MGIC Investment (MTG) - 2024 Q4 - Annual Results

Financial Performance - Fourth Quarter 2024 net income was $184.7 million, or $0.72 per diluted share, compared to $184.5 million, or $0.66 per diluted share in Q4 2023[2][19] - Full Year 2024 net income reached $763.0 million, or $2.89 per diluted share, an increase from $712.9 million, or $2.49 per diluted share in 2023[2][19] - Net income for Q4 2024 was $184.7 million, a slight increase from $184.5 million in Q4 2023, while total net income for the year reached $763.0 million, up from $712.9 million in 2023[21] - Diluted net income per share increased to $0.72 in Q4 2024 from $0.66 in Q4 2023, and for the full year, it rose to $2.89 from $2.49[23] Insurance Operations - New insurance written (NIW) for Q4 2024 was $15.9 billion, down from $17.2 billion in Q3 2024 and up from $10.9 billion in Q4 2023[4] - New primary insurance written (NIW) for Q4 2024 was $15.9 billion, while the total NIW for the year was $55.7 billion, up from $46.1 billion in 2023[28] - The percentage of new primary risk written for Q4 2024 was $4.1 billion, compared to $2.8 billion in Q4 2023, showing a significant increase in risk underwriting[28] - In Q4 2024, 86.2% of new insurance written (NIW) was subject to reinsurance, slightly down from 87.0% in Q3 2024[35] Delinquency and Claims - The annual persistency rate decreased to 84.8% in Q4 2024 from 86.1% in Q4 2023[4] - The primary delinquency inventory increased to 26,791 in Q4 2024 from 25,650 in Q4 2023, with a primary IIF delinquency rate of 2.40%[4] - The delinquency rate for primary insurance in force rose to 2.40% in Q4 2024, compared to 2.24% in Q3 2024[33] - The primary average claim payment increased to $34.0 thousand in Q4 2024, compared to $27.2 thousand in Q3 2024[34] Financial Position - Total assets as of December 31, 2024, were $6.55 billion, compared to $6.54 billion in 2023, indicating a stable asset base[26] - The company's total liabilities decreased to $1.37 billion in 2024 from $1.47 billion in 2023, indicating a reduction in financial obligations[27] - The book value per share increased to $20.82 in 2024 from $18.61 in 2023, demonstrating growth in shareholder equity[27] - As of December 31, 2024, MGIC had $295.4 billion of primary insurance in force covering 1.1 million mortgages[9] Shareholder Returns - The company repurchased 7.8 million shares of common stock for $193.3 million in Q4 2024[7] - A dividend of $0.13 per common share was declared, payable on March 5, 2025[7] - The company paid $750 million in dividends to the holding company in the twelve months ended December 31, 2024[131] Risk Management and Compliance - The company incurred a $1 million termination fee in Q4 2024 related to the partial termination of a quota share reinsurance transaction[35] - MGIC established case reserves for 26,791 loans in its delinquency inventory, with an IBNR reserve totaling $29 million as of December 31, 2024[66] - The GSEs may change the credit allowed under the PMIERs for risk ceded under reinsurance transactions, potentially impacting MGIC's returns[65] - MGIC is in compliance with the PMIERs and is eligible to insure loans purchased by the GSEs[49] Market Environment - The FHA's share of low down payment residential mortgages was 33.2% in 2023, compared to 26.7% in 2022 and 24.7% in 2021, indicating a growing competitive pressure on MGIC[77] - The VA's market share of low down payment residential mortgages was 21.5% in 2023, down from 24.5% in 2022 and 30.2% in 2021, reflecting fluctuations in the competitive landscape[78] - The mortgage insurance industry remains highly competitive, with the company’s top ten customers accounting for approximately 37% of new insurance written (NIW) for the twelve months ended December 31, 2024 and December 31, 2023[118] Investment Portfolio - The company’s 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[126] - The company’s ability to manage risks in its investment portfolio is critical, as a prolonged period of low investment yields could adversely impact investment income[129] Regulatory Environment - Changes in state or federal regulations could lead to more mortgage loans being originated with higher risk characteristics, impacting the company's underwriting and pricing models[112] - A proposed regulatory capital rule could impose higher capital standards on large U.S. banks, potentially negatively affecting MGIC's new insurance written (NIW) if adopted[79] Cybersecurity Risks - Cybersecurity risks are increasing, with potential impacts from AI technology and hybrid workforce models[96] - The company may face material adverse effects from unauthorized disclosures of information or cyber attacks, with some costs potentially non-recoverable[98]