Mortgage insurer MGIC Investment (NYSE: MTG) missed Wall Street’s revenue expectations in Q4 CY2025, with sales flat year on year at $298.7 million. Its non-GAAP profit of $0.75 per share was in line with analysts’ consensus estimates.
Is now the time to buy MTG? Find out in our full research report (it’s free for active Edge members).
MGIC Investment (MTG) Q4 CY2025 Highlights:
- Revenue: $298.7 million vs analyst estimates of $307.1 million (flat year on year, 2.8% miss)
- Adjusted EPS: $0.75 vs analyst estimates of $0.75 (in line)
- Adjusted Operating Income: $212.7 million (71.2% margin, 9.4% year-on-year decline)
- Operating Margin: 71.2%, down from 77.9% in the same quarter last year
- Market Capitalization: $6.04 billion
StockStory’s Take
MGIC Investment’s fourth quarter saw a negative market response, as revenue came in below analyst expectations and margins compressed compared to the prior year. Management attributed the results to a combination of stagnant new insurance growth and persistent high operating expenses, despite stable credit performance in its insurance portfolio. CEO Timothy James Mattke cited the company’s “disciplined risk management and a thoughtful, measured approach to the market,” while also acknowledging that housing affordability challenges and elevated mortgage rates limited near-term growth opportunities. CFO Nathaniel Howe Colson noted that expense reductions and steady investment income partially offset these pressures.
Looking ahead, management expects the size of the mortgage insurance market to remain similar in 2026, with insurance in force likely to stay flat unless mortgage rates fall more than anticipated. CEO Mattke emphasized the company’s focus on portfolio diversification, ongoing reinsurance activity, and disciplined capital management as key strategies for navigating a challenging environment. He stated, “Our focus remains on building and maintaining a strong, well-diversified insurance portfolio,” and highlighted the importance of reinsurance agreements and expense management in supporting future profitability.
Key Insights from Management’s Remarks
Management pointed to stable credit fundamentals, prudent capital allocation, and ongoing reinsurance activity as the most significant contributors to the quarter’s performance and future positioning.
- Stable credit quality: The insurance portfolio’s average credit score at origination remained high at 748, and management reported no material changes in credit performance or early payment defaults, reflecting continued normalization after the pandemic period.
- Expense discipline underway: Underwriting and other expenses declined compared to last year, with the company reaffirming its focus on operational efficiency. Colson projected further reductions in 2026 due to renegotiated ceding commissions on quota share reinsurance treaties.
- Persistent insurance in force: Insurance in force grew modestly to over $303 billion, supported by elevated persistency rates (the proportion of existing policies that remain active). Management expects limited growth in 2026 as mortgage rates stay high.
- Reinsurance strengthens balance sheet: The company expanded its reinsurance program with new quota share and excess of loss arrangements, which reduce loss volatility and regulatory capital requirements, while providing flexibility at attractive costs.
- Capital return remains active: MGIC returned significant capital to shareholders through dividends and share repurchases, enabled by a robust capital position and strong credit performance, while maintaining ample liquidity at both the holding and operating company levels.
Drivers of Future Performance
Management anticipates that a stable mortgage insurance market, continued expense controls, and reinsurance optimization will shape 2026 results, while housing affordability and mortgage rates remain key uncertainties.
- Mortgage rates and market size: The company expects the overall mortgage insurance market to remain unchanged in 2026, unless a decline in mortgage rates drives higher refinancing activity, which would impact both new business volume and policy persistency.
- Expense reductions and reinsurance: Operating expenses are projected to decline further, supported by renegotiated reinsurance agreements that lower ceding costs, which management believes will support profitability even if top-line growth remains muted.
- Credit normalization risk: While credit trends have stabilized, management acknowledged that shifts in home price appreciation or economic conditions could alter default rates for recent policy vintages, especially as the portfolio transitions out of the exceptionally strong post-pandemic years.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be watching (1) the pace and impact of refinancing activity on new insurance written and policy persistency, (2) further execution on expense reductions and the effect of new reinsurance treaties on profitability, and (3) any shifts in credit quality as new mortgage vintages mature. Developments in housing affordability initiatives and possible regulatory actions around FHA premiums will also be important to monitor.
MGIC Investment currently trades at $26.54, down from $27.55 just before the earnings. Is there an opportunity in the stock?Find out in our full research report (it’s free).
Stocks That Trumped Tariffs
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
Stocks that have made our list include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.
