Essent Group Ltd. has benefited from a strong housing market that company leaders think is poised for continued growth because of demographics.
Driving the company's increase in net income has been growth in insurance in force, Chairman, President and CEO Mark Casale said during a conference call to discuss quarterly earnings.
Essent Group's financial results tend to reflect the housing industry, which is strong right now, Casale said. During the quarter, Essent Group saw growth in both origination and persistency, or the percentage of policies that do not lapse and are not replaced by new policies. Also, people in the millennial age group, particularly potential buyers in the mid-20s and older, are entering the house-buying years, Casale said.
"So you combine those three things, [and] I think that's really contributed to a little bit faster-than-expected growth within the portfolio," he said.
The millennial age group is particularly large between the ages of 25 and 27, and the average age of the first-time homebuyer is 32, Casale said. Further, builders have been increasing the supply of homes for first-time buyers that are priced in the low $200,000 range, the CEO said.
Essent Group has deployed capital to support higher-than-forecast growth and will continue as needed, Casale said, noting the expansion of the company's credit facility during the quarter.