ICBA Mortgage - The Official Mortgage Solutions Provider for Community Banks
What is a Reinsurance Program?
Mortgage Guaranty Insurance Corporation (MGIC) and ICBA have teamed up to offer a group
mortgage reinsurance program to ICBA members. The program offers members a potential long-
term revenue opportunity where none previously existed. With a modest capital contribution, banks
may become part owners of the ICBA reinsurance company, from which dividends accrue based on a
portion of the mortgage insurance premium stream contributed by MGIC in return for program
participants assuming a share of the underlying mortgage insurance risk.
How Does Reinsurance Work?
The mortgage reinsurance program has been set up and initially capitalized by ICBA. Banks that
join the program will contribute capital of $1,750. Then, each quarter, MGIC will contribute 25% of
the primary mortgage insurance premium for each eligible loan that MGIC has insured for the
participating ICBA member. All funds contributed by MGIC are held in a trust account and will be
available for payment of potential future losses.
After five years, each participating bank will be eligible to receive annual dividends from the ICBA
reinsurance company. The annual dividend is determined by each member's pro rata share (based
on the member's MGIC-insured earned premium volume) of the reinsurance company’s net profits.
The net profits include MGIC mortgage insurance premium contributions less reinsurance-related
management and administrative expenses, taxes, and any reinsurance losses.
Eligible loans will remain subject to the reinsurance program for a 10-year term, as long as they
remain in force. Members continue to earn dividends on loans in the program during the entire 10-
year term, and will be paid such dividends annually.
The return to members is expected to be 80% of contributed premium based on several
assumptions (see The ICBA Bank Opportunity). However, the actual return may differ from this