Essent Group Ltd. (NYSE:ESNT) reported its Q3/22 results, with adjusted operating EPS of $1.66 vs. $1.56 in Q3/21. Results included a roughly $0.07 per share benefit from the other invested assets business. On an operating basis, earnings were $1.59, above the Street estimate of $1.51. The upside in the quarter was due to reserve releases and other income, which benefited from favorable marks on derivatives in its reinsurance agreements.
According to the analysts at RBC Capital, Q3 results reflect the company's disciplined underwriting approach and increasingly challenging macro conditions. Growth is slowing, and premium yields are a headwind to earnings, but excellent core margins and continued favorable development is driving strong ROEs, with rising NII a major tailwind.
The analysts lowered their price target on the company’s shares to $46 from $53, while reiterating their outperform rating.