Essent Group (ESNT) Stock Analysis & Winston Score

Essent Group is a private mortgage insurance company. When someone buys a home but puts down less than 20%, their lender usually requires mortgage insurance to protect against the risk of the borrower not paying back the loan. Essent sells that insurance to mortgage lenders across the United States, making it one of the larger private mortgage insurers in the country. Essent earns money by collecting regular premium payments on the mortgage insurance policies it writes. The company operates mainly in the U.S. residential housing market and has a relatively simple, focused business model compared to large diversified insurers. Its high margins reflect the low overhead nature of the insurance-writing business. The main risk Essent faces is a rise in unemployment or a drop in home prices, either of which could cause more homeowners to default on their loans and trigger large insurance payouts that hurt profits.