MGIC Investment (MTG) - 2025 Q2 - Quarterly Report

Forward Looking and Other Statements 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] - 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] Glossary of Terms and Acronyms 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][9][10][11][12][14][15][16][17][18][19][20][21][22][23][24][25][26] PART I — FINANCIAL INFORMATION 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 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 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] Consolidated Statements of Operations 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][160] - 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][163] Consolidated Statements of Comprehensive Income 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][113] Consolidated Statements of Shareholders' Equity 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][305][311] Consolidated Statements of Cash Flows 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][308] - 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][310] - 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][311] Notes to Consolidated Financial Statements 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 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] - The company operates as a single segment for financial performance evaluation and resource allocation[38] - 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] Note 2 - Significant Accounting Policies 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] - 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][48] Note 3 - Debt 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][51] - Interest payments for the six months ended June 30, 2025, and 2024, were $17.1 million[52] Note 4 - Reinsurance 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][56] | 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] - 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][78][79] Note 5 - Litigation and Contingencies 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] - 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] Note 6 - Earnings per Share 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][160][163] Note 7 - Investments 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][100] Note 8 - Fair Value Measurements 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][103][104][105] | 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] | 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 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 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] | 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] Note 11 - Loss Reserves 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][123][124][125] - 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] | 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][166] Note 12 - Shareholders' Equity 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] - 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][170] - 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][171] Note 13 - Share-Based Compensation 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] | 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 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][180] - 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][181] - 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][319] | 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 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] - The Senior Management Oversight Committee (SMOC) uses consolidated net income (loss) as the primary GAAP measure to evaluate financial performance and allocate resources[152] | 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 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 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] - The discussion incorporates forward-looking statements and refers to risk factors that could materially affect actual results[156][157] Overview This section provides a high-level summary of the company's financial performance, capital position, and regulatory compliance Summary Financial Results 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] - 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] - 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][165][166] 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] - 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] - 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] 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] - 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] - 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][176] GSE Reform 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][178] State Regulations 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] - 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] Factors Affecting Our Results 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] - 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][187] - 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][188][197] - Underwriting and other expenses include employee compensation, professional services, depreciation, and premium taxes, reported net of ceding commissions[190] 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][199][201] - 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][202] Explanation and Reconciliation of Non-GAAP Financial Measures 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][205][206][207][208][209] | 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 This section provides an overview of the company's mortgage insurance portfolio, including new insurance written, insurance in force, and risk characteristics Mortgage Originations 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] | 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 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] - 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] CRT Programs 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] Consolidated Results of Operations This section provides a detailed analysis of the company's consolidated revenues, losses, and expenses for the reported periods 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] | 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][239] Reinsurance Transactions 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] | 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][248] - 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][254] Investment Income 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] Losses and Expenses This section provides a detailed analysis of the company's losses incurred, delinquency inventory, claims severity, and underwriting expenses Losses Incurred, Net 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] | 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] - 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] Delinquency Inventory 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][270] | 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 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][275] | 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 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] Underwriting and Other Expenses, Net 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] | | 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] Provision for Income Taxes and Effective Tax Rate 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] Balance Sheet Review This section provides a comprehensive review of the company's consolidated balance sheet, analyzing changes in assets, liabilities, and equity Consolidated Balance Sheets - Assets 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] | 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] Consolidated Balance Sheets - Liabilities and Equity 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][305] - 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] Liquidity and Capital Resources This section analyzes the company's liquidity and capital resources, including cash flow, capitalization, and holding company liquidity Consolidated Cash Flow Analysis 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][310][311] - 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] 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] Liquidity Analysis - Holding Company 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] - 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] - 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] Debt at Subsidiaries 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] Capital Adequacy 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] | 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 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