AM Best Affirms Enact Holdings Ratings

AM Best has confirmed the Financial Strength Rating (FSR) of A- (Excellent) and the Long-Term Issuer Credit Ratings (ICR) of “a-” (Excellent) for Enact Holdings, Inc. (EHI) and its subsidiaries, Enact Mortgage Insurance Corporation (EMIC) and Enact Mortgage Insurance Corporation of North Carolina (EMIC-NC). This affirmation reflects the companies' robust balance sheet strength, supported by strong risk-adjusted capitalization and effective reinsurance strategies, alongside compliance with PMIERs. Despite the strong ratings, AM Best notes potential risks stemming from the credit profile of Genworth Financial, Inc. (GFI), the ultimate parent company of Enact. While there is a significant separation between GFI's credit profile and that of EHI, the legacy mortgage insurance book from 2008 and earlier still poses challenges. The assessment highlights improvements in governance and a reduced impact from older insurance policies. The business profile of the Enact US-domiciled companies is characterized as limited, primarily due to their focus on U.S. single-family mortgage insurance. The inherent product risk is elevated, as the performance of the mortgage insurance sector is closely tied to macroeconomic conditions and government-sponsored enterprise (GSE) policies. Additionally, AM Best has evaluated Enact Re Ltd. (ERL), which assumes mortgage insurance risk from EMIC. ERL's balance sheet strength is also rated as very strong, benefiting from its quota share agreement with EMIC, which enhances capital flexibility and allows for exposure to diverse risks not covered by the Enact US-domiciled companies.