Essent Group Ltd. (NYSE:ESNT) Q3 2023 Earnings Call Transcript

Eric Hagen : Okay. Great. There’s always kind of 2 dimensions of risk to think about, right? There’s the borrower risk and then there’s the asset level risk. Like which 1 would you say your may be more sensitive to right now and whether you think — like how you adjust for that and how it factors into the risk-adjusted return that you think you’re picking up right now?

Mark Casale : I think it’s a good — it’s a really good question. I think on the portfolio, it’s clearly around the asset risk, right? It’s already you’ve already underwritten the mortgage home prices can fluctuate, borrowers could not pay and then you have severity issues. So I think we’re more focused because you can’t control that. So I think we’re more focused there on the asset risk. We feel pretty good with that, Mike, because we have 75% mark-to-market, we have a lot of embedded HPA. And clearly, we talked about the persistency angle helping us. And I think also — so for new originations, clearly, right? I mean it’s going to be higher DTI’s obvious with 7%, 8% mortgages. So you’re much more focused. You’re not going to have and certainly not going to have that HPA growth. It’s going to be, in our view, probably more flattish over the next 3 to 4 years. So I think it’s a little bit more on the borrower risk on that side.

Operator: I will now turn the call back over to management for closing remarks.

Mark Casale : I’d like everyone to thanks. Thanks, everyone, for joining us, and have a great day. .

Operator: Ladies and gentlemen, that concludes today’s call. Thank you all for joining. You may now disconnect.