ESNT reported for the 3rd qtr last week. I’m providing a summary here using essentially the same format as last quarter.

Here are updated numbers for ESNT through 3rd qtr 2016:

```
Qtr 1st 2nd 3rd 4th
Earnings
2013 .22
2014 .18 .23 .29 .33
2015 .38 .41 .44 .48
2016 .52 .57 .65
YoY Earnings Growth
2014 50%
2015 111% 78% 52% 45%
2016 37% 39% 48%
Current 1YPEG = 0.24
Revenue
2013 42
2014 48 54 65 73
2015 80 84 92 97
2016 103 108 121
YoY Revenue Growth
2014 74%
2015 67% 56% 42% 33%
2016 29% 29% 32%
Combined Ratio (percent)
2013 73.8 58.7 54.1 57.0
2014 54.4 48.9 42.9 42.3
2015 39.3 37.6 38.4 37.8
2016 37.2 34.1 34.1
```

Earnings and revenue continues to grow and are accelerating for 2016 3rd qtr, and Combined Ratio is unchanged at 34.1 % (which is awesome). 1YPEG is at .24 for share price of $27.10, which is much than at the last quarter (.30).

As I noted in my previous summaries, these articles explain the metrics I am calculating, and can be used to value insurance companies in general:

http://www.investopedia.com/articles/investing/082813/how-va…

http://seekingalpha.com/article/3280525-how-to-find-a-great-…

Here are updated metrics.

**Metric 1: Price to Book Tangible Book Value**

Rule of thumb is P/B should be less than 2.0. At a share price of $27.10, ESNT has P/B of 1.91 based on 2016 3rd qtr numbers. Not over 2, so OK, and essentially unchanged from last quarter.

**Metric 2: Premium Growth**

YoY premium growth was 46% for 2015, 25% for 1st qtr 2016, 29% for 2nd qtr, and 32% for 3rd qtr. Steady increase in premium growth continued this quarter.

**Metric 3: Net Income Growth**

YoY net income growth was 78% for 2015 and 38% for 1st qtr 2016, 41% for 2nd qtr, and 46% for 3rd. More increased growth. This is becoming a pattern.

**Metric 4: Combined Ratio**

The lower the better for this metric that measures how well an insurance company turns sold premiums into profit. For all of 2015, the combined ratio was 38.3% and reduced to 37.2% for 1st qtr 2016. Dropped in 2nd qtr to 34.1% and remains there for 3rd. This level is still just silly good.

**Metric 5: Float Calculations**

Float for 2015 was $219 mil and they had 20 mil return on investment for 9.1% and 1st qtr 2016 float was up to 228 mill with return of 2.7% for qtr. 2nd qtr was at 2.8% on $237 mil and 3rd is still 2.8% but on $245 mil – very nice. (1 – combined ratio) + return on float came in at 76.7% for prior 4 qtrs. Finally taking the last step suggested in the Rokke article, and dividing by P/B gives 40.2% based on 3rd qtr numbers. Even better than last quarter - which was awsome.

**Metric 6: Potential Return on Float: Equities / (Fixed Income + Cash)**

For ESNT, this ratio is 31.5% for 3rd qtr 2016. Even *more* aggressive level than last qtr which is OK as long as they are not required to pay out on a lot of claims

**Metric 7: Return on Equity**

ESNT ROE was at 14.1% for 2015 and updated for the 3rd quarter is 15.6% for the prior 4 quarters. Since an ROE in the mid teens is considered ideal for a well-run insurance company, ESNT passes this metric.

**Summary**

ESNT has put together another great quarter, and has continued to improve and grow almost every one of their metrics. Share price is still in the $26 - $27 range, which is about where it was last quarter, which means the YPEG is down to .24 from .30. I think shares are very reasonably priced right now, and I will definitely be adding shares if Mr. Market gives me a gift.

DT