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    MTG
    Earnings call· Mar 2026(Q1 FY26)

    MGIC INVESTMENT Q1 FY26 earnings call MTG

    Apr 30, 2026 Source

    Executive summary

    MGIC Q1 FY26 — Strong NIW Growth and Robust Capital Returns

    MGIC reported a strong first quarter, driven by significant new insurance written and solid operating performance, leading to a 13% annualized return on equity and a 10% increase in book value per share. The company continues its disciplined capital allocation, initiating a new $750 million share repurchase program while maintaining a robust capital structure. While credit quality remains favorable, management noted a slight sequential increase in delinquency rates against seasonal trends, partly attributed to servicer reporting timing.

    Highlights

    5

    • Net income of $165 million, delivering an annualized return on equity of 13%.

    • Book value per share increased 10% year-over-year to $23.63.

    • New insurance written (NIW) increased 41% year-over-year to $14 billion, the largest Q1 since 2022.

    • Favorable loss reserve development of $31 million due to better-than-expected delinquency notices.

    • Board authorized a new $750 million share repurchase program.

    Concerns

    3

    • Delinquency rate increased 1 basis point quarter-over-quarter, against normal seasonal trends of decline.

    • Refinance activity, while elevated in Q1, is expected to moderate, potentially impacting future NIW growth and persistency.

    • Housing affordability remains a challenge for many prospective homebuyers.

    Guidance & targets

    3
    CategoryTargetConfidence
    Insurance in force
    remain relatively flat
    medium materiality
    Medium
    Operating expenses
    $190 million to $200 million
    medium materiality
    High
    In-force premium yield
    remain relatively flat
    medium materiality
    Medium

    Operational metrics

    25
    Net income
    $165 million
    Q1 FY26

    Reported for the first quarter.

    Annualized return on equity
    13%
    Q1 FY26

    Delivered in the first quarter.

    Book value per share
    $23.63up 10% year-over-year
    Q1 FY26

    At the end of the first quarter.

    New insurance written (NIW)
    $14 billionup 41% from last year
    Q1 FY26

    Driven by higher refinance activity and a modestly larger purchase market.

    Insurance in force
    $303 billionrelatively flat quarter-over-quarter, up 3% from a year ago
    Q1 FY26

    At the end of the first quarter.

    Annual persistency rate
    84%down from 85% last quarter
    Q1 FY26

    Aligned with expectations entering the year.

    Balance sheet capital
    $6 billion
    Q1 FY26

    Reflects robust capital structure.

    PMIERs required assets reduction
    $3.1 billionapproximately 52%
    Q1 FY26

    Achieved through the reinsurance program.

    Share repurchase program authorization
    $750 million
    Last week

    Board authorized new program.

    Dividend to holding company
    $400 million
    Earlier this week

    Paid by MGIC to enhance holding company liquidity.

    Favorable loss reserve development
    $31 million
    Q1 FY26

    Primarily due to delinquency notices received in 2025 exceeding expectations.

    Initial claim rate assumption
    7.5%
    Current

    Applied to delinquency notices received in the quarter.

    Account-based delinquency rate
    14 basis pointsyear-over-year increase
    Q1 FY26

    Increased year-over-year.

    Account-based delinquency rate
    1 basis pointin the quarter increase
    Q1 FY26

    Increased sequentially, against normal seasonal trends.

    In-force premium yield
    38 basis pointsflat sequentially
    Q1 FY26

    Consistent with expectations.

    Investment income
    $62 millionflat sequentially and year-over-year
    Q1 FY26

    Book yield on investment portfolio approximately 4% for the last year.

    Underwriting and other expenses
    $48 milliondown from $53 million in Q1 last year
    Q1 FY26

    Reflects disciplined expense management.

    Shares repurchased
    7.2 million
    Q1 FY26

    Allocated excess capital to share repurchases.

    Common stock dividend paid
    $35 million
    Q1 FY26

    Quarterly dividend.

    Total capital returned (prior 4 quarters)
    $888 million
    Prior 4 quarters

    Combined share repurchases and shareholder dividends.

    Payout ratio (prior 4 quarters)
    123%
    Prior 4 quarters

    Payout of net income earned over the period.

    Shares repurchased (Q2 FY26 to April 24)
    1.7 million
    Q2 FY26 (through April 24)

    Additional repurchases in the second quarter.

    Common stock dividend per share
    $0.15
    Q2 FY26

    Board approved dividend.

    Refinance activity as % of NIW
    21%
    Q1 FY26

    Increased from prior periods.

    Persistency run rate (quarterly activity)
    closer to 80%
    Q1 FY26

    Based on quarterly activity, distinct from annual measure.

    Industry KPIs

    1
    MetricValueDetails
    Capital returns$750 millionUSD

    Risks & headwinds

    5
    Housing affordabilityongoing

    remains a challenge for many prospective homebuyers

    Mitigation: Private mortgage insurance plays a critical role in supporting housing affordability by enabling low down payment borrowers into the market.

    Impact of servicer reporting timing on delinquency ratesQ1 FY26

    may have increased new notices and decreased cures in Q1 FY26

    Mitigation: April trends look pretty favorable and more in line with what we would have expected; cure rates on new notices remain strong.

    Macroeconomic headwinds (energy prices, general price levels)ongoing

    no direct impact seen to date; interest rates drive activity more than goods prices

    Mitigation: Actively monitor; strong wage growth and nominal GDP are offsetting factors; maintain flexible credit policy, underwriting, and capital position.

    Normalization of cure ratesongoing

    expected some normalization from historically good levels

    Mitigation: Later-stage cure rates (12, 18, 24 months) are much better, leading to favorable development.

    Potential for lower persistency and premium yield from increased refinance activityfuture, if rates decline significantly

    if refinance activity remained at 20% of NIW, persistency would tick down and premium yield could face slight headwinds

    Mitigation: Current expectations are for moderation in refinance activity in Q2 and H2, with rates around 6.25%-6.5%.

    What to watch in Q2 FY26

    5

    Delinquency rate trend

    next quarter and beyond
    Currentincreased 1 basis point QoQ to 14 bps YoY
    Targetnormalization of delinquency rate, potentially gradual upward movement

    Why it matters

    Delinquency rates are a key indicator of credit quality and potential future losses, impacting reserve development and profitability.

    I think we would expect a gradual upward movement in the delinquency rate. If the '20, '21, '22, '23 books persist as they have.

    Q&A highlights

    5

    Asked for color on Q1 credit trends, specifically the 1 bp QoQ increase in delinquency rate against normal seasonal declines.

    Nathan Colson explained that while broad-based seasonal benefits were less pronounced, unique servicer reporting timing (earlier in March) likely accelerated new notices and decreased cures. He noted that April trends look more favorable and cure rates remain strong, leading to consistent reserve releases.

    “We had a couple of servicers that gave us reporting earlier in March than they had in prior periods. So that may have accelerated -- or may have increased a little bit the amount of new notices and decrease the cures that we have seen.”

    asked by Terry Ma · answered by Nathaniel Colson

    2 min read5 chapters

    Detailed Narrative

    01

    Q1 Performance Highlights

    MGIC reported net income of $165 million for Q1 FY26, translating to an annualized return on equity of 13%. Book value per share grew 10% year-over-year to $23.63. The company generated $14 billion in new insurance written (NIW), marking a 41% increase from the prior year and its strongest Q1 since 2022, primarily driven by higher refinance activity and a modestly larger purchase market.

    02

    Capital Management and Shareholder Returns

    The Board authorized a new $750 million share repurchase program, underscoring the company's commitment to disciplined capital allocation and shareholder value. In Q1, MGIC repurchased 7.2 million shares for $193 million and paid a $35 million common stock dividend. Over the past four quarters, total capital returned (buybacks + dividends) amounted to $888 million, representing a 123% payout of net income.

    03

    Credit Quality and Delinquency Trends

    The company's portfolio continues to exhibit strong credit quality, with early payment defaults remaining low. Favorable loss reserve development of $31 million was recorded, primarily from 2025 delinquencies. While the account-based delinquency rate increased 1 basis point quarter-over-quarter against normal seasonal declines, management attributed this partly to servicer reporting timing, noting that cure rates on new notices remain strong.

    04

    Insurance in Force and Persistency

    Insurance in force stood at approximately $303 billion at quarter-end, flat sequentially and up 3% year-over-year. The annual persistency rate was 84%, slightly down from 85% last quarter. Management expects insurance in force to remain relatively flat for FY26, acknowledging that a significant decline in mortgage rates could boost refinance activity but also lower persistency.

    05

    Industry and Regulatory Landscape

    MGIC actively supports housing affordability initiatives and is engaged in industry discussions. The company fully supports FHFA's credit score modernization advances, including the adoption of VantageScore 4.0 and FICO Score 10 T, and is working to operationalize these changes with GSEs and lenders to lower costs for borrowers.

    AI-generated summary of the company’s earnings call. Not investment advice.