While 2023 was another financiallyhealthy year for the private mortgage insurance industry, as the business written during and immediately after the pandemic ages, delinquencies are likely to pick up.

The peak time frame for a borrower to fail to make a payment as scheduled is in the third through fifth years following origination. That period has already started for the 2020 vintage and will soon arrive for the 2021 production.

"On the fourth quarter conference call, management noted that while they are encouraged by the overall credit environment, they (along with industry peers) believe new notices will continue to tick up as the large vintage books from 2020-2022 season [age]," said Bose George, an analyst at Keefe, Bruyette & Woods, in his report on NMI Holdings.

The industry's capital ratios — at least 25 states use some form of risk-based metric, while the secondary market requires active companies to meet the Primary Mortgage Insurer Eligibility Requirments standard — are stable at this point in the housing market cycle, Eric Hagen of BTIG wrote in his weekly mortgage industry overview on Feb. 12.

"We think the higher reported loss rates in [the fourth quarter] may be contributing to more limited visibility for earnings growth. Some investors had been anticipating a tapering-off of Covid-era reserve releases, but with somewhat uncertain timing until now. We're starting to turn to more story-specific catalysts for earnings and valuation upside," Hagen said.