MGIC Investment (MTG) - 2024 Q3 - Quarterly Results

Financial Performance - Third Quarter 2024 net income was $200.0 million, or $0.77 per diluted share, compared to $182.8 million, or $0.64 per diluted share in Q3 2023, reflecting a 9.5% year-over-year increase in net income[1][3][19] - Net income for Q3 2024 was $199,969,000, an increase of 9.6% compared to $182,844,000 in Q3 2023[20] - Diluted net income per share rose to $0.77 in Q3 2024 from $0.64 in Q3 2023, reflecting a 20.3% increase[21] - The company reported net premiums earned of $243.3 million in Q3 2024, compared to $241.3 million in Q3 2023, indicating a modest growth[3][19] - The loss ratio for Q3 2024 was (4.0%), an improvement from (0.0%) in Q3 2023, indicating better loss management[3] - Total assets increased to $6,677,784,000 as of September 30, 2024, compared to $6,538,380,000 at the end of 2023, marking a growth of 2.1%[23] - Total liabilities decreased to $1,383,708,000 as of September 30, 2024, down from $1,466,363,000 at the end of 2023, a reduction of 5.6%[24] Insurance Metrics - New insurance written (NIW) for Q3 2024 was $17.2 billion, up from $14.6 billion in Q3 2023, representing a 17.8% increase[3] - New primary insurance written (NIW) reached $17.2 billion in Q3 2024, up from $14.6 billion in Q3 2023, representing an 17.8% increase[25] - New primary risk written was $4.5 billion in Q3 2024, compared to $3.5 billion in Q2 2024, showing a 28.6% increase[25] - The percentage of new primary insurance written with FICO scores below 680 remained stable at 4% for both Q3 2024 and Q3 2023[25] - Primary Insurance In Force (IIF) for Q3 2024 is $292.8 billion, a decrease from $294.3 billion in Q3 2023[26] - The primary IIF delinquency rate increased to 2.24% in Q3 2024 from 2.14% in Q3 2023[3] - The primary average direct reserve per delinquency decreased to $18,232 in Q3 2024 from $20,307 in Q2 2024[29] Shareholder Returns - MGIC paid a dividend of $0.13 per common share in Q3 2024 and repurchased 5.2 million shares for $122.9 million[5] - In the twelve months ended September 30, 2024, the company paid $650 million in dividends to the holding company, with future payments subject to regulatory approval[143] Capital and Liquidity - Holding company liquidity was reported at $841 million as of September 30, 2024, compared to $723 million a year earlier[4] - As of September 30, 2024, MGIC's Available Assets totaled $6.0 billion, exceeding the Minimum Required Assets by $2.5 billion[52] - MGIC's risk-to-capital ratio was 9.6 to 1 as of September 30, 2024, which is below the maximum allowed by jurisdictions with State Capital Requirements[73] - The company has agreed to a 40% quota share transaction with unaffiliated reinsurers covering most of its 2025 and 2026 NIW[6] Delinquency and Claims - The primary delinquency inventory increased to 25,089, up from 24,720 in Q3 2023, while the primary IIF delinquency rate rose to 2.24% from 2.14% in Q3 2023[3] - Beginning delinquent inventory for Q3 2024 is 23,370, an increase from 24,142 in Q2 2024[28] - New notices for delinquency increased to 13,679 in Q3 2024 from 11,444 in Q2 2024, representing a 19.5% increase[28] - Ending delinquent inventory rose to 25,089 in Q3 2024, up from 23,370 in Q2 2024, indicating a 7.4% increase[28] - Net paid claims for Q3 2024 were $10 million, down from $12 million in Q2 2024[29] Regulatory and Market Environment - The GSEs' updated Equitable Housing Finance Plans published in spring 2024 may impact mortgage insurance practices and revenues[39] - The proposed regulatory capital rule by the Federal Reserve could negatively impact new insurance written (NIW) if adopted, although the extent of the impact remains uncertain[82] - The company is subject to comprehensive regulation, which may impact its ability to write new insurance if it fails to meet State Capital Requirements[75] - The revised Mortgage Guaranty Insurance Model Act adopted by the NAIC includes new capital and minimum capital requirements, which may affect MGIC's operations[74] Risk Factors - Changes in claim rate and claim severity estimates could materially impact MGIC's future results, even in stable economic conditions[57] - Cybersecurity threats are increasing in frequency and sophistication, posing risks to the company's information security and operational integrity[100] - The company's risk management programs may not effectively identify or mitigate risks, potentially impacting financial results[92] - The company faces potential adverse effects on operations from unauthorized disclosures of information or cyber attacks, which may not be fully recoverable through insurance[102] Market Trends - The FHA's share of low down payment residential mortgages was 33.2% in 2023, up from 26.7% in 2022 and 24.7% in 2021, indicating a significant increase in government-supported mortgage insurance market share[80] - The VA's market share of low down payment residential mortgages decreased to 21.5% in 2023 from 24.5% in 2022 and 30.2% in 2021, reflecting a downward trend[81] - The market price of the company's common stock may fluctuate significantly due to various factors, including economic conditions and changes in operating performance[148]