Enact Mortgage Insurance Enters into Two Forward XOL Reinsurance Transactions as Part of its Diversified Credit Risk Transfer Program

Rhea-AI Summary

Enact Holdings (Nasdaq: ACT) has secured two significant excess of loss (XOL) reinsurance transactions through its subsidiary Enact Mortgage Insurance The company obtained approximately $225 million and $260 million in reinsurance coverage from highly-rated reinsurance providers.

The coverage applies to expected new insurance written for the 2025 book year (January 1 - December 31, 2025) and 2026 book year (January 1 - December 31, 2026), effective from their respective start dates. All participating reinsurers maintain strong credit ratings of 'A-' or better from S&P or A.M. Best, or 'A3' or better from Moody's.

These credit risk transfer (CRT) transactions demonstrate Enact's commitment to proactive credit risk management and financial strength enhancement.

Positive

• Secured $485 million total in new reinsurance coverage
• Coverage spans two years of new insurance written (2025-2026)
• All reinsurance providers maintain strong credit ratings
• Strengthens company's financial position through risk transfer

Negative

• None.

Insights

Financial Risk Management Expert

The announcement of $485 million in combined excess of loss reinsurance coverage represents a significant strategic enhancement to Enact's risk management framework. The dual-transaction structure, with $225 million for 2025 and $260 million for 2026, demonstrates sophisticated forward planning in a volatile mortgage market environment.

The timing of these transactions is particularly strategic, as they're secured ahead of potential market volatility and rising interest rate concerns. The selection of highly-rated reinsurance partners (A- or better) significantly reduces counterparty risk and strengthens the company's financial resilience.

These XOL arrangements effectively create a risk-sharing mechanism that protects Enact's balance sheet from unexpected losses beyond a certain threshold. This is especially important given the current housing market dynamics and economic uncertainties. The forward-looking nature of these transactions provides clear visibility into risk management costs through 2026, enabling more accurate financial planning and potentially more competitive pricing strategies.

The transaction structure indicates strong market confidence in Enact's underwriting capabilities and risk management approach. By securing coverage for future book years, Enact has effectively locked in protection at current market rates, potentially avoiding higher costs if market conditions deteriorate. This proactive approach to risk management should positively impact the company's regulatory capital position and could enhance its competitive positioning in the private mortgage insurance market.

Secures approximately $225 million and $260 million of excess of loss reinsurance coverage from a panel of third-party reinsurance providers

RALEIGH, N.C., Jan. 27, 2025 (GLOBE NEWSWIRE) -- Enact Holdings, Inc. (Nasdaq: ACT) (Enact), a leading provider of private mortgage insurance through its insurance subsidiaries, today announced that its flagship legal entity, Enact Mortgage Insurance Corporation, has secured approximately $225 million and $260 million of additional excess of loss (XOL) reinsurance coverage. These credit risk transfer (CRT) transactions cover a portion of expected new insurance written for the 2025 book year (policies written from January 1, 2025 through December 31, 2025) and 2026 book year (policies written from January 1, 2026 through December 31, 2026) respectively, and are effective January 1, 2025 and January 1, 2026. Reinsurance coverage for both transactions are provided by a panel of reinsurers each currently rated “A-” or better by Standard & Poor’s (“S&P”) or A.M. Best Company, Inc., or rated “A3” or better by Moody’s.

“Today’s announcement reflects our on-going commitment to proactively manage credit risk and strengthen our financial position,” said Rohit Gupta, President and CEO of Enact. “Looking ahead, we remain committed to continuing to successfully execute on our CRT strategy while helping people responsibly achieve the dream of homeownership.”

Safe Harbor Statement
This communication contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may address, among other things, our expected financial and operational results, the related assumptions underlying our expected results, guidance concerning the future return of capital and the quotations of management. These forward-looking statements are distinguished by use of words such as “will,” “may,” “would,” “anticipate,” “expect,” “believe,” “designed,” “plan,” “predict,” “project,” “target,” “could,” “should,” 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 press release. Factors or events that we cannot predict, including risks related to an economic downturn or a recession in the United States and in other countries around the world; changes in political, business, regulatory, and economic conditions; changes in or to Fannie Mae and Freddie Mac (the “GSEs”), whether through Federal legislation, restructurings or a shift in business practices; failure to continue to meet the mortgage insurer eligibility requirements of the GSEs; competition for customers; lenders or investors seeking alternatives to private mortgage insurance; an increase in the number of loans insured through Federal government mortgage insurance programs, including those offered by the Federal Housing Administration; and other factors described in the risk factors contained in our most recent Annual Report on Form 10-K and other filings with the SEC, may cause our actual results to differ from those expressed in forward-looking statements. Although Enact believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, Enact 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.

About Enact Holdings, Inc.
Enact (Nasdaq: ACT), operating principally through its wholly-owned subsidiary Enact Mortgage Insurance Corporation since 1981, is a leading U.S. private mortgage insurance provider committed to helping more people achieve the dream of homeownership. Building on a deep understanding of lenders' businesses and a legacy of financial strength, we partner with lenders to bring best-in class service, leading underwriting expertise, and extensive risk and capital management to the mortgage process, helping to put more people in homes and keep them there. By empowering customers and their borrowers, Enact seeks to positively impact the lives of those in the communities in which it serves in a sustainable way. Enact is headquartered in Raleigh, North Carolina.

This press release was published by a CLEAR® Verified individual.

FAQ

How much reinsurance coverage did Enact Holdings (ACT) secure in its latest XOL transactions?

Enact Holdings secured approximately $225 million and $260 million in excess of loss reinsurance coverage, totaling $485 million.

What time periods do Enact's (ACT) new reinsurance transactions cover?

The reinsurance transactions cover new insurance written for the 2025 book year (January 1 - December 31, 2025) and 2026 book year (January 1 - December 31, 2026).

What are the credit ratings of reinsurers in Enact's (ACT) 2025-2026 XOL transactions?

All participating reinsurers are rated 'A-' or better by S&P or A.M. Best, or 'A3' or better by Moody's.

When do Enact's (ACT) new reinsurance coverages become effective?

The reinsurance coverages become effective January 1, 2025 and January 1, 2026 respectively.