Chris Curran - Senior Vice President, Investor Relations Mark Casale - Chairman of the Board, President, Chief Executive Officer Larry McAlee - Chief Financial Officer, Senior Vice President.

Bose George - KBW Mackenzie Kelly - Zelman Mackenzie Kelly - Zelman Eric Beardsley - Goldman Sachs Doug Harter - Credit Suisse Jack Micenko - Susquehanna Sean Dargan - Macquarie Rick Shane - JPMorgan Amy DeBone - Compass Point. Geoffrey Dunn - Dowling & Partners.

Good morning. My name is Susan, and I will be your conference operator today. At this time, I would like to welcome everyone to the Essent Group Limited Second Quarter 2015 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session.

[Operator Instructions] Thank you. Mr. Chris Curran, Senior Vice President of Investor Relations, you may begin your conference..

Thank you, operator. Good morning, everyone, and welcome to our call. Joining me today are Mark Casale, Chairman and CEO, and Larry McAlee, Chief Financial Officer.

Our press release, which contains Essent's financial results for the second quarter of 2015 was issued earlier today and is available on our website at essentgroup.com in the Investor section. Our press release also includes non-GAAP financial measures that may be discussed during today's call.

The complete description of these measures and the reconciliation to GAAP may be found in our press release in Exhibit L. Prior to getting started, I would like to remind participants that today's discussions are being recorded and will include the use of forward-looking statements.

These statements are based on current expectations, estimates, projections and assumptions that are subject to risks and uncertainties, which may cause actual results to differ materially.

For a discussion of these risks, please review the cautionary language regarding forward-looking statements in today's press release, the risk factors included in our Form 10-K filed with the SEC on February 27, 2015 and any other reports and registration statements filed with the SEC, which are also available on our website.

Now, let me turn the call over to Mark..

Thanks, Chris. Good morning everyone, and thank you for joining us. Earlier today, we reported our financial results of the second quarter of 2015. Essent’s strong results reflect our continued execution on building a high credit quality and profitable mortgage insurance portfolio.

Our outlook remains positive for our franchise and the MI sector and we continue to be pleased with the pace of the U.S. economic and housing recoveries. The Essent franchise and our market presence remains strong in our core MI business while in Bermuda we successfully participated in another Freddie Mac ACIS deal during the quarter.

EssentRe continues to be an opportunity to invest in U.S. mortgage risk and to better leverage our Bermuda-based holding company structure creating incremental value for our shareholders. Now, let me discuss our strong results.

For the second quarter, we earned net income of $37.2 million, representing a 90% increase from $19.6 million earned for the second quarter a year ago. On a per diluted share basis, we earned $0.41 for the quarter compared to $0.23 for the second quarter a year ago.

Our strong results were driven by our insurance in force, which increased 46% to $57.4 billion as of June 30 compared to $39.4 billion as of June 30, 2014. Growth in insurance in force increases the amount of premium earned and improves our operating leverage.

For the second quarter, earned premium was $78.4 million, a 56% increase compared to $50.3 million for the second quarter a year ago. Including operating expenses and our strong credit performance our combined ratio was 37.6%, for the second quarter, down from 48.9% for the second quarter a year ago.

During the first quarter, we generated $7.3 billion of NIW and grew our active customers to 1,045, representing a 22% increase compared to 860 active customers as of the second quarter a year ago. As a reminder, we define active customers as those which have delivered NIW to us during the last 12 months.

We continue to be pleased with the debt and breadth of our franchise, and our position in the marketplace. On the Bermuda front, we continue seeding 25% of Essent Guaranty GSE eligible NIW to EssentRe or also participating in the Freddie Mac 2015-4 ACIS transactions. As of June 30, 2015 EssentRe has total risk in force of $1.6 billion.

Turning our attention to Washington, the FHFA and GSEs issued their updated PMI requirements for lender paid MI which will be effective on perspective NIW beginning in 2016.Our initial assessment is that the new factories are consistent with our economic capital framework regarding the amount of capital required on the LPMI product.

We will continue to manage our business on a portfolio basis focussing on our all in premium yield and generating strong returns. Now, let me turn the call over to Larry..

Thanks Mark, and good morning, everyone. As Mark noted for the second quarter, we reported net income of $37.2 million or $0.41 per diluted share. This compares to $34.8 million or $0.38 per diluted share for the first quarter of 2015 and $19.6 million or $0.23 per diluted share for the second quarter a year ago.

Earned premium for the second quarter was $78.4 million compared to $75 million for the first quarter and $50.3 million for the second quarter of 2014. The average premium rate for the second quarter was 57 basis points compared to 58 basis points last quarter and 55 basis points for the full year 2014.

The provision for losses and loss adjustment expenses for the second quarter was $2.3 million compared to $2 million in the first quarter of 2015 and $966,000 in the second quarter a year ago. The provision for the quarter is in line with the number of defaults and ageing of our inventory.

The default rate as of June 30 was 23 basis points as compared to 21 basis points last quarter and 13 basis points as of the end of the second quarter of 2014. Our expense ratio for the second quarter was 34.6%, a decrease from 36.6% last quarter and 47% for the second quarter a year ago.

Other underwriting and operating expenses for the second quarter were $27.1 million compared to $27.5 million last quarter and $23.6 million for the second quarter a year ago. For the full-year, we continue to believe that other underwriting in operating expenses will be in the $110 million to $115 million range.

The consolidated balance of cash and investments at June 30, 2015, was $1.2 billion. The cash and investments balance at the holding company at June 30th, was $108 million as compared to $124 million at March 31st, 2015. The decrease during the second quarter was primarily due to a $20 million capital contribution to Essent Guaranty.

The combined statutory capital of the U.S. mortgage insurance companies was $860 million, reflecting an increase of $68 million compared to March 31, 2015. This increase was driven by statutory earnings during the quarter and the $20 million capital contribution from Essent Group. The combined risk to capital ratio of the U.S.

mortgage insurance business was 15.3:1 at the end of the quarter. Finally as of June 30, 2015, Essent Group's total consolidated GAAP equity was $1 billion. Also, as of June 30, EssentRe had GAAP equity of $162 million and total risk in force of $1.6 billion Now, let me turn the call back over to Mark..

Thanks, Larry. In closing, we had another strong quarter of operating performance and producing high-quality and growing earnings for our shareholders. The underlying drivers of this performance continue to be solid and we remain pleased with the returns of our business.

Our operating platform remained strong on all fronts and our team continues to deliver best-in-class service to our customers. Essent is well positioned within our industry and in housing finance and we remain optimistic about the future of our franchise. Now, let us turn the call over to your questions.

Operator?.

[Operator Instructions] Your first question comes from the line of Bose George of KBW. Your line is open..

Yes, good morning. First just a little house-keeping question on taxes.

Your tax rate bumped up a bit this quarter; just curious what drove that near, what’s the tax we should use for the year?.

Yes, hey Bose it’s Larry McAlee. In terms of our tax rate what we do is at the end of each quarter we estimate what our effective tax rate will be for the entire year and we apply that rate to our quarterly earnings.

As of the end of the first quarter our estimated tax rate for the full year was 31%, as we updated our forecast, we had an increase in the proportion of our U.S.

earnings versus our Bermuda earnings which resulted in our updated effective tax rate for the full year now being at 31.5%, so we made an adjustment in the second quarter which resulted in a 31.9% rate for the second quarter..

Okay. Perfect thanks. And then just going switching to the expectations for the insurance and new insurance written for the industry.

I think, Mark last quarter you said they had talked about I think a 175 to 185 and clearly we had a very strong quarter, just curious what your outlook is for the full year?.

Yes, hi Bose, good morning. Yes, I think given the strong NIW for the first half of the year I think our new range is it’s probably in that $190 billion to $200 billion market..

Okay. Great. Thanks and then just one from me. The Freddie Mac you guys did the ACIS deal again this quarter, can you just talk about opportunities on the Fannie Mae side [Indiscernible] deals is that an opportunity for you guys..

Yes, I think it’s definitely an opportunity I think both in EssentRe we engage with both Freddie Mac and Fannie Mae. We’ve participated more on the Freddie Mac side at this time, but I would also say Fannie Mae is an opportunity there..

Okay. Great, thanks..

Your next question comes from the line of Mackenzie Kelly of Zelman. Your line is open..

Thanks, good morning. First question, Mark I just wanted to get some additional color around the bulk product that you did this quarter. Were those new originations over those lines that have been held on balance sheet and just looking at the mix of credit score and LTV, it seems like it was fairly high quality and very skew towards the purchase side.

So just wanting to get some perspective on how that compares to typical single premium demand that you see and whether could be more a steady source of incremental volume going forward?.

Yes it’s a good question. It’s really the second type of deal we’ve done; we didn’t want that in the third quarter last year. It’s a little bit seasoned so it’s not new originations. It was one where it was on balance sheet and actually got moved to the GSEs.

So we underwrote it there, the single premium really its just – its more efficient from that standpoint, so it’s not really monthly versus singles like it is in the flow of business, just a more efficient way to move the loans over to the GSEs..

Got it.

And then just on the lender paid new PMIERs role, just can you give any insight of how you are thinking about addressing that in 2016 and maybe getting in front of those by maybe resetting customer expectations around what returns could be, just how you plan on moving forward there?.

Yes I ain’t going to approach LPMI you know we’ll obviously look at the pricing in the market, but our approach to LPMI is really not going to change.

As I said in the script, the capital required, it’s pretty consistent with how we evaluate it on an economic capital basis, that’s why we always have been pretty diligent really since the day we started around managing the mix.

We don’t control of how lenders sell the products, so I think we participate, you know as we said before we don’t lead with price.

So I think that’s you know others may do that, we have chosen not to and again I think that goes back to how we look at everything on an overall portfolio basis and you know I think we’ve been very successful as we manage the mix, but really looking at the all in portfolio and the yield on the portfolio and I think the returns there speak for themselves..

Okay. Got it, thanks..

Your next question comes from the line of Eric Beardsley of Goldman Sachs. Your line is open..

Hi, good morning.

Just curious I guess how far are you now from being I guess self sustainable on the capital front? I guess how much more would you have to push down over the rest of the year?.

Yes, I mean, I think in general Eric, we are relatively close to full scale on terms of it being self sustaining. Second half of the year is really going to depend on how much business we write.

We put some down in the first half of the year, we could put additional capital down in the second half of the year, but I think around Essent Guaranty we’re pretty close to being self sustaining any capital needs that we would have in the future outside of our forecast would really come from EssentRe, but I think in general you know I think Essent Guaranty we’re in pretty good shape..

Great.

And then just on the premium rate this quarter, I guess how much contribution did you have from accelerated amortization on singles from refi?.

A little less than in the first quarter, that’s really the drop in the rate, so I think that’s it’s’ obviously less re-financings in the second quarter, so that contributed to the drop..

Got it.

And then just lastly, I guess now we’ve had refi come in a bit, do you have any thoughts on where persistency could go in the back half of the year?.

I’m sorry, could you repeat the question..

I was wondering if you had any thoughts on where persistency could go on the back half of the year with refi’s coming down some..

Yes I mean it depends really, a little depends also on where rates are going to be in the second half of the year but I mean I think it’s going to be relatively consistent with where it was in the second quarter, we don’t see any dramatic changes..

Okay. Great. Thank you..

Your next question comes from the line of Doug Harter of Credit Suisse. Your line is open..

A capital question a little bit.

To the extent that you need or do you want additional capital, how would you think about the options of kind of debt equity reinsurance those kind of as your options for that capital?.

Yes I mean, hey Doug, its Mark. I think just like we said in the past, we will evaluate all of the options, debt, equity and also reinsurance we consistently look at all three. So I would say a lot of its going to be depending on what the market is at that time for those three options but we certainly would look at all three at the appropriate time..

Got it. And just on the reinsurance, I mean I guess just interested in your thoughts on kind of what the development and what AIG with their reinsurance bond deal that they did and just how you would think about that option..

Yes I mean again it’s something that we’ve reviewed. I think it’s positive for the business. Again it’s another capital source.

So if you think of debt and equities away for us to fund our business, reinsurance and especially the capital market is part of it is another source of capital which I think for a company growing company of our size, it’s always good to have multiple sources of capital over the long term. So I look at it as a positive..

Great. Thank you, Mark..

Your next question comes from the line of Jack Micenko of Susquehanna. Your line is open.

Hey good morning. A couple of questions initially on expenses.

Obviously guiding that the 110 to 115 for the year, but I guess that already contemplates the sort of higher NIW the sort of 190 to 200 as that some of that reflects up and down on volume, but and then the second question being insurance and force, how much insurance and force do you think that the 110 to 115 kind of expense level can support as you look out beyond 2015 into 2016 and 2017..

Yes. Again, it’s still early for 2016, 2017 for us to be giving expense guidance. I think you know our view is we’re pretty much at full scale in terms of handling insurance in force, the system is very efficient in terms of that.

So, in terms of people, really we’ve been adding over the course of this year what could be for underwriting, it’s a percentage of non-delegated switches. We’ve added some on the BD [ph] side.

But I think from an expense standpoint, we’re relatively at full scale and could handle much larger insurance in force given where we are, but again we’ll look to invest around opportunities, people when we think it can help the franchise. And Jack we’ve always look at this from a long term basis and that’s how we manage the business.

So I think we’re – I think our nominal expense number is very good relative to others in the industry. It’s a big focus. The best managed risk companies are usually the best cost managers still and I think we’re focus on that. One of the things we can control in the business, but certainly we’ll look to invest to when it make sense..

Is it safe to assume a continued glide path of operating leverage there as we’ve seen over the last four or five quarters?.

You’ve seen the numbers and I would expect to have the leverage to continue to work on the expense side, no doubt..

Okay, great.

And then on the reinsurance side, you know $5.5 million of risk this quarter, that’s a step down from prior, is that just volume driven or are there any – I think there are some fair value fluctuation there just kind of talking through I think that number had being closer to the 20s in the last couple of quarters?.

The fair value had to do with the earnings related to it. The volume really has to do with just participants in the market and how much Freddie would award on any one deal to participants.

I wouldn’t -- again, as we said we’re very optimistic or cautiously optimistic around EssentRe any opportunities, but that’s going to fluctuate quarter-to-quarter just like it does, NIW does in the U.S..

Okay.

So that’s more of an allocation at the GSE, is not appetite for you guys?.

Correct..

Okay. Great. Thank you..

Your next question comes from the line of Sean Dargan of Macquarie. Your line is open..

Thanks. Good morning. Mark, given Genworth’s [ph] recent troubles and their decision not to take certain capital actions. They claim because they wanted to protect their MI financial strength ratings.

I just found that interesting because the couple of competitors has been running with low investment grade financial strength ratings for some time, do you think even your strong financial strength ratings will become more of a selling point going forward?.

Sean, it tough to tell, I think our view is we’ve always held ratings in high regard and that’s one of the reasons we’ve sought to get the ratings and make sure we manage the business to maintain the ratings. On the GSE side, it’s obviously a little bit less important.

We think it’s much more important when banks keep loans on balance sheet and look to use MI partners, so we believe that’s an advantage there. And longer-term we just think well run insurance companies have high ratings and I think that’s how we’ve – that’s our approach to the business.

I can’t comment on Genworth [ph] it’s really just around how we manage the business..

Got it. Thanks. Your loss ratio as you’re saying persistently below or stubbornly low.

Are you changing – have you change it all your internal assumptions around loss ratios over the next two, three years?.

No, we’re still – I think we’re -- like as we said before it’s still relatively early in the game for us. Our book is 15-month seasons.

Very pleased with the underwriting quality we’re seeing from a lender partners and they’ve done a fantastic job and I think the backdrop of kind of approving economy and housing, kind of makes us feel good, but its too early for us to adjust any estimate at this point..

Great. Thank you..

Your next question comes from the line Rick Shane of JPMorgan. Your line is open..

Thanks for taking my questions. One of the things we’ve observed is that the actual losses continue to come in a little bit lower than we expect and the cure rates seem to be higher.

Do you guys -- do we see that – should we see that as a cyclical issue, should we see it as growth issue or do you think that just overall credit is going to be better over the next three to four years?.

Again, hey, Rick, it’s Mark. I think we can just comment on what we’ve seen to-date and it’s really been since inception, so we’ve pretty good look on how the files have come in and the underwriting quality, I think bodes well forward. I think we said this many times.

Two significant mitigants that help us in terms of quality, one QAM [ph], which I think the lenders have all done a great job in managing. And also, Freddie and Fannie really done a nice job, I mean, they look at the loans. So I think it’s bodes well. I think the quality of the originations that we’ve seen is probably the best.

It’s a good time for that and we continue to be pleased with what we’re seeing on the front end..

Hey, Mark, can probably in some way could have asked question in a slightly better way which is that, okay, let’s acknowledge that we’re little bit surprised by how well credits coming in or it’s better than our modeled expectations.

Would you say from your seat you’re seeing the same thing or do you expected it to be about this good?.

Again it’s early, so it’s tough to call it, but I think to-date, I can only comment on what we’re seeing in the underlying quality and then using what we’re seeing on the claim side.

So even loans that are going to claim or job loss, divorce or death really kind of the way it was in terms of pure claim, and I think that is a positive – I think that is definitely a positive trend. It always gets back to the quality of underwriting.

And what we’ve seen in the five years we’ve been in the businesses the underwriting qualities has been excellent. And the fact that that’s getting reflected in the returns, that’s obviously not a surprise, it just too early for us to pin a number on it..

Got it. Thank you..

Your next question comes from line of Amy DeBone of Compass Point. Your line is open..

Hi. Thanks for taking my questions.

Most of them are actually already been answered, but is there any update on the FHFA, PMIER coverage pilot program you talked about a few months ago?.

I don’t have any specific update on that program. Just in terms of GSE we’re sharing in general, I think our view is the trend is very positive.

I mean it continues, if you look at the scorecards, the amount of the risk that the GSEs are sharing over the last few years continues to increase and in multiple forms both obviously through the backend with the capital markets they’ve done it through the Bermuda companies. They’ve done it some with the U.S. MI.

So again, I think the trend is very positive for private capital which MI is part of. And I think Essent is relatively well positioned, I mean, we’ve been able to take risk share both at our Bermuda subsidiary and we’ve been able to do with through Essent guarantee. So again, trend overall is positive. The form, again it will take many forms..

Okay. And is there were there deeper PMI [ph] include in the next GSE’s scorecard.

How long do you think it would take you to get ready or get prepared to offer deeper coverage, would that be something that would be a factor?.

It’s speculative at this point until we see the exact form of it and what it would take, it’s hard for us to comment.

Again, I wouldn’t – my guidance for you is don’t get too caught up in the form and then just look, take a step back and look at the overall amount continues to increase and I think that’s the real takeaway and that’s the real positive for the industry..

Okay. Thank you..

Your next question comes from the line Christy [Indiscernible], Autonomous. Your line is open..

Good morning, guys.

On the capital front do you have estimate of how much more insurance in force you could add with your before meeting external capital through some other revenue?.

No. I wouldn’t look just at our hold company cash and say and try to figure out how much NIW we could rate. I mean, I think you have to remember how much cash and earnings we’re generating within Essent guarantee which obviously is a strong form of capital.

Our view cut to the chase, Chris is we think our holding company cash really is very strong right now and we think the level -- I think we’re very comfortable for the next 12 months. That’s probably a better way to look at it..

Perfect.

And then on can you give us a sense of what percentage of NIW was LTMI you mentioned that it was – the new roles are consistent with how you evaluate it, but this quarter only single, obviously that cut our old PMI so I’m just trying to get a sense of kind of where you are in mix or participation level?.

Yes. We don’t – it’s not a number we disclosed but I think it’s probably LPMI is really kind of on just some of the flow stuff we do is actually relatively small amount..

Okay.

So is it fair to take that as the singles are much more typical flow refinance related?.

Correct. Its obviously more bend towards the refinance product..

Thank you very much. The rest of my questions have been answered..

You’re welcome..

Your next question comes from the line of Geoffrey Dunn of Dowling & Partners. Your line is open..

Thanks. Good morning. Larry, I actually had accounting question for you. Arch was indicating I think that the ACE’s deals were going to shift from derivative to insurance accounting. But it seems unclear if that’s going to be on the retroactive basis just going forward.

Can you add a little bit more color to that and what it means for modeling?.

Yes.

We’ve heard similar things but we’ve not had anything confirm yet Geoff in terms of that, so to the extent that we confirm that then we’ll evaluate the options in terms of what the terms would be to switch from the derivative accounting to insurance accounting and what’s through the driving it is there is a formula D180 in the current contracts that were acquire derivative accounting if they were move towards actual loss that would allow the insurers to apply insurance accounting, but we’ll evaluate that once we get some more specifics from Aon..

And what’s the latest deal you did actually loss. I know it was [Indiscernible] shift to deal went that way.

Yes. Geoff, great question. That’s correct. The last deal that closed this quarter was actual loss and we will apply insurance accounting to that..

Okay. Great. All right. Thank you..

This concludes today’s question and answer session. I now turn the call back over to the presenters for their closing remarks..

Thank you, operator. We’d like to thank everyone for participating in today's call and enjoy your weekend.

This concludes today's conference call. You may now disconnect..