Market Overview

A.M. Best Assigns Credit Ratings to Mortgage Guaranty Insurance Corporation and Certain Subsidiaries


A.M. Best has assigned the Financial Strength Rating of A-
(Excellent) and the Long-Term Issuer Credit Rating of "a-" to Mortgage
Guaranty Insurance Corporation and the following subsidiaries: MGIC
Indemnity Corporation, MGIC Assurance Corporation and MGIC Reinsurance
Corporation of Wisconsin (collectively referred to as MGIC). All
companies are domiciled in Milwaukee, WI. The outlooks assigned to these
Credit Ratings (ratings) are stable.

The ratings reflect MGIC's balance sheet strength, which A.M. Best
categorizes as strongest, as well as its adequate operating performance,
limited business profile and appropriate enterprise risk management

MGIC's risk-adjusted capital, as measured by the Best Capital Adequacy
Ratio (BCAR), is currently at the strongest level both on a stressed and
unstressed basis. Shareholders' equity at MGIC has increased in the past
five years and A.M. Best expects further increases in the near term. The
company's strong liquidity position, conservative investment portfolio
and financial flexibility, as well as its compliance with Private
Mortgage Insurer Eligibility Requirements (PMIERs) financial
requirements, all support the balance sheet assessment of strongest.

MGIC's operating performance is assessed as adequate based on positive
underwriting results as reflected in the loss and combined ratios of its
mortgage insurance business during the past few years. MGIC's historical
loss and combined ratios, which spiked significantly during 2008-2012,
have declined meaningfully over the past five years, reflecting
improvements in the housing market. MGIC's expense ratio remains one of
the lowest in the mortgage insurance industry. MGIC's overall operating
performance over the past five years has been fueled by favorable
macroeconomic conditions that greatly impact the quality of mortgage
originations and the credit profile of borrowers.

MGIC's business profile is assessed as limited as the company is a
monoline (re)insurer. Furthermore, it faces stiff competition not only
from other private mortgage insurers and governmental agencies (i.e.,
Federal Housing Administration and Veterans Affairs) providing mortgage
insurance, but also from products that effectively reduce the demand for
private mortgage insurance. In addition, the product risk is considered
high because the performance of the mortgage insurance industry is
linked to the macroeconomic environment and the policies of the
government-sponsored enterprises (i.e., Fannie Mae and Freddie Mac).

MGIC's overall ERM assessment is appropriate, as the company employs a
robust ERM framework and infrastructure that is embedded across the
company. MGIC's ERM framework is commensurate with the size, nature and
complexity of its mortgage insurance business. A.M. Best considers
MGIC's risk assessment capabilities to be aligned appropriately with its
risk profile.

This press release relates to Credit Ratings that have been published
on A.M. Best's website. For all rating information relating to the
release and pertinent disclosures, including details of the office
responsible for issuing each of the individual ratings referenced in
this release, please see A.M. Best's
Rating Activity
web page. For additional information
regarding the use and limitations of Credit Rating opinions, please view
Best's Credit Ratings
. For information on the proper media
use of Best's Credit Ratings and A.M. Best press releases, please view
for Media - Proper Use of Best's Credit Ratings and A.M. Best Rating
Action Press Releases

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