Essent Group Ltd.ESNT
Essent Group Ltd. Commitments Disclosure
Commitments and Contingencies
Obligations under Guarantees
Under the terms of CUW Solutions' contract underwriting agreements with lenders and subject to contractual limitations on liability, we agree to indemnify certain lenders against losses incurred in the event that we make an error in determining whether loans processed meet specified underwriting criteria, to the extent that such error materially restricts or impairs the salability of such loan, results in a material reduction in the value of such loan or results in the lender repurchasing the loan. The indemnification may be in the form of monetary or other remedies. For each of the years ended December 31, 2025 and 2024, we paid less than $0.1 million related to remedies. As of December 31, 2025, management believes any potential claims for indemnification related to contract underwriting services through December 31, 2025 are not material to our consolidated financial position or results of operations.
In addition to the indemnifications discussed above, in the normal course of business, we enter into agreements or other relationships with third parties pursuant to which we may be obligated under specified circumstances to indemnify the counterparties with respect to certain matters. Our contractual indemnification obligations typically arise in the context of agreements entered into by us to, among other things, purchase or sell services, finance our business and business transactions, lease real property and license intellectual property. The agreements we enter into in the normal course of business generally require us to pay certain amounts to the other party associated with claims or losses if they result from our breach of the agreement, including the inaccuracy of representations or warranties. The agreements we enter into may also contain other indemnification provisions that obligate us to pay amounts upon the occurrence of certain events, such as the negligence or willful misconduct of our employees, infringement of third-party intellectual property rights or claims that performance of the agreement constitutes a violation of law. Generally, payment by us under an indemnification provision is conditioned upon the
other party making a claim, and typically we can challenge the other party's claims. Further, our indemnification obligations may be limited in time and/or amount, and in some instances, we may have recourse against third parties for certain payments made by us under an indemnification agreement or obligation. As of December 31, 2025, contingencies triggering material indemnification obligations or payments have not occurred historically and are not expected to occur. The nature of the indemnification provisions in the various types of agreements and relationships described above are believed to be low risk and pervasive, and we consider them to have a remote risk of loss or payment. We have not recorded any provisions on the consolidated balance sheets related to these indemnifications.
Commitments
We lease office space for use in our operations under leases accounted for as operating leases. These leases generally include options to extend them for periods of up to fifteen years. Our option to extend the term of our primary office locations at the greater of existing or prevailing market rates was not recognized in our right-of-use asset and lease liability. When establishing the value of our right-of-use asset and lease liability, we determine the discount rate for the underlying leases using the prevailing market interest rate for a borrowing of the same duration of the lease plus the risk premium inherent in the borrowings under our Credit Facility. Operating lease right-of-use assets of $29.9 million and $30.0 million as of December 31, 2025 and 2024, respectively, are reported on our consolidated balance sheet as . of $36.6 million and $36.2 million as of December 31, 2025 and 2024, respectively, are reported on our consolidated balance sheet as other accrued liabilities. Total rent expense was $5.5 million, $5.9 million and $5.1 million for the years ended December 31, 2025, 2024 and 2023, respectively.
The following table presents lease cost and other lease information as of and for the years ended December 31:
| Year Ended December 31, | ||||||||||||||||||||
| ($ in thousands) | 2025 | 2024 | 2023 | |||||||||||||||||
| Lease cost: | ||||||||||||||||||||
| Operating lease cost | $ | 5,605 | $ | 5,918 | $ | 5,138 | ||||||||||||||
| Short-term lease cost | 215 | 207 | 128 | |||||||||||||||||
| Sublease income | (364) | (213) | (142) | |||||||||||||||||
| Total lease cost | $ | 5,456 | $ | 5,912 | $ | 5,124 | ||||||||||||||
| Other information: | ||||||||||||||||||||
| Weighted average remaining lease term - operating leases | 8.3 years | 9.4 years | 10.6 years | |||||||||||||||||
| Weighted average discount rate - operating leases | 4.7 | % | 4.6 | % | 4.5 | % | ||||||||||||||
The following table presents a maturity analysis of our lease liabilities as follows at December 31, 2025:
| Year Ended December 31 (In thousands) | ||||||||
| 2026 | $ | 5,977 | ||||||
| 2027 | 5,706 | |||||||
| 2028 | 5,480 | |||||||
| 2029 | 5,275 | |||||||
| 2030 | 4,882 | |||||||
| 2031 and thereafter | 17,414 | |||||||
| Total lease payments to be paid | 44,734 | |||||||
| Less: Future interest expense | (8,089) | |||||||
| Present value of lease liabilities | $ | 36,645 | ||||||
The maturity analysis of our lease liabilities shown above have not been reduced by minimum sublease rental income of $0.1 million due in 2026 under the non-cancelable sublease.
Contingencies
Our title operations may occasionally be named as a defendant in claims concerning alleged errors or omissions pertaining to the issuance of title policies or the performance of escrow services. The Company assesses pending and threatened claims to determine whether losses are probable and reasonably estimable in accordance with ASC 450, Contingencies. The Company maintains a reserve for potential losses related to title research and the related title policies sold by the Company as the agent. This reserve is subjective and is based on known claims and claims incurred but not yet reported to the Company. The Company monitors the claims reserve for adequacy on a quarterly basis. As of December 31, 2025 the Company had recorded a claims reserve on the Consolidated Balance Sheet of $3.6 million, which is included in other accrued liabilities.Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 18, 2026 | Showing above |
| 2024 | Feb 19, 2025 | |
| 2023 | Feb 16, 2024 | |
| 2022 | Feb 17, 2023 | |
| 2021 | Feb 16, 2022 | |
| 2020 | Feb 26, 2021 | |
| 2019 | Feb 18, 2020 | |
| 2018 | Feb 19, 2019 | |
| 2017 | Feb 20, 2018 | |
| 2016 | Feb 16, 2017 | |
| 2015 | Feb 29, 2016 | |
About Commitments Disclosures
Commitments and contingencies disclosures catalog a company's off-balance-sheet obligations and legal exposures — purchase commitments, guarantee arrangements, pending litigation, and regulatory proceedings. These items represent potential future cash outflows that may not appear as liabilities on the balance sheet until they become probable and estimable.
Key signals: litigation reserves and disclosed loss ranges quantify management's estimate of legal exposure, but unquantified "reasonably possible" losses often represent the larger risk. Watch for changes in language around pending cases — shifts from "remote" to "reasonably possible" or increases in estimated loss ranges signal deteriorating outcomes. Unconditional purchase obligations and take-or-pay contracts create fixed cost structures that reduce operational flexibility. Guarantee arrangements for subsidiaries or joint ventures can create cascading obligations. Compare the total commitment schedule against projected free cash flow to assess whether the company can meet its obligations without additional financing.