AM Best affirmed the financial strength rating of A- (Excellent) and the long-term issuer credit rating of “a-” (Excellent) of the operating subsidiaries of MGIC Investment Corporation. The operating subsidiaries are
The ratings reflect MGIC’s balance sheet strength, which AM Best rates as the strongest, as well as its adequate operating performance, limited business profile and adequate enterprise risk management (ERM).
MGIC’s risk-adjusted capitalization, as measured by Best’s capital adequacy ratio (BCAR), is at the highest level under the base and stress scenarios. The baseline scenario is analyzed on the basis of the company’s financial statements as of
The company’s compliance with Private Mortgage Insurer (PMIERs 2.0) eligibility requirements, the use of traditional reinsurance and mortgage insurance-linked securities to reduce its earnings and capital volatility, its strong liquidity position and its conservative investment portfolio, along with the proven financial flexibility to raise capital during adverse economic conditions, support the fittest balance sheet valuation.
AM Best considers MGIC’s operating performance to be adequate. The company’s claims ratio, combined ratio and percentage of loans in default continued to decline in 2021 and the first half of 2022 compared to the end of 2020. The various programs and policies implemented by the government, government agencies and government sponsored enterprises (GSEs) have been instrumental in mitigating the negative impact of the COVID-19 pandemic on MGIC. MGIC’s average loss, expense and combined ratios from 2017 to
AM Best considers MGIC’s business profile to be limited, as the company is a monoline (re)insurer. In addition, it faces fierce competition from other private mortgage insurers and government agencies (eg.
AM Best rates MGIC’s overall ERM as appropriate, as the company utilizes a robust ERM framework and infrastructure that is integrated across the enterprise. MGIC’s ERM framework is commensurate with the size, nature and complexity of its mortgage loan insurance business. AM Best considers MGIC’s risk assessment capabilities to be appropriately aligned with its risk profile.
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Source: AM Best