ACT

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How ACT rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025

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We also offer mortgage and credit-related insurance and reinsurance through our other subsidiaries, including our wholly owned Bermuda-based subsidiary, Enact Re.
Our proprietary risk-based pricing model evaluates returns and volatility under multiple capital frameworks, which are sensitive to economic cycles and current housing market conditions.
The following table presents our NIW, number of cures and new delinquencies for primary policies, excluding our run-off business, for the periods indicated: Seasonality Three months ended (Dollar amounts in millions) Mar 31, 2024 Jun 30, 2024 Sep 30, 2024 Dec 31, 2024 Mar 31, 2025 Jun 30, 2025 Sep 30, 2025 Dec 31, 2025 NIW $10,526 $13,619 $13,591 $13,266 $9,818 $13,254 $14,048 $14,386 % Change 0.7% 29.4% (0.2)% (2.4)% (26.0)% 35.0% 6.0% 2.4% Cure Counts 12,160 10,731 10,749 10,971 13,263 11,574 11,467 11,883 % Change 17.9% (11.8)% 0.2% 2.1% 20.9% (12.7)% (0.9)% 3.6% New Delinquency Count 11,395 10,461 12,964 13,717 12,237 11,567 12,998 13,679 % Change (2.7)% (8.2)% 23.9% 5.8% (10.8)% (5.5)% 12.4% 5.2% NIW NIW occurs when a lender activates mortgage insurance coverage on a closed mortgage loan.
The following table presents the weighted average mortgage interest rate on outstanding primary IIF as of December 31, 2025, excluding our run-off business.
Policy Year Weighted average rate (1) 2008 and prior 5.36 % 2009-2017 4.02 % 2018 4.86 % 2019 4.24 % 2020 3.26 % 2021 3.12 % 2022 4.89 % 2023 6.59 % 2024 6.67 % 2025 6.57 % Total portfolio 5.21 % ______________ (1) Average Annual Mortgage Interest Rate weighted by IIF.
As of December 31, 2025 and 2024, single premium policies comprised 9% and 9% of primary IIF, respectively.
Credit Quality Improved analytics, stronger loan origination quality controls and regulatory developments have resulted in a significant improvement in the credit quality for loans originated in the private mortgage insurance market over time.
Incurred losses depend to a significant extent on the following factors: • deterioration of regional or national economic conditions leading to a reduction in borrowers’ income and thus their ability to make mortgage payments; • legislative, regulatory, FHFA or GSE action, or executive orders permitting or mandating forbearance or a moratorium on foreclosures or evictions due to events such as natural disasters or a pandemic; • a drop in housing values that could expose us to greater loss on resale of properties obtained through foreclosure proceedings and an adverse change in the effectiveness of loss mitigation actions that could result in an increase in the frequency of expected claim rates; • a drop in housing values that negatively impacts a borrower’s willingness to continue mortgage payments, potentially leading to higher delinquencies and ultimately claims; • if the foreclosure occurs in a state that imposes judicial process, which generally increases the amount of time it takes for a foreclosure to be completed, which impacts severity of the claim; • the credit characteristics in our in-force portfolio, as loans with higher risk characteristics generally result in more delinquencies and claims; • the size of loans we insure, as loans with relatively higher average loan amounts generally result in higher incurred losses; • the coverage percentage on insured loans, as loans with higher percentages of insurance coverage generally correlate with higher incurred losses; • the level and amount of reinsurance coverage maintained with third parties; and • the distribution of claims over the life of a book.
LAE include costs incurred in the claim settlement process such as legal fees and costs to record, process and adjust claims.
Loss reserves as of December 31, 2025, were $572 million, an increase of $48 million since December 31, 2024.
For example, based on our actual experience during the three-year period immediately preceding December 31, 2025, a change of 4 percentage points, or 15%, in the average claim rate would change the gross loss reserve amount for such quarter by approximately $79 million.
Likewise, a change of 3 percentage points, or a change of 3%, in the average severity rate would change the gross loss reserve amount for such quarter by approximately $16 million.
Investments Valuation of Fixed Maturity Securities Our portfolio of fixed maturity securities was valued at $6,051 million as of December 31, 2025, an increase of $426 million from December 31, 2024.
There is no recorded allowance for credit losses on available-for-sale securities as of December 31, 2025.
A portion of the revenue from single premium policies is recognized in premiums earned in the current period, and the remaining portion remains deferred as unearned premiums and earned over the estimated expiration of risk of the policy.
Unearned premiums were $92 million as of December 31, 2025, a decrease of $23 million compared to December 31, 2024.
For example, a decline in primary new insurance written of $1.0 billion would result in a reduction in earned premiums of approximately $3 million in the first full year.
Throughout 2025, the United States economy was subject to significant volatility and uncertainty, largely related to changing economic policies, including new and variable tariffs, continued inflationary pressure, the government shutdown and certain domestic and geopolitical tensions.
The ancillary effects of these factors on the domestic and global economies could materially impact the United States housing markets and our business.
The Bureau of Labor Statistics reported in December 2025 that Consumer Price Index (“CPI”) inflation was 2.7% year-over-year compared to 2.9% year-over-year in December 2024, while the unemployment rate has risen to 4.4% in December 2025 from 4.1% in December 2024.
Elevated inflation remains a challenge for the Federal Open Market Committee as it navigates heightened uncertainty.
The U.S. purchase mortgage originations remained relatively slow in response to elevated mortgage rates.
Over the past few years, housing affordability has deteriorated as elevated mortgage rates and home price appreciation outpaced median family income according to the National Association of Realtors Housing Affordability Index.
Affordability pressures eased slightly during the end of 2025 as mortgage rates began to decline and national house price growth has slowed according to the Federal Housing Finance Agency (“FHFA”) Monthly Purchase-Only House Price Index (Seasonally Adjusted).
In July 2025, the FHFA announced that it will implement the acceptance of VantageScore 4.0 for mortgages delivered to Fannie Mae and Freddie Mac.
The GSEs have not yet released implementation details and timelines, and the full impact of this initiative on our business, processes and financial results remains uncertain.
New insurance written of $51.5 billion in 2025 increased 1% compared to 2024.
Our primary persistency rate decreased to 82% during 2025 compared to 83% during 2024.
Persistency remains slightly elevated due to high interest rates but decreased in 2025 due to rate volatility throughout the year.
Elevated persistency and modest new insurance written growth has led to an increase in primary insurance in-force of $4.3 billion or 2% since December 31, 2024.
Net earned premiums increased marginally in 2025 compared to 2024 as higher average IIF and higher assumed premiums were mostly offset by higher ceded premiums and slightly lower average premium rates.
Our largest customer accounted for 12%, 11% and 10% of our total revenues for the years ended December 31, 2025, 2024 and 2023, respectively.
This customer also accounted for 22%, 20% and 19% of our total NIW during the years ended December 31, 2025, 2024 and 2023, respectively.
No other customer accounted for 10% or more of total revenues or NIW for the years ended December 31, 2025, 2024 or 2023.
Our loss ratio for the year ended December 31, 2025, was 11% as compared to 4% for the year ended December 31, 2024.
Both periods were impacted by favorable reserve adjustments due to strong cure performance and loss mitigation efforts.
In 2025, we recorded a net reserve release of $200 million.
A majority of the reserve adjustments related to prior period delinquencies but a portion of the release also related to 2025 delinquencies as we reduced the expected claim rates as a result of sustained favorable cure performance and our current market expectations.
In 2024, we recorded a reserve release of $252 million, primarily on prior accident year reserves.
New delinquencies in 2025 increased compared to 2024 primarily due to the normal loss development pattern on newer books.

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We also offer mortgage-related insurance and reinsurance through our wholly owned Bermuda-based subsidiary, Enact Re.
Our net premiums earned (i.e., materially, the gross premiums charged less premiums ceded as part of our CRT program) represent the largest source of our revenues.
Our proprietary risk-based pricing engine evaluates returns and volatility under both the PMIERs capital framework and our internal economic capital framework, which is sensitive to economic cycles and current housing market conditions.
The following table presents our NIW, number of cures and new delinquencies for primary policies, excluding our run-off insurance block with reference properties in Mexico, for the periods indicated: Seasonality Three months ended (Dollar amounts in millions) Mar 31, 2023 Jun 30, 2023 Sep 30, 2023 Dec 31, 2023 Mar 31, 2024 Jun 30, 2024 Sep 30, 2024 Dec 31, 2024 NIW $13,154 $15,083 $14,391 $10,453 $10,526 $13,619 $13,591 $13,266 % Change (13.1)% 14.7% (4.6)% (27.4)% 0.7% 29.4% (0.2)% (2.4)% Cure Counts 10,771 9,609 9,778 10,317 12,160 10,731 10,749 10,971 % Change 19.4% (10.8)% 1.8% 5.5% 17.9% (11.8)% 0.2% 2.1% New Delinquency Count 9,599 9,205 11,107 11,706 11,395 10,461 12,964 13,717 % Change (6.8)% (4.1)% 20.7% 5.4% (2.7)% (8.2)% 23.9% 5.8% NIW NIW occurs when a lender activates mortgage insurance coverage on a closed mortgage loan.
We believe that our platform, powered by our proprietary risk model and our understanding of mortgage risk volatility, provides us with a highly sophisticated pricing regime that improves our risk selection and is designed to yield attractive risk adjusted returns through credit cycles.
The following table presents the weighted average mortgage interest rate on outstanding primary IIF as of December 31, 2024, excluding our run-off business.
Policy Year Weighted average rate (1) 2008 and prior 5.33 % 2009-2016 4.00 % 2017 4.32 % 2018 4.83 % 2019 4.23 % 2020 3.26 % 2021 3.11 % 2022 4.88 % 2023 6.62 % 2024 6.70 % Total portfolio 4.88 % ______________ (1) Average Annual Mortgage Interest Rate weighted by IIF.
As of December 31, 2024 and 2023, single premium policies comprised 9% and 10% of primary IIF, respectively.
Credit Quality Improved analytics, stronger loan origination quality controls and the regulatory developments have resulted in a significant improvement in the credit quality for loans originated in the private mortgage insurance market over time.
Incurred losses depend to a significant extent on the following factors: • deterioration of regional or national economic conditions leading to a reduction in borrowers’ income and thus their ability to make mortgage payments; • legislative, regulatory, FHFA or GSE action, or executive orders permitting or mandating forbearance or a moratorium on foreclosures or evictions due to events such as natural disasters or a pandemic (e.g.
COVID-19); • a drop in housing values that could expose us to greater loss on resale of properties obtained through foreclosure proceedings and an adverse change in the effectiveness of loss mitigation actions that could result in an increase in the frequency of expected claim rates; • a drop in housing values that negatively impacts a borrower’s willingness to continue mortgage payments, potentially leading to higher delinquencies and ultimately claims; • if the foreclosure occurs in a state that imposes judicial process, which generally increases the amount of time it takes for a foreclosure to be completed, which impacts severity of the claim; • the credit characteristics in our in-force portfolio, as loans with higher risk characteristics generally result in more delinquencies and claims; • the size of loans we insure, as loans with relatively higher average loan amounts generally result in higher incurred losses; • the coverage percentage on insured loans, as loans with higher percentages of insurance coverage generally correlate with higher incurred losses; • the level and amount of reinsurance coverage maintained with third parties; and • the distribution of claims over the life of a book.
Loss reserves as of December 31, 2024, were $525 million, an increase of $7 million since December 31, 2023.
For example, based on our actual experience during the three-year period immediately preceding December 31, 2024, a change of 4 percentage points, or 15%, in the average claim rate would change the gross loss reserve amount for such quarter by approximately $72 million.
Likewise, a change of 3 percentage points, or a change of 3%, in the average severity rate would change the gross loss reserve amount for such quarter by approximately $15 million.
Investments Valuation of Fixed Maturity Securities Our portfolio of fixed maturity securities was valued at $5,625 million as of December 31, 2024, an increase of $359 million from December 31, 2023.
There is no recorded allowance for credit losses on available-for-sale securities as of December 31, 2024.
Unearned premiums were $115 million as of December 31, 2024, a decrease of $35 million compared to December 31, 2023.
For example, a decline in primary new insurance written of $1.0 billion would result in a reduction in earned premiums of approximately $4 million in the first full year.
During 2024, the United States economy continued to show positive signs, but faced lingering uncertainty due to inflationary pressure, the geopolitical environment and other macroeconomic concerns.
Inflationary pressures moderated in 2024, with the Bureau of Labor Statistics reporting in December that Consumer Price Index inflation was 2.9% year-over-year.
The Federal Reserve took an aggressive approach towards addressing inflation with policy rates reaching a cyclical peak in July 2023.
The Federal Open Market Committee began to lower policy rates in September 2024 with additional reductions in November and December 2024.
Mortgage rates remain elevated but have declined compared to highs in late 2023.
Mortgage origination activity increased modestly in 2024 but remained relatively slow in response to elevated mortgage rates and sustained low housing supply.
Over the past few years, housing affordability deteriorated as elevated mortgage rates and home price appreciation outpaced median family income according to the National Association of Realtors Housing Affordability Index.
National house prices continued to rise in 2024 according to the Federal Housing Finance Agency (“FHFA”) Monthly Purchase-Only House Price Index.
The unemployment rate was 4.1% as of December 31, 2024, compared to 3.7% in December 2023.
As of December 31, 2024, the number of unemployed Americans was approximately 6.9 million and the number of long term unemployed over 26 weeks was approximately 1.6 million.
Forbearance and loss mitigation programs.
Borrowers’ ability to utilize extended forbearance timelines permitted through the CARES Act and GSE COVID-19 servicing-related policies ended in 2023.
Borrowers that meet general hardship and program guidelines continue to have access to standard forbearance policies as a loss mitigation option.
Additionally, in March 2023, the GSEs announced new loss mitigation programs that allow six-month payment deferrals for borrowers facing financial hardship.
Although it is difficult to predict the future level of reported forbearance and how many of the policies in a forbearance plan that remain current on their monthly mortgage payment will go delinquent, servicer-reported forbearances have generally declined.
As of December 31, 2024, approximately 1.1%, or 10,943, of our active primary policies were reported in a forbearance plan, of which approximately 34% were reported as delinquent.
Approximately 9% of our primary new delinquencies in 2024 were subject to a forbearance plan as compared to 13% in 2023.
On October 24, 2022, the FHFA announced the validation and approval of both the FICO 10T credit score model and the VantageScore 4.0 credit score model for anticipated use by the GSEs as well as proposing to change the requirement that lenders provide credit reports from all three nationwide consumer reporting agencies and instead only requiring credit reports from two of the three nationwide credit reporting agencies.
The validation of the new credit scores is currently expected to require lenders to deliver both credit scores for each loan sold to the GSEs.
Implementation, which has been delayed beyond 2025, will require system and process updates along with coordination across stakeholders of the industry.
The updates also establish limits for assets backed by residential mortgages or commercial real estate to mitigate the impact if such assets lose value during periods of housing stress.
The ultimate impact of the PMIERs changes will be influenced by investment portfolio maturities, dispositions, reinvestments, and overall business and economic performance between today and the phase-in dates.

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Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2024 ↗, FY2025 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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