Enact Announces 16% Increase to Quarterly Dividend and New $250 Million Share Repurchase Program

Rhea-AI Summary

Enact Holdings, a leading provider of private mortgage insurance, announced a 16% increase in its quarterly dividend to $0.185 per common share. The company also introduced a new $250 million share repurchase program, in addition to its existing $100 million program. The decision reflects Enact's strong financial position and commitment to creating long-term value for shareholders.

Positive

• 16% increase in quarterly dividend to $0.185 per common share.

• Introduction of a new $250 million share repurchase program.

• Company's commitment to creating long-term value for shareholders.

Negative

• None.

Insights

Financial Analyst

The announcement by Enact Holdings, Inc. of a 16% increase in its quarterly dividend and the initiation of a new $250 million share repurchase program is a strong signal to the market regarding the company's financial health and management's confidence in the company's future performance. The increase in the dividend is a positive development for income-focused investors, as it implies a higher yield on their investment. Additionally, the share repurchase program indicates that the company believes its stock is undervalued and that it is a good use of capital to buy back shares, which can be accretive to earnings per share over time. This can also be interpreted as a method to return value to shareholders, as it often leads to an appreciation in the stock price. However, investors should be aware that share repurchases reduce the equity of the company and can sometimes be used to artificially inflate stock prices. It will be essential to monitor the implementation of this program and its impact on the company's balance sheet. Overall, these actions by Enact suggest a positive outlook on the company's financial management and future prospects.

Market Research Analyst

Considering the broader market implications, Enact's decision to raise its dividend and authorize a significant share repurchase program may be reflective of a larger trend in the financial services industry, where companies aim to demonstrate financial resilience and attract a stable shareholder base. Such strategic moves are also indicative of a company's lifecycle stage, where mature organizations, with steady cash flows, often transition to returning more cash to shareholders rather than reinvesting heavily in growth. It's critical for investors to compare Enact's dividend yield and payout ratio with industry averages to assess sustainability. Additionally, monitoring the company's stock performance in the wake of this announcement will provide insights into market sentiment and whether the company's valuation aligns with management's assessment. The market’s reaction to such news can vary and it would be prudent for investors to assess not just the immediate stock price movement but also the longer-term trend, which depends on the company's operational performance and the overall market environment. The rating on this aspect is neutral, as the long-term benefits depend on future market conditions and company performance.

Corporate Governance Expert

From a corporate governance standpoint, the increase in dividend and the launch of a new share repurchase program are decisions that typically fall well within the purview of a company's board of directors, showcasing a commitment to shareholder returns. However, it's imperative for investors to ensure that these decisions are not at the expense of necessary investment in innovation and growth, which could jeopardize future competitiveness. Effective capital allocation should balance current shareholder returns with long-term strategic investments. Another angle to observe is the alignment between such financial decisions and the company’s overall governance policies, including executive remuneration and shareholder rights. Transparency in how these decisions are made is crucial, as is the consideration of any potential conflicts of interest, particularly when it comes to arrangements with entities like Genworth Holdings, Inc. It's a positive indicator that the company has a structured approach to repurchasing shares, including automatic trading plans under Rule 10b5-1 and Rule 10b-18, which suggest a methodical and compliant approach to market transactions. The governance perspective rates the announcement as positive.

RALEIGH, N.C., May 01, 2024 (GLOBE NEWSWIRE) -- Enact Holdings, Inc. (Nasdaq: ACT) (Enact) a leading provider of private mortgage insurance through its insurance subsidiaries, today announced that its Board of Directors declared a quarterly dividend of $0.185 per common share, an increase of 16% from the prior quarter’s dividend. This dividend will be payable on June 13, 2024, to shareholders of record on May 29, 2024. Future dividends will be subject to Board approval.

Additionally, Enact announced that its Board of Directors authorized a new share repurchase program under which the company may purchase up to $250 million of its common stock. The new share repurchase authorization is in addition to the company’s current $100 million share repurchase program, of which $24 million remains as of April 26th, 2024.

“Today’s announcement underscores the strength of our financial position and our ongoing confidence in our business,” said Rohit Gupta, Enact’s President and Chief Executive Officer. “The decision by the Board to raise our quarterly dividend and authorize a new share repurchase program are aligned with our disciplined and balanced approach to capital allocation focused on creating long-term value for our shareholders.”

Enact’s new share repurchase program authorizes the purchase of up to $250 million of the company’s common stock utilizing a variety of methods, including open market purchases, and privately negotiated transactions, and may be made under Rule 10b5-1 and Rule 10b-18 trading plans, at such times and in such amounts as management deems appropriate. In support, Enact has entered into an agreement with Genworth Holdings, Inc. to repurchase its Enact shares on a pro rata basis as part of the program.

Enact expects the timing and amount of any share repurchases will be opportunistic and will depend on a variety of factors, including Enact’s share price, capital availability, business and market conditions, regulatory requirements, and debt covenant restrictions. The program does not obligate Enact to acquire any amount of common stock, it may be suspended or terminated at any time at the Company’s discretion without prior notice, and it does not have a specified expiration date.

About Enact Holdings, Inc.
Enact (Nasdaq: ACT), operating principally through its wholly-owned subsidiary Enact Mortgage Insurance Corporation since 1981, is a leading U.S. private mortgage insurance provider committed to helping more people achieve the dream of homeownership. Building on a deep understanding of lenders' businesses and a legacy of financial strength, we partner with lenders to bring best-in class service, leading underwriting expertise, and extensive risk and capital management to the mortgage process, helping to put more people in homes and keep them there. By empowering customers and their borrowers, Enact seeks to positively impact the lives of those in the communities in which it serves in a sustainable way. Enact is headquartered in Raleigh, North Carolina.

FAQ

What is the new quarterly dividend amount announced by Enact?

Enact announced a quarterly dividend of $0.185 per common share, reflecting a 16% increase from the prior quarter.

When will the new dividend be payable to shareholders?

The new dividend will be payable on June 13, 2024, to shareholders of record on May 29, 2024.

What is the value of the new share repurchase program authorized by Enact?

Enact has authorized a new share repurchase program of up to $250 million in addition to its current $100 million program.

How will Enact repurchase its common stock under the new program?

Enact may repurchase its common stock through open market purchases, privately negotiated transactions, or under Rule 10b5-1 and Rule 10b-18 trading plans.

What factors will influence the timing and amount of share repurchases by Enact?

The timing and amount of share repurchases by Enact will depend on factors such as share price, capital availability, business and market conditions, regulatory requirements, and debt covenant restrictions.