MGIC (MTG) Q1 FY26 earnings call: guidance and Q&A

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

Followed up on whether servicer reporting also impacted cure rates and asked about the impact of gas/energy prices on borrowers.

Nathan confirmed servicer reporting impacts both new notices and cures. He noted that while cure rates are normalizing from historically good levels, later-stage cure rates remain strong. Regarding macro factors, he stated that while they monitor energy prices, interest rates drive activity more than goods prices, and strong wage growth and nominal GDP are offsetting factors.

“The servicer reporting timing does impact both new notices and cures. Relative to energy prices and just general price levels and the impact on consumers and on borrowers that we ensure... I do think that rates drive activity and behavior in our space a lot more than maybe higher prices for certain goods.”

asked by Terry Ma · answered by Nathaniel Colson

Asked if AOCI reversal plays a role in the payout ratio and if the current payout level is sustainable given flat insurance in force.

Tim Mattke stated that AOCI is primarily a GAAP concept and does not significantly impact capital return decisions, which are based more on statutory and PMIERs capital. He confirmed that assuming consistent performance and macroeconomic environment, the current pace of capital return is comfortable.

“Generally, we don't really think about AOCI as something that really impacts our thought about capital return. It's much more of a GAAP concept. And so looking at statutory and PMIERs.”

asked by Bose George · answered by Timothy Mattke

Asked where the delinquency rate is expected to stabilize and the path to get there, considering portfolio changes and regulations.

Nathan Colson explained that the delinquency rate has seen gradual upward movement (10-15 bps YoY increase) consistent with normalizing credit. He noted that the current book has a significant amount of aged in-force, which are typically higher delinquency periods. The stabilization path depends on future interest rates and new business volume; lower rates would benefit delinquency rates but pressure premium yields, while persistent high rates would increase delinquency but maintain renewal premiums.

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

asked by Mihir Bhatia · answered by Nathaniel Colson

Noted increased refinance share of NIW (6% to 20%) but steady premium yield and persistency (84-85%), asking for the drivers and future outlook.

Nathan clarified that persistency saw a slight decline in Q1 and would tick down further if refinance activity remained at 20% of NIW. He stated that the current expectation is for moderation in refinance activity in Q2 and H2, with rates around 6.25%-6.5%. If rates drop significantly, persistency would lower, NIW would be higher, and premium yield could face headwinds.

“If refinance activity remained at the 20% level of NIW, I do think that, that would work its way into the premium yield that we're seeing and persistency will continue to tick down.”

asked by Mihir Bhatia · answered by Nathaniel Colson