Group 1 - MGIC Investment Corporation (NYSE: MTG) shares have increased by 27% over the past year and are close to their 52-week high [1] - The company has no direct exposure to tariffs, which positions it favorably in the current economic environment [1] - Elevated home prices contribute positively to the company's business outlook [1]

MGIC Investment Corporation (MTG) reported first-quarter 2025 operating net income per share of 75 cents, which beat the Zacks Consensus Estimate by 13.6%. Moreover, the bottom line increased 15.4% year over year. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)Shares gained 1.9% in the aftermarket trading session to reflect the outperformance. MGIC Investment recorded total operating revenues of $305 million, which increased 0.7% year over year on higher net investment income and n ...

Financial Data and Key Metrics Changes - The company reported net income of $186 million for Q1 2025, with an annualized return on equity of 14.3% [5] - Adjusted net operating income was $0.75 per diluted share, compared to $0.64 per diluted share in the previous year [14] - The in-force insurance ended the quarter at $294 billion, with annual persistency at 85%, remaining relatively flat over the past several quarters [6][11] Business Line Data and Key Metrics Changes - The company wrote $10 billion of new insurance during the quarter, maintaining strong underwriting standards [6] - The in-force premium yield was 38.4 basis points, remaining flat sequentially and year-over-year [18] Market Data and Key Metrics Changes - The delinquency rate decreased by 10 basis points to 2.3%, consistent with seasonal trends [16] - The number of new delinquency notices received was 13,000, down from 14,200 in the previous quarter [16] Company Strategy and Development Direction - The company focuses on maintaining financial strength and flexibility, with a capital management strategy that includes share repurchases and dividends [7][10] - An additional $750 million share repurchase program was approved, reflecting the company's commitment to returning capital to shareholders [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the fundamentals of the housing market, citing demographic trends and increasing housing inventory as positive factors [11] - The company anticipates that uncertainties in the economic environment may persist, but remains optimistic about its ability to navigate these challenges [11] Other Important Information - The company returned $828 million of capital to shareholders through share repurchases and dividends over the past year [19] - The unrealized loss position on the investment portfolio decreased by $66 million, primarily due to a decrease in interest rates [20] Q&A Session Summary Question: Adjustments to pricing or underwriting due to macro uncertainties - Management indicated that they consider a wide range of economic scenarios in their pricing strategy, but no specific changes were made due to tariffs [26][27] Question: Claim rate assumptions and unemployment considerations - The 7.5% new notice claim rate is used for various economic outcomes, and reserves are set to be sufficient across a wide range of scenarios without targeting specific unemployment rates [29][30] Question: Market share volatility and volume - Management acknowledged some volatility in market share but emphasized that it is a competitive industry and fluctuations are expected [35][36]

Core Viewpoint - MGIC Investment (MTG) reported a slight increase in revenue and a notable rise in EPS for the quarter ended March 2025, although revenue fell short of analyst expectations [1]. Financial Performance - Revenue for the quarter was $305.49 million, reflecting a year-over-year increase of 0.9% [1]. - EPS was reported at $0.75, an increase from $0.65 in the same quarter last year, resulting in a surprise of +13.64% over the consensus estimate of $0.66 [1]. - The revenue reported was -1.46% below the Zacks Consensus Estimate of $310.03 million [1]. Key Metrics - GAAP underwriting expense ratio was 22.5%, lower than the average estimate of 24.4% based on two analysts [4]. - GAAP loss ratio stood at 3.9%, significantly below the average estimate of 16.2% [4]. - Net premiums earned were $243.72 million, slightly below the average estimate of $245.41 million, with a year-over-year change of +0.4% [4]. - Other revenue was reported at $0.33 million, which is -31.3% lower than the average estimate of $0.50 million [4]. - Net investment income was $61.44 million, compared to the average estimate of $64.12 million, marking a year-over-year increase of +2.8% [4]. Stock Performance - Shares of MGIC have returned -2% over the past month, while the Zacks S&P 500 composite experienced a -0.2% change [3]. - The stock currently holds a Zacks Rank 2 (Buy), suggesting potential outperformance against the broader market in the near term [3].

Group 1 - MGIC Investment reported quarterly earnings of $0.75 per share, exceeding the Zacks Consensus Estimate of $0.66 per share, and showing an increase from $0.65 per share a year ago, representing an earnings surprise of 13.64% [1] - The company posted revenues of $305.49 million for the quarter ended March 2025, which was 1.46% below the Zacks Consensus Estimate, and a slight increase from $302.87 million year-over-year [2] - MGIC has surpassed consensus EPS estimates in all four of the last quarters, while it has only topped consensus revenue estimates once during the same period [2] Group 2 - The stock has increased approximately 4.1% since the beginning of the year, contrasting with a decline of 5.5% in the S&P 500 [3] - The current consensus EPS estimate for the upcoming quarter is $0.67, with expected revenues of $312.43 million, and for the current fiscal year, the estimate is $2.75 on revenues of $1.25 billion [7] - The Zacks Industry Rank for Insurance - Multi line is in the top 17% of over 250 Zacks industries, indicating a favorable outlook for the industry [8]

Risk in Force Composition - The original risk written in 2025 was $2.6 billion, with 99.4% remaining [6] - The original risk written in 2004 & Prior was $181.5 billion, with only 0.2% remaining [6] - Loans with an original LTV (loan-to-value) of 85% or less accounted for 3.7% of the primary risk in force as of March 31, 2025 [6] - Loans with an original LTV between 90.01% and 95.00% accounted for 53.3% of the primary risk in force as of March 31, 2025 [6] - Loans with FICO scores of 760 and greater represent 44.0% of the primary risk in force [6] Delinquency and Losses - The delinquency rate (based on loan count) was 2.3% [7] - Ever-to-date claims paid for the 2005-2008 origination year reached $13,388.3 million [7] - New notices previously delinquent accounted for 66.8% [7] Financial Performance - Net losses incurred for Q1 2025 were $10 million, after considering prior period development [12] - Direct primary loss reserves totaled $404 million as of March 31, 2025 [13] Capital and Risk Management - Total PMIERs (Primary Mortgage Insurer Eligibility Requirements) Primary Minimum Required Assets were $5,749 million, with $3,310 million retained [11] - The company ceded 42% of its risk through various reinsurance arrangements [11] - Scheduled Contingency Reserve Releases for 2025 totaled $457 million [39], with $112 million released as of March 31, 2025 [40]

Financial Performance - For Q1 2025, net premiums written increased to $235.346 million, up from $233.800 million in Q1 2024, representing a growth of 0.66%[29] - Total revenues for Q1 2025 reached $306.234 million, compared to $294.361 million in Q1 2024, marking an increase of 4.4%[29] - Net income for Q1 2025 was $185.460 million, an increase from $174.097 million in Q1 2024, reflecting a growth of 6.5%[29] - Basic earnings per share rose to $0.76 in Q1 2025, compared to $0.64 in Q1 2024, indicating an increase of 18.75%[29] - Cash flows from operating activities for Q1 2025 were $223,654 thousand, an increase from $190,537 thousand in Q1 2024[35] - Total shareholders' equity at the end of Q1 2025 was $5,139,884 thousand, up from $5,102,343 thousand at the end of Q1 2024[33] Losses and Expenses - Losses incurred, net for Q1 2025 were $9.591 million, significantly higher than $4.555 million in Q1 2024, representing an increase of 110.4%[29] - Other underwriting and operating expenses, net, decreased to $51.406 million in Q1 2025 from $59.018 million in Q1 2024, a reduction of 12.8%[29] - The company reported a decrease in unearned premiums, net, to $8,373 thousand in Q1 2025 from $8,844 thousand in Q1 2024[29] Investment Income - Investment income, net of expenses, increased to $61.443 million in Q1 2025 from $59.744 million in Q1 2024, a rise of 2.84%[29] - The company reported net gains on investments and other financial instruments of $741 thousand for Q1 2025, a significant recovery from net losses of $8,509 thousand in Q1 2024[95] - The company reported net unrealized investment gains of $65,406,000 for the three months ended March 31, 2025, compared to a loss of $13,154,000 in the same period of 2024[117] Stock and Dividends - The company repurchased common stock worth $225,176 thousand in Q1 2025, compared to $95,183 thousand in Q1 2024, indicating a significant increase in stock buybacks[35] - The company declared a quarterly cash dividend of $0.13 per share, totaling $32.5 million in Q1 2025[142] - The company had remaining authorization to repurchase $232.9 million of common stock through December 31, 2026[140] Reinsurance and Risk Management - The company executed a 40% quota share reinsurance (QSR) transaction covering most of its new insurance written in 2026[62] - The company retains the first layer of aggregate losses paid under traditional excess of loss (XOL) transactions, with reinsurers providing second layer coverage[65] - The profit commission for the 2023 QSR is set at 58.5% if the annual loss ratio remains below the specified threshold[62] Comprehensive Income - The company reported a comprehensive income of $237.177 million for Q1 2025, compared to $164.244 million in Q1 2024, reflecting a substantial increase of 44.4%[31] - Other comprehensive income for Q1 2025 was $51,717 thousand, compared to a loss of $9,853 thousand in Q1 2024, showing a significant improvement[31] Shareholder Metrics - The weighted average common shares outstanding for basic shares decreased to 244,147 in Q1 2025 from 270,314 in Q1 2024, a decline of 9.66%[29] - The company repurchased 9.2 million shares for $224.3 million in Q1 2025, compared to approximately 25.3 million shares for $566.6 million in 2024[140] Asset Management - Cash and cash equivalents at the end of Q1 2025 were $212,693 thousand, down from $439,568 thousand at the end of Q1 2024[35] - The company’s Available Assets exceeded its Minimum Required Assets as of March 31, 2025, ensuring compliance with GSEs' PMIERs[41] - Total fixed income securities at fair value as of March 31, 2025, were $5,885,033 thousand, compared to $5,851,689 thousand as of December 31, 2024[87]

Financial Performance - First Quarter 2025 net income was $185.5 million, or $0.75 per diluted share, compared to $174.1 million, or $0.64 per diluted share in Q1 2024, representing a 6.9% increase in net income year-over-year [2][5]. - Adjusted net operating income for Q1 2025 was $185.2 million, or $0.75 per diluted share, up from $178.4 million, or $0.65 per diluted share in Q1 2024, indicating a 3.9% increase [5][22]. - Net premiums earned in Q1 2025 were $243.7 million, slightly up from $242.6 million in Q1 2024 [5][18]. - Book value per share increased to $21.40 in Q1 2025, up from $20.82 in Q4 2024 [26]. - The net premium yield is 33.0% in Q1 2025, compared to 32.9% in Q4 2024 [28]. Insurance Activity - New insurance written (NIW) for Q1 2025 was $10.2 billion, a decrease from $15.9 billion in Q4 2024 and an increase from $9.1 billion in Q1 2024 [5][7]. - New primary insurance written (NIW) for Q1 2025 is $10.2 billion, down from $15.9 billion in Q4 2024 [27]. - New primary risk written for Q1 2025 is $2.6 billion, down from $4.1 billion in Q4 2024 [27]. - The company's NIW on mortgages with LTV ratios greater than 95% was 13% in Q1 2025, compared to 15% in Q1 2024 and 14% for the full year 2024 [103]. - The company's NIW on mortgages with DTI ratios greater than 45% was 31% in Q1 2025, up from 28% in Q1 2024 [103]. Delinquency and Losses - Losses incurred, net for Q1 2025 were $9.6 million, compared to $4.6 million in Q1 2024, resulting in a loss ratio of 3.9% [5][18]. - The beginning delinquent inventory for Q1 2025 was 26,791 loans, decreasing to 25,438 by the end of the quarter, resulting in a delinquency rate of 2.30% [32]. - The company reported a total of 13,981 cures in Q1 2025, an increase from 12,040 in Q4 2024 [32]. - Total gross loss reserves for Q1 2025 stood at $465 million, slightly up from $463 million in Q4 2024 [33]. - Ceded losses incurred in Q1 2025 were $6.4 million, up from $6.1 million in Q4 2024 [35]. Capital Management - The company repurchased 9.2 million shares of common stock for $224.3 million during the quarter and declared a dividend of $0.13 per common share [7]. - The board approved an additional share repurchase program, authorizing up to $750 million of common stock purchases prior to December 31, 2027 [7]. - As of March 31, 2025, the holding company had approximately $824 million in cash and investments, with long-term debt obligations totaling $650 million [128]. - Annual debt service on the long-term debt obligations is approximately $34 million [128]. - MGIC paid $750 million in dividends to the holding company in the twelve months ended March 31, 2025 [127]. Regulatory and Compliance Issues - The PMIERs require significantly more Minimum Required Assets for delinquent loans compared to performing loans, increasing the risk of non-compliance if loan delinquencies rise [60]. - MGIC's compliance with PMIERs is critical, as non-compliance could lead to suspension or termination of eligibility to insure loans purchased by the GSEs, significantly reducing new insurance written [51]. - The proposed regulatory capital rule by the Federal Reserve could impose higher capital standards on large U.S. banks, potentially negatively affecting the company's NIW [78]. - Changes in GSEs' business practices regarding mortgage insurance coverage and costs could negatively impact the mortgage insurance industry and MGIC's financial results [43]. - The GSEs may increase guaranty fees and loan level price adjustments, leading to higher costs for borrowers and potentially affecting MGIC's new insurance written [44]. Market Conditions and Risks - The company experienced a decline in home prices, with a 0.1% increase in the Purchase-Only U.S. Home Price Index in February 2025 compared to January 2025 [40]. - Economic downturns due to wars or pandemics could lead to increased unemployment, inflation, and home price declines, resulting in higher loan delinquencies [42]. - The mortgage insurance industry is highly competitive, with competitors including private mortgage insurers and governmental agencies, which may impact the company's market position [112]. - The widespread use of risk-based pricing systems complicates the comparison of premium rates with competitors, affecting the company's ability to maintain its market share [114]. - Financial strength ratings are crucial for maintaining public confidence and competitive position, with potential downgrades adversely impacting business operations [119]. Operational Risks - The company faces risks related to legal proceedings and regulatory scrutiny, which could materially affect its financial condition and results of operations [120]. - The company relies on third-party reporting for mortgage loan information, which may be subject to inaccuracies that could affect claims [85]. - The company's risk management programs may not effectively identify or mitigate risks, potentially impacting financial results [86]. - The company has delegated authority to GSEs for loss mitigation options, which may not always align with its interests and could increase claims [84]. - The risk of cybersecurity incidents affecting the company may increase, posing a threat to operational stability [42]. Investment Portfolio - The investment portfolio is primarily composed of high-quality, investment-grade fixed income investments, but is subject to risks from economic conditions and interest rate volatility [123]. - The investment portfolio is structured to meet expected liabilities, including claim payments in the mortgage insurance business [126]. - The company invests primarily in investment grade fixed income securities, which are subject to regulatory limitations and may impact investment income [125]. - Concerns over the federal budget deficit and potential political conflicts may increase liquidity risks associated with investments in U.S. government securities [124]. Shareholder Considerations - The market price of the company's common stock may fluctuate significantly due to various economic and industry factors [131]. - The inability of insurance subsidiaries to pay sufficient dividends could adversely affect the holding company's cash requirements and operational capabilities [127]. - Any required capital contributions to subsidiaries would decrease the holding company's cash and investments [129].

Core Viewpoint - MGIC Investment Corporation reported strong financial results for the first quarter of 2025, demonstrating continued performance improvement and market leadership despite macroeconomic concerns [2][3]. Financial Performance - Net income for Q1 2025 was $185.5 million, or $0.75 per diluted share, compared to $184.7 million and $0.72 per diluted share in Q4 2024, and $174.1 million and $0.64 per diluted share in Q1 2024 [4]. - Adjusted net operating income for Q1 2025 was $185.2 million, or $0.75 per diluted share, reflecting a slight increase from $184.5 million and $0.72 per diluted share in Q4 2024, and $178.4 million and $0.65 per diluted share in Q1 2024 [4]. - New insurance written (NIW) was $10.2 billion in Q1 2025, down from $15.9 billion in Q4 2024 and up from $9.1 billion in Q1 2024 [4][20]. - Net premiums earned were $243.7 million, slightly up from $241.3 million in Q4 2024 and $242.6 million in Q1 2024 [4]. - The annual persistency rate was 84.7%, a slight decrease from 84.8% in Q4 2024 and 85.7% in Q1 2024 [4]. Capital and Liquidity - As of March 31, 2025, PMIERs available assets were $5.9 billion, with PMIERs excess at $2.6 billion [4]. - The holding company liquidity was reported at $824 million, down from $1,076 million at the end of Q4 2024 [4]. Shareholder Actions - The company repurchased 9.2 million shares for $224.3 million and an additional 2.8 million shares for $65.8 million through April 25, 2025 [7]. - A dividend of $0.13 per common share was declared, payable on May 21, 2025 [7]. Delinquency and Loss Metrics - Primary delinquency inventory stood at 25,438, down from 26,791 in Q4 2024 [4][24]. - The primary IIF delinquency rate was 2.30%, a decrease from 2.40% in Q4 2024 [4][24]. - Losses incurred, net, were $9.6 million, compared to $8.7 million in Q4 2024 and $4.6 million in Q1 2024 [4]. Market Position and Strategy - The company maintains a strong market position with robust capital and liquidity, allowing it to continue executing its business strategies and supporting customers with innovative solutions [2][3].

Core Insights - MGIC Investment (MTG) has a strong history of beating earnings estimates and is well-positioned for continued success in upcoming reports [1][2] - The company has surpassed earnings estimates by an average of 12.85% over the last two quarters, with recent surprises of 10.77% and 14.93% [2] Earnings Performance - In the most recent quarter, MGIC reported earnings of $0.72 per share against an expectation of $0.65, resulting in a surprise of 10.77% [2] - For the previous quarter, the consensus estimate was $0.67 per share, while the actual earnings were $0.77, leading to a surprise of 14.93% [2] Earnings Estimates and Predictions - Recent estimates for MGIC have been increasing, with a positive Earnings ESP (Expected Surprise Prediction) indicating potential for another earnings beat [5][8] - The current Earnings ESP for MGIC is +7.04%, suggesting analysts are optimistic about the company's near-term earnings potential [8] Zacks Rank and Success Rate - MGIC holds a Zacks Rank of 2 (Buy), which, when combined with a positive Earnings ESP, indicates a high likelihood of beating earnings estimates [8] - Research indicates that stocks with a positive Earnings ESP and a Zacks Rank of 3 (Hold) or better have a nearly 70% success rate in beating consensus estimates [6]