How Reinsurance Cuts Mortgage Insurers' PMIERs Capital by Half

The six private mortgage insurers wrote $76.7 billion of new insurance in the first quarter of 2026, up 32% year over year (Milliman, 1Q 2026 PMI Market Trends), and every one cleared its PMIERs capital threshold with room to spare.

At MGIC, roughly 52%, or $3.1 billion, of the required-asset figure that excess is measured against exists because reinsurance moved it off the balance sheet (MGIC, Q1 2026 10-Q). The cushion is real. How much of it is MGIC's own is a separate question.

Key Takeaways

$3.1 billion, about 52%, of MGIC's Minimum Required Assets is relieved by its reinsurance program, so a $2.9 billion PMIERs excess is measured against a denominator barely half its fully retained size.
$14.3 billion of reinsurance and ILN limits sit across the six PMI companies, built through more than a decade of consecutive issuance led by Arch's $8.7 billion across 18 Bellemeade Re transactions.
The 2024 Available Asset haircuts complete September 30, 2026, after phasing in at 25%, 50% and 75%. MGIC modeled the full impact at roughly $50 million, about 1% of Available Assets, against a 2024 balance sheet.
Radian took 13,584 new default notices, up 9% from 12,505, and still booked favorable development, because cures on prior-year defaults ran ahead of assumption on home price appreciation.
MGIC released $31 million of favorable reserve development on the same mechanism, which holds only while appreciation continues.

What the 52% Is Measured Against

PMIERs is a bilateral capital standard Fannie Mae and Freddie Mac impose on the mortgage insurers they accept as counterparties, separate from the NAIC risk-based capital framework governing statutory solvency elsewhere in P&C. An approved insurer holds Available Assets, largely cash, short-duration investment-grade bonds and certain reinsurance recoverables, in excess of Minimum Required Assets computed from a factor table applied to each insured loan's loan-to-value, credit score, age and delinquency status (Freddie Mac PMIERs Handbook).

The ratio of the two is the sufficiency ratio, and it, not statutory RBC, decides whether the GSEs keep accepting an insurer's policies as eligible credit enhancement.

MGIC reported PMIERs Available Assets of $5.8 billion against Minimum Required Assets its reinsurance program had already reduced by $3.1 billion. Strip the ceded credit out and the $2.9 billion excess sits on a required-asset base roughly twice the reported size.

Two mechanisms produce that relief. Quota share treaties cede 90% of risk on most transactions, 80% on the Credit Union transaction, and earn full PMIERs credit for the ceded portion. Excess-of-loss coverage placed into the capital markets adds the rest, including a $324 million insurance-linked note covering policies written between January 2022 and March 2025.

The Asset Side Tightens While the Sector Leans Harder on Cessions

MGIC is not an outlier. Moody's puts current reinsurance and ILN limits across the six companies at roughly $14.3 billion: Arch has placed over $8.7 billion through 18 Bellemeade Re transactions since 2015, Essent roughly $3.1 billion through seven Radnor Re deals, Radian nearly $3 billion through six Eagle Re deals, MGIC nearly $2.3 billion through six Home Re transactions, National MI roughly $2.1 billion through seven Oaktown Re deals, and Enact roughly $1.8 billion through five Triangle Re transactions (Moody's, via Artemis.bm).

Moody's reads the capacity favorably, as dampening "potential for earnings and capital volatility that has historically impacted the mortgage insurance sector during adverse economic environments."

Insurer	PMIERs Available Assets	PMIERs Excess	Sufficiency Ratio	Primary Delinquency Rate
MGIC	$5.8B	$2.9B	—	2.44%
Radian	$5.4B	$1.6B	—	2.51%
Essent	—	$1.6B	174%	—
Enact	—	$1.9B	162%	—

Every ratio clears the 100% minimum comfortably. The summary figure does not separate the two kinds of capital inside it: retained earnings sitting on the insurer's own balance sheet, and required-asset relief arranged with reinsurers and capital markets investors.

That separation is about to matter more, because the GSEs revised the Available Asset side in 2024 with exclusions, concentration limits and new haircuts. The adjustment phased in at 25% on March 31, 2025, 50% at September 30, 2025 and 75% at March 31, 2026, with the full 100% landing September 30, 2026 (MGIC, August 2024).

MGIC estimated the fully phased-in impact at roughly $50 million, about 1% of its then-$5.8 billion Available Assets, projecting PMIERs excess near $2.3 billion once implemented. That estimate was calibrated to a 2024 balance sheet. Two years later the asset base has shifted further toward reinsurance recoverables and structured credit, precisely because the industry leaned into risk transfer to manage the same calculation the haircuts are tightening. The final phase-in quarter is therefore a different test than the one modeled, and no insurer has broken out its asset base at the instrument level to size it (USMI statement).

The Reserve Side Runs on a Cure Rate, Not a Delinquency Rate

The delinquency rates in the table, 2.44% at MGIC and 2.51% at Radian, look like the leading indicator of reserve adequacy. They are not sufficient on their own. What decides whether reserves prove redundant is the roll rate: the share of newly delinquent loans that cure, typically through resumed payments or a refinance that pulls equity out of an appreciated home, against the share that rolls into claim.

Radian received 13,584 new primary default notices, up 9% from 12,505 a year earlier, and still recorded favorable development because cures on prior-year defaults beat estimate on home price appreciation (Radian, Q1 2026 10-Q). MGIC booked $31 million of favorable development for the same reason.

Rising notice counts alongside reserve releases is exactly what a roll-rate framework predicts when appreciation runs ahead of the cure-rate curve. A borrower 30 days delinquent with meaningful positive equity has both the incentive and the mechanism to cure. The same borrower with little or negative equity has neither.

The exposure is asymmetric, and persistency is aging into it. Easing rates lifted new insurance written, but higher persistency also keeps the 2020-2022 origination vintages in force rather than recycling the book into thinly seasoned business. Mortgage credit losses on a cohort typically peak in years three through seven, so those vintages are entering their highest-emergence years now, underneath a fresh unseasoned layer.

A reserve anchored to elevated post-pandemic cure rates looks adequate for as long as prices appreciate. It is tested when appreciation stalls against a delinquent inventory 9% larger than a year earlier, at which point the same notice count that read as benign becomes the leading edge of claims the reserve was not sized for.

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