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Investing.com -- S&P Global Ratings has revised its outlook on MGIC Investment Corp. and its core operating subsidiaries to positive from stable, while affirming the company’s existing credit ratings.
The ratings agency maintained its ’A-’ issuer credit and financial strength ratings for Mortgage Guaranty Insurance Corp., MGIC Indemnity Corp., and MGIC Assurance Corp. It also affirmed the ’BBB-’ issuer credit ratings for MGIC Investment Corp.
The improved outlook reflects expectations that MGIC will maintain its enhanced capital resilience. As of year-end 2024, the company’s capital adequacy was redundant at the 99.99% confidence level according to S&P’s capital model, with projections suggesting it could maintain this position through 2027 despite capital returns.
MGIC has demonstrated strong underwriting discipline through prudent risk selection, pricing, and reinsurance partnerships. This approach has generated solid capital-accretive earnings, with the company posting a five-year (2020-2024) average combined ratio of 24.9%, better than the industry average of 26.4%. Its return on shareholders’ equity averaged 14.2% during this period.
In the first half of 2025, MGIC’s underwriting performance remained strong with a combined ratio of 22.9% and annualized ROE of approximately 14.7%.
S&P economists anticipate weakness in the labor market could lead to higher unemployment, potentially increasing mortgage delinquencies and near-term loss ratios. The ratings agency expects MGIC’s combined ratio to be around 25%-30% in 2025, benefiting from cure activity, and about 50%-55% in 2026 and 2027.
Despite these challenges, S&P believes MGIC’s earnings could absorb potential losses due to its strong underwriting portfolio quality, significant home equity cushion, and substantial reinsurance protection.
The company’s financial leverage stood at 11.2% at the end of second-quarter 2025 and 11.1% at year-end 2024, with fixed-charge coverage at 28.3x and 28.9x for the same periods.
S&P could raise its ratings in the next two years if U.S. economic and housing fundamentals remain supportive and if MGIC sustainably manages its capital at the highest confidence level or significantly improves its competitive position.
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