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MGIC Investment's Unit & CUNA Partner for Mortgage Insurance

Zacks Equity Research
·4-min read

MGIC Investment Corporation’s MTG subsidiary Mortgage Guaranty Insurance Corp. (MGIC) has teamed up with CUNA Mutual Group in a bid to assist credit unions with private mortgage insurance (PMI).

Founded in 1935, Madison, WI-based CUNA Mutual Group offers insurance and protection for credit unions, employees and members; lending solutions and marketing programs. It helps credit unions by providing their members with insurance and investment products to attain financial security in this fluctuating environment.

Its investment products include institutional investments, member investments and brokerage services.

CUNA Mutual Group Private Mortgage Insurance, the new program, provided by MGIC, will aid credit union members with easy access to homeownership by lowering risks for lenders.

This partnership brings together two strong financial organizations that share a spirit for serving credit unions, building relationships and helping members to achieve financial security through homeownership.

The collaboration is aimed at reducing the risk of credit unions to enable their members to achieve home ownership. Their combined effort to provide private mortgage insurance will aid credit union members to purchase a home faster by eradicating the need for a 20% down payment. The program is expected to protect lenders with a financial guaranty against defaults on mortgages with loan-to-value ratios greater than 80%.

Private mortgage insurance has generally been purchased by lenders in primary mortgage market transactions to satisfy this credit enhancement requirement. Therefore, PMI facilitates the sale of low-down payment mortgages in the secondary mortgage market and plays an important role in the housing finance system by assisting consumers, especially lower net-worth homebuyers, to finance homes with low down payment mortgages. The private mortgage insurance industry is highly competitive.

PMI's market share of total mortgage originations is influenced by the mix of purchase and refinance originations as PMI market share is typically 3-4 times higher for purchase originations than refinance originations. In the recent quarters, MGIC Investment has experienced an increase in new issuance written (NIW) from refinances.

With a focus on sustainable homeownership, MGIC provides a critical component of the country's residential mortgage finance system by protecting mortgage investors from credit losses. Since 1957, MGIC has helped more than 10 million people achieve homeownership. Even after paying a total of $16.5B in claims after the Great Recession of 2008, its financial strength has remained steadfast. The current assets are well in excess of stringent regulatory standards and the company has been rated as ‘A-’ (Stable) by A.M. Best. As of Jun 30, 2020, MGIC had $230.5 billion in primary insurance in force.

Shares of this Zacks Rank #3 (Hold) multi-line insurer have lost 25.1% year to date compared with the industry’s decline of 15.6%.

Stocks to Consider

Some better-ranked stocks in the multi-line insurance industry include Old Republic International Corporation ORI, Assurant Inc. AIZ and Horace Mann Educators Corporation HMN, each carrying a Zacks Rank #2 (Buy).  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Old Republic engages in the insurance underwriting and related services business primarily in the United States and Canada. It surpassed estimates in each of the last four quarters, with the average surprise being 36.72%.

Assurant provides lifestyle and housing solutions that support, protect, and connect consumer purchases in North America, Europe and the Asia Pacific. It surpassed estimates in three of the last four quarters, with the average surprise being 6%.

Horace Mann Educators operates as a multiline insurance company in the United States. It underwrites and markets personal lines of property and casualty insurance. It surpassed estimates in each of the last four quarters, with the average surprise being 24.77%.

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MGIC Investment Corporation (MTG) : Free Stock Analysis Report
 
Assurant, Inc. (AIZ) : Free Stock Analysis Report
 
Old Republic International Corporation (ORI) : Free Stock Analysis Report
 
Horace Mann Educators Corporation (HMN) : Free Stock Analysis Report
 
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Zacks Investment Research