# MGIC Investment: a solid insurer, priced about right MTG, NYSE. Published September 26, 2026. Price as of the September 25, 2026 close. ## Verdict: HOLD at $28.48 Watchlist for a better entry. MGIC is a well-capitalized mortgage insurer with strong recent profitability and a shrinking share count, but the stock trades close to its triangulated Base value. That's fair, not cheap. For a mortgage-credit insurer the framework requires a 25% margin of safety, which puts the buy zone at $22.13 or below. - Bear value: $22 - Base value: $29.50 - Bull value: $36 - Upside to base value: 3.6% - Maximum buy price: $22.13 - Required margin of safety: 25% - Probability-weighted value: $28.93 (25/55/20) - Price to book value: 1.17x - Dividend yield: 2.39% - Business quality: 74/100 - Valuation score: 58/100 - Confidence: 17/25, grade C MGIC insures lenders against losses on low-down-payment residential mortgages through its main subsidiary, Mortgage Guaranty Insurance Corporation. The business earns premiums for taking on mortgage-credit risk, invests the float, and leans on reinsurance and a capital cushion required under GSE rules to absorb stress losses. At $28.48 the company is profitable, well capitalized and buying back stock, and the question is simply whether that's already priced in. At $28.48 on September 25, 2026, the shares trade 3.5% below my triangulated Base value of $29.50, an upside of 3.6%. The Bear value of $22 is 22.8% below the price. For a mortgage-credit insurer, the framework's required margin of safety is 25%, which puts the maximum buy price at $22.13. The shares sit about 29% above that level. Existing holders are collecting a covered dividend and ongoing buybacks; new money doesn't yet get a discount. Route: SF-03 Insurance, U.S. private mortgage guaranty subtype. Economic classification: Quality financial company / standard insurer valuation (5/6 on the sector scorecard). Primary method: justified price to book value. Secondary method: normalized price to earnings. Values are present fair-value estimates, not 12-month price targets. ## What MGIC is MGIC is one of the largest private mortgage insurers in the U.S., with an estimated 19.4% share of the private mortgage insurance market in 2025. It insures lenders and government-sponsored entities against borrower default on eligible low-down-payment loans, manages risk transfer through reinsurance, and has to maintain capital under GSE eligibility requirements known as PMIERs. The business is long-lived and recurring, but it is concentrated in one correlated exposure: the health of the U.S. housing and employment cycle. Credit quality is currently a real strength. 45% of primary risk in force carries borrower credit scores of 760 or above, with only 2% below 660. Persistency fell to 83.3% from 84.7% a year earlier as refinancing picked up, and net premium yield declined to 31.3% from 33.0%, partly reflecting reinsurance costs and portfolio mix. Nothing here signals a business-model change; it remains a mortgage-credit insurer with a strong current book. ## The latest quarter | Q2 2026 | Result | | --- | --- | | Book value per share | $24.27, up from $22.11 a year earlier (+9.8%) | | Net income | $182.1 million, $0.86 diluted EPS | | Adjusted net operating income | $183.7 million, $0.87 per share | | H1 2026 net income | $347.4 million, $1.62 diluted EPS | | Primary insurance / risk in force | $304.8 billion / $81.8 billion | | PMIERs available assets / excess | $5.6 billion / $2.7 billion | | Holding-company liquidity | $930 million, boosted by a $400 million subsidiary dividend in the quarter | ## Which numbers matter for a mortgage insurer Operating cash flow or generic free cash flow isn't the right lens for an insurer. The hardest honest metric here is **reported common book value per share**, read together with normalized earnings and return on equity. Q2 GAAP net income of $182.1 million was very close to adjusted net operating income of $183.7 million, so this analysis gives priority to the GAAP figure and treats the adjusted number as a cross-check rather than the primary input. Tangible book value per share, after the AOCI adjustment, was $25.08. Simple annualization of H1 diluted EPS gives $3.24; annualizing Q2 alone gives $3.44. A conservative normalized EPS range of **$3.00 to $3.50** is used, midpoint **$3.25**, allowing for policy runoff, premium yield pressure and claims variability against a strong recent run. ## Shares and capital return Shares outstanding fell 11.4% year over year to 206.6 million at Q2-end, driven by real buybacks rather than a share-class quirk: 6.6 million shares for $176.6 million in Q2 alone, plus another 1.5 million for $42.4 million through late July. The board authorized a further $750 million of repurchases through the end of 2028. The company also carries $650 million of 5.25% notes due 2028. Buybacks support per-share book value and EPS today, but future pace depends on capital needs and board discretion, so it shouldn't be extrapolated indefinitely. ## Primary valuation: justified price to book value | Scenario | BVPS | P/BV | Value | | --- | --- | --- | --- | | Bear | $22.00 | 1.00x | $22.00 | | Base | $24.27 | 1.24x | $30.09 | | Bull | $25.08 | 1.44x | $36.12 | The Base multiple sits intentionally above the cited long-run median of roughly 1.02x book, because current profitability, book growth and capital return are stronger than that historical average; this is a judgment, not a company forecast. The primary Base value is **about $30.10**. ## Secondary valuation: normalized price to earnings | Input | Value | | --- | --- | | Normalized EPS midpoint | $3.25 | | Justified multiple | 9.0x | | Implied value | $29.25 | An 8x to 10x range gives $26.00 to $32.50. This is an independent earnings-based cross-check, not anchored to book value; it may overstate value if current investment income or low claims prove to be above mid-cycle levels. ## Historical cross-check A third-party historical reference puts MGIC's five-year median price to book near 1.02x, with a range of roughly 0.77x to 1.30x. Applied mechanically to $24.27 book value per share, the median implies about $24.75 and the top of the range about $31.55. At $28.48, MTG trades at 1.17x reported book and 1.14x tangible book, inside the historical band but above the median, without adjusting for today's higher profitability, capital rules or portfolio mix. ## Valuation triangulation | Method | Base value | Weight | | --- | --- | --- | | Justified price to book | $30.10 | 60% | | Normalized price to earnings | $29.25 | 30% | | Historical P/BV context | $24.75 | 10% | | Triangulated Base | $29.31 | 100% | Rounded working fair value used throughout this analysis is **$29.50**. The book and earnings methods agree within 3%; the historical reference is about 16% more conservative and is treated as a smaller-weight check rather than a primary input, since it isn't synchronized to today's cycle. ## What is the market already pricing in? At $28.48 the market pays about 8.76x normalized earnings and 1.17x book. Those multiples say investors expect MGIC to keep earning above a distressed insurer's return and to preserve the current capital cushion, while still assigning some discount for cyclical housing and regulatory risk. No reverse DCF is used, since price-to-book and normalized earnings are the sector-correct valuation engines for a regulated, capital-dependent insurer. ## Bear, base and bull scenarios | | Bear | Base | Bull | | --- | --- | --- | --- | | Probability | 25% | 55% | 20% | | Main assumptions | EPS falls to ~$2.75, P/B compresses toward book, PMIERs headroom shrinks | EPS near $3.25, moderate book growth, no severe recession | EPS $3.50 to $3.65, book compounds, premium multiple near 1.4x | | Value | $22 | $29.50 | $36 | **Double-pessimism control:** the Bear case combines lower earnings and a lower book multiple deliberately, because a recession would plausibly worsen both claims and perceived capital risk at once; no separate blanket recession haircut is layered on top. The probability-weighted value is **$28.93** ($22 × 25% + $29.50 × 55% + $36 × 20%), close to and slightly above the current price. ### Sensitivity: normalized EPS and P/E | EPS \ P/E | 8x | 9x | 10x | | --- | --- | --- | --- | | $3.00 | $24 | $27 | $30 | | $3.25 | $26 | $29.25 | $32.50 | | $3.50 | $28 | $31.50 | $35 | ## How the buy price is set A 25% margin of safety fits a profitable insurer with a strong current capital position but concentrated exposure to housing, employment, borrower credit and long-tail claims: higher than a low-volatility compounder would need, lower than a distressed or opaque insurer would require. Applied to the $29.50 Base value, that gives a **maximum buy price of $22.13**, with the strongest opportunity below $22. At $28.48 the shares trade about 28.7% above that ceiling. ## Dividend The board declared a quarterly dividend of $0.17 per share, an annualized run rate of $0.68 and an indicated yield of about 2.39% at the current price. Q2 repurchases plus dividends returned capital equal to 124% of net income for the quarter. Repurchases, not the dividend, are the larger part of the capital-return story, and both remain subject to insurer capital needs and regulatory limits. Dividend growth is not assumed in the valuation. ## Reasons to own MTG - **Scale and share.** An estimated 19.4% share of the U.S. private mortgage insurance market as of 2025. - **Capital strength.** $2.7 billion of PMIERs excess and $930 million of holding-company liquidity at quarter-end. - **Strong recent profitability.** $182.1 million of Q2 net income and 9.8% year-over-year book value growth. - **Credit mix.** 45% of risk in force carries 760+ credit scores, with meaningful reinsurance protection. - **Shrinking share count.** Buybacks that reduce shares outstanding can compound per-share value when executed below intrinsic worth. - **Earnings support.** The stock trades below 9x estimated normalized earnings. ## What could go wrong? - **Housing and employment stress.** A U.S. recession, rising unemployment or falling home prices can increase delinquencies and claims. - **Persistency risk.** Refinancing and housing turnover can reduce policy persistency, premium yield and new insurance written. - **Competition.** FHA pricing and eligibility, along with other private insurers, can intensify competitive pressure. - **Regulatory risk.** Changes to GSE charters, PMIERs rules or reinsurance eligibility could reduce distributable capital. - **Concentration.** Mortgage insurance is one correlated U.S. housing-credit system; benign historical loss experience may not predict a severe stress period. - **Capital allocation.** Buybacks at an excessive valuation, or while capital buffers are actually needed, can destroy value. ## Management execution Management has sustained profitability, grown book value per share, returned capital through buybacks and dividends, and extended reinsurance protection, including a $400 million subsidiary dividend to the holding company this quarter that supported parent liquidity. The framework does not independently verify a multi-year guidance track record, and a high buyback pace can destroy value if executed above intrinsic value or if capital is later needed for stress. **Assessment: positive but not exceptional; moderate confidence.** ## Stock Analyza scorecard | Economic classification (sector scorecard) | Score | | --- | --- | | Competitive position / scale | 1/1 | | Sustainable profitability | 1/1 | | Capital strength | 1/1 | | Growth durability | 0.5/1 | | Balance sheet / asset quality | 0.5/1 | | Governance / per-share allocation | 1/1 | | Total: Quality financial company | 5/6 | Business quality score is **74/100**: strong capital and franchise economics, offset by housing-cycle and regulatory exposure. The valuation score is **58/100**: profitable and inexpensive on earnings, but only a modest discount to estimated value. ## Confidence score | Confidence | Score | | --- | --- | | Data quality / provenance | 4/5 | | Business and balance-sheet visibility | 4/5 | | Valuation-method reliability | 3/5 | | Scenario confidence | 3/5 | | Governance / capital allocation confidence | 3/5 | | Total | 17/25, grade C | The main limitation is the difficulty of estimating through-cycle mortgage claims and capital outcomes, not a lack of current reported data. ## What I would watch from here ### Green - PMIERs excess stable or rising near or above $2.7 billion - Primary insurance in force stable to growing, risk-in-force growth controlled - Book value per share growing year over year - Delinquencies and new notices stable against the portfolio - Repurchases continuing with capital intact ### Yellow - PMIERs excess declining but staying above $1.5 billion - Insurance in force declining, or risk-in-force growing faster than in force - Book value flat to a low-single-digit decline - Delinquencies rising for two consecutive quarters - Persistency and premium yield continuing their moderate decline ### Red - PMIERs excess below $1.5 billion or capital eligibility threatened - Sharp deterioration in backlog metrics alongside rising delinquencies - Book value down more than 10% year over year without an explainable AOCI cause - Broad-based delinquency acceleration, especially in newer policy years - Distributions threatening PMIERs or parent liquidity Review after every quarterly filing and immediately after any material PMIERs, reinsurance or GSE eligibility update. No earnings-calendar catalyst substitutes for monitoring credit and capital indicators directly. ## The three most important thesis breakers 1. Meaningful deterioration in delinquencies or credit quality. 2. Book value declining rather than compounding. 3. PMIERs capital headroom shrinking toward the eligibility threshold. ## Adversarial review The first draft's arithmetic mostly reconciled: the price to book and price to earnings multiples, the justified base values, and the triangulation all check out. One number was wrong. The probability-weighted scenario value was stated as $28.33, but the draft's own scenarios and probabilities ($22 × 25% + $29.50 × 55% + $36 × 20%) actually sum to $28.93. The corrected figure is used throughout this article; it doesn't change the conclusion, since it's still close to, and now slightly above, the current price. The strongest counter-thesis is that current earnings may be closer to a cyclical peak than the framework's normalized $3.25 EPS assumes, and that the market's roughly 1.17x book valuation could understate losses that would emerge in a severe housing downturn. At normalized EPS of $3.00 and 8x earnings, value would be $24; combined with a book multiple near 1x, that points to a $22 to $24 stress range, which challenges the Base case but is already substantially represented in the stated Bear scenario. | Robustness check | Result | | --- | --- | | P/BV | 1.17x | | Price / tangible book | 1.14x | | Normalized P/E | 8.76x | | Justified P/B base | $30.09 | | Normalized P/E base | $29.25 | | Corrected probability-weighted value | $28.93 | Audit limitations: the historical price-to-book median comes from a secondary data provider rather than a fully synchronized primary dataset, and exact Q2 debt carrying value, full-period guidance and multi-year industry claims scenarios weren't independently reconstructed. These are disclosed limits that don't change the Hold conclusion, but they keep the confidence grade at C rather than A or B. The publication gate status is PASS\_WITH\_WARNING. ## Final verdict: hold at $28.48, watchlist for a better entry MGIC is a profitable, well-capitalized mortgage insurer with strong capital returns, but a small estimated upside doesn't compensate for housing-cycle risk at the current price. The main thesis breaker is a meaningful deterioration in delinquencies, book value or PMIERs capital headroom. **Verdict: HOLD at $28.48. Triangulated Base value $29.50, upside 3.6%, Confidence C (17/25). Required margin of safety 25%, maximum buy price $22.13.** For an existing holder, the covered dividend and ongoing buybacks support holding while book value and credit quality stay intact. New money waits for $22.13 or below, or for a meaningful discount to book value without deterioration in credit or capital. ## More analyses on Patreon This analysis is free. Premium members get every in-depth analysis, the full archive and a vote on which stocks get analyzed next: https://www.patreon.com/stockanalyza ## Sources Primary sources include MGIC's Q2 2026 results, its Q2 2026 Form 10-Q, and its 2025 Form 10-K annual report. Market price comes from stockanalysis.com. The historical price-to-book cross-check comes from third-party financial-data aggregation. The reference market price is $28.48, the September 25, 2026 close. Balance sheet figures are as of June 30, 2026. Forward earnings and book value are estimates. **Disclaimer.** This analysis is provided solely for research and educational purposes. It is not personalized investment, financial, legal or tax advice. Values are estimates, not forecasts or trading instructions. MGIC is a mortgage-credit insurer exposed to U.S. housing and employment cycles, and its book value and earnings can decline sharply in a severe downturn. Investors can lose part or all of their invested capital. Framework: SF-03, U.S. private mortgage guaranty insurer. Economic class: Quality financial company / standard insurer valuation. Engine: justified P/BV plus normalized P/E. Confidence: C/17. Data status: PASS WITH WARNING. Adversarial gate: PASS WITH WARNING. Version: Master v3.1.