Sagen MI Canada Inc. (TSX: MIC) announced its intention to issue $300 million of senior direct, unsecured, and unsubordinated debentures. These debentures will bear a fixed annual interest rate of 3.261%, payable semi-annually, and will mature on March 5, 2031. The offering is managed by a syndicate of agents including TD Securities Inc. and RBC Dominion Securities Inc., and the debentures are expected to receive ratings of A (high) from DBRS and BBB+ from S&P.
The company plans to allocate the net proceeds from this offering to strengthen its capital base, facilitate distributions to shareholders in connection with an announced plan of arrangement where Brookfield Business Partners L.P. will acquire outstanding shares not already owned, and for general corporate purposes.
In related financial news, Sagen reported a Q2 2026 net income of $108 million, a 2% decrease year-over-year. This was primarily due to higher claims, insurance expenses, and insurance finance expenses, despite increases in insurance revenue and investment income. The company’s total premiums written rose 8% year-over-year to $281 million, driven by a 7% increase in transactional premiums written to $276 million and a 40% rise in portfolio insurance premiums to $5 million.
Sagen's financial performance showed an increase in new reported delinquencies by 15% to 640 during the quarter, with the delinquency rate across its insured mortgage portfolio increasing to 0.23% from 0.19%. Losses on claims significantly increased to $28 million from $2 million a year prior, leading to a loss ratio climb to 17% from 1%. The average reserve per delinquency also rose by 56% to $48,000. Despite these increases in claims, Sagen maintained a strong Mortgage Insurer Capital Adequacy Test ratio of 184%, well above OSFI's 150% supervisory target.
Morningstar DBRS reaffirmed Sagen Mortgage Insurance Company Canada's Financial Strength Rating at AA and Sagen MI Canada Inc.'s Issuer Rating at A (high), citing consistently strong financial performance and a robust capital cushion. They anticipate a moderate increase in claims due to macroeconomic uncertainties and housing market softness, expecting overall financial performance to normalize towards historical averages in 2026. The company had total assets of $7.0 billion and shareholders’ equity of $2.8 billion as of June 30, 2026.
