MGIC Investment Corp. Files 10-Q for Period Ending March 31, 2024

Ticker: MTG · Form: 10-Q · Filed: 2024-05-01T00:00:00.000Z

Sentiment: neutral

Topics: MGIC Investment Corp, 10-Q Filing, Financial Report, Reinsurance, Q1 2024

TL;DR

<b>MGIC Investment Corp. filed its Q1 2024 10-Q, detailing financial positions and reinsurance activities.</b>

AI Summary

MGIC INVESTMENT CORP (MTG) filed a Quarterly Report (10-Q) with the SEC on May 1, 2024. MGIC Investment Corp. reported financial results for the quarter ended March 31, 2024. The company's filing includes data on fixed maturities and short-term investments as of March 31, 2024, and December 31, 2023. Key balance sheet components such as common stock, additional paid-in capital, treasury stock, and retained earnings are detailed for various periods. Information regarding senior notes, specifically the 5.25% Senior Notes, is provided for March 31, 2024, and December 31, 2023. The filing also covers reinsurance transactions, including quota share and excess of loss, for the periods ending March 31, 2024, and March 31, 2023.

Why It Matters

For investors and stakeholders tracking MGIC INVESTMENT CORP, this filing contains several important signals. This 10-Q filing provides a detailed look at MGIC's financial health and investment portfolio as of the end of the first quarter of 2024, crucial for investors assessing stability and performance. The inclusion of specific data on reinsurance transactions offers insight into the company's risk management strategies and its exposure to potential liabilities.

Risk Assessment

Risk Level: medium — MGIC INVESTMENT CORP shows moderate risk based on this filing. The filing is a standard quarterly report (10-Q) which typically contains detailed financial information but does not usually include significant new strategic announcements or dramatic shifts in performance that would indicate immediate high risk or reward.

Analyst Insight

Investors should review the detailed financial statements and risk factors within the 10-Q to understand MGIC's current financial standing and potential future performance.

Key Numbers

Key Players & Entities

FAQ

When did MGIC INVESTMENT CORP file this 10-Q?

MGIC INVESTMENT CORP filed this Quarterly Report (10-Q) with the SEC on May 1, 2024.

What is a 10-Q filing?

A 10-Q is a quarterly financial report with unaudited financials, management discussion, and interim business updates. This particular 10-Q was filed by MGIC INVESTMENT CORP (MTG).

Where can I read the original 10-Q filing from MGIC INVESTMENT CORP?

You can access the original filing directly on the SEC's EDGAR system. The filing is publicly available and includes all exhibits and attachments submitted by MGIC INVESTMENT CORP.

What are the key takeaways from MGIC INVESTMENT CORP's 10-Q?

MGIC INVESTMENT CORP filed this 10-Q on May 1, 2024. Key takeaways: MGIC Investment Corp. reported financial results for the quarter ended March 31, 2024.. The company's filing includes data on fixed maturities and short-term investments as of March 31, 2024, and December 31, 2023.. Key balance sheet components such as common stock, additional paid-in capital, treasury stock, and retained earnings are detailed for various periods..

Is MGIC INVESTMENT CORP a risky investment based on this filing?

Based on this 10-Q, MGIC INVESTMENT CORP presents a moderate-risk profile. The filing is a standard quarterly report (10-Q) which typically contains detailed financial information but does not usually include significant new strategic announcements or dramatic shifts in performance that would indicate immediate high risk or reward.

What should investors do after reading MGIC INVESTMENT CORP's 10-Q?

Investors should review the detailed financial statements and risk factors within the 10-Q to understand MGIC's current financial standing and potential future performance. The overall sentiment from this filing is neutral.

Key Dates

Filing Stats: 4,559 words · 18 min read · ~15 pages · Grade level 19.8 · Accepted 2024-05-01 16:07:07

Key Financial Figures

Filing Documents

— FINANCIAL INFORMATION

PART I — FINANCIAL INFORMATION Item 1

Financial Statements

Financial Statements: Consolidated Balance Sheets - March 31, 2024 (Unaudited) and December 31, 2023 8 Consolidated Statements of Operations (Unaudited) - Three Months Ended March 31, 2024 and 2023 9 Consolidated Statements of Comprehensive Income (Unaudited) - Three Months Ended March 31, 2024 and 2023 10 Consolidated Statements of Shareholders' Equity (Unaudited) - Three Months Ended March 31, 2024 and 2023 11 Consolidated Statements of Cash Flows (Unaudited) - Three Months Ended March 31, 2024 and 2023 12

Notes to Consolidated Financial Statements (Unaudited)

Notes to Consolidated Financial Statements (Unaudited) 13 Note 1 - Nature of Business and Basis of Presentation 13 Note 2 - Significant Accounting Policies 14 Note 3 - Debt 14 Note 4 - Reinsurance 15 Note 5 - Litigation and Contingencies 19 Note 6 - Earnings Per Share 20 Note 7 - Investments 21 Note 8 - Fair Value Measurements 24 Note 9 - Other Comprehensive Income 27 Note 10 - Benefit Plans 28 Note 11 - Loss Reserves 29 Note 12 - Shareholders' Equity 31 Note 13 - Share-Based Compensation 31 Note 14 - Statutory Information 32 Item 2

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 33 Item 3

Quantitative and Qualitative Disclosures about Market Risk

Quantitative and Qualitative Disclosures about Market Risk 57 Item 4

Controls and Procedures

Controls and Procedures 57

— OTHER INFORMATION

PART II — OTHER INFORMATION Item 1

Legal Proceedings

Legal Proceedings 58 Item 1A

Risk Factors

Risk Factors 58

Unregistered Sales of Equity Securities and Use of Proceeds 58

Item 2 Unregistered Sales of Equity Securities and Use of Proceeds 58 Item 5 Other Information 58 Item 6 Exhibits 59 INDEX TO EXHIBITS 59

SIGNATURES

SIGNATURES 60 MGIC Investment Corporation - Q1 2024 | 3 Glossary of terms and acronyms / A ARMs Adjustable rate mortgages ABS Asset-backed securities Annual Persistency The percentage of our insurance remaining in force from one year prior. As of September 30, 2023, we refined our methodology for calculating our Annual Persistency by excluding the amortization of the principal balance. All prior periods have been revised ASC Accounting Standards Codification Available Assets Assets, as designated under the PMIERs, that are readily available to pay claims, and include the most liquid investments / B Book or book year A group of loans insured in a particular calendar year BPMI Borrower-paid mortgage insurance / C CECL Current expected credit losses covered under ASC 326 CFPB Consumer Financial Protection Bureau CLO Collateralized loan obligations CMBS Commercial mortgage-backed securities COVID-19 Pandemic An outbreak of the novel coronavirus disease, later named COVID-19. The outbreak of COVID-19 was declared a pandemic by the World Health Organization and a national emergency in the United States in March 2020 CRT Credit risk transfer. The transfer of a portion of mortgage credit risk to the private sector through different forms of transactions and structures / D DAC Deferred insurance policy acquisition costs Debt-to-income ("DTI") ratio The ratio, expressed as a percentage, of a borrower's total debt payments to gross income Delinquent Loan A loan that is past due on a mortgage payment. A delinquent loan is typically reported to us by servicers when the loan has missed two or more payments. A loan will continue to be reported as delinquent until it becomes current, or a claim payment has been made. A delinquent loan is also referred to as a default Delinquency Rate The percentage of insured loans that are delinquent Direct Before giving effect to reinsurance / E EPS Earnings per share / F Fannie

Management's discussion and analysis of financial condition and results of operations

Management's discussion and analysis of financial condition and results of operations MGIC Mortgage Guaranty Insurance Corporation, a subsidiary of MGIC Investment Corporation MAC MGIC Assurance Corporation, a subsidiary of MGIC Minimum Required Assets The minimum amount of Available Assets that must be held under the PMIERs which is based on an insurer's book of RIF and is calculated from tables of factors with several risk dimensions, reduced for credit given for risk ceded under reinsurance transactions, and subject to a floor of $400 million MPP Minimum Policyholder Position, as required under certain state requirements. The "policyholder position" of a mortgage insurer is its net worth or surplus, contingency reserve and a portion of the reserves for unearned premiums / N N/A Not applicable for the period presented NAIC The National Association of Insurance Commissioners NIW New Insurance Written, is the aggregate original principal amount of the mortgages that are insured during a period N/M Data, or calculation, deemed not meaningful for the period presented NPL Settlement The commutation of coverage on non-performing loans, which are a delinquent loans, at any stage in their delinquency / O OCI Office of the Commissioner of Insurance of the State of Wisconsin / P PMI Private Mortgage Insurance (as an industry or product type) MGIC Investment Corporation - Q1 2024 | 5 PMIERs Private Mortgage Insurer Eligibility Requirements issued by each of Fannie Mae and Freddie Mac to set forth requirements that an approved insurer must meet and maintain to provide mortgage guaranty insurance on loans delivered to or acquired by Fannie Mae or Freddie Mac, as applicable Premium Yield The ratio of premium earned divided by the average IIF outstanding for the period measured Premium Rate The contractual rate charged for coverage under our insurance policies Primary Insurance Insurance that provides mortgage default protection

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements MGIC INVESTMENT CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands) Note March 31, 2024 December 31, 2023 (Unaudited) ASSETS Investment portfolio: 7 / 8 Fixed income, available-for-sale, at fair value (amortized cost 2024 - $5,928,057; 2023 - $5,939,483) $ 5,576,997 $ 5,601,540 Short-term, fixed income, available-for-sale, at fair value (amortized cost 2024 - $95,721; 2023 - $121,539) 95,717 121,573 Equity securities, at fair value (cost 2024 - $16,053; 2023 - $16,025) 14,697 14,771 Other invested assets, at cost 850 850 Total investment portfolio 5,688,261 5,738,734 Cash and cash equivalents 431,347 363,666 Restricted cash and cash equivalents 8,221 6,978 Accrued investment income 58,093 58,774 Reinsurance recoverable on loss reserves 4 39,200 33,302 Reinsurance recoverable on paid losses 4 555 9,896 Premiums receivable 56,033 58,499 Home office and equipment, net 37,614 38,755 Deferred insurance policy acquisition costs 13,846 14,591 Deferred income taxes, net 76,271 79,782 Other assets 125,805 135,403 Total assets $ 6,535,246 $ 6,538,380 LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Loss reserves 11 $ 504,447 $ 505,379 Unearned premiums 148,935 157,779 Senior notes 3 643,563 643,196 Other liabilities 135,958 160,009 Total liabilities 1,432,903 1,466,363 Contingencies 5 Shareholders' equity: 12 Common stock ( one dollar par value, shares authorized 1,000,000 ; shares issued 2024 - 371,353 ; 2023 - 371,353 ; shares outstanding 2024 - 268,990 ; 2023 - 272,494 ) 371,353 371,353 Paid-in capital 1,788,050 1,808,113 Treasury stock at cost (shares 2024 - 102,363 ; 2023 - 98,859 ) ( 1,466,224 ) ( 1,384,293 ) Accumulated other comprehensive income (loss), net of tax ( 326,134 ) ( 316,281 ) Retained earnings 4,735,298 4,593,125 Total shareholders' equity 5,102,343 5,072,017 Total liabilities and shareholders' equity $ 6,535,246 $ 6,538,380 See accompanying notes to consol

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2024 (Unaudited) Note 1. Nature of Business and Basis of Presentation MGIC Investment Corporation is a holding company which, through Mortgage Guaranty Insurance Corporation ("MGIC"), is principally engaged in the mortgage insurance business. We provide mortgage insurance to lenders throughout the United States and to government sponsored entities to protect against loss from defaults on low down payment residential mortgage loans. MGIC Assurance Corporation ("MAC") and MGIC Indemnity Corporation ("MIC"), insurance subsidiaries of MGIC, provide insurance for certain mortgages under Fannie Mae and Freddie Mac (the "GSEs") credit risk transfer programs. The accompanying unaudited consolidated financial statements of MGIC Investment Corporation and its wholly-owned subsidiaries have been prepared in accordance with the instructions to Form 10-Q as prescribed by the Securities and Exchange Commission ("SEC") for interim reporting and do not include all of the other information and disclosures required by accounting principles generally accepted in the United States of America ("GAAP"). These statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2023 included in our 2023 Annual Report on Form 10-K. As used below, "we," "our" and "us" refer to MGIC Investment Corporation's consolidated operations or to MGIC Investment Corporation, as the context requires. In the opinion of management, the accompanying financial statements include all adjustments, consisting primarily of normal recurring accruals, necessary to fairly state our consolidated financial position and consolidated results of operations for the periods indicated. The consolidated results of operations for an interim period are not necessarily indicative of the results that may be expected for the year ending December 31, 2024. The substantial majority of our NIW has been

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