What MGIC Investment (MTG) Said on Its Q3 Earnings Call

Key Points

• Q3 net income reached $175 million, or $0.85 per diluted share, while new insurance written rose 3.6% year over year to $17 billion and insurance in force grew 2.2% to $307 billion.
• Credit performance remained favorable, with a 10% loss ratio helped by $34 million in favorable reserve development. MGIC expects delinquencies to rise gradually as newer loan vintages become a larger share of its portfolio.
• MGIC returned $287.5 million through buybacks and dividends during the quarter and approved another $0.17-per-share dividend. It also updated reinsurance arrangements, including transactions covering eligible 2027–2029 business.

MGIC Investment NYSE: MTG reported third-quarter 2026 net income of $175 million as new insurance written increased and favorable reserve development helped hold down losses. Executives said they expect delinquency rates to rise gradually as the mortgage insurer’s portfolio shifts toward newer loans, while capital returns remain sensitive to market conditions and the company’s share price.

Net income was $0.85 per diluted share, compared with $0.83 a year earlier. Annualized return on equity was 14.2%, Chief Executive Officer Tim Mattke said on the earnings call.

MGIC wrote $17 billion of new insurance during the quarter, up 3.6% from the third quarter of 2025. Insurance in force ended the period at $307 billion, an increase of 2.2% from a year earlier. Annual persistency, a measure of policies remaining in force, was 83%, unchanged from the previous quarter.

Credit performance and reserve assumptions

The company’s loss ratio was 10%, benefiting from $34 million of favorable loss reserve development. Chief Financial Officer Nathan Colson said the adjustment primarily reflected better-than-expected cures on delinquency notices received in 2025 and the first quarter of 2026. A cure occurs when a delinquent borrower returns to good standing.

The count-based delinquency rate rose to 2.52%, up 15 basis points from the prior quarter and 20 basis points from a year earlier. Colson described the increase as consistent with a multiyear normalization in credit performance following unusually strong results during the COVID-19 period.

MGIC’s portfolio is becoming more concentrated in loans from 2022 and later, which the company expected to have somewhat higher ultimate loss ratios than its 2020 and 2021 books, Colson said. Those newer vintages are performing slightly better than expected, he added, but their growing share of the portfolio is expected to contribute to a slow increase in the delinquency rate.

MGIC maintained its initial claim rate assumption of 7.5% for new delinquency notices. Colson said ultimate claim rates on nearly fully developed notice quarters have risen from historically low levels but remain below that assumption. He said the next change to the initial assumption is more likely to be an increase than a decrease, although strong credit performance could continue to produce favorable reserve development.

Capital returns and reinsurance

MGIC repurchased 5.1 million shares for $152.5 million during the quarter and paid a dividend of $0.17 per share. Over the preceding four quarters, it returned $711 million through buybacks and $135 million through dividends, equivalent to 122% of net income earned during that period, Mattke said. The board also approved another quarterly dividend of $0.17 per share.

Colson said the company prefers to invest capital in organic growth, but muted market conditions and strong business performance have supported returns at or above net income. He said repurchases remain price-sensitive: The pace slowed in the third quarter but accelerated in October as the share price moved closer to book value.

MGIC also outlined changes to its reinsurance program. The company executed an excess-of-loss transaction providing up to $168 million of coverage on eligible 2027 new insurance written. Amendments to quota-share agreements covering 2023 business are expected to reduce their ongoing cost by about 35% beginning in 2027.

The company agreed to terms for a 40% quota-share transaction covering eligible 2028 business and a separate 20% quota share for eligible 2029 business. Colson estimated the after-tax cost of capital for the forward transactions at around 3%, while noting that future risk, pricing and return conditions will ultimately determine the cost.

Expenses, premium yield and cancellation policy

Underwriting and other expenses fell to $45 million from $50 million a year earlier. MGIC now expects full-year operating expenses to come in slightly below the low end of its previous $190 million to $200 million range. Colson said a larger quota-share program and associated ceding commissions accounted for an estimated couple of million dollars of the quarterly year-over-year decline.

The in-force premium yield was 38 basis points, down less than half a basis point from a year earlier. Colson expects the yield to continue gradually declining at a pace similar to that of recent years. He declined to forecast net premium yield, saying it is substantially affected by near-term losses and profit commissions under quota-share agreements.

Executives also discussed a recent executive order that calls for the Federal Housing Finance Agency to explore a mortgage-insurance cancellation pilot. Mattke said it was too early to determine MGIC’s response without details of a potential pilot, including eligibility requirements. He said the company supports efforts to lower costs for new homeowners and hopes to share its views with regulators and the government-sponsored enterprises.

Colson estimated that roughly 40,000 to 50,000 policies a year in MGIC’s book are canceled at borrowers’ request while the underlying loans continue. The estimate is based on cancellations occurring more than 180 days before the expected Homeowners Protection Act cancellation date. He said the company already incorporates both statutory and borrower-requested cancellations into its models.

About MGIC Investment (NYSE:MTG)

MGIC Investment Corporation NYSE: MTG is a holding company whose principal subsidiary is Mortgage Guaranty Insurance Corporation (MGIC), a provider of private mortgage insurance in the United States. MGIC's insurance helps protect mortgage lenders and investors against losses when borrowers default, enabling qualified homebuyers to obtain mortgages with smaller down payments.

MGIC primarily offers primary mortgage insurance for residential loans, working with mortgage lenders, banks and other housing-finance institutions.

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