Mortgage reinsurer Essent Group Ltd posted a $128.5 million profit in the fourth quarter of last year.
The Bermudian-based company’s results were boosted by the release of most of the reserves it had set aside to cover potential loan defaults in connection with hurricanes Harvey and Irma in 2017.
Net income for the quarter broke down $1.31 per share. For the full year, Essent reported net income of $467.4 million or $4.77 per share.
The provision for losses and loss adjustment expenses for the fourth quarter was a benefit of $1 million, compared to a provision of $5.5 million in the third quarter of 2018 and a provision of $17.5 million in the fourth quarter of 2017.
“The provision in the fourth quarter of 2018 included a $9.9 million release of the $11.1 million reserve associated with loans identified as related to Hurricanes Harvey and Irma that was established in the fourth quarter of 2017,” Essent said in a statement on Friday.
Mark Casale, Essent’s chairman and chief executive officer, said: “We are pleased with our strong fourth-quarter and full-year 2018 results as we continued growing our high credit quality and profitable mortgage insurance portfolio.
“Also during 2018, we successfully piloted our risk-based pricing engine, EssentEDGETM, and executed in the reinsurance markets. We believe that increased sophistication in the front end and back end of our business positions us well to shape our insured portfolio and profitably manage the long-tail mortgage credit risk.”
The percentage of loans in default as of December 31, 2018 was 0.66 per cent, compared to 0.61 per cent three months earlier and 0.96 per cent at the end of 2017.
Essent said its combined ratio — the proportion of premium dollars spent on claims and expenses — for the fourth quarter was 22.2 per cent, compared to 25.4 per cent in the third quarter of 2018 and 36.4 per cent in the fourth quarter of 2017.
The consolidated balance of cash and investments at the end of 2018 was $2.9 billion.