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    MTG
    Earnings call· Jun 2026(Q2 FY26)

    MGIC INVESTMENT Q2 FY26 earnings call MTG

    Jul 30, 2026 Source

    Executive summary

    MGIC Investment Corporation Q2 FY26 — Strong Profitability and Capital Returns Amidst Credit Normalization

    MGIC delivered solid Q2 FY26 results, driven by strong underwriting and effective capital management, including significant share repurchases and a dividend increase. While credit normalization continues with a slight increase in delinquencies, the company maintains a robust balance sheet and expects continued favorable credit performance. The market remains competitive, and the company is focused on disciplined execution and strategic reinsurance to navigate evolving conditions.

    Highlights

    5

    • Net income of $182 million, delivering an annualized return on equity of 14.5%.

    • Book value per share increased 10% year-over-year to $24.27.

    • New insurance written (NIW) of $18 billion, up 8.5% from Q2 2025 and highest since Q3 2022.

    • Favorable loss reserve development of $43 million due to better-than-expected cure activity.

    • Approved an increase to quarterly common stock dividend to $0.17 per share, marking 6 consecutive years of increases.

    Concerns

    4

    • Delinquency rate increased 16 basis points year-over-year to 2.37%.

    • In-force premium yield continued its slight downward trend, down a little less than 1 basis point in the past 3 years.

    • Investment portfolio growth and resulting investment income limited by capital return activities.

    • Affordability remains stretched due to high interest rates and home prices, limiting market growth.

    Guidance & targets

    3
    CategoryTargetConfidence
    Full-year operating expenses
    toward the low end of the $190 million to $200 million range
    medium materiality
    High
    In-force premium yield trajectory
    continue on a similar path to the past couple of years
    medium materiality
    Medium
    Delinquency rate trend
    increase in delinquencies in the second half of the year
    medium materiality
    High

    Operational metrics

    24
    Net income
    $182 million
    Q2 FY26

    Reported net income for the quarter.

    Annualized return on equity (ROE)
    14.5%
    Q2 FY26

    Annualized ROE for the quarter.

    Book value per share
    $24.27up 10% YoY
    Q2 FY26

    Book value per share at quarter-end.

    New insurance written (NIW)
    $18 billionup 8.5% from Q2 2025
    Q2 FY26

    New insurance written in the second quarter, driven by seasonal growth in the purchase market.

    Insurance in force (IIF)
    $305 billionup slightly QoQ, up 2.6% YoY
    Q2 FY26

    Total insurance in force at the end of the quarter.

    Annual persistency
    83%down slightly from 84% last quarter
    Q2 FY26

    Annual persistency rate, in line with expectations.

    Balance sheet capital
    $6 billion
    Q2 FY26

    Total balance sheet capital, indicating a robust capital structure.

    PMIERs required assets reduction by reinsurance
    $3.1 billion
    Q2 FY26

    Reinsurance program's impact on reducing PMIERs required assets.

    Favorable loss reserve development
    $43 million
    Q2 FY26

    Favorable reestimation of ultimate losses on prior delinquencies, primarily from better-than-expected cure activity on 2025 delinquency notices.

    Initial claim rate assumption for new delinquencies
    7.5%
    Q2 FY26

    The initial claim rate assumption applied to new delinquency notices received in the second quarter.

    Count-based delinquency rate
    2.37%decreased 7 bps QoQ, increased 16 bps YoY
    Q2 FY26

    The delinquency rate at the end of the second quarter.

    In-force premium yield
    38 bpsdown a little less than 1 bps in the past 3 years
    Q2 FY26

    The in-force premium yield for the quarter, continuing a slight downward trend.

    Book yield on investment portfolio
    approximately 4%
    Q2 FY26

    The book yield on the company's investment portfolio.

    Underwriting and other expenses
    $46 milliondown from $52 million in Q2 2025
    Q2 FY26

    Underwriting and other expenses for the quarter, reflecting disciplined expense management.

    Share repurchases
    $177 million
    Q2 FY26

    Amount spent on share repurchases in the second quarter.

    Share repurchases
    $746 million
    LTM

    Total share repurchases over the prior four quarters.

    Shareholder dividends
    $135 million
    LTM

    Total shareholder dividends paid over the prior four quarters.

    Payout of net income
    124%
    LTM

    Combined share repurchases and dividends as a percentage of net income earned over the prior four quarters.

    Quarterly common stock dividend
    $0.17increased from $0.15 per share
    Q3 FY26 onwards

    New quarterly common stock dividend amount.

    Mix of above 45 DTI business
    slight decrease
    last 2 years

    A slight decrease in the amount of business with Debt-to-Income ratios above 45% over the last two years, not necessarily due to guideline changes.

    Reinsurance risk sharing (quota share)
    up to 40%
    ongoing

    Percentage of risk ceded through quota share reinsurance.

    Reinsurance risk sharing (excess of loss)
    about 30%
    ongoing

    Percentage of risk allocated to excess of loss deals.

    Reinsurance risk sharing (ILN market)
    about 30%
    ongoing

    Percentage of risk allocated to the ILN market.

    Reinsurance detachment point (MI retention)
    2.5% to 3%
    ongoing

    The initial loss position retained by MGIC before reinsurance attaches.

    Industry KPIs

    1
    MetricValueDetails
    Capital returnsTotal $881 million returnedUSD

    Deals & partnerships

    1
    panel of highly rated reinsurersTraditional excess of loss reinsurance transactionup to $168 million

    Further enhanced the reinsurance program by executing a traditional excess of loss reinsurance transaction.

    Risks & headwinds

    6
    Seasonal increase in delinquenciessecond half of the year

    expect seasonality to lead to an increase in delinquencies

    Mitigation: delinquency trends remain consistent with credit normalization experienced over the past 3 years

    Stunted refi marketforeseeable future

    Refi market, obviously, is going to be really stunted by where rates are right now.

    Mitigation: company content to return capital to shareholders if in-force portfolio is not growing

    Affordability challenges

    Affordability definitely continues to be stretched, again, with where interest rates are and where home prices are.

    Mitigation: no meaningful underwriting changes needed given expected performance and risk-adjusted returns

    Competitive marketplaceongoing

    competitive marketplace, right? With 6 active participants.

    Mitigation: disciplined execution and strategy refinement

    Downward trend in in-force premium yieldongoing

    down a little less than 1 basis point in the past 3 years

    Mitigation: expected to continue on a similar path, not unexpected

    Limited investment portfolio growthongoing

    capital return activities have limited the growth in the investment portfolio and the resulting investment income.

    Mitigation: prioritizes prudent insurance in-force growth over capital return; capital return reflects strong credit performance and robust financial position

    What to watch in Q3 FY26

    4

    Delinquency rate trend

    H2 FY26
    Current2.37% (decreased 7 bps QoQ, increased 16 bps YoY)
    Targetseasonal increase in H2 FY26

    Why it matters

    Management expects a seasonal increase in delinquencies in the second half of the year, which will test the consistency of the ongoing credit normalization trend.

    While we expect seasonality to lead to an increase in delinquencies in the second half of the year, the delinquency trends through the second quarter remain consistent with the credit normalization we have been experiencing for the past 3 years.

    Q&A highlights

    6

    Seeking color on new notices by region or vintage to inform future credit views, given the 10-15 bps YoY increase in delinquency rate is consistent with normalization.

    Management stated that other than the natural roll-forward to more recent vintages, they see no significant differences in the mix of new delinquencies across key credit variables, regions, or correlation to home price changes. This reinforces confidence in broad-based credit normalization.

    “we really don't see a lot of difference in the mix, and we're not seeing it geographically. We're not seeing it really correlated to, say, home price changes in various states.”

    asked by Terry Ma · answered by Nathaniel Colson

    2 min read6 chapters

    Detailed Narrative

    01

    Financial Performance Highlights

    MGIC reported net income of $182 million, translating to an annualized return on equity of 14.5%. Diluted EPS was $0.86, up from $0.81 last year. Book value per share reached $24.27, a 10% increase year-over-year, reflecting the company's strong financial health and consistent execution.

    02

    Credit Quality and Delinquency Trends

    The company experienced $43 million in favorable loss reserve development, primarily due to better-than-expected cure activity on 2025 delinquencies. While the count-based delinquency rate decreased 7 basis points quarter-over-quarter due to seasonality, it increased 16 basis points year-over-year to 2.37%. Management noted that delinquency trends are consistent with credit normalization and remain below 2019 levels.

    03

    Capital Management and Shareholder Returns

    MGIC maintains a robust capital structure with $6 billion of balance sheet capital. The company paid a common stock dividend of $0.15 per share and repurchased 6.6 million shares for $177 million in Q2. Over the prior four quarters, share repurchases totaled $746 million and dividends $135 million, representing a 124% payout of net income. The Board approved an increase in the quarterly dividend to $0.17 per share, marking six consecutive years of increases.

    04

    Reinsurance Strategy

    MGIC's reinsurance program significantly reduced PMIERs required assets by $3.1 billion (approximately 52%). The company executed a traditional excess of loss reinsurance transaction providing up to $168 million of protection on eligible NIW in 2027, complementing its programmatic approach to both XOL and ILN markets. Management aims for approximately one-third risk sharing across quota share, traditional XOL, and ILN.

    05

    Market Conditions and Underwriting Posture

    New insurance written (NIW) reached $18 billion, an 8.5% increase year-over-year, driven by seasonal growth in the purchase market. However, the refi market remains stunted by high interest rates, and affordability challenges persist. Management indicated no meaningful changes to underwriting guidelines, remaining comfortable with the current mix of business and risk-adjusted returns.

    06

    Industry Representation

    CEO Tim Mattke assumed the role of Chairman of USMI, the industry's trade association, highlighting the company's commitment to informing policy discussions with data and experience regarding mortgage insurance's value to the housing finance system.

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