Enact Holdings (ACT) risk factors, FY2024 10-K

Other

1. 01In furtherance of Fannie Mae and Freddie Mac’s respective charter requirements, each GSE adopted PMIERs effective December 31, 2015. PMIERs has since been amended on several occasions
2. 02condition. It is possible the GSEs could, at their discretion, require additional limitations and/or conditions on our activities and practices that are not currently in PMIERs for us to remain an approved insurer
3. 03A deterioration in economic conditions, a severe recession or a decline in home prices may adversely affect our loss experience
4. 04missed payment. We also establish incurred but not reported (“IBNR”) reserves for estimated losses incurred on loans in default that have not yet been reported to us by servicers
5. 05If the models used in our business are inaccurate or there are differences and/or variability in loss development compared to our model estimates and actuarial assumptions, it could have a material adverse effect on our business, results of operations and financial condition
6. 06and could lead us to make wrong or sub-optimal decisions in aspects of our business, which could have a material adverse effect on our business, results of operations and financial condition
7. 07The United States private mortgage insurance industry is highly competitive. We believe the principal competitive factors in the sale of our products are price, reputation, customer relationships, financial strength ratings and service
8. 08Changes to the charters or practices of the GSEs, including actions or decisions to decrease or discontinue the use of mortgage insurance, could adversely affect our business, results of operations and financial condition
9. 09On January 2, 2025, the FHFA and Treasury agreed to again amend the PSPAs between the Treasury and each of the GSEs to establish a methodical process for eventual public input on the termination of conservatorship to minimize disruption to the housing and financial markets
10. 10The amount of mortgage insurance we write could decline significantly if alternatives to private mortgage insurance are used or lower coverage levels of mortgage insurance are selected
11. 11Geographic concentration in our mortgage portfolio increases our exposure to losses due to localized economic conditions. We seek to diversify our insured loan portfolio geographically; however, customer concentration might lead to concentrations in specific regions in the United States
12. 12Our risk management programs may not be effective in identifying or adequate in controlling or mitigating the risks we face
13. 13Management of operational, legal, franchise, technology and regulatory risks requires, among other things, methods to appropriately identify all such key risks, systems to record incidents and policies and procedures designed to mitigate, detect, record and address all such risks and occurrences
14. 14Interest rates and changes in rates could materially adversely affect our business, results of operations and financial condition
15. 15primary persistency rates can result in reduced IIF and earned premiums, which could have a significant adverse impact on our results of operations
16. 16We may be unable to maintain or increase the capital needed in our business in a timely manner, on anticipated terms or at all, including through improved business performance, CRT transactions, securities offerings or otherwise, in each case as and when required
17. 17CRT transactions may not be available, affordable or adequate to protect us against losses
18. 18Adverse rating agency actions may result in a loss of business and adversely affect our business, results of operations and financial condition
19. 19If servicers fail to adhere to appropriate servicing standards or experience disruptions to their businesses, our losses could increase
20. 20delinquency rates could also strain the resources of servicers, reducing their ability to undertake mitigation efforts that would help limit losses
21. 21Our delegated underwriting program may subject our mortgage insurance business to unanticipated claims
22. 22The premiums we agree to charge for our mortgage insurance coverage may not adequately compensate us for the risks and costs associated with the coverage we provide
23. 23A decrease in the volume of Low Down Payment Loan originations or an increase in the volume of mortgage insurance cancellations could result in a decline in our revenue
24. 24A decline in the volume of Low Down Payment Loan originations would reduce the demand for mortgage insurance and, therefore, could have a material adverse effect on our business, results of operations and financial condition
25. 25We collect, process, store, share, disclose and use consumer information and other data, and an actual or perceived failure to protect such information and data or respect users’ privacy could damage our reputation and brand and adversely affect our business, results of operations and financial condition

Risks Relating to Regulatory Matters

1. 26Our business is extensively regulated and changes in regulation may reduce our profitability and limit our growth
2. 27Insurance regulators and the NAIC regularly re-examine existing laws and regulations, which may lead to modifications to SAP, interpretations of existing laws and the development of new laws and regulations applicable to insurance companies and their products
3. 28Inability to maintain sufficient regulatory capital could result in restrictions or prohibitions on our doing business or impact our financial strength ratings, which could have a material adverse impact on our business, results of operations and financial condition
4. 29In addition to the general regulatory risks described under “—Our business is extensively regulated and changes in regulation may reduce our profitability and limit our growth,” we are also affected by various additional regulations, particularly those that relate to our mortgage insurance operations
5. 30The Dodd-Frank Act also requires an originator or issuer to retain a specified percentage of the credit risk exposure on securitized mortgages that do not meet the definition of a QRM

Risks Relating to Our Continuing Relationship with Genworth

1. 31Genworth has the ability to exert significant influence over us and our corporate decisions
2. 32The terms of our arrangements with Genworth may be more favorable than we will be able to obtain from an unaffiliated third party
3. 33subsidiaries in the context of a parent-subsidiary relationship. We cannot ensure that these services will be sustained at the same levels or that we would be able to replace such services in a timely manner or on comparable terms
4. 34We remain a part of Genworth’s family of businesses. Therefore, our customers, third-party service providers, credit providers and other persons may continue to associate us with Genworth’s reputation and services, as well as its capital base and financial strength
5. 35Genworth’s continued ownership of at least 80% of our common stock may limit our ability to raise additional capital by issuing common stock to third parties

Risks Relating to Taxation

1. 36Changes in tax laws could have a material adverse effect on our business, cash flows, results of operations or financial condition
2. 37not reported as part of income tax expense, and it did not have a material impact on our financial position for the years ended December 31, 2024 and 2023
3. 38We are jointly and severally liable for any U.S. federal income taxes owed by the Genworth Consolidated Group for taxable periods in which we are a member of the group
4. 39If we leave the Genworth Consolidated Group, we may be required to pay more income tax in the future
5. 40We are a holding company, and a large majority of our assets are the equity interests in our subsidiaries. As a consequence, we depend on the ability of our subsidiaries to pay dividends and make other payments and distributions to us in order to meet our obligations
6. 41Our business could be adversely impacted from deficiencies in our disclosure controls and procedures or internal control over financial reporting
7. 42We may suffer losses in connection with litigation, regulatory proceedings or other actions
8. 43If we are unable to attract, on-board, retain and motivate qualified employees or senior management, our business, results of operations and financial condition may be adversely impacted
9. 44We rely upon third-party vendors who may be unable or unwilling to meet their obligations to us
10. 45cybersecurity event could still occur that would cause damage to our reputation with our customers and other stakeholders and could have a material adverse effect on our business, results of operations and financial condition
11. 46Risks related to emerging and changing technology, including artificial intelligence, could impact our results of operations or financial condition
12. 47The occurrence of natural or man-made disasters or public health emergencies, including pandemics and disasters caused or exacerbated by climate change, could materially adversely affect our business, results of operations and financial condition
13. 48Our amended and restated certificate of incorporation contains exclusive forum provisions, which could limit our stockholders’ ability to choose the judicial forum for disputes with us or our directors, officers or employees
14. 49No assurance can be given that we will be able to return capital to our shareholders via dividends or share repurchases in the future at current levels or at all