MGIC Investment Corporation

MGIC Investment Corporation is the parent of Mortgage Guaranty Insurance Corporation. The insurance business protects mortgage lenders and investors against credit losses, helping borrowers obtain loans with smaller down payments. It earns premiums and investment income, while paying claims and transferring some risk through reinsurance. The parent trades on the New York Stock Exchange under MTG and reports on a December 31 year-end.

Quarterly profit and credit performance

Adjusted net operating income removes specified realized investment gains or losses, debt-extinguishment items and unusual non-operating items. The latest quarterly adjustment was small: removing a $0.377 million realized gain before its tax effect reduced net income to $174.674 million. Adjusted EPS was $0.85, compared with $0.83 a year earlier.

Loss expense increased as favorable changes to older reserve estimates became smaller. On the release's current-quarter basis, estimated ultimate losses for new delinquency notices were a rounded $58 million in both years, offset by favorable prior-period adjustments of $34 million versus $47 million.

Delinquent loans numbered 27,814 at September 30, versus 25,747 a year earlier. New notices rose to 14,412 from 13,582, while the estimated eventual claim rate on new notices remained 7.5%. Management describes a usual seasonal weakening in the second half.

Business volume and management expectations

New mortgages insured totaled $49.3 billion in the first nine months, up from $43.1 billion. The original July report expected full-year 2026 new insurance written to remain relatively flat against 2025. The November report instead expects a modest increase.

Insurance in force was about $307.3 billion at September 30, versus $300.8 billion a year earlier. Annual persistency, the proportion of insurance in force retained over a year, declined to 82.5% from 85%. The in-force portfolio premium yield was 37.9 basis points versus 38.3; the net premium yield after reinsurance and other adjustments was 31.2 versus 32.3. More premiums ceded to reinsurers contributed to lower net premiums earned.

New risk-transfer arrangements include up to $168 million of excess-of-loss protection for eligible 2027 new business. MGIC also agreed terms for quota-share arrangements covering 40% of eligible 2028 new business and 20% of eligible 2029 new business. These spread future risks and premiums with outside reinsurers.

Capital, cash flow and shareholder returns

The insurance subsidiary had $5.8 billion of assets eligible under the mortgage agencies' capital rules and a $2.8 billion excess above requirements at September 30. The combined insurance companies' risk-to-capital ratio was 9.6 to 1. Holding-company liquidity was $783 million in cash and investments.

The insurer paid the parent $400 million during the first nine months and $350 million in November. These are internal distributions, distinct from the common-share dividend of $0.17 declared for payment November 23 to shareholders of record November 12.

MGIC repurchased $152.5 million of shares in the third quarter and $70.2 million in October. Its April authorization added $750 million of buyback capacity through December 2028; $653.5 million remained at September 30.

First-nine-month operating cash flow was $478.3 million versus $622 million. Cash paid for common-share repurchases was $528.8 million and common dividends were $101.6 million; employee equity-award tax withholding used another $22.5 million. Purchases of transferable tax credits, lower premiums received and higher losses paid contributed to the operating cash-flow decline, partly offset by lower underwriting expenses.

Consolidated cash was $215.4 million, restricted cash $8.4 million and investments $5.538 billion at September 30. The parent's notes had $650 million of face value and a $647.2 million carrying amount. Their coupon is 5.25%, with maturity in August 2028; the insurance subsidiary had no outstanding debt.

Tax-credit purchase liabilities were $160.1 million, with about $154.4 million expected to be paid over the next twelve months. The main developments to track are new-insurance volume against the improved outlook, delinquencies and reserve releases, net premiums after reinsurance, and the pace of capital returned to shareholders.