MGIC Investment (MTG) - 2025 Q3 - Quarterly Results

Financial Performance - Third Quarter 2025 net income was $191.1 million, or $0.83 per diluted share, compared to $192.5 million and $0.81 per diluted share in Q2 2025[2][3] - Adjusted net operating income for Q3 2025 was $190.8 million, or $0.83 per diluted share, down from $194.0 million and $0.82 per diluted share in Q2 2025[3] - Net premiums earned in Q3 2025 totaled $241.8 million, compared to $244.3 million in Q2 2025[3] - For the three months ended September 30, 2025, the adjusted pre-tax operating income was $234,670,000, compared to $255,214,000 for the same period in 2024, reflecting a decrease of approximately 8.1%[21] - The net income per diluted share for Q3 2025 was $0.83, an increase from $0.77 in Q3 2024, representing a growth of 7.8%[22] - For the nine months ended September 30, 2025, the adjusted pre-tax operating income was $717,065,000, compared to $741,169,000 for the same period in 2024, indicating a decrease of about 3.2%[23] - The total assets as of September 30, 2025, were $6,625,643,000, an increase from $6,547,235,000 as of December 31, 2024, showing a growth of approximately 1.2%[26] - The book value per share increased to $22.87 as of September 30, 2025, from $20.82 as of December 31, 2024, indicating a growth of about 9.8%[26] Insurance Metrics - New insurance written (NIW) for Q3 2025 was $16.5 billion, slightly up from $16.4 billion in Q2 2025, but down from $17.2 billion in Q3 2024[3] - Insurance in force reached $300.8 billion as of September 30, 2025, an increase from $297.0 billion in Q2 2025[3][8] - The primary insurance in force (IIF) reached $300.8 billion as of Q3 2025, up from $292.8 billion in Q3 2024, marking an increase of about 2.9%[28] - New primary insurance written (NIW) for Q3 2025 was $16.5 billion, slightly up from $16.4 billion in Q2 2025, indicating a growth of approximately 0.6%[27] - The average loan size of insurance in force was $270,600 as of Q3 2025, compared to $261,600 in Q3 2024, reflecting an increase of about 3.4%[28] Shareholder Actions - The company repurchased 7.0 million shares of common stock for $187.9 million during the quarter[6] - A dividend of $0.15 per common share was declared, payable on November 20, 2025[6] - MGIC paid $800 million in dividends to the holding company in the twelve months ended September 30, 2025[130] - As of September 30, 2025, the holding company had approximately $858 million in cash and investments, with long-term debt obligations totaling $650 million[131] - Annual debt service on the long-term debt obligations is approximately $34 million[131] Risk and Compliance - The company has agreed to terms on a traditional excess of loss reinsurance transaction providing $250 million of coverage on NIW from 2021, effective December 1, 2025[6] - The PMIERs require significantly more Minimum Required Assets for delinquent loans compared to performing loans, which could adversely affect MGIC's business if loan delinquencies increase[49] - MGIC's compliance with the PMIERs is critical for eligibility to insure loans delivered to or purchased by the GSEs, with potential adverse effects on revenue if compliance is not maintained[45] - The risk of cybersecurity incidents affecting MGIC may increase, posing a threat to its operations and financial stability[40] - Legal and regulatory proceedings pose risks that could materially affect the company's business and financial condition[122] Market Conditions - The seasonally-adjusted Purchase-Only U.S. Home Price Index increased by 0.4% nationwide in August 2025 compared to July 2025, with a 12-month change in home prices reaching historically high rates but moderating to a 0.3% increase in the first 8 months of 2025[38] - The GSEs' business practices and policies regarding mortgage insurance coverage, costs, and cancellation may change, potentially negatively impacting the mortgage insurance industry and MGIC's financial results[43] - The volatility in financial markets may impact the performance of MGIC's investment portfolio, which could include investments negatively affected by global events[40] Delinquency and Claims - The ending delinquent inventory for Q3 2025 increased to 25,747 loans, up from 24,444 in Q2 2025, reflecting a 5.3% increase[30] - The primary IIF delinquency rate for Q3 2025 was 2.32%, compared to 2.21% in Q2 2025, indicating a rise of 4.97%[30] - The total primary net paid claims for Q3 2025 were $14 million, up from $12 million in Q2 2025, marking a 16.7% increase[31] - The total cures in the quarter were 11,814, a decrease from 12,588 in Q2 2025, reflecting a decline of 6.1%[30] Competitive Landscape - The company faces increased competition in the mortgage insurance industry, with new entrants potentially impacting market share[113] - The FHA's share of low down payment residential mortgages was 33.5% in 2024, which has negatively impacted the company's NIW due to a 30-basis point decrease in its mortgage insurance premium rates announced in February 2023[75] - The VA's share of low down payment residential mortgages was 24.5% in 2024, indicating a competitive landscape for mortgage insurance[76] Investment Portfolio - The investment portfolio is primarily composed of high-quality, investment-grade fixed income investments, but is subject to market volatility and economic conditions[124] - A prolonged period of low investment yields would adversely impact the company’s investment income[128] - The company’s investment income depends on the size of the portfolio and its reinvestment at prevailing interest rates[128] - The company faces liquidity risks from investments guaranteed by the federal government, which may be affected by potential downgrades in sovereign credit ratings[127] Underwriting and Risk Management - The company relies on third-party servicers for mortgage loan information, with approximately 58% of loans serviced by non-bank servicers as of September 30, 2025[81] - The company’s risk management programs and models are critical for identifying and mitigating risks, with potential material impacts if they are ineffective[87] - The company’s ability to rescind insurance coverage has become more limited for new insurance written since mid-2012, potentially leading to higher losses[100] - Approximately 70% of the new insurance written (NIW) in the first three quarters of 2025 was originated under delegated underwriting programs[105]