National MI is still the share-gain story inside a six-name private mortgage insurance oligopoly, and the second-quarter print tests whether that franchise still compounds book value when policy life is shortening. Management has grown insurance in force far faster than the rest of the industry over four years, and the company still writes a larger slice of new business than its share of the in-force book. That pull-to-par dynamic is the entire equity case: more premium years on a cleaner book, recycled into share retirement rather than a cash dividend. Primary insurance in force, the unpaid balance still covered, reached a record $227.1 billion. The question is whether the quality of that new business still funds mid-teens returns once persistency and defaults stop cooperating.
The production engine is not the problem. New insurance written, the face amount of policies bound in the period, jumped to $16.1 billion in a purchase-heavy quarter that still looks like owner-occupier demand rather than rate-chasing refinance churn. What is changing is the life of the book. Twelve-month persistency, the share of in-force coverage that remains after a year, slipped again, and the default rate has climbed from the year-ago print even though the raw default count ticked down sequentially. Claims expense fell and the loss ratio compressed because borrowers cured faster than the reserve model assumed. That is a welcome credit outcome. It is also the kind of prior-period gift that does not automatically repeat later in the year, when management already flags seasonal default normalization.
Capital is not the constraint. Available assets under the Private Mortgage Insurer Eligibility Requirements, the GSE capital floor that sets how much liquid capital the Wisconsin-domiciled writing company has to hold, still exceed required assets by $1.6 billion. The company retired more stock in the quarter than the prior run-rate implied, and book value excluding unrealized investment marks kept compounding. The market is paying a modest premium to book for that return on equity. The next several quarters decide whether persistency holds near the low eighties, whether the default rate stays contained, and whether the repurchase program remains the residual claim on excess capital.