10-Q: MGIC Investment Corp. Q2 2026 Earnings Report

MGIC Investment Corporation reports a decrease in net income for Q2 2026 compared to the prior year, primarily due to increased losses incurred, though new insurance written saw an increase.

Summary

• MGIC Investment Corporation reported a decrease in net income for the second quarter and first six months of 2026 compared to the same periods in 2025.
• Net income for Q2 2026 was $182.1 million, down from $192.5 million in Q2 2025. For the six months ended June 30, 2026, net income was $347.4 million, down from $377.9 million in the prior year.
• The decrease in net income was primarily attributed to an increase in net losses incurred and a decrease in net premiums earned.
• New insurance written (NIW) increased to $17.8 billion in Q2 2026 from $16.4 billion in Q2 2025, and $32.2 billion for the six months ended June 30, 2026, up from $26.6 billion in the prior year.
• The company maintained compliance with GSEs' Private Mortgage Insurer Eligibility Requirements (PMIERs), with available assets exceeding minimum required assets by $2.7 billion as of June 30, 2026.
• The company's risk-to-capital ratio was 9.9:1 as of June 30, 2026, which is below the maximum allowed by jurisdictions with State Capital Requirements.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this filing as having a negative sentiment due to the decrease in net income and significant increase in losses incurred, despite positive NIW growth.

Positives

• New insurance written (NIW) increased by 8.5% to $17.8 billion in Q2 2026 compared to Q2 2025, and by 21% for the first six months of 2026 compared to the prior year, indicating market growth.
• The company remains in compliance with GSEs' Private Mortgage Insurer Eligibility Requirements (PMIERs), with available assets exceeding minimum required assets by $2.7 billion as of June 30, 2026.
• The risk-to-capital ratio of 9.9:1 is below the 25:1 maximum allowed by most state regulations.
• The company declared a quarterly cash dividend of $0.17 per share, an increase from the $0.15 per share paid in prior quarters.
• The company has remaining authorization to repurchase $806.0 million of its common stock under existing programs.

Negatives

• Net income decreased by 5% to $182.1 million in Q2 2026 compared to $192.5 million in Q2 2025.
• Net income for the six months ended June 30, 2026, decreased by 8% to $347.4 million compared to $377.9 million in the prior year.
• Losses incurred, net, increased significantly by 488% in Q2 2026 compared to Q2 2025, and by 555% for the six-month period.
• Net premiums earned decreased by 3% for both the three and six-month periods ended June 30, 2026, compared to the prior year.
• The company's investment portfolio experienced net unrealized losses of $3.2 million at June 30, 2026.

Risks

• Adverse U.S. economic and housing market conditions could lead to decreased new insurance written and increased delinquencies, claim frequency, and claim severity.
• Changes to the business practices or legislative/regulatory reforms affecting Fannie Mae and Freddie Mac (GSEs) could materially affect the company's business and financial results.
• Failure to comply with GSEs' Private Mortgage Insurance Eligibility Requirements (PMIERs) could limit operations or lead to termination of eligibility.
• Loss reserve estimates are subject to uncertainties, and actual losses may differ materially from estimates.
• Operating in a highly regulated environment means regulatory changes or enforcement actions could adversely affect operations and financial results.
• Pandemics, severe weather events, and climate-related developments may negatively affect home prices and affordability, potentially increasing delinquencies and claims.
• Instability in financial markets or counterparty failures could increase credit risk and losses.
• Cybersecurity breaches or data privacy incidents could disrupt operations and cause financial and reputational damage.

Future Outlook

The company expects its full-year 2026 NIW to remain relatively flat compared with 2025. With elevated Annual Persistency and continued high credit quality for NIW expected in 2026, the in force portfolio premium yield is expected to remain relatively flat during 2026, though net premium yield may fluctuate due to accelerated earnings on single premium policies and reinsurance.

Management Comments

• The company believes that changes such as more rigorous underwriting standards, higher quality credit profiles, strengthened mortgage loan servicing and government support to help borrowers stay in their homes, have led to improved credit performance on its 2009 and later books.
• The company expects average claims paid as a percentage of exposure to increase, though the magnitude and timing of this increase is uncertain.
• The company believes its holding company has sufficient sources of liquidity to meet its payment obligations for the foreseeable future.

Industry Context

StockSavvy.ai notes that MGIC's performance reflects broader trends in the mortgage insurance sector, including increased new insurance written driven by a larger purchase origination market, but also faces headwinds from rising losses incurred. The company's ability to maintain PMIER compliance and manage its risk-to-capital ratio remains crucial in this evolving regulatory and economic landscape.

Comparison to Industry Standards

• MGIC's net income for Q2 2026 ($182.1 million) and six months ($347.4 million) shows a decline compared to the prior year, which may be a concern relative to peers if they are experiencing growth.
• The significant increase in losses incurred (488% for Q2, 555% for six months) is a key area to monitor against industry trends, as it directly impacts profitability.
• The increase in New Insurance Written (NIW) for both periods suggests a potentially stronger market for mortgage insurance overall, which should be compared against competitors' NIW growth.
• The company's effective duration of 4.1 years for its fixed income portfolio is a standard metric for interest rate sensitivity, and its comparison to industry benchmarks would be relevant for assessing investment risk.
• The company's risk-to-capital ratio of 9.9:1 is a key solvency metric; industry standards and peer comparisons are essential to gauge its strength.

Corporate Governance

Legal Proceedings

• The company is involved in disputes and legal proceedings in the ordinary course of business, but in management's opinion, their ultimate resolution will not have a material adverse effect on financial condition or results of operations.

Stakeholder Impact

• Shareholders: The company declared an increased quarterly cash dividend of $0.17 per share and has an ongoing share repurchase program, indicating a return of capital.
• Creditors: The company is in compliance with its debt covenants.
• Regulators: The company must continue to comply with PMIERs and state capital requirements, which could impact operations if not met.
• Employees: The company's financial performance and operational stability affect employee job security and compensation.

Next Steps

• The company expects its full-year 2026 NIW to remain relatively flat compared with 2025.
• The company expects its in force portfolio premium yield to remain relatively flat during 2026.
• The company expects net losses and LAE paid to increase, though the magnitude and timing are uncertain.
• In the next twelve months, the company anticipates paying approximately $154.4 million for amounts owed for transferable federal tax credits and approximately $12.8 million for purchase obligations.

Key Dates

Recommendation

While the increase in New Insurance Written is positive, the significant rise in losses incurred and the resulting decrease in net income suggest caution. The company's compliance with regulatory requirements (PMIERs, state capital) and its ability to manage increasing losses will be key factors to monitor. The increased dividend and share repurchase authorization are positive but do not outweigh the core profitability concerns in the current reporting period.

Keywords

Mortgage Insurance, PMIERs, New Insurance Written, Loss Reserves, GSEs, Reinsurance, Delinquency Rate, Financial Statements