MGIC Investment Q4 2025 Earnings Report

MGIC Investment EPS Results

• Actual EPS: $0.75
• Consensus EPS: $0.73
• Beat/Miss: Beat by +$0.02
• One Year Ago EPS: $0.72

MGIC Investment Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $308.19 million
• Beat/Miss: N/A
• YoY Revenue Growth: -0.90%

MGIC Investment Announcement Details

• Quarter: Q4 2025
• Date: 2/2/2026
• Time: After Market Closes
• Conference Call Date: Tuesday, February 3, 2026
• Conference Call Time: 10:00AM ET

MGIC Investment (NYSE:MTG) (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 lenders manage the risk associated with residential mortgages made to borrowers who have limited down payments, allowing qualified homebuyers to obtain financing with less than 20% down.

MGIC primarily offers primary mortgage insurance to mortgage lenders, banks, credit unions and other residential lending institutions. Its coverage generally protects the insured lender against losses resulting from borrower default and foreclosure, while supporting the availability of conventional mortgage credit. The company also uses risk-management and reinsurance arrangements to manage its exposure to insured mortgage loans.

MGIC traces its history to 1961, when Mortgage Guaranty Insurance Corporation was established as one of the early private mortgage insurers. Through its lender relationships and insurance platform, the company serves the U.S. residential housing market across a broad national footprint. MGIC Investment is headquartered in Milwaukee, Wisconsin.

MGIC Investment Q4 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: MGIC reported strong results — Q4 net income of $169 million (annualized 13% ROE) and full‑year net income of $738 million with a 14.3% ROE, and grew book value per share to $23.47 (+13% YoY).
• Neutral Sentiment: The company surpassed $303 billion of insurance in force (an industry first) and wrote $60 billion of new insurance for 2025 (+8% YoY), but expects insurance‑in‑force to be relatively flat in 2026 if mortgage rates remain elevated.
• Positive Sentiment: Credit trends remain solid with an average origination credit score of 748, low early payment defaults, and a $31 million favorable reserve development this quarter driven by stronger‑than‑expected cure rates.
• Positive Sentiment: Management strengthened reinsurance and risk diversification (including a $250M excess‑of‑loss, a 40% quota share for 2027 NIW, and an insurance‑linked note), which reduced PMIERs required assets by $2.8 billion (~47%).
• Positive Sentiment: Capital returns and balance‑sheet flexibility remained priorities — MGIC returned $915 million to shareholders in 2025 (repurchasing 12% of shares outstanding and raising the dividend), while preserving $1 billion holding‑company liquidity and an operating‑company excess to PMIERs of $2.5 billion.

Presentation

[Operator]

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the MGIC Investment Corporation Fourth Quarter 2025 Earnings Call. At this time, all lines have been placed on mute to prevent any background noise. At the end of today's presentation, we'll have a question and answer session. If anyone should require to ask a question at this time, please press star one one on your telephone keypad. At this time, I would like to turn the conference over to Dianna Higgins, Head of Investor Relations. Please go ahead.

[Dianna Higgins, Head of Investor Relations at MGIC Investment Corporation]

Thank you, Howard. Good morning, and welcome, everyone. Thank you for your interest in MGIC. Joining me on today's call to discuss our results for the fourth quarter are Tim Mattke, Chief Executive Officer, and Nathan Colson, Chief Financial Officer and Chief Risk Officer. Our press release, which contains MGIC's fourth quarter financial results, was issued yesterday and is available on our website at mtg.mgic.com under Newsroom.

[Dianna Higgins, Head of Investor Relations at MGIC Investment Corporation]

It includes additional information about our quarterly results that we will reference during today's call, as well as a reconciliation of non-GAAP financial measures to their most comparable GAAP measures. In addition, we posted a quarterly supplement on our website that provides details about our primary risk in force and other information you may find valuable. As a reminder, from time to time, we may post updates to our underwriting guidelines, additional presentations, or corrections to past materials on our website.

[Dianna Higgins, Head of Investor Relations at MGIC Investment Corporation]

Before we get started today, I want to remind everyone that during today's call, we may make forward-looking statements regarding our expectations for the future. Actual results could differ materially from those expressed in these forward-looking statements. Additional information about the factors that could cause actual results to differ materially from those discussed in today's call is included in our 8-K filed yesterday. If we make any forward-looking statements, we are not undertaking an obligation to update those statements in the future in light of subsequent events. No one should rely on the fact that such guidance or forward-looking statements are current at any time other than the time of this call or the issuance of our 8-K. With that, I now have the pleasure of turning the call over to Tim.

[Tim Mattke, CEO at MGIC Investment Corporation]

Thank you, Dianna, and good morning, everyone. We delivered another quarter of solid financial results, closing 2025 strong and entering the new year from a position of strength. This performance is a continuation of the sustained momentum we've built over the past several years. Our performance stems from being grounded in decades of experience across a wide range of market cycles, disciplined risk management, and a thoughtful, measured approach to the market. We pair our expertise with a customer-centric mindset, continually evolving to meet the changing needs of our customers and the broader market. Turning to a few financial highlights, in the quarter, we earned net income of $169 million, producing an annualized 13% return on equity.

[Tim Mattke, CEO at MGIC Investment Corporation]

For the full year, we earned net income of $738 million, and a full year return on equity was 14.3%. Our strong operating performance and robust balance sheet enabled us to grow book value per share to $23.47, 13% higher year-over-year. As I mentioned on last quarter's call, we are proud to have achieved a significant milestone in our company's history and an industry first during the year, surpassing $300 billion of insurance in force. We continue to grow insurance in force in the fourth quarter, ending the year with more than $303 billion, up 3% from a year ago. Annual persistency remained elevated and stable throughout 2025, ending the quarter at 85%, in line with our expectations at the start of the year.

[Tim Mattke, CEO at MGIC Investment Corporation]

We wrote $17 billion of high-quality new business in the fourth quarter and $60 billion for the full year, an increase of 8% from the prior year. Consensus mortgage origination forecasts project the size of the MI market in 2026 will be relatively similar to 2025, with mortgage rates remaining elevated. Overall, we expect insurance in force to remain relatively flat in 2026. If mortgage rates were to decrease more in 2026 than currently predicted, we expect the size of the MI market would benefit due to increased refinance volume, but growth in insurance in force would be offset by lower persistency. Our focus remains on building and maintaining a strong, well-diversified insurance portfolio. Credit quality of our insurance portfolio remains solid, with an average credit score at origination of 748.

[Tim Mattke, CEO at MGIC Investment Corporation]

To date, we have not seen a material change in the credit performance of our portfolio, and early payment defaults remain low, which we believe is a good indicator of near-term credit trends. As discussed throughout the year, financial strength and flexibility are the cornerstones of our capital management strategy, positioning us to perform well across a range of economic environments. As part of our strategy, we regularly evaluate capital levels of both the operating company and holding company, taking into account current and potential future environments to position ourselves for success, an approach that has consistently served our stakeholders well. As part of this, we continue to bolster our reinsurance program through the use of forward commitment quota share agreements and excess of loss agreements executed in either the traditional reinsurance or capital markets.

[Tim Mattke, CEO at MGIC Investment Corporation]

In addition to reducing loss volatility and stress scenarios, these agreements provide capital diversification and flexibility at attractive costs. We remained active in the reinsurance market in the fourth quarter and in January. In the fourth quarter, as previously announced, we further strengthened our reinsurance program with a $250 million excess of loss transaction covering our 2021 NIW, and a 40% quota share transaction that will cover most of our 2027 NIW. We also amended the terms of our quota share treaties covering our 2022 NIW, with most participants from the existing reinsurance panel, reducing the ongoing cost by approximately 40% beginning in 2026.

[Tim Mattke, CEO at MGIC Investment Corporation]

In addition, in January, we completed our eighth insurance-linked note transaction, which provides $324 million of loss protection and covers certain policies written between January 2022 and March 2025. These reinsurance activities are aligned with our long-term strategy and reflect our consistent, disciplined approach to managing risk and capital. At the end of the fourth quarter, our reinsurance program reduced our PMIERs required assets by $2.8 billion, or approximately 47%. With that, let me turn it over to Nathan to provide more details on our financial results and capital management activities for the quarter.

[Nathan Colson, CFO and Chief Risk Officer at MGIC Investment Corporation]

Thanks, Tim, and good morning. As Tim mentioned, we had another quarter of solid financial results. We earned net income of $0.75 per diluted share, compared to $0.72 during the fourth quarter last year. For the full year, we earned net income of $3.14 per diluted share, compared to $2.89 per diluted share last year. Our re-estimation of ultimate losses on prior delinquencies resulted in $31 million of favorable loss reserve development in the quarter. The favorable development was primarily driven by delinquency notices we received in 2024 and in the first half of 2025, as cure rates on recent new notices continue to exceed our expectations. For new delinquency notices received in the quarter, we continue to apply the initial claim rate assumption of 7.5%, consistent with recent periods.

[Nathan Colson, CFO and Chief Risk Officer at MGIC Investment Corporation]

Our count-based delinquency rate increased 3 basis points from the prior year and 11 basis points in the quarter. The sequential increase was in line with our expectations and reflects normal seasonal patterns, as well as the continued aging of our 2021 and 2022 book years, as we have discussed on prior calls. The 3 basis point year-over-year increase was the slowest rate of increase since the first quarter of 2024, and we believe reflects the continued normalization of credit conditions that we have discussed throughout the year.

[Nathan Colson, CFO and Chief Risk Officer at MGIC Investment Corporation]

Turning to our revenue, the in-force premium yield was 38 basis points in the quarter and remained relatively flat during the year, consistent with what we expected at the start of the year. Given expectations of a similar MI market to 2025, we expect the in-force premium yield to remain near 38 basis points again in 2026.

[Nathan Colson, CFO and Chief Risk Officer at MGIC Investment Corporation]

Investment income totaled $62 million in the fourth quarter and again contributed meaningfully to revenue. The book yield on our investment portfolio was 4% at the end of the quarter. Investment income remained relatively flat sequentially and year-over-year, as both the book yield and the size of the investment portfolio have also remained relatively flat. During the quarter, reinvestment rates on our fixed income portfolio continued to exceed our book yield and remained relatively flat for the year. The unrealized loss position on our portfolio narrowed again this quarter by $16 million, primarily driven by lower interest rates. Underwriting and other expenses in the quarter were $46 million, down from $49 million in the fourth quarter last year.

[Nathan Colson, CFO and Chief Risk Officer at MGIC Investment Corporation]

For the full year, expenses were $201 million, down $17 million from 2024, and within the $195 million-$205 million range we shared throughout the year. We remain committed to disciplined expense management and ongoing operational efficiency across the organization. For 2026, we expect operating expenses to decline further to a range of $190 million-$200 million, due primarily to higher expected ceding commissions, as we have recently renegotiated several seasonal quota share reinsurance treaties instead of canceling those treaties. Turning to our capital management activities. Consistent with our approach over the past several years, we prioritize prudent insurance in force growth over capital return. Over the past several years, market conditions have constrained the growth of our insurance in force.

[Nathan Colson, CFO and Chief Risk Officer at MGIC Investment Corporation]

Against that backdrop, our capital return activity reflects our robust capital position, continued strong credit performance and financial results, and share price levels that we believe are attractive to generate long-term value for our shareholders. In the fourth quarter, we paid a quarterly common stock dividend of $33 million and repurchased 6.8 million shares of common stock for $189 million. For the full year, we returned $915 million of capital to our shareholders through a combination of share repurchases and dividends and reduced shares outstanding by 12%. This represents a 124% payout ratio of the year's net income, and our quarterly dividend increased by 15% in the third quarter, marking five consecutive years of dividend growth.

[Nathan Colson, CFO and Chief Risk Officer at MGIC Investment Corporation]

In January, we repurchased an additional 2.7 million shares of common stock for a total of $73 million. In addition, in January, as previously announced, the board approved the quarterly common stock dividend of $0.15 per share, payable on March sixth. All of these actions were taken while continuing to strengthen our balance sheet and enhance flexibility during the year. We paid $800 million in dividends from MGIC to the holding company during the year, ending the year with $1 billion of liquidity at the holding company and an excess to PMIERs of $2.5 billion at the operating company.

[Nathan Colson, CFO and Chief Risk Officer at MGIC Investment Corporation]

With that, let me turn it back over to Tim.

[Tim Mattke, CEO at MGIC Investment Corporation]

Thanks, Nathan. As the founder of Mortgage Guaranty Insurance Corporation nearly 70 years ago, we strive to be the most trusted and transparent partner in the MI industry. We are proud of the critical role private MI plays in the housing finance system. We look forward to continuing to work with industry stakeholders, including the FHFA and the GSEs, to responsibly serve low down payment borrowers, expand the use of private MI, protect the taxpayers from mortgage credit risk, and help shape the future of housing finance system. With that said, housing affordability remains a challenge for many prospective home buyers. We continue to actively participate in industry discussions and support responsible policy changes that improve affordability.

[Tim Mattke, CEO at MGIC Investment Corporation]

The passage of the Working Families Tax Cut restored the tax deductibility of MI premiums, providing meaningful tax relief to homeowners without increasing risk to the housing finance system.

[Tim Mattke, CEO at MGIC Investment Corporation]

In addition, the cost of private mortgage insurance premiums represents a temporary expense, unlike other ongoing homeownership costs, such as homeowners insurance and property taxes, which have risen significantly. Private mortgage insurance plays an important role in enabling low down payment borrowers to enter the market and achieve the American dream of homeownership sooner. In closing, we had a strong year, successfully executing our business strategies and returning meaningful capital to our shareholders. I'm confident in our talented team, our position in the market, as well as our ability to continue executing and delivering on our business strategies in 2026 and beyond, to create long-term value for all of our stakeholders. With that, Howard, let's take questions.

[Operator]

At this time, please press star one one on your telephone keypad. If your question has been answered or you wish to remove yourself from the queue, simply press star one one again. Again, if you have a question or comment at this time, please press star one one on your telephone keypad. Please stand by while we compile the Q&A roster. Our first question or comment comes from the line of Bose George from KBW. Mr. George, your line is open.

[Bose George, Managing Director at KBW]

Hey, guys, good morning. Actually, first I wanted to ask about any, you know, price competition or changes you're seeing in the industry. I mean, based on your comments, it sounds like, you know, premiums were very stable, but just wanted to confirm that.

[Tim Mattke, CEO at MGIC Investment Corporation]

Yeah, I think, Bose, I mean, I think, you know, we don't like to comment too much on industry pricing generally, but I think from our perspective, you know, we were able to, to sort of find the value where we wanted it this quarter, similar to what we've been seeing for the majority of the year, without having, you know, major sort of adjustments in our, in our premium, you know, in the quarter. So I think we feel good about that. Again, we focus on the returns ultimately and what we can get, but felt pretty good stability there, you know, looking back the last quarter.

[Bose George, Managing Director at KBW]

Okay, great. Thanks. And then switching over to sort of regulatory stuff, you know, the market seems quite, you know, worked up about a potential reduction in FHA premiums. Have you seen anything from the FHA itself or from, you know, from the administration that suggests that that is, that is a possibility?

[Tim Mattke, CEO at MGIC Investment Corporation]

You know, I always view when it comes to affordability and sort of looking at different levers, I always view it as a possibility. I don't get the sense that it's viewed as any more possible or any more work's being done specifically on it, right now than sort of making sure they understand sort of the different levers that can be pulled. So again, it's really tough to sort of try to put odds on it, other than I would say that I don't get the sense that there is any, you know, increasing sort of discussion of people we've talked with about it, other than I think whenever you look at affordability, we know that certain constituencies will advocate for reducing the FHA premium, and that always creates external pressure. But haven't seen anything just to believe that that is imminent.

[Tim Mattke, CEO at MGIC Investment Corporation]

But that can change quickly in this world, right?

[Bose George, Managing Director at KBW]

Okay, great. Thanks.

[Operator]

Thank you. Our next question or comment comes from the line of Terry Ma from Barclays. Mr. Ma, your line is open. Mr. Ma, you may be muted.

[Terry Ma, Senior Equity Research Analyst at Barclays]

Hey, yes, sorry, I was muted. Good morning. Thank you. Hey, I was interested to see if you could provide kind of any color on kind of credit trends that you're seeing kind of by region or state.

[Nathan Colson, CFO and Chief Risk Officer at MGIC Investment Corporation]

Terry, it's Nathan. I'll take that one. You know, we do look at the mix of new delinquencies that we're seeing on a monthly basis and really haven't seen much in the way of movement on a geographic basis, whether it be state or even at the market level. You know, I think when we look at the mix of new notices from, you know, the first quarter, the second quarter, the third quarter, compared to the fourth, you know, not seeing states that are really standing out, one way or the other. I think there's always some noise, especially with the relatively low level of new notices that we have. You know, some of the jurisdictions have relatively small numbers, so it can be a little bit noisier.

[Nathan Colson, CFO and Chief Risk Officer at MGIC Investment Corporation]

But as a kind of percent of the total, really not seeing areas that are standing out or areas of concern for us right now.

[Terry Ma, Senior Equity Research Analyst at Barclays]

Got it. That's helpful. And then on the reserve release in the quarter, appreciate the color and kind of makeup. But can you maybe just kind of remind us how that compares to the makeup, or the drivers that release, that you've had in the last, you know, few quarters? I know not a great way to look at it, but at least the magnitude of the release was noticeably lower than what you saw the last few quarters.

[Nathan Colson, CFO and Chief Risk Officer at MGIC Investment Corporation]

Yeah. Terry, it's Nathan again. I think the way that we've approached reserving and the way that then the reserve releases have kind of mechanically worked is unchanged. You know, we're always comparing our initial estimates to, you know, what we now think is our best estimate.

[Nathan Colson, CFO and Chief Risk Officer at MGIC Investment Corporation]

You know, in our business, cures come earlier than claims, so early cures don't give you as much new information about ultimate losses. So, you know, from what we're seeing, a couple of quarters ago, we would have seen reserve development coming out of maybe notices that we had received 2, 3, 4, 5 quarters before, and it kind of keeps moving forward as time advances. So, I would say, you know, the quarters where development is coming from are different, but mostly because, you know, we're just further in time.

[Nathan Colson, CFO and Chief Risk Officer at MGIC Investment Corporation]

So we had development, say, on the notices from the first half of 2025, but we wouldn't have had that, you know, say, in Q2, but it would have been from the back half of 2024, you know, those notices that had been aged for two or three quarters. So, and that's not a kind of rule or anything for us. It's really looking at how many are curing, what is the monthly pace and quarterly pace at which they're curing? How closely are they following previously identified trends and cure activity? And really, where do we think it will ultimately play out and continue to be reestimating down new notice quarters from our initial estimates of 7.5%, you know, down into the lower single digits.

[Terry Ma, Senior Equity Research Analyst at Barclays]

Got it. That's, that's helpful. Thank you.

[Nathan Colson, CFO and Chief Risk Officer at MGIC Investment Corporation]

Thank you.

[Operator]

Thank you. Our next question or comment comes from the line of Doug Harter from UBS. Mr. Harter, your line is now open.

[Doug Harter, Equity Research Analyst at UBS]

Thanks. I guess along those lines of the last question, can you just talk about the composition of the NODs and kind of what vintages those are coming from, and, you know, kind of as we get to the newer vintages with less HPA, how you think that might impact cures?

[Nathan Colson, CFO and Chief Risk Officer at MGIC Investment Corporation]

Yeah, Doug, it's Nathan. I think on the cure side, you know, really haven't seen a lot of divergence in cure activity based on vintage. I think, you know, perhaps the 2022 vintage is at the lower end of the range as we would look at cure rates by vintage for delinquent loans, but still all within a, I'd say, a pretty tight band, and much better than pre-COVID levels. You know, the long-term cure rates are really what are driving the ultimate reductions in our ultimate loss expectations. So, yeah, I think not seeing much on the cure rate side. On the delinquency emergence, you know, we have got a couple, you know, tables and charts in the supplement.

[Nathan Colson, CFO and Chief Risk Officer at MGIC Investment Corporation]

You know, one of them does look at delinquency rates over time by vintage. And you can see, you know, 2022 is running modestly higher than 2021 or 2020 or even 2019. But the recent vintages are all tracking very close to that or inside of that. So again, I think this is all consistent in our mind with the normalization in credit conditions coming off of, you know, kind of early post-COVID conditions that just led to, you know, very, very low losses for those vintages.

[Doug Harter, Equity Research Analyst at UBS]

Great. Appreciate it. Thank you.

[Operator]

Thank you. Our next question or comment comes from the line of Giuliano Bologna from Compass. Mr. Bologna, your line is open.

[Giuliano Bologna, Managing Director at Compass]

Yeah, congrats on the continued execution and especially on the expense management side. When I look forward to next year, obviously, you know, you put out the $190-$200 range for underwriting and operating expenses. I'd be curious, you know, especially looking at this environment, you know, are there any other levers that you could pull to kind of improve, you know, returns on capital, at least in the near term? I realize the environment's relatively tough when insurance in force, you know, is barely growing or expected to be roughly flat. I'm curious what other levers you might have, you know, that you could pull to, you know, push some incremental margin at this point.

[Nathan Colson, CFO and Chief Risk Officer at MGIC Investment Corporation]

Yeah, this is Nathan. I'll get started on the. I think the biggest thing that we've done this year, really in anticipation of a normalization in credit conditions and the movement away from, you know, what has been close to zero losses for the last couple of years, is really getting the reinsurance program, you know, really bolstered with really attractive costs on our in-force book, but increasingly covering our future new business. You know, 2026 and 2027 NIW is now covered. And, you know, when you think about return on capital, we often think about that as return on PMI's capital. And, you know, the reinsurance at the cost that we're able to procure it does provide us, you know, better returns on equity than we earn on a return on capital basis.

[Nathan Colson, CFO and Chief Risk Officer at MGIC Investment Corporation]

And that's why I think capital management for us is so important. And it's not just the capital return side of it, it's also, you know, how we're constructing, you know, our capital balance sheet for, you know, our regulatory capital measures, our risk-based capital measures, rating agencies, and the like. And increasingly, you know, that has taken on, you know, an even heavier reinsurance lean, partly because of the attractiveness of that market and the tail risk protection that it provides. But, you know, partly because we do think that that is the best way to continue to earn kind of good risk-adjusted returns on equity.

[Giuliano Bologna, Managing Director at Compass]

That's very helpful. And then, you know, maybe this partially addressed, but, you know, obviously during, you know, during the pickup and refinancing activity and kind of the expected continuation of that, you know, it's somewhat disproportionately impacting, you know, or sort of disproportionately impact your high WAC, WAC coupons that you have out there. I'm curious, is there any-- is there a big divergence in the premium rates between, you know, some of your COVID or lower WAC, lower WAC, insurance in force versus-

[Giuliano Bologna, Managing Director at Compass]

Yeah, some of the more recent vintages that seem to be, they're being more, much more exposed to, you know, refinance activity at the moment. And, you know, should that impact your average premium rate, yeah, throughout the year?

[Nathan Colson, CFO and Chief Risk Officer at MGIC Investment Corporation]

Yes, it's an interesting question. Premium rates on average have been relatively flat for the last, you know, five or six years. You know, and you can see that in our in-force premium yield. The really low coupon books that we wrote in 2020 and 2021 had a much lower credit risk at origination characteristics. So all else equal, they would have had lower premium rates. There was a lot of refinance activity in those books. Whereas the more recent higher coupon books have been purchase-dominated, you know, higher LTV, still really good credit profile, especially from a credit score perspective.

[Nathan Colson, CFO and Chief Risk Officer at MGIC Investment Corporation]

But, I don't think that, I think, you know, it's less about maybe the vintage effect and more if we're already insuring a loan, if that refis into something that has a lower capital charge and lower, you know, kind of, at origination credit characteristics, you know, all else equal, we get lower premium for that loan in a risk-based pricing market.

[Giuliano Bologna, Managing Director at Compass]

That's very helpful. I appreciate it, and I will jump back in the queue.

[Nathan Colson, CFO and Chief Risk Officer at MGIC Investment Corporation]

Thank you.

[Operator]

Thank you. Our next question or comment comes from the line of Mihir Bhatia from Bank of America. Your line is now open.

[Mihir Bhatia, Senior Equity Research Analyst at Bank of America]

Good morning. Thank you for taking my questions. The first one I wanted to ask was just about in-force premium yield. It declined a touch this quarter after being steady for most of 25. What drove that?

[Nathan Colson, CFO and Chief Risk Officer at MGIC Investment Corporation]

Yeah, Mihir, it's Nathan. You know, it was down a couple tenths of a basis point, and I think, you know, that's just, I think, for us, you know, within the margin of flat. It does fluctuate a little bit. I think, you know, we wrote more business in Q4 than we would have otherwise anticipated due to refinance activity. So that increases the ending in-force, but it doesn't add to premium because we don't collect premium in the, you know, often in the first month. It's really, you know, starts in the second month. So I think you're dealing with, you know, some really situations like that versus there being, you know, any substantive change in the mix of the in-force or the, you know, premium dollars on a direct basis were up.

[Nathan Colson, CFO and Chief Risk Officer at MGIC Investment Corporation]

So I think it probably has more to do with the insurance in-force dollars going up at the end, such that the average is a little bit higher and drives the yield lower. But again-

[Mihir Bhatia, Senior Equity Research Analyst at Bank of America]

Okay.

[Nathan Colson, CFO and Chief Risk Officer at MGIC Investment Corporation]

Those things, often, it will normalize over more than a quarter.

[Mihir Bhatia, Senior Equity Research Analyst at Bank of America]

Got it. And then I guess, somewhat related, but in your prepared remarks, you talked about insurance in-force staying flat, even if the market ends up being a little bigger because you think you'll have a maybe a giveback, if you will, on persistency. That didn't happen this quarter. So I guess, maybe just talk a little bit about that. Why do you think it would happen, at least early on in the early stages of, you know, a rate cut potentially or a larger market? Like, just given that didn't happen in fourth quarter, where you wrote more in NIW, but persistency stayed pretty high.

[Tim Mattke, CEO at MGIC Investment Corporation]

Yeah, I think, Mihir, it's Tim. I think it's all within sort of a range of outcomes. I think what we wanna make sure that we are clear about is that when refi activity, normally it's going to be times refi that happens from MI into MI, and that there's gonna be downward pressure on persistency. And so it just. If there's more NIW volume, it doesn't just inure to sort of a total increase in insurance in force. So yeah, we did have a slight increase this quarter, good call with an increase in sort of refi activity, pretty substantial increase in refi activity. But it's a very, I'd say, marginal sort of increase in our insurance in force.

[Tim Mattke, CEO at MGIC Investment Corporation]

And so I think just trying to make sure we temper the expectations appropriately, that even if interest rates fall, and the majority of the pickup in volume is from refi activity, that that has downward pressure on persistency.

[Mihir Bhatia, Senior Equity Research Analyst at Bank of America]

Got it. And then maybe just, I'll just wrap with this one. Just in terms of credit trends from here, anything we should be keeping in mind as we think about default rate, as we look at 2026 and 2027? Just from a, even from a vintage size perspective, are we through the peak years for the last vintages? Does vintage size maybe become a bit of a good guy for DQ rate from here, given persistency is staying elevated? Just any thoughts there on the default rate? Thanks.

[Nathan Colson, CFO and Chief Risk Officer at MGIC Investment Corporation]

Yeah, Mihir, it's Nathan. I think that's possible. You know, our expectations now are for a pretty similarly sized market. And with, you know, home price appreciation being relatively modest, the dollar growth that we've enjoyed in certain years, even if the units weren't growing as much, we don't think will be as strong. So, it does feel like we're off of the lows, though, in terms of the new business that we wrote, say, in 2023 or 2024. And it also feels like there's maybe more upside risk to NIW than downside at this point, given the refi volume we saw when rates, you know, went directionally lower but not, you know, that much lower, just into the low sixes, generated a lot of refi activity.

[Nathan Colson, CFO and Chief Risk Officer at MGIC Investment Corporation]

So, that could definitely become something that is a benefit to the in-force delinquency rate. But I think as we're seeing it today, you know, the next couple of vintages are maybe modestly higher, so any impact like that would be relatively modest.

[Mihir Bhatia, Senior Equity Research Analyst at Bank of America]

Got it. Thank you. Thank you for taking my questions.

[Operator]

Thank you. I'm showing no additional questions in the queue at this time. I'd like to. I'm sorry. We do have a follow-up question from Mr. Bose George from KBW. Mr. George, your line is open.

[Bose George, Managing Director at KBW]

Hey, guys, thanks for the follow-up. Actually, for modeling the ceded premium number, going forward, like, what's a good run rate for that? Just the impact on the premium.

[Nathan Colson, CFO and Chief Risk Officer at MGIC Investment Corporation]

I think many of the lines for ceded premium, and we have this in our earnings release in the supplement. I think the challenging one to model is the profit commission on the quota share deals, because as we have higher losses, we're ceding those losses to the quota share deals, but then earning less profit commission. So the answer to that question is quite a bit dependent on your expectations around future losses, and that's something that we haven't given guidance on, and don't intend to going forward, just because the nature of our business and the potential variability there. But if it'd be helpful to work through the mechanics of the profit commission, happy to follow up offline, too.

[Bose George, Managing Director at KBW]

Okay. And just to understand, so the increase in the ceded premiums this quarter, it was a reflection of that, was a reflection of a change in the profit commission? Is that right?

[Nathan Colson, CFO and Chief Risk Officer at MGIC Investment Corporation]

That's largely the case. You know, the profit commission was down about $4 million sequentially. And that's really because we ceded additional losses under the quota share agreements. So you know, we're, from a net cost perspective, it doesn't have an impact. We're getting it back on the loss line.

[Bose George, Managing Director at KBW]

Okay.

[Nathan Colson, CFO and Chief Risk Officer at MGIC Investment Corporation]

But it does impact premium line. So, and we do have the profit commission broken out separately, for each quarter, so you can, you can see that. But, you know, it was down, like I said, about $4 million in the quarter.

[Bose George, Managing Director at KBW]

Okay. Okay, great. Thanks.

[Nathan Colson, CFO and Chief Risk Officer at MGIC Investment Corporation]

Thank you.

[Operator]

I'm showing no additional questions in the queue at this time. I would like to turn the conference back over to management for any closing remarks.

[Nathan Colson, CFO and Chief Risk Officer at MGIC Investment Corporation]

Thank you, Howard. I want to thank everyone for your interest in MGIC. We will be participating in the UBS and BofA Financial Services conferences next week. I look forward to talking to all of you in the near future. Have a great rest of your week.

[Operator]

Thank you for participating in today's conference. This concludes the program. You may now disconnect. Everyone, have a wonderful day. Speakers, stand by.

Participants

Executives

• Dianna Higgins, Head of Investor Relations
• Nathan Colson, CFO and Chief Risk Officer
• Tim Mattke, CEO

Analysts

• Bose George, Managing Director at KBW
• Doug Harter, Equity Research Analyst at UBS
• Giuliano Bologna, Managing Director at Compass
• Mihir Bhatia, Senior Equity Research Analyst at Bank of America
• Terry Ma, Senior Equity Research Analyst at Barclays