Before market open, Essent Group (NYSE:ESNT) posted its third-quarter earnings release, and investors were quick to react to it. Unfortunately for the insurer and its stock, they gave it a clear thumbs-down, and the shares dived by almost 8% across the trading day as a result.
Down about defaults
For the period, Essent’s total revenue rose by nearly 20% year over year to more than $374 million. That was on the back of a 25% improvement in net premiums written, to almost $303 million. However, the company’s foundational business didn’t look so impressive, as new mortgage insurance written dipped to $12.1 billion from $12.2 billion in the third quarter of 2025.
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Net income declined marginally to slightly over $163 million, or $1.82 per share. That meant a miss of $0.03 per share, as the consensus analyst forecast for the metric was $1.85. Revenue estimates weren’t immediately available.
Increased provisioning for losses and the expenses connected to them dinged profitability. Essent also saw a 40% increase in other underwriting and operating expenses. This wasn’t surprising, as the company’s mortgage default rate rose to 2.75% from the previous quarter’s 2.5%, and the under 2.3% of third quarter 2025.
The trend is not a friend
Mortgages matter for Essent stockholders, and I believe it’s the consistently climbing default rate that’s giving them serious pause. I feel they’re hungry to see some stabilization, at which point they’ll likely become more bullish on the company’s future.
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