Standard & Poor's Ratings Services said it raised its financial strength and long-term counterparty credit ratings on MGIC Investment Corp.'s core operating subsidiaries to BBB from BB-plus.
At the same time, it raised its unsolicited senior unsecured debt issue and counterparty credit rating on MGIC Investment Corp. to BB and its junior subordinated debt rating to B-plus. The outlook is stable.
The upgrade of MGIC Investment Corp. and its core operating subsidiaries Mortgage Guaranty Insurance Corp. and MGIC Indemnity Corp. (collectively MGIC) reflects the company's continued improvement in operating performance, directly affecting its statutory capitalization and generally accepted accounting principles (GAAP) financial flexibility metrics, such as financial and debt leverage and EBITDA fixed-charge coverage.
Through year-end 2015, MGIC maintained its market position among legacy mortgage insurers while growing its new insurance written to $43.0 billion, S&P said. This was in the face of competitive headwinds from new entrants and other legacy insurers that have proven to be enigmatic in various product-pricing initiatives, making an effort to attract new business and overall share in the market.
The company through Dec. 31, 2015, continued to grow its earnings base, reporting GAAP adjusted EBIT of $528 million primarily driven by lower claim rates on new and previously delinquent mortgages. During this same time, total delinquencies in the portfolio decreased to just about 6.3% from 8.35%, showcasing improvement in its insurance in force, which S&P expects to continue.
