30-year mortgage uptake lifts Sagen business, but claims hit earnings

Growing uptake of 30-year insured mortgages is changing Sagen MI Canada’s business mix, with the longer amortizations contributing to higher premiums written in the second quarter. At the same time, rising claims weighed on the mortgage insurer’s earnings.

Total premiums written rose 8% year over year to $281 million, driven primarily by $276 million in transactional mortgage insurance, which generally covers mortgages with loan-to-value ratios above 80%.

Transactional premiums written increased 7%, reflecting modestly higher new insurance volumes and an increase in the average premium rate to 363 basis points from 354 basis points a year earlier.

Sagen attributed the higher rate to a greater share of insured borrowers selecting 30-year amortizations, which carry higher mortgage insurance premiums than the standard 25-year option.

The federal government first introduced 30-year insured amortizations for first-time buyers purchasing newly built homes in August 2024, before expanding eligibility that December to all first-time buyers and all purchasers of new builds. Mortgage insurers have since said the changes are expanding activity in the insured mortgage market, particularly among first-time buyers.

Portfolio insurance premiums, which cover mortgages with loan-to-value ratios of 80% or less, increased 40% to $5 million amid stronger lender demand.

The average credit score among Sagen’s new transactional borrowers was 769, while approximately 1.5% of new insurance written involved borrowers with credit scores below 660.

The average home price on transactional originations rose 4% to approximately $493,000. The average gross debt service ratio was 28.8%, based on the qualifying rate used for insured mortgages.

Claims rise in softer housing market

Sagen recorded 640 new reported delinquencies during the quarter, up 15% from a year earlier, while the number of delinquent mortgages brought back into good standing fell 20% to 506.

The delinquency rate across Sagen’s insured mortgage portfolio increased to 0.23% from 0.19%.

Losses on claims rose to $28 million from $2 million, which Sagen attributed to higher net delinquencies and greater loss severity in a softer housing market.

The average reserve per delinquency increased 56% to $48,000, while the loss ratio climbed to 17% from 1%. Sagen said the increase reflected an “expected normalization of losses.”

Outstanding insured mortgage balances declined slightly to $191.6 billion from $193 billion a year earlier.

Net income fell 2% to $108 million as higher claims, insurance expenses and insurance finance expense more than offset higher insurance revenue and investment income.

Sagen’s mortgage insurer capital adequacy test ratio remained unchanged at 184%, above OSFI’s 150% supervisory target and the company’s internal target of 157%.

Sagen Q2 2026 highlights

• Total premiums written: $281 million, up 8% year over year
• Transactional premiums written: $276 million, up 7%
• Portfolio insurance premiums: $5 million, up 40%
• Insured mortgage balance: $191.6 billion, down from $193 billion
• Delinquency rate: 0.23%, up from 0.19%
• Losses on claims: $28 million, up from $2 million
• Loss ratio: 17%, up from 1%
• Net income: $108 million, down 2%
• Capital ratio: 184%, unchanged from a year earlier

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Last modified: August 4, 2026