MGIC Investment (US:MTG)2025-02-26 21:49Financial Performance - In 2024, total revenues were $1.2 billion, with primary new insurance written (NIW) at $55.7 billion[34]. - Net income for 2024 was $763 million ($2.89 per diluted share), up from $713 million ($2.49 per diluted share) in 2023, representing a 7% increase[37]. - Cash dividends paid from MGIC to the holding company increased by 25% to $750 million in 2024, compared to $600 million in 2023[37]. - Operating expenses decreased by 8% in 2024 compared to 2023, reflecting improved efficiency[37]. - The company ended 2024 with $1.1 billion in cash and investments, an increase of $0.2 billion during the year[37]. Insurance Market Trends - The private mortgage insurance industry insured $299 billion of mortgages in 2024, up from $284 billion in 2023[46]. - The FHA accounted for 33.5% of low down payment residential mortgages in 2024, slightly up from 33.2% in 2023[47]. - The VA's market share of low down payment residential mortgages increased to 24.5% in 2024, compared to 21.5% in 2023[48]. - The PMI industry is highly competitive, with government-backed programs accounting for approximately 58.9% of low down payment residential mortgages in 2024, up from 55.9% in 2023[82]. Insurance Operations - New primary insurance written was $55.7 billion in 2024, up from $46.1 billion in 2023, reflecting a 20% increase attributed to higher refinance volumes[56]. - Primary insurance in force (IIF) reached $295.4 billion in 2024, a slight increase from $293.5 billion in 2023[58]. - The risk in force (RIF) for primary insurance was $78.8 billion in 2024, compared to $77.2 billion in 2023, indicating a 2% growth[58]. - The percentage of new insurance written (NIW) on loans representing refinances was 4% in 2024, compared to 2% in 2023[64]. - The weighted average interest rate for primary insurance in force was 6.7% in 2024, with a delinquency rate of 0.4%[75]. Shareholder Actions - MGIC repurchased 8.8% of its shares outstanding at the beginning of 2024[37]. - The company maintains a financial strength rating of A (stable outlook) by A.M. Best, A3 (positive outlook) by Moody's, and A- (stable outlook) by S&P[86]. Risk Management - The company’s primary insurance portfolio is heavily weighted towards borrower-paid mortgage insurance (BPMI), which constitutes most of the primary IIF[66]. - The percentage of loans with a loan-to-value ratio of 95.01% and above rose to 16.6% in 2024, compared to 15.7% in 2023[77]. - The debt-to-income ratio of 45.01% and above increased to 19.8% in 2024, up from 17.5% in 2023[77]. - The company’s exposure to catastrophic losses is influenced by economic conditions, including home prices and employment levels[102]. - The company has limited its ability to rescind insurance coverage under new master policy terms, potentially leading to higher losses[115]. Delinquency and Claims - As of December 31, 2024, the company had 1,118,308 insured loans in force, with a delinquency rate of 2.40%[105]. - The number of delinquent loans increased to 26,791 in 2024 from 25,650 in 2023, reflecting a rise in delinquency[105]. - The primary delinquency rate for Florida was 3.7% in 2024, up from 2.8% in 2023, indicating localized economic challenges[106]. - Claims received inventory included 319 delinquent loans as of December 31, 2024, compared to 302 in 2023[105]. - The average claim paid was reduced by approximately 4.7% in 2024 due to curtailments, compared to a 5.4% reduction in 2023[114]. Regulatory Environment - The company is subject to comprehensive regulation by state insurance departments, which includes maintaining minimum capital levels and adequacy ratios[138]. - MGIC is in compliance with PMIERs and is eligible to insure loans purchased by the GSEs, but any loss of eligibility would significantly reduce new business writings[152]. - The mortgage insurance premium rates are subject to state regulation, requiring justification for any increases based on loss experience and future trend analysis[146]. - Non-compliance with PMIERs could lead to suspension or termination of MGIC's eligibility to insure loans purchased by GSEs, significantly reducing the volume of new insurance written (NIW)[183]. Investment Portfolio - The fair value of the company's investment portfolio was approximately $5.9 billion as of December 31, 2024[130]. - The company's pre-tax yield on investments was 4.0% in 2024, compared to 3.7% in 2023 and 3.0% in 2022[135]. - The investment portfolio consisted of 47% corporate securities, 10% tax-exempt municipals, and 22% taxable municipals as of December 31, 2024[135]. - Approximately 94% of the investment portfolio was managed by two external investment managers as of December 31, 2024[131]. Community Involvement - The company is committed to community involvement, providing financial support for housing and youth programs in 2024[166]. Future Outlook - The proposed regulatory capital rule by U.S. regulators may negatively affect MGIC's NIW, although the extent of the impact is currently uncertain[210]. - Climate risk considerations are being incorporated into FHFA policy development, which may materially impact MGIC's NIW and borrower defaults in certain areas[193].