MGIC Posts $175 Million Q3 Profit as Delinquencies Creep Higher

MGIC Investment (NYSE:MTG) earned $175 million in the third quarter of 2026, or $0.85 per diluted share, up from $0.83 a year earlier, as new insurance written grew and favorable reserve development held down losses. The profit rests partly on a tailwind the company itself expects to fade: delinquency rates are rising, and executives say that rise will continue.

What did the quarter deliver?

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, held at 83%, unchanged from the previous quarter.

Annualized return on equity reached 14.2%, Chief Executive Officer Tim Mattke said on the earnings call.

The loss ratio came in at 10%, helped by $34 million of favorable loss reserve development. Chief Financial Officer Nathan Colson attributed the adjustment primarily to 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. Favorable development is a benefit today; it is also a signal that today's reserves may be set against conditions that will not persist.

Why is the delinquency rate climbing?

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.

The portfolio itself is shifting. MGIC's book is becoming more concentrated in loans from 2022 and later, which the company expected to carry somewhat higher ultimate loss ratios than its 2020 and 2021 books. Those newer vintages are performing slightly better than expected, Colson said, but their growing share of the portfolio should still lift the delinquency rate slowly over time.

MGIC kept its initial claim rate assumption at 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 flagged the direction of the next move: an increase is more likely than a decrease, though strong credit performance could keep producing favorable reserve development. Takeaway: the reserve assumption has not changed yet, but management is telling you which way it leans.

How much capital went back to shareholders?

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 — 122% of net income earned during that period, Mattke said. The board approved another quarterly dividend of $0.17 per share.

Returning more than 100% of earnings is sustainable only while capital generation outruns needs. 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. Repurchases remain price-sensitive: the pace slowed in the third quarter, then accelerated in October as the share price moved closer to book value.

What changed in the reinsurance program?

MGIC detailed several moves:

• 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, expected to cut their ongoing cost by about 35% beginning in 2027.
• Agreed terms for a 40% quota-share transaction covering eligible 2028 business.
• 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. The estimate, in other words, is a planning figure, not a locked price.

What about expenses and premium yield?

Underwriting and other expenses fell to $45 million from $50 million a year earlier. MGIC now expects full-year operating expenses 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 keep declining gradually at a pace similar to recent years. He declined to forecast net premium yield, citing its sensitivity to near-term losses and profit commissions under quota-share agreements.

What is the FHFA cancellation pilot risk?

Executives addressed a recent executive order directing the Federal Housing Finance Agency to explore a mortgage-insurance cancellation pilot. Mattke said it is 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, 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. The models account for the risk; they cannot price a pilot nobody has yet defined.