MGIC Investment Corporation 2025 Form 10-K Summary
Business Context and Reporting Period
Company: MGIC Investment Corporation (MGIC)
Reporting Period: Fiscal year ended December 31, 2025
Business Overview: MGIC is a holding company providing private mortgage insurance (PMI) and credit risk management solutions through its primary subsidiary, Mortgage Guaranty Insurance Corporation. The company insures low down payment residential mortgage loans, primarily for loans purchased by Fannie Mae and Freddie Mac (the GSEs).
Market Position: As of December 31, 2025, MGIC held an estimated 19.4% market share of the primary private mortgage insurance industry. The company is licensed in all 50 states, D.C., Puerto Rico, and Guam.
Key Financial Metrics
| Metric | 2025 | 2024 |
|---|---|---|
| Total Revenues | $1.21 billion | $1.21 billion |
| Net Income | $738.3 million | $763.0 million |
| Diluted EPS | $3.14 | $2.89 |
| Net Premiums Earned | $965.8 million | $970.8 million |
| Net Investment Income | $246.3 million | $244.6 million |
| Losses Incurred, Net | $48.9 million | $(14.9) million (Benefit) |
| Underwriting & Operating Expenses, Net | $200.6 million | $218.3 million |
| Loss Ratio | 5.1% | (1.5)% |
| Underwriting Expense Ratio | 21.4% | 23.0% |
| Long-Term Debt | $650 million (5.25% Notes due 2028) | $650 million |
| Cash & Investments (Holding Co.) | $1.1 billion | $1.1 billion |
| Available Assets (PMIERs) | $5.7 billion | N/A |
| Excess PMIERs Capital | $2.5 billion | N/A |
Material Changes vs. Prior Period
- Profitability: Net income decreased 3% to $738.3 million, primarily due to a shift from a loss reserve benefit in 2024 to incurred losses of $48.9 million in 2025. However, diluted EPS increased 9% to $3.14 due to significant share repurchases reducing the share count.
- Loss Experience: Losses incurred turned positive ($48.9 million) compared to a benefit of $(14.9) million in 2024. This was driven by an increase in estimated severity on current year delinquencies and higher new delinquency notices, partially offset by favorable development on prior year reserves ($155.2 million benefit).
- Expense Management: Underwriting and operating expenses decreased 8% to $200.6 million, driven by reduced employee costs and operational streamlining.
- Portfolio Growth: New Insurance Written (NIW) increased 8% to $60.2 billion. Primary Insurance in Force (IIF) grew 2.6% to $303.1 billion, and Risk in Force (RIF) increased to $81.2 billion.
- Capital Return: The company returned approximately $915 million to shareholders in 2025, including $132.5 million in dividends and $782.0 million in share repurchases (12% of shares outstanding).
Guidance, Outlook, and Risks
2026 Outlook:
- NIW: Expected to remain relatively flat compared to 2025.
- IIF: Expected to remain relatively flat.
- Premium Yield: In-force portfolio yield expected to remain relatively flat; net premiums written/earned expected to decrease modestly due to increased ceded premiums.
- Investment Income: Expected to be relatively flat.
- Losses: Net losses and LAE paid are expected to increase, though magnitude and timing are uncertain.
- Expenses: Underwriting and operating expenses expected to be relatively flat.
- Tax Rate: Effective tax rate expected to be approximately 21%.
Management Commentary:
- MGIC's Financial Strength Rating was upgraded by Moody's from A3 to A2. S&P revised its outlook to positive.
- The company expanded its reinsurance program to protect existing and future NIW and renegotiated seasoned transactions to recapture attractive risk.
- Operating expenses were sustainably reduced through workflow optimization and retirement of legacy data platforms.
Key Risks and Contingencies:
- Regulatory Compliance: Continued eligibility to insure GSE loans depends on maintaining PMIERs financial requirements. MGIC currently holds $2.5 billion in excess Available Assets.
- Loss Reserve Uncertainty: Estimates are subject to judgment regarding claim rates and severity. A $1,000 change in average claim severity could impact reserves by approximately $7 million.
- Competition: Intense competition from government programs (FHA, VA) and other private insurers. FHA market share increased to 34.3% in 2025.
- Macroeconomic Sensitivity: Results are sensitive to unemployment rates, home prices, and interest rates. Declines in home prices or economic downturns could increase delinquencies and losses.
- Cybersecurity: The company faces risks from cyber attacks and data breaches, though no material incidents were reported in 2025.
Investor Verification Checklist
- Loss Reserve Adequacy: Verify the assumptions used for claim rates and severity, particularly given the shift from a reserve benefit in 2024 to incurred losses in 2025.
- PMIERs Compliance: Confirm the $2.5 billion excess in Available Assets remains sufficient against potential increases in delinquency inventory or changes in GSE capital requirements.
- Reinsurance Counterparty Risk: Review the financial strength of reinsurers in Quota Share (QSR) and Excess of Loss (XOL) transactions, which cover 73.8% of IIF.
- Share Repurchase Impact: Assess the sustainability of the aggressive capital return program ($782M in buybacks) relative to future dividend requirements and capital needs.
- Competitive Market Share: Monitor the trend of FHA and VA market share growth, which could compress PMI volumes and pricing power.
- Delinquency Trends: Track the delinquency rate (2.43% in 2025) and the aging of the delinquency inventory to anticipate future claim severity.