Enact Holdings Inc (NASDAQ:ACT) closed its 2025 fiscal year with a fourth-quarter earnings report that presented a mixed financial picture, characterized by a slight revenue miss but a solid bottom-line beat, against a backdrop of disciplined capital management and a robust insurance portfolio.
The private mortgage insurer reported quarterly revenue of $312.7 million, a 1.2% increase compared to the fourth quarter of 2024. This figure came in just below Wall Street's expectations, which were set at approximately $320 million. Conversely, the company's profitability metrics were stronger than anticipated. Enact posted an adjusted operating income of $179 million, or $1.23 per diluted share. This non-GAAP earnings per share (EPS) result surpassed the analyst consensus estimate of $1.10 by approximately 11.9%.
Market Reaction and Recent Performance
The immediate market reaction to the earnings release appears measured. Following the announcement, the stock's after-market performance showed negligible movement. Over the past month, the share price has been essentially flat, suggesting investors had largely priced in the company's steady performance or are weighing the revenue shortfall against the earnings strength and capital return initiatives. The stock has seen modest gains over the past two weeks and one week, potentially reflecting broader market trends or anticipation ahead of the report.
Key Financial and Operational Highlights
Beyond the headline revenue and EPS figures, Enact's fourth-quarter results underscored several pillars of its business model: underwriting discipline, strong capital generation, and a consistent return of capital to shareholders.
- Resilient Underlying Metrics: The company's primary insurance in-force grew 2% year-over-year to $273 billion. New insurance written (NIW) was $14 billion, up 8% from the prior-year quarter.
- Favorable Credit Trends: A significant driver of the quarterly profit was a continued benign credit environment. Losses incurred were $18 million, resulting in a low loss ratio of 7%. This was primarily due to a $60 million net reserve release, reflecting better-than-expected cure rates on delinquent loans and a reduction in the company's forward-looking claim rate expectations.
- Strong Capital Position: Enact's PMIERs (Private Mortgage Insurer Eligibility Requirements) sufficiency ratio remained strong at 162%, or $1.9 billion above minimum requirements. Book value per share increased to $37.66.
- Aggressive Capital Return: A focal point of the report was the company's commitment to returning capital. For the full year 2025, Enact returned over $500 million to shareholders through a combination of dividends and share repurchases. Concurrent with the earnings, the Board of Directors approved a new $500 million share repurchase authorization and declared a quarterly dividend of $0.21 per share.
Forward-Looking Commentary and Estimates
In its release, CEO Rohit Gupta acknowledged ongoing "affordability pressures and interest rate volatility" but expressed confidence in the company's strategic position. While the press release did not provide specific quantitative financial guidance, the announced capital return program signals management's confidence in sustained cash generation.
Analyst estimates for the coming periods provide a benchmark for future performance. For the first quarter of 2026, the consensus is for revenue of approximately $321.9 million and EPS of $1.16. For the full 2026 year, analysts are projecting sales of around $1.30 billion and earnings per share of $4.69.
Conclusion
Enact's fourth-quarter earnings depict a company executing effectively within its controlled environment. The minor revenue miss may give some investors pause, but it is overshadowed by a substantial earnings beat driven by exceptional credit performance and prudent reserve management. The market's muted reaction likely balances these factors. More significantly, the company's robust capital position and enhanced shareholder return program, including the new $500 million buyback, underscore a management team focused on delivering value. The key question for investors will be whether the current favorable loss trends are sustainable in a more normalized housing market or if the elevated reserve releases represent a peak in earnings quality.
For a detailed look at Enact's historical earnings, future estimates, and analyst projections, you can review the data here.
Disclaimer: This article is for informational purposes only and does not constitute financial advice, a recommendation, or an offer to buy or sell any security. Investing carries risks, including the potential loss of principal.
