MTG — MGIC Investment Corporation

Summary of MGIC Investment Corporation Q1 2026 Earnings Call

1. Key Financial Results and Metrics:

• Net Income: $165 million, or $0.76 per diluted share, up from $0.75 per diluted share year-over-year.
• Return on Equity: Annualized at 13%.
• Book Value per Share: Increased to $23.63, a 10% rise year-over-year.
• New Insurance Written (NIW): $14 billion, a 41% increase from the previous year, marking the largest first quarter since 2022.
• Insurance in Force: Approximately $303 billion, flat quarter-over-quarter and up 3% year-over-year.
• Persistency Rate: 84%, down from 85% in the previous quarter.
• Investment Income: $62 million, flat year-over-year.
• Share Repurchases: 7.2 million shares for $193 million in Q1; an additional 1.7 million shares for $47 million in Q2 to date.
• Dividends: $35 million quarterly dividend declared, with a total of $400 million paid to the holding company to enhance liquidity.

2. Strategic Updates and Business Highlights:

• The company continues to focus on disciplined capital allocation, emphasizing prudent insurance in force growth over immediate capital returns.
• A new $750 million share repurchase program was authorized, reflecting confidence in financial strength.
• Engagement in industry discussions to improve housing affordability, supporting recent credit score modernization initiatives by the FHFA.
• Strong underwriting standards maintained with low early payment defaults indicating solid credit quality.

3. Forward Guidance and Outlook:

• MGIC expects insurance in force to remain relatively flat throughout 2026, with potential for increased refinance activity if mortgage rates decline more than anticipated.
• Operating expenses are projected to be between $190 million and $200 million for the full year.
• The company anticipates continued strong credit performance, with delinquency rates expected to normalize gradually.

4. Bad News, Challenges, or Points of Concern:

• The persistency rate has declined, which could impact future premium yields.
• Seasonal trends that typically benefit mortgage credit performance were less pronounced in Q1.
• A slight increase in the account-based delinquency rate, up 14 basis points year-over-year, raises concerns about potential normalization of credit conditions.
• The macroeconomic environment remains uncertain, with potential headwinds from gas and energy prices affecting borrowers.

5. Notable Q&A Insights:

• Management acknowledged that the increase in delinquency rates was influenced by unique reporting timing from servicers, which may have skewed results.
• There is an expectation for normalization in delinquency rates, influenced by the aging of the insurance portfolio and potential shifts in refinancing activity.
• The increase in new notice severity is attributed to a changing vintage mix rather than regional pressures, with newer vintages carrying higher average loan amounts.
• The company remains vigilant about macroeconomic factors, particularly interest rates and unemployment, which significantly influence borrower behavior and credit performance.

Overall, MGIC demonstrated strong financial performance in Q1 2026, with positive growth in NIW and disciplined capital management, while also navigating challenges related to credit normalization and macroeconomic uncertainties.