Mortgage insurer Essent Group Ltd’s second-quarter earnings took a hit as borrowers were stretched by the economic impact of the pandemic.The Bermudian-based company said net income for the April-to-June period was $15.4 million, a drop of nearly 89 per cent from the $136.4 million profit in the corresponding quarter last year.The proportion of loans in default on Essent’s books surged to 5.19 per cent as of June 30 this year from 0.83 per cent three months earlier. As of the end of July, loans in default had fallen slightly to 5.01 per cent. Essent said its provision for losses and loss adjustment expenses for the second quarter was $175.9 million, compared to a provision of $8.1 million in the first quarter of 2020 and a provision of $5 million in the second quarter of 2019.The combined ratio — the proportion of premium dollars spent on claims and expenses — was 101.5 per cent, indicating an underwriting loss, and compared to 24.7 per cent in the second quarter of 2019.Mark Casale, Essent’s chairman and chief executive officer, said: “Our financial results for the second quarter reflect the initial impact of the Covid-19 pandemic on our insured portfolio. “Our outlook on the timing and shape of an economic recovery remains cautious. However, we remain confident that with the strength and sustainability of our operating model, in conjunction with our strong balance sheet, capital and liquidity, we are well suited to navigate this challenging operating environment.”The company’s board of directors declared a quarterly cash dividend of 16 cents per common share. The dividend is payable on September 10, 2020, to shareholders of record on August 31, 2020.Essent said insurance in force as of June 30, 2020 was $174.6 billion, up from $165.6 billion as of March 31, 2020.New insurance written for the second quarter was $28.2 billion, up from $18 billion in the same quarter a year ago.Net premiums earned were $211.5 million, compared to $188.5 million in the second quarter of 2019.Essent managed to cut its expense ratio for the quarter to 18.4 per cent from 22 per cent in the same period of last year.On June 2, 2020, Essent completed an offering of 13.8 million common shares at $33.25 per share, generating net proceeds of $440 million.