Enact Holdings Inc., the holding company for Enact Mortgage Insurance Co., has inked a deal with five lenders that have agreed to extend a $200 million revolving line of credit to the company.
The credit facility will be used for working capital and other corporate purposes as well as for capital contributions to its insurance subsidiaries. Enact (Nasdaq: ACT), formerly known as Genworth Mortgage Insurance Corp., announced the new five-year credit facility in a filing with the U.S. Securities and Exchange Commission (SEC).
The annual interest rate for borrowings against the line of credit include, at Enact’s option, either a base rate or an adjusted-term SOFR (Secured Overnight Financing Rate] rate. Both borrowing options also include a margin based on the company’s current credit rating — which is now 2% for the SOFR loan or 1% for the base-rate loan, according to Enact’s SEC filing.
“This new credit facility enhances our financial flexibility and bolsters our already strong balance sheet,” said Dean Mitchell, executive vice president and chief financial officer of Enact. “We are pleased with the terms of the facility, which reflect our strong operating performance, credit profile and capital position.”
The revolving credit facility is not secured but is tied to certain loan covenants that restrict the ability of Enact and its subsidiaries, with some exceptions, from doing the following:
- Incurring or guaranteeing added debt.
- Paying dividends or making other distributions, redemptions or repurchases of capital stock.
- Making certain investments.
- Incurring certain liens.
- Entering into transactions with affiliates.
- Merging or consolidating.
- Transferring or selling assets.
The credit agreement also requires the company to maintain minimum net worth, total adjusted capital, debt-to-capital and liquidity levels.
“The Corporation may voluntarily repay outstanding loans and terminate commitments under the revolving facility at any time without premium or penalty,” Enact’s SEC filing states.
Five banks are participating in extending the $200 million line of credit to enact. They are led by JPMorgan Chase Bank, as administrative agent and joint lead arranger and Truist Bank as joint lead arranger. The other three lenders participating in the credit facility are Goldman Sachs Bank USA, Barclays Bank PLC and Citibank.
Enact recorded net income of $165 million on net premiums of $234 million for the first quarter of 2022 compared with net income of $125 million on net premiums of $253 million for the same quarter in 2021, the company reported. The mortgage insurer had $232 billion in insurance in force as of the end of the first quarter of this year, up 10% compared with $210 billion as of the end of the first quarter of 2021.
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