Executives of mortgage insurer and reinsurer Essent Group Ltd said that the company’s Bermuda structure still gives it a tax advantage — even after US tax reform reduced the benefit.

Essent reported first-quarter profits of $111.1 million last Friday, or $1.13 per share, up from 72 cents per share a year earlier and beating the $1.10 consensus forecast of analysts tracked by Zacks.

The company is based in Bermuda and has a Bermudian-based reinsurer, Essent Re. The US tax reform, passed late last year, had a punitive impact on reinsurance transactions between US-based insurers and affiliated reinsurers based outside the US through its base erosion abuse tax.

In a conference call given by Essent executives after the results were released, Sean Dargan, an analyst with Wells Fargo Securities, asked: “Would it be fair to say that pre-tax reform, that your targeted returns were a point or two higher than your onshore competitors because of the tax advantage?”

Mark Casale, Essent’s chief executive officer, replied: “I wouldn’t say targeted returns. I would say, we generated stronger returns because of the tax advantage, yes.

“But I think we still target mid-teen returns. We never used our lower tax rate as a tool from a pricing perspective. We price competitively, and we always will continue to price competitively. The lower tax rate allowed us to achieve higher returns.”

Lawrence McAlee, Essent’s chief financial officer, added some detail.

“The corporate statutory rate [in the US] is 21 per cent, and you still see that we do receive a benefit from our Bermuda structure,” Mr McAlee said.

“Our estimated rate for this year is about 16.5 per cent. So there still is an incremental benefit that we generate from the Bermuda structure and having Essent Re in place.”

Essent posted revenue of $167.5 million during the first three months of the year, up from $127.6 million in the same period a year earlier. Essent said it generated a 23 per cent annualised return on equity.

On Friday, the company released its results before US markets opened, after which its shares rose $1.22, or 3.6 per cent.

Essent’s shares have fallen about 18.7 per cent on the New York Stock Exchange in the year to date.