Mortgage insurance companies share in strong Q4

February 18, 2025 5:00 AM

Private mortgage insurer volume rebounded last year, rising 5% compared with 2023, supported by a relatively strong fourth quarter in terms of new insurance written.

While in the first and second quarter, the six companies wrote less new business than for the same periods in 2023, third quarter volume was 5% higher and fourth quarter was up by 33%, according to an analysis from Keefe, Bruyette & Woods.

As a group, NIW was about half from what had been the industry record year of 2020, when the total was over $600 billion. In 2024, the six active underwriters did $298.9 billion, up from $286.3 billion.

The overall purchase market last year was $1.3 trillion, relatively flat with $1.28 trillion in 2023, Fannie Mae's January estimate noted. Most mortgage insurance policies are written on purchase loans.

For this year, Fannie Mae expects more growth in purchase loans, to $1.42 trillion.

The quarter ended with the second through sixth companies by market share separated by $1.5 billion of NIW.

Here are the quarterly and full-year results for the mortgage insurers, which is the primary business line for all but Arch.

MGIC back on top, with annual volume up nearly 50%

MGIC Investment ended the quarter with net income of $184.7 million, down from $200 million in the third quarter and flat with the $184.5 million recorded one year prior.

Full year 2024 net income of $763 million was $50 million higher than for one year prior.

It remained the No. 1 underwriter in the business even as NIW shrunk quarter-to-quarter to $15.9 billion from $17.2 billion. But it was well ahead of the $10.9 billion for the fourth quarter of 2023.

Whereas MGIC was the fourth largest underwriter for the full year in 2023, for 2024 it was also at the top, growing to $55.7 billion from $46.1 billion, a 46% gain.

During the earnings call, CEO Tim Mattke was asked about the possibility of government-sponsored enterprises being released from conservatorship and how that would affect MGIC.

Many things could happen in consideration of any release, Mattke responded.

"If you could think about them wanting to shrink that footprint to make it easier, which could have an impact, obviously, on the amount of volume that can flow to us," he said. "You could also think of it in terms of trying to think about the amount of volume that they can do versus [the Federal Housing Administration] and probably a lot of dialogue that will be had there."

Mattke said a really good case can be made to protect taxpayers for volume to flow through the GSEs as opposed to FHA, which would benefit the private mortgage insurers.

However, the "right guardrails" have to be in place and policymakers need to think about how the market will function in the long run.

They need to be "thoughtful about the role that private credit and mortgage insurance can play in sort of providing that safety valve to the taxpayers as far as not having the GSEs tap to take that credit risk," Mattke said.

Enact looking at opportunities in GSE credit risk transfer

Enact finished the quarter ranked second for market share with NIW of $13.3 billion. This was close to the third quarter's $13.6 billion and up from $10.5 billion one year prior.

Full year volume of $51 billion was down from $53.1 billion in 2023.

Net income of $163 million compared with $181 million for the period ended Sept. 30, 2024 and with $158 million for the fourth quarter of 2023.

It earned $688.1 million for all of 2024, up from $665.5 million one year prior.

During the presentation, Rohit Gupta, president and CEO, spoke about Enact Re's performance, especially in the GSE credit risk transfer market, saying it was excited to build upon the momentum generated in that business.

"So absolutely, there is potential for GSE CRT volume to pick up under different scenarios," coming out of the reform effort, Gupta added during the Q&A on its earnings call.

"As we move forward, if the market gets bigger, either because GSEs actually start ceding more risk or there is some kind of derisking initiative from the regulator or broadly from the administration, that would be a net positive and will allow us to deploy capital in an area where we find risk-adjusted returns attractive."

Radian reports flat annual net income

Annual net income at Radian Group was flat, $604 million for 2024 versus $603 million one year prior. For the fourth quarter, it earned $148 million, down from $152 million three months prior, but up from $143 million for the same period in 2023.

NIW for the quarter of $13.2 billion was down 2% from $13.5 billion in the third quarter but up 24% year-over-year, when it did $10.6 billion.

Full year NIW was marginally lower, $52.1 billion versus $51.8 billion during 2023.

"In terms of the housing and mortgage market, the supply of existing homes remains constrained, which we expect will continue to provide support for home values from [a price appreciation] perspective," CEO Rick Thornberry said on the earnings call. "While the private mortgage insurance market has been relatively flat over the past two years at approximately $300 billion, based on industry forecasts, we expect a slightly larger market in 2025."

Radian has grouped its reporting for businesses outside of MI into an all other category.

This includes the conduit, real estate services, title underwriter and the Homegenius business. For the last one, Radian is looking at strategic options and partnerships, Thornberry said.

"Our title business really kind of got reset back to a point where we look for that business to kind of maintain its path towards profitability, but significant reduction in terms of any kind of financial impact," he added.

Essent second largest gainer in market share

Essent Group's quarter-to-quarter drop in NIW was in line with most of the industry at 2%, to $12.2 billion from $12.5 billion. But it had the second largest fourth quarter gain year-over-year in market share at 39% from $8.8 billion for the period in 2023.

Full year, it did $45.6 billion, versus $47.7 billion in 2023.

Net income of $167.9 million in the fourth quarter was down from $175.4 million for the same period a year ago. For all of 2024, it earned $729.4 million, up from $696.4 million the prior year.

Essent is the other MI holding company that owns a title business. It acquired Finance of America's underwriter and agency in 2023.

"Our title operations incurred a pretax loss of approximately $21 million in the prior year prior to corporate allocations," Essent Chairman, CEO and President Mark Casale, said on the earnings call. "We continue to maintain a long-term view for this business. However, given it is levered to rates, we do not expect title will have any material impact on earnings over the near term."

NMI reports 34% rise in NIW in the fourth quarter

NMI Holdings, the parent of National MI, reported net income of $86.2 million for the fourth quarter. That compares with $92.8 million for the third quarter and $83.4 million, for the fourth quarter of 2023.

The company reported an increase in full year net income, to $360.1 million, versus $322.1 million during 2023.

But its fourth quarter NIW grew 34% from the prior year, to $11.9 billion from $8.9 billion; in the third quarter it did $12.2 billion.

Full year NIW grew to $46 billion from $40.5 billion.

"As we begin 2025, we're encouraged by both the broad resiliency that we've seen in the macro environment and housing market and by the continued opportunity and discipline that we see across the private MI industry," said Adam Pollitzer, president and CEO, on the earnings call. "Total MI industry NIW volume was an estimated $300 billion in 2024, with the market demonstrating real strength despite the continued headwind of elevated interest rates."

For the current year, long-term secular trends will drive attractive new business opportunities, he said.

Arch loses most market share versus 3Q24

Arch Capital's mortgage insurance business had the largest percentage drop off in market share, down 1.3% versus the third quarter.

It reported NIW of $11.8 billion, the lowest total for the period. This compared with $13.5 billion in the third quarter and $9.4 billion for the fourth quarter of 2023.

Fourth quarter underwriting income for the mortgage insurance segment, which includes international and reinsurance, was $267 million, versus $286 million for the same period in 2023.

"Overall, the U.S. mortgage insurance industry remained disciplined despite suppressed mortgage origination due to low housing supply and high mortgage rates," Nicolas Papadopoulo, Arch Capital CEO, said on the earnings call.