SEC Filing | Enact Holdings, Inc.

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act-20220630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For transition period from to

Commission File Number 001-40399

Enact Holdings, Inc.

(Exact name of registrant as specified in its charter)


Delaware						46-1579166
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification Number)

8325 Six Forks Road

Raleigh, North Carolina 27615

(919) 846-4100

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock, par value $0.01 per share

ACT

The Nasdaq Stock Market

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ No ☒

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No ☒

As of August 1, 2022, there were 162,842,614 shares of Common Stock, par value $0.01 per share, outstanding.

TABLE OF CONTENTS


			Page
Part I. Financial Information			4
Item 1. Financial Statements			4
Condensed Consolidated Balance Sheets			4
Condensed Consolidated Statements of Income			5
Condensed Consolidated Statements of Comprehensive Income			6
Condensed Consolidated Statements of Changes In Equity			7
Condensed Consolidated Statements of Cash Flows			9
Notes to Condensed Consolidated Financial Statements			10
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			32
Item 3. Quantitative and Qualitative Disclosures About Market Risk			62
Item 4. Controls and Procedures			63
Part II. Other Information			64
Item 1. Legal Proceedings			64
Item 1A. Risk Factors			64
Item 2. Recent Sales of Unregistered Securities			64

Item 6. Exhibits			65
Signatures			66

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q, including Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act. These forward-looking statements may address, among other things, our expected financial and operational results, the related assumptions underlying our expected results and the quotations of management. These forward-looking statements are distinguished by use of words such as “will,” “would,” “anticipate,” “expect,” “believe,” “designed,” “plan,” or “intend,” the negative of these terms and similar references to future periods. These views involve risks and uncertainties that are difficult to predict and, accordingly, our actual results may differ materially from the results discussed in our forward-looking statements. Our forward-looking statements contained herein speak only as of the date of this quarterly report.

Although Enact Holdings, Inc. (the “Company”) believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, the Company can give no assurance that its expectations will be achieved and it undertakes no obligation to update publicly any forward-looking statements as a result of new information, future events, or otherwise, except as required by applicable law. Factors or events that we cannot predict, including the following, may cause our actual results to differ from those expressed in forward-looking statements:

•uncertainty around COVID-19 and its variants or the effects of government and other measures seeking to contain its spread, including risks related to an economic downturn or recession in the United States and in other countries around the world;

•inability to continue to maintain the private mortgage insurer eligibility requirements (“PMIERs”) or any other restrictions imposed on us by the Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“Freddie Mac”), government-sponsored enterprises collectively referred to as the “GSEs”;

•deterioration in economic conditions or a decline in home prices;

•uncertainty of our loss reserve estimates or inaccuracies in our models;

•competition for our customers or the loss of a significant customer;

•changes to the charters or practices of the GSEs, including actions or decisions to decrease or discontinue the use of mortgage insurance;

•lenders or investors seeking alternatives to private mortgage insurance;

•failure of our risk management or loss mitigation strategies;

•fluctuations and continued increases in interest rates;

•limited availability of capital or reinsurance;

•adverse actions by rating agencies;

•competition with government-owned enterprises and GSEs;

•failure to manage the risk in our investment portfolio;

•disruption in the servicing of mortgages covered by our insurance policies or poor servicer performance;

•unanticipated claims arising under and risks associated with our delegated underwriting program or contract underwriting program;

•inadequacy of the premiums we charge to compensate for the losses we incur;

•decrease in the volume of Low-Down Payment Loan originations;

•failure to protect our confidential customer information;

•adverse changes in regulatory requirements;

•inability to maintain sufficient regulatory capital;

•risks relating to our continuing relationship with our parent;

•changes in tax laws;

•litigation, regulatory investigations or other actions;

•changes in accounting principles or policies or in our application of such accounting principles or policies;

•inability to attract and retain key employees;

•failure or any compromise of the security of our computer systems, disaster recovery systems, business continuity plans and failures to safeguard or breaches of confidential information; and

•occurrence of natural or man-made disasters or public health emergencies, including pandemics and disasters caused or exacerbated by climate change

We provide additional information regarding these and other risks and uncertainties in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, as filed with the U.S. Securities and Exchange Commission (“SEC”) on February 28, 2022, and in Part II. Item 1A Risk Factors of this report. In addition, unlisted factors may present significant additional obstacles to the realization of forward-looking statements. We therefore caution you against relying on any forward-looking statements.

Part I. Financial Information

Item 1. Financial Statements

ENACT HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS


	June 30, 2022		December 31, 2021
(Amounts in thousands, except par value amount)	(Unaudited)
Assets

Fixed maturity securities available-for-sale, at fair value (amortized cost of $5,281,654 and $5,160,174 as of June 30, 2022 and December 31, 2021, respectively)	$	4,909,362	$	5,266,339


Cash and cash equivalents	583,947		425,828
Accrued investment income	33,103		31,061
Deferred acquisition costs	26,689		27,220
Premiums receivable (net of allowance for credit losses of $856 and $948 as of June 30, 2022 and December 31, 2021, respectively)	41,036		42,266
Deferred tax asset	98,695		—
Other assets	67,601		73,059
Total assets	$	5,760,433	$	5,865,773
Liabilities and equity
Liabilities:
Loss reserves	$	558,894	$	641,325
Unearned premiums	224,781		246,319
Other liabilities	154,656		130,604
Long-term borrowings	741,602		740,416
Deferred tax liability	—		1,586
Total liabilities	1,679,933		1,760,250
Equity:
Common stock ($0.01 par value, 600,000 shares authorized, 162,842 shares issued and outstanding)	1,628		1,628
Additional paid-in capital	2,377,042		2,371,861
Accumulated other comprehensive income	(293,027)		83,581
Retained earnings	1,994,857		1,648,453
Total equity	4,080,500		4,105,523
Total liabilities and equity	$	5,760,433	$	5,865,773

See Notes to Condensed Consolidated Financial Statements

ENACT HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)


	Three months ended June 30,				Six months ended June 30,
(Amounts in thousands, except per share amounts)	2022		2021		2022		2021
Revenues:
Premiums	$	237,386	$	242,480	$	471,665	$	495,022
Net investment income	35,776		34,689		70,922		69,948
Net investment losses	(381)		(1,753)		(720)		(2,709)
Other income	760		705		1,262		2,443
Total revenues	273,541		276,121		543,129		564,704
Losses and expenses:
Losses incurred	(61,563)		30,003		(72,009)		85,377
Acquisition and operating expenses, net of deferrals	58,201		63,050		112,463		120,672
Amortization of deferred acquisition costs and intangibles	3,230		3,597		6,320		7,435
Interest expense	12,786		12,745		25,562		25,482
Total losses and expenses	12,654		109,395		72,336		238,966
Income before income taxes	260,887		166,726		470,793		325,738
Provision for income taxes	56,152		35,914		101,428		69,795
Net income	$	204,735	$	130,812	$	369,365	$	255,943

Net income per common share:
Basic	$	1.26	$	0.80	$	2.27	$	1.57
Diluted	$	1.25	$	0.80	$	2.26	$	1.57
Weighted average common shares outstanding:
Basic	162,842		162,840		162,842		162,840
Diluted	163,225		162,840		163,140		162,840

See Notes to Condensed Consolidated Financial Statements

ENACT HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


	Three months ended June 30,				Six months ended June 30,
(Amounts in thousands)	2022		2021		2022		2021
Net income	$	204,735	$	130,812	$	369,365	$	255,943
Other comprehensive income (loss), net of taxes:
Net unrealized gains (losses) on securities without an allowance for credit losses	(152,401)		21,387		(376,701)		(48,805)
Net unrealized gains (losses) on securities with an allowance for credit losses	—		1,507		—		—
Foreign currency translation	64		—		93		—
Other comprehensive income (loss)	(152,337)		22,894		(376,608)		(48,805)
Total comprehensive income (loss)	$	52,398	$	153,706	$	(7,243)	$	207,138

See Notes to Condensed Consolidated Financial Statements

ENACT HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Unaudited)


	Three months ended June 30, 2022
(Amounts in thousands)	Common stock		Additional paid-in capital		Accumulated other comprehensive income (loss)		Retained earnings		Total equity
Balances as of March 31, 2022	$	1,628	$	2,374,568	$	(140,690)	$	1,813,083	$	4,048,589

Comprehensive income (loss):
Net income	—		—		—		204,735		204,735
Other comprehensive loss, net of taxes	—		—		(152,337)		—		(152,337)

Stock-based compensation expense and exercises and other	—		2,474		—		(163)		2,311
Dividends	—		—		—		(22,798)		(22,798)
Balance as of June 30, 2022	$	1,628	$	2,377,042	$	(293,027)	$	1,994,857	$	4,080,500


	Three months ended June 30, 2021
(Amounts in thousands)	Common stock		Additional paid-in capital		Accumulated other comprehensive income (loss)		Retained earnings		Total equity
Balances as of March 31, 2021	$	1,628	$	2,368,782	$	136,960	$	1,427,956	$	3,935,326

Comprehensive income (loss):
Net income	—		—		—		130,812		130,812
Other comprehensive income, net of taxes	—		—		22,894		—		22,894



Capital contributions from Genworth Financial, Inc.	—		819		—		—		819
Balance as of June 30, 2021	$	1,628	$	2,369,601	$	159,854	$	1,558,768	$	4,089,851

See Notes to Condensed Consolidated Financial Statements


	Six months ended June 30, 2022
(Amounts in thousands)	Common stock		Additional paid-in capital		Accumulated other comprehensive income (loss)		Retained earnings		Total equity
Balances as of December 31, 2021	$	1,628	$	2,371,861	$	83,581	$	1,648,453	$	4,105,523

Comprehensive income (loss):
Net income	—		—		—		369,365		369,365
Other comprehensive loss, net of taxes	—		—		(376,608)		—		(376,608)

Stock-based compensation expense and exercises and other	—		5,181		—		(163)		5,018
Dividends	—		—		—		(22,798)		(22,798)
Balance as of June 30, 2022	$	1,628	$	2,377,042	$	(293,027)	$	1,994,857	$	4,080,500


	Six months ended June 30, 2021
(Amounts in thousands)	Common stock		Additional paid-in capital		Accumulated other comprehensive income (loss)		Retained earnings		Total equity
Balances as of December 31, 2020	$	1,628	$	2,368,699	$	208,378	$	1,303,106	$	3,881,811
Cumulative effect of change in accounting, net of taxes	—		—		281		(281)		—
Comprehensive income (loss):
Net income	—		—		—		255,943		255,943
Other comprehensive loss, net of taxes	—		—		(48,805)		—		(48,805)


Capital contributions from Genworth Financial, Inc.	—		902		—		—		902
Balances as of June 30, 2021	$	1,628	$	2,369,601	$	159,854	$	1,558,768	$	4,089,851

See Notes to Condensed Consolidated Financial Statements

ENACT HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Six months ended June 30,
(Amounts in thousands)	2022		2021
Cash flows from operating activities:
Net income	$	369,365	$	255,943
Adjustments to reconcile net income to net cash provided by operating activities:
Net investment losses	720		2,709
Amortization of fixed maturity securities discounts and premiums	(1,529)		(4,639)
Amortization of deferred acquisition costs and intangibles	6,320		7,435
Acquisition costs deferred	(3,316)		(3,752)
Deferred income taxes	1,475		2,225
Stock-based compensation expense	5,040		—
Amortization of debt issuance costs	1,186		1,107
Other	(20)		664
Change in certain assets and liabilities:
Accrued investment income	(2,042)		(1,633)
Premiums receivable	1,230		3,177
Other assets	1,931		(9,681)
Loss reserves	(82,431)		68,577
Unearned premiums	(21,538)		(43,372)
Other liabilities	25,354		(15,653)
Net cash provided by operating activities	301,745		263,107
Cash flows from investing activities:
Purchases of fixed maturity securities available-for-sale	(624,909)		(892,287)

Proceeds from sales of fixed maturity securities available-for-sale	261,732		258,101
Proceeds from maturities of fixed maturity securities available-for-sale	242,349		353,608
Net cash used in investing activities	(120,828)		(280,578)
Cash flows from financing activities:


Dividends paid	(22,798)		—
Net cash provided by (used in) financing activities	(22,798)		—

Net decrease in cash and cash equivalents	158,119		(17,471)
Cash and cash equivalents at beginning of period	425,828		452,794
Cash and cash equivalents at end of period	$	583,947	$	435,323

See Notes to Condensed Consolidated Financial Statements

ENACT HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(1)Nature of Business, Organization Structure and Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include, on a consolidated basis, the accounts of Enact Holdings, Inc. (“EHI,” together with its subsidiaries, the “Company,” “we,” “us” or “our”) (formerly known as Genworth Mortgage Holdings, Inc.). EHI is a subsidiary of Genworth Financial, Inc. (“Genworth” or “Parent”) and has been since EHI’s incorporation in Delaware in 2012.

We are engaged in the business of writing and assuming residential mortgage guaranty insurance. The insurance protects lenders and investors against certain losses resulting from nonpayment of loans secured by mortgages, deeds of trust, or other instruments constituting a lien on residential real estate.

On May 3, 2021, EHI amended its certificate of incorporation to change its name from Genworth Mortgage Holdings, Inc. This amendment also authorized EHI to issue 600,000,000 shares of common stock, each having a par value of $0.01 per share. Concurrently, we entered into a share exchange agreement with Genworth Holdings, Inc. (“Genworth Holdings”), pursuant to which Genworth Holdings exchanged its 100 shares of common stock, representing all of the previously issued and outstanding capital stock, for 162,840,000 newly-issued shares of common stock, par value $0.01, of EHI. All of the share and per share information presented in the condensed consolidated financial statements and notes to the condensed consolidated financial statements have been adjusted to reflect the share exchange on a retroactive basis for all periods and as of all dates presented.

On September 15, 2021, we priced our initial public offering (“IPO”) of common stock, which resulted in the issuance and sale of 13,310,400 shares of common stock at the IPO price of $19.00 per common share. All shares were offered by the selling stockholder, our parent company, Genworth Holdings. In addition to the shares sold in the IPO, 14,655,600 common shares were sold in a concurrent private sale (“Private Sale”) at a price per share of $17.86, which is equal to the IPO price less the underwriting discount share. Genworth Holdings also granted the underwriters a 30-day option to purchase up to an additional 1,996,560 common shares (“Over-Allotment Option”) at the IPO price less the underwriting discount. On September 16, 2021, the underwriters exercised their option to purchase all 1,996,560 common shares permitted under the terms of the underwriting agreement. The IPO, Private Sale and Over-Allotment Option (collectively the “Offering”) closed on September 20, 2021, and Genworth Holdings retained all net proceeds from the Offering. The gross proceeds of the Offering, before payment of underwriter fees and other expenses, were approximately $553 million. Costs directly related to the Offering, including underwriting fees and other expenses, were approximately $24 million.

We offer private mortgage insurance products predominantly insuring prime-based, individually underwritten residential mortgage loans (“primary mortgage insurance”). Our primary mortgage insurance enables borrowers to buy homes with a down payment of less than 20% of the home’s value. Primary mortgage insurance also facilitates the sale of these low down payment mortgage loans in the secondary mortgage market, most of which are sold to government sponsored enterprises. We also selectively enter into insurance transactions with lenders and investors, under which we insure a portfolio of loans at or after origination.

We operate our business through our primary insurance subsidiary, Enact Mortgage Insurance Corporation, (“EMICO”), formerly known as Genworth Mortgage Insurance Corporation, with operations in all 50 states and the District of Columbia. We completed name changes to some of our subsidiary legal entities during the first quarter of 2022. EMICO is an approved insurer by the Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“Freddie Mac”). Fannie Mae and Freddie Mac are government-sponsored enterprises and we refer to them collectively as the “GSEs.”

ENACT HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

We also perform fee-based contract underwriting services for mortgage lenders. The provision of underwriting services by mortgage insurers eliminates the duplicative lender and mortgage insurer underwriting activities and expedites the approval process.

We operate our business in a single segment, which is how our chief operating decision maker (who is our Chief Executive Officer) reviews our financial performance and allocates resources. Our segment includes a run-off insurance block with reference properties in Mexico (“run-off business”), which is immaterial to our condensed consolidated financial statements.

The accompanying condensed consolidated financial statements are unaudited and have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). Preparing financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect reported amounts and related disclosures. Actual results could differ from those estimates. These unaudited condensed consolidated financial statements include all adjustments (including normal recurring adjustments) considered necessary by management to present a fair statement of the financial position, results of operations and cash flows for the periods presented. The results reported in these unaudited condensed consolidated financial statements should not be regarded as necessarily indicative of results that may be expected for the entire year. The unaudited condensed consolidated financial statements included herein should be read in conjunction with the audited consolidated financial statements and related notes for the years ended December 31, 2021 and 2020.

(2)Accounting Changes

Accounting Pronouncements Recently Adopted

We have not adopted new accounting pronouncements in 2022.

Accounting Pronouncements Not Yet Adopted

There are no significant new accounting pronouncements impacting our financial statements.

(3)Investments

Net Investment Income

Sources of net investment income were as follows for the periods indicated:


	Three months ended June 30,				Six months ended June 30,
(Amounts in thousands)	2022		2021		2022		2021
Fixed maturity securities available-for-sale	$	36,810	$	36,301	$	73,344	$	72,952
Cash, cash equivalents and short-term investments	422		16		432		52
Gross investment income before expenses and fees	37,232		36,317		73,776		73,004
Investment expenses and fees	(1,456)		(1,628)		(2,854)		(3,056)
Net investment income	$	35,776	$	34,689	$	70,922	$	69,948

ENACT HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Net Investment Losses

The following table sets forth net investment gains (losses) for the periods indicated:


	Three months ended June 30,				Six months ended June 30,
(Amounts in thousands)	2022		2021		2022		2021
Fixed maturity securities available-for-sale:
Gross realized gains	$	291	$	90	$	641	$	584
Gross realized (losses)	(672)		(541)		(1,534)		(1,133)
Net realized gains (losses)	(381)		(451)		(893)		(549)
Net change in allowance for credit losses on fixed maturity securities available-for-sale	—		(1,302)		173		(2,160)

Net investment losses	$	(381)	$	(1,753)	$	(720)	$	(2,709)

There was no recorded allowance for credit losses for fixed maturity securities available-for-sale as of and for the three and six months ended June 30, 2022.

The following table represents the allowance for credit losses aggregated by security type for fixed maturity available-for-sale securities as of and for the three months ended June 30, 2021:


(Amounts in thousands)	Beginning balance		Cumulative effect of change in accounting		Increase from securities without allowance in previous periods		Securities sold		Ending balance
Fixed maturity securities:
Non-U.S. corporate	$	1,210	$	—	$	1,304	$	(2,514)	$	—
Total fixed maturity securities available-for-sale	$	1,210	$	—	$	1,304	$	(2,514)	$	—

The following table represents the allowance for credit losses aggregated by security type for fixed maturity available-for-sale securities as of and for the six months ended June 30, 2021:


(Amounts in thousands)	Beginning balance		Cumulative effect of change in accounting		Increase from securities without allowance in previous periods		Securities sold		Ending balance
Fixed maturity securities:
Non-U.S. corporate	$	—	$	357	$	2,157	$	(2,514)	$	—
Total fixed maturity securities available-for-sale	$	—	$	357	$	2,157	$	(2,514)	$	—

ENACT HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Unrealized Investment Gains (Losses)

Net unrealized gains and losses on available-for-sale securities reflected as a separate component of accumulated other comprehensive income (“AOCI”) were as follows as of the dates indicated:


(Amounts in thousands)	June 30, 2022		December 31, 2021
Net unrealized gains (losses) on investment securities:
Fixed maturity securities	$	(372,292)	$	106,165
Income taxes	79,179		(22,577)
Net unrealized investment gains (losses)	$	(293,113)	$	83,588

The change in net unrealized gains (losses) on available-for-sale securities reported in accumulated other comprehensive income was as follows as of and for the periods indicated:


	Three months ended June 30,
(Amounts in thousands)	2022		2021
Beginning balance	$	(140,712)	$	136,960

Unrealized gains (losses) arising during the period:
Unrealized gains (losses) on investment securities	(193,949)		28,631
Provision for income taxes	41,247		(6,094)
Change in unrealized gains (losses) on investment securities	(152,702)		22,537
Reclassification adjustments to net investment (gains) losses, net of taxes of $(80) and $(94), respectively	301		357
Change in net unrealized investment gains (losses)	(152,401)		22,894
Ending balance	$	(293,113)	$	159,854

	Six months ended June 30,
(Amounts in thousands)	2022		2021
Beginning balance	$	83,588	$	208,378
Cumulative effect of change in accounting, net of taxes	—		281
Unrealized gains (losses) arising during the period:
Unrealized gains (losses) on investment securities	(479,350)		(62,539)
Provision for income taxes	101,944		13,300
Change in unrealized gains (losses) on investment securities	(377,406)		(49,239)
Reclassification adjustments to net investment (gains) losses, net of taxes of $(188) and $(115), respectively	705		434
Change in net unrealized investment gains (losses)	(376,701)		(48,805)
Ending balance	$	(293,113)	$	159,854

Amounts reclassified out of accumulated other comprehensive income to net investment gains (losses) include realized gains (losses) on sales of securities, which are determined on a specific identification basis.

ENACT HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Fixed Maturity Securities Available-For-Sale

As of June 30, 2022, the amortized cost, gross unrealized gains (losses) and fair value of our fixed maturity securities classified as available-for-sale were as follows:


(Amounts in thousands)	Amortized cost		Gross unrealized gains		Gross unrealized losses		Fair value
U.S. government, agencies and GSEs	$	50,295	$	143	$	(770)	$	49,668
State and political subdivisions	537,225		3,678		(71,394)		469,509
Non-U.S. government	22,228		—		(1,108)		21,120
U.S. corporate	2,928,441		2,905		(188,823)		2,742,523
Non-U.S. corporate	670,535		499		(52,324)		618,710
Other asset-backed	1,072,930		146		(65,244)		1,007,832
Total fixed maturity securities available-for-sale	$	5,281,654	$	7,371	$	(379,663)	$	4,909,362

As of December 31, 2021, the amortized cost, gross unrealized gains (losses) and fair value of our fixed maturity securities classified as available-for-sale were as follows:


(Amounts in thousands)	Amortized cost		Gross unrealized gains		Gross unrealized losses		Fair value
U.S. government, agencies and GSEs	$	56,547	$	1,863	$	(2)	$	58,408
State and political subdivisions	531,927		10,982		(4,456)		538,453
Non-U.S. government	22,358		248		(190)		22,416
U.S. corporate	2,863,100		98,293		(16,090)		2,945,303
Non-U.S. corporate	652,503		17,556		(3,465)		666,594
Other asset-backed	1,033,739		6,989		(5,563)		1,035,165
Total fixed maturity securities available-for-sale	$	5,160,174	$	135,931	$	(29,766)	$	5,266,339

There was no allowance for credit losses recorded fixed maturity securities classified as available-for-sale as of June 30, 2022 or December 31, 2021.

ENACT HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Gross Unrealized Losses and Fair Values of Fixed Maturity Securities Available-For-Sale

The following table presents the gross unrealized losses and fair values of our fixed maturity securities for which an allowance for credit losses has not been recorded, aggregated by investment type and length of time that individual fixed maturity securities have been in a continuous unrealized loss position, as of June 30, 2022:


	Less than 12 months					12 months or more					Total
(Amounts in thousands)	Fair value		Gross unrealized losses		Number of securities	Fair value		Gross unrealized losses		Number of securities	Fair value		Gross unrealized losses		Number of securities
Fixed maturity securities:
U.S. government, agencies and GSEs	$	43,708	$	(762)	17	$	97	$	(8)	1	$	43,805	$	(770)	18
State and political subdivisions	417,186		(69,038)		85	14,102		(2,356)		4	431,288		(71,394)		89
Non-U.S. government	21,120		(1,108)		2	—		—		—	21,120		(1,108)		2
U.S. corporate	2,010,547		(157,115)		387	178,817		(31,708)		21	2,189,364		(188,823)		408
Non-U.S. corporate	490,438		(44,945)		99	52,773		(7,379)		7	543,211		(52,324)		106
Other asset-backed	883,706		(62,224)		186	34,558		(3,020)		8	918,264		(65,244)		194
Total for fixed maturity securities in an unrealized loss position	$	3,866,705	$	(335,192)	776	$	280,347	$	(44,471)	41	$	4,147,052	$	(379,663)	817

We did not recognize an allowance for credit losses on securities in an unrealized loss position included in the table above. Based on a qualitative and quantitative review of the issuers of the securities, we believe the decline in fair value is largely due to rising interest rates and recent market volatility, and is not indicative of credit losses. The issuers continue to make timely principal and interest payments.

For all securities in an unrealized loss position without an allowance for credit losses, we expect to recover the amortized cost based on our estimate of the amount and timing of cash flows to be collected. We do not intend to sell nor do we expect that we will be required to sell these securities prior to recovering our amortized cost.

The following table presents the gross unrealized losses and fair values of our fixed maturity securities, aggregated by investment type and length of time that individual fixed maturity securities have been in a continuous unrealized loss position, as of December 31, 2021:


	Less than 12 months					12 months or more					Total
(Amounts in thousands)	Fair value		Gross unrealized losses		Number of securities	Fair value		Gross unrealized losses		Number of securities	Fair value		Gross unrealized losses		Number of securities
Fixed maturity securities:
U.S. government, agencies and GSEs	$	103	$	(2)	1	$	—	$	—	—	$	103	$	(2)	1
State and political subdivisions	255,202		(4,456)		47	—		—		—	255,202		(4,456)		47
Non-U.S. government	10,560		(190)		1	—		—		—	10,560		(190)		1
U.S. corporate	649,927		(14,300)		94	26,181		(1,790)		4	676,108		(16,090)		98
Non-U.S. corporate	183,485		(3,465)		28	—		—		—	183,485		(3,465)		28
Other asset-backed	456,565		(5,549)		76	3,736		(14)		1	460,301		(5,563)		77
Total for fixed maturity securities in an unrealized loss position	$	1,555,842	$	(27,962)	247	$	29,917	$	(1,804)	5	$	1,585,759	$	(29,766)	252

ENACT HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Contractual Maturities of Fixed Maturity Securities Available-For-Sale

The scheduled maturity distribution of fixed maturity securities as of June 30, 2022, is set forth below. Actual maturities may differ from contractual maturities because issuers of securities may have the right to call or prepay obligations with or without call or prepayment penalties.


(Amounts in thousands)	Amortized cost		Fair value
Due one year or less	$	292,225	$	292,044
Due after one year through five years	2,138,334		2,060,317
Due after five years through ten years	1,504,429		1,322,151
Due after ten years	273,736		227,018
Subtotal	4,208,724		3,901,530
Other asset-backed	1,072,930		1,007,832
Total fixed maturity securities available-for-sale	$