.2		Combined risk-to-capital ratio	11.6		12.8

______________

(1)Adjusted RIF for purposes of calculating combined statutory RTC differs from RIF presented elsewhere ~~in this periodic report.~~herein. In accordance with NCDOI requirements, adjusted RIF excludes delinquent policies.

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The following table presents the calculation of our RTC ratio for our principal insurance company, EMICO, as of the dates indicated:


(Dollar amounts in millions)	(Dollar amounts in millions)	September 30, 2022		December 31, 2021		(Dollar amounts in millions)	September 30, 2023		December 31, 2022
Statutory policyholders’ surplus	Statutory policyholders’ surplus	$	1,296	$	1,346	Statutory policyholders’ surplus	$	1,076	$	1,084
Contingency reserves	Contingency reserves	3,422		3,041		Contingency reserves	3,917		3,548
EMICO statutory capital	EMICO statutory capital	$	4,718	$	4,387	EMICO statutory capital	$	4,993	$	4,632
Adjusted RIF(1)	Adjusted RIF(1)	$	58,233	$	54,033	Adjusted RIF(1)	$	58,150	$	59,663
EMICO risk-to-capital ratio	EMICO risk-to-capital ratio	12.3		12.3		EMICO risk-to-capital ratio	11.6		12.9

______________

(1)Adjusted RIF for purposes of calculating EMICO statutory RTC differs from RIF presented elsewhere herein. In accordance with NCDOI requirements, adjusted RIF excludes delinquent policies.

Liquidity

As of September 30, ~~2022,~~2023, we maintained liquidity in the form of cash and cash equivalents of ~~$536~~$678 million compared to ~~$426~~$514 million as of December 31, ~~2021,~~2022, 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. On August 21, 2020, we issued the 2025 Senior Notes. The GSE Restrictions required us to retain $300 million of the net 2025 Senior Notes proceeds that can be drawn down exclusively for our debt service or to contribute to EMICO to meet its regulatory capital needs including PMIERs, until the GSE Conditions are satisfied. See “—Trends and Conditions” for additional details. We distributed $437 million of the net proceeds to Genworth Holdings at the closing of the offering of our 2025 Senior Notes. The 2025 Senior Notes were issued to persons reasonably believed to be qualified institutional buyers in a private offering exempt from registration pursuant to Rule 144A under the Securities Act and to non-U.S. persons outside of the United States in compliance with Regulation S under the Securities Act. The current balance of the 2025 Senior Notes proceeds required to be held by our holding company is approximately $203 million.

Additionally, on June 30, 2022, we entered into a five-year, unsecured revolving credit facility with a syndicate of lenders in the initial aggregate principal amount of $200 million. The Facility may be used for working capital needs and general corporate purposes, including the execution of dividends to our shareholders and capital contributions to our insurance subsidiaries. The Facility remains undrawn as of September 30, ~~2022.~~2023.

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.~~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. To the extent the remaining balance of the $300 million of net proceeds retained from the 2025 Senior Notes offering is used to provide capital support to EMICO, the GSEs and the NCDOI may seek to prevent EMICO from returning that capital to EHI in the form of a dividend, distribution or an intercompany loan. We currently have no material financing commitments, such as lines of credit or guarantees, that are expected to affect our liquidity over the next five years, other than the 2025 Senior Notes and the Facility.

Financial Strength Ratings

The following EMICO financial strength ratings have been independently assigned by third-party rating organizations and represent our current ratings, which are subject to change.

Name of Agency

Rating

Outlook

Action

Date of Rating

Moody’s Investor Service, Inc.

~~Baa1~~A3

Stable

Upgrade

~~July 21, 2022~~March 1, 2023

Fitch Ratings, Inc.

~~BBB+~~A-

Stable

~~Affirmed~~Upgrade

April ~~27, 2022~~25, 2023

S&P Global Ratings

~~BBB~~BBB+

~~Positive~~Stable

~~Affirmed~~Upgrade

~~March 11, 2022~~February 16, 2023

A.M. Best

A-

Stable

Initial

August 1, 2023

On August 1, 2023, Enact Re, was independently assigned a rating of A- by third-party rating organization A.M. Best.

Contractual Obligations and Commitments

Our loss reserves ~~include~~have a high degree of estimation due to macroeconomic uncertainty along with delinquencies from borrower forbearance programs ~~due to COVID-19, which have~~and foreclosure delays as a ~~high degree~~result of ~~estimation.~~COVID-19. Therefore, it is possible we could have higher contractual obligations related to these loss reserves if they

do not cure or progress to claim as we expect. Other than changes in our aforementioned loss reserves, there have been no material additions or changes to our contractual obligations or other off-balance sheet arrangements as compared to the amounts disclosed within our audited consolidated financial statements for the years ended December 31, ~~2021~~2022 and ~~2020.~~2021.

Critical Accounting Estimates

As of the filing date of this report, there were no significant changes in our critical accounting estimates from those discussed in our Annual Report.

New Accounting Standards

Refer to Note 2 in our unaudited condensed consolidated financial statements for the ~~three and~~ nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, and in our audited consolidated financial statements for the years ended December 31, ~~2021~~2022 and ~~2020,~~2021, for a discussion of recently adopted and not yet adopted accounting standards.

6263

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We own and manage a large investment portfolio of various holdings, types and maturities. Investment income is one of our material sources of revenue and the investment portfolio represents the primary resource supporting operational and claim payments. The assets within the investment portfolio are exposed to the same factors that affect overall financial market performance. While our investment portfolio is exposed to factors affecting markets worldwide, it is most sensitive to fluctuations in the drivers of United States markets.

We manage market risk via our defined investment policy guidelines implemented by our investment managers with oversight from our Board of Directors and our senior management. Important drivers of our market risk exposure that we monitor and manage include but are not limited to:

•Changes to the level of interest rates. Increasing interest rates may reduce the value of certain fixed-rate bonds held in the investment portfolio. Higher rates may cause variable-rate assets to generate additional income. Decreasing rates will have the reverse impact. Significant changes in interest rates can also affect persistency and claim rates that may require that the investment portfolio be restructured to better align it with future liabilities and claim payments. Such restructuring may cause investments to be liquidated when market conditions are adverse.

•Changes to the term structure of interest rates. Rising or falling rates typically change by different amounts along the yield curve. These changes may have unforeseen impacts on the value of certain assets.

•Market volatility/changes in the real or perceived credit quality of investments. Deterioration in the quality of investments, identified through changes to our own or third-party (e.g., rating agency) assessments, will reduce the value and potentially the liquidity of investments.

•Concentration risk. If the investment portfolio is highly concentrated in one asset, or in multiple assets whose values are highly correlated, the value of the total portfolio may be greatly affected by the change in value of just one asset or a group of highly correlated assets.

•Prepayment risk. Bonds may have call provisions that permit debtors to repay prior to maturity when it is to their advantage. This typically occurs when rates fall below the interest rate of the debt.

Market risk is measured for all investment assets at the individual security level. Market risks that are not fully captured by the quantitative analysis and material market risk changes that occur from the last reporting period to the current are discussed within “—Trends and conditions” and “—Investment Portfolio” in “Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations”.

AtAs of September 30, ~~2022,~~2023, the effective duration of our investments available-for-sale was ~~3.7~~3.5 years, which means that an instantaneous parallel shift (movement up or down) in the yield curve of 100 basis points would result in a change of ~~3.7%~~3.5% in fair value of our investments available-for-sale.

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Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of September 30, ~~2022,~~2023, an evaluation was conducted under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as ~~amended (the “Exchange Act”))~~amended). Based on this evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that our disclosure controls and procedures were effective as of September 30, ~~2022.~~2023.

Changes in Internal Control Over Financial Reporting During the Quarter Ended September 30, ~~2022~~2023

There have been no changes in our internal control over financial reporting during the quarter ended September 30, ~~2022,~~2023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Part II. Other Information

Item 1. Legal Proceedings

We are not subject to any pending material legal proceedings.

Item 1A. Risk Factors

We have disclosed within Part I, Item 1A in our Annual Report ~~and Part II, Item 1A in our Quarterly Report on Form 10-Q for the period ended June 30, 2022~~ the risk factors that could have a material adverse effect on our business, results of operations and/or financial condition. There have been no material changes from the risk factors previously disclosed. You should carefully consider the risk factors set forth in the Annual Report ~~and the Quarterly Report on Form 10-Q for the period ended June 30, 2022,~~ and the other information set forth elsewhere in this Form 10-Q. These risk factors and other information may not describe every risk that we face. The occurrence of any additional risks and uncertainties that are currently immaterial or unknown could have a material adverse effect on our business, results of operations and/or financial condition.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

~~There were no sales~~Issuer Purchases of ~~unregistered equity securities~~Equity Securities

The table below sets forth information regarding repurchases of our common shares during the three months ended September 30, ~~2022.~~2023:


Period (Dollar amounts in thousands except per share amounts)	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet be Purchased under Plans or Programs (1)
July 1 - July 31, 2023	241,946	$	25.96	241,946	$	3,859
August 1 - August 31, 2023	0	$	—	0	$	103,859
September 1 - September 30, 2023	0	$	—	0	$	103,859
Total	241,946	$	25.96	241,946	$	103,859

(1) On November 1, 2022, the Company announced authorization to repurchase up to $75 million of its common shares. The authorization has no expiration date. In August 2023, we also announced a new share repurchase authorization which allows for the purchase of an additional $100 million of EHI common stock (also with no expiration date).

Subsequent to quarter end, the Company purchased 294,876 shares at an average price of $27.13 through October 31, 2023.

Item 5. Other Information

~~On November 1, 2022, EHI entered into a Share Repurchase Agreement (the “Agreement”) with Genworth Holdings, Inc. (“Genworth”). EHI’s Board~~Trading Plans

During the quarter ended September 30, 2023, no director or Section 16 officer adopted or terminated any “Rule 10b5-1 trading arrangements” or “non-Rule 10b5-1 trading arrangements” (in each case, as defined in Item 408(a) of Directors has authorized the Company to repurchase shares of Common Stock for a purchase price of up to $75.0 million. EHI intends to repurchase shares of its Common Stock from stockholders other than Genworth (“Market Repurchases”) from time to time and subject to market and other conditions. Pursuant to the Agreement, EHI will repurchase shares from Genworth on a pro rata basis to Market Repurchases. The share repurchase program is not expected to change Genworth’s ownership interest in Enact post completion. The foregoing description of the Agreement is only a summary and is qualified in its entirety by reference to the full text of the Agreement, which is filed as Exhibit 10.1 to this quarterly filing on Form 10-Q and incorporated by reference herein. The Agreement is filed with this quarterly report on Form 10-Q to provide security holders with information regarding its terms. It is not intended to provide any other factual information about Enact, or Genworth. The representations, warranties, and covenants contained in the Agreement were made solely for purposes of such agreement and as of specific dates, are solely for the benefit of the parties to the Agreement, and may be subject to limitations agreed upon by the parties. Security holders should not rely on the representations, warranties, and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of Enact, or Genworth. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Agreement, which subsequent information may or may not be fully reflected in Enact’s public disclosures, except to the extent required by law.

Regulation S-K).

6566

Item 6. Exhibits and Financial Statement Schedules


Exhibit Number						Description of Exhibit
~~3.1~~						~~Amended and Restated Bylaws of Enact Holdings, Inc. (incorporated by reference to Exhibit~~ ~~3.1~~ to th ~~e Company~~’~~s Current Report on Form~~ ~~8-K~~ ~~filed with the Securities and Exchange Co~~m ~~mission on August 15, 202~~2)





10.1						Share Repurchase Agreement, dated ~~November~~ August 1,~~, 2022,~~ 2023, by and between Enact Holdings, Inc. and Genworth Holdings, Inc. (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 4, 2023).
10.2*						Amended and Restated Master Agreement, dated August 29, 2023, between Genworth Financial and Enact Holdings, Inc.
~~31.1~~31.1*						Certification of Principal Executive Officer ~~(filed herewith)~~
~~31.2~~31.2*						Certification of Principal Financial Officer ~~(filed herewith)~~
~~32.1~~32.1**						Certification Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code — Principal Executive Officer ~~(filed herewith)~~
~~32.2~~32.2**						Certification Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code — Principal Financial Officer ~~(filed herewith)~~
101.INS						Inline XBRL Instance Document
101.SCH						Inline XBRL Taxonomy Extension Schema Document
101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document
104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

______________

+ Indicates management contract and compensatory plan

* Filed herewith

** Furnished herewith and not deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended

6667

SIGNATURES

Pursuant to the requirements of the Securities Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned duly authorized.

ENACT HOLDINGS, INC.

(Registrant)

Dated: November ~~3, 2022~~2, 2023


By:			/s/ Hardin Dean Mitchell
			Hardin Dean Mitchell
			Executive Vice President, Chief Financial Officer and Treasurer
			(Principal Financial Officer)


By:			/s/ James McMullen
			James McMullen
			Vice President, Controller and Principal Accounting Officer

6768


			Page
Part I. Financial Information			4
Item 1. Financial Statements			4
Condensed Consolidated Balance Sheets			4
Condensed Consolidated Statements of Income			5
Condensed Consolidated Statements of Comprehensive Income			6
Condensed Consolidated Statements of Changes Inin Equity			7
Condensed Consolidated Statements of Cash Flows			9
Notes to Condensed Consolidated Financial Statements			10
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			3133
Item 3. Quantitative and Qualitative Disclosures About Market Risk			6364
Item 4. Controls and Procedures			6465
Part II. Other Information			6566
Item 1. Legal Proceedings			6566
Item 1A. Risk Factors			6566
Item 2. Recent Sales of Unregistered Securities			6566
Item 5. Other Information			6566
Item 6. Exhibits			6667
Signatures			6768


	Nine months ended September 30, 2021
(Amounts in thousands)	Common stock		Additional paid-in capital		Accumulated other comprehensive income (loss)		Retained earnings		Total equity
Balances as of December 31, 2020	$	1,628	$	2,368,699	$	208,378	$	1,303,106	$	3,881,811
Cumulative effect of change in accounting, net of taxes	—		—		281		(281)		—
Comprehensive income (loss):
Net income	—		—		—		393,151		393,151
Other comprehensive loss, net of taxes	—		—		(74,704)		—		(74,704)

Stock-based compensation expense and exercises and other	—		221		—		—		221
Capital contributions from Genworth Financial, Inc.	—		902		—		—		902
Balances as of September 30, 2021	$	1,628	$	2,369,822	$	133,955	$	1,695,976	$	4,201,381


	Beginning balance as of January 1, 2022		Total realized and unrealized gains (losses)				Purchases		Settlements		Transfer into Level 3 (1)		Transfer out of Level 3 (1)			Ending balance as of September 30, 2022		Total gains (losses) attributable to assets still held
(Amounts in thousands)			Included in net income		Included in OCI										Included in net income			Included in OCI
Fixed maturity securities:
U.S. corporate	$	220,733	$	(42)	$	(39,462)	$	49,968	$	(850)	$	—	$	(13,410)		$	216,937	$	(42)	$	(38,970)
Non-U.S. corporate	83,664		(254)		(11,768)		21,009		(10,316)		—		(3,719)			78,616		(254)		(11,476)
Other asset-backed	24,223		—		(2,090)		22,820		—		—		(37,310)			7,643		—		(123)
Total	$	328,620	$	(296)	$	(53,320)	$	93,797	$	(11,166)	$	—	$	(54,439)		$	303,196	$	(296)	$	(50,569)

(Amounts in thousands)	Beginning balance as of January 1, 2021		Total realized and unrealized gains (losses)				Purchases		Settlements		Transfer into Level 3 (1)		Transfer out of Level 3 (1)			Ending balance as of September 30, 2021		Total gains (losses) attributable to assets still held
			Included in net income		Included in OCI										Included in net income			Included in OCI
Fixed maturity securities:
U.S. corporate	$	119,373	$	(92)	$	(3,750)	$	71,000	$	(8,914)	$	7,397	$	(7,327)		$	177,687	$	(92)	$	(4,029)
Non-U.S. corporate	95,751		868		3,147		42,786		(25,044)		3,010		(34,185)			86,333		(168)		(683)
Other asset-backed	13,781		—		(104)		10,000		(2,723)		—		(2,568)			18,386		—		(130)
Total	$	228,905	$	776	$	(707)	$	123,786	$	(36,681)	$	10,407	$	(44,080)		$	282,406	$	(260)	$	(4,842)