MGIC Investment Corporation - Q3 2025 10-Q Summary
Business Context and Reporting Period
Company: MGIC Investment Corporation (MGIC)
Reporting Period: Quarter ended September 30, 2025 (Q3 2025)
Business Overview: MGIC is a holding company primarily engaged in the mortgage insurance business through its subsidiary, Mortgage Guaranty Insurance Corporation. It provides mortgage insurance to lenders and Government Sponsored Enterprises (GSEs) to protect against losses from defaults on low down payment residential mortgage loans. The company operates as a single reportable segment.
Key Financial Metrics
| Metric (in thousands, except per share) | Q3 2025 | Q3 2024 | YTD 9M 2025 | YTD 9M 2024 |
|---|---|---|---|---|
| Net Premiums Earned | $241,750 | $243,340 | $729,791 | $729,512 |
| Investment Income (Net) | $62,210 | $62,093 | $184,648 | $183,316 |
| Losses Incurred, Net | $10,928 | $(9,842) | $17,684 | $(23,559) |
| Net Income | $191,095 | $199,969 | $569,037 | $578,294 |
| Diluted EPS | $0.83 | $0.77 | $2.39 | $2.17 |
| Total Assets | $6,625,643 | N/A | N/A | N/A |
| Shareholders' Equity | $5,172,699 | N/A | N/A | N/A |
| Long-Term Debt (Carrying Value) | $645,770 | N/A | N/A | N/A |
| Cash & Cash Equivalents | $266,901 | N/A | N/A | N/A |
Note: Losses incurred were negative in Q3 2024 and YTD 2024 due to favorable prior year reserve development exceeding current year losses.
Material Changes vs. Prior Period
- Net Income: Q3 2025 net income decreased 4% to $191.1 million from $200.0 million in Q3 2024. The decline was primarily driven by an increase in net losses incurred, partially offset by a lower provision for income taxes.
- Earnings Per Share: Diluted EPS increased 8% to $0.83 from $0.77, driven by a significant reduction in the weighted average number of shares outstanding due to share repurchases, which offset the decline in net income.
- Losses Incurred: Net losses incurred turned positive at $10.9 million in Q3 2025 compared to a benefit of $9.8 million in Q3 2024. This shift reflects new delinquency notices adding $43.1 million to reserves, partially offset by $32.1 million in favorable prior year reserve development.
- Operating Expenses: Other underwriting and operating expenses decreased 6% to $47.8 million in Q3 2025 from $51.0 million in Q3 2024, primarily due to lower employee costs.
- Share Repurchases: The company repurchased 23.4 million shares for $592.9 million in the first nine months of 2025. As of September 30, 2025, $614 million remained authorized under the repurchase program.
Guidance, Outlook, and Risks
- Outlook: Management expects full-year 2025 New Insurance Written (NIW) to be higher than 2024. The company anticipates a modest decrease in the effective tax rate for the remainder of 2025 due to the purchase of transferable federal tax credits.
- Capital Adequacy: MGIC remains in compliance with GSE Private Mortgage Insurer Eligibility Requirements (PMIERs). As of September 30, 2025, Available Assets were $5.9 billion, exceeding Minimum Required Assets by $2.5 billion. The risk-to-capital ratio was 9.7 to 1, well below the maximum allowed in most jurisdictions.
- Reinsurance: The company executed a 40% Quota Share Reinsurance (QSR) transaction for 2026 NIW and agreed to terms for a 40% QSR for 2027. It also executed Excess-of-Loss (XOL) transactions providing up to $160 million and $184 million of coverage for 2025 and 2026 NIW, respectively.
- Risks: Key risks include potential changes in GSE business practices or reform, state capital requirements that could limit new business writing, and macroeconomic factors such as unemployment and housing prices that impact delinquency rates. Cybersecurity threats and potential litigation regarding claims-paying practices are also noted.
Investor Verification Checklist
- Loss Reserve Development: Verify the sustainability of favorable prior year loss reserve development ($136.5 million YTD 2025) and its impact on future earnings volatility.
- PMIERs Compliance: Confirm the impact of the GSE's phased-in updates to Available Assets calculations (fully effective Sept 2026) on future capital requirements.
- Share Repurchase Impact: Assess the remaining $614 million authorization and the company's strategy for capital allocation between buybacks and dividends.
- Delinquency Trends: Monitor the delinquency inventory (25,747 loans as of Sept 30, 2025) and the average number of missed payments to gauge future claim severity.
- Reinsurance Credit: Review the stability of capital credit received from reinsurance transactions under PMIERs, as reductions could increase capital requirements.