The following discussion and analysis of our consolidated financial condition
and results of operations should be read in conjunction with our unaudited
condensed consolidated financial statements and related notes for the three
months ended March 31, 2022 and 2021, and our audited consolidated financial
statements and related notes for the years ended December 31, 2021 and 2020
within our Annual Report on Form 10-K for the fiscal year ending December 31,
2021 (the "Annual Report").

In addition to historical information, this discussion contains forward-looking
statements that involve risks, uncertainties and assumptions that could cause
actual results to differ materially from management's expectations. Factors that
could cause such differences are discussed in the sections entitled "Cautionary
Note Regarding Forward-Looking Statements" above and Part I, Item 1A "Risk
Factors" in our Annual Report and Part II, Item 1A "Risk Factors" in this
Quarterly Report. Future results could differ significantly from the historical
results presented in this section. References to EHI, Enact, Enact Holdings, the
"Company," "we" or "our" herein are, unless the context otherwise requires, to
EHI on a consolidated basis.

Key Factors Affecting Our Results



There have been no material changes to the factors affecting our results, as
compared to those disclosed in the Annual Report, other than the impact of items
as discussed below in "-Trends and Conditions".

Trends and Conditions



During the first quarter of 2022, the United States and global economies
experienced new headwinds due to geopolitical uncertainty that increased global
shortfalls in supplies of energy, food and raw materials. Combined with a
renewed COVID-19 outbreak in China and subsequent shutdowns across the country,
inflationary pressures rose in the first quarter of 2022 with the Bureau of
Labor Statistics reporting in March that the Consumer Price Index increased by
over a percentage point to 8.5% year-over-year. As a result, the Federal Reserve
has indicated a more aggressive approach towards addressing inflation through
rate increases and a reduction of its balance sheet and approved an interest
rate increase of 0.25% in March of 2022. Financial markets have reacted with
increased volatility and rates have increased across the Treasury yield curve.

Mortgage origination activity declined during the first quarter of 2022 due to
typical seasonal trends and in response to rising mortgage rates that
specifically impacted the refinance market. This trend is likely to continue as
the Federal Reserve has signaled that it expects to make additional interest
rate increases throughout the remainder of 2022. Housing affordability declined
nationally as of February 2022 compared to one year ago due to rising home
prices and increasing interest rates modestly offset by rising median family
income according to the National Association of Realtors Housing Affordability
Index.

The unemployment rate has continued to decrease since the beginning of COVID-19
and was 3.6% in March 2022. Unemployment is relatively in line with the
pre-pandemic level of 3.5% in February 2020, and has steadily decreased from a
peak of 14.8% in April 2020. After the continued recovery in the first quarter
of 2022, the number of unemployed Americans stands at approximately 6 million,
which is 0.3 million higher than in February 2020. Among the unemployed, those
on temporary layoff continued to decrease to 0.8 million from a peak of 18
million in April 2020, and the number of permanent job losses decreased to
approximately 1.4 million. In addition, the number of long term unemployed over
26 weeks has continued to decrease since March 2021, falling to approximately
1.4 million in March 2022.

The Federal Housing Finance Agency ("FHFA") and the GSEs are focused on
increasing the accessibility and affordability of homeownership, in particular
for low- and moderate-income borrowers and underserved minority communities.
Among other things, FHFA directed the GSEs to submit Equitable Housing Plans by
the end of 2021 to identify and address barriers to sustainable housing
opportunities to

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advance equity in housing finance. Any new practices or programs subsequently implemented under the GSEs' Equitable Housing Plans or other affordability initiatives may impact the fees, underwriting and servicing standards on mortgage loans purchased by the GSEs.



In January 2022, the FHFA introduced new upfront fees for some high-balance and
second-home loans sold to Fannie Mae and Freddie Mac. Upfront fees for high
balance loans increased between 0.25% and 0.75%, tiered by loan-to-value ratio.
For second home loans, the upfront fees increased between 1.125% and 3.875%,
also tiered by loan-to-value ratio. The new pricing framework became effective
April 1, 2022. We do not anticipate this will significantly impact the mortgage
insurance market or our growth projections.

For mortgages insured by the federal government (including those purchased by
Fannie Mae and Freddie Mac), forbearance allows borrowers impacted by COVID-19
to temporarily suspend mortgage payments up to 18 months subject to certain
limits. An initial forbearance period is typically up to six months and can be
extended up to another six months if requested by the borrower to its mortgage
servicer. For GSE loans in a COVID-19 forbearance plan as of February 28, 2021,
the maximum forbearance can be up to 18 months. Currently, the GSEs do not have
a deadline for requesting an initial forbearance. Even though most foreclosure
moratoriums expired at the end of 2021, federal laws and regulations continue to
require servicers to discuss loss mitigation options with borrowers before
proceeding with foreclosures. These requirements could further extend the
foreclosure timeline, which could negatively impact the severity of loss on
loans that go to claim.

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. At the end of the first quarter of 2022 approximately 2.0%,
or 18,588, of our active primary policies were reported in a forbearance plan,
of which approximately 41% were reported as delinquent.

Total delinquencies decreased during the first quarter of 2022 as a result of
cures outpacing new delinquencies, which increased modestly during the quarter.
The first quarter 2022 new delinquency rate of 0.9% was in line with
pre-pandemic levels.

Despite continued economic recovery, the full impact of COVID-19 and its ancillary economic effects on our future business results are difficult to predict. Given the maximum length of forbearance plans, the resolution of a delinquency in a plan may not be known for several quarters. We continue to monitor regulatory and government actions and the resolution of forbearance delinquencies. While the associated risks have moderated, it is possible that COVID-19 could have a significantly adverse impact on our future results of operations and financial condition.



Private mortgage insurance market penetration and eventual market size are
affected in part by actions that impact housing or housing finance policy taken
by the GSEs and the U.S. government, including but not limited to, the Federal
Housing Administration ("FHA") and the FHFA. In the past, these actions have
included announced changes, or potential changes, to underwriting standards,
including changes to the GSEs' automated underwriting systems, FHA pricing, GSE
guaranty fees, loan limits and alternative products. On February 25, 2022, the
FHFA finalized the rule for the Enterprise Capital Framework, which included
technical corrections to their December 17, 2020 rule. Higher GSE capital
requirements could ultimately lead to increased costs to borrowers of GSE loans,
which in turn could shift the market away from the GSEs to the FHA or lender
portfolios. Such a shift could result in a smaller market for private mortgage
insurance.

In conjunction with preparing to release the GSEs from conservatorship, on January 14, 2021, the FHFA and the Treasury Department agreed to amend the Preferred Stock Purchase Agreements ("PSPAs") between the Treasury Department and each of the GSEs to increase the amount of capital each GSE may retain. Among other things, the amendments to the PSPAs limit the number of certain mortgages the GSEs may acquire with two or more prescribed risk factors, including certain mortgages


                                       28

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with combined loan-to-value ("LTV") ratios above 90%. However, on September 14,
2021, the FHFA and Treasury Department suspended certain provisions of the
amendments to the PSPAs, including the limit on the number of mortgages with two
or more risk factors that the GSEs may acquire. Such suspensions terminate on
the later of one year after September 14, 2021, or six months after the Treasury
Department notifies the GSEs of termination. The limit on the number of
mortgages with two or more risk factors was based on the market size at the
time, and we do not expect any material impact to the private mortgage market in
the near term.

New insurance written of $18.8 billion in the first quarter of 2022 decreased
25% compared to the first quarter of 2021 primarily due to a smaller estimated
private mortgage insurance market which was primarily driven by a decline in
refinance originations due to rising mortgage rates.

Our primary persistency increased to 76% during the first quarter of 2022
compared to 56% during the first quarter of 2021 and is approaching historic
levels of approximately 80%. The increase in persistency was primarily driven by
a decline in the percentage of our in-force policies with mortgage rates above
current mortgage rates. The increase in persistency has offset the decline in
new insurance written in the first quarter of 2022, leading to an increase in
insurance in-force ("IIF") of $5.3 billion since December 31, 2021. Low
persistency impacted business performance trends in 2021 in several ways
including, but not limited to, accelerating the recognition of earned premiums
due to single premium policy cancellations, accelerating the amortization of our
existing reinsurance transactions, and shifting the concentration of our primary
IIF to more recent years of policy origination. As of March 31, 2022, our
primary IIF has approximately 4% concentration in 2014 and prior book years. In
contrast, our 2021 book year represents 38% of our primary IIF concentration
while our 2022 book year is 8% as of March 31, 2022.

The U.S. private mortgage insurance industry is highly competitive. Our market
share is influenced by the execution of our go to market strategy, including but
not limited to, pricing competitiveness relative to our peers and our selective
participation in forward commitment transactions. We continue to manage the
quality of new business through pricing and our underwriting guidelines, which
are modified from time to time when circumstances warrant. We see the market and
underwriting conditions, including the pricing environment, as being well within
our risk-adjusted return appetite enabling us to write new business at
attractive returns. Ultimately, we expect our new insurance written with its
strong credit profile and attractive pricing to positively contribute to our
future profitability and return on equity.

Net earned premiums declined in the first quarter of 2022 compared to the first
quarter of 2021 as a result of the continued lapse of older, higher priced
policies, a decrease in single premium cancellations and higher ceded premiums
as the use of credit risk transfer increased. This was partially offset by
insurance in-force growth. The total number of delinquent loans has declined
from the COVID-19 peak in the second quarter of 2020 as forbearance exits
continue and new forbearances declined. During this time and consistent with
prior years, servicers continued the practice of remitting premiums during the
early stages of default. Additionally, we have a business practice of refunding
the post-delinquent premiums to the insured party if the delinquent loan goes to
claim. We record a liability and a reduction to net earned premiums for the
post-delinquent premiums we expect to refund. The post-delinquent premium
liability recorded since the beginning of COVID-19 in the second quarter of 2020
through the first quarter of 2022 was not significant to the change in earned
premiums for those periods as a result of the high concentration of new
delinquencies being subject to a servicer reported forbearance plan and the
lower estimated rate at which delinquencies go to claim for these loans.

Our loss ratio for the three months ended March 31, 2022, was (4)% as compared
to 22% for the three months ended March 31, 2021. The decrease was largely from
a $50 million reserve release during the quarter, primarily related to COVID-19
delinquencies from 2020 compared to $10 million of reserve strengthening on
pre-COVID-19 delinquencies during the first quarter of 2021. During the peak of
COVID-19, we experienced elevated new delinquencies subject to forbearance
plans. Those delinquencies have been curing at levels above our reserve
expectations, which led to the release of reserves in the first quarter of 2022.

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Our loss reserves continue to be impacted by COVID-19 and remain subject to
uncertainty. Borrowers who have experienced a financial hardship including, but
not limited to, the loss of income due to the closing of a business or the loss
of a job, continue to take advantage of available forbearance programs and
payment deferral options. Loss reserves recorded on these new delinquencies have
a high degree of estimation due to the level of uncertainty regarding whether
delinquencies in forbearance will ultimately cure or result in claim payments.

The severity of loss on loans that do go to claim may be negatively impacted by
the extended forbearance and foreclosure timelines, the associated elevated
expenses and the higher loan amount of the recent new delinquencies. These
negative influences on loss severity could be mitigated, in part, by further
home price appreciation. For loans insured on or after October 1, 2014, our
mortgage insurance policies limit the number of months of unpaid interest and
associated expenses that are included in the mortgage insurance claim amount to
a maximum of 36 months.

New delinquencies in the first quarter of 2022 declined compared to the first
quarter of 2021. Current period primary delinquencies of 8,724 contributed $39
million of loss expense in the first quarter of 2022. We incurred $44 million of
losses from 10,053 current period delinquencies in the first quarter of 2021
driven primarily by an increase in borrower forbearance as a result of COVID-19.
In determining the loss expense estimate, considerations were given to
forbearance and non-forbearance delinquencies, recent cure and claim experience,
and the prevailing economic conditions. Approximately 27% of our primary new
delinquencies in the first quarter of 2022 were subject to a forbearance plan as
compared to 54% in the first quarter of 2021.

As of March 31, 2022, EMICO's risk-to-capital ratio under the current regulatory
framework as established under North Carolina law and enforced by the North
Carolina Department of Insurance ("NCDOI"), EMICO's domestic insurance
regulator, was approximately 12.2:1, compared with a risk-to-capital ratio of
12.3:1 and 11.9:1 as of December 31, 2021 and March 31, 2021, respectively.
EMICO's risk-to-capital ratio remains below the NCDOI's maximum risk-to-capital
ratio of 25:1. North Carolina's calculation of risk-to-capital excludes the
risk-in-force for delinquent loans given the established loss reserves against
all delinquencies. EMICO's ongoing risk-to-capital ratio will depend on the
magnitude of future losses incurred by EMICO, the effectiveness of ongoing loss
mitigation activities, new business volume and profitability, the amount of
policy lapses and the amount of additional capital that is generated or
distributed by the business or capital support provided.

Under PMIERs, we are subject to operational and financial requirements that private mortgage insurers must meet in order to remain eligible to insure loans that are purchased by the GSEs. Since 2020, the GSEs have issued several amendments to PMIERs, which implemented both permanent and temporary revisions.



For loans that became non-performing due to a COVID-19 hardship, PMIERs was
temporarily amended with respect to each non-performing loan that (i) had an
initial missed monthly payment occurring on or after March 1, 2020, and prior to
April 1, 2021, or (ii) is subject to a forbearance plan granted in response to a
financial hardship related to COVID-19, the terms of which are materially
consistent with terms of forbearance plans offered by the GSEs. The risk-based
required asset amount factor for the non-performing loan is the greater of (a)
the applicable risk-based required asset amount factor for a performing loan
were it not delinquent, and (b) the product of a 0.30 multiplier and the
applicable risk-based required asset amount factor for a non-performing loan. In
the case of (i) above, absent the loan being subject to a forbearance plan
described in (ii) above, the 0.30 multiplier was applicable for no longer than
three calendar months beginning with the month in which the loan became a
non-performing loan due to having missed two monthly payments. Loans subject to
a forbearance plan described in (ii) above include those that are either in a
repayment plan or loan modification trial period following the forbearance plan
unless reported to the approved insurer that the loan is no longer in such
forbearance plan, repayment plan, or loan modification trial period. The PMIERs
amendment dated June 30, 2021 further allows loans that enter a forbearance plan
due to a COVID-19 hardship on or after April 1, 2021 to remain eligible for
extended application of the reduced PMIERs capital factor for as long as the

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loan remains in forbearance. In addition, the PMIERs amendment imposed permanent revisions to the risk-based required asset amount factor for non-performing loans for properties located in future Federal Emergency Management Agency Declared Major Disaster Areas eligible for individual assistance.



In September 2020, subsequent to the issuance of Enact Holdings' senior notes
due in 2025, the GSEs imposed certain restrictions (the "GSE Restrictions") with
respect to capital on our business. In May 2021, in connection with their
conditional approval of the then potential partial sale of Enact Holdings, the
GSEs confirmed the GSE Restrictions will remain in effect until the following
collective conditions ("GSE Conditions") are met: (a) EMICO obtains
"BBB+"/"Baa1" (or higher) rating from S&P, Moody's or Fitch Ratings, Inc. for
two consecutive quarters and (b) Genworth achieves certain financial metrics.
Prior to the satisfaction of the GSE Conditions, the GSE Restrictions require:

•EMICO to maintain 115% of PMIERs minimum required assets through 2021, 120% during 2022 and 125% thereafter;



•Enact Holdings to retain $300 million of net proceeds from the 2025 Senior
Notes offering that can be drawn down exclusively for debt service of those
notes or to contribute to EMICO to meet its regulatory capital needs including
PMIERs; and

•written approval must be received from the GSEs prior to any additional debt issuance by either EMICO or Enact Holdings.



Until the GSE Conditions imposed in connection with the GSE Restrictions are
met, Enact Holdings' liquidity must not fall below 13.5% of its outstanding
debt. In addition, Fannie Mae agreed to reconsider the GSE Restrictions if
Genworth were to own 50% or less of Enact Holdings at any point prior to their
expiration. We understand that Genworth's current plans do not include a
potential sale in which Genworth owns less than 80% of Enact Holdings. The
current balance of the 2025 Senior Notes proceeds required to be held by our
holding company is approximately $228 million.

As of March 31, 2022, we had estimated available assets of $5,222 million
against $2,961 million net required assets under PMIERs compared to available
assets of $5,077 million against $3,074 million net required assets as of
December 31, 2021. The sufficiency ratio as of March 31, 2022, was 176%, or
$2,261 million, above the published PMIERs requirements, compared to 165%, or
$2,003 million, above the published PMIERs requirements as of December 31, 2021.
PMIERs sufficiency is based on the published requirements applicable to private
mortgage insurers and does not give effect to the GSE Restrictions imposed on
our business. The increase in the PMIERs sufficiency was driven by the
completion of two excess of loss ("XOL") reinsurance transactions in the first
quarter of 2022, which added approximately $370 million of additional PMIERs
capital credit as of March 31, 2022, as well as lapse, business cash flows and
lower delinquencies, partially offset by NIW and amortization of existing
reinsurance transactions. Our PMIERs required assets as of March 31, 2022, and
December 31, 2021, benefited from the application of a 0.30 multiplier applied
to the risk-based required asset amount factor for certain non-performing loans.
The application of the 0.30 multiplier to all eligible delinquencies provided
$272 million of benefit to our March 31, 2022 PMIERs required assets compared to
$390 million of benefit as of December 31, 2021. These amounts are gross of any
incremental reinsurance benefit from the elimination of the 0.30 multiplier.

On January 27, 2022, we executed an excess of loss reinsurance transaction with
a panel of reinsurers, which provides up to $294 million of reinsurance coverage
on a portion of current and expected new insurance written for the 2022 book
year, effective January 1, 2022.

On March 24, 2022 we executed an excess of loss reinsurance transaction with a panel of reinsurers, which provides up to approximately $325 million of reinsurance coverage on a portfolio of existing


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mortgage insurance policies written from July 1, 2021 through December 31, 2021, effective March 1, 2022.



On April 26, 2022, Enact's Board of Directors approved the initiation of a
dividend program under which the Company intends to pay a quarterly cash
dividend. The inaugural quarterly dividend for the second quarter of 2022 will
be $0.14 per share, payable on May 26, 2022, to common shareholders of record on
May 9, 2022. Future dividend payments are subject to quarterly review and
approval by our Board of Directors and Genworth, and will be targeted to be paid
in the third month of each subsequent quarter. In April 2022, our primary
mortgage insurance operating company, EMICO, completed a distribution to EHI
that will support our ability to pay a quarterly dividend. We intend to use
these proceeds and future EMICO distributions to fund the quarterly dividend as
well as to bolster our financial flexibility at EHI and return additional
capital to shareholders.

Returning capital to shareholders, balanced with our growth and risk management
priorities, remains a key commitment for Enact as we look to drive shareholder
value through time. We believe the initiation of a quarterly dividend reflects
meaningful progress towards that goal, and we continue to evaluate the most
appropriate amount of total capital to return to shareholders for the remainder
of 2022. We believe we have several options available to us to return capital to
shareholders and will continue to evaluate our capital allocation options. Our
ultimate view will be shaped by our capital prioritization framework: supporting
our existing policyholders, growing our mortgage insurance business, funding
attractive new business opportunities and returning capital to shareholders. Our
total return of capital will also be based on our view of the prevailing and
prospective macro-economic conditions, regulatory landscape and business
performance.




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Results of Operations and Key Metrics

Results of Operations

Three months ended March 31, 2022, compared to three months ended March 31, 2021



The following table sets forth our consolidated results for the periods
indicated:

                                                                                                   Increase (decrease)
                                                   Three months ended                                 and percentage
                                                        March 31,                                         change
(Amounts in thousands)                          2022                2021                              2022 vs. 2021
Revenues:
Premiums                                    $  234,279          $  252,542          $                     (18,263)               (7) %
Net investment income                           35,146              35,259                                   (113)                -  %
Net investment gains (losses)                     (339)               (956)                                    617              (65) %
Other income                                       502               1,738                                 (1,236)              (71) %
Total revenues                                 269,588             288,583                                (18,995)               (7) %
Losses and expenses:
Losses incurred                                (10,446)             55,374                                (65,820)             (119) %
Acquisition and operating expenses, net of
deferrals                                       54,262              57,622                                 (3,360)               (6) %
Amortization of deferred acquisition costs
and intangibles                                  3,090               3,838                                   (748)              (19) %
Interest expense                                12,776              12,737                                      39                -  %
Total losses and expenses                       59,682             129,571                                (69,889)              (54) %
Income before income taxes                     209,906             159,012                                  50,894               32  %
Provision for income taxes                      45,276              33,881                                  11,395               34  %
Net income                                  $  164,630          $  125,131          $                       39,499               32  %
Loss ratio (1)                                      (4) %               22  %
Expense ratio (2)                                   24  %               24  %


_______________
(1)Loss ratio is calculated by dividing losses incurred by net earned premiums.
(2)Expense ratio is calculated by dividing acquisition and operating expenses,
net of deferrals, plus amortization of deferred acquisition costs and
intangibles by net earned premiums.

Revenues

Premiums decreased mainly attributable to continued lapse of our in-force portfolio as older, higher priced policies continued to lapse, lower single premium cancellations, and higher ceded premiums as the use of credit risk transfer increased. This was partially offset by higher IIF.

Net investment income remained flat with an increase from higher average invested assets in the current year offset by lower income from bond calls. Portfolio investment yields remained flat.



Net investment losses in the first quarter of 2022 were primarily driven by
realized losses from the sale of fixed maturity securities, while net investment
losses from the first quarter of 2021 were driven by credit losses related to
United States corporate fixed maturity securities and realized losses from
sales.

Other income primarily includes underwriting fee revenue charged on a per-unit or per-diem basis, as defined in the underwriting agreement. Other income decreased primarily due to lower contract underwriting revenue.


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Losses and expenses



Losses incurred during the first quarter of 2022 decreased largely due to
development related to performance of delinquencies from 2020, as we experienced
better than expected cures on loans impacted by COVID-19, resulting in a $50
million reserve release. Current period primary delinquencies of 8,724
contributed $39 million of loss expense in the three months ended March 31,
2022. This compares to $44 million of loss expense from 10,053 current period
primary delinquencies in the first quarter of 2021. In the period year, we
strengthened reserves on pre-COVID-19 delinquencies.

The following table shows incurred losses related to current and prior accident years for the three months ended March 31,:



(Amounts in thousands)                                         2022         

2021

Losses and LAE incurred related to current accident year $ 41,274 $ 45,064 Losses and LAE incurred related to prior accident years (51,707)


 10,321
Total incurred (1)                                          $ (10,433)     $ 55,385


_______________
(1)Excludes run-off business.

Acquisition and operating expenses, net of deferrals, decreased modestly in the
three months ended March 31, 2022, as a result of lower costs allocated by our
Parent, partially offset by higher general and administrative expenses.

The expense ratio remained flat as premiums and expenses both declined slightly in the current quarter.

Interest expense relates to our 2025 Senior Notes. For additional details see Note 7 to our unaudited condensed consolidated financial statements for the three months ended March 31, 2022 and 2021.

Provision for income taxes



The effective tax rate was 21.6% and 21.3% for the three months ended March 31,
2022 and 2021, respectively, consistent with the United States corporate federal
income tax rate.


Use of Non-GAAP Measures

We use a non-U.S. GAAP ("non-GAAP") financial measure entitled "adjusted
operating income." This non-GAAP financial measure aligns with the way our
business performance is evaluated by both management and by our Board of
Directors. This measure has been established in order to increase transparency
for the purposes of evaluating our core operating trends and enabling more
meaningful comparisons with our peers. Although "adjusted operating income" is a
non-GAAP financial measure, for the reasons discussed above we believe this
measure aids in understanding the underlying performance of our operations. Our
senior management, including our chief operating decision maker (who is our
Chief Executive Officer), uses "adjusted operating income" as the primary
measure to evaluate the fundamental financial performance of our business and to
allocate resources.

"Adjusted operating income" is defined as U.S. GAAP net income excluding the
effects of (i) net investment gains (losses), (ii) change in fair value of
unconsolidated affiliate and (iii) restructuring costs and infrequent or unusual
non-operating items.

(i)Net investment gains (losses)-The recognition of realized investment gains or
losses can vary significantly across periods as the activity is highly
discretionary based on the timing of individual securities sales due to such
factors as market opportunities or exposure management. Trends in the
profitability of our fundamental operating activities can be more clearly
identified without the

                                       34

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fluctuations of these realized gains and losses. We do not view them to be indicative of our fundamental operating activities. Therefore, these items are excluded from our calculation of adjusted operating income.

(ii)Restructuring costs and infrequent or unusual non-operating items are also excluded from adjusted operating income if, in our opinion, they are not indicative of overall operating trends.



In reporting non-GAAP measures in the future, we may make other adjustments for
expenses and gains we do not consider reflective of core operating performance
in a particular period. We may disclose other non-GAAP operating measures if we
believe that such a presentation would be helpful for investors to evaluate our
operating condition by including additional information.

Adjusted operating income is not a measure of total profitability, and therefore
should not be considered in isolation or viewed as a substitute for U.S. GAAP
net income. Our definition of adjusted operating income may not be comparable to
similarly named measures reported by other companies, including our peers.

Adjustments to reconcile net income to adjusted operating income assume a 21% tax rate (unless otherwise indicated).

The following table includes a reconciliation of net income to adjusted operating income for the periods indicated:



                                           Three months ended
                                               March 31,
(Amounts in thousands)                    2022           2021
Net income                             $ 164,630      $ 125,131
Adjustments to net income:
Net investment (gains) losses                339            956
Costs associated with reorganization         222              -
Taxes on adjustments                        (118)          (201)
Adjusted operating income              $ 165,073      $ 125,886


Adjusted operating income increased for the three months ended March 31, 2022,
as compared to March 31, 2021, primarily from decreased losses, partially offset
by lower premiums.


Key Metrics

Management reviews the key metrics included within this section when analyzing
the performance of our business. The metrics provided in this section exclude
activity related to our run-off business, which is immaterial to our
consolidated results.

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The following table sets forth selected operating performance measures on a primary basis as of or for the three months ended March 31,:

(Dollar amounts in millions) 2022 2021 New insurance written

$18,823       $24,934
Primary insurance in-force(1)      $231,853      $210,187
Primary risk in-force               $58,295       $52,866
Persistency rate                      76  %         56  %
Policies in-force (count)           941,689       922,186
Delinquent loans (count)             22,571        41,332
Delinquency rate                    2.40  %       4.48  %


_______________

(1)Represents the aggregate unpaid principal balance for loans we insure. Original loan balances are primarily used to determine premiums.

New insurance written ("NIW")



NIW for the three months ended March 31, 2022 decreased 25% compared to the
three months ended March 31, 2021, primarily due to lower mortgage refinancing
originations in the current period. We manage the quality of new business
through pricing and our underwriting guidelines, which we modify from time to
time as circumstances warrant.

The following table presents NIW by product for the periods indicated:



                                      Three months ended
                                          March 31,
(Amounts in millions)           2022                     2021
Primary                 $ 18,823       100  %    $ 24,934       100  %
Pool                           -         -              -         -
Total                   $ 18,823       100  %    $ 24,934       100  %


The following table presents primary NIW by underlying type of mortgage for the
periods indicated:

                                      Three months ended
                                          March 31,
(Amounts in millions)           2022                     2021
Purchases               $ 17,326        92  %    $ 15,500        62  %
Refinances                 1,497         8          9,434        38
Total                   $ 18,823       100  %    $ 24,934       100  %






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The following table presents primary NIW by policy payment type for the periods
indicated:

                                      Three months ended
                                          March 31,
(Amounts in millions)           2022                     2021
Monthly                 $ 17,071        91  %    $ 23,358        94  %
Single                     1,690         9          1,446         6
Other                         62         -            130         -
Total                   $ 18,823       100  %    $ 24,934       100  %


The following table presents primary NIW by FICO score for the periods
indicated:

                                      Three months ended
                                          March 31,
(Amounts in millions)           2022                     2021
Over 760                $  8,359        45  %    $ 10,520        42  %
740-759                      3,085      16            3,836      15
720-739                      2,515      13            3,423      14
700-719                      1,952      10            2,979      12
680-699                      1,316       7            2,480      10
660-679 (1)                    931       5              983       4
640-659                        486       3              511       2
620-639                        173       1              202       1
<620                           6         -              -         -
Total                   $ 18,823       100  %    $ 24,934       100  %


______________

(1)Loans with unknown FICO scores are included in the 660-679 category.



LTV ratio is calculated by dividing the original loan amount, excluding financed
premium, by the property's acquisition value or fair market value at the time of
origination. The following table presents primary NIW by LTV ratio for the
periods indicated:

                                      Three months ended
                                          March 31,
(Amounts in millions)           2022                     2021
95.01% and above        $  3,146        17  %    $  2,241         9  %
90.01% to 95.00%             6,682      35            9,453      38
85.01% to 90.00%             5,620      30            8,392      34
85.00% and below             3,375      18            4,848      19
Total                   $ 18,823       100  %    $ 24,934       100  %


                                       37

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DTI ratio is calculated by dividing the borrower's total monthly debt obligations by total monthly gross income. The following table presents primary NIW by DTI ratio for the periods indicated:


                                      Three months ended
                                          March 31,
(Amounts in millions)           2022                     2021
45.01% and above        $  4,452        24  %    $  2,566        10  %
38.01% to 45.00%             6,361      34            8,746      35
38.00% and below             8,010      42           13,622      55
Total                   $ 18,823       100  %    $ 24,934       100  %

Insurance in-force ("IIF") and Risk in-force ("RIF")



IIF increased as a result of NIW. Higher interest rates and the declining
refinance market led to lower lapse and cancellations during the first quarter
of 2022 driving increased persistency. Primary persistency was 76% and 56% for
the three months ended March 31, 2022 and 2021, respectively. RIF increased
primarily as a result of higher IIF.

The following table sets forth IIF and RIF as of the dates indicated:



(Amounts in millions)                    March 31, 2022                         December 31, 2021                        March 31, 2021
Primary IIF                    $      231,853               100  %       $  226,514               100  %       $      210,187               100  %
Pool IIF                                  600                 -                 641                 -                     841                 -
Total IIF                      $      232,453               100  %       $  227,155               100  %       $      211,028               100  %

Primary RIF                    $       58,295               100  %       $   56,881               100  %       $       52,866               100  %
Pool RIF                                   97                 -                 105                 -                     134                 -
Total RIF                      $       58,392               100  %       $   56,986               100  %       $       53,000               100  %



The following table sets forth primary IIF and primary RIF by origination as of
the dates indicated:

(Amounts in millions)                    March 31, 2022                         December 31, 2021                        March 31, 2021
Purchases IIF                  $      184,080                79  %       $  176,550                78  %       $      156,298                74  %
Refinances IIF                         47,773                21              49,964                22                  53,889                26
Total IIF                      $      231,853               100  %       $  226,514               100  %       $      210,187               100  %

Purchases RIF                  $       48,326                83  %       $   46,470                82  %       $       41,396                78  %
Refinances RIF                          9,969                17              10,411                18                  11,470                22
Total RIF                      $       58,295               100  %       $   56,881               100  %       $       52,866               100  %








                                       38

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The following table sets forth primary IIF and primary RIF by product as of the
dates indicated:

(Amounts in millions)                    March 31, 2022                         December 31, 2021                        March 31, 2021
Monthly IIF                    $      200,304                86  %       $  194,826                86  %       $      177,126                84  %
Single IIF                             29,198                13              29,205                13                  29,653                14
Other IIF                               2,351                 1               2,483                 1                   3,408                 2
Total IIF                      $      231,853               100  %       $  226,514               100  %       $      210,187               100  %

Monthly RIF                    $       51,153                88  %       $   49,614                87  %       $       45,009                85  %
Single RIF                              6,561                11               6,658                12                   7,049                13
Other RIF                                 581                 1                 609                 1                     808                 2
Total RIF                      $       58,295               100  %       $   56,881               100  %       $       52,866               100  %



The following table sets forth primary IIF by policy year as of the dates
indicated:

(Amounts in millions)                     March 31, 2022                         December 31, 2021                          March 31, 2021
2008 and prior                 $        7,723                  3  %       $    8,196                  3  %       $       10,500                  5  %
2009 to 2014                            2,946                  1               3,369                  2                   5,570                  2
2015                                    3,960                  2               4,488                  2                   6,729                  3
2016                                    8,076                  4               8,997                  4                  13,213                  6
2017                                    8,023                  4               8,962                  4                  13,817                  7
2018                                    8,306                  4               9,263                  4                  14,618                  7
2019                                   19,609                  8              21,730                 10                  33,430                 16
2020                                   65,807                 28              69,963                 31                  87,599                 42
2021                                   88,757                 38              91,546                 40                  24,711                 12
2022                                   18,646                  8                   -                  0                       -                  -
Total                          $      231,853                100  %       $  226,514                100  %       $      210,187                100  %


                                       39

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The following table sets forth primary RIF by policy year as of the dates indicated:



(Amounts in millions)         March 31, 2022                December 31, 2021                March 31, 2021
2008 and prior          $       1,991         3  %    $          2,112         3  %    $       2,705         5  %
2009 to 2014                      788         1                    904         2               1,510         3
2015                            1,058         2                  1,197         2               1,795         3
2016                            2,147         4                  2,388         4               3,503         7
2017                            2,094         4                  2,324         4               3,556         7
2018                            2,092         4                  2,330         4               3,671         7
2019                            4,935         8                  5,454        10               8,361        16
2020                           16,606        28                 17,574        31              21,787        41
2021                           21,959        38                 22,598        40               5,978        11
2022                            4,625         8                      -         0                   -         -
Total                   $      58,295       100  %    $         56,881       100  %    $      52,866       100  %



The following table presents the development of primary IIF for the periods
indicated:

                                                                   Three months ended
                                                                       March 31,
(Amounts in millions)                                             2022           2021
Beginning balance                                              $ 226,514      $ 207,947
NIW                                                               18,823         24,934

Cancellations, principal repayments and other reductions (1) (13,484)


    (22,694)
Ending balance                                                 $ 231,853      $ 210,187


______________

(1)Includes the estimated amortization of unpaid principal balance of covered loans



The following table sets forth primary IIF by LTV ratio at origination as of the
dates indicated:

(Amounts in millions)                    March 31, 2022                         December 31, 2021                        March 31, 2021
95.01% and above               $       36,867                16  %       $   35,455                16  %       $       33,757                16  %
90.01% to 95.00%                       96,419                42              95,149                42                  92,124                44
85.01% to 90.00%                       66,226                28              64,549                28                  58,098                28
85.00% and below                       32,341                14              31,361                14                  26,208                12
Total                          $      231,853               100  %       $  226,514               100  %       $      210,187               100  %

The following table sets forth primary RIF by LTV ratio at origination as of the dates indicated:



(Amounts in millions)         March 31, 2022                December 31, 2021                March 31, 2021
95.01% and above        $      10,379        18  %    $          9,907        17  %    $       9,151        17  %
90.01% to 95.00%               27,987        48                 27,608        49              26,637        51
85.01% to 90.00%               16,082        27                 15,644        27              13,997        26
85.00% and below                3,847         7                  3,722         7               3,081         6
Total                   $      58,295       100  %    $         56,881       100  %    $      52,866       100  %


                                       40

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The following table sets forth primary IIF by FICO score at origination as of
the dates indicated:

(Amounts in millions)                    March 31, 2022                         December 31, 2021                        March 31, 2021
Over 760                       $       93,222                40  %       $   89,982                40  %       $       79,285                38  %
740-759                                36,821                16              35,874                16                  33,607                16
720-739                                32,363                14              31,730                14                  30,295                14
700-719                                27,620                12              27,359                12                  26,309                13
680-699                                21,259                 9              21,270                 9                  20,777                10
660-679 (1)                            10,805                 5              10,549                 5                  10,001                 5
640-659                                 6,188                 3               6,124                 3                   5,981                 3
620-639                                 2,774                 1               2,783                 1                   2,893                 1
<620                                      801                 -                 843                 -                   1,039                 -
Total                          $      231,853               100  %       $  226,514               100  %       $      210,187               100  %


______________

(1)Loans with unknown FICO scores are included in the 660-679 category.

The following table sets forth primary RIF by FICO score at origination as of the dates indicated:



(Amounts in millions)         March 31, 2022                December 31, 2021                March 31, 2021
Over 760                $      23,326        40  %    $         22,489        40  %    $      19,829        37  %
740-759                         9,267        16                  9,009        16               8,442        16
720-739                         8,224        14                  8,055        14               7,715        15
700-719                         6,974        12                  6,907        12               6,678        13
680-699                         5,334         9                  5,334         9               5,231        10
660-679 (1)                     2,715         5                  2,638         5               2,484         5
640-659                         1,550         3                  1,530         3               1,485         3
620-639                           699         1                    702         1                 734         1
<620                              206         -                    217         -                 268         -
Total                   $      58,295       100  %    $         56,881       100  %    $      52,866       100  %


______________

(1)Loans with unknown FICO scores are included in the 660-679 category.



The following table sets forth primary IIF by DTI score at origination as of the
dates indicated:

(Amounts in millions)                    March 31, 2022                         December 31, 2021                        March 31, 2021
45.01% and above               $       36,428                16  %       $   34,076                15  %       $       30,225                14  %
38.01% to 45.00%                       80,741                35              79,147                35                  74,674                36
38.00% and below                      114,684                49             113,291                50                 105,288                50
Total                          $      231,853               100  %       $  226,514               100  %       $      210,187               100  %

The following table sets forth primary RIF by DTI score at origination as of the dates indicated:



(Amounts in millions)         March 31, 2022                December 31, 2021                March 31, 2021
45.01% and above        $       9,227        16  %    $          8,631        15  %    $       7,643        14  %
38.01% to 45.00%               20,392        35                 19,974        35              18,888        36
38.00% and below               28,676        49                 28,276        50              26,335        50
Total                   $      58,295       100  %    $         56,881       100  %    $      52,866       100  %


                                       41

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Delinquent loans and claims



Our delinquency management process begins with notification by the loan servicer
of a delinquency on an insured loan. "Delinquency" is defined in our master
policies as the borrower's failure to pay when due an amount equal to the
scheduled monthly mortgage payment under the terms of the mortgage. Generally,
the master policies require an insured to notify us of a delinquency if the
borrower fails to make two consecutive monthly mortgage payments prior to the
due date of the next mortgage payment. We generally consider a loan to be
delinquent and establish required reserves after the insured notifies us that
the borrower has failed to make two scheduled mortgage payments. Borrowers may
cure delinquencies by making all of the delinquent loan payments, agreeing to a
loan modification, or by selling the property in full satisfaction of all
amounts due under the mortgage. In most cases, delinquencies that are not cured
result in a claim under our policy.

The following table shows a roll forward of the number of primary loans in default for the periods indicated:



                                                        Three months ended
                                                            March 31,
(Loan count)                                        2022                  

2021


Number of delinquencies, beginning of period      24,820                44,904
New defaults                                       8,724                10,053
Cures                                            (10,860)              (13,478)
Claims paid                                         (107)                 (134)
Rescissions and claim denials                         (6)                  (13)
Number of delinquencies, end of period            22,571                

41,332




The following table sets forth changes in our direct primary case loss reserves
for the periods indicated:

                                           Three months ended
                                               March 31,
(Amounts in thousands) (1)                2022           2021
Loss reserves, beginning of period     $ 606,102      $ 516,863
Claims paid                               (5,617)        (5,933)
Change in reserve                         (9,977)        53,278
Loss reserves, end of period           $ 590,508      $ 564,208


______________

(1)Direct primary case reserves exclude LAE, IBNR and reinsurance reserves.

The following tables set forth primary delinquencies, direct case reserves and RIF by aged missed payment status as of the dates indicated:

March 31, 2022


                                                                       Direct case               Risk                   Reserves as %
(Dollar amounts in millions)                 Delinquencies             reserves (1)            in-force               of risk in-force
Payments in default:
3 payments or less                                6,837              $          38          $       359                                11  %
4 - 11 payments                                   6,875                        115                  392                                29  %
12 payments or more                               8,859                        438                  515                                85  %
Total                                            22,571              $         591          $     1,266                                47  %


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                                                                              December 31, 2021
                                                                   Direct case               Risk                   Reserves as %
(Dollar amounts in millions)             Delinquencies             reserves (1)            in-force               of risk in-force
Payments in default:
3 payments or less                            6,586              $          35          $       340                                10  %
4 - 11 payments                               7,360                        111                  426                                26  %
12 payments or more                          10,874                        460                  643                                72  %
Total                                        24,820              $         606          $     1,409                                43  %


                                                                                   March 31, 2021
                                                                       Direct case               Risk                   Reserves as %
(Dollar amounts in millions)                 Delinquencies             reserves (1)            in-force               of risk in-force
Payments in default:
3 payments or less                                8,296              $          40          $       436                                 9  %
4 - 11 payments                                  21,011                        227                1,232                                18  %
12 payments or more                              12,025                        297                  724                                41  %
Total                                            41,332              $         564          $     2,392                                24  %


______________

(1)Direct primary case reserves exclude loss adjustment expenses, incurred but not reported and reinsurance reserves.



The total increase in reserves as a percentage of RIF as of March 31, 2022
compared to December 31, 2021 was primarily driven by the decrease in delinquent
RIF. Delinquent RIF decreased mainly due to lower total delinquencies as cures
outpaced new delinquencies in the first three months of 2022, while reserves
decreased due to our reserve release. While the number of loans that are
delinquent for 12 months or more has decreased since December 31, 2021, it
remains elevated compared to pre-COVID-19 levels due, in large part, to
borrowers entering a forbearance plan over a year ago driven by COVID-19.

Resolution of a delinquency in a forbearance plan, whether it ultimately results
in a cure or a claim, remains difficult to estimate and may not be known for
several quarters, if not longer. In addition, due to foreclosure moratoriums and
the uncertainty around the lack of progression through the foreclosure process
there is still uncertainty around the likelihood and timing of delinquencies
going to claim.

Primary insurance delinquency rates differ from region to region in the United
States at any one time depending upon economic conditions and cyclical growth
patterns. Delinquency rates are shown by region based upon the location of the
underlying property, rather than the location of the lender.

                                       43

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The table below sets forth our primary delinquency rates for the ten largest states by our primary RIF as of March 31, 2022:



                                            Percent of direct
                                              primary case         Delinquency
                        Percent of RIF          reserves              rate
By State:
California                        11  %                  11  %          2.75  %
Texas                              8                      8             2.51  %
Florida (1)                        8                      9             2.51  %
New York                           5                     12             3.51  %
Illinois                           5                      6             2.85  %
Michigan                           4                      2             1.87  %
Arizona                            4                      2             1.92  %
North Carolina                     3                      2             1.96  %
Pennsylvania                       3                      3             2.30  %
Washington                         3                      4             2.68  %
All other states (2)              46                     41             2.25  %
Total                            100  %                 100  %          2.40  %


______________

(1)Jurisdiction predominantly uses a judicial foreclosure process, which generally increases the amount of time it takes for a foreclosure to be completed. (2)Includes the District of Columbia.

The table below sets forth our primary delinquency rates for the ten largest states by our primary RIF as of December 31, 2021:



                                            Percent of direct
                                              primary case         Delinquency
                        Percent of RIF          reserves              rate
By State:
California                        11  %                  12  %          3.17  %
Texas                              8                      8             2.89  %
Florida (1)                        7                      9             2.97  %
New York (1)                       5                     12             3.80  %
Illinois (1)                       5                      6             3.09  %
Michigan                           4                      2             1.87  %
Arizona                            4                      2             2.31  %
North Carolina (1)                 3                      2             2.18  %
Pennsylvania                       3                      3             2.38  %
Washington                         3                      3             2.98  %
All other states (2)              47                     41             2.46  %
Total                            100  %                 100  %          2.65  %


______________

(1)Jurisdiction predominantly uses a judicial foreclosure process, which generally increases the amount of time it takes for a foreclosure to be completed. (2)Includes the District of Columbia.


                                       44

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The table below sets forth our primary delinquency rates for the ten largest
Metropolitan Statistical Areas ("MSA") or Metro Divisions ("MD") by our primary
RIF as of March 31, 2022:

                                                                                                   Percent of direct              Delinquency
                                                                      Percent of RIF             primary case reserves                rate
By MSA or MD:
Chicago-Naperville, IL MD                                                             3  %                        5  %                      3.39  %
Phoenix, AZ MSA                                                                       3                           2                         1.92  %
New York, NY MD                                                                       3                           8                         4.68  %
Atlanta, GA MSA                                                                       2                           3                         2.92  %
Washington-Arlington, DC MD                                                           2                           2                         2.50  %
Houston, TX MSA                                                                       2                           3                         3.20  %
Riverside-San Bernardino CA MSA                                                       2                           2                         3.05  %
Los Angeles-Long Beach, CA MD                                                         2                           3                         3.22  %
Dallas, TX MD                                                                         2                           1                         2.04  %
Nassau County, NY MD                                                                  2                           4                         5.02  %
All Other MSAs/MDs                                                                   77                          67                         2.23  %
Total                                                                               100  %                      100  %                      2.40  %

The table below sets forth our primary delinquency rates for the ten largest MSAs or MDs by our primary RIF as of December 31, 2021:



                                                                                                   Percent of direct              Delinquency
                                                                      Percent of RIF             primary case reserves                rate
By MSA or MD:
Chicago-Naperville, IL MD                                                             3  %                        4  %                      3.68  %
Phoenix, AZ MSA                                                                       3                           2                         2.36  %
New York, NY MD                                                                       3                           8                         5.32  %
Atlanta, GA MSA                                                                       2                           3                         3.28  %
Washington-Arlington, DC MD                                                           2                           2                         2.96  %
Houston, TX MSA                                                                       2                           3                         3.61  %
Riverside-San Bernardino CA MSA                                                       2                           2                         3.42  %
Los Angeles-Long Beach, CA MD                                                         2                           3                         3.95  %
Dallas, TX MD                                                                         2                           2                         2.31  %
Nassau County, NY MD                                                                  2                           4                         5.55  %
All Other MSAs/MDs                                                                   77                          67                         2.44  %
Total                                                                               100  %                      100  %                      2.65  %


The frequency of delinquencies may not correlate directly with the number of
claims received because delinquencies may cure. The rate at which delinquencies
cure is influenced by borrowers' financial resources and circumstances and
regional economic differences. Whether a delinquency leads to a claim correlates
highly with the borrower's equity at the time of delinquency, as it influences
the borrower's willingness to continue to make payments, the borrower's or the
insured's ability to sell the home for an amount sufficient to satisfy all
amounts due under the mortgage loan and the borrower's financial ability to
continue making payments. When we receive notice of a delinquency, we use our
proprietary model to determine whether a delinquent loan is a candidate for a
modification. When our model identifies such a candidate, our loan workout
specialists prioritize cases for loss mitigation based upon the likelihood that
the loan will result in a claim. Loss mitigation actions include loan
modification,

                                       45

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extension of credit to bring a loan current, foreclosure forbearance, pre-foreclosure sale and deed-in-lieu. These loss mitigation efforts often are an effective way to reduce our claim exposure and ultimate payouts.

The following table sets forth the dispersion of primary RIF and direct primary case reserves by policy year and delinquency rates as of March 31, 2022:



                                Percent of direct                       Cumulative
                   Percent        primary case         Delinquency      delinquency
                   of RIF           reserves              rate           rate (1)
Policy Year:
2008 and prior         3  %                  25  %         10.41  %          5.59  %
2009-2014              1                      5             5.34  %          0.77  %

2015                   2                      5             4.06  %          0.92  %
2016                   4                      7             3.48  %          1.02  %
2017                   4                     10             4.43  %          1.34  %
2018                   4                     12             5.48  %          1.60  %
2019                   8                     17             3.44  %          1.37  %
2020                  28                     15             1.49  %          1.08  %
2021                  38                      4             0.58  %          0.55  %
2022                   8                      0             0.04  %          0.04  %
Total portfolio      100  %                 100  %          2.40  %          4.36  %


______________

(1)Calculated as the sum of the number of policies where claims were ever paid to date and number of policies for loans currently in default divided by policies ever in-force.

The following table sets forth the dispersion of primary RIF and loss reserves by policy year and delinquency rates as of December 31, 2021:



                                Percent of direct                       Cumulative
                   Percent        primary case         Delinquency      delinquency
                   of RIF           reserves              rate           rate (1)
Policy Year:
2008 and prior         3  %                  24  %         10.54  %          5.59  %
2009 to 2013           1                      2             5.54  %          0.74  %
2014                   1                      3             5.51  %          0.99  %
2015                   2                      5             4.24  %          1.04  %
2016                   4                      8             3.69  %          1.16  %
2017                   4                     10             4.78  %          1.56  %
2018                   4                     13             5.93  %          1.88  %
2019                  10                     19             3.89  %          1.68  %
2020                  31                     14             1.50  %          1.14  %
2021                  40                      2             0.37  %          0.36  %
Total portfolio      100  %                 100  %          2.65  %          4.42  %


______________

(1)Calculated as the sum of the number of policies where claims were ever paid to date and number of policies for loans currently in default divided by policies ever in-force.


                                       46

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Loss reserves in policy years in 2008 and prior are outsized compared to their
representation of RIF. The size of these policy years at origination combined
with the significant decline in home prices led to significant losses in these
policy years. Although uncertainty remains with respect to the ultimate losses
we will experience on these policy years, they have become a smaller percentage
of our total mortgage insurance portfolio. The largest portion of loss reserves
has shifted to newer book years as a result of COVID-19 given their significant
representation of RIF. As of March 31, 2022, our 2015 and newer policy years
represented approximately 96% of our primary RIF and 70% of our total direct
primary case reserves.

Investment Portfolio

Our investment portfolio is affected by factors described below, each of which
in turn may be affected by COVID-19 as noted above in "-Trends and Conditions."
Management of our investment portfolio has been delegated to our Parent's
investment committee and chief investment officer. Our Parent's investment team,
with oversight from our Board of Directors and our senior management team, is
responsible for the execution of our investment strategy. Our investment
portfolio is an important component of our consolidated financial results and
represents our primary source of claims paying resources. Our investment
portfolio primarily consists of a diverse mix of highly rated fixed income
securities and is designed to achieve the following objectives:

•Meet policyholder obligations through maintenance of sufficient liquidity;

•Preserve capital;

•Generate investment income;

•Maximize statutory capital; and

•Increase shareholder value, among other objectives.

To achieve our portfolio objectives, our investment strategy focuses primarily on:

•Our business outlook, current and expected future investment conditions;

•Investments selection based on fundamental, research-driven strategies;

•Diversification across a mix of fixed income, low-volatility investments while actively pursuing strategies to enhance yield;

•Regular evaluation and optimization of our asset class mix;

•Continuous monitoring of investment quality, duration, and liquidity;

•Regulatory capital requirements; and

•Restriction of investments correlated to the residential mortgage market.


                                       47

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Fixed Maturity Securities Available-for-Sale

The following table presents the fair value of our fixed maturity securities available-for-sale as of the dates indicated:



                                                                        March 31, 2022                              December 31, 2021
                                                                                         % of                                           % of
(Amounts in thousands)                                          Fair value               total                Fair value               total

U.S. government, agencies and government-sponsored enterprises

$       56,751                   1  %       $          58,408                  1  %
State and political subdivisions                                    508,391                  10                    538,453                 10
Non-U.S. government                                                  21,529                   -                     22,416                  0
U.S. corporate                                                    2,882,497                  57                  2,945,303                 56
Non-U.S. corporate                                                  629,795                  12                    666,594                 13
Other asset-backed                                                  994,121                  20                  1,035,165                 20
Total available-for-sale fixed maturity securities           $    5,093,084                 100  %       $       5,266,339                100  %


Our investment portfolio did not include any direct residential real estate or whole mortgage loans as of March 31, 2022 or December 31, 2021. We have no derivative financial instruments in our investment portfolio.



As of March 31, 2022, and December 31, 2021, 97% of our investment portfolio was
rated investment grade, respectively. The following table presents the security
ratings of our fixed maturity securities as of the dates indicated:

              March 31, 2022      December 31, 2021
AAA                      9  %                   9  %
AA                      16                     17
A                       34                     34
BBB                     38                     37
BB & below               3                      3
Total                  100  %                 100  %

The table below presents the effective duration and investment yield on our investments available-for-sale, excluding cash and cash equivalents as of the dates indicated:



                                                               March 31, 2022            December 31, 2021
Duration (in years)                                                          3.8                          3.9
Pre-tax yield (% of average investment portfolio assets)                  2.7  %                       2.7  %


We manage credit risk by analyzing issuers, transaction structures and any associated collateral. We also manage credit risk through country, industry, sector and issuer diversification and prudent asset allocation practices.



We primarily mitigate interest rate risk by employing a buy and hold investment
philosophy that seeks to match fixed income maturities with expected liability
cash flows in modestly adverse economic scenarios.

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Liquidity and Capital Resources

Cash Flows



The following table summarizes our consolidated cash flows for the periods
indicated:

                                                                   Three months ended
                                                                       March 31,
(Amounts in thousands)                                            2022           2021
Net cash provided by (used in):
Operating activities                                           $ 160,800      $ 127,028
Investing activities                                            (146,497)      (148,487)
Financing activities                                                   -              -

Effect of exchange rate changes on cash and cash equivalents 29

-


Net increase (decrease) in cash and cash equivalents           $  14,332

$ (21,459)




Our most significant source of operating cash flows is from premiums received
from our insurance policies, while our most significant uses of operating cash
flows are generally for claims paid on our insured policies and our operating
expenses. Net cash from operating activities increased due to timing of tax
payments made to our Parent and lower unearned premium declines from cancelled
single premium policies.

Investing activities are primarily related to purchases, sales, and maturities
of our investment portfolio. Net cash used by investing activities decreased
slightly as a result of lower net purchases of fixed maturity securities in the
current year.

There were no dividends paid or other financing activity during the three months
ended March 31, 2022. The amount and timing of future dividends is discussed
within "-Trends and Conditions" as well as below.

Capital Resources and Financing Activities



We issued our 2025 Senior Notes in 2020 with interest payable semi-annually in
arrears on February 15 and August 15 of each year. The 2025 Senior Notes mature
on August 15, 2025. We may redeem the 2025 Senior Notes, in whole or in part, at
any time prior to February 15, 2025, at our option, by paying a make-whole
premium, plus accrued and unpaid interest, if any. At any time on or after
February 15, 2025, we may redeem the 2025 Senior Notes, in whole or in part, at
our option, at 100% of the principal amount, plus accrued and unpaid interest.
The 2025 Senior Notes contain customary events of default, which subject to
certain notice and cure conditions, can result in the acceleration of the
principal and accrued interest on the outstanding 2025 Senior Notes if we breach
the terms of the indenture.

Pursuant to the GSE Restrictions, we were required to retain $300 million of the net proceeds from the 2025 Senior Notes offering that can be drawn down exclusively for our debt service or to contribute to EMICO to meet its regulatory capital needs including PMIERs. The current balance of the 2025 Senior Notes proceeds required to be held by our holding company is approximately $228 million. See "-Trends and Conditions" for additional information regarding the GSE Restrictions.

Restrictions on the Payment of Dividends



The ability of our regulated insurance operating subsidiaries to pay dividends
and distributions to us is restricted by certain provisions of North Carolina
insurance laws. Our insurance subsidiaries may pay dividends only from
unassigned surplus; payments made from sources other than unassigned surplus,
such as paid-in and contributed surplus, are categorized as distributions.
Notice of all dividends must be submitted to the Commissioner of the NCDOI (the
"Commissioner") within 5 business days after declaration of the dividend or
distribution, and at least 30 days before payment thereof. No dividend may

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be paid until 30 days after the Commissioner has received notice of the
declaration thereof and (i) has not within that period disapproved the payment
or (ii) has approved the payment within the 30-day period. Any distribution,
regardless of amount, requires that same 30-day notice to the Commissioner, but
also requires the Commissioner's affirmative approval before being paid. Based
on our estimated statutory results and in accordance with applicable dividend
restrictions, EMICO has the capacity to pay dividends from unassigned surplus of
$110 million as of March 31, 2022, with 30 day advance notice to the
Commissioner of the intent to pay. In addition to dividends and distributions,
alternative mechanisms, such as share repurchases, subject to any requisite
regulatory approvals, may be utilized from time to time to upstream surplus.

In addition, we review multiple other considerations in parallel to determine a
prospective dividend strategy for our regulated insurance operating
subsidiaries. Given the regulatory focus on the reasonableness of an insurer's
surplus in relation to its outstanding liabilities and the adequacy of its
surplus relative to its financial needs for any dividend, our insurance
subsidiaries consider the minimum amount of policyholder surplus after giving
effect to any contemplated future dividends. Regulatory minimum policyholder
surplus is not codified in North Carolina law and limitations may vary based on
prevailing business conditions including, but not limited to, the prevailing and
future macroeconomic conditions. We estimate regulators would require a minimum
policyholder surplus of approximately $300 million to meet their threshold
standard. Given (i) we are subject to statutory accounting requirements that
establish a contingency reserve of at least 50% of net earned premiums annually
for ten years, after which time it is released into policyholder surplus and
(ii) that no material 10-year contingency reserve releases are scheduled before
2024, we expect modest growth in policyholder surplus through 2024. As a result,
minimum policyholder surplus could be a limitation on the future dividends of
our regulated operating subsidiaries.

Another consideration in the development of the dividend strategies for our
regulated insurance operating subsidiaries is our expected level of compliance
with PMIERs. Prior to the satisfaction of the GSE Conditions, the GSE
Restrictions also require EMICO to maintain 120% of PMIERs Minimum Required
Assets through 2022, and 125% thereafter. In addition, under PMIERs, EMICO is
subject to other operational and financial requirements that approved insurers
must meet in order to remain eligible to insure loans purchased by the GSEs.
Refer to "-Trends and Conditions" for recent updates related to these
requirements.

Our regulated insurance operating subsidiaries are also subject to statutory
"risk-to-capital" ("RTC") requirements that affect the dividend strategies of
our regulated operating subsidiaries. EMICO's domiciliary regulator, the NCDOI,
requires the maintenance of a statutory RTC ratio not to exceed 25:1. See
"-Risk-to-Capital Ratio" for additional RTC trend analysis.

We consider potential future dividends compared to the prior year statutory net
income in the evaluation of dividend strategies for our regulated operating
subsidiaries. We also consider the dividend payout ratio, or the ratio of
potential future dividends compared to the estimated U.S. GAAP net income, in
the evaluation of our dividend strategies. In either case, we do not have
prescribed target or maximum thresholds, but we do evaluate the reasonableness
of a potential dividend relative to the actual or estimated income generated in
the proceeding or preceding calendar year after giving consideration to
prevailing business conditions including, but not limited to the prevailing and
future macroeconomic conditions. In addition, the dividend strategies of our
regulated operating subsidiaries are made in consultation with our Parent.

In April 2022, EMICO completed a distribution of approximately $242 million to
EHI that will support our ability to pay a quarterly dividend. We intend to use
these proceeds and future EMICO distributions to fund a quarterly dividend as
well as to bolster our financial flexibility at EHI and return additional
capital to shareholders. All future dividends from EHI will be subject to Parent
consent and EHI Board of Directors approval.

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Risk-to-Capital Ratio



We compute our RTC ratio on a separate company statutory basis, as well as for
our combined insurance operations. The RTC ratio is net RIF divided by
policyholders' surplus plus statutory contingency reserve. Our net RIF
represents RIF, net of reinsurance ceded, and excludes risk on policies that are
currently delinquent and for which loss reserves have been established.
Statutory capital consists primarily of statutory policyholders' surplus (which
increases as a result of statutory net income and decreases as a result of
statutory net loss and dividends paid), plus the statutory contingency reserve.
The statutory contingency reserve is reported as a liability on the statutory
balance sheet.

Certain states have insurance laws or regulations that require a mortgage
insurer to maintain a minimum amount of statutory capital (including the
statutory contingency reserve) relative to its level of RIF in order for the
mortgage insurer to continue to write new business. While formulations of
minimum capital vary in certain states, the most common measure applied allows
for a maximum permitted RTC ratio of 25:1.

The following table presents the calculation of our RTC ratio for our combined insurance subsidiaries as of the dates indicated:

(Dollar amounts in millions) March 31, 2022 December 31, 2021 Statutory policyholders' surplus $ 1,438 $

            1,397
Contingency reserves                         3,168                   3,042
Combined statutory capital         $         4,606      $            4,439
Adjusted RIF(1)                    $        55,512      $           54,201
Combined risk-to-capital ratio                  12.1                    

12.2

______________

(1)Adjusted RIF for purposes of calculating combined statutory RTC differs from RIF presented elsewhere in this periodic report. In accordance with NCDOI requirements, adjusted RIF excludes delinquent policies.

The following table presents the calculation of our RTC ratio for our principal insurance company, EMICO, as of the dates indicated:

(Dollar amounts in millions) March 31, 2022 December 31, 2021 Statutory policyholders' surplus $ 1,386 $

            1,346
Contingency reserves                         3,167                   3,041
EMICO statutory capital            $         4,553      $            4,387
Adjusted RIF(1)                    $        55,321      $           54,033
EMICO risk-to-capital ratio                   12.2                      12.3


______________
(1)Adjusted RIF for purposes of calculating EMICO statutory RTC differs from RIF
presented elsewhere herein. In accordance with NCDOI requirements, adjusted RIF
excludes delinquent policies.

Liquidity



As of March 31, 2022, we maintained liquidity in the form of cash and cash
equivalents of $440 million compared to $426 million as of December 31, 2021,
and we also held significant levels of investment-grade fixed maturity
securities that can be monetized should our cash and cash equivalents be
insufficient to meet our obligations. On August 21, 2020, we issued the 2025
Senior Notes. The GSE Restrictions required us to retain $300 million of the net
2025 Senior Notes proceeds that can be drawn down exclusively for our debt
service or to contribute to EMICO to meet its regulatory capital needs including
PMIERs, until the GSE Conditions are satisfied. See "-Trends and Conditions" for
additional details. We distributed $437 million of the net proceeds to Genworth
Holdings at the closing of the offering of our 2025 Senior Notes. The 2025
Senior Notes were issued to persons reasonably believed to be qualified
institutional buyers in a private offering exempt from registration pursuant to
Rule 144A under

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the Securities Act and to non-U.S. persons outside of the United States in
compliance with Regulation S under the Securities Act. The current balance of
the 2025 Senior Notes proceeds required to be held by our holding company is
approximately $228 million.

The principal sources of liquidity in our business currently include insurance
premiums, net investment income and cash flows from investment sales and
maturities. We believe that the operating cash flows generated by our mortgage
insurance subsidiary will provide the funds necessary to satisfy our claim
payments, operating expenses and taxes. However, our subsidiaries are subject to
regulatory and other capital restrictions with respect to the payment of
dividends. As of March 31, 2022, the $300 million of the net proceeds of the
2025 Senior Notes offering retained by EHI comprises substantially all of the
cash and cash equivalents held directly by EHI and initially available to pay
interest on the 2025 Senior Notes. To the extent the remaining balance of the
$300 million of net proceeds retained from the 2025 Senior Notes offering is
used to provide capital support to EMICO, the GSEs and the NCDOI may seek to
prevent EMICO from returning that capital to EHI in the form of a dividend,
distribution or an intercompany loan. We currently have no material financing
commitments, such as lines of credit or guarantees, that are expected to affect
our liquidity over the next five years, other than the 2025 Senior Notes.

Financial Strength Ratings



The following EMICO financial strength ratings have been independently assigned
by third-party rating organizations and represent our current ratings, which are
subject to change.

Name of Agency                    Rating    Outlook     Action      Date of Rating
Moody's Investor Service, Inc.     Baa2     Stable     Upgrade    September 24, 2021
Fitch Ratings, Inc.                BBB+     Stable     Affirmed     April 27, 2022
S&P Global Ratings                 BBB     Positive    Affirmed     March 11, 2022

Contractual Obligations and Commitments



Our loss reserves are driven largely by delinquencies from borrower forbearance
programs due to COVID-19. We expect a large portion of these delinquencies to
cure before becoming an active claim; however, reserves recorded related to
borrower forbearance have a high degree of estimation. Therefore, it is possible
we could have higher contractual obligations related to these loss reserves if
they do not cure as we expect. Other than the aforementioned loss reserves,
there have been no material additions or changes to our contractual obligations
or other off-balance sheet arrangements as compared to the amounts disclosed
within our audited consolidated financial statements for the years ended
December 31, 2021 and 2020.

Critical Accounting Estimates

As of the filing date of this report, there were no significant changes in our critical accounting estimates from those discussed in our Annual Report.

New Accounting Standards



Refer to Note 2 in our unaudited condensed consolidated financial statements for
the three months ended March 31, 2022 and 2021, and in our audited consolidated
financial statements for the years ended December 31, 2021 and 2020, for a
discussion of recently adopted and not yet adopted accounting standards.

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