MGIC Comments on the Recently Adopted PMIERs Updates

Rhea-AI Summary

MGIC Investment (NYSE: MTG) has commented on recent updates to the Private Mortgage Insurer Eligibility Requirements (PMIERs) by Fannie Mae and Freddie Mac. CEO Tim Mattke expressed support for the changes, emphasizing the importance of private mortgage insurance in the housing finance system. The updates, focusing on Available Assets Standards, will be implemented over a 24-month period, becoming fully effective on September 30, 2026.

If applied immediately, these changes would reduce MGIC's Available Assets by approximately 1% ($50 million) from $5.8 billion. Despite this, MGIC's PMIERs excess would remain at $2.3 billion, demonstrating the company's strong capitalization and ability to meet the new requirements.

Positive

• MGIC maintains a strong PMIERs excess of $2.3 billion even after the new requirements
• The company supports and collaborates with GSEs on prudent PMIERs changes
• Implementation of new requirements is phased over 24 months, allowing time for adjustment

Negative

• New PMIERs updates would reduce MGIC's Available Assets by approximately $50 million (1%)

Financial Analyst

The PMIERs updates, while seemingly minor, carry significant implications for MGIC's financial stability. The 1% decrease in Available Assets, equivalent to $50 million, is relatively small compared to MGIC's total Available Assets of $5.8 billion. More importantly, the company would still maintain a substantial PMIERs excess of $2.3 billion even if the changes were implemented immediately.

The 24-month phased-in period provides MGIC ample time to adjust its investment strategy and capital allocation. This gradual implementation suggests minimal short-term impact on MGIC's operations or financial performance. However, investors should monitor how these changes might affect MGIC's long-term investment returns and capital efficiency.

Risk Management Expert

The PMIERs updates reflect a prudent approach to risk management in the mortgage insurance sector. By refining the criteria for Available Assets, the GSEs are enhancing the resilience of private mortgage insurers against potential market downturns. For MGIC, maintaining a substantial PMIERs excess of $2.3 billion even after these changes is a strong indicator of its robust capital position.

The new exclusions, concentration limits and haircuts on qualifying investments may lead to a more conservative investment strategy across the industry. While this could potentially reduce investment yields, it also mitigates risk, which is important for long-term stability in the housing finance system. Investors should view these changes as a positive step towards ensuring the continued reliability of private mortgage insurers as counterparties to the GSEs.

MILWAUKEE, Aug. 21, 2024 /PRNewswire/ -- Mortgage Guaranty Insurance Corporation (MGIC), the principal subsidiary of MGIC Investment Corporation (NYSE: MTG), comments on the updates by the government sponsored enterprises (GSEs), Fannie Mae and Freddie Mac, to the Private Mortgage Insurer Eligibility Requirements (PMIERs) Available Assets Standards.

"We are proud of the critical role private mortgage insurance (MI) plays in the housing finance system. PMIERs operational and risk-based capital requirements provide a strong foundation to serve low down payment borrowers while protecting the GSEs and taxpayers from undue mortgage credit risk and private MIs continue to be strong, well-capitalized counterparties," said Tim Mattke, CEO of MTG. "We appreciate the collaboration with the GSEs and support prudent PMIERs changes," added Mr. Mattke.

The latest updates relate to exclusions, concentration limits, and haircuts to investments that qualify as Available Assets and will be implemented over a 24-month phased-in period, with a fully effective date of September 30, 2026. If these changes were effective as of June 30, 2024, without a graduated implementation period, MGIC's Available Assets of $5.8 billion would decrease by approximately 1% or $50 million, and MGIC's PMIERs excess would be $2.3 billion.

About MGIC

Mortgage Guaranty Insurance Corporation ("MGIC") (www.mgic.com), the principal subsidiary of MGIC Investment Corporation, serves lenders throughout the United States, helping families achieve homeownership sooner by making affordable low-down-payment mortgages a reality through the use of private mortgage insurance.

From time-to-time MGIC Investment Corporation releases important information via postings on its corporate website, and via postings on MGIC's website, and it intends to continue to do so in the future. Such postings include corrections of previous disclosures and may be made without any other disclosure. Investors and other interested parties are encouraged to enroll to receive automatic email alerts and Really Simple Syndication (RSS) feeds regarding new postings. Enrollment information for MGIC Investment Corporation alerts can be found at https://mtg.mgic.com/shareholder-services/email-alerts. For information about our underwriting and rates, see https://www.mgic.com/underwriting.

View original content:https://www.prnewswire.com/news-releases/mgic-comments-on-the-recently-adopted-pmiers-updates-302228029.html

SOURCE MGIC Investment Corporation

FAQ

What are the key changes in the PMIERs updates affecting MGIC (MTG)?

The PMIERs updates relate to exclusions, concentration limits, and haircuts to investments qualifying as Available Assets. These changes will be implemented over 24 months, becoming fully effective on September 30, 2026.

How will the PMIERs updates impact MGIC's (MTG) Available Assets?

If the changes were effective as of June 30, 2024, MGIC's Available Assets of $5.8 billion would decrease by approximately 1% or $50 million.

What is MGIC's (MTG) PMIERs excess after the new updates?

Despite the reduction in Available Assets, MGIC's PMIERs excess would remain at $2.3 billion, demonstrating the company's strong capitalization.

When will the new PMIERs updates be fully implemented for MGIC (MTG)?

The PMIERs updates will be fully implemented and effective for MGIC on September 30, 2026, following a 24-month phased-in period.