MGIC Investment Corp. Q2 Earnings Show Profit Growth

Ticker: MTG · Form: 10-Q · Filed: 2024-07-31T00:00:00.000Z

Sentiment: bullish

Topics: earnings, financials, insurance

TL;DR

MGIC Q2 profit up to $236M, assets slightly down. Solid performance.

AI Summary

MGIC Investment Corp. filed its 10-Q for the period ending June 30, 2024. The company reported total assets of $5,914,023 for the period, a slight decrease from $5,939,483 at the end of 2023. Net income for the quarter ending June 30, 2024, was $236,448, compared to $121,539 for the same period in the prior year.

Why It Matters

This filing provides insight into MGIC's financial performance and stability in the mortgage insurance sector, impacting investors and the housing market.

Risk Assessment

Risk Level: low — The filing is a routine quarterly report with no immediate red flags indicating significant new risks.

Key Numbers

Key Players & Entities

FAQ

What was MGIC's total revenue for the quarter ending June 30, 2024?

The provided snippet does not contain specific revenue figures for the quarter ending June 30, 2024.

How has MGIC's investment portfolio changed since the last fiscal year?

The filing indicates changes in 'Fixed Maturities' and 'Short Term Investments' between December 31, 2023, and June 30, 2024, but specific details on portfolio composition changes are not detailed in this snippet.

What is the company's diluted earnings per share for the second quarter of 2024?

Diluted earnings per share figures are not explicitly stated in the provided text snippet.

Are there any significant changes in MGIC's common stock or additional paid-in capital reported?

The filing references common stock and additional paid-in capital for various dates, including June 30, 2024, and prior periods, suggesting these accounts are being reported on, but specific changes are not detailed in this snippet.

What is the company's primary business activity?

MGIC Investment Corp. is primarily involved in Surety Insurance, as indicated by its Standard Industrial Classification code [6351].

Filing Stats: 4,621 words · 18 min read · ~15 pages · Grade level 20 · Accepted 2024-07-31 16:10:16

Key Financial Figures

Filing Documents

— FINANCIAL INFORMATION

PART I — FINANCIAL INFORMATION Item 1

Financial Statements

Financial Statements: Consolidated Balance Sheets - June 30, 2024 (Unaudited) and December 31, 2023 8 Consolidated Statements of Operations (Unaudited) - Three and Six Months Ended June 30, 2024 and 2023 9 Consolidated Statements of Comprehensive Income (Unaudited) - Three and Six Months Ended June 30, 2024 and 2023 10 Consolidated Statements of Shareholders' Equity (Unaudited) - Three and Six Months Ended June 30, 2024 and 2023 11 Consolidated Statements of Cash Flows (Unaudited) - Three and Six Months Ended June 30, 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 60 Item 4

Controls and Procedures

Controls and Procedures 60

— OTHER INFORMATION

PART II — OTHER INFORMATION Item 1

Legal Proceedings

Legal Proceedings 61 Item 1A

Risk Factors

Risk Factors 61

Unregistered Sales of Equity Securities and Use of Proceeds 61

Item 2 Unregistered Sales of Equity Securities and Use of Proceeds 61 Item 5 Other Information 62 Item 6 Exhibits 63 INDEX TO EXHIBITS 63

SIGNATURES

SIGNATURES 64 MGIC Investment Corporation - Q2 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 - Q2 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 June 30, 2024 December 31, 2023 (Unaudited) ASSETS Investment portfolio: 7 / 8 Fixed income, available-for-sale, at fair value (amortized cost 2024 - $5,914,023; 2023 - $5,939,483) $ 5,553,549 $ 5,601,540 Short-term, fixed income, available-for-sale, at fair value (amortized cost 2024 - $236,448; 2023 - $121,539) 236,419 121,573 Equity securities, at fair value (cost 2024 - $16,084; 2023 - $16,025) 14,636 14,771 Other invested assets, at cost 1,109 850 Total investment portfolio 5,805,713 5,738,734 Cash and cash equivalents 281,788 363,666 Restricted cash and cash equivalents 6,020 6,978 Accrued investment income 60,402 58,774 Reinsurance recoverable on loss reserves 4 42,346 33,302 Reinsurance recoverable on paid losses 4 884 9,896 Premiums receivable 56,597 58,499 Home office and equipment, net 36,747 38,755 Deferred insurance policy acquisition costs 13,126 14,591 Deferred income taxes, net 90,629 79,782 Other assets 129,670 135,403 Total assets $ 6,523,922 $ 6,538,380 LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Loss reserves 11 $ 477,614 $ 505,379 Unearned premiums 138,885 157,779 Senior notes 3 643,931 643,196 Other liabilities 146,571 160,009 Total liabilities 1,407,001 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 - 261,390 ; 2023 - 272,494 ) 371,353 371,353 Paid-in capital 1,795,231 1,808,113 Treasury stock at cost (shares 2024 - 109,963 ; 2023 - 98,859 ) ( 1,624,791 ) ( 1,384,293 ) Accumulated other comprehensive income (loss), net of tax ( 333,055 ) ( 316,281 ) Retained earnings 4,908,183 4,593,125 Total shareholders' equity 5,116,921 5,072,017 Total liabilities and shareholders' equity $ 6,523,922 $ 6,538,380 See accompanying notes to con

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 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 f

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