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MGIC Investment (MTG) - 2025 Q2 - Earnings Call Presentation
2025-07-31 13:30
Risk in Force Composition - The original risk written in 2025 was $6.9 billion, with 98.1% remaining [6] - The original risk written in 2004 and prior was $181.5 billion, with only 0.2% remaining [6] - For loans originated in 2025, 50.6% had a FICO score of 760 and above [6] - Loans with an original LTV between 90.01% and 95.00% constitute 53.5% of the primary risk in force [6] Delinquency and Losses - The total number of delinquent loans is 24,444 [7] - Risk in force delinquent is 1.9% [7] - Ever-to-date claims paid for the 2005-2008 origination years reached $13.3913 billion [7] PMIERs and Risk Distribution - Total Primary Minimum Required Assets are $5.758 billion [9] - Of the $418 million required for 2025, $192 million is retained, $162 million is covered by Quota-Share Reinsurance (QSR), and $63 million by Excess-of-Loss (XOL), resulting in 54% ceded [9] - The company has a $2.5 billion Reinsurance Benefit [9] Financial Performance - Net losses incurred for Q2 2025 were $(3) million [11] - Direct primary loss reserves totaled $392 million in Q2 2025 [12]
MGIC Investment: Solid Q2 With Minimal Losses Persisting
Seeking Alpha· 2025-07-31 10:45
Group 1 - MGIC Investment Corp (MTG) shares have gained 2% over the past year, indicating modest performance [1] - The stock has experienced a pullback in the last month due to increasing concerns about a slowing market [1] Group 2 - The article reflects a contrarian investment approach based on macro views and stock-specific turnaround stories [1]
MGIC Investment (MTG) Q2 Earnings Surpass Estimates
ZACKS· 2025-07-30 23:06
Group 1 - MGIC Investment (MTG) reported quarterly earnings of $0.82 per share, exceeding the Zacks Consensus Estimate of $0.70 per share, and showing an increase from $0.77 per share a year ago, resulting in an earnings surprise of +17.14% [1] - The company posted revenues of $305.67 million for the quarter ended June 2025, slightly missing the Zacks Consensus Estimate by 0.35%, and showing a marginal increase from $305.55 million year-over-year [2] - MGIC has surpassed consensus EPS estimates for the last four quarters, but has not beaten consensus revenue estimates during the same period [2] Group 2 - The stock has gained approximately 8.3% since the beginning of the year, matching the S&P 500's gain of 8.3% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to those expectations [4] - The current consensus EPS estimate for the upcoming quarter is $0.71 on revenues of $308.28 million, and for the current fiscal year, it is $2.89 on revenues of $1.23 billion [7] Group 3 - The Zacks Industry Rank indicates that the Insurance - Multi line sector is currently in the bottom 33% of over 250 Zacks industries, suggesting potential challenges for stock performance [8] - The trend of estimate revisions for MGIC was mixed prior to the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6]
MGIC Investment (MTG) - 2025 Q2 - Quarterly Report
2025-07-30 20:07
[Forward Looking and Other Statements](index=2&type=section&id=Forward%20Looking%20and%20Other%20Statements) This section outlines the nature of forward-looking statements and associated risks, emphasizing that actual results may vary - The report contains forward-looking statements, identifiable by words like 'believe,' 'anticipate,' or 'expect,' which relate to future events, developments, or results. Actual outcomes may differ materially due to various risk factors[4](index=4&type=chunk) - The company does not undertake any obligation to update forward-looking statements, and readers should not rely on them being current beyond the filing date with the SEC[4](index=4&type=chunk) [Glossary of Terms and Acronyms](index=4&type=section&id=Glossary%20of%20terms%20and%20acronyms) This glossary defines key financial and industry-specific terms and acronyms used throughout the report - The glossary provides definitions for key terms and acronyms used throughout the report, such as ARMs (Adjustable rate mortgages), ABS (Asset-backed securities), Annual Persistency, CECL (Current expected credit losses), DAC (Deferred insurance policy acquisition costs), EPS (Earnings per share), GSEs (Government Sponsored Entities), IIF (Insurance in force), LAE (Loss adjustment expenses), LTV (Loan-to-value) ratio, NIW (New Insurance Written), PMIERs (Private Mortgage Insurer Eligibility Requirements), QSR (Quota share reinsurance), RIF (Risk in force), and XOL (Excess-of-loss) Transactions[8](index=8&type=chunk)[9](index=9&type=chunk)[10](index=10&type=chunk)[11](index=11&type=chunk)[12](index=12&type=chunk)[14](index=14&type=chunk)[15](index=15&type=chunk)[16](index=16&type=chunk)[17](index=17&type=chunk)[18](index=18&type=chunk)[19](index=19&type=chunk)[20](index=20&type=chunk)[21](index=21&type=chunk)[22](index=22&type=chunk)[23](index=23&type=chunk)[24](index=24&type=chunk)[25](index=25&type=chunk)[26](index=26&type=chunk) [PART I — FINANCIAL INFORMATION](index=8&type=section&id=PART%20I%20%E2%80%94%20FINANCIAL%20INFORMATION) This part presents the company's unaudited consolidated financial statements and management's discussion and analysis of financial condition and results of operations [Item 1. Financial Statements](index=8&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements for Q2 and YTD 2025 and 2024, including balance sheets, income statements, and cash flows, with detailed notes [Consolidated Balance Sheets](index=8&type=section&id=Consolidated%20Balance%20Sheets%20-%20June%2030%2C%202025%20(Unaudited)%20and%20December%2031%2C%202024) This section details the company's financial position, including assets, liabilities, and shareholders' equity, as of June 30, 2025, and December 31, 2024 | (In thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **ASSETS** | | | | Total investment portfolio | $5,818,478 | $5,867,560 | | Cash and cash equivalents | 294,871 | 229,485 | | Restricted cash and cash equivalents | 4,024 | 5,142 | | Reinsurance recoverable on loss reserves | 53,781 | 47,281 | | Deferred income taxes, net | 41,818 | 69,875 | | **Total assets** | **$6,542,327** | **$6,547,235** | | **LIABILITIES AND SHAREHOLDERS' EQUITY** | | | | Loss reserves | $452,154 | $462,662 | | Unearned premiums | 105,049 | 120,360 | | Senior notes | 645,402 | 644,667 | | Other liabilities | 184,778 | 147,171 | | **Total liabilities** | **$1,387,383** | **$1,374,860** | | Common stock | 233,138 | 248,449 | | Paid-in capital | 1,801,159 | 1,808,236 | | Accumulated other comprehensive income (loss), net of tax | (204,969) | (288,162) | | Retained earnings | 3,325,616 | 3,403,852 | | **Total shareholders' equity** | **$5,154,944** | **$5,172,375** | | **Total liabilities and shareholders' equity** | **$6,542,327** | **$6,547,235** | - Total assets slightly decreased by **$4.9 million** from December 31, 2024, to June 30, 2025, while total liabilities increased by **$12.5 million**. Total shareholders' equity saw a minor decrease of **$17.4 million**[27](index=27&type=chunk) [Consolidated Statements of Operations](index=12&type=section&id=Consolidated%20Statements%20of%20Operations%20(Unaudited)%20-%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) This section presents the company's revenues, expenses, and net income for the three and six months ended June 30, 2025, and 2024 | (In thousands, except per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net premiums earned | $244,322 | $243,528 | $488,041 | $486,172 | | Total revenues | $304,245 | $305,277 | $610,479 | $599,638 | | Total losses and expenses | $58,156 | $45,452 | $129,709 | $119,933 | | Income before tax | $246,089 | $259,825 | $480,770 | $479,705 | | Provision for income tax | $53,607 | $55,597 | $102,828 | $101,380 | | Net income | $192,482 | $204,228 | $377,942 | $378,325 | | Basic EPS | $0.81 | $0.77 | $1.57 | $1.41 | | Diluted EPS | $0.81 | $0.77 | $1.56 | $1.40 | - Net income for the three months ended June 30, 2025, decreased by **$11.7 million (6% YoY)** to **$192.5 million**, primarily due to an increase in net losses incurred. However, diluted EPS increased by **$0.04 (5% YoY)** to **$0.81**, mainly due to a decrease in diluted weighted average shares outstanding[29](index=29&type=chunk)[160](index=160&type=chunk) - For the six months ended June 30, 2025, net income remained relatively flat at **$377.9 million (0% YoY decrease)**, while diluted EPS increased by **$0.16 (11% YoY)** to **$1.56**, also driven by fewer diluted weighted average shares outstanding[29](index=29&type=chunk)[163](index=163&type=chunk) [Consolidated Statements of Comprehensive Income](index=13&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Unaudited)%20-%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) This section details the company's comprehensive income, including net income and other comprehensive income (loss), for the periods ended June 30, 2025, and 2024 | (In thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income | $192,482 | $204,228 | $377,942 | $378,325 | | Other comprehensive income (loss), net of tax | $31,476 | $(6,921) | $83,193 | $(16,774) | | **Comprehensive income (loss)** | **$223,958** | **$197,307** | **$461,135** | **$361,551** | - Other comprehensive income (loss), net of tax, significantly improved, moving from a loss of **$(6.9) million** in Q2 2024 to a gain of **$31.5 million** in Q2 2025, and from a loss of **$(16.8) million** in YTD 2024 to a gain of **$83.2 million** in YTD 2025. This was primarily driven by a positive change in unrealized investment gains and losses[31](index=31&type=chunk)[113](index=113&type=chunk) [Consolidated Statements of Shareholders' Equity](index=14&type=section&id=Consolidated%20Statements%20of%20Shareholders'%20Equity%20(Unaudited)%20-%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) This section outlines changes in shareholders' equity, including common stock, paid-in capital, and retained earnings, for the periods ended June 30, 2025, and December 31, 2024 | (In thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Common stock | $233,138 | $248,449 | | Paid-in capital | $1,801,159 | $1,808,236 | | Accumulated other comprehensive income (loss) | $(204,969) | $(288,162) | | Retained earnings | $3,325,616 | $3,403,852 | | **Total shareholders' equity** | **$5,154,944** | **$5,172,375** | - Total shareholders' equity decreased slightly from **$5,172.4 million** at December 31, 2024, to **$5,154.9 million** at June 30, 2025. This decrease was primarily due to common stock repurchases (**$411.6 million**) and cash dividends paid (**$64.7 million**), partially offset by net income (**$377.9 million**) and an increase in accumulated other comprehensive income[33](index=33&type=chunk)[305](index=305&type=chunk)[311](index=311&type=chunk) [Consolidated Statements of Cash Flows](index=15&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20(Unaudited)%20-%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) This section presents the company's cash flows from operating, investing, and financing activities for the six months ended June 30, 2025, and 2024 | (In thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $406,647 | $359,775 | | Net cash provided by (used in) investing activities | $152,784 | $(108,412) | | Net cash provided by (used in) financing activities | $(495,163) | $(334,199) | | Net increase (decrease) in cash and cash equivalents and restricted cash and cash equivalents | $64,268 | $(82,836) | | Cash and cash equivalents and restricted cash and cash equivalents at end of period | $298,895 | $287,808 | - Net cash provided by operating activities increased by **$46.9 million (13% YoY)** for the six months ended June 30, 2025, primarily due to a decrease in taxes paid and an increase in premiums written, partially offset by higher losses paid[35](index=35&type=chunk)[308](index=308&type=chunk) - Net cash from investing activities significantly improved, moving from a net outflow of **$(108.4) million** in YTD 2024 to a net inflow of **$152.8 million** in YTD 2025, mainly reflecting sales and maturities of fixed income securities exceeding purchases[35](index=35&type=chunk)[310](index=310&type=chunk) - Net cash used in financing activities increased by **$160.9 million (48% YoY)** to **$(495.2) million**, primarily due to higher common stock repurchases and dividends paid[35](index=35&type=chunk)[311](index=311&type=chunk) [Notes to Consolidated Financial Statements](index=16&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements%20(Unaudited)) This section provides detailed explanations and disclosures for the consolidated financial statements, covering accounting policies, debt, reinsurance, and other financial components [Note 1 - Nature of Business and Basis of Presentation](index=16&type=section&id=Note%201%20-%20Nature%20of%20Business%20and%20Basis%20of%20Presentation) This note describes MGIC Investment Corporation's primary business as mortgage insurance and its basis of financial statement presentation - MGIC Investment Corporation is a holding company primarily engaged in the mortgage insurance business through its subsidiary, Mortgage Guaranty Insurance Corporation (MGIC), providing protection against defaults on low down payment residential mortgage loans[38](index=38&type=chunk) - The company operates as a single segment for financial performance evaluation and resource allocation[38](index=38&type=chunk) - As of June 30, 2025, MGIC's Available Assets exceeded its Minimum Required Assets, indicating compliance with the Private Mortgage Insurer Eligibility Requirements (PMIERs) and eligibility to insure loans purchased by Government Sponsored Entities (GSEs)[41](index=41&type=chunk) [Note 2 - Significant Accounting Policies](index=17&type=section&id=Note%202%20-%20Significant%20Accounting%20Policies) This note outlines the significant accounting policies and recent accounting pronouncements relevant to the company's financial reporting - The One Big Beautiful Bill Act (OBBB Act), signed into law on July 4, 2025, reinstates **100% bonus depreciation** and immediate expensing for domestic R&E costs, but is not expected to materially impact the consolidated financial statements[45](index=45&type=chunk) - ASU 2023-09 (Improvements to Income Tax Disclosures), effective for annual periods after December 15, 2024, and ASU 2024-03 (Disaggregation of Income Statement Expenses), effective for annual periods after December 15, 2026, are not expected to have a material impact on the company's financial statements or disclosures[47](index=47&type=chunk)[48](index=48&type=chunk) [Note 3 - Debt](index=17&type=section&id=Note%203%20-%20Debt) This note details the company's long-term debt obligations, including senior notes and compliance with debt covenants | Long-term debt obligation, carrying value (In thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | 5.25% Notes, due August 2028 (par value: $650 million) | $645,402 | $644,667 | - The company's **5.25% Senior Notes**, due August 2028, are an obligation of the holding company, MGIC Investment Corporation, and the company was in compliance with its debt covenants as of June 30, 2025[50](index=50&type=chunk)[51](index=51&type=chunk) - Interest payments for the six months ended June 30, 2025, and 2024, were **$17.1 million**[52](index=52&type=chunk) [Note 4 - Reinsurance](index=18&type=section&id=Note%204%20-%20Reinsurance) This note describes the company's reinsurance arrangements, including quota share and excess-of-loss transactions, and their financial impact | Reinsurance (In thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net premiums earned | $244,322 | $243,528 | $488,041 | $486,172 | | Losses incurred, net | $(2,835) | $(18,272) | $6,756 | $(13,717) | | Profit commission on quota share reinsurance | $32,299 | $27,301 | $60,994 | $51,885 | | Ceding commission on quota share reinsurance | $12,081 | $10,789 | $23,808 | $21,449 | - The company utilizes Quota Share Reinsurance (QSR) and Excess-of-Loss (XOL) Transactions to cede a fixed percentage of premiums and losses, receiving ceding commissions and profit commissions (which vary inversely with loss levels)[54](index=54&type=chunk)[56](index=56&type=chunk) | Quota Share Reinsurance | Covered Policy Years | Quota Share % | Annual Loss Ratio to Exhaust Profit Commission | | :--- | :--- | :--- | :--- | | 2024 QSR | 2024 | 30.0 % | 56.0 % | | 2025 QSR | 2025 | 40.0 % | 63.0 % | | Credit Union QSR | 2020-2025 | 65.0 % | 50.0 % | | Excess of Loss Reinsurance | Issue Date | Policy In force Dates | (1) Optional Call Date | | :--- | :--- | :--- | :--- | | 2025 Traditional XOL | June 1, 2025 | January 1, 2025 - December 31, 2025 | January 1, 2031 | | Home Re 2023-1, Ltd. | October 23, 2023 | June 1, 2022 - August 31, 2023 | October 25, 2028 | - Reinsurance recoverable on loss reserves increased to **$53.8 million** as of June 30, 2025, from **$47.3 million** as of December 31, 2024, secured by funds on deposit from reinsurers[65](index=65&type=chunk) - Home Re Entities, which are Variable Interest Entities (VIEs), finance XOL coverages by issuing mortgage insurance-linked notes (ILNs). The company does not consolidate these VIEs and has no material exposure to loss from them[70](index=70&type=chunk)[78](index=78&type=chunk)[79](index=79&type=chunk) [Note 5 - Litigation and Contingencies](index=23&type=section&id=Note%205%20-%20Litigation%20and%20Contingencies) This note discusses the company's involvement in legal proceedings and contingencies, and management's assessment of their potential financial impact - The company is involved in ordinary course disputes and legal proceedings within the highly regulated mortgage insurance industry[82](index=82&type=chunk) - Management believes the ultimate resolution of these matters will not have a material adverse effect on the company's financial condition or results of operations[82](index=82&type=chunk) [Note 6 - Earnings per Share](index=23&type=section&id=Note%206%20-%20Earnings%20per%20Share) This note provides the calculation of basic and diluted earnings per share, including the weighted average common shares outstanding | (In thousands, except per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income - basic and diluted | $192,482 | $204,228 | $377,942 | $378,325 | | Basic weighted average common shares outstanding | 236,333 | 265,315 | 240,218 | 267,814 | | Diluted weighted average common shares outstanding | 237,971 | 266,872 | 242,209 | 269,990 | | Basic earnings per share | $0.81 | $0.77 | $1.57 | $1.41 | | Diluted earnings per share | $0.81 | $0.77 | $1.56 | $1.40 | - Basic and diluted EPS increased for both the three and six months ended June 30, 2025, compared to the prior year, primarily due to a decrease in weighted average common shares outstanding[86](index=86&type=chunk)[160](index=160&type=chunk)[163](index=163&type=chunk) [Note 7 - Investments](index=24&type=section&id=Note%207%20-%20Investments) This note details the composition and fair value of the company's investment portfolio, primarily fixed income securities | Fixed Income Securities (In thousands) | June 30, 2025 Fair Value | December 31, 2024 Fair Value | | :--- | :--- | :--- | | U.S. Treasury securities and obligations of U.S. government corporations and agencies | $338,694 | $260,493 | | Obligations of U.S. states and political subdivisions | $1,837,405 | $1,875,495 | | Corporate debt securities | $2,678,441 | $2,757,381 | | ABS | $186,155 | $156,517 | | RMBS | $363,279 | $350,060 | | CMBS | $246,100 | $235,871 | | CLOs | $124,678 | $200,059 | | Foreign government debt | $3,984 | $3,798 | | Commercial paper | $23,595 | $12,015 | | **Total fixed income securities** | **$5,802,331** | **$5,851,689** | | Equity Securities (In thousands) | June 30, 2025 Fair Value | December 31, 2024 Fair Value | | :--- | :--- | :--- | | Equity securities | $15,038 | $14,762 | | Net gains (losses) on investments and other financial instruments (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net gains (losses) on investments and other financial instruments | $(1,426) | $(276) | $(685) | $(8,785) | - The total fair value of fixed income securities decreased by **$49.4 million** from December 31, 2024, to June 30, 2025. The company had **$3.45 billion** in securities with unrealized losses as of June 30, 2025, primarily due to increases in prevailing interest rates, but believes these losses are not indicative of ultimate collectability[88](index=88&type=chunk)[100](index=100&type=chunk) [Note 8 - Fair Value Measurements](index=27&type=section&id=Note%208%20-%20Fair%20Value%20Measurements) This note explains the methodologies and hierarchy used for fair value measurements of financial instruments - The company uses valuation methodologies to measure financial instruments at fair value, classifying them into a hierarchy: Level 1 (quoted prices in active markets), Level 2 (significant other observable inputs), and Level 3 (significant unobservable inputs)[101](index=101&type=chunk)[103](index=103&type=chunk)[104](index=104&type=chunk)[105](index=105&type=chunk) | Assets carried at fair value by hierarchy level (In thousands) | June 30, 2025 Total Fair Value | June 30, 2025 Level 1 | June 30, 2025 Level 2 | | :--- | :--- | :--- | :--- | | Total fixed income securities | $5,802,331 | $301,764 | $5,500,567 | | Equity securities | $15,038 | $15,038 | — | | Cash equivalents | $281,866 | $276,998 | $4,868 | | **Total** | **$6,099,235** | **$593,800** | **$5,505,435** | - Embedded derivatives related to Home Re Transactions, classified as 'Other liabilities' or 'Other assets,' are categorized in Level 3 of the fair value hierarchy, with a fair value of an asset of **$0.3 million** at June 30, 2025[108](index=108&type=chunk) | Financial assets and liabilities not measured at fair value (In thousands) | June 30, 2025 Carrying Value | June 30, 2025 Fair Value | December 31, 2024 Carrying Value | December 31, 2024 Fair Value | | :--- | :--- | :--- | :--- | :--- | | Other invested assets | $1,109 | $1,109 | $1,109 | $1,109 | | 5.25% Senior Notes | $645,402 | $650,384 | $644,667 | $636,883 | [Note 9 - Other Comprehensive Income](index=30&type=section&id=Note%209%20-%20Other%20Comprehensive%20Income) This note presents the components of other comprehensive income (loss) and reclassifications from accumulated other comprehensive income | Components of other comprehensive income (loss) (In thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net unrealized investment gains (losses) arising during the period, net of tax | $28,523 | $(7,459) | $80,194 | $(17,851) | | Net changes in benefit plan assets and obligations, net of tax | $2,953 | $538 | $2,999 | $1,077 | | **Total other comprehensive income (loss), net of tax** | **$31,476** | **$(6,921)** | **$83,193** | **$(16,774)** | | Reclassifications from AOCI (In thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total reclassifications, net of tax | $(6,454) | $(2,166) | $(11,225) | $(10,584) | | Rollforward of AOCI (In thousands) | Net unrealized gains and (losses) on available-for-sale securities | Net benefit plan assets and (obligations) recognized in shareholders' equity | Total accumulated other comprehensive income (loss) | | :--- | :--- | :--- | :--- | | Balance at December 31, 2024, net of tax | $(257,878) | $(30,284) | $(288,162) | | Other comprehensive income (loss) before reclassifications | $71,968 | — | $71,968 | | Less: Amounts reclassified from AOCI | $(8,226) | $(2,999) | $(11,225) | | **Balance, June 30, 2025, net of tax** | **$(177,684)** | **$(27,285)** | **$(204,969)** | [Note 10 - Benefit Plans](index=31&type=section&id=Note%2010%20-%20Benefit%20Plans) This note describes the company's defined benefit pension and postretirement benefit plans, including their frozen status and net periodic benefit cost - The company's non-contributory defined benefit pension plan and supplemental executive retirement plan were frozen effective **January 1, 2023**, meaning no future benefits will accrue, and all participants were fully vested[117](index=117&type=chunk) | Components of net periodic benefit cost (In thousands) | Six Months Ended June 30, 2025 (Pension and Supplemental Executive Retirement Plans) | Six Months Ended June 30, 2024 (Pension and Supplemental Executive Retirement Plans) | Six Months Ended June 30, 2025 (Other Postretirement Benefit Plans) | Six Months Ended June 30, 2024 (Other Postretirement Benefit Plans) | | :--- | :--- | :--- | :--- | :--- | | Company service cost | $— | $— | $469 | $834 | | Interest cost | $6,596 | $6,494 | $622 | $750 | | Expected return on plan assets | $(6,884) | $(7,288) | $(5,822) | $(4,988) | | Amortization of net actuarial losses (gains) | $1,092 | $1,046 | $(1,385) | $(760) | | Prior service cost (credit) | $173 | $172 | $235 | $906 | | Cost of settlements and curtailments | $3,680 | $— | $— | $— | | **Net periodic benefit cost (benefit)** | **$4,657** | **$424** | **$(5,881)** | **$(3,258)** | - In the first quarter of 2025, the company made a **$7.5 million** contribution to its pension plan[121](index=121&type=chunk) [Note 11 - Loss Reserves](index=32&type=section&id=Note%2011%20-%20Loss%20Reserves) This note details the methodology for establishing loss reserves for reported and unreported delinquencies, and their development - Loss reserves are established for reported delinquent loans (case reserves) and estimated unreported delinquencies (IBNR reserves), based on estimated claim rates and claim severities. The estimation process is inherently judgmental and sensitive to economic conditions[122](index=122&type=chunk)[123](index=123&type=chunk)[124](index=124&type=chunk)[125](index=125&type=chunk) - A **$1,000** increase/decrease in the average severity reserve factor would change loss reserves by approximately **+/- $6 million**, and a one percentage point increase/decrease in the average claim rate reserve factor would change loss reserves by approximately **+/- $17 million**[126](index=126&type=chunk) | Development of reserves for losses and loss adjustment expenses (In thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Reserve at beginning of period | $462,662 | $505,379 | | Total losses incurred | $6,756 | $(13,717) | | Total losses paid | $23,764 | $23,092 | | **Reserve at end of period** | **$452,154** | **$477,614** | | Reserve development on previously received delinquencies (In thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Total prior year loss development | $(104,337) | $(116,270) | - Favorable loss development on previously received delinquencies for both periods primarily resulted from a decrease in the expected claim rate, as home price appreciation allowed some borrowers to cure delinquencies through property sales[133](index=133&type=chunk)[166](index=166&type=chunk) [Note 12 - Shareholders' Equity](index=34&type=section&id=Note%2012%20-%20Shareholders'%20Equity) This note provides information on changes in shareholders' equity, including common stock repurchases and dividend payments - As of **November 15, 2024**, the company retired all treasury stock, and subsequent repurchases are immediately retired, with the excess repurchase price over par value recorded as an adjustment to retained earnings[138](index=138&type=chunk) - In the six months ended June 30, 2025, the company repurchased **16.4 million shares** for **$405.0 million**. As of June 30, 2025, **$802.2 million** remained authorized under existing share repurchase programs through December 31, 2027[139](index=139&type=chunk)[170](index=170&type=chunk) - In the first half of 2025, the company paid quarterly cash dividends of **$0.13 per share**, totaling **$63.7 million**. A quarterly cash dividend of **$0.15 per share** was declared on July 24, 2025, payable on August 21, 2025[140](index=140&type=chunk)[171](index=171&type=chunk) [Note 13 - Share-Based Compensation](index=34&type=section&id=Note%2013%20-%20Share-Based%20Compensation) This note describes the company's share-based compensation plans, including restricted stock unit grants and their associated accounting treatment - Compensation cost for share-based awards is measured at grant date fair value and recognized over the vesting period, typically **one to three years**, with non-employee director awards vesting immediately[141](index=141&type=chunk) | Restricted stock unit grants (in thousands) | Six months ended June 30, 2025 RSUs Granted | Six months ended June 30, 2025 Weighted Average Fair Value per Share | Six months ended June 30, 2024 RSUs Granted | Six months ended June 30, 2024 Weighted Average Fair Value per Share | | :--- | :--- | :--- | :--- | :--- | | RSUs subject to performance conditions | 339 | $24.30 | 634 | $19.81 | | RSUs subject only to service conditions | 320 | $24.65 | 248 | $19.81 | | Non-employee director RSUs | 59 | $24.12 | 76 | $19.81 | [Note 14 - Statutory Information](index=35&type=section&id=Note%2014%20-%20Statutory%20Information) This note provides statutory financial information for the insurance subsidiaries, including capital requirements and dividend restrictions - MGIC complies with State Capital Requirements, maintaining a risk-to-capital ratio of **10.0 to 1** at June 30, 2025, below the maximum allowed **25 to 1**, and its policyholder position was **$3.6 billion** above the required MPP of **$2.2 billion**[145](index=145&type=chunk)[180](index=180&type=chunk) - The NAIC adopted a revised Mortgage Guaranty Insurance Model Act in 2023, which is uncertain when it will be adopted by jurisdictions, but is not expected to have a material adverse effect on the business[146](index=146&type=chunk)[181](index=181&type=chunk) - MGIC's dividend payments are subject to statutory regulations and OCI approval. In April 2025, MGIC paid a **$400 million** dividend to the holding company[147](index=147&type=chunk)[319](index=319&type=chunk) | Financial information of our insurance subsidiaries (including MGIC) (In thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Statutory net income | $342,930 | $175,577 | | (In thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Statutory policyholders' surplus | $911,638 | $976,756 | | Contingency loss reserves | $4,938,329 | $4,897,284 | [Note 15 - Segment Reporting](index=36&type=section&id=Note%2015%20-%20Segment%20Reporting) This note confirms the company operates as a single reportable segment and details significant segment expenses - The company operates as a single reportable segment, 'Mortgage Insurance,' generating revenue through mortgage insurance and reinsurance[151](index=151&type=chunk) - The Senior Management Oversight Committee (SMOC) uses consolidated net income (loss) as the primary GAAP measure to evaluate financial performance and allocate resources[152](index=152&type=chunk) | Significant segment expenses (In thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Employee costs | $36,351 | $38,478 | $73,311 | $82,203 | | Outside services | $8,713 | $9,374 | $16,524 | $17,443 | | Premium taxes | $5,237 | $5,269 | $10,647 | $10,598 | | Depreciation expense | $941 | $1,144 | $1,884 | $2,284 | | All other underwriting and operating | $(888) | $(1,590) | $(606) | $(835) | | **Total other underwriting and operating expenses net** | **$50,354** | **$52,675** | **$101,760** | **$111,693** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=37&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's analysis of the company's financial condition and operational results for Q2 and YTD 2025, covering key highlights, capital, and regulatory compliance [Introduction](index=37&type=section&id=Introduction) This introduction provides an overview of the Management's Discussion and Analysis, highlighting its scope and forward-looking nature - This Management's Discussion and Analysis (MD&A) provides an overview of MGIC Investment Corporation's financial condition and results of operations for Q2 2025, to be read in conjunction with the 2024 Annual Report on Form 10-K[156](index=156&type=chunk) - The discussion incorporates forward-looking statements and refers to risk factors that could materially affect actual results[156](index=156&type=chunk)[157](index=157&type=chunk) [Overview](index=38&type=section&id=Overview) This section provides a high-level summary of the company's financial performance, capital position, and regulatory compliance [Summary Financial Results](index=38&type=section&id=Summary%20Financial%20Results) This section summarizes the company's key financial results, including net income and diluted earnings per share, for the reported periods | (In thousands, except per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income | $192,482 | $204,228 | $377,942 | $378,325 | | Diluted income per share | $0.81 | $0.77 | $1.56 | $1.40 | | Adjusted net operating income | $194,018 | $204,877 | $379,226 | $383,263 | | Adjusted net operating income per diluted share | $0.82 | $0.77 | $1.57 | $1.42 | - Q2 2025 net income decreased by **$11.7 million (6% YoY)** to **$192.5 million**, primarily due to increased net losses incurred. Diluted EPS increased by **$0.04 (5% YoY)** to **$0.81**, driven by fewer diluted weighted shares outstanding[160](index=160&type=chunk) - YTD 2025 net income was **$377.9 million**, a slight decrease of **$0.4 million (0% YoY)**. Diluted EPS increased by **$0.16 (11% YoY)** to **$1.56**, also due to fewer diluted weighted shares outstanding[163](index=163&type=chunk) - Losses incurred, net, for Q2 2025 were **$(2.8) million** (compared to **$(18.3) million** in Q2 2024), and for YTD 2025 were **$6.8 million** (compared to **$(13.7) million** in YTD 2024). Favorable loss development from home price appreciation reduced expected claim rates on previously received delinquencies[162](index=162&type=chunk)[165](index=165&type=chunk)[166](index=166&type=chunk) [Capital](index=39&type=section&id=Capital) This section discusses the company's capital position, including dividend restrictions, share repurchases, and cash dividends - MGIC's ability to pay dividends to the holding company is restricted by insurance regulation. In 2025, MGIC can pay **$97 million** of ordinary dividends without OCI approval. In the six months ended June 30, 2025, MGIC paid **$400 million** in dividends to the holding company (compared to **$350 million** in YTD 2024)[169](index=169&type=chunk) - The company repurchased **16.4 million shares** for **$405.0 million** in YTD 2025, with **$802.2 million** remaining authorization under existing share repurchase programs through December 31, 2027[170](index=170&type=chunk) - Quarterly cash dividends of **$0.13 per share** were paid in Q1 and Q2 2025, totaling **$63.7 million**. A **$0.15 per share** dividend was declared on July 24, 2025[171](index=171&type=chunk) [GSEs](index=39&type=section&id=GSEs) This section addresses the company's compliance with GSE Private Mortgage Insurer Eligibility Requirements (PMIERs) and its capital position relative to these standards - MGIC is in compliance with the GSEs' Private Mortgage Insurer Eligibility Requirements (PMIERs) and is eligible to insure loans purchased by the GSEs[172](index=172&type=chunk) - As of June 30, 2025, MGIC's Available Assets totaled **$5.7 billion**, exceeding its Minimum Required Assets by **$2.4 billion**. Updates to PMIERs calculation, effective September 30, 2026, would reduce Available Assets by approximately **1%** or **$60 million** if fully implemented as of June 30, 2025[173](index=173&type=chunk) - Reinsurance transactions reduce the Minimum Required Assets under PMIERs, enabling higher returns. However, the level of credit received for ceded risk is subject to GSE review and potential changes[175](index=175&type=chunk)[176](index=176&type=chunk) [GSE Reform](index=41&type=section&id=GSE%20Reform) This section discusses the uncertainties surrounding future GSE reform and its potential impact on the company's business - The future role of GSEs, FHA, and private capital in the residential housing finance system is uncertain, and changes influenced by the current administration could materially adversely affect the company[177](index=177&type=chunk)[178](index=178&type=chunk) [State Regulations](index=41&type=section&id=State%20Regulations) This section outlines the company's compliance with state capital requirements and the potential impact of revised NAIC model acts - MGIC's risk-to-capital ratio was **10.0 to 1** at June 30, 2025, below the maximum **25 to 1** allowed by State Capital Requirements, and its policyholder position was **$3.6 billion** above the required MPP of **$2.2 billion**[180](index=180&type=chunk) - The NAIC's revised Mortgage Guaranty Insurance Model Act, adopted in 2023, includes new capital and other requirements. While its adoption timeline and final form are uncertain, it is not expected to have a material adverse effect on the business[181](index=181&type=chunk) [Factors Affecting Our Results](index=41&type=section&id=Factors%20Affecting%20Our%20Results) This section identifies macroeconomic conditions and other factors that significantly influence the company's business results - Business results are impacted by macroeconomic conditions (interest rates, home prices, employment, inflation) and other factors like pandemics and credit restrictions[183](index=183&type=chunk) - Premiums written and earned are influenced by New Insurance Written (NIW), cancellations (due to refinancings, payoffs, home equity), and premium rates. Ceded premiums under reinsurance also affect net premiums[184](index=184&type=chunk)[187](index=187&type=chunk) - Losses incurred are driven by new delinquencies, economic conditions, product mix, loan size, coverage percentage, and the distribution of claims over a book's life. Reinsurance and loss mitigation efforts (rescissions, curtailments) decrease net losses[186](index=186&type=chunk)[188](index=188&type=chunk)[197](index=197&type=chunk) - Underwriting and other expenses include employee compensation, professional services, depreciation, and premium taxes, reported net of ceding commissions[190](index=190&type=chunk) [Cybersecurity](index=44&type=section&id=Cybersecurity) This section highlights the company's vulnerability to cyber attacks and the potential financial and reputational risks involved - The company maintains confidential information on its servers and cloud services, making it vulnerable to cyber attacks, malware, and unauthorized access, which could lead to reputational damage, financial losses, litigation, and regulatory penalties[196](index=196&type=chunk)[199](index=199&type=chunk)[201](index=201&type=chunk) - Cyber threats are increasing in frequency and sophistication, potentially hindering the company's ability to identify and recover from incidents. Costs incurred from such attacks may not be fully recoverable through insurance[200](index=200&type=chunk)[202](index=202&type=chunk) [Explanation and Reconciliation of Non-GAAP Financial Measures](index=46&type=section&id=Explanation%20and%20reconciliation%20of%20our%20use%20of%20non-GAAP%20financial%20measures) This section explains and reconciles the company's use of non-GAAP financial measures to GAAP equivalents for performance evaluation - The company uses non-GAAP financial measures—adjusted pre-tax operating income, adjusted net operating income, and adjusted net operating income per diluted share—to evaluate core financial performance, excluding items not considered part of primary operating activities or influenced by discretionary/economic factors[204](index=204&type=chunk)[205](index=205&type=chunk)[206](index=206&type=chunk)[207](index=207&type=chunk)[208](index=208&type=chunk)[209](index=209&type=chunk) | Reconciliation of Income before tax / Net income to Adjusted pre-tax operating income / Adjusted net operating income (In thousands) | Three Months Ended June 30, 2025 (Pre-tax) | Three Months Ended June 30, 2025 (Net after-tax) | Three Months Ended June 30, 2024 (Pre-tax) | Three Months Ended June 30, 2024 (Net after-tax) | | :--- | :--- | :--- | :--- | :--- | | Income before tax / Net income | $246,089 | $192,482 | $259,825 | $204,228 | | Net realized investment (gains) losses | $1,944 | $1,536 | $822 | $649 | | **Adjusted pre-tax operating income / Adjusted net operating income** | **$248,033** | **$194,018** | **$260,647** | **$204,877** | | Reconciliation of Income before tax / Net income to Adjusted pre-tax operating income / Adjusted net operating income (In thousands) | Six Months Ended June 30, 2025 (Pre-tax) | Six Months Ended June 30, 2025 (Net after-tax) | Six Months Ended June 30, 2024 (Pre-tax) | Six Months Ended June 30, 2024 (Net after-tax) | | :--- | :--- | :--- | :--- | :--- | | Income before tax / Net income | $480,770 | $377,942 | $479,705 | $378,325 | | Net realized investment (gains) losses | $1,625 | $1,284 | $6,251 | $4,938 | | **Adjusted pre-tax operating income / Adjusted net operating income** | **$482,395** | **$379,226** | **$485,956** | **$383,263** | [Mortgage Insurance Portfolio](index=48&type=section&id=Mortgage%20Insurance%20Portfolio) This section provides an overview of the company's mortgage insurance portfolio, including new insurance written, insurance in force, and risk characteristics [Mortgage Originations](index=48&type=section&id=Mortgage%20originations) This section details the volume and characteristics of new insurance written, including FICO scores, LTV ratios, and loan types - New Insurance Written (NIW) for Q2 2025 was **$16.4 billion** (up from **$13.5 billion** in Q2 2024) and **$26.6 billion** for YTD 2025 (up from **$22.6 billion** in YTD 2024). The company expects 2025 NIW to be higher than 2024[215](index=215&type=chunk) | Primary NIW by FICO score (% of primary NIW) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | 760 and greater | 51.5 % | 50.1 % | 51.3 % | 51.4 % | | 639 and less | 0.5 % | 0.5 % | 0.4 % | 0.5 % | | Primary NIW by loan-to-value (% of primary NIW) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | 95.01% and above | 13.2 % | 13.9 % | 13.1 % | 14.5 % | | Primary NIW by debt-to-income ratio (% of primary NIW) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | 45.01% and above | 26.3 % | 29.2 % | 28.1 % | 28.7 % | | Primary NIW by policy payment type (% of primary NIW) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Monthly premiums | 97.7 % | 97.5 % | 97.5 % | 97.1 % | | Primary NIW by type of mortgage (% of primary NIW) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Purchases | 94.2 % | 98.4 % | 94.3 % | 98.1 % | [Insurance and Risk in Force](index=49&type=section&id=Insurance%20and%20risk%20in%20force) This section presents data on the company's insurance and risk in force, including persistency rates and risk characteristics of different policy years | (In billions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | NIW | $16.4 | $13.5 | $26.6 | $22.6 | | Cancellations, principal payments, and other reductions | $(13.2) | $(12.8) | $(25.0) | $(24.5) | | Increase (decrease) in primary IIF | $3.2 | $0.7 | $1.6 | $(1.9) | | Direct primary IIF as of June 30, | $297.0 | $291.6 | $297.0 | $291.6 | | Direct primary RIF as of June 30, | $79.5 | $77.3 | $79.5 | $77.3 | - The company's 2009 and later books show significantly improved risk characteristics compared to 2005-2008 books, attributed to more rigorous underwriting, higher credit quality, and strengthened loan servicing[226](index=226&type=chunk) - Annual persistency was **84.7%** at June 30, 2025, slightly down from **85.4%** at June 30, 2024, primarily influenced by current mortgage interest rates and borrower home equity[227](index=227&type=chunk) [CRT Programs](index=50&type=section&id=CRT%20Programs) This section describes the company's involvement in GSE Credit Risk Transfer programs and the associated risk in force - The company's insurance subsidiary provides insurance and reinsurance for GSE Credit Risk Transfer (CRT) programs. Risk in force (RIF) related to these programs was approximately **$520 million** at June 30, 2025, up from **$392 million** at December 31, 2024[229](index=229&type=chunk) [Consolidated Results of Operations](index=51&type=section&id=Consolidated%20Results%20of%20Operations) This section provides a detailed analysis of the company's consolidated revenues, losses, and expenses for the reported periods [Revenues](index=51&type=section&id=Revenues) This section analyzes the company's revenue streams, including net premiums earned, investment income, and net premium yield | (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net premiums written | $237,384 | $233,478 | $472,730 | $467,278 | | Net premiums earned | $244,322 | $243,528 | $488,041 | $486,172 | | Investment income, net of expenses | $60,995 | $61,479 | $122,438 | $121,223 | | Net gains (losses) on investments and other financial instruments | $(1,426) | $(276) | $(685) | $(8,785) | | Other revenue | $354 | $546 | $685 | $1,028 | | **Total revenues** | **$304,245** | **$305,277** | **$610,479** | **$599,638** | - Net premiums earned remained relatively flat for both the three and six months ended June 30, 2025, compared to the prior year, at **$244.3 million** and **$488.0 million**, respectively[233](index=233&type=chunk) | Premium Yield (in basis points) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | In force portfolio yield | 38.3 | 38.4 | 38.2 | 38.3 | | Premium refunds | (0.1) | 0.2 | 0.0 | 0.1 | | Accelerated earnings on single premium policies | 0.2 | 0.3 | 0.2 | 0.3 | | Total direct premium yield | 38.4 | 38.9 | 38.4 | 38.7 | | Ceded premiums earned, net of profit commission and assumed premiums | (5.4) | (5.5) | (5.5) | (5.5) | | **Net premium yield** | **33.0** | **33.4** | **32.9** | **33.2** | - Net premium yield slightly decreased to **33.0 basis points** in Q2 2025 (from **33.4 bps** in Q2 2024) and to **32.9 basis points** in YTD 2025 (from **33.2 bps** in YTD 2024). The in-force portfolio premium yield is expected to remain relatively flat in 2025[236](index=236&type=chunk)[239](index=239&type=chunk) [Reinsurance Transactions](index=52&type=section&id=Reinsurance%20Transactions) This section details the financial impact and characteristics of the company's quota share and excess-of-loss reinsurance transactions | Quota Share Reinsurance (Dollars in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Ceded premiums written and earned, net of profit commission | $28,101 | $26,643 | $58,044 | $55,358 | | Profit commission | $32,299 | $27,301 | $60,994 | $51,885 | | Ceding commissions | $12,081 | $10,789 | $23,808 | $21,449 | | Ceded losses incurred | $3,958 | $4,030 | $10,389 | $10,483 | | Mortgage insurance portfolio (Dollars in millions) | As of June 30, 2025 | As of June 30, 2024 | | :--- | :--- | :--- | | Total ceded RIF | $18,828 | $16,644 | - The increase in profit commission for Q2 and YTD 2025 was primarily driven by an increase in the percentage of the company's Insurance In Force (IIF) covered by QSR Transactions[242](index=242&type=chunk) | Quota Share Reinsurance | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | NIW subject to QSR Transactions | 87.7 % | 86.9 % | 87.4 % | 87.2 % | | RIF subject to QSR Transactions | 74.3 % | 67.6 % | 74.3 % | 67.6 % | - As of June 30, 2025, the weighted average coverage percentage of QSR transactions was **32%** based on RIF. The company executed a **40% QSR Transaction** for new insurance written in 2026[243](index=243&type=chunk)[248](index=248&type=chunk) - XOL Transactions provide loss coverage, with Home Re Transactions offering **$689.9 million** of coverage as of June 30, 2025. The company executed two new XOL Transactions in June 2025, providing up to **$160 million** and **$184 million** of reinsurance coverage for NIW in 2025 and 2026, respectively[251](index=251&type=chunk)[254](index=254&type=chunk) [Investment Income](index=54&type=section&id=Investment%20income) This section reports the company's net investment income for the three and six months ended June 30, 2025, and 2024 - Net investment income for Q2 2025 was **$61.0 million** (down from **$61.5 million** in Q2 2024). For YTD 2025, it was **$122.4 million** (up from **$121.2 million** in YTD 2024)[257](index=257&type=chunk) [Losses and Expenses](index=54&type=section&id=Losses%20and%20expenses) This section provides a detailed analysis of the company's losses incurred, delinquency inventory, claims severity, and underwriting expenses [Losses Incurred, Net](index=54&type=section&id=Losses%20incurred%2C%20net) This section analyzes the components of net losses incurred, including current year notices and prior year reserve development - Losses incurred, net, increased by **$15.4 million** for Q2 2025 and **$20.5 million** for YTD 2025 compared to the prior year, reaching **$(2.8) million** and **$6.8 million**, respectively[264](index=264&type=chunk) | Composition of losses incurred (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Current year / New notices | $51,596 | $49,117 | $111,093 | $102,553 | | Prior year reserve development | $(54,431) | $(67,389) | $(104,337) | $(116,270) | | **Losses incurred, net** | **$(2,835)** | **$(18,272)** | **$6,756** | **$(13,717)** | - Favorable development on previously received delinquencies, primarily due to a decrease in the expected claim rate from home price appreciation, offset new delinquency additions[266](index=266&type=chunk) - The loss ratio was **(1.2)%** for Q2 2025 (compared to **(7.5)%** in Q2 2024) and **1.4%** for YTD 2025 (compared to **(2.8)%** in YTD 2024)[267](index=267&type=chunk) [Delinquency Inventory](index=55&type=section&id=Delinquency%20inventory) This section presents the rollforward and composition of the company's delinquency inventory, including new notices, cures, and paid claims | Delinquency inventory rollforward | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Delinquency inventory at beginning of period | 25,438 | 24,142 | 26,791 | 25,650 | | New notices | 11,970 | 11,444 | 24,935 | 23,621 | | Cures | (12,588) | (11,786) | (26,569) | (25,100) | | Paid claims | (341) | (313) | (653) | (665) | | Rescissions and denials | (35) | (16) | (60) | (35) | | Other items removed from inventory | — | (101) | — | (101) | | **Delinquency inventory at end of period** | **24,444** | **23,370** | **24,444** | **23,370** | - The delinquency inventory decreased to **24,444** at June 30, 2025, from **26,791** at December 31, 2024. New delinquency notices for YTD 2025 were **24,935**, with a claim rate of **7.5%**[269](index=269&type=chunk)[270](index=270&type=chunk) | Primary delinquency inventory - consecutive months delinquent | June 30, 2025 | December 31, 2024 | June 30, 2024 | | :--- | :--- | :--- | :--- | | 3 months or less | 8,552 (35%) | 10,352 (38%) | 8,245 (35%) | | 4-11 months | 8,868 (36%) | 9,281 (35%) | 8,091 (35%) | | 12 months or more | 7,024 (29%) | 7,158 (27%) | 7,034 (30%) | | **Total** | **24,444 (100%)** | **26,791 (100%)** | **23,370 (100%)** | | Primary delinquency inventory - number of payments delinquent | June 30, 2025 | December 31, 2024 | June 30, 2024 | | :--- | :--- | :--- | :--- | | 3 payments or less | 12,260 (50%) | 14,135 (53%) | 11,716 (50%) | | 4-11 payments | 7,963 (33%) | 8,392 (31%) | 7,252 (31%) | | 12 payments or more | 4,221 (17%) | 4,264 (16%) | 4,402 (19%) | | **Total** | **24,444 (100%)** | **26,791 (100%)** | **23,370 (100%)** | [Claims Severity and Paid](index=56&type=section&id=Claims%20severity%20and%20paid) This section discusses factors influencing claims severity and provides data on average claim paid and percentage paid to exposure - Claim severity is impacted by economic conditions (home prices), loan exposure, time between delinquency and claim filing, and curtailments. The average claim paid as a percentage of exposure is expected to increase as delinquencies from periods with less home price appreciation are received[272](index=272&type=chunk)[275](index=275&type=chunk) | Claims severity trend for claims paid during the period | Q2 2025 | Q1 2025 | Q4 2024 | Q3 2024 | Q2 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Average exposure on claim paid | $50,411 | $55,297 | $51,368 | $47,779 | $49,623 | $45,284 | | Average claim paid | $36,536 | $38,826 | $34,042 | $27,249 | $30,578 | $28,267 | | % Paid to exposure | 72.5 % | 70.2 % | 66.3 % | 57.0 % | 61.6 % | 62.4 % | | Average number of missed payments at claim received date | 30 | 34 | 35 | 34 | 36 | 40 | | Net losses and LAE paid (In millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net losses and LAE paid | $12 | $12 | $24 | $24 | | Average Claim Paid | $36,536 | $30,578 | $37,630 | $29,355 | [Loss Reserves](index=58&type=section&id=Loss%20reserves) This section details the company's gross loss reserves, delinquency rates, and average reserves per delinquency | Gross reserves (Primary, in millions) | June 30, 2025 | December 31, 2024 | June 30, 2024 | | :--- | :--- | :--- | :--- | | Direct case loss reserves | $392 | $402 | $422 | | Direct IBNR and LAE reserves | $58 | $58 | $53 | | **Total primary direct loss reserves** | **$450** | **$460** | **$475** | | Ending delinquent inventory (count based) | 24,444 | 26,791 | 23,370 | | Percentage of loans delinquent (delinquency rate) | 2.21 % | 2.40 % | 2.09 % | | Average total primary loss reserves per delinquency | $18,395 | $17,159 | $20,307 | | Primary delinquency inventory by jurisdiction (Top 5) | June 30, 2025 | December 31, 2024 | June 30, 2024 | | :--- | :--- | :--- | :--- | | Florida | 2,081 | 2,648 | 1,816 | | Texas | 2,037 | 2,207 | 1,901 | | Illinois | 1,593 | 1,762 | 1,561 | | California | 1,468 | 1,499 | 1,310 | | Pennsylvania | 1,381 | 1,504 | 1,352 | | Primary average RIF - delinquent loans (Top 5, in thousands) | June 30, 2025 | December 31, 2024 | June 30, 2024 | | :--- | :--- | :--- | :--- | | Florida | $71,298 | $70,377 | $65,579 | | Texas | $66,174 | $63,943 | $61,532 | | Illinois | $48,036 | $46,311 | $46,639 | | California | $113,989 | $109,226 | $107,013 | | Pennsylvania | $46,631 | $45,227 | $46,344 | - Gross reserves decreased to **$450 million** at June 30, 2025, from **$460 million** at December 31, 2024. The delinquency rate decreased to **2.21%** from **2.40%** over the same period[284](index=284&type=chunk) [Underwriting and Other Expenses, Net](index=59&type=section&id=Underwriting%20and%20other%20expenses%2C%20net) This section analyzes the company's underwriting and other expenses, net of ceding commissions, and the associated expense ratio - Underwriting and other expenses, net, for Q2 2025 were **$50.4 million** (down from **$52.7 million** in Q2 2024) and for YTD 2025 were **$101.8 million** (down from **$111.7 million** in YTD 2024), primarily due to a decrease in employee costs[291](index=291&type=chunk) | | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Underwriting expense ratio | 21.9 % | 23.1 % | 22.2 % | 24.4 % | - The underwriting expense ratio decreased for both periods, driven by lower underwriting and other expenses, net, and an increase in net premiums written[292](index=292&type=chunk) [Provision for Income Taxes and Effective Tax Rate](index=60&type=section&id=Provision%20for%20income%20taxes%20and%20effective%20tax%20rate) This section details the company's provision for income taxes and effective tax rate for the reported periods | (In thousands, except rate) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Income before tax | $246,089 | $259,825 | $480,770 | $479,705 | | Provision for income taxes | $53,607 | $55,597 | $102,828 | $101,380 | | Effective tax rate | 21.8 % | 21.4 % | 21.4 % | 21.1 % | - The effective tax rate for Q2 and YTD 2025 approximated the statutory tax rate of **21%**. A modest decrease in the effective tax rate is expected for the remainder of 2025 due to purchases of transferable federal tax credits[294](index=294&type=chunk) [Balance Sheet Review](index=61&type=section&id=Balance%20Sheet%20Review) This section provides a comprehensive review of the company's consolidated balance sheet, analyzing changes in assets, liabilities, and equity [Consolidated Balance Sheets - Assets](index=61&type=section&id=Consolidated%20balance%20sheets%20-%20Assets) This section reviews the company's consolidated assets, including investments, cash, and deferred income taxes, and their period-over-period changes | (in thousands) | June 30, 2025 | December 31, 2024 | % Change | | :--- | :--- | :--- | :--- | | Investments | $5,818,478 | $5,867,560 | (1) | | Cash and cash equivalents | $294,871 | $229,485 | 28 | | Reinsurance recoverable on loss reserves | $53,781 | $47,281 | 14 | | Deferred incomes taxes, net | $41,818 | $69,875 | (40) | | Other assets | $333,379 | $333,034 | 0 | | **Total Assets** | **$6,542,327** | **$6,547,235** | **0** | - Total assets remained relatively stable, with a slight decrease of **0%** from December 31, 2024, to June 30, 2025. The investment portfolio decreased by **1%**, while cash and cash equivalents increased by **28%**[297](index=297&type=chunk) | Portfolio duration and embedded investment yield | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Effective duration (in years) | 4.1 | 3.9 | | Pre-tax yield | 4.0% | 4.0% | | After-tax yield | 3.2% | 3.2% | | Fixed income security ratings | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | AAA | 10% | 10% | | AA | 36% | 34% | | A | 36% | 36% | | BBB | 18% | 20% | - The net deferred tax asset decreased by **40%** to **$41.8 million**, primarily due to changes in the fair market value of the investment portfolio[303](index=303&type=chunk) [Consolidated Balance Sheets - Liabilities and Equity](index=62&type=section&id=Consolidated%20balance%20sheets%20-%20Liabilities%20and%20equity) This section reviews the company's consolidated liabilities and shareholders' equity, including loss reserves, unearned premiums, and capital components | (in thousands) | June 30, 2025 | December 31, 2024 | % Change | | :--- | :--- | :--- | :--- | | Loss reserves | $452,154 | $462,662 | (2) | | Unearned premiums | $105,049 | $120,360 | (13) | | Long-term debt | $645,402 | $644,667 | 0 | | Other liabilities | $184,778 | $147,171 | 26 | | **Total Liabilities** | **$1,387,383** | **$1,374,860** | **1** | | Common stock | $233,138 | $248,449 | (6) | | Paid-in capital | $1,801,159 | $1,808,236 | 0 | | Accumulated other comprehensive income (loss), net of tax | $(204,969) | $(288,162) | 29 | | Retained earnings | $3,325,616 | $3,403,852 | (2) | | **Shareholders' equity** | **$5,154,944** | **$5,172,375** | **0** | - Loss reserves decreased by **2%** to **$452.2 million**, primarily due to favorable development offset by new notices. Unearned premiums decreased by **13%** to **$105.0 million**, as the run-off of existing single premium policies outpaced new single premium NIW[304](index=304&type=chunk)[305](index=305&type=chunk) - Shareholders' equity saw a slight decrease of **0%**, mainly due to common stock repurchases and dividends paid, partially offset by net income and an increase in accumulated other comprehensive income[305](index=305&type=chunk) [Liquidity and Capital Resources](index=63&type=section&id=Liquidity%20and%20Capital%20Resources) This section analyzes the company's liquidity and capital resources, including cash flow, capitalization, and holding company liquidity [Consolidated Cash Flow Analysis](index=63&type=section&id=Consolidated%20Cash%20Flow%20Analysis) This section provides a detailed analysis of the company's consolidated cash flows from operating, investing, and financing activities | Summary of consolidated cash flows (In thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Total cash provided by (used in): Operating activities | $406,647 | $359,775 | | Total cash provided by (used in): Investing activities | $152,784 | $(108,412) | | Total cash provided by (used in): Financing activities | $(495,163) | $(334,199) | | **Increase (decrease) in cash and cash equivalents and restricted cash and cash equivalents** | **$64,268** | **$(82,836)** | - Net cash from operating activities increased by **$46.9 million (13% YoY)** in YTD 2025, driven by lower taxes paid and higher premiums written. Net cash from investing activities shifted to a **$152.8 million inflow** (from a **$108.4 million outflow**), while net cash used in financing activities increased by **$160.9 million (48% YoY)** due to share repurchases and dividends[308](index=308&type=chunk)[310](index=310&type=chunk)[311](index=311&type=chunk) - The company has approximately **$12.5 million** in purchase obligations, with **$5.9 million** anticipated to be paid in the next twelve months, primarily for IT infrastructure[309](index=309&type=chunk) [Capitalization](index=63&type=section&id=Capitalization) This section details the holding company's debt obligations and overall capitalization structure - As of June 30, 2025, the holding company's debt obligations totaled **$650 million** in aggregate principal amount, consisting of **5.25% Notes** due in 2028[312](index=312&type=chunk) [Liquidity Analysis - Holding Company](index=63&type=section&id=Liquidity%20analysis%20-%20holding%20company) This section analyzes the holding company's liquidity position, including cash and investments, and its ability to meet financial obligations - The holding company held approximately **$1.0 billion** in cash and investments at June 30, 2025, primarily to service debt interest, pay debt maturities, repurchase shares, and pay dividends[313](index=313&type=chunk) - Principal demands over the next twelve months include **$34.0 million** in interest payments on **5.25% Notes** and dividends to shareholders. The holding company believes it has sufficient liquidity[316](index=316&type=chunk) - MGIC paid a **$400 million** dividend to the holding company in YTD 2025. Future dividends are determined in consultation with the board and subject to regulatory approval[319](index=319&type=chunk) [Debt at Subsidiaries](index=64&type=section&id=Debt%20at%20subsidiaries) This section confirms the absence of outstanding debt obligations at the subsidiary level and access to secured lending facilities - MGIC, a subsidiary, had no outstanding debt obligations at June 30, 2025, but has access to a secured lending facility via its membership in the FHLB[320](index=320&type=chunk) [Capital Adequacy](index=64&type=section&id=Capital%20Adequacy) This section assesses MGIC's capital adequacy under PMIERs and state capital requirements, including reinsurance credit - As of June 30, 2025, MGIC's Available Assets under PMIERs totaled approximately **$5.7 billion**, exceeding Minimum Required Assets by **$2.4 billion**, ensuring compliance and eligibility to insure GSE loans[321](index=321&type=chunk) | PMIERs - Reinsurance Credit (In millions) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | QSR Transactions | $1,267 | $1,177 | | Home Re Transactions | $535 | $666 | | Traditional XOL Transactions | $669 | $388 | | **Total capital credit for Reinsurance Transactions** | **$2,471** | **$2,231** | | Risk-to-capital - MGIC (In millions, except ratio) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | RIF - net | $57,934 | $58,213 | | Statutory policyholders' surplus | $904 | $973 | | Statutory contingency loss reserve | $4,875 | $4,833 | | **Statutory policyholders' position** | **$5,779** | **$5,806** | | **Risk-to-capital** | **10.0:1** | **10.0:1** | [Financial Strength Ratings](index=65&type=section&id=Financial%20Strength%20Ratings) This section provides the financial strength ratings and outlooks for MGIC and MAC from various rating agencies | MGIC financial strength ratings | Rating | Outlook | | :--- | :--- | :--- | | Moody's Investor Services | A3 | Positive | | Stand
MGIC Investment (MTG) - 2025 Q2 - Quarterly Results
2025-07-30 20:05
[Second Quarter 2025 Results Overview](index=2&type=section&id=Second%20Quarter%202025%20Results%20Overview) MGIC Investment Corporation reports strong Q2 2025 results with solid net income, adjusted operating income, and a 15% annualized return on equity, returning $212 million to shareholders [Executive Summary](index=2&type=section&id=1.1.%20Executive%20Summary) MGIC reported Q2 2025 net income of **$192.5 million** and adjusted net operating income of **$194.0 million**, achieving a **15% annualized return on equity** and returning **$212 million** to shareholders - MGIC reported Q2 2025 net income of **$192.5 million**, adjusted net operating income of **$194.0 million**, and an annualized return on equity of **15%**[2](index=2&type=chunk)[3](index=3&type=chunk) - The company returned **$212 million** to shareholders through share repurchases and dividends, and announced a **15% increase** in its common stock dividend[3](index=3&type=chunk) [Summary Financial Metrics](index=2&type=section&id=1.2.%20Summary%20Financial%20Metrics) Q2 2025 key financial metrics include **$192.5 million** net income, **$0.81** diluted EPS, **$16.4 billion** new insurance written, and **15.0%** annualized return on equity | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--------------------------------- | :------ | :------ | :------ | | Net income (millions) | $192.5 | $185.5 | $204.2 | | Net income per diluted share | $0.81 | $0.75 | $0.77 | | Adjusted net operating income (millions) | $194.0 | $185.2 | $204.9 | | Adjusted net operating income per diluted share | $0.82 | $0.75 | $0.77 | | New insurance written (NIW) (billions) | $16.4 | $10.2 | $13.5 | | Net premiums earned (millions) | $244.3 | $243.7 | $243.5 | | Insurance in force (billions) | $297.0 | $293.8 | $291.6 | | Annual persistency | 84.7 % | 84.7 % | 85.4 % | | Losses incurred, net (millions) | $(2.8) | $9.6 | $(18.3) | | Loss ratio | (1.2 %) | 3.9 % | (7.5 %) | | Annualized return on equity | 15.0 % | 14.3 % | 16.0 % | | Book value per common share outstanding | $22.11 | $21.40 | $19.58 | [Capital and Liquidity](index=2&type=section&id=1.3.%20Capital%20and%20Liquidity) As of June 30, 2025, MGIC's PMIERs available assets were **$5.7 billion**, exceeding minimum requirements by **$2.4 billion**, with holding company liquidity at **$1,046 million** | Metric | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :-------------------------- | :------------ | :------------- | :------------ | | PMIERs available assets (billions) | $5.7 | $5.9 | $5.8 | | PMIERs excess (billions) | $2.4 | $2.6 | $2.4 | | Holding company liquidity (millions) | $1,046 | $824 | $990 | [Quarterly Highlights](index=4&type=section&id=Quarterly%20Highlights) MGIC completed reinsurance transactions, repurchased shares, paid dividends to shareholders, and issued a **$400 million** dividend to its holding company [Second Quarter 2025 Highlights](index=4&type=section&id=2.1.%20Second%20Quarter%202025%20Highlights) Q2 2025 highlights include two excess-of-loss reinsurance transactions, **$180.7 million** in share repurchases, and a **$400 million** dividend to the holding company - Two traditional excess-of-loss reinsurance transactions were completed, providing up to **$160 million** (2025) and **$184 million** (2026) in reinsurance coverage[8](index=8&type=chunk) - **7.1 million** common shares were repurchased for **$180.7 million**, and a common stock dividend of **$0.13 per share** was paid[8](index=8&type=chunk) - MGIC paid a **$400 million** dividend to its holding company[8](index=8&type=chunk) [Third Quarter 2025 Highlights (as of July 25, 2025)](index=4&type=section&id=2.2.%20Third%20Quarter%202025%20Highlights%20(as%20of%20July%2025%2C%202025)) As of July 25, 2025, the board approved a **$750 million** share repurchase program, with additional repurchases totaling **$68 million**, and declared a **$0.15 per share** common stock dividend - The Board of Directors approved an additional share repurchase program, authorizing the purchase of up to **$750 million** of common stock through December 31, 2027[8](index=8&type=chunk) - As of July 25, 2025, an additional **2.6 million** common shares were repurchased for **$68 million**[8](index=8&type=chunk) - A common stock dividend of **$0.15 per share** was declared, payable to shareholders on August 21, 2025[8](index=8&type=chunk) [Company Information & Disclosures](index=5&type=section&id=Company%20Information%20%26%20Disclosures) This section details conference call information, company overview, additional data availability, safe harbor statements, and non-GAAP financial measure usage [Conference Call and Webcast Details](index=5&type=section&id=3.1.%20Conference%20Call%20and%20Webcast%20Details) A conference call for Q2 2025 results is scheduled for July 31, 2025, at 9:30 AM ET, with webcast and replay available online - The conference call is scheduled for July 31, 2025, at 9:30 AM ET to discuss quarterly results[9](index=9&type=chunk) - A webcast and replay will be available on the company's website under "Newsroom"[9](index=9&type=chunk) [About MGIC](index=5&type=section&id=3.2.%20About%20MGIC) MGIC, a subsidiary of MGIC Investment Corporation, provides private mortgage insurance, with **$297.0 billion** of primary insurance in force covering **1.1 million** mortgages as of June 30, 2025 - MGIC provides private mortgage insurance to lenders nationwide, helping families achieve homeownership[10](index=10&type=chunk) - As of June 30, 2025, MGIC had **$297.0 billion** of primary insurance in force, covering **1.1 million** mortgages[10](index=10&type=chunk) [Additional Information Availability](index=5&type=section&id=3.3.%20Additional%20Information%20Availability) Additional statistics, non-GAAP financial information, and portfolio data are available on the company's website, which also provides important updates and email alerts - Additional statistics and non-GAAP financial information, including portfolio statistics, are available on the company's website[11](index=11&type=chunk) - MGIC Investment Corporation posts important information via its corporate website and encourages investors to sign up for automated email alerts[11](index=11&type=chunk) [Safe Harbor Statement](index=5&type=section&id=3.4.%20Safe%20Harbor%20Statement) Actual results may differ from forward-looking statements due to SEC-reported risk factors, and the company disclaims any obligation to update these statements - Actual results may differ materially from forward-looking statements due to risk factors detailed in SEC reports[12](index=12&type=chunk) - The company disclaims any obligation to update any forward-looking statements, and investors should not rely on them being current beyond their release date[12](index=12&type=chunk) - Company policy prohibits disclosing any material non-public or confidential information to securities analysts, and investors should not assume the company concurs with any analyst reports[13](index=13&type=chunk) [Use of Non-GAAP Financial Measures](index=6&type=section&id=3.5.%20Use%20of%20Non-GAAP%20Financial%20Measures) MGIC uses non-GAAP measures like adjusted operating income to assess core financial performance, excluding non-operating or non-recurring items for investor clarity - Non-GAAP measures (adjusted pre-tax operating income, adjusted net operating income) are used to assess core financial performance, excluding items not part of primary operations or representative of operating trends[14](index=14&type=chunk)[17](index=17&type=chunk) - Adjusted pre-tax operating income is defined as GAAP income (loss) before tax, excluding net realized investment gains (losses), gains (losses) on extinguishment of debt, and unusual or non-recurring non-operating items[15](index=15&type=chunk)[17](index=17&type=chunk) - Adjusted net operating income is defined as GAAP net income (loss), excluding the after-tax impact of net realized investment gains (losses), gains (losses) on extinguishment of debt, and unusual or non-recurring non-operating items, with adjustments tax-effected at a **21%** federal statutory tax rate[16](index=16&type=chunk)[17](index=17&type=chunk) [Condensed Consolidated Financial Statements (Unaudited)](index=7&type=section&id=Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) This section presents unaudited condensed consolidated financial statements, including statements of operations, earnings per share, non-GAAP reconciliations, and balance sheets [Statements of Operations](index=7&type=section&id=4.1.%20Statements%20of%20Operations) Q2 2025 total revenues were **$304.2 million**, with net premiums earned at **$244.3 million**, leading to **$192.5 million** net income | (In thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Net premiums written | $237,384 | $233,478 | $472,730 | $467,278 | | Net premiums earned | $244,322 | $243,528 | $488,041 | $486,172 | | Net investment income | $60,995 | $61,479 | $122,438 | $121,223 | | Total revenues | $304,245 | $305,277 | $610,479 | $599,638 | | Losses incurred, net | $(2,835) | $(18,272) | $6,756 | $(13,717) | | Underwriting and other expenses, net | $52,092 | $54,825 | $105,155 | $115,852 | | Total losses and expenses | $58,156 | $45,452 | $129,709 | $119,933 | | Income before tax | $246,089 | $259,825 | $480,770 | $479,705 | | Provision for income taxes | $53,607 | $55,597 | $102,828 | $101,380 | | Net income | $192,482 | $204,228 | $377,942 | $378,325 | [Earnings Per Share](index=8&type=section&id=4.2.%20Earnings%20Per%20Share) Q2 2025 diluted EPS increased to **$0.81** from **$0.77** in Q2 2024, driven by fewer diluted weighted average common shares outstanding | (In thousands, except per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Net income - basic and diluted | $192,482 | $204,228 | $377,942 | $378,325 | | Diluted weighted average common shares outstanding | 237,971 | 266,872 | 242,209 | 269,990 | | Diluted earnings per share | $0.81 | $0.77 | $1.56 | $1.40 | [Non-GAAP Reconciliations](index=9&type=section&id=4.3.%20Non-GAAP%20Reconciliations) Q2 2025 adjusted net operating income was **$194.0 million**, with adjusted diluted net operating income per share at **$0.82**, primarily excluding net realized investment losses | (In thousands, except per share amounts) | Q2 2025 (Pre-tax) | Q2 2025 (Net after-tax) | Q2 2024 (Pre-tax) | Q2 2024 (Net after-tax) | | :--------------------------------------- | :---------------- | :---------------------- | :---------------- | :---------------------- | | Income before tax / Net income | $246,089 | $192,482 | $259,825 | $204,228 | | Net realized investment (gains) losses | $1,944 | $1,536 | $822 | $649 | | Adjusted pre-tax operating income / Adjusted net operating income | $248,033 | $194,018 | $260,647 | $204,877 | | (Per diluted share) | Q2 2025 | Q2 2024 | | :------------------------------------ | :------ | :------ | | Net income per diluted share | $0.81 | $0.77 | | Net realized investment (gains) losses | $0.01 | $0.00 | | Adjusted net operating income per diluted share | $0.82 | $0.77 | [Balance Sheets](index=10&type=section&id=4.4.%20Balance%20Sheets) As of June 30, 2025, total assets were **$6.542 billion**, total liabilities **$1.387 billion**, shareholders' equity **$5.155 billion**, and book value per share **$22.11** | (In thousands) | June 30, 2025 | December 31, 2024 | June 30, 2024 | | :------------------------------------ | :------------ | :---------------- | :------------ | | Total assets | $6,542,327 | $6,547,235 | $6,523,922 | | Total liabilities | $1,387,383 | $1,374,860 | $1,407,001 | | Shareholders' equity | $5,154,944 | $5,172,375 | $5,116,921 | | Book value per share | $22.11 | $20.82 | $19.58 | | Shares outstanding | 233,138 | 248,449 | 261,390 | - As of June 30, 2025, investments included **$224.917 million** in unrealized losses on securities, an improvement from **$326.428 million** at December 31, 2024[29](index=29&type=chunk) [Additional Operational Statistics](index=11&type=section&id=Additional%20Operational%20Statistics) This section provides additional operational statistics, including new insurance written, insurance in force, delinquency data, reserves, and reinsurance metrics [New Insurance Written (NIW)](index=11&type=section&id=5.1.%20New%20Insurance%20Written%20(NIW)) Q2 2025 new primary insurance written (NIW) significantly increased to **$16.4 billion**, with year-to-date NIW at **$26.6 billion** | (billions) | Q2 2025 | Q1 2025 | Q2 2024 | Year-to-date 2025 | Year-to-date 2024 | | :-------------------------- | :------ | :------ | :------ | :---------------- | :---------------- | | New primary insurance written | $16.4 | $10.2 | $13.5 | $26.6 | $22.6 | | New primary risk written | $4.3 | $2.6 | $3.5 | $6.9 | $5.9 | | Product mix as a % of primary NIW | Q2 2025 | Q1 2025 | Q2 2024 | Year-to-date 2025 | Year-to-date 2024 | | :-------------------------------- | :------ | :------ | :------ | :---------------- | :---------------- | | FICO < 680 | 4 % | 4 % | 4 % | 4 % | 4 % | | >95% LTVs | 13 % | 13 % | 14 % | 13 % | 15 % | | >45% DTI | 26 % | 31 % | 29 % | 28 % | 29 % | | Refinances | 6 % | 6 % | 2 % | 6 % | 2 % | [Insurance In Force (IIF) and Risk In Force (RIF)](index=12&type=section&id=5.2.%20Insurance%20In%20Force%20(IIF)%20and%20Risk%20In%20Force%20(RIF)) Primary insurance in force (IIF) reached **$297.0 billion** in Q2 2025, with net premium yield at **33.0 bps** and primary risk in force (RIF) at **$79.5 billion** | (billions) | Q2 2025 | Q1 2025 | Q2 2024 | | :-------------------------------- | :------ | :------ | :------ | | Primary Insurance In Force (IIF) | $297.0 | $293.8 | $291.6 | | Primary Risk In Force (RIF) | $79.5 | $78.5 | $77.3 | | Premium Yield (bps) | Q2 2025 | Q1 2025 | Q2 2024 | | :-------------------------- | :------ | :------ | :------ | | In force portfolio yield | 38.3 | 38.4 | 38.4 | | Net premium yield | 33.0 | 33.0 | 33.4 | - Annual persistency for Q2 2025 was **84.7%**, consistent with Q1 2025 but slightly lower than Q2 2024's **85.4%**[31](index=31&type=chunk) [Delinquency Statistics](index=13&type=section&id=5.3.%20Delinquency%20Statistics) Q2 2025 delinquent inventory decreased to **24,444** loans, reducing the primary IIF delinquency rate to **2.21%**, with **11,970** new notices and **12,588** cures | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :------------------------------------ | :------ | :------ | :------ | | Ending Delinquent Inventory ( of Loans) | 24,444 | 25,438 | 23,370 | | Primary IIF Delinquency Rate (count based) | 2.21 % | 2.30 % | 2.09 % | | New Notices | 11,970 | 12,965 | 11,444 | | Cures | (12,588) | (13,981) | (11,786) | | Paid claims | (341) | (312) | (313) | - The aging distribution of primary delinquent inventory shows **35%** of loans are 3 months or less delinquent, **36%** are 4-11 months, and **29%** are 12 months or longer[35](index=35&type=chunk) [Reserves and Claims Paid](index=14&type=section&id=5.4.%20Reserves%20and%20Claims%20Paid) Q2 2025 total gross loss reserves were **$452 million**, with net paid claims stable at **$12 million** and primary average claim payment at **$36.5 thousand** | (millions) | Q2 2025 | Q1 2025 | Q2 2024 | | :-------------------------- | :------ | :------ | :------ | | Total Gross Loss Reserves | $452 | $465 | $478 | | Net Paid Claims | $12 | $12 | $12 | | (thousands) | Q2 2025 | Q1 2025 | Q2 2024 | | :-------------------------- | :------ | :------ | :------ | | Primary Average Direct Reserve Per Delinquency | $18,395 | $18,167 | $20,307 | | Primary Average Claim Payment | $36.5 | $38.8 | $30.6 | [Reinsurance and MI Ratios](index=15&type=section&id=5.5.%20Reinsurance%20and%20MI%20Ratios) Q2 2025 saw **87.7%** of NIW reinsured, with a GAAP loss ratio of **(1.2%)** and MGIC's risk-to-capital ratio at **10.0:1** | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :------------------------------------ | :------ | :------ | :------ | | % NIW subject to reinsurance | 87.7 % | 86.8 % | 86.9 % | | Ceded premiums written and earned (millions) | $28.1 | $29.9 | $26.7 | | Ceded losses incurred (millions) | $4.0 | $6.4 | $4.0 | | GAAP loss ratio | (1.2 %) | 3.9 % | (7.5 %) | | GAAP underwriting expense ratio | 21.9 % | 22.5 % | 23.1 % | | Mortgage Guaranty Insurance Corporation - Risk to Capital | 10.0:1 | 9.8:1 | 10.0:1 | [Risk Factors](index=16&type=section&id=Risk%20Factors) This section details risks from global events, industry-specific challenges like economic downturns and regulatory changes, and general business risks [Risk Factors Relating to Global Events](index=16&type=section&id=6.1.%20Risk%20Factors%20Relating%20to%20Global%20Events) Global events like wars can negatively impact the U.S. economy, increasing inflation, supply chain strains, and financial market volatility, potentially raising loan delinquencies - Wars and global events may adversely affect the U.S. economy, leading to increased inflation, supply chain strains, and heightened volatility in domestic and global financial markets[41](index=41&type=chunk) - Potential impacts include increased loan delinquencies, negative effects on portfolio performance, and reinsurance terms that may become limited or unattractive[45](index=45&type=chunk) [Risk Factors Relating to the Mortgage Insurance Industry and its Regulation](index=16&type=section&id=6.2.%20Risk%20Factors%20Relating%20to%20the%20Mortgage%20Insurance%20Industry%20and%20its%20Regulation) This section details mortgage insurance industry risks, including economic downturns, GSE changes, PMIERs compliance, regulatory scrutiny, natural disasters, and reinsurance availability [Economic Downturns and Home Price Declines](index=16&type=section&id=6.2.1.%20Economic%20Downturns%20and%20Home%20Price%20Declines) Economic downturns or home price declines can increase homeowner defaults and company losses, as falling prices hinder sales or refinancing - A domestic economic downturn or decline in home prices could lead to more homeowner defaults, increased company losses, and reduced returns[42](index=42&type=chunk) - Falling home prices may make it harder for borrowers to sell or refinance their homes, increasing the likelihood of default and potentially leading to loan balances exceeding home values, discouraging continued payments[43](index=43&type=chunk) - National home prices decreased **0.2%** month-over-month in May 2025 and **0.1%** year-to-date through May 2025, following increases of **4.8%**, **6.7%**, and **6.8%** in 2024, 2023, and 2022, respectively[43](index=43&type=chunk) [Changes in GSE Business Practices and Regulation](index=16&type=section&id=6.2.2.%20Changes%20in%20GSE%20Business%20Practices%20and%20Regulation) Changes in GSE business practices or regulation could reduce revenue or increase losses, as most new insurance written is for GSE-purchased loans - GSE business practices significantly impact the company's business, as the vast majority of new insurance written (NIW) is for loans purchased by the GSEs[44](index=44&type=chunk) - FHFA's review of the GSEs' mission and potential changes to GSE business practices and policies, including mortgage insurance coverage, cost, and cancellations, could negatively affect the mortgage insurance industry and the company's financial performance[46](index=46&type=chunk)[47](index=47&type=chunk) - The future role of the GSEs, FHA, and private capital in the residential housing finance system remains uncertain, as do the timing and impact of any resulting changes on the company's business[48](index=48&type=chunk) [PMIERs Compliance and Capital Requirements](index=18&type=section&id=6.2.3.%20PMIERs%20Compliance%20and%20Capital%20Requirements) PMIERs compliance is crucial; MGIC's available assets exceed requirements, but future calculation updates and increased delinquencies could impact compliance - The company must comply with the GSEs' PMIERs, including financial, operational, quality control, and certain transaction approval requirements, to maintain eligibility[49](index=49&type=chunk) - As of June 30, 2025, MGIC's available assets totaled **$5.7 billion**, exceeding minimum required assets by **$2.4 billion**, meeting PMIERs requirements[51](index=51&type=chunk) - Updates to the GSEs' available assets calculation, fully effective September 30, 2026, could reduce MGIC's available assets by approximately **1%** or **$60 million**; increased loan delinquencies could cause minimum required assets to exceed available assets, adversely affecting business and operating results[51](index=51&type=chunk)[53](index=53&type=chunk) [Uncertainty of Loss Reserve Estimates](index=18&type=section&id=6.2.4.%20Uncertainty%20of%20Loss%20Reserve%20Estimates) Loss reserve estimates are inherently uncertain, requiring significant management judgment, as actual claims may differ materially and economic factors can impact claim rates - Establishing loss reserves involves inherent uncertainty and requires significant management judgment, as actual claims paid may differ materially from loss reserve estimates[56](index=56&type=chunk)[57](index=57&type=chunk) - Factors such as economic conditions, the duration of loan delinquencies, and foreclosure moratorium programs can impact claim rates and severity, potentially having a significant effect on future performance[57](index=57&type=chunk) [Comprehensive Regulation and Compliance](index=19&type=section&id=6.2.5.%20Comprehensive%20Regulation%20and%20Compliance) The company faces extensive state and federal regulations, with increased scrutiny on risk-based pricing and AI use, potentially leading to litigation or regulatory action - The company is subject to comprehensive regulation, including by state insurance departments, with many regulations designed to protect insured policyholders and consumers[58](index=58&type=chunk) - The private mortgage insurance industry's increasing use of risk-based pricing systems, algorithms, artificial intelligence, and data analytics has led to additional regulatory scrutiny on matters such as premium rates, pricing discrimination, underwriting, data privacy, and access to insurance[60](index=60&type=chunk) - Failure to satisfy applicable contractual or regulatory standards exposes the company to potential litigation or regulatory action[59](index=59&type=chunk)[61](index=61&type=chunk) [Impact of Pandemics and Disasters](index=19&type=section&id=6.2.6.%20Impact%20of%20Pandemics%20and%20Disasters) Pandemics and natural disasters can trigger economic downturns, leading to home price declines, increased claim rates, and potentially higher reinsurance costs or reduced availability - Pandemics and other disasters could trigger economic downturns in affected areas, leading to home price declines, increased claim rates, and greater claim severity[62](index=62&type=chunk) - Increased frequency and severity of natural disasters may cause some homeowners insurance companies to raise premiums or withdraw from high-risk areas, indirectly affecting home prices and delinquency rates[62](index=62&type=chunk) - Pandemics and disasters could also lead to higher reinsurance rates or reduced availability, and impact portfolio values, potentially negatively affecting compliance with state capital requirements and PMIERs financial requirements[63](index=63&type=chunk)[64](index=64&type=chunk) [Reinsurance Availability and Capital Credit](index=20&type=section&id=6.2.7.%20Reinsurance%20Availability%20and%20Capital%20Credit) Reinsurance reduces risk and capital needs, but market conditions affect its availability and cost, and changes in GSEs' PMIERs credit for ceded risk could impact returns - Reinsurance transactions reduce tail risk and risk-based capital requirements, but market conditions affect the availability and cost of reinsurance[66](index=66&type=chunk) - The GSEs may change the credit given for ceded risk under PMIERs, which could reduce returns unless premium rates are increased, potentially leading to a decrease in new insurance written (NIW)[68](index=68&type=chunk) - Reinsurance transactions expose the company to counterparty risk, and failure to recover losses from reinsurers could materially affect operating results and financial condition[67](index=67&type=chunk) [Loss Reserve Accounting Practices](index=20&type=section&id=6.2.8.%20Loss%20Reserve%20Accounting%20Practices) Loss reserves are established only for reported or estimated delinquencies, not for non-delinquent loans, potentially impacting future earnings disproportionately when delinquencies arise - Under GAAP, the company establishes loss reserves only upon receipt of a delinquency notice (two or more payments past due) or for estimated incurred but not reported (IBNR) delinquencies, not for non-delinquent loans[69](index=69&type=chunk) - Consequently, future losses on currently non-delinquent loans could materially impact future performance when delinquencies arise, disproportionately affecting earnings in certain periods[69](index=69&type=chunk) - As of June 30, 2025, the company had case reserves for **24,444** delinquent loans and total IBNR reserves of **$29 million**, but the number of delinquent loans could increase due to economic conditions or other factors[69](index=69&type=chunk) [State Capital Requirements](index=20&type=section&id=6.2.9.%20State%20Capital%20Requirements) State capital requirements mandate minimum capital-to-risk ratios; MGIC's ratio is **10.0:1**, exceeding minimums, but failure to comply could prohibit new business underwriting - Insurance laws in 16 jurisdictions require mortgage insurers to maintain minimum statutory capital-to-risk-in-force ratios, typically with a maximum risk-to-capital ratio of **25:1**[70](index=70&type=chunk) - As of June 30, 2025, MGIC's risk-to-capital ratio was **10.0:1**, below the maximum ratio allowed by jurisdictions, and its policyholders' position exceeded the minimum required policyholders' position by **$3.6 billion**[71](index=71&type=chunk) - If MGIC fails to meet state capital requirements, it could be prohibited from underwriting new business in all or specific jurisdictions, potentially affecting lenders' willingness to choose the company's insurance[73](index=73&type=chunk) [Decline in Low Down Payment Mortgage Originations](index=21&type=section&id=6.2.10.%20Decline%20in%20Low%20Down%20Payment%20Mortgage%20Originations) A decline in low down payment mortgage originations, influenced by economic factors and credit standards, could reduce mortgage insurance demand and limit new insurance written - Factors influencing low down payment mortgage originations include the health of the U.S. economy, interest rate levels, housing affordability, and credit standards[74](index=74&type=chunk) - A decline in low down payment mortgage originations could reduce demand for mortgage insurance and limit the company's new insurance written (NIW)[74](index=74&type=chunk) [Alternatives to Private Mortgage Insurance](index=21&type=section&id=6.2.11.%20Alternatives%20to%20Private%20Mortgage%20Insurance) Competition from GSE credit risk transfer, lender self-insurance, and government programs, along with proposed regulatory capital rules, could negatively impact new insurance written - Alternatives to private mortgage insurance include investors using risk mitigation and credit risk transfer techniques other than private mortgage insurance, lender self-insurance, and the use of FHA, VA, and other government mortgage insurance programs[75](index=75&type=chunk)[76](index=76&type=chunk)[77](index=77&type=chunk) - FHA's market share was **33.5%** in 2024, and VA's was **24.5%**; the FHA mortgage insurance premium rate reduction announced in February 2023 has negatively impacted the company's new insurance written (NIW)[79](index=79&type=chunk)[80](index=80&type=chunk) - Proposed regulatory capital rules could impose higher capital standards on large U.S. banks, where affected banks would no longer receive risk capital relief for mortgage insurance, which is expected to negatively impact the company's new insurance written (NIW)[81](index=81&type=chunk) [Impact of Policy Persistency on Results](index=22&type=section&id=6.2.12.%20Impact%20of%20Policy%20Persistency%20on%20Results) Policy persistency significantly impacts revenue; high persistency can reduce single-premium profitability, while low persistency reduces future premiums for monthly and annual policies - The duration of insurance policies (annual persistency) significantly impacts the company's revenue, as most earned premiums each year are from insurance underwritten in prior years[82](index=82&type=chunk) - Higher-than-expected persistency could reduce the profitability of single-premium policies as they remain in force longer and potentially increase claim incidence; conversely, low persistency for monthly and annual premium policies will reduce future premiums[82](index=82&type=chunk) - As of June 30, 2025, annual persistency was **84.7%**, primarily influenced by current mortgage interest rates relative to the mortgage coupon rates of insurance in force and the amount of equity borrowers have in their homes[83](index=83&type=chunk) [Disruptions in Mortgage Loan Servicing and Third-Party Reliance](index=23&type=section&id=6.2.13.%20Disruptions%20in%20Mortgage%20Loan%20Servicing%20and%20Third-Party%20Reliance) Reliance on third-party servicers for mortgage servicing and reporting exposes the company to risks from servicer liquidity issues, operational burdens, and inaccurate reporting - The company relies on third-party servicers for reliable and consistent servicing of insured mortgage loans and on third-party reporting for information, which may contain omissions or inaccuracies[84](index=84&type=chunk)[88](index=88&type=chunk) - Servicer liquidity issues or operational burdens from increased delinquent loans could disrupt servicing, reduce servicers' loss mitigation efforts, and affect premium income[84](index=84&type=chunk)[85](index=85&type=chunk)[86](index=86&type=chunk) - The company has delegated authority for certain loss mitigation options to the GSEs, who in turn delegate to most approved servicers, and these loss mitigation decisions may be adverse to the company and increase the incidence of paid claims[87](index=87&type=chunk) [Risk Factors Relating to Our Business Generally](index=23&type=section&id=6.3.%20Risk%20Factors%20Relating%20to%20Our%20Business%20Generally) This section covers general business risks, including risk management, IT failures, cybersecurity, underwriting, premium adequacy, financial instability, personnel, competition, ratings, legal, investments, and stock price [Effectiveness of Risk Management Programs and Model Accuracy](index=23&type=section&id=6.3.1.%20Effectiveness%20of%20Risk%20Management%20Programs%20and%20Model%20Accuracy) Risk management programs may not effectively mitigate all risks, and models used for forecasting and pricing rely on uncertain assumptions, with errors potentially impacting financial performance - The company's enterprise risk management program may not effectively identify or adequately control and mitigate the risks faced in its business[89](index=89&type=chunk) - The models used by the company rely on inherently uncertain estimates, forecasts, and assumptions and may not always perform as expected, especially during unusual events[91](index=91&type=chunk) - Changes in models or model assumptions, errors in model design, implementation, or use, and incorrect or inaccurate underlying input data, assumptions, and calculations could lead to significant changes in future expectations, returns, or financial performance[91](index=91&type=chunk) [Information Technology System Failures](index=24&type=section&id=6.3.2.%20Information%20Technology%20System%20Failures) The company's business heavily relies on IT systems; failures or disruptions could impact service delivery, efficiency, and operations, while system upgrades are complex and costly - The company's business is highly dependent on information technology systems, and failures or disruptions to these systems or disaster recovery and business continuity plans could affect the company's ability to provide products and services to customers, reduce efficiency, or cause operational delays[92](index=92&type=chunk) - Upgrades, automation, and transformation of information systems are complex, expensive, and time-consuming, and failure to successfully implement and integrate them in a timely manner could materially and adversely affect the business and operating results[93](index=93&type=chunk) [Cybersecurity Breach and Information Security](index=24&type=section&id=6.3.3.%20Cybersecurity%20Breach%20and%20Information%20Security) The company is vulnerable to cyberattacks and security breaches, including AI-driven threats, which could result in reputational damage, financial losses, and regulatory penalties - The company maintains a large volume of confidential and proprietary information and is vulnerable to cyberattacks, ransomware, unauthorized access, and system failures[94](index=94&type=chunk)[95](index=95&type=chunk) - The development and use of artificial intelligence (AI) may increase information security risks, such as being used to create attacks or bypass security measures, and hybrid work models may be more susceptible to security breaches[96](index=96&type=chunk) - If unauthorized information disclosure or a cyberattack occurs, some costs may not be recoverable through insurance or legal proceedings, potentially materially and adversely affecting operating results[98](index=98&type=chunk) [Underwriting Practices and Business Mix](index=25&type=section&id=6.3.4.%20Underwriting%20Practices%20and%20Business%20Mix) Underwriting practices and business mix directly impact PMIERs capital requirements, premium yield, and loss likelihood, with reliance on delegated underwriting affecting pricing and risk assessment - Underwriting practices and business mix (such as LTV ratios, credit scores, loan terms, HARP status, and delinquency status) affect minimum required assets under PMIERs, premium yield, and the likelihood of losses[99](index=99&type=chunk) - The company relies on information provided by loan originators through delegated underwriting programs (approximately **69%** of NIW for the first six months of 2025) and GSE automated underwriting systems, which can affect pricing and risk assessment[107](index=107&type=chunk)[108](index=108&type=chunk) - The widespread use of risk-based pricing systems in the private mortgage insurance industry makes rate comparisons with competitors more difficult and can lead to volatility in new insurance written (NIW)[109](index=109&type=chunk) [Adequacy of Premiums](index=26&type=section&id=6.3.5.%20Adequacy%20of%20Premiums) Premiums set at issuance may be insufficient to cover liabilities, as coverage cannot be canceled or adjusted, and regulatory delays for increases could reduce returns - Premiums set at policy issuance may be insufficient to cover loss liabilities, as mortgage insurance coverage generally cannot be canceled or renewal premiums adjusted during the policy term[111](index=111&type=chunk) - Premiums are subject to state regulatory approval, which may delay or limit the company's ability to increase premiums on future policies; if required capital increases or actual losses exceed expectations, returns may be lower than anticipated[111](index=111&type=chunk) - If changes in state or federal regulations relax mortgage loan standards, or lenders seek alternative business, it could lead to underwriting more high-risk loans, and claim rates could be higher than anticipated by current underwriting and pricing models[111](index=111&type=chunk) [Instability in Financial Services Industry and Counterparty Risk](index=27&type=section&id=6.3.6.%20Instability%20in%20Financial%20Services%20Industry%20and%20Counterparty%20Risk) Instability in the financial services industry or counterparty defaults could significantly impact the company's business, leading to market disruptions and increased regulatory pressure - Actual or perceived instability in the financial services industry, or non-performance by financial institutions or counterparties, could materially affect the company's business[112](index=112&type=chunk) - These conditions could lead to disruptions in mortgage markets, delayed access to deposits or other financial assets, reduced or more costly access to funding sources and credit arrangements, increased regulatory pressure, and the inability of counterparties and/or customers to fulfill their obligations to the company[112](index=112&type=chunk)[113](index=113&type=chunk) [Management Team and Personnel Retention](index=27&type=section&id=6.3.7.%20Management%20Team%20and%20Personnel%20Retention) Company success depends on key personnel; unexpected departures or failure to recruit replacements could adversely affect business and increase costs - The company's success depends in part on the skills, working relationships, and continued service of its management team and other key personnel[114](index=114&type=chunk) - Unexpected departures of key personnel or failure to successfully recruit and develop replacements, as well as replacing the knowledge and expertise of an aging workforce, could adversely affect the company's business and increase costs[114](index=114&type=chunk) - Fluctuations or underperformance in the company's stock price could affect its ability to retain key personnel or attract replacements[114](index=114&type=chunk) [Competition and Customer Relationships](index=27&type=section&id=6.3.8.%20Competition%20and%20Customer%20Relationships) The mortgage insurance industry is highly competitive, with rivals including government agencies; changes in competition or risk-based pricing could affect revenue and market share - The mortgage insurance industry is highly competitive, with key competitors including other private mortgage insurance companies and government agencies (FHA and VA)[115](index=115&type=chunk) - The widespread use of risk-based pricing systems in the private mortgage insurance industry makes rate comparisons with competitors more difficult and can lead to volatility in new insurance written (NIW)[117](index=117&type=chunk) - For the twelve months ended June 30, 2025, the top ten customers accounted for approximately **35%** of the company's new insurance written (NIW), with the largest customer accounting for approximately **19%**[118](index=118&type=chunk) [Adverse Rating Agency Actions](index=28&type=section&id=6.3.9.%20Adverse%20Rating%20Agency%20Actions) Financial strength ratings are crucial; downgrades could impact PMIERs eligibility, new insurance written, and capital market access, with MGIC currently rated A, A3, and A- - Financial strength ratings are critical to maintaining public confidence in mortgage insurance coverage and the company's competitive position, and a downgrade could materially affect business and operating results[122](index=122&type=chunk)[124](index=124&type=chunk) - MGIC's financial strength ratings are A (A.M. Best, stable outlook), A3 (Moody's, positive outlook), and A- (S&P, stable outlook)[124](index=124&type=chunk) - A ratings downgrade could adversely affect the company's cost of funds, liquidity, and access to capital markets[124](index=124&type=chunk) [Legal Proceedings](index=28&type=section&id=6.3.10.%20Legal%20Proceedings) Operating in a highly regulated industry, the company faces legal and regulatory proceedings, with future litigation potentially leading to significant expenditures or adverse business impacts - The company operates in a highly regulated industry and faces legal and regulatory proceedings, including litigation related to claims payment practices[125](index=125&type=chunk) - While current disputes in the ordinary course of business are not expected to have a material adverse effect on financial condition or operating results, future legal and regulatory proceedings could result in adverse judgments, settlements, fines, injunctions, or other relief, requiring significant expenditures or materially and adversely affecting the business[125](index=125&type=chunk)[126](index=126&type=chunk) [Investment Portfolio Risks](index=29&type=section&id=6.3.11.%20Investment%20Portfolio%20Risks) The investment portfolio, a key income and claims resource, is vulnerable to macroeconomic conditions, market volatility, and regulatory restrictions, with current higher rates impacting fair value - The investment portfolio is a significant source of income and a primary source of resources for claims payments, subject to general economic conditions and tax policies that may adversely affect credit and interest-rate sensitive securities markets[127](index=127&type=chunk) - Currently prevailing higher market interest rates have resulted in a decrease in the fair value of the investment portfolio's held securities relative to their amortized cost; portfolio values may also be adversely affected by ratings downgrades, increased bankruptcies, and widening credit spreads[127](index=127&type=chunk) - Insurance regulations limit the types and scope of investments, and PMIERs reduce available assets through exclusions, limitations, and deductions, which are generally higher for investments with greater credit risk or lower liquidity[129](index=129&type=chunk) [Subsidiary Dividend Limitations](index=30&type=section&id=6.3.12.%20Subsidiary%20Dividend%20Limitations) MGIC Investment Corporation relies on subsidiary dividends, primarily from MGIC, to meet cash needs, but these payments are subject to regulatory approval and restrictions - MGIC Investment Corporation, as a holding company, has its principal assets in the capital stock and cash investments of its insurance subsidiary (MGIC), and dividends from MGIC are the primary source for the holding company to meet its cash needs[132](index=132&type=chunk) - MGIC's dividend payments are subject to regulatory approval and restrictions; for the twelve months ended June 30, 2025, MGIC paid **$800 million** in dividends to the holding company[132](index=132&type=chunk) - If MGIC is unable to pay dividends in sufficient amounts, it could adversely affect the company's operations, ability to repay debt, repurchase stock, and/or pay dividends to shareholders[133](index=133&type=chunk) [Dilution from Additional Capital](index=30&type=section&id=6.3.13.%20Dilution%20from%20Additional%20Capital) Future issuance of additional debt or equity capital could dilute existing ownership interests and potentially decrease common stock market price - The company may issue additional debt capital or equity/equity-related capital to manage its capital position under PMIERs or for other purposes[135](index=135&type=chunk) - Any future issuance of equity securities could dilute existing ownership interests, and the market price of the company's common stock could decline due to the sale of a large number of shares or similar securities or the anticipation that such sales could occur[135](index=135&type=chunk) [Common Stock Price Fluctuations](index=30&type=section&id=6.3.14.%20Common%20Stock%20Price%20Fluctuations) Common stock price can fluctuate significantly due to economic conditions, housing market trends, company performance, analyst expectations, and institutional investor activity - The market price of the company's common stock can fluctuate significantly, influenced by changes in general economic or housing market conditions, the mortgage insurance industry, or the stability of financial markets and the financial services industry[136](index=136&type=chunk) - Factors such as actual or anticipated quarterly and annual operating results, changes in securities analyst or rating agency expectations, and actual or anticipated changes in share repurchase programs or dividends could adversely affect the market price of common stock[136](index=136&type=chunk) - Holdings by investors such as index funds and exchange-traded funds may affect stock price and trading volume when these investors experience significant cash inflows or outflows, index rebalancing, or when the company's common stock is added to or removed from an index[136](index=136&type=chunk)
Why MGIC (MTG) Could Beat Earnings Estimates Again
ZACKS· 2025-07-24 17:10
Core Insights - MGIC Investment (MTG) has a strong track record of exceeding earnings estimates, particularly in the last two quarters, with an average surprise of 12.20% [1][4] - The most recent earnings report showed a surprise of 13.64%, with actual earnings of $0.66 per share against an expectation of $0.75 per share [2] - The previous quarter also saw a positive surprise of 10.77%, with actual earnings of $0.72 per share compared to a consensus estimate of $0.65 per share [2] Earnings Estimates and Predictions - There has been a favorable change in earnings estimates for MGIC, indicated by a positive Earnings ESP (Expected Surprise Prediction) of +2.37%, suggesting analysts are optimistic about the company's near-term earnings potential [4][7] - The combination of a positive Earnings ESP and a Zacks Rank of 3 (Hold) indicates a high likelihood of another earnings beat, with historical data showing that such combinations lead to positive surprises nearly 70% of the time [5][7] Earnings ESP Explanation - The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate, with the Most Accurate Estimate reflecting the latest analyst revisions [6] - A negative Earnings ESP can reduce predictive power but does not necessarily indicate an earnings miss [8] Importance of Earnings ESP - Companies often beat consensus EPS estimates, but this alone may not drive stock price increases; thus, checking the Earnings ESP before quarterly releases is crucial for investment decisions [9]
MGIC Investment (MTG) Expected to Beat Earnings Estimates: What to Know Ahead of Q2 Release
ZACKS· 2025-07-23 15:08
Core Viewpoint - Wall Street anticipates a year-over-year decline in earnings for MGIC Investment (MTG) despite higher revenues, with actual results being crucial for stock price movement [1][2]. Earnings Expectations - MGIC is expected to report quarterly earnings of $0.70 per share, reflecting a year-over-year decrease of 9.1%, while revenues are projected to be $306.76 million, an increase of 0.4% from the previous year [3]. Estimate Revisions - The consensus EPS estimate has remained unchanged over the last 30 days, indicating that analysts have not significantly altered their outlook for the company [4]. Earnings Surprise Prediction - The Zacks Earnings ESP for MGIC is +2.37%, suggesting a likelihood of beating the consensus EPS estimate, although the stock holds a Zacks Rank of 3 [12]. Historical Performance - MGIC has consistently beaten consensus EPS estimates, achieving a surprise of +13.64% in the last reported quarter and surpassing estimates in all of the last four quarters [13][14]. Market Reaction Factors - The stock's movement may not solely depend on earnings results, as other factors can influence investor sentiment and stock performance [15].
Why MGIC Investment (MTG) is a Top Dividend Stock for Your Portfolio
ZACKS· 2025-07-11 16:45
Company Overview - MGIC Investment (MTG) is a mortgage insurance company headquartered in Milwaukee, operating in the Finance sector [3] - The stock has experienced a price change of 9.11% since the beginning of the year [3] Dividend Information - MGIC Investment currently pays a dividend of $0.13 per share, resulting in a dividend yield of 2.01%, which is higher than the Insurance - Multi line industry's yield of 1.8% and the S&P 500's yield of 1.52% [3] - The company's annualized dividend of $0.52 has increased by 6.1% from the previous year [4] - Over the past 5 years, MGIC Investment has raised its dividend 4 times, achieving an average annual increase of 20.17% [4] - The current payout ratio is 17%, indicating that the company pays out 17% of its trailing 12-month earnings per share as dividends [4] Earnings Growth - The Zacks Consensus Estimate for MGIC Investment's earnings in 2025 is $2.92 per share, with an expected increase of 0.34% from the previous year [5] - Earnings growth appears solid for the current fiscal year [5] Investment Considerations - MGIC Investment is viewed as a compelling investment opportunity due to its attractive dividend and strong Zacks Rank of 2 (Buy) [6] - The company is positioned well compared to high-growth firms or tech start-ups, which typically do not provide dividends [6]
MGIC Investment Corporation Schedules 2nd Quarter 2025 Earnings Call
Prnewswire· 2025-07-07 20:05
Company Announcement - MGIC Investment Corporation plans to release its second quarter 2025 financial results after the market closes on July 30, 2025 [1] - A conference call/webcast is scheduled for 9:30 a.m. Eastern Time on July 31, 2025, to discuss the results for the quarter ended June 30, 2025 [1] Participation Details - Individuals interested in joining the conference call should register to receive the dial-in number and unique PIN [2] - It is recommended to join the call at least 10 minutes before it begins, and the call will also be available via webcast on the Company's Investor website [2] Company Overview - Mortgage Guaranty Insurance Corporation (MGIC) is the principal subsidiary of MGIC Investment Corporation, serving lenders across the United States [3] - MGIC helps families achieve homeownership by providing affordable low-down-payment mortgages through private mortgage insurance [3]
MTG Hits 52-Week High: Time to Add the Stock for Better Returns?
ZACKS· 2025-06-25 15:26
Core Insights - MGIC Investment Corporation (MTG) has reached a 52-week high of $28.28, closing at $28.10, with an 18.5% year-to-date gain, outperforming its industry and the S&P 500 composite [2] - The company has a market capitalization of $6.67 billion, with an average trading volume of 1.9 million shares over the last three months [3] - MTG is trading above its 50-day and 200-day simple moving averages, indicating strong upward momentum [4] Financial Performance - MTG is expanding its insurance-in-force portfolio through robust new business and high annual persistency [6] - The company has a price-to-book value of 1.3X, which is lower than the industry average of 2.68X, providing a favorable entry point for investors [7] - Return on invested capital (ROIC) has improved to 11.4%, significantly higher than the industry average of 2% [8] Growth Projections - The Zacks Consensus Estimate projects a 0.3% year-over-year increase in earnings per share for 2025, with revenues expected to reach $1.24 billion, reflecting a 1.8% improvement [9] - Earnings have grown by 12% over the past five years, surpassing the industry average of 10.1% [9] - MTG has consistently exceeded earnings estimates in the last four quarters, with an average surprise of 15.88% [10] Analyst Sentiment - Analysts have raised their earnings estimates for MTG for 2025 and 2026, with increases of 6.2% and 5.9%, respectively, over the past 60 days [14] - The company has a VGM Score of B, indicating potential upside and strong investor confidence [19] Market Dynamics - Factors driving MTG's growth include increased new business, solid persistency, and a favorable environment for home sales and refinancing [16] - The company is experiencing a decline in claim filings, which is expected to enhance its financial profile [16] - MTG has a solid capital position, with $232.9 million remaining in its share repurchase authorization through December 2026 [17] Conclusion - Higher premiums, excellent credit quality, and new business are anticipated to drive growth for MGIC Investment [18] - The company's share buyback activities reflect its strong capital position and commitment to generating long-term value for shareholders [18]