MGIC's Q3 Net Income Dips Amid Higher Losses, EPS Boosted by Buybacks

Ticker: MTG · Form: 10-Q · Filed: 2025-10-29T00:00:00.000Z

Sentiment: mixed

Topics: Mortgage Insurance, Earnings Report, Share Buybacks, Loss Reserves, Financial Performance, Credit Risk, Shareholder Returns

Related Tickers: MTG, Radian Group Inc., Essent Group Ltd., NMI Holdings, Inc.

TL;DR

**MGIC's Q3 net income is down, but their aggressive share buybacks are artificially inflating EPS, making it a mixed bag for traders.**

AI Summary

MGIC Investment Corporation reported a net income of $191.095 million for the three months ended September 30, 2025, a decrease from $199.969 million in the same period of 2024. For the nine months ended September 30, 2025, net income was $569.037 million, down from $578.294 million in 2024. Total revenues for the quarter decreased slightly to $304.505 million from $306.649 million year-over-year, while nine-month revenues increased to $914.984 million from $906.287 million. Net premiums earned remained stable at $241.750 million for the quarter and $729.791 million for the nine months. A significant change was the increase in losses incurred, net, to $10.928 million for the quarter, compared to a benefit of $(9.842) million in the prior year, and to $17.684 million for the nine months, compared to $(23.559) million in 2024. The company's total shareholders' equity remained robust at $5.172 billion as of September 30, 2025, consistent with December 31, 2024. Basic earnings per share increased to $0.83 for the quarter from $0.77, and to $2.41 for the nine months from $2.18, primarily due to a reduction in weighted average common shares outstanding from 258.596 million to 229.308 million for the quarter and from 264.719 million to 236.541 million for the nine months.

Why It Matters

MGIC's slight dip in net income and increased losses incurred, net, could signal a shift in the mortgage insurance landscape, potentially impacting investor confidence in the sector's profitability. However, the rise in EPS from $0.77 to $0.83 for the quarter, driven by aggressive share repurchases totaling $599.453 million for the nine months, demonstrates a strong commitment to shareholder returns. This strategy, while boosting per-share metrics, also reduces the number of outstanding shares, which could make the stock more attractive to investors seeking higher EPS. Competitors in the private mortgage insurance space will be watching MGIC's loss trends closely, as they could indicate broader housing market or credit quality changes.

Risk Assessment

Risk Level: medium — The increase in 'Losses incurred, net' from $(9.842) million in Q3 2024 to $10.928 million in Q3 2025, and from $(23.559) million to $17.684 million for the nine months, indicates a potential deterioration in credit quality or an increase in claims. This shift from a net benefit to a net loss in this category suggests rising risk in their insured portfolio, despite stable net premiums earned.

Analyst Insight

Investors should scrutinize MGIC's loss reserve adequacy and the underlying drivers of the increased 'Losses incurred, net.' While share buybacks are boosting EPS, the fundamental profitability from underwriting is showing signs of stress. Consider if the buyback strategy is sustainable given potential future claim increases and evaluate the company's exposure to economic downturns.

Financial Highlights

debt To Equity
0.28
revenue
$304.505M
operating Margin
N/A
total Assets
$6.626B
total Debt
$645.770M
net Income
$191.095M
eps
$0.83
gross Margin
N/A
cash Position
$266.901M
revenue Growth
-0.7%

Revenue Breakdown

SegmentRevenueGrowth
Net Premiums Earned$241.750M-0.6%
Investment Income, Net$62.210M0.2%
Total Revenues$304.505M-0.7%

Key Numbers

Key Players & Entities

FAQ

What were MGIC Investment Corp's net income figures for Q3 2025?

MGIC Investment Corp reported a net income of $191.095 million for the three months ended September 30, 2025, a decrease from $199.969 million in the same period of 2024.

How did MGIC's losses incurred, net, change in Q3 2025 compared to Q3 2024?

Losses incurred, net, for MGIC increased to $10.928 million in Q3 2025, a significant shift from a benefit of $(9.842) million in Q3 2024.

What was MGIC's basic earnings per share for the nine months ended September 30, 2025?

MGIC's basic earnings per share for the nine months ended September 30, 2025, was $2.41, an increase from $2.18 in the prior year period.

Why did MGIC's earnings per share increase despite a decrease in net income?

MGIC's earnings per share increased primarily due to a reduction in weighted average common shares outstanding, driven by significant share repurchases totaling $599.453 million for the nine months ended September 30, 2025.

What is the total shareholders' equity for MGIC Investment Corp as of September 30, 2025?

As of September 30, 2025, MGIC Investment Corp's total shareholders' equity stood at $5.172 billion, remaining stable compared to December 31, 2024.

What are the key risks highlighted by MGIC's Q3 2025 filing?

A key risk highlighted is the increase in 'Losses incurred, net,' which shifted from a benefit of $(9.842) million in Q3 2024 to a cost of $10.928 million in Q3 2025, indicating potential deterioration in credit quality or increased claims.

How much did MGIC spend on common stock repurchases during the nine months ended September 30, 2025?

MGIC spent $599.453 million on the repurchase of common stock during the nine months ended September 30, 2025, an increase from $374.814 million in the same period of 2024.

What was MGIC's net premiums earned for the three months ended September 30, 2025?

MGIC's net premiums earned for the three months ended September 30, 2025, were $241.750 million, which was stable compared to $243.340 million in the same period of 2024.

What is MGIC's primary business activity?

MGIC Investment Corporation, through its subsidiary Mortgage Guaranty Insurance Corporation, is principally engaged in the mortgage insurance business, providing protection to lenders against loss from defaults on low down payment residential mortgage loans.

What impact do share buybacks have on MGIC's financial reporting?

Share buybacks reduce the number of outstanding shares, which can increase earnings per share (EPS) even if net income remains flat or slightly decreases, as seen in MGIC's Q3 2025 results.

Risk Factors

Industry Context

The private mortgage insurance (PMI) industry is highly regulated and closely tied to the U.S. housing market and interest rate environment. Key players like MGIC provide essential protection to lenders against defaults on low down payment mortgages, facilitating homeownership. The industry is influenced by government-sponsored enterprises (GSEs) like Fannie Mae and Freddie Mac, which set eligibility requirements (PMIERs) for insurers.

Regulatory Implications

MGIC must continuously comply with stringent regulatory requirements, including PMIERs set by GSEs and state-specific regulations. Changes in these regulations or failure to meet them could significantly impact the company's ability to operate and its market access. The increase in federal tax credits payable suggests potential interactions with tax regulations.

What Investors Should Do

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Key Dates

Glossary

PMIERs
Private Mortgage Insurer Eligibility Requirements issued by Fannie Mae and Freddie Mac, setting financial and business standards for approved insurers. (Crucial for MGIC's ability to insure loans for the GSEs, indicating regulatory compliance.)
NIW
New Insurance Written, representing the aggregate original principal amount of mortgages insured during a period. (A key metric for measuring business volume and growth in the mortgage insurance industry.)
Losses incurred, net
The total amount of claims paid out by the insurer, net of any reinsurance recoveries, for losses that occurred during the period. (A critical indicator of underwriting performance and the cost of insurance risk.)
Net premiums earned
The portion of premiums written that relates to the coverage provided during the reporting period. (Represents the core revenue generated from insurance policies.)
Weighted average common shares outstanding
The average number of a company's outstanding shares over a specific period, used in EPS calculations. (A reduction in this number, due to share buybacks, directly increases Earnings Per Share.)
Available Assets
Generally, the most liquid assets of an insurer, as defined by PMIERs. (Used in conjunction with Minimum Required Assets to determine compliance with GSE requirements.)
Minimum Required Assets
The minimum amount of Available Assets an insurer must hold, based on its risk in force, as defined by PMIERs. (A key component of the PMIERs, ensuring insurers have sufficient financial backing.)
QSR Transaction
Quota share reinsurance transaction with a group of unaffiliated reinsurers, providing coverage on eligible New Insurance Written. (A risk management tool used by MGIC to cede a portion of its insurance risk to reinsurers.)

Year-Over-Year Comparison

Compared to the prior year, MGIC Investment Corporation reported a slight decrease in net income for both the quarter and nine-month periods, primarily driven by an increase in net losses incurred. Total revenues saw a minor dip for the quarter but a slight increase for the nine months. A significant positive development is the substantial increase in basic earnings per share, largely attributable to a reduction in outstanding shares due to aggressive share repurchases. Shareholders' equity remains stable, indicating a solid capital base.

Filing Stats: 4,520 words · 18 min read · ~15 pages · Grade level 20 · Accepted 2025-10-29 16:05:44

Key Financial Figures

Filing Documents

— FINANCIAL INFORMATION

PART I — FINANCIAL INFORMATION Item 1

Financial Statements

Financial Statements: Consolidated Balance Sheets - September 30, 2025 (Unaudited) and December 31, 2024 8 Consolidated Statements of Operations (Unaudited) - Three and Nine Months Ended September 30, 2025 and 2024 9 Consolidated Statements of Comprehensive Income (Unaudited) - Three and Nine Months Ended September 30, 2025 and 2024 10 Consolidated Statements of Shareholders' Equity (Unaudited) - Three and Nine Months Ended September 30, 2025 and 2024 11 Consolidated Statements of Cash Flows (Unaudited) - Nine Months Ended September 30, 2025 and 2024 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 19 Note 7 - Investments 20 Note 8 - Fair Value Measurements 23 Note 9 - Other Comprehensive Income 26 Note 10 - Benefit Plans 27 Note 11 - Loss Reserves 28 Note 12 - Shareholders' Equity 30 Note 13 - Share-Based Compensation 30 Note 14 - Statutory Information 31 Note 15 - Segment Reporting 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

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

SIGNATURES

SIGNATURES 63 MGIC Investment Corporation - Q3 2025 | 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. 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 Mae Federal National Mortgage Association FCRA Fair Credit Reporting Act FHA Federal Housing Administration FHFA Federal Housing Finance Agency FHLB Federal Home Loan Ban

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) 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 MGIC Investment Corporation - Q3 2025 | 5 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 September 30, 2025 December 31, 2024 (Unaudited) ASSETS Investment portfolio: 7 / 8 Fixed income, available-for-sale, at fair value (amortized cost 2025 - $5,666,048; 2024 - $5,838,145) $ 5,497,303 $ 5,511,564 Short-term, fixed income, available-for-sale, at fair value (amortized cost 2025 - $370,896; 2024 - $339,978) 371,291 340,125 Equity securities, at fair value (cost 2025 - $16,250; 2024 - $16,146) 15,286 14,762 Other invested assets, at cost 1,109 1,109 Total investment portfolio 5,884,989 5,867,560 Cash and cash equivalents 266,901 229,485 Restricted cash and cash equivalents 4,891 5,142 Accrued investment income 56,688 61,064 Reinsurance recoverable on loss reserves 4 57,565 47,281 Reinsurance recoverable on paid losses 4 2,352 4,197 Premiums receivable 56,531 57,536 Home office and equipment, net 32,737 35,679 Deferred insurance policy acquisition costs 9,394 11,694 Deferred income taxes, net 59,486 69,875 Other assets 194,109 157,722 Total assets $ 6,625,643 $ 6,547,235 LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Loss reserves 11 $ 452,160 $ 462,662 Unearned premiums 98,527 120,360 Senior notes 3 645,770 644,667 Federal tax credits payable 139,591 12,535 (1) Other liabilities 116,896 134,636 (1) Total liabilities 1,452,944 1,374,860 Contingencies 5 Shareholders' equity: 12 Common stock ($ 1 par value, shares authorized 1,000,000 ; shares issued and outstanding 2025 - 226,155 ; 2024 - 248,449 ) 226,155 248,449 Paid-in capital 1,806,807 1,808,236 Accumulated other comprehensive income (loss), net of tax 9 ( 159,221 ) ( 288,162 ) Retained earnings 3,298,958 3,403,852 Total shareholders' equity 5,172,699 5,172,375 Total liabilities and shareholders' equity $ 6,625,643 $ 6,547,235 (1) Certain amounts have been reclassified to conform with current year presentation See accompanying

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 2025 (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. We operate as a single segment for purposes of evaluating financial performance and allocating resources. 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, 2024 included in our 2024 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 resul

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