FORM 10-K

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

           [ x ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934


                   For the fiscal year ended December 31, 1999

                                       OR

          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

         For the transition period from ____________ to ________________

                         Commission file number   1-10816
                                                 ---------

                           MGIC Investment Corporation
             (Exact name of registrant as specified in its charter)

               Wisconsin                                  39-1486475 
    (State or other jurisdiction of         (I.R.S. Employer Identification No.)
    incorporation or organization)

MGIC Plaza, 250 East Kilbourn Avenue, Milwaukee, Wisconsin          53202    
----------------------------------------------------------      ---------------
    (Address of principal executive offices)                      (Zip Code)


Registrant's telephone number, including area code     (414) 347-6480 
                                                    -------------------

           Securities Registered Pursuant to Section 12(b) of the Act:

               Title of Each Class:        Common Stock, Par Value $1 Per Share
                                           Common Share Purchase Rights

               Name of Each Exchange
               on Which Registered:        New York Stock Exchange

           Securities Registered Pursuant to Section 12(g) of the Act:

               Title of Class:             None


<PAGE>


Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.  Yes  _X_    No

State the aggregate market value of the voting stock held by  non-affiliates  of
the Registrant as of February 1, 2000: $4.3 billion.*

____________________
* Solely for purposes of computing such value and without thereby admitting that
such persons are affiliates of the Registrant,  shares held by The  Northwestern
Mutual Life  Insurance  Company and by directors and  executive  officers of the
Registrant  are deemed to be held by affiliates of the  Registrant.  Shares held
are  those  shares  beneficially  owned for  purposes  of Rule  13d-3  under the
Securities Exchange Act of 1934 but excluding shares subject to stock options.

Indicate the number of shares outstanding of each of the Registrant's classes of
common stock as of February 1, 2000: 105,778,434.

The following  documents have been  incorporated by reference in this Form 10-K,
as indicated:

                                               Part and Item Number of
                                               Form 10-K Into Which
Document                                       Incorporated
--------                                       ------------

1.  Information from 1999 Annual Report to     Item 1 of Part I
    Shareholders (for Fiscal Year              Items 5 through 8 of Part II
    Ended December 31, 1999)

2.  Proxy Statement for the 2000 Annual        Items 10 through 13 of Part III
    Meeting of Shareholders


Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of Registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  ___


                                      -2-

<PAGE>


                                     Part I
                                     ------


Item 1.  Business.
-----------------

A. General

     MGIC  Investment  Corporation  (the  "Company") is a holding company which,
through its wholly owned  subsidiary,  Mortgage Guaranty  Insurance  Corporation
("MGIC"),  is the leading provider of private mortgage insurance coverage in the
United States to the home mortgage lending industry.  Private mortgage insurance
covers residential first mortgage loans and expands home ownership opportunities
by enabling  people to purchase homes with less than 20% down  payments.  If the
home owner defaults,  private mortgage insurance reduces and, in some instances,
eliminates the loss to the insured institution.  Private mortgage insurance also
facilitates  the  sale of low  down  payment  mortgage  loans  in the  secondary
mortgage  market,  principally  to the  Federal  National  Mortgage  Association
("Fannie Mae") and the Federal Home Loan Mortgage  Corporation  ("Freddie  Mac")
(Fannie Mae and  Freddie Mac are  collectively  referred to as the  "GSEs").  In
addition to mortgage  insurance  on first  liens,  the  Company,  through  other
subsidiaries,  insures  residential  second  mortgages and provides lenders with
various  underwriting  and other services and products  related to home mortgage
lending.

     MGIC is licensed  in all 50 states of the United  States,  the  District of
Columbia and Puerto Rico. The Company is a Wisconsin corporation.  Its principal
office is located at MGIC Plaza, 250 East Kilbourn Avenue, Milwaukee,  Wisconsin
53202 (telephone number (414) 347-6480).

     The  Company and its  business  may be  materially  affected by the factors
discussed in  "Management's  Discussion and Analysis -- Risk Factors" in Exhibit
13 to this  Annual  Report on Form 10-K.  These  factors  may also cause  actual
results to differ  materially  from the results  contemplated by forward looking
statements that the Company may make.

B. The MGIC Book

     Types of Product

          There are two principal types of private mortgage insurance: "primary"
     and "pool."


                                      -3-

<PAGE>

     Primary  Insurance.  Primary insurance provides mortgage default protection
on individual  loans and covers unpaid loan principal,  delinquent  interest and
certain  expenses  associated  with  the  default  and  subsequent   foreclosure
(collectively,  the "claim  amount").  The insurer  generally  pays the coverage
percentage  of the claim  amount  specified in the primary  policy,  but has the
option to pay 100% of the claim amount and acquire  title to the  property.  The
claim amount  averages about 115% of the unpaid  principal  balance of the loan.
Primary insurance  generally applies to owner occupied,  first mortgage loans on
one-to-four family homes, including  condominiums.  Primary coverage can be used
on any type of  residential  mortgage loan  instrument  approved by the mortgage
insurer.  References  in this  document  to amounts of  insurance  written or in
force,  risk  written or in force and other  historical  data  related to MGIC's
insurance  refer only to direct  (before giving effect to  reinsurance)  primary
insurance, unless otherwise indicated.

     The following  table shows, on a direct basis,  primary  insurance in force
(the unpaid  principal  balance of insured loans) and primary risk in force (the
coverage percentage applied to the unpaid principal balance), for insurance that
has been written by MGIC (the "MGIC Book") as of the dates indicated:

                       Primary Insurance and Risk In Force

                                                  December 31,
                               -------------------------------------------------
                                 1999      1998      1997       1996     1995
                                 ----      ----      ----       ----     ----
                                           (In millions of dollars)    
Direct Primary
Insurance In Force...........  $147,607  $137,990  $138,497   $131,397  $120,341

Direct Primary
Risk In Force................   $35,623   $32,891   $32,175    $29,308   $25,502


     The coverage  percentage  provided by MGIC is determined by the lender. For
loans sold by lenders to Fannie Mae or Freddie Mac, the coverage percentage must
comply with the requirements established by the particular GSE to which the loan
is delivered. Effective in the first quarter of 1995, Freddie Mac and Fannie Mae
increased their coverage requirements for, among other loan types, 30-year fixed
rate  mortgages  with  loan-to-value  ratios,  determined  at  loan  origination
("LTVs"), of 90.01-95.00% ("95s") from 25% coverage to 30% coverage and for such
mortgages with LTVs of 85.01-90.00% ("90s") from 17% to 25%.

     During the first quarter of 1999, the GSEs changed their mortgage insurance
requirements  for fixed  rate and  certain  other  mortgages  on owner  occupied
properties having terms greater than 20 years when the loan is approved by their
automated  underwriting  services.  Lenders may deliver  these loans to the GSEs
with the prior coverage  requirements (30% for a 95


                                      -4-


<PAGE>

and 25% for a 90), or in the case of 95s,  with either (i) 25%  coverage or (ii)
18%  coverage  and the payment of a delivery  fee to the GSE, and in the case of
90s,  with  either (i) 17%  coverage or (ii) 12%  coverage  and the payment of a
delivery fee to the GSE.

     The following table shows new insurance written during the last three years
for 95s with 30% coverage and for 90s with 25% coverage:

          Coverage Categories as a Percentage of New Insurance Written

                                       Year Ended December 31,
           LTV/                 -------------------------------------
         Coverage                1999           1998           1997
       ------------              ----           ----           ----

         95 /30%                 32.0%          33.9%          38.7%
         90 /25%                 34.7%          38.6%          39.1%
 

The Company expects the percentage of its new insurance  written with 95/30% and
90/25% coverage will decline in response to the GSEs changed mortgage  insurance
requirements.

     MGIC charges  higher  premium  rates for higher  coverages,  and the deeper
coverage  requirements  imposed by the GSEs  beginning in 1995 have  resulted in
higher earned premiums for loans with the same characteristics  (such as LTV and
loan type).  MGIC believes  depth of coverage  requirements  have no significant
impact on frequency of default.  Higher coverage percentages generally result in
increased  severity  (which is the amount paid on a claim),  and lower  coverage
percentages  generally result in decreased severity. In accordance with industry
accounting  practice,  reserves  for  losses are only  established  for loans in
default.  Because  relatively few defaults occur in the early years of a book of
business (see "Past Industry Losses;  Defaults; and Claims--Claims"  below), the
higher  premium  revenue from deeper  coverage is  recognized  before any higher
losses  resulting from that deeper coverage may be incurred.  On the other hand,
while a decline in coverage  percentage will result in lower premium revenue, it
should  also  result in lower  incurred  (and paid)  losses at the same level of
claim incidence. However, given the historical pattern of claims, the decline in
revenue will precede the benefits of reduced  severity.  MGIC's premium  pricing
methodology   generally  targets   substantially   similar  returns  on  capital
regardless  of the depth of coverage.  However,  there can be no assurance  that
changes in the level of premium rates  adequately  reflect the risks  associated
with changes in the depth of coverage.


                                      -5-

<PAGE>

     In partnership with mortgage insurers, the GSEs are also beginning to offer
programs  under  which,  on  delivery of an insured  loan to a GSE,  the primary
coverage is restructured  to an initial  shallow tier of coverage  followed by a
second  tier that is  subject to an overall  loss  limit and,  depending  on the
program, some compensation may be paid to the GSE for services.  Lenders receive
guaranty fee relief from the GSEs on mortgages delivered with these restructured
coverages.

     Mortgage insurance coverage cannot be terminated by the insurer, except for
non-payment  of  premium,  and  remains  renewable  at the option of the insured
lender, generally at the renewal rate fixed when the loan was initially insured.
Lenders may cancel  insurance at any time at their option or because of mortgage
repayment,  which may be accelerated because of the refinancing of mortgages. In
the case of a loan  purchased  by Freddie Mac or Fannie Mae, a borrower  meeting
certain  conditions may require the mortgage  servicer to cancel  insurance upon
the borrower's  request when the principal balance of the loan is 80% or less of
the home's current value.

     Under the federal Homeowners  Protection Act (the "HPA") a borrower has the
right to stop paying  premiums  for private  mortgage  insurance on loans closed
after July 28, 1999 secured by a property comprised of one dwelling unit that is
the borrower's primary residence when certain LTV ratio thresholds determined by
the value of the home at loan  origination  and other  requirements  are met. In
general,  a borrower may stop making  mortgage  insurance  payments when the LTV
ratio is  scheduled  to reach 80%  (based on the  loan's  amortization  schedule
established  at loan  origination)  if the  borrower so requests  and if certain
requirements  relating  to the  borrower's  payment  history  and the absence of
junior  liens  and a decline  in the  property's  value  since  origination  are
satisfied.  In addition,  a borrower's  obligation  to make payments for private
mortgage  insurance  generally  terminates  regardless  of whether a borrower so
requests when the LTV ratio reaches 78% of the unpaid  principal  balance of the
mortgage and the  borrower is (or  thereafter  becomes)  current in his mortgage
payments.  A borrower's right to stop paying for private mortgage insurance does
not apply to lender paid mortgage insurance.  The HPA requires that lenders give
borrowers  certain notices with regard to the  cancellation of private  mortgage
insurance.

     In addition,  some states  require  that  mortgage  servicers  periodically
notify  borrowers  of the  circumstances  in which  they may  request a mortgage
servicer to cancel private mortgage insurance and some states allow the borrower
to require the mortgage  servicer to cancel  private  mortgage  insurance  under
certain  circumstances or require the mortgage servicer to cancel such insurance
automatically  in  certain  circumstances.  Under the HPA,  states  having  laws
regarding any requirements  relating to private mortgage  insurance that were in
effect on January 2, 1998 may provide for mortgage  insurance  cancellation  and
notice  requirements  that are more favorable to borrowers than under the HPA if
such provisions are enacted by July 29, 2000.

     Coverage tends to continue in areas experiencing  economic  contraction and
housing price  depreciation.  The  persistency of coverage in such areas coupled
with  cancellation  of coverage in areas  experiencing  economic  expansion  and
housing  price  appreciation  can  increase  the  percentage  of  the  insurer's
portfolio  comprised of loans in economically  weak areas.  This development can
also occur during periods of heavy mortgage refinancing because refinanced loans
in areas of


                                      -6-

<PAGE>

economic expansion  experiencing  property value appreciation are less likely to
require mortgage insurance at the time of refinancing, while refinanced loans in
economically  weak areas not experiencing  property value  appreciation are more
likely to require  mortgage  insurance at the time of refinancing or not qualify
for  refinancing  at all and,  thus,  remain  subject to the mortgage  insurance
coverage.

     When a borrower  refinances an MGIC-insured  mortgage loan by paying it off
in full with the proceeds of a new  mortgage,  the  insurance  on that  existing
mortgage is cancelled, and insurance on the new mortgage is considered to be new
primary  insurance  written.  Therefore,  continuation of MGIC's coverage from a
refinanced  loan to a new loan results in both a  cancellation  of insurance and
new insurance  written.  The  percentage of primary risk written with respect to
loans representing refinances was 22.3% in 1999 as compared to 25.6% in 1998 and
12.2% in 1997.

     In addition to varying with the coverage  percentage,  MGIC's premium rates
vary depending upon the perceived risk of a claim on the insured loan and, thus,
take  into  account  the LTV,  the loan type  (fixed  payment  versus  non-fixed
payment) and mortgage  term and, for MGIC's  program to insure  subprime  loans,
MGIC's evaluation of the borrower's credit  worthiness.  Premium rates cannot be
changed after the issuance of coverage.  Because the Company  believes that over
the long term each  region of the United  States is  subject to similar  factors
affecting  risk  of  loss  on  insurance  written,  MGIC  generally  utilizes  a
nationally based, rather than a regional or local, premium rate policy.

     The borrower's mortgage loan instrument may require the borrower to pay the
mortgage insurance premium ("borrower paid mortgage  insurance") or there may be
no such requirement  imposed on the borrower,  in which case the premium is paid
by the lender,  usually  through an  increase  in the note rate on the  mortgage
("lender paid mortgage  insurance").  Almost all of MGIC's primary insurance and
new insurance written is borrower paid mortgage insurance.

     Under the monthly  premium plan, a monthly  premium payment is made to MGIC
to provide only one month of coverage, rather than one year of coverage provided
by the annual premium plan.  Under the annual premium plan, the initial  premium
is paid to MGIC in advance,  and earned over the next twelve months of coverage,
with annual  renewal  premiums  paid in advance  thereafter  and earned over the
subsequent  twelve  months of  coverage.  The annual  premiums  can be paid with
either a higher  premium rate for the initial year of coverage and lower premium
rates for the renewal  years,  or with premium rates which are equal (level) for
the initial year and subsequent  renewal years. Under the single premium plan, a
single payment is made to MGIC, covering a specified term exceeding 12 months.

     During 1999 and 1998, the monthly premium plan represented 95.2% and 93.9%,
respectively,   of  MGIC's  new  insurance  written.  The  annual  premium  plan
represented substantially all of the remaining new insurance written.

     Pool Insurance.  Pool insurance is generally used as an additional  "credit
enhancement" for certain secondary market mortgage transactions.  Pool insurance
generally covers the loss on a


                                      -7-

<PAGE>

defaulted  mortgage  loan which  exceeds  the claim  payment  under the  primary
coverage, if primary insurance is required on that mortgage loan, as well as the
total loss on a defaulted mortgage loan which did not require primary insurance,
in each case up to a stated aggregate loss limit.

     During the first quarter of 1997,  the Company began writing pool insurance
generally covering  fixed-rate,  30-year mortgage loans delivered to Freddie Mac
and Fannie Mae ("agency pool  insurance").  The  aggregate  loss limit on agency
pool insurance  generally does not exceed 1% of the aggregate original principal
balance of the mortgage loans in the pool. New pool risk written during 1999 was
$564  million and was $618 million in 1998.  New pool risk written  during these
years was virtually all agency pool  insurance,  with the remaining risk written
associated with loans insured under state housing finance programs.  Net (giving
effect to external  reinsurance)  MGIC Book pool risk in force at  December  31,
1999 was $1.4 billion  compared to $927 million and $530 million at December 31,
1998 and 1997, respectively.

     In December  1999, a complaint  seeking  class action status on behalf of a
nationwide  class of home  mortgage  borrowers was filed against MGIC in Federal
District Court in Augusta,  Georgia (the "RESPA  Litigation").  The complaint in
the RESPA  Litigation  alleges  that MGIC  violated  the Real Estate  Settlement
Procedures  Act ("RESPA") by providing  agency pool  insurance and entering into
other transactions with lenders that were not properly priced, in return for the
referral of mortgage  insurance.  The complaint seeks damages of three times the
amount of the mortgage  insurance  premiums that have been paid and that will be
paid for the mortgage  insurance  that is found to be involved in a violation of
RESPA. In February 2000, MGIC answered the complaint and denied liability. There
can be no  assurance,  however,  regarding  the  ultimate  outcome  of the RESPA
Litigation or its effect on the Company.  Three other mortgage insurers are also
defendants in equivalent  lawsuits pending in Federal District Court in Augusta,
Georgia.

     In a February 1, 1999 circular  addressed to all mortgage guaranty insurers
licensed in New York, the New York Department of Insurance ("NYID") advised that
"signficantly underpriced" agency pool insurance would violate the provisions of
New York insurance law that prohibit  mortgage  guaranty insurers from providing
lenders with inducements to obtain mortgage guaranty business. The NYID circular
does not provide  standards  under which the NYID will evaluate  whether  agency
pool  insurance  is  "significantly  underpriced."  In  response  to  subsequent
inquiries from the NYID,  MGIC provided  various  information  about agency pool
insurance  to the NYID.  In a January 31, 2000 letter  addressed to all mortgage
guaranty  insurers  licensed in Illinois,  the Illinois  Department of Insurance
advised that providing pool insurance at a "discounted or below market  premium"
in return for the referral of primary mortgage  insurance would violate Illinois
law.

     Captive  Mortgage  Reinsurance.  MGIC's products  include captive  mortgage
reinsurance in which an affiliate of a lender reinsures a portion of the risk on
loans  originated or purchased by the lender which have MGIC primary  insurance.
Approximately 32% of MGIC's new insurance written in 1999 was subject to captive
mortgage  reinsurance and other similar structures compared to approximately 16%
in 1998. The complaint in the RESPA Litigation alleges that MGIC pays "inflated"
captive  mortgage  reinsurance  premiums in violation of RESPA. In a February 1,
1999 circular  addressed to all mortgage insurers licensed in New York, the NYID
said that it was in the


                                      -8-

<PAGE>

process of developing  guidelines  that would  articulate the  parameters  under
which captive mortgage reinsurance is permissible under New York insurance law.

     Other  Reinsurance.  At December 31, 1999,  disregarding  reinsurance under
captive  structures,  less than 5% of MGIC's  insurance in force was  reinsured.
Reinsuring  against  possible loan losses does not discharge MGIC from liability
to a  policyholder;  however,  the  reinsurer  agrees to indemnify  MGIC for the
reinsurer's share of losses incurred.

     Customers

     Originators of residential mortgage loans such as mortgage bankers, savings
institutions,  commercial  banks,  mortgage  brokers,  credit  unions  and other
lenders have historically  determined the placement of mortgage insurance and as
a result are the customers of MGIC.  To obtain  primary  insurance  from MGIC, a
mortgage  lender  must first apply for and  receive a mortgage  guaranty  master
policy  ("Master  Policy")  from  MGIC.  MGIC had  approximately  11,000  master
policyholders  at December 31, 1999 (not including  policies  issued to branches
and  affiliates of large  lenders).  In 1999,  MGIC issued  coverage on mortgage
loans  for  approximately  4,500  of its  master  policyholders.  MGIC's  top 10
customers  generated  32.5% of its new  insurance  written in 1999,  compared to
33.7% in 1998 and 27.0% in 1997.

     Sales and Marketing and Competition

     Sales and  Marketing.  MGIC sells its  insurance  products  through its own
employees,  located throughout the United States. At December 31, 1999, MGIC had
30 underwriting service centers located in 21 states and in Puerto Rico.

     Competition. MGIC and other private mortgage insurers compete directly with
federal and state governmental and quasi-governmental agencies,  principally the
FHA and, to a lesser degree, the Veterans  Administration ("VA"). These agencies
sponsor  government-backed   mortgage  insurance  programs,  which  during  1999
accounted for  approximately  48% (compared to approximately 44% during 1998) of
the  total  low  down  payment  residential  mortgages  which  were  subject  to
governmental  or  private  mortgage   insurance.   See   "Regulation,   Indirect
Regulation"  below.  In October  1998,  the maximum  loan  amounts that could be
insured by the FHA and the VA were increased as a result of legislation that set
the limit as a higher  percentage of the conforming loan limit than in the past.
For 2000,  the  maximum  loan amount for homes with one  dwelling  unit in "high
cost"  counties  may be as  high as  $214,849  compared  to  $208,800  in  1999.
President  Clinton's  fiscal year 2001  budget  proposes  that the maximum  loan
amount for homes with one dwelling  unit be raised to match the GSEs  conforming
loan limit ($252,700 in 2000) regardless of the home's location.

     In addition to competition  from the FHA and the VA, MGIC and other private
mortgage insurers face competition from state-supported mortgage insurance funds
in several  states,  including  California,  Illinois and New York. From time to
time, other state legislatures and agencies consider expansions of the authority
of their state governments to insure residential mortgages.


                                      -9-

<PAGE>

     Private  mortgage  insurers may also be subject to competition  from Fannie
Mae and Freddie Mac to the extent the GSEs are compensated for assuming  default
risk that would otherwise be insured by the private mortgage insurance industry.
Fannie Mae and Freddie Mac each have programs  under which an up-front  delivery
fee  can be  paid  to  the  GSE  and  primary  mortgage  insurance  coverage  is
substantially  reduced compared to the coverage requirements that would apply in
the absence of the program. See "Types of Product--Primary  Insurance" above. In
October 1998,  Freddie Mac's charter was amended (and the amendment  immediately
repealed) to give Freddie Mac  flexibility to use protection  against default in
addition  to  private  mortgage  insurance  and the two  other  types of  credit
enhancement  required by the charter for low down payment mortgages purchased by
Freddie Mac. In addition,  to the extent up-front delivery fees are not retained
by the GSEs to compensate  for their  assumption  of default risk,  and are used
instead to purchase supplemental coverage from mortgage insurers,  the resulting
concentration  of  purchasing  power in the  hands of the  GSEs  could  increase
competition among insurers to provide such coverage.

     The capital  markets may also develop as  competitors  to private  mortgage
insurers. During 1998, a newly-organized off-shore company funded by the sale of
notes to institutional  investors provided  "reinsurance" to Freddie Mac against
default on a specified pool of mortgages owned by Freddie Mac.

     MGIC and other mortgage insurers also compete with transactions  structured
to  avoid  mortgage   insurance  on  low  down  payment  mortgage  loans.   Such
transactions  include  self-insuring  and originating  loans comprised of both a
first and a second mortgage, with the LTV ratio of the first mortgage below what
investors require for mortgage insurance, instead of originating a loan in which
the  first  mortgage  covers  the  entire  borrowed  amount.   Captive  mortgage
reinsurance  and  similar  transactions  also  result  in  mortgage  originators
receiving a portion of the premium and the risk.

     The private mortgage  insurance industry currently consists of eight active
mortgage insurers and their  affiliates;  one of the eight is a joint venture in
which a mortgage insurer is one of the joint venturers.  For 1995 and subsequent
years,  MGIC has been the largest private  mortgage insurer based on new primary
insurance written (with a market share of 24.3% in 1999, 23.1% in 1998 and 26.6%
in 1997) and at December  31,  1999,  MGIC also had the  largest  book of direct
primary insurance in force.

     The  private  mortgage  insurance  industry is highly  competitive  and, in
recent years, the dynamics of industry  competition  have undergone  significant
change.  The Company believes it competes with other private  mortgage  insurers
principally on the basis of programs  involving  agency pool insurance,  captive
mortgage  reinsurance  and  other  similar  structures  involving  lenders;  the
provision of contract  underwriting and related  fee-based  services to lenders;
the  provision  of other  products  and  services  that  meet  lender  needs for
underwriting  risk management,  affordable  housing,  loss  mitigation,  capital
markets and training  support;  the strength of MGIC's management team and field
organization; and the effective use of technology and innovation in the delivery
and servicing


                                      -10-

<PAGE>

of MGIC's insurance products. The Company believes MGIC's additional competitive
strengths,  compared to other private insurers, are its customer  relationships,
name recognition and reputation.

     The complaint in the RESPA  Litigation  alleges,  among other things,  that
agency pool insurance, captive mortgage reinsurance and contract underwriting as
provided by the Company  violate  RESPA.  Equivalent  allegations  are made with
respect to the other three mortgage insurance company defendants.

     Certain private  mortgage  insurers compete by offering lower premium rates
than other  companies,  including  MGIC,  either in  general or with  respect to
particular classes of business. MGIC on a case-by-case basis will adjust premium
rates,  generally  depending on the risk  characteristics,  loss  performance or
class of business of the loans to be insured, or the costs associated with doing
such  business.  Currently,  the Illinois and  California  insurance laws do not
permit a mortgage  insurer  licensed  in those  states  (such as MGIC) to insure
loans with LTVs in excess of 97 regardless  of the location of the property.  At
least  one  private  mortgage  insurer  has the  capability  to  write  mortgage
insurance for such loans  through an affiliated  company that is not licensed in
Illinois or California.  Certain other states (including New Jersey and Ohio) do
not permit a licensed mortgage insurer to insure loans with LTVs in excess of 97
when property is located in that state. While the capability to provide coverage
on loans with LTVs above 97 has not been a significant  competitive  factor, the
private  mortgage  insurance  industry is working  collectively  to change these
provisions  so that  loans  with  LTVs in  excess  of 97 could be  insured  on a
nationwide basis.

     If the  risk-based  capital stress test for the GSEs proposed in March 1999
by the Office of  Federal  Housing  Enterprise  Oversight  ("OFHEO")  as finally
adopted  gives  more  capital  credit  to  mortgage   insurance  provided  by  a
"AAA"-rated insurer (as discussed under  "Regulation--Direct  Regulation" below,
MGIC's claims-paying ability is rated "AA+"), the availability of "AAA" capacity
would  likely  become  a  competitive  factor  among  mortgage   insurers.   See
"Management's Discussion and Analysis--Results of Consolidated  Operations--1999
Compared  to 1998"  under Item 7 hereof  for  additional  information  about the
proposed OFHEO stress test.

     Contract Underwriting and Related Services

     The Company performs  contract  underwriting  services for lenders in which
the Company  judges  whether  the data  relating  to the  borrower  and the loan
contained  in the  lender's  mortgage  loan  application  file  comply  with the
lender's loan underwriting guidelines. The Company also provides an interface to
submit  such data to the  automated  underwriting  systems  of the  GSEs,  which
independently judge the data. These services are provided for loans that require
private  mortgage  insurance  as well as for loans that do not  require  private
mortgage insurance. A material portion of the Company's new insurance written in
recent years involved loans for which the Company provided contract underwriting
services.  The complaint in the RESPA  Litigation  alleges,  among other things,
that contract underwriting as provided by the Company violates RESPA.


                                      -11-

<PAGE>

     Risk Management

     Risk Management Approach. MGIC evaluates four major elements of risk:

     .    Individual  Loan and  Borrower.  Except to the  extent  its  delegated
          underwriting  program is being  utilized or for loans  approved by the
          automated   underwriting   services   of  the  GSEs  (see   "Delegated
          Underwriting and GSE Automated  Underwriting  Approvals" below),  MGIC
          evaluates  insurance   applications  based  on  its  analysis  of  the
          borrower's ability to repay the mortgage loan and the  characteristics
          and value of the  property.  The  analysis  of the  borrower  includes
          reviewing the borrower's  housing and total debt ratios as well as the
          borrower's  FICO  credit  score,  as  reported  by  credit   reporting
          agencies.  In the  case of  delegated  underwriting,  compliance  with
          program  parameters  is  monitored  by  periodic  audits of  delegated
          business.

     .    Geographic Market.  MGIC places significant  emphasis on the condition
          of  the  housing   markets  around  the  nation  in  determining   its
          underwriting policies.

     .    Product. The type of mortgage instrument that the borrower selects and
          the purpose of the loan are  important  factors in MGIC's  analysis of
          mortgage default risk. MGIC analyzes four general  characteristics  of
          the product to quantify this risk evaluation: (i) LTV ratio; (ii) type
          of loan  instrument;  (iii) type of property;  and (iv) purpose of the
          loan.  In  addition to its  underwriting  guidelines  (as  referred to
          below), pricing is MGIC's principal method used to manage these risks.
          Loans with higher LTV ratios  generally have a higher  premium,  as do
          instruments  such as ARMs with an initial interest period of less than
          five years and loans with a maturity longer than fifteen years.

     .    Mortgage Lender.  MGIC evaluates from time to time its major customers
          and the performance of their business which MGIC has insured.

     The Company  believes  that the claim  incidence  for 95s is  substantially
higher  than for 90s or loans  with  lower LTV  ratios;  for loans  with LTVs of
95.01-97.00  ("97s") is  substantially  higher  than for 95s;  for ARMs during a
prolonged period of rising interest rates would be substantially higher than for
fixed rate  loans;  for loans in which the  original  loan  amount  exceeds  the
conforming  loan limit is higher  than for loans  where such amount is below the
conforming loan limit; and for subprime loans (the volume of which prior to 1999
was  insignificant)  is substantially  higher than for prime loans. MGIC charges
higher premium rates for insuring 95s, 97s, ARMs with an initial interest period
of less than five years and subprime loans.  However,  there can be no assurance
that such higher rates  adequately  reflect the increased risk  associated  with
those types of loans, particularly in a period of economic recession.


                                      -12-

<PAGE>

     There  are  also  other  types  of  loan  characteristics  relating  to the
individual  loan or borrower  which affect the risk  potential  for a loan.  The
presence  of a  number  of  higher-risk  characteristics  in a  loan  materially
increases  the  likelihood  of a claim on such a loan  unless  there  are  other
characteristics to lower the risk.

     Underwriting  Process.  To obtain primary  insurance on a specific mortgage
loan,  a  master  policyholder  typically  submits  an  application  to an  MGIC
underwriting  service  center,  supported by various  documents,  if required by
MGIC. MGIC utilizes national  underwriting  guidelines to evaluate the potential
risk of default on  mortgage  loans  submitted  for  insurance  coverage.  These
guidelines generally are consistent with Fannie Mae and Freddie Mac underwriting
guidelines  and take into account the  applicable  premium rates charged by MGIC
and the loss experience of the private mortgage insurance  industry,  as well as
the initiatives to expand home ownership opportunities  undertaken by Fannie Mae
and Freddie Mac.  MGIC's  underwriters  have  discretionary  authority to insure
loans which deviate in one or more respects from MGIC's underwriting guidelines.
In most such cases, offsetting underwriting strengths must be identified.

     In order to react to local or regional economic  conditions,  MGIC has also
developed for use by its underwriting  staff certain  modified  guidelines which
attempt to address  particular  regional  or local  market  developments.  These
"special  market  underwriting  guidelines"  are  updated  from time to time and
deviate in varying  degrees  from  MGIC's  national  guidelines  based on MGIC's
analysis of area housing markets and related economic indicators and conditions.
The special market  underwriting  guidelines are more liberal than the published
national guidelines in some markets, but in other markets are more restrictive.

     To assist its staff of  underwriters,  MGIC  utilizes  a  computer-assisted
underwriting  system  which  analyzes and approves  certain  mortgage  insurance
applications  based on  MGIC's  underwriting  standards,  but  without  personal
underwriter  intervention,  thereby allowing MGIC's underwriting staff to devote
additional attention to evaluating more difficult underwriting  decisions.  MGIC
audits a representative sample of applications approved by the system.

     Delegated Underwriting and GSE Automated Underwriting Approvals.  Delegated
underwriting is a program whereby approved lenders are allowed to commit MGIC to
insure  loans  utilizing  their   MGIC-approved   underwriting   guidelines  and
underwriting evaluation.  While MGIC does not underwrite on a case-by-case basis
the credit of the borrower, the value of the property, or other factors which it
normally  considers  in its  underwriting  decision,  it does audit on a regular
basis a sample of the loans insured.

     At December  31,  1999,  MGIC's  delegated  underwriting  program  involved
approximately 606 lenders,  including all of MGIC's top twenty customers.  Loans
insured under MGIC's delegated  underwriting program accounted for approximately
35.4% of MGIC's total risk in force at December 31, 1999.  The percentage of new
risk written by delegated  underwriters increased to 38.4% in 1999 from 36.2% in
1998 and was 36.8% in 1997. The performance of loans insured under the delegated
underwriting  program  has been  comparable  to MGIC's  non-delegated  business,
although  performance  of that  program  has not yet been  tested in a period of
severe economic stress.


                                      -13-

<PAGE>
     Loans covered under agency pool insurance are not underwritten by MGIC on a
loan-by-loan  basis.  If the  loan  has  primary  insurance  provided  by  MGIC,
delegated  underwriting is used, and if the loan has primary insurance  provided
by another mortgage insurer or has no primary insurance,  the lender underwrites
the loan to standards set forth in the agency pool insurance  agreement with the
lender.

     MGIC also has a reduced document submission program under which it approves
a loan for  insurance if the borrower  satisfies  certain  minimum  criteria for
credit scores and debt ratios.

     Loans  approved  by the  automated  underwriting  services  of the GSEs are
deemed acceptable for MGIC mortgage  insurance without MGIC itself  underwriting
the loan.


     Past Industry Losses; Defaults; and Claims

     Past Industry Losses.  The private mortgage insurance  industry,  including
the WMAC Book (see "The WMAC Book" below), experienced substantial unanticipated
incurred losses in the mid-to-late 1980s. From the 1970s until 1981, rising home
prices in the United States generally led to profitable  insurance  underwriting
results for the  industry  and caused  private  mortgage  insurers to  emphasize
market share. To maximize market share,  until the mid-1980s,  private  mortgage
insurers  employed  liberal  underwriting  practices,  and charged premium rates
which,  in  retrospect,  generally did not  adequately  reflect the risk assumed
(particularly on pool insurance). These industry practices compounded the losses
which  resulted  from changing  economic and market  conditions  which  occurred
during the early and  mid-1980s,  including (i) severe  regional  recessions and
attendant  declines in property values in the nation's energy producing  states;
(ii) the development by lenders of new mortgage  products to defer the impact on
home  buyers of double  digit  mortgage  interest  rates;  and (iii)  changes in
federal  income  tax  incentives  which  initially   encouraged  the  growth  of
investment in non-owner occupied properties.

     Defaults.  The claim cycle on private  mortgage  insurance  begins with the
insurer's  receipt of  notification  of a default  on an  insured  loan from the
lender.  Lenders are  required to notify MGIC of defaults  within 130 days after
the initial  default,  although  most  lenders do so earlier.  The  incidence of
default is  affected by a variety of  factors,  including  the level of borrower
income growth,  unemployment,  divorce and illness,  the level of interest rates
and general borrower  creditworthiness.  Defaults that are not cured result in a
claim  to MGIC.  Defaults  may be cured by the  borrower  bringing  current  the
delinquent  loan payments or by a sale of the property and the  satisfaction  of
all amounts due under the mortgage.

     The  following  table shows the number of primary and pool loans insured in
the MGIC Book,  the  related  number of loans in default and the  percentage  of
loans in default (default rate) as of the dates indicated:


                                      -14-

<PAGE>

<TABLE>
                                        Default Statistics for the MGIC Book
<CAPTION>
                                                                             December 31,
                                         -------------------------------------------------------------------------------
                                             1999            1998            1997             1996             1995
                                             ----            ----            ----             ----             ----

PRIMARY INSURANCE
<S>                                        <C>             <C>             <C>              <C>              <C>      
     Insured loans in force ...            1,370,020       1,320,994       1,342,976        1,299,038        1,219,304
     Loans in default .........               29,761          29,253          28,493           25,034           19,980
     Percentage of loans in default
     (default rate) ...........                2.17%           2.21%           2.12%            1.93%            1.64%

POOL INSURANCE
     Insured loans in force ...            1,181,512         899,063         374,378           19,123           20,427
     Loans in default .........               11,638           6,524           2,174              855            1,053
     Percentage of loans in default
     (default rate) ...........                0.99%           0.73%           0.58%            4.47%            5.15%
</TABLE>



     The  default  rate for  primary  loans has  generally  increased  due to an
increase in the risk profile of loans insured in late 1994 and the first half of
1995 and the continued  maturation of MGIC's  insurance in force.  The number of
pool insurance loans in force increased at December 31, 1997, 1998 and 1999 as a
result of agency pool insurance writings, and the number of pool insurance loans
in default at those dates  increased  due to the  increase in pool  insurance in
force. The percentage of pool insurance loans in default  decreased from 1996 to
1997 as a result of the increase in pool  insurance in force and increased  from
1997 to 1999 due to the aging of the underlying loans in earlier pools.


                                      -15-

<PAGE>

     Regions of the United States may experience  different default rates due to
varying  localized  economic  conditions  from year to year. The following table
shows the  percentage of the MGIC Book's primary loans in default by MGIC region
at the dates indicated:

                 Default Rates for Primary Insurance By Region*

                                    Dec. 31         Dec. 31          Dec. 31
                                     1999            1998             1997
                                     ----            ----             ----
     MGIC REGION:
     New England.............        1.60%           1.78%            1.89%
     Northeast...............        3.02            3.05             3.03
     Mid-Atlantic............        2.19            2.28             2.23
     Southeast...............        2.24            2.23             2.13
     Great Lakes.............        2.09            1.89             1.75
     North Central...........        1.85            1.91             1.72
     South Central...........        2.00            2.00             1.86
     Plains..................        1.40            1.40             1.27
     Pacific.................        2.42            2.73             2.69

        National.............        2.17            2.21%            2.12%

--------------------
*   The  default  rate is affected by both the number of loans in default at any
    given date as well as the number of insured loans in force at such date.


     Claims.  Claims result from defaults  which are not cured.  Whether a claim
results from an uncured default  principally depends on the borrower's equity in
the home at the time of default and the borrower's (or the lender's)  ability to
sell the home for an amount  sufficient  to satisfy  all  amounts  due under the
mortgage. Claims are affected by various factors, including local housing prices
and employment levels, and interest rates.

     Under the terms of the  Master  Policy,  the lender is  required  to file a
claim for primary  insurance with MGIC within 60 days after it has acquired good
and marketable title to the underlying property through  foreclosure.  Depending
on the  applicable  state  foreclosure  law,  an  average  of  about  12  months
transpires from the date of default to payment of a claim on an uncured default.
The claim amount generally averages about 115% of the unpaid principal amount of
the loan.


                                      -16-

<PAGE>

     Within  60 days  after the claim  has been  filed,  MGIC has the  option of
either (i) paying the  coverage  percentage  specified  for that loan,  with the
insured  retaining  title to the underlying  property and receiving all proceeds
from the  eventual  sale of the property or (ii) paying 100% of the claim amount
in exchange  for the lender's  conveyance  of good and  marketable  title to the
property to MGIC, with MGIC then selling the property for its own account.

     Claim  activity is not evenly spread  throughout  the coverage  period of a
book of primary  business.  Relatively few claims are received  during the first
two years following issuance of coverage on a loan. This is followed by a period
of rising claims which, based on industry  experience,  has historically reached
its  highest  level in the  third  through  fifth  years  after the year of loan
origination. Thereafter, the number of claims received has historically declined
at a gradual rate, although the rate of decline can be affected by conditions in
the  economy,  including  lower  housing  price  appreciation.  There  can be no
assurance  that this  historical  pattern of claims will continue in the future.
Moreover,  when a loan is refinanced,  because the new loan  replaces,  and is a
continuation  of, an earlier loan, the pattern of claims  frequency for that new
loan may be different from the historical pattern of other loans. As of December
31,  1999,  65.5% of the MGIC Book  primary  insurance in force had been written
during 1997, 1998 and 1999,  although a portion of such insurance arose from the
refinancing of earlier originations.

     In addition to the  increasing  level of claim  activity  arising  from the
maturing of the MGIC Book,  another  important factor affecting MGIC Book losses
is the amount of the average claim paid, which is generally referred to as claim
severity. The main determinants of claim severity are the amount of the mortgage
loan and coverage percentage on the loan. The average claim severity on the MGIC
Book  primary  insurance  was  $18,319  for 1999 as compared to $20,705 in 1998,
reflecting  the  decline in the  number of claims  paid from  certain  high cost
regions of the country.

     Loss Reserves

     A  significant  period of time may elapse  between  the  occurrence  of the
borrower's  default on a mortgage  payment  (the event  triggering  a  potential
future  claim  payment by MGIC),  the  reporting of such default to MGIC and the
eventual payment of the claim related to such uncured default.  To recognize the
liability for unpaid losses related to outstanding  reported  defaults (known as
the default inventory), the Company (similar to other private mortgage insurers)
establishes  loss reserves,  representing  the estimated  percentage of defaults
which will ultimately result in a claim (known as the claim rate), and estimates
of the severity of each claim which will arise from the defaults included in the
default inventory. In accordance with industry accounting practices, the Company
does not  establish  loss  reserves for future claims on insured loans which are
not currently in default.


                                      -17-

<PAGE>

     The Company also establishes reserves to provide for the estimated costs of
settling  claims,  including  legal and other  fees,  and  general  expenses  of
administering the claims settlement  process ("loss adjustment  expenses"),  and
for losses and loss adjustment  expenses from defaults which have occurred,  but
which have not yet been reported to the insurer.

     The  Company's  reserving  process is based upon the  assumption  that past
experience,  adjusted for the anticipated effect of current economic  conditions
and projected future economic trends, provides a reasonable basis for estimating
future  events.  However,  estimation of loss  reserves is a difficult  process,
especially in light of the rapidly  changing  economic  conditions over the past
few years in  certain  regions  of the  United  States.  In  addition,  economic
conditions  that have affected the  development of the loss reserves in the past
may not  necessarily  affect  development  patterns in the  future,  in either a
similar manner or degree.

     For a further description of loss reserves,  see Note 6 to the consolidated
financial  statements  of the  Company,  included  in Exhibit 13 to this  Annual
Report on Form 10-K.

     Geographic Dispersion

     The following table reflects the percentage of primary risk in force in the
top 10 states and top 10  metropolitan  statistical  areas ("MSAs") for the MGIC
Book at December 31, 1999:

                       Dispersion of Primary Risk in Force

          Top 10 States                           Top 10 MSAs
          -------------                           -----------
      1.  California         10.9%           1.   Chicago               4.1%
      2.  Texas               6.6            2.   Los Angeles           3.0
      3.  Illinois            5.4            3.   Boston                2.9
      4.  Michigan            5.4            4.   Washington, DC        2.9
      5.  Florida             5.2            5.   Atlanta               2.6
      6.  Ohio                4.6            6.   Philadelphia          2.1
      7.  New York            4.4            7.   Detroit               2.1
      8.  Pennsylvania        4.3            8.   Houston               1.7
      9.  Georgia             3.3            9.   Phoenix               1.7
     10.  New Jersey          3.2           10.   Dallas                1.6
                            -----                                    ------
               Total         53.3%                   Total             24.7%
                             =====                                     =====


     The  percentages  shown above for various  MSAs can be affected by changes,
from time to time, in the federal government's definition of an MSA.


                                      -18-

<PAGE>

     Insurance in Force by Policy Year

     The following  table sets forth the dispersion of MGIC's primary  insurance
in force as of December 31, 1999,  by year(s) of policy  origination  since MGIC
began operations in 1985:

                    Primary Insurance In Force by Policy Year

                                    Primary
                                  Insurance in                Percent of
     Policy Year                     Force                      Total
     -----------                     -----                    ----------
                            (In millions of dollars)

     1985-1993                     $ 20,519                    13.9%
     1994                             8,423                     5.7
     1995                             9,630                     6.5
     1996                            12,364                     8.4
     1997                            17,823                    12.1
     1998                            39,406                    26.7
     1999                            39,442                    26.7
                                     ------                    ----

       Total                       $147,607                   100.0%
                                   ========                   ======


     Product Characteristics of Risk in Force

     At December  31, 1999 and 1998,  95.8% and 96.7%,  respectively,  of MGIC's
risk in force was primary  insurance  and the  remaining  risk in force was pool
insurance.  The following  table  reflects at the dates  indicated the (i) total
dollar amount of primary risk in force for the MGIC Book and (ii)  percentage of
such primary risk in force (as determined on the basis of information  available
on the date of mortgage origination) by the categories indicated.


                                      -19-

<PAGE>

                    Characteristics of Primary Risk in Force

                                                    December 31,   December 31,
                                                        1999           1998
                                                    ---------------------------

Direct Risk in  Force (Dollars in Millions):.......   $35,623        $32,891

Lender Concentration:
     Top 10 lenders................................     28.4%          26.4%
     Top 20 lenders................................     39.7%          37.3%
LTV(1)
     95s(2) .......................................     49.8%          48.3%
     90s(3)........................................     49.8           51.6
     80s...........................................      0.4            0.1
                                                       ------         ------
         Total.....................................    100.0%         100.0%
                                                       ======         ======
Loan Type:
     Fixed(4)......................................     89.8%          87.6%
     ARM(5)........................................      8.6           10.3
     Balloon(6)....................................      1.5            2.0
     Other.........................................      0.1            0.1
                                                       ------         ------
         Total.....................................    100.0%         100.0%
                                                       ======         ======
Original Insured Loan Amount(7):
     Conforming loan limit and below...............     91.4%          91.0%
     Non-conforming................................      8.6            9.0
                                                       ------         ------
         Total.....................................    100.0%         100.0%
                                                       ======         ======
Mortgage Term:
     15-years and under............................      4.6%           4.4%
     Over 15 years.................................     95.4           95.6
                                                       ------         ------
         Total.....................................    100.0%         100.0%
                                                       ======         ======
Property Type:
     Single-family(8)..............................     94.0%          93.8%
     Condominium...................................      5.7            5.8
     Other(9)......................................      0.3            0.4
                                                       ------         ------
         Total.....................................    100.0%         100.0%
                                                       ======         ======
Occupancy Status:
     Primary residence.............................     97.7%          98.2%
     Second home...................................      1.4            1.2
     Non-owner occupied............................      0.9            0.6
                                                       ------         ------
         Total.....................................    100.0%         100.0%
                                                       ======         ======
--------------------


                                      -20-

<PAGE>

(1)  Loan-to-value  represents  the ratio  (expressed  as a  percentage)  of the
     dollar amount of the mortgage loan to the value of the property at the time
     the loan  became  insured.  They are  identified  as in  excess  of 90% LTV
     ("95s");  in excess of 80% LTV and up to 90% LTV  ("90s");  and equal to or
     less than 80% LTV ("80s").
(2)  Includes 97% LTV loans, which were 4.5% and 3.4%, respectively,  of primary
     risk in force at December 31, 1999 and 1998.
(3)  MGIC includes in its  classification of 90s, loans where the borrower makes
     a down  payment  of 10% and  finances  the  associated  mortgage  insurance
     premium  payment as part of the  mortgage  loan.  At December  31, 1999 and
     1998, 2.9% and 3.1%,  respectively,  of the primary risk in force consisted
     of these types of loans.
(4)  Includes fixed rate mortgages with temporary buydowns (where in effect, the
     applicable  interest  rate is  typically  reduced by one or two  percentage
     points  during  the  first  two  years of the  loan)  and ARMS in which the
     initial interest rate is fixed for at least five years.
(5)  Includes ARMs where payments  adjust fully with interest rate  adjustments.
     Also includes ARMs with negative  amortization,  which at December 31, 1999
     and 1998,  represented  1.1% and 1.5%,  respectively,  of  primary  risk in
     force.  Does not include ARMs in which the initial  interest  rate is fixed
     for at least five years.  As of December 31, 1999 and 1998,  ARMs with LTVs
     in excess of 90% represented 7.0% and 7.5%,  respectively,  of primary risk
     in force.
(6)  Balloon  payment  mortgages  are loans with a maturity,  typically  five to
     seven years, that is shorter than the loans' amortization period.
(7)  Loans within the conforming loan limit have an original  principal  balance
     that does not exceed the maximum original  principal  balance of loans that
     the GSEs are eligible to purchase.  The conforming loan limit is subject to
     annual upward  adjustment  and was $240,000 for 1999 and $227,150 for 1998.
     Non-conforming loans are loans with an original principal balance above the
     conforming loan limit.
(8)  Includes  townhouse-style  attached housing with fee simple ownership.
(9)  Includes cooperatives and manufactured homes deemed to be real estate.


C.  The WMAC Book

     In 1985,  the Company  acquired  certain assets and businesses of Wisconsin
Mortgage Assurance  Corporation  ("WMAC") and WMAC's parent,  including the MGIC
name and  offices  of WMAC,  and hired  substantially  all of  WMAC's  employees
("Acquisition").  WMAC retained substantially all of its insurance in force, net
of  domestic  reinsurance  (the "WMAC  Book" and  sometimes  in other  documents
referred to as the "Old  Book").  Effective  as of the time of the  Acquisition,
WMAC reinsured 100% of the WMAC Book with several international  reinsurers (the
"WMAC  Reinsurers").  As a result of  subsequent  transactions,  at December 31,
1999,  approximately  32.0%  of the  WMAC  Book  was  reinsured  with  the  WMAC
Reinsurers and the remainder was reinsured by MGIC.


                                      -21-

<PAGE>

     On December 31, 1998, MGIC purchased WMAC from a third party. WMAC's direct
primary insurance in force, direct primary risk in force and direct pool risk in
force  was   approximately   $2.3  billion,   $0.6  billion  and  $0.4  billion,
respectively, at December 31, 1999.

D.  Other Business

     The Company,  through subsidiaries,  provides various mortgage services for
the  mortgage  finance  industry,  such  as  contract  underwriting,   portfolio
retention and secondary  marketing of  mortgage-related  assets. At December 31,
1999, the Company also owned  approximately 48% of Credit-Based  Asset Servicing
and Securitization LLC and Litton Loan Servicing LP (collectively, "C-BASS") and
approximately  46% of Sherman  Financial  Group LLC, joint ventures with Enhance
Financial  Services Group Inc. and senior management of the joint ventures,  and
approximately  47% of  Customers  Forever LLC, a joint  venture with  Marshall &
Ilsley  Corporation  and senior  management  of the joint  venture.  For further
information  about  these  joint  ventures,  see  "Management's  Discussion  and
Analysis--Results of Consolidated  Operations--1999 Compared to 1998" and Note 8
to the  consolidated  financial  statements  of the  Company,  both of which are
included  in  Exhibit  13 to this  Annual  Report  on Form  10-K.  The  revenues
recognized from these mortgage services operations, other non-insurance services
and the joint ventures represented 4.8% of the Company's  consolidated  revenues
in both 1999 and 1998.

     The  Company's  eMagic.com,  LLC  subsidiary,  launched  in  January  2000,
provides  an Internet  portal  through  which  mortgage  originators  can access
products and services of wholesalers, investors, and vendors necessary to make a
home mortgage loan.

     In  1997,  the  Company,   through  subsidiaries,   began  insuring  second
mortgages,  including  home  equity  loans.  New  insurance  written  on  second
mortgages in 1999 was approximately $1.1 billion and was immaterial in 1998.


E.  Investment Portfolio

     Policy and Strategy

     Cash flow from the Company's investment portfolio represented approximately
34% of its total cash flow from operations during 1999. Approximately 82% of the
Company's  long-term  investment  portfolio  is managed by a  subsidiary  of The
Northwestern  Mutual Life  Insurance  Company,  although  the Company  maintains
overall control of investment policy and strategy.  The Company maintains direct
management of the remainder of its investment portfolio.

     The Company's current policies emphasize  preservation of capital,  as well
as total return.  Therefore,  the Company's investment portfolio consists almost
entirely of high-quality,  fixed-income investments. Liquidity is sought through
diversification  and  investment  in  publicly  traded  securities.  The Company
attempts  to  maintain  a level of  liquidity  commensurate  with its  perceived
business  outlook and the expected  timing,  direction  and degree of changes in
interest rates. The


                                      -22-

<PAGE>

Company's investment policies in effect at December 31, 1999 limited investments
in the  securities of a single issuer  (other than the U.S.  government  and its
agencies) and generally did not permit  purchasing fixed income securities rated
below "A."

     At December 31, 1999, based on amortized cost,  approximately  98.8% of the
Company's  total fixed income  investment  portfolio  was invested in securities
rated "A" or better,  with 64.6%  which  were rated  "AAA" and 26.2%  which were
rated "AA," in each case by at least one nationally recognized securities rating
organization.

     The  Company's  investment  policies and  strategies  are subject to change
depending upon  regulatory,  economic and market  conditions and the existing or
anticipated  financial condition and operating  requirements,  including the tax
position, of the Company.


     Investment Operations

     At December 31, 1999, the consolidated book value (which is equal to market
value) of the Company's  investment portfolio was approximately $2.8 billion. At
December 31, 1999, municipal  securities  represented 77.0% of the book value of
the total investment  portfolio.  Securities due within one year,  within one to
five years,  within five to ten years,  and after ten years,  represented  4.2%,
16.7%, 31.8% and 47.3%,  respectively,  of the total book value of the Company's
investment in debt securities.  The Company's net pre-tax  investment income was
$153.1 million for the year ended December 31, 1999,  representing  an after-tax
yield of 4.9% for the year which was comparable to 1998.

     For further information concerning investment operations, see Note 4 to the
consolidated financial statements of the Company, included in Exhibit 13 to this
Annual Report on Form 10-K.

F. Regulation

     Direct Regulation

     The Company and its insurance subsidiaries,  including MGIC, are subject to
regulation,  principally for the protection of  policyholders,  by the insurance
departments of the various states in which each is licensed to do business.  The
nature and extent of such regulation  varies,  but generally depends on statutes
which  delegate  regulatory,  supervisory  and  administrative  powers  to state
insurance commissioners.

     In general,  such regulation  relates,  among other things,  to licenses to
transact  business;  policy forms;  premium  rates;  annual and other reports on
financial condition; the basis upon which assets and liabilities must be stated;
requirements  regarding  contingency  reserves equal to 50% of premiums  earned;
minimum   capital  levels  and  adequacy   ratios;   reinsurance   requirements;
limitations  on the  types of  investment  instruments  which  may be held in an
investment  portfolio;  the size of risks and limits on coverage  of  individual
risks which may be insured; deposits of securities; limits


                                      -23-

<PAGE>

on  dividends   payable;   and  claims  handling.   Most  states  also  regulate
transactions  between  insurance  companies and their parents or affiliates  and
have  restrictions on transactions  that have the effect of inducing  lenders to
place business with the insurer. For a discussion of a February 1, 1999 circular
letter from the NYID and a January 31, 2000 letter from the Illinois  Department
of Insurance,  see "The MGIC Book-Types of Product-Pool Insurance" and "-Captive
Mortgage  Reinsurance."  For a description of limits on dividends  payable,  see
Note 11 to the  consolidated  financial  statements of the Company,  included in
Exhibit 13 to this Annual Report on Form 10-K.

     Mortgage  insurance  premium rates are also subject to state  regulation to
protect  policyholders  against the adverse effects of excessive,  inadequate or
unfairly  discriminatory  rates and to encourage  competition  in the  insurance
marketplace.  Any increase in premium rates must be justified,  generally on the
basis of the insurer's loss experience,  expenses and future trend analysis. The
general  mortgage default  experience may also be considered.  Premium rates are
subject to review and challenge by state regulators.

     A number of states  generally  limit the amount of insurance risk which may
be  written  by a  private  mortgage  insurer  to 25 times the  insurer's  total
policyholders' reserves, commonly known as the "risk-to-capital" requirement.

     MGIC is required to  contribute  to a  contingency  loss  reserve an amount
equal to 50% of earned  premiums.  Such amounts cannot be withdrawn for a period
of 10 years, except under certain circumstances.

     Mortgage  insurers  are  generally  single-line  companies,  restricted  to
writing residential mortgage insurance business only. This essentially prohibits
MGIC from using its capital  resources in support of other types of insurance or
non-insurance  business.  Although the Company, as an insurance holding company,
is prohibited from engaging in certain transactions with MGIC without submission
to and, in some instances,  prior approval of applicable insurance  departments,
the Company is not subject to insurance company  regulation on its non-insurance
businesses.

     As the most  significant  purchasers and sellers of  conventional  mortgage
loans and  beneficiaries of private mortgage  insurance,  Freddie Mac and Fannie
Mae impose  requirements on private mortgage insurers in order for such insurers
to be eligible to insure  loans sold to such  agencies.  These  requirements  of
Freddie Mac and Fannie Mae are  subject to change from time to time.  Currently,
MGIC is an approved  mortgage  insurer  for both  Freddie Mac and Fannie Mae. In
addition,  to the extent  Fannie Mae or Freddie  Mac  assumes  default  risk for
itself  that  would  otherwise  be  insured,   changes  current   guarantee  fee
arrangements (including as a result of primary mortgage insurance coverage being
restructured  as  described  under  "The MGIC  Book--Types  of  Product--Primary
Insurance"),  allows  alternative  credit  enhancement,  alters  or  liberalizes
underwriting  guidelines  on  low  down  payment  mortgages  they  purchase,  or
otherwise  changes its  business  practices  or  processes  with respect to such
mortgages, private mortgage insurers may be affected.


                                      -24-

<PAGE>

     Fannie Mae has issued primary mortgage  insurance master policy  guidelines
applicable to MGIC and all other Fannie Mae-approved  private mortgage insurers,
establishing certain minimum terms of coverage necessary in order for an insurer
to be  eligible to insure  loans  purchased  by Fannie Mae.  The terms of MGIC's
Master Policy comply with these guidelines.

     MGIC's   claims-paying   ability  is  rated  "AA+"  by  Standard  &  Poor's
Corporation  and "Aa2" by  Moody's  Investors  Service,  Inc.  Maintenance  of a
claims-paying  ability  rating of at least  AA-/Aa3  is  critical  to a mortgage
insurer's ability to continue to write new business. In assigning  claims-paying
ability  ratings,  rating  agencies  review  a  mortgage  insurer's  competitive
position and business, management,  corporate strategy, historical and projected
operating and underwriting performance, adequacy of capital to withstand extreme
loss scenarios  under  assumptions  determined by the rating agency,  as well as
other factors.  The rating agency issuing the  claims-paying  ability rating can
withdraw or change its rating at any time.


     Indirect Regulation

     The Company and MGIC are also indirectly,  but  significantly,  impacted by
regulations  affecting  purchasers  of mortgage  loans,  such as Freddie Mac and
Fannie Mae, and regulations affecting governmental insurers, such as the FHA and
VA, and lenders. Private mortgage insurers, including MGIC, are highly dependent
upon federal  housing  legislation  and other laws and regulations to the extent
they affect the demand for private  mortgage  insurance  and the housing  market
generally.  From time to time,  those laws and regulations  have been amended to
affect  competition  from  government  agencies.  See "The MGIC Book - Sales and
Marketing and Competition -  Competition."  Proposals are discussed from time to
time by Congress  and certain  federal  agencies to reform or modify the FHA and
the  Government  National  Mortgage  Association,  which  securitizes  mortgages
insured by the FHA.

     Subject to certain exceptions,  in general, RESPA prohibits any person from
giving  or  receiving  any  "thing  of  value"   pursuant  to  an  agreement  or
understanding  to refer  settlement  services.  MGIC is a defendant in the RESPA
Litigation. See "Item 3--Legal Proceedings."

     The OTS,  the OCC,  the Federal  Reserve  Board,  and the  Federal  Deposit
Insurance  Corporation have uniform guidelines on real estate lending by insured
lending  institutions  under their  supervision.  The guidelines  specify that a
residential  mortgage loan  originated with an LTV of 90% or greater should have
appropriate  credit  enhancement  in the form of mortgage  insurance  or readily
marketable collateral,  although no depth of coverage percentage is specified in
the guidelines.

     Lenders are subject to various laws, including the Home Mortgage Disclosure
Act, the Community Reinvestment Act and the Fair Housing Act, and Fannie Mae and
Freddie Mac are subject to various laws,  including  laws relating to government
sponsored  enterprises,  which may impose  obligations or create  incentives for
increased lending to low and moderate income persons, or in targeted areas.


                                      -25-

<PAGE>

     There can be no assurance that other federal laws and regulations affecting
such  institutions  and entities  will not change,  or that new  legislation  or
regulations  (including  legislation or regulation  that expands the permissible
insurance  activities  of affiliates  of  depositary  institutions)  will not be
adopted which will adversely affect the private mortgage insurance industry.


G. Employees

     At December 31, 1999, the Company had 1,114 full- and part-time  employees,
of whom approximately 60% were assigned to its Milwaukee headquarters and 40% to
its field  offices.  The  number  of  employees  given  above  does not  include
"on-call"  employees.  The number of "on-call" employees can vary substantially,
primarily as a result of changes in demand for contract underwriting services.


I
tem 2. Properties.
------------------

     At December 31, 1999,  the Company  leased  office space in various  cities
throughout  the United  States under leases  expiring  between 2000 and 2006 and
which required annual rentals of $2.6 million in 1999.

     The   Company   owns   its   headquarters   facility   and  an   additional
office/warehouse  facility, both located in Milwaukee,  Wisconsin, which contain
an aggregate of approximately 310,000 square feet of space.


Item 3.  Legal Proceedings.
--------------------------

     The Company is involved in litigation  in the ordinary  course of business.
No pending  litigation  is  expected  to have a material  adverse  affect on the
financial position of the Company.

     In  addition,  MGIC is a  defendant  in Lambert v.  MGIC.  This  action was
commenced  on  December  17,  1999 with the  filing of a  complaint  in  Federal
District Court for the Southern  District of Georgia seeking class action status
on  behalf of a  nationwide  class of home  mortgage  borrowers.  The  complaint
alleges that MGIC violated the Real Estate  Settlement  Procedures Act ("RESPA")
by providing  agency pool  insurance and entering into other  transactions  with
lenders (including captive mortgage reinsurance and contract  underwriting) that
were not properly priced, in return for the referral of mortgage insurance.  The
complaint  seeks  damages of three  times the amount of the  mortgage  insurance
premiums  that have been paid and that will be paid at the time of judgment  for
the mortgage insurance that is found to be involved in a violation of RESPA. The
complaint  also  seeks  injunctive  relief,   including  prohibiting  MGIC  from
receiving future premium payments. In February 2000, MGIC answered the complaint
and denied  liability.  There can be no  assurance,  however,  that the ultimate
outcome of this litigation will not materially  affect the Company.  Three other
mortgage insurers are also defendants in equivalent  lawsuits pending in Federal
District Court for the Southern District of Georgia.


                                      -26-

<PAGE>


Item 4. Submission of Matters to a Vote of Security Holders.
-----------------------------------------------------------

     None

                               Executive Officers

     Certain  information with respect to the Company's executive officers as of
March 1, 2000 is set forth below:

Name and Age                                Title
-------------                               -----

Curt S. Culver, 47.............  President and Chief  Executive  Officer of the
                                 Company and MGIC; Director of the Company and
                                 MGIC

J. Michael Lauer, 55...........  Executive  Vice President and Chief  Financial
                                 Officer of the Company and MGIC

James S. MacLeod, 52...........  Executive Vice President--Field Operations of
                                 MGIC

Lawrence J. Pierzchalski, 47...  Executive Vice President--Risk Management of 
                                 MGIC

Gordon H. Steinbach, 54........  Executive Vice President--Credit Policy of
                                 MGIC

Lou T. Zellner, 49.............  Executive  Vice  President--Corporate  
                                 Development  of  MGIC

Jeffrey H. Lane, 50............  Senior Vice  President,  General  Counsel and 
                                 Secretary of the Company and MGIC


     Mr. Culver has served as President of the Company since January 1999 and as
Chief Executive  Officer since January 2000. He has been President of MGIC since
May 1996 and was Chief  Operating  Officer of MGIC from May 1996 until he became
Chief Executive Officer in January 1999. Mr. Culver has been a senior officer of
MGIC since 1988 having  responsibility  at various  times during his career with
MGIC for field operations,  marketing and corporate development. From March 1985
to  1988,  he held  various  management  positions  with  MGIC in the  areas  of
marketing and sales.

     Mr.  Lauer has  served as  Executive  Vice  President  and Chief  Financial
Officer of the Company and MGIC since March 1989.


                                      -27-

<PAGE>

     Mr. MacLeod has served as Executive Vice President-Field Operations of MGIC
since January 1998 and was Senior Vice  President-Field  Operations of MGIC from
May 1996 to January 1998.  Mr.  MacLeod has been a senior  officer of MGIC since
1987  having  responsibility  at various  times  during his career with MGIC for
sales,  business  development  and  marketing.  From March 1985 to 1987, he held
various  management  positions with MGIC in the areas of  underwriting  and risk
management .

     Mr. Pierzchalski has served as Executive Vice President-Risk  Management of
MGIC since May 1996 and prior thereto as Senior Vice  President-Risk  Management
or Vice  President-Risk  Management of MGIC from April 1990.  From March 1985 to
April  1990,  he held  various  management  positions  with MGIC in the areas of
market research, corporate planning and risk management.

     Mr. Steinbach has served as Executive Vice President-Credit  Policy of MGIC
since October 1996. He served as Executive Vice President-Affordable Housing and
Claims of MGIC from July 1992 to  October  1996 and prior  thereto  was a senior
officer of MGIC since March 1985 having  responsibility  at various times during
his career with MGIC for risk management and underwriting.

     Mrs. Zellner has served as Executive Vice  President-Corporate  Development
of MGIC since  January 1999.  Prior  thereto,  she was a senior  officer of MGIC
since 1986 having  responsibility  at various  times during her career with MGIC
for corporate  development,  non-insurance  operations,  claims and reinsurance.
From 1983-1986, Mrs. Zellner was Wisconsin Deputy Commissioner of Insurance.

     Mr. Lane has served as Senior Vice President, General Counsel and Secretary
of the Company and MGIC since August 1996. For more than five years prior to his
joining  the  Company,  Mr.  Lane was a partner of Foley &  Lardner,  a law firm
headquartered in Milwaukee, Wisconsin.



                                      -28-

<PAGE>


                                     PART II
                                     -------


Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters.
------   ---------------------------------------------------------------------

          The  information  set forth in the second to last paragraph  under the
          caption "Management's  Discussion and Analysis - Liquidity and Capital
          Resources"  and under the caption  "MGIC  Stock" in Exhibit 13 to this
          Annual Report on Form 10-K is incorporated herein by reference.


Item 6.  Selected Financial Data.
------   -----------------------

          The information  set forth in the tables under the caption  "Five-Year
          Summary of Financial  Information" in Exhibit 13 to this Annual Report
          on Form 10-K is hereby  incorporated  by  reference  in answer to this
          Item.


Item 7.  Management's Discussion and Analysis of Financial Condition and
------   ---------------------------------------------------------------
         Results of Operations.
         ---------------------

          The information set forth under the caption  "Management's  Discussion
          and  Analysis"  in  Exhibit 13 to this  Annual  Report on Form 10-K is
          hereby incorporated by reference in answer to this Item.


Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
-------  ----------------------------------------------------------

          The  information  set forth in the third to last  paragraph  under the
          caption   "Management's   Discussion   and   Analysis   -  Results  of
          Consolidated  Operations  - 1999  Compared  with  1998," in the second
          paragraph  under the caption  "Management's  Discussion  and  Analysis
          Financial  Condition"  and in Note 5 of the Notes to the  consolidated
          financial statements,  all in Exhibit 13 to this Annual Report on Form
          10-K, is hereby incorporated by reference in answer to this Item.


Item 8.  Financial Statements and Supplementary Data.
------   -------------------------------------------

          The consolidated statements of operations, of shareholders' equity and
          of cash  flows for each of the years in the  three-year  period  ended
          December 31, 1999, and the related  consolidated  balance sheet of the
          Company as of December  31, 1999 and 1998,  together  with the related
          notes thereto and the report of  independent  accountants,  as well as

          the unaudited quarterly financial data, all set forth in Exhibit 13 to
          this Annual Report on Form 10-K, are hereby  incorporated by reference
          in answer to this Item.


                                      -29-

<PAGE>


Item 9.  Changes in and Disagreements with Accountants on Accounting and
------   ---------------------------------------------------------------
         Financial Disclosure.
         --------------------

          None.




                                      -30-

<PAGE>


                                    PART III
                                    --------



Item 10. Directors and Executive Officers of the Registrant.
-------  --------------------------------------------------

          The  information on the Directors of the Registrant is included in the
          Company's Proxy Statement for the 2000 Annual Meeting of Shareholders,
          and is  hereby  incorporated  by  reference.  The  information  on the
          Executive  Officers of the Registrant  appears at the end of Part I of
          this Form 10-K.


Item 11. Executive Compensation.
-------  ----------------------

          This  information is included in the Company's Proxy Statement for the
          2000 Annual Meeting of Shareholders (other than information covered by
          Instruction  (9) to Item 402 (a) of Regulation  S-K of the  Securities
          and Exchange Commission), and is hereby incorporated by reference.


Item 12. Security Ownership of Certain Beneficial Owners and Management.
-------  --------------------------------------------------------------

          This  information is included in the Company's Proxy Statement for the
          2000 Annual Meeting of  Shareholders,  and is hereby  incorporated  by
          reference.


Item 13. Certain Relationships and Related Transactions.
-------  ----------------------------------------------

          This  information is included in the Company's Proxy Statement for the
          2000 Annual Meeting of  Shareholders,  and is hereby  incorporated  by
          reference.



                                      -31-

<PAGE>


                                     PART IV
                                     -------



Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
-------  ----------------------------------------------------------------

          (a)  1.   Financial statements. The financial statements listed in the
                    accompanying Index to Consolidated  Financial Statements and
                    Financial Statement Schedules are filed as part of this Form
                    10-K.

               2.   Financial  statement  schedules.   The  financial  statement
                    schedules listed in the  accompanying  Index to Consolidated
                    Financial  Statements and Financial  Statement Schedules are
                    filed as part of this Form 10-K.

               3.   Exhibits. The accompanying Index to Exhibits is incorporated
                    by  reference in answer to this portion of this Item and the
                    Exhibits listed in such Index are filed as part of this Form
                    10-K.

          (b)  Reports on Form 8-K

               No  reports  on Form 8-K were  filed  during  the  quarter  ended
               December 31, 1999.



                                      -32-

<PAGE>

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
                        AND FINANCIAL STATEMENT SCHEDULES
                        ---------------------------------
                              [Item 14(a) 1 and 2]


Consolidated  Financial  Statements  (all contained in Exhibit 13 to this Annual
Report on Form 10-K)

Consolidated  statement of operations  for each of the three years in the period
ended December 31, 1999

Consolidated balance sheet at December 31, 1999 and 1998

Consolidated  statement of  shareholders'  equity for each of the three years in
the period ended December 31, 1999

Consolidated  statement  of cash flows for each of the three years in the period
ended December 31, 1999

Notes to consolidated financial statements

R
eport of independent accountants



Financial Statement Schedules (all contained immediately following the signature
page to this Annual Report on Form 10-K)

Report of independent accountants on financial statement schedules

Schedules at and for the specified years in the three-year period ended
December 31, 1999:

     Schedule I - Summary of  investments  , other than  investments  in related
                  parties

     Schedule II - Condensed financial information of Registrant

     Schedule IV - Reinsurance

All other schedules are omitted since the required information is not present or
is not present in amounts sufficient to require submission of the schedules,  or
because the  information  required is  included  in the  consolidated  financial
statements and notes thereto.



                                      -33-

<PAGE>


                                   SIGNATURES
                                   ----------

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized, on March 28, 2000.

MGIC INVESTMENT CORPORATION


By   /s/ Curt S. Culver                    
     Curt S. Culver
     President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below as of the date set forth above by the following persons on
behalf of the registrant and in the capacities indicated.

Name and Title
--------------

/s/ Curt S. Culver                      /s/ David S. Engelman
---------------------------------       -------------------------------------
Curt S. Culver                          David S. Engelman, Director
President, Chief Executive Officer
 and Director
                                        /s/ James D. Ericson
                                        -------------------------------------
                                        James D. Ericson, Director

/s/ J. Michael Lauer                    /s/ Daniel Gross
---------------------------------       -------------------------------------
J. Michael Lauer                        Daniel Gross, Director
Executive Vice President and
     Chief Financial Officer            /s/ Kenneth M. Jastrow, II
(Principal Financial Officer)           -------------------------------------
                                        Kenneth M. Jastrow, II, Director

/s/ Patrick Sinks                       /s/ Daniel P. Kearney
---------------------------------       -------------------------------------
Patrick Sinks                           Daniel P. Kearney, Director
Vice President, Controller and
     Chief Accounting Officer           /s/ Sheldon B. Lubar
(Principal Accounting Officer)          -------------------------------------
                                        Sheldon B. Lubar, Director

/s/ James A. Abbott                     /s/ William A. McIntosh
---------------------------------       -------------------------------------
James A. Abbott, Director               William A. McIntosh, Director

/s/ Mary K. Bush                        /s/ Leslie M. Muma
---------------------------------       -------------------------------------
Mary K. Bush, Director                  Leslie M. Muma, Director

/s/ Karl E. Case                        /s/ Edward J. Zore
---------------------------------       -------------------------------------
Karl E. Case, Director                  Edward J. Zore, Director


                                      -34-

<PAGE>


                     Report of Independent Accountants on
                          Financial Statement Schedules

To the Board of Directors
of MGIC Investment Corporation:

Our audits of the consolidated  financial  statements  referred to in our report
dated January 12, 2000  appearing in the 1999 Annual Report to  Shareholders  of
MGIC Investment  Corporation (which report and consolidated financial statements
are  incorporated by reference in this Annual Report on Form 10-K) also included
an audit of the financial  statement  schedules  listed in Item 14(a)(2) of this
Form 10-K. In our opinion,  these financial  statement schedules present fairly,
in all  material  respects,  the  information  set  forth  therein  when read in
conjunction with the related consolidated financial statements.



PricewaterhouseCoopers LLP

Milwaukee, Wisconsin
January 12, 2000




                                      -35-

<PAGE>

<TABLE>
                                               MGIC INVESTMENT CORPORATION

                                          SCHEDULE I - SUMMARY OF INVESTMENTS -
                                        OTHER THAN INVESTMENTS IN RELATED PARTIES

                                                    December 31, 1999
<CAPTION>
                                                                                                          Amount at
                                                               Amortized              Market           which shown in
             Type of Investment                                   Cost                 Value         the balance sheet
             ------------------                               -------------       --------------    -------------------
                                                                                (In thousands of dollars)
<S>                                                           <C>                  <C>                   <C>         
Fixed maturities:
  Bonds:
    United States Government and government
      agencies and authorities                                $    163,663         $    154,806          $    154,806
    States, municipalities and political subdivisions            2,195,031            2,148,904             2,148,904
    Foreign governments                                             13,933               13,973                13,973
    Public utilities                                                55,703               54,373                54,373
    All other corporate bonds                                      304,121              294,506               294,506
                                                              -------------        -------------         -------------
      Total fixed maturities                                     2,732,451            2,666,562             2,666,562

Equity securities:
  Common stocks:
    Banks, trust and insurance companies                             1,333                4,556                 4,556
    Industrial, miscellaneous and all other                         10,870               10,870                10,870
                                                              -------------        -------------         -------------
      Total equity securities                                       12,203               15,426                15,426
                                                              -------------        -------------         -------------

Short-term investments                                             107,746              107,746               107,746
                                                              -------------        -------------         -------------
      Total investments                                       $  2,852,400         $  2,789,734          $  2,789,734
                                                              =============        =============         =============

</TABLE>



                                        -36-

<PAGE>

<TABLE>
                                           MGIC INVESTMENT CORPORATION

                               SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT

                                                 CONDENSED BALANCE SHEET
                                                   PARENT COMPANY ONLY
                                               December 31, 1999 and 1998
<CAPTION>

                                                                                    1999                1998
                                                                                    ----                ----
                                                                                    (In thousands of dollars)
ASSETS
------
<S>                                                                             <C>                 <C>           
Investment portfolio, at market value:
   Fixed maturities                                                             $       12,729      $        1,056
   Short-term investments                                                                1,663              21,983
                                                                                ---------------     ---------------
       Total investment portfolio                                                       14,392              23,039

Cash                                                                                         -                   5
Investment in subsidiaries, at equity in net assets                                  2,183,599           2,072,944
Income taxes receivable - affiliates                                                     4,518                 259
Accrued investment income                                                                  209                  27
Other assets                                                                               958                 848
                                                                                ---------------     ---------------
        Total assets                                                            $    2,203,676      $    2,097,122
                                                                                ===============     ===============

LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Liabilities:
   Notes payable                                                                $      425,000      $      442,000
   Accounts payable - affiliates                                                           682              11,009
   Other liabilities                                                                     2,005               3,522
                                                                                ---------------     ---------------
        Total liabilities                                                              427,687             456,531
                                                                                ---------------     ---------------

Shareholders' equity (note B):
   Common stock, $1 par value, shares authorized
       300,000,000; shares issued 121,110,800;
       outstanding 1999 - 105,798,034; 1998 - 109,003,032                              121,111             121,111
   Paid-in surplus                                                                     211,593             217,022
   Treasury stock (shares at cost, 1999 - 15,312,766;
       1998 - 12,107,768)                                                             (665,707)           (482,465)
   Accumulated other comprehensive income - unrealized (depreciation)
       appreciation in investment portfolio of subsidiaries, net of tax                (40,735)             94,572
   Retained earnings                                                                 2,149,727           1,690,351
                                                                                ---------------     ---------------
       Total shareholders' equity                                                    1,775,989           1,640,591
                                                                                ---------------     ---------------
       Total liabilities and shareholders' equity                               $    2,203,676      $    2,097,122
                                                                                ===============     ===============


                 See accompanying supplementary notes to Parent Company condensed financial statements.
</TABLE>



                                        -37-

<PAGE>

<TABLE>
                                               MGIC INVESTMENT CORPORATION

                               SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT

                                            CONDENSED STATEMENT OF OPERATIONS
                                                   PARENT COMPANY ONLY
                                      Years Ended December 31, 1999, 1998 and 1997
<CAPTION>

                                                                       1999              1998             1997
                                                                       ----              ----             ----
                                                                             (In thousands of dollars)
<S>                                                               <C>               <C>              <C>          
Revenue:
   Equity in undistributed net income of subsidiaries             $       313,292   $     368,242    $     304,434
   Dividends received from subsidiaries                                   169,650          28,394           22,143
   Investment income, net                                                   1,362           1,117            1,576
   Realized investment (losses) gains, net                                   (216)            334              233
   Other income                                                                 -               9                -
                                                                  ----------------  --------------   --------------
       Total revenue                                                      484,088         398,096          328,386
                                                                  ----------------  --------------   --------------

Expenses:
   Operating expenses                                                         312             180              374
   Interest expense                                                        20,402          18,624            6,080
                                                                  ----------------  --------------   --------------
       Total expenses                                                      20,714          18,804            6,454
                                                                  ----------------  --------------   --------------
Income before tax                                                         463,374         379,292          321,932
Credit for income tax                                                      (6,827)         (6,173)          (1,818)
                                                                  ----------------  --------------   --------------
Net income                                                                470,201         385,465          323,750
                                                                  ----------------  --------------   --------------
Other comprehensive income - unrealized
   investment (losses) gains, net                                        (135,307)         10,587           43,300
                                                                  ----------------  --------------   --------------
Comprehensive income                                              $       334,894   $     396,052    $     367,050
                                                                  ================  ==============   ==============



See  accompanying  supplementary  notes to Parent  Company  condensed  financial statements.
</TABLE>


                                        -38-

<PAGE>

<TABLE>
                                               MGIC INVESTMENT CORPORATION

                               SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT

                                            CONDENSED STATEMENT OF CASH FLOWS
                                                   PARENT COMPANY ONLY
                                      Years Ended December 31, 1999, 1998 and 1997
<CAPTION>

                                                                         1999              1998              1997
                                                                         ----              ----              ----
                                                                                 (in thousands of dollars)
Cash flows from operating activities:
<S>                                                                 <C>               <C>               <C>            
   Net income                                                       $       470,201   $       385,465   $       323,750
   Adjustments to reconcile net income to net cash
       provided by operating activities:
           Equity in undistributed net income of subsidiaries              (313,292)         (368,242)         (304,434)
           (Increase) decrease in income taxes receivable                    (4,259)           18,653            (6,824)
           (Increase) decrease in accrued investment income                    (182)              197                36
           (Decrease) increase in accounts payable - affiliates             (10,327)            7,952            (9,299)
           (Decrease) increase in other liabilities                          (1,517)              939             2,583
           (Increase) decrease in other assets                                 (110)             (839)                6
           Other                                                              8,411             8,681             5,679
                                                                    ----------------  ----------------  ----------------
Net cash provided by operating activities                                   148,925            52,806            11,497
                                                                    ----------------  ----------------  ----------------

Cash flows from investing activities:
   Transactions with subsidiaries                                            67,801                 -            (5,000)
   Purchase of fixed maturities                                             (14,448)             (500)           (8,650)
   Sale of fixed maturities                                                   1,843            10,901            17,756
                                                                    ----------------  ----------------  ----------------
Net cash provided by investing activities                                    55,196            10,401             4,106
                                                                    ----------------  ----------------  ----------------

Cash flows from financing activities:
   Dividends paid to shareholders                                           (10,825)          (11,243)          (11,029)
   Net (decrease) increase in notes payable                                 (17,000)          204,500           237,500
   Reissuance of treasury stock                                               3,912             6,953             7,073
   Repurchase of common stock                                              (200,533)         (246,840)         (248,426)
                                                                    ----------------  ----------------  ----------------
Net cash used in financing activities                                      (224,446)          (46,630)          (14,882)
                                                                    ----------------  ----------------  ----------------
Net (decrease) increase in cash and short-term investments                  (20,325)           16,577               721
Cash and short-term investments at beginning of year                         21,988             5,411             4,690
                                                                    ----------------  ----------------  ----------------
Cash and short-term investments at end of year                                1,663            21,988             5,411
                                                                    ================  ================  ================



See accompanying notes to Parent Company condensed financial statements.
</TABLE>



                                        -39-

<PAGE>

                           MGIC INVESTMENT CORPORATION

           SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT

                               PARENT COMPANY ONLY

                               SUPPLEMENTARY NOTES


Note A

      The accompanying  Parent Company  financial  statements  should be read in
conjunction with the Consolidated Financial Statements and Notes to Consolidated
Financial  Statements  appearing  on pages 10 through 23 of the MGIC  Investment
Corporation 1999 Annual Report to Shareholders.

Note B

      The Company's insurance  subsidiaries are subject to statutory regulations
as to  maintenance  of  policyholders'  surplus  and payment of  dividends.  The
maximum  amount of  dividends  that the  insurance  subsidiaries  may pay in any
twelve-month   period  without   regulatory   approval  by  the  Office  of  the
Commissioner  of  Insurance  of the State of Wisconsin is the lesser of adjusted
statutory  net  income  or 10% of  statutory  policyholders'  surplus  as of the
preceding  calendar year end. Adjusted  statutory net income is defined for this
purpose to be the greater of statutory  net income,  net of realized  investment
gains, for the calendar year preceding the date of the dividend or statutory net
income, net of realized investment gains, for the three calendar years preceding
the date of the  dividend  less  dividends  paid  within  the  first  two of the
preceding three calendar  years. As a result of a $150 million special  dividend
paid  by  Mortgage  Guaranty  Insurance  Corporation  ("MGIC"),   the  Company's
principle insurance  subsidiary,  MGIC is required to obtain regulatory approval
prior to the payment of dividends in 2000. The other  insurance  subsidiaries of
the Company can pay $6.3 million of  dividends  in 2000 without such  regulatory
approval.

      Certain of the Company's non-insurance subsidiaries also have requirements
as to  maintenance  of net  worth.  These  restrictions  could  also  affect the
Company's ability to pay dividends.

     In 1999, 1998 and 1997, the Company paid dividends of $10.8 million,  $11.2
million and $11.0 million,  respectively  or $.10 per share in 1999 and 1998 and
$.095 per share in 1997.


                                      -40-

<PAGE>

<TABLE>
                                               MGIC INVESTMENT CORPORATION

                                                SCHEDULE IV - REINSURANCE

                                           MORTGAGE INSURANCE PREMIUMS EARNED
                                      Years Ended December 31, 1999, 1998 and 1997
<CAPTION>

                                                                               Assumed                           Percentage
                                                            Ceded to           From                              of Amount
                                           Gross             Other             Other              Net           Assumed to
                                           Amount           Companies         Companies          Amount              Net
                                       --------------    ---------------    -------------     --------------    ------------
                                                                     (In thousands of dollars)
<S>                                    <C>               <C>                <C>               <C>                    <C> 
Year ended December 31,
           1999                        $     810,974     $       25,401     $      7,008      $     792,581          0.9%
                                       ==============    ===============    ==============    ==============

           1998                        $     770,775     $       17,161     $      9,670      $     763,284          1.3%
                                       ==============    ===============    ==============    ==============

           1997                        $     712,069     $       15,990     $     12,665      $     708,744          1.8%
                                       ==============    ===============    ==============    ==============
</TABLE>




                                      -41-

<PAGE>


                                INDEX TO EXHIBITS

                                  [Item 14(a)3]

Exhibit
Numbers        Description of Exhibits
-------        -----------------------

3.1            Articles of Incorporation, as amended.(1)

3.2            Amended and Restated Bylaws.

4.1            Article 6 of the  Articles of  Incorporation  (included
               within Exhibit 3.1)

4.2            Amended and Restated Bylaws (included as Exhibit 3.2)

               [The Company is a party to separate  Credit  Agreements
               with different groups of financial institutions.  These
               Credit  Agreements are not being filed pursuant to Reg.
               S-K Item  602(b)  (4) (iii)  (A).  The  Company  hereby
               agrees to furnish a copy of such Credit  Agreements  to
               the Commission upon its request.]

4.3            Rights  Agreement,  dated as of July 22, 1999,  between
               MGIC Investment Corporation and Firstar Bank Milwaukee,
               N.A.,  which  includes as Exhibit A thereto the Form of
               Right  Certificate and as Exhibit B thereto the Summary
               of Rights to Purchase Common shares(2)

10.1           Common Stock Purchase Agreement between the Company and
               The Northwestern Mutual Life Insurance Company ("NML"),
               dated November 30, 1984(3)

10.2           Tax  Agreement  between  NML,  the  Company and certain
               subsidiaries  of the  Company,  dated  January 1, 1986,
               including  amendment  thereto  dated  as of  August  2,
               1991(4)

10.3           Tax Sharing  Agreement  between the  Company,  MGIC and
               certain subsidiaries of MGIC, dated January 22, 1986(5)

10.4           Amendment  to Tax  Agreement,  dated as of  August  14,
               1991,  by  and  between  NML,  the  Company,   and  its
               subsidiaries(6)


                                 -42-

<PAGE>
Exhibit
Numbers        Description of Exhibits
-------        -----------------------

10.5           Amended and Restated  Investment Advisory and Servicing
               Agreement  between the Company and Northwestern  Mutual
               Investment Services,  Inc. ("NMIS"),  dated December 5,
               1997.(7)  [Northwestern Mutual Investment Services, LLC
               has succeeded NMIS as a party to such Agreement.]

10.6           MGIC Investment  Corporation  Amended and Restated 1989
               Stock   Option   Plan   (including   forms  of   option
               agreement).(8)

10.7           MGIC Investment Corporation 1991 Stock Incentive Plan.

10.8           Employment  Agreement,  dated as of  January  1,  2000,
               between  Mortgage  Guaranty  Insurance  Corporation and
               William H. Lacy.

10.9           Two Forms of Stock  Option  Agreement  under 1991 Stock
               Incentive Plan.

10.10          Two Forms of  Restricted  Stock Award  Agreement  under
               1991 Stock Incentive Plan.

10.11          Executive Bonus Plan

10.12          Supplemental Executive Retirement Plan (9)

10.13          MGIC Investment  Corporation Deferred Compensation Plan
               for Non-Employee Directors.(10)

10.14          MGIC Investment  Corporation 1993 Restricted Stock Plan
               for Non-Employee Directors.(11)

10.15          Two  Forms of Award  Agreement  under  MGIC  Investment
               Corporation 1993 Restricted Stock Plan for Non-Employee
               Directors.(12)

10.16          Form of MGIC Mortgage Guaranty Master Policy, in effect
               generally for insurance  commitments  issued  beginning
               March 1,  1995,  including  the Master  Policy  Program
               Endorsement relating to delegated underwriting.(13)

10.17          Form  of  Key   Executive   Employment   and  Severance
               Agreement

11             Statement re: computation of per share earnings


                                 -43-

<PAGE>
Exhibit
Numbers        Description of Exhibits
-------        -----------------------

13             Information  from the 1999 Annual Report of the Company
               to  Shareholders  which is incorporated by reference in
               this Annual Report on Form 10-K.

21             List of Subsidiaries

23             Consent of PricewaterhouseCoopers LLP

27             Financial Data Schedule

      Supplementary  List of the  above  Exhibits  which  relate  to  management
contracts or compensatory plans or arrangements.

10.6           MGIC Investment  Corporation  Amended and Restated 1989
               Stock   Option   Plan   (including   forms  of   option
               agreement).

10.7           MGIC Investment Corporation 1991 Stock Incentive Plan.

10.8           Employment  Agreement,  dated as of  January  1,  2000,
               between  Mortgage  Guaranty  Insurance  Corporation and
               William H. Lacy.

10.9           Two Forms of Stock  Option  Agreement  under 1991 Stock
               Incentive Plan.

10.10          Two Forms of  Restricted  Stock Award  Agreement  under
               1991 Stock Incentive Plan.

10.11          Executive Bonus Plan

10.12          Supplemental Executive Retirement Plan.

10.13          MGIC Investment  Corporation Deferred Compensation Plan
               for Non-Employee Directors.

10.14          MGIC Investment  Corporation 1993 Restricted Stock Plan
               for Non-Employee Directors.

10.15          Two  Forms of Award  Agreement  under  MGIC  Investment
               Corporation 1993 Restricted Stock Plan for Non-Employee
               Directors.

10.17          Form  of  Key   Executive   Employment   and  Severance
               Agreement


                                 -44-

<PAGE>

          The following documents,  identified in the footnote references above,
are  incorporated  by  reference,  as  indicated,  to:  the  Company's  Form S-1
Registration  Statement (No.  33-41289),  which became  effective in August 1991
(the "1991 S-1");  the Company's Annual Reports on Form 10-K for the years ended
December  31, 1991,  1993,  1994,  1996,  or 1997 (the "1991 10-K," "1993 10-K,"
"1994  10-K,"  "1996  10-K," and "1997  10-K"  respectively);  to the  Company's
Quarterly Reports on Form 10-Q for the Quarters ended June 30, 1994 or 1998 (the
"June 30, 1994 10-Q" and "June 30, 1998 10-Q," respectively; or to the Company's
registration  Statement Form 8-A filed July 27, 1999 (the "8-A")). The documents
are further  identified  by  cross-reference  to the Exhibits in the  respective
documents where they were originally filed:

     (1)  Exhibit 3 to the June 30, 1998 10-Q.

     (2)  Exhibit 4.1 to the 8-A.

     (3)  Exhibit 10.1 to the 1991 S-1.

     (4)  The Tax  Agreement is Exhibit  10.8 to the 1991 S-1 and the  amendment
          thereto is Exhibit 10.21 to the 1991 S-1.

     (5)  Exhibit 10.9 to the 1991 S-1.

     (6)  Exhibit 10.10 to the 1991 10-K.

     (7)  Exhibit 10.5 to the 1997 10-K.

     (8)  Exhibit 10.16 to the 1996 S-1.

     (9)  Exhibit 10.16 to the 1996 10-K.

     (10) Exhibit 10.23 to the 1993 10-K.

     (11) Exhibit 10.24 to the 1993 10-K.

     (12) Exhibits 10.27 and 10.28 to the June 30, 1994 10-Q.

     (13) Exhibit 10.26 to the 1994 10-K.



                                      -45-






                                                                     EXHIBIT 3.2
                                                                     -----------

                           AMENDED AND RESTATED BYLAWS

                                       OF

                           MGIC INVESTMENT CORPORATION

                               ARTICLE I. OFFICES

          1.01.  Principal and Business  Offices.  The corporation may have such
principal  and other  business  offices,  either  within or without the State of
Wisconsin,  as the Board of  Directors  may  designate or as the business of the
corporation may require from time to time.

          1.02.  Registered  Office.  The registered  office of the  corporation
required by the Wisconsin Business Corporation Law to be maintained in the State
of Wisconsin may be, but need not be, identical with the principal office in the
State of Wisconsin, and the address of the registered office may be changed from
time to time by the Board of Directors or by the registered  agent. The business
office of the  registered  agent of the  corporation  shall be identical to such
registered office.

                            ARTICLE II. SHAREHOLDERS

          2.01. Annual Meeting. The annual meeting of the shareholders  ("Annual
Meeting")  shall be held on the  first  Monday  in May,  at such time or on such
other day as may be  designated  by  resolution  of the Board of  Directors.  In
fixing a  meeting  date for any  Annual  Meeting,  the  Board of  Directors  may
consider such factors as it deems relevant within the good faith exercise
 of its
business judgment.

          2.02.  Purposes  of  Annual  Meeting.  At  each  Annual  Meeting,  the
shareholders  shall  elect  the  number  of  directors  equal to the  number  of
directors in the class whose term expires at the time of such Annual Meeting and
transact such other  business as may properly come before the Annual  Meeting in
accordance with Section 2.14 of these Bylaws. If the election of directors shall
not be held on the date designated herein, or fixed as herein provided,  for any
Annual Meeting, or any adjournment  thereof,  the Board of Directors shall cause
the  election  to be held at a  special  meeting  of  shareholders  (a  "Special
Meeting") as soon thereafter as is practicable.

          2.03. Special Meetings.

          (a) A Special Meeting,  unless  otherwise  prescribed by the Wisconsin
Business Corporation Law, may be called only by (i) the Board of Directors, (ii)
the Chairman of the Board (if a Chairman is elected) or (iii) the  President and
shall be called by the Chairman of the Board or the  President  upon the demand,
in accordance with this Section 2.03, of the holders


                                      -1-

<PAGE>

of record of shares  representing  at least 10% of all the votes  entitled to be
cast on any issue proposed to be considered at the Special Meeting.

          (b) In order  that the  corporation  may  determine  the  shareholders
entitled to demand a Special  Meeting,  the Board of Directors  may fix a record
date to determine the  shareholders  entitled to make such a demand (the "Demand
Record Date").  The Demand Record Date shall not precede the date upon which the
resolution  fixing the Demand  Record Date is adopted by the Board of  Directors
and  shall not be more than ten days  after the date upon  which the  resolution
fixing  the  Demand  Record  Date is  adopted  by the  Board of  Directors.  Any
shareholder  of record  seeking to have  shareholders  demand a Special  Meeting
shall,  by sending written notice to the Secretary of the corporation by hand or
by certified or registered mail, return receipt requested,  request the Board of
Directors to fix a Demand Record Date.  The Board of Directors  shall  promptly,
but in all events within ten days after the date on which a valid request to fix
a Demand  Record Date is received,  adopt a resolution  fixing the Demand Record
Date and shall make a public  announcement  of such Demand  Record  Date.  If no
Demand  Record  Date has been  fixed by the Board of  Directors  within ten days
after the date on which such  request is received by the  Secretary,  the Demand
Record Date shall be the 10th day after the first date on which a valid  written
request to set a Demand Record Date is received by the  Secretary.  To be valid,
such  written  request  shall set forth the  purpose or  purposes  for which the
Special  Meeting is to be held,  shall be signed by one or more  shareholders of
record (or their duly authorized proxies or other  representatives),  shall bear
the  date  of   signature   of  each  such   shareholder   (or  proxy  or  other
representative)  and shall set forth all information about each such shareholder
and about the beneficial owner or owners, if any, on whose behalf the request is
made that would be required to be set forth in a shareholder's  notice described
in paragraph (a) (ii) of Section 2.14 of these Bylaws.

          (c) In order for a  shareholder  or  shareholders  to demand a Special
Meeting,  a written  demand or demands  for a Special  Meeting by the holders of
record as of the Demand Record Date of shares  representing  at least 10% of all
the votes  entitled  to be cast on any issue  proposed to be  considered  at the
Special Meeting must be delivered to the corporation.  To be valid, each written
demand by a  shareholder  for a  Special  Meeting  shall set forth the  specific
purpose or purposes for which the Special  Meeting is to be held (which  purpose
or purposes shall be limited to the purpose or purposes set forth in the written
request to set a Demand  Record  Date  received by the  corporation  pursuant to
paragraph (b) of this Section 2.03),  shall be signed by one or more persons who
as of the  Demand  Record  Date  are  shareholders  of  record  (or  their  duly
authorized proxies or other  representatives),  shall bear the date of signature
of each such shareholder (or proxy or other representative), and shall set forth
the name  and  address,  as they  appear  in the  corporation's  books,  of each
shareholder  signing  such  demand  and the  class  and  number of shares of the
corporation which are owned of record and beneficially by each such shareholder,
shall be sent to the  Secretary  by hand or by  certified  or  registered  mail,
return receipt requested,  and shall be received by the Secretary within seventy
days after the Demand Record Date.


                                      -2-

<PAGE>

          (d) The  corporation  shall not be required to call a Special  Meeting
upon  shareholder  demand  unless,  in  addition  to the  documents  required by
paragraph (c) of this Section 2.03, the Secretary  receives a written  agreement
signed by each Soliciting Shareholder (as defined below), pursuant to which each
Soliciting Shareholder,  jointly and severally,  agrees to pay the corporation's
costs of holding the  Special  Meeting,  including  the costs of  preparing  and
mailing proxy materials for the corporation's own solicitation, provided that if
each of the resolutions introduced by any Soliciting Shareholder at such meeting
is  adopted,  and  each of the  individuals  nominated  by or on  behalf  of any
Soliciting  Shareholder  for  election as a director at such meeting is elected,
then the Soliciting  Shareholders  shall not be required to pay such costs.  For
purposes of this paragraph (d), the following  terms shall have the meanings set
forth below:

          (i)  "Affiliate"  of any Person  (as  defined  herein)  shall mean any
     Person  controlling,  controlled by or under common control with such first
     Person.

          (ii)  "Participant"  shall have the  meaning  assigned to such term in
     Rule 14a-11  promulgated  under the  Securities  Exchange  Act of 1934,  as
     amended (the "Exchange Act").

          (iii)  "Person"  shall  mean  any   individual,   firm,   corporation,
     partnership, joint venture, association, trust, unincorporated organization
     or other entity.

          (iv)  "Proxy"  shall have the  meaning  assigned  to such term in Rule
     14a-1 promulgated under the Exchange Act.

          (v)  "Solicitation"  shall have the  meaning  assigned to such term in
     Rule 14a-11 promulgated under the Exchange Act.

          (vi) "Soliciting  Shareholder" shall mean, with respect to any Special
     Meeting  demanded by a shareholder  or  shareholders,  any of the following
     Persons:

               (A) if the number of  shareholders  signing the demand or demands
          of meeting  delivered to the corporation  pursuant to paragraph (c) of
          this Section 2.03 is ten or fewer,  each shareholder  signing any such
          demand;

               (B) if the number of  shareholders  signing the demand or demands
          of meeting  delivered to the corporation  pursuant to paragraph (c) of
          this Section  2.03 is more than ten,  each Person who either (I) was a
          Participant in any  Solicitation  of such demand or demands or (II) at
          the time of the delivery to the corporation of the documents described
          in paragraph (c) of this Section 2.03 had engaged or intends to engage
          in any  Solicitation of Proxies for use at such Special Meeting (other
          than a Solicitation of Proxies on behalf of the corporation); or


                                      -3-

<PAGE>

               (C) any Affiliate of a Soliciting  Shareholder,  if a majority of
          the directors then in office determine,  reasonably and in good faith,
          that such  Affiliate  should be required  to sign the  written  notice
          described  in  paragraph  (c) of this  Section 2.03 and/or the written
          agreement  described  in this  paragraph  (d) in order to prevent  the
          purposes of this Section 2.03 from being evaded.

          (e) Except as provided in the following sentence,  any Special Meeting
shall be held at such  hour and day as may be  designated  by  whichever  of the
Board of Directors, the Chairman of the Board or the President shall have called
such meeting.  In the case of any Special  Meeting called by the Chairman of the
Board or the  President  upon the  demand of  shareholders  (a  "Demand  Special
Meeting"),  such meeting shall be held at such hour and day as may be designated
by the  Board of  Directors;  provided,  however,  that  the date of any  Demand
Special  Meeting  shall be not more than seventy  days after the Meeting  Record
Date (as defined in Section 2.06 hereof); and provided further that in the event
that the  directors  then in  office  fail to  designate  an hour and date for a
Demand Special Meeting within ten days after the date that valid written demands
for such meeting by the holders of record as of the Demand Record Date of shares
representing  at least 10% of all the votes  entitled  to be cast on each  issue
proposed  to  be  considered  at  the  Special  Meeting  are  delivered  to  the
corporation (the "Delivery Date"),  then such meeting shall be held at 2:00 P.M.
local time on the 100th day after the Delivery Date or, if such 100th day is not
a Business  Day (as defined  below),  on the first  preceding  Business  Day. In
fixing a meeting  date for any  Special  Meeting,  the Board of  Directors,  the
Chairman of the Board or the  President  may  consider  such factors as it or he
deems relevant  within the good faith exercise of its or his business  judgment,
including,  without  limitation,  the nature of the action proposed to be taken,
the facts and  circumstances  surrounding  any demand for such meeting,  and any
plan of the Board of  Directors to call an Annual  Meeting or a Special  Meeting
for the conduct of related business.

          (f) The  corporation  may engage  regionally or nationally  recognized
independent  inspectors of elections to act as an agent of the  corporation  for
the purpose of promptly  performing a ministerial  review of the validity of any
purported  written  demand or  demands  for a Special  Meeting  received  by the
Secretary.  For the purpose of permitting the inspectors to perform such review,
no purported  demand shall be deemed to have been  delivered to the  corporation
until the earlier of (i) five Business Days  following  receipt by the Secretary
of such  purported  demand  and (ii)  such  date as the  independent  inspectors
certify to the  corporation  that the valid  demands  received by the  Secretary
represent  at  least  10% of all the  votes  entitled  to be cast on each  issue
proposed to be  considered  at the Special  Meeting.  Nothing  contained in this
paragraph  (f) shall in any way be  construed to suggest or imply that the Board
of Directors or any shareholder shall not be entitled to contest the validity of
any demand,  whether  during or after such five Business Day period,  or to take
any other action (including,  without limitation, the commencement,  prosecution
or defense of any litigation with respect thereto).


                                      -4-

<PAGE>

          (g) For purposes of these  Bylaws,  "Business  Day" shall mean any day
other than a Saturday,  a Sunday or a day on which banking  institutions  in the
State of Wisconsin  are  authorized  or  obligated by law or executive  order to
close.

          2.04.  Place of Meeting.  The Board of Directors,  the Chairman of the
Board, the President or the Secretary may designate any place,  either within or
without the State of Wisconsin,  as the place of meeting for any Annual  Meeting
or for any Special Meeting or for any postponement or adjournment thereof. If no
designation is made, the place of meeting shall be the principal business office
of the  corporation  in the State of Wisconsin.  Any meeting may be adjourned to
reconvene  at any place  designated  by vote of the Board of Directors or by the
Chairman of the Board, the President or the Secretary.

          2.05.  Notice of Meeting.  Written or printed notice stating the date,
time and place of any Annual  Meeting or Special  Meeting shall be delivered not
less than  three  days  (unless a longer  period is  required  by the  Wisconsin
Business  Corporation Law) nor more than 70 days before the date of such meeting
either  personally  or by mail,  by or at the  direction  of the Chairman of the
Board, the President or the Secretary, to each shareholder of record entitled to
vote at such meeting and to such other shareholders as required by the Wisconsin
Business  Corporation  Law.  In the event of any Demand  Special  Meeting,  such
notice shall be sent not more than 45 days after the Delivery  Date.  If mailed,
notice  pursuant  to this  Section  2.05  shall be deemed to be  effective  when
deposited in the United States mail, addressed to the shareholder at his address
as it appears on the stock record books of the corporation, with postage thereon
prepaid.  Unless otherwise required by the Wisconsin Business Corporation Law or
the articles of incorporation of the corporation,  a notice of an Annual Meeting
need not include a  description  of the purpose for which the meeting is called.
In the case of any Special Meeting, (a) the notice of meeting shall describe any
business that the Board of Directors shall have theretofore  determined to bring
before the meeting and (b) in the case of a Demand Special  Meeting,  the notice
of meeting (i) shall describe any business set forth in the statement of purpose
of the demands  received by the  corporation in accordance  with Section 2.03 of
these  Bylaws and (ii) shall  contain  all of the  information  required  in the
notice  received by the  corporation in accordance with Section 2.14(b) of these
Bylaws.  If an Annual  Meeting or Special  Meeting is  adjourned  to a different
date, time or place, the corporation shall not be required to give notice of the
new  date,  time or place if the new  date,  time or place is  announced  at the
meeting before adjournment; provided, however, that if a new Meeting Record Date
for an adjourned  meeting is or must be fixed, the corporation shall give notice
of the adjourned  meeting to persons who are  shareholders as of the new Meeting
Record Date.

          2.06. Fixing of Record Date. The Board of Directors may fix in advance
a date not less than 10 days and not more than 70 days  prior to the date of any
Annual  Meeting  or  Special  Meeting  as the  record  date for the  purpose  of
determining  shareholders  entitled to notice of, and to vote at,  such  meeting
("Meeting  Record  Date").  In the case of any Demand Special  Meeting,  (i) the
Meeting Record Date shall not be later than the 30th day after the Delivery Date
and (ii) if the Board of Directors  fails to fix the Meeting  Record Date within
30 days after the  Delivery  Date,  then the close of  business on such 30th day
shall be the Meeting  Record  Date.  The  shareholders  of record on the Meeting
Record Date shall be the shareholders entitled to notice of,


                                      -5-

<PAGE>

and to vote at,  the  meeting.  Except as  provided  by the  Wisconsin  Business
Corporation Law for a court-ordered adjournment, a determination of shareholders
entitled to notice of, and to vote at, any Annual Meeting or Special  Meeting is
effective  for any  adjournment  of such  meeting  unless the Board of Directors
fixes a new Meeting  Record Date,  which it shall do if the meeting is adjourned
to a date more than 120 days after the date fixed for the original meeting.  The
Board of  Directors  may also fix in advance a date as the  record  date for the
purpose  of  determining  shareholders  entitled  to take any  other  action  or
determining  shareholders  for any other purpose.  Such record date shall be not
more than 70 days prior to the date on which the  particular  action,  requiring
such  determination  of  shareholders,  is to be  taken.  The  record  date  for
determining  shareholders  entitled to a distribution (other than a distribution
involving a  purchase,  redemption  or other  acquisition  of the  corporation's
shares)  or a share  dividend  is the  date on  which  the  Board  of  Directors
authorizes the  distribution or share  dividend,  as the case may be, unless the
Board of Directors fixes a different record date.

          2.07. Voting Records.  After a Meeting Record Date has been fixed, the
corporation  shall  prepare  a list  of  the  names  of all of the  shareholders
entitled to notice of the meeting. The list shall be arranged by class or series
of shares,  if any,  and show the address of, and number of shares held by, each
shareholder.  Such list shall be available for  inspection  by any  shareholder,
beginning  two business  days after notice of the meeting is given for which the
list  was  prepared  and  continuing  to  the  date  of  the  meeting,   at  the
corporation's principal office or at a place identified in the meeting notice in
the city where the  meeting  will be held.  A  shareholder  or his agent may, on
written demand, inspect and, subject to the limitations imposed by the Wisconsin
Business  Corporation  Law, copy the list,  during regular business hours and at
his expense,  during the period that it is available for inspection  pursuant to
this Section 2.07. The corporation shall make the  shareholders'  list available
at the meeting and any shareholder or his agent or attorney may inspect the list
at any time during the meeting or any adjournment thereof. Refusal or failure to
prepare or make available the  shareholders'  list shall not affect the validity
of any action taken at a meeting of shareholders.

          2.08. Quorum and Voting Requirements; Postponements; Adjournments.

          (a) Shares entitled to vote as a separate voting group may take action
on a matter at any Annual  Meeting or Special  Meeting only if a quorum of those
shares exists with respect to that matter. If the corporation has only one class
of stock  outstanding,  such class shall  constitute a separate voting group for
purposes of this Section 2.08.  Except as otherwise  provided in the articles of
incorporation of this corporation or the Wisconsin  Business  Corporation Law, a
majority  of the votes  entitled  to be cast on the matter  shall  constitute  a
quorum  of the  voting  group  for  action  on  that  matter.  Once a  share  is
represented for any purpose at any Annual Meeting or Special Meeting, other than
for the purpose of objecting to holding the meeting or  transacting  business at
the meeting,  it is  considered  present for purposes of  determining  whether a
quorum exists for the remainder of the meeting and for any  adjournment  of that
meeting,  unless a new Meeting  Record Date is or must be set for the  adjourned
meeting.  If a quorum  exists,  except in the case of the election of directors,
action on a matter  shall be approved if the votes cast within the voting  group
favoring  the action  exceed  the votes cast  opposing  the  action,  unless the
articles of incorporation of the corporation or the


                                      -6-

<PAGE>

Wisconsin  Business  Corporation  Law requires a greater  number of  affirmative
votes.  Unless  otherwise  provided  in the  articles  of  incorporation  of the
corporation,  each director shall be elected by a plurality of the votes cast by
the shares  entitled to vote in the election of directors at any Annual  Meeting
or Special Meeting at which a quorum is present.

          (b) The Board of  Directors  acting by  resolution  may  postpone  and
reschedule any previously scheduled Annual Meeting or Special Meeting; provided,
however,  that a Demand Special Meeting shall not be postponed  beyond the 100th
day following the Delivery Date.  Any Annual  Meeting or Special  Meeting may be
adjourned from time to time,  whether or not there is a quorum, (i) at any time,
upon a resolution of  shareholders if the votes cast in favor of such resolution
by the  holders of shares of each  voting  group  entitled to vote on any matter
theretofore  properly brought before the meeting exceed the number of votes cast
against  such  resolution  by the holders of shares of each such voting group or
(ii) at any time prior to the  transaction  of any business at such meeting,  by
the Chairman of the Board or the  President  or pursuant to a resolution  of the
Board of Directors.  No notice of the time and place of adjourned  meetings need
be given except as required by the Wisconsin  Business  Corporation  Law. At any
adjourned  meeting  at  which a quorum  shall be  present  or  represented,  any
business may be  transacted  which might have been  transacted at the meeting as
originally notified.

          2.09.  Conduct of  Meetings.  The  Chairman  of the Board,  and in his
absence, the Vice Chairman of the Board, and in his absence, the President,  and
in their absence, a Vice President in the order provided under Section 4.08, and
in their absence,  any person chosen by the shareholders  present shall call any
Annual  Meeting or Special  Meeting to order and shall act as  chairman  of such
meeting,  and the  Secretary  of the  corporation  shall act as secretary of all
Annual Meetings and Special Meetings,  but in the absence of the Secretary,  the
presiding  officer  may  appoint  any other  person to act as  secretary  of the
meeting.

          2.10.  Proxies.  At  all  Annual  Meetings  and  Special  Meetings,  a
shareholder  entitled to vote may vote in person or by proxy. A shareholder  may
appoint a proxy to vote or  otherwise  act for the  shareholder  by  signing  an
appointment form, either personally or by his  attorney-in-fact.  An appointment
of a proxy is effective when received by the Secretary or other officer or agent
of the  corporation  authorized to tabulate  votes.  An appointment is valid for
eleven  months  from  the  date of its  signing  unless a  different  period  is
expressly provided in the appointment form. Unless otherwise  provided,  a proxy
may be revoked any time before it is voted,  either by written notice filed with
the Secretary or the acting  secretary of the meeting or by oral notice given by
the shareholder to the presiding  officer during the meeting.  The presence of a
shareholder who has filed his proxy does not of itself  constitute a revocation.
The  Board of  Directors  shall  have the  power  and  authority  to make  rules
establishing presumptions as to the validity and sufficiency of proxies.

          2.11. Voting of Shares.

          (a) Each  outstanding  share  shall be  entitled to one vote upon each
matter submitted to a vote at any Annual Meeting or Special  Meeting,  except to
the extent that the


                                      -7-

<PAGE>

voting  rights of the shares of any class or classes  are  enlarged,  limited or
denied  by  the  Wisconsin   Business   Corporation   Law  or  the  articles  of
incorporation of the corporation.

          (b) Shares  held by another  corporation,  if a  sufficient  number of
shares  entitled to elect a majority of the directors of such other  corporation
is held  directly or indirectly  by this  corporation,  shall not be entitled to
vote at any Annual  Meeting or Special  Meeting,  but shares held in a fiduciary
capacity may be voted.

          2.12.  Acceptance of Instruments  Showing  Shareholder  Action. If the
name signed on a vote, consent,  waiver or proxy appointment  corresponds to the
name of a shareholder,  the corporation, if acting in good faith, may accept the
vote,  consent,  waiver or proxy  appointment and give it effect as the act of a
shareholder.  If the name signed on a vote, consent, waiver or proxy appointment
does not correspond to the name of a shareholder, the corporation may accept the
vote, consent,  waiver or proxy appointment and give it effect as the act of the
shareholder if any of the following apply:

          (a) The  shareholder  is an entity and the name signed  purports to be
that of an officer or agent of the entity.

          (b)  The  name  purports  to be  that  of a  personal  representative,
administrator,  executor,  guardian or conservator  representing the shareholder
and, if the corporation requests, evidence of fiduciary status acceptable to the
corporation  is  presented  with respect to the vote,  consent,  waiver or proxy
appointment.

          (c) The name  signed  purports  to be that of a receiver or trustee in
bankruptcy of the shareholder and, if the corporation requests, evidence of this
status  acceptable  to the  corporation  is presented  with respect to the vote,
consent, waiver or proxy appointment.

          (d) The  name  signed  purports  to be that of a  pledgee,  beneficial
owner, or attorney-in-fact of the shareholder and, if the corporation  requests,
evidence acceptable to the corporation of the signatory's  authority to sign for
the shareholder is presented with respect to the vote, consent,  waiver or proxy
appointment.

          (e)  Two  or  more  persons  are  the  shareholder  as  co-tenants  or
fiduciaries  and the name signed  purports to be the name of at least one of the
co-owners  and  the  person  signing  appears  to be  acting  on  behalf  of all
co-owners.

          The  corporation  may  reject  a  vote,   consent,   waiver  or  proxy
appointment if the Secretary or other officer or agent of the corporation who is
authorized to tabulate  votes,  acting in good faith,  has reasonable  basis for
doubt  about  the  validity  of the  signature  on it or about  the  signatory's
authority to sign for the shareholder.

          2.13.  Waiver of Notice by  Shareholders.  A shareholder may waive any
notice  required by the  Wisconsin  Business  Corporation  Law,  the articles of
incorporation  of the  corporation  or these Bylaws before or after the date and
time  stated in the  notice.  The waiver  shall be in writing  and signed by the
shareholder entitled to the notice, contain the same


                                      -8-

<PAGE>
information  that  would  have been  required  in the  notice  under  applicable
provisions of the Wisconsin  Business  Corporation Law (except that the time and
place of meeting  need not be stated) and be delivered  to the  corporation  for
inclusion in the corporate  records.  A  shareholder's  attendance at any Annual
Meeting or Special  Meeting,  in person or by proxy,  waives objection to all of
the following: (a) lack of notice or defective notice of the meeting, unless the
shareholder at the beginning of the meeting or promptly upon arrival  objects to
holding  the  meeting  or   transacting   business  at  the  meeting;   and  (b)
consideration  of a  particular  matter at the  meeting  that is not  within the
purpose  described  in the meeting  notice,  unless the  shareholder  objects to
considering the matter when it is presented.

          2.14. Notice of Shareholder Business and Nomination of Directors.

          (a) Annual Meetings.

          (i)  Nominations  of persons for election to the Board of Directors of
     the  corporation  and the  proposal  of business  to be  considered  by the
     shareholders  may  be  made  at an  Annual  Meeting  (A)  pursuant  to  the
     corporation's notice of meeting, (B) by or at the direction of the Board of
     Directors or (C) by any shareholder of the corporation who is a shareholder
     of record at the time of giving of notice  provided  for in this  Bylaw and
     who is  entitled  to vote at the  meeting  and  complies  with  the  notice
     procedures set forth in this Section 2.14.

          (ii) For  nominations or other business to be properly  brought before
     an Annual  Meeting by a  shareholder  pursuant  to clause (C) of  paragraph
     (a)(i) of this Section 2.14, the shareholder  must have given timely notice
     thereof in writing to the  Secretary of the  corporation.  To be timely,  a
     shareholder's  notice shall be received by the Secretary of the corporation
     at the principal  offices of the corporation not less than 45 days nor more
     than 70 days prior to the first annual anniversary of the date set forth in
     the  corporation's  proxy  statement for the immediately  preceding  Annual
     Meeting as the date on which the corporation  first mailed definitive proxy
     materials for the immediately  preceding  Annual Meeting (the  "Anniversary
     Date");  provided,  however,  that in the event that the date for which the
     Annual  Meeting  is called is  advanced  by more than 30 days or delayed by
     more than 30 days  from the first  annual  anniversary  of the  immediately
     preceding Annual Meeting, notice by the shareholder to be timely must be so
     delivered  not earlier than the close of business on the 100th day prior to
     the date of such Annual  Meeting and not later of (A) the 75th day prior to
     the date of such Annual  Meeting or (B) the 10th day  following  the day on
     which public announcement of the date of such Annual Meeting is first made.
     In no event shall the  announcement  of an adjournment of an Annual Meeting
     commence  a new time  period  for the  giving  of a  shareholder  notice as
     described  above.  Such  shareholder's   notice  shall  be  signed  by  the
     shareholder  of record who intends to make the  nomination or introduce the
     other  business  (or his duly  authorized  proxy or other  representative),
     shall bear the date of  signature  of such  shareholder  (or proxy or other
     representative)  and shall set  forth:  (A) the name and  address,  as


                                      -9-

<PAGE>
     they  appear  on this  corporation's  books,  of such  shareholder  and the
     beneficial  owner or owners,  if any,  on whose  behalf the  nomination  or
     proposal  is made;  (B) the class and  number of shares of the  corporation
     which are  beneficially  owned by such  shareholder or beneficial  owner or
     owners; (C) a representation that such shareholder is a holder of record of
     shares of the  corporation  entitled to vote at such meeting and intends to
     appear in  person  or by proxy at the  meeting  to make the  nomination  or
     introduce the other  business  specified in the notice;  (D) in the case of
     any proposed nomination for election or re-election as a director,  (I) the
     name and residence address of the person or persons to be nominated, (II) a
     description of all arrangements or understandings  between such shareholder
     or  beneficial  owner or owners and each  nominee  and any other  person or
     persons (naming such person or persons) pursuant to which the nomination is
     to be made by such shareholder, (III) such other information regarding each
     nominee  proposed by such  shareholder as would be required to be disclosed
     in  solicitations  of  proxies  for  elections  of  directors,  or would be
     otherwise required to be disclosed, in each case pursuant to Regulation 14A
     under the Exchange Act, including any information that would be required to
     be included in a proxy  statement  filed pursuant to Regulation 14A had the
     nominee  been  nominated  by the Board of  Directors  and (IV) the  written
     consent of each nominee to be named in a proxy  statement and to serve as a
     director of the corporation if so elected; and (E) in the case of any other
     business that such shareholder  proposes to bring before the meeting, (I) a
     brief  description of the business desired to be brought before the meeting
     and,  if such  business  includes a proposal  to amend  these  Bylaws,  the
     language of the proposed amendment,  (II) such shareholder's and beneficial
     owner's or owners'  reasons for conducting such business at the meeting and
     (III) any  material  interest  in such  business  of such  shareholder  and
     beneficial owner or owners.

          (iii)  Notwithstanding  anything in the second  sentence of  paragraph
     (a)(ii) of this Section 2.14 to the contrary,  in the event that the number
     of directors to be elected to the Board of Directors of the  corporation is
     increased  and there is no public  announcement  naming all of the nominees
     for director or  specifying  the size of the  increased  Board of Directors
     made by the corporation at least 45 days prior to the  Anniversary  Date, a
     shareholder's notice required by this Section 2.14 shall also be considered
     timely,  but only with respect to nominees for any new positions created by
     such  increase,  if it shall be received by the  Secretary at the principal
     offices of the corporation not later than the close of business on the 10th
     day  following the day on which such public  announcement  is first made by
     the corporation.

          (b) Special  Meetings.  Only such  business  shall be  conducted  at a
Special  Meeting as shall have been  described  in the notice of meeting sent to
shareholders  pursuant to Section 2.05 of these Bylaws.  Nominations  of persons
for election to the Board of Directors may be made at a Special Meeting at which
directors are to be elected  pursuant to such notice of meeting (i) by or at the
direction  of  the  Board  of  Directors  or  (ii)  by  any  shareholder  of the


                                      -10-

<PAGE>
corporation  who (A) is a  shareholder  of  record at the time of giving of such
notice of meeting,  (B) is entitled to vote at the meeting and (C) complies with
the notice  procedures set forth in this Section 2.14. Any shareholder  desiring
to nominate  persons for  election to the Board of  Directors  at such a Special
Meeting  shall cause a written  notice to be received  by the  Secretary  of the
corporation at the principal  offices of the corporation not earlier than ninety
days prior to such  Special  Meeting and not later than the close of business on
the later of (x) the 60th day prior to such Special Meeting and (y) the 10th day
following the day on which public announcement is first made of the date of such
Special  Meeting and of the  nominees  proposed by the Board of  Directors to be
elected at such meeting.  Such written notice shall be signed by the shareholder
of record who intends to make the  nomination (or his duly  authorized  proxy or
other representative),  shall bear the date of signature of such shareholder (or
proxy or other representative) and shall set forth: (A) the name and address, as
they appear on the  corporation's  books, of such shareholder and the beneficial
owner or owners,  if any, on whose behalf the  nomination is made; (B) the class
and number of shares of the  corporation  which are  beneficially  owned by such
shareholder  or  beneficial  owner or  owners;  (C) a  representation  that such
shareholder is a holder of record of shares of the corporation  entitled to vote
at such  meeting  and  intends to appear in person or by proxy at the meeting to
make the nomination  specified in the notice; (D) the name and residence address
of the person or persons to be nominated;  (E) a description of all arrangements
or  understandings  between such  shareholder or beneficial  owner or owners and
each  nominee and any other  person or persons  (naming  such person or persons)
pursuant to which the  nomination  is to be made by such  shareholder;  (F) such
other  information  regarding each nominee proposed by such shareholder as would
be  required to be  disclosed  in  solicitations  of proxies  for  elections  of
directors, or would be otherwise required to be disclosed, in each case pursuant
to Regulation 14A under the Exchange Act,  including any information  that would
be required to be included in a proxy statement filed pursuant to Regulation 14A
had the nominee been  nominated by the Board of  Directors;  and (G) the written
consent  of each  nominee  to be  named in a proxy  statement  and to serve as a
director of the corporation if so elected.

          (c) General.

          (i) Only persons who are nominated in accordance  with the  procedures
     set forth in this  Section  2.14 shall be eligible  to serve as  directors.
     Only such  business  shall be  conducted  at an Annual  Meeting  or Special
     Meeting as shall have been brought  before such meeting in accordance  with
     the  procedures set forth in this Section 2.14. The chairman of the meeting
     shall  have the power and duty to  determine  whether a  nomination  or any
     business  proposed to be brought  before the meeting was made in accordance
     with the  procedures  set forth in this  Section  2.14 and, if any proposed
     nomination  or business is not in  compliance  with this Section  2.14,  to
     declare that such defective proposal shall be disregarded.

          (ii) For purposes of this Section 2.14,  "public  announcement"  shall
     mean disclosure in a press release  reported by the Dow Jones News Service,
     Associated  Press or  comparable  national  news  service  or in a document
     publicly


                                      -11-

<PAGE>
     filed  by the  corporation  with the  Securities  and  Exchange  Commission
     pursuant to Section 13, 14 or 15(d) of the Exchange Act.

          (iii) Notwithstanding the foregoing provisions of this Section 2.14, a
     shareholder  shall also  comply  with all  applicable  requirements  of the
     Exchange Act and the rules and  regulations  thereunder with respect to the
     matters set forth in this Section 2.14.  Nothing in this Section 2.14 shall
     be deemed to limit the  corporation's  obligation  to  include  shareholder
     proposals  in its proxy  statement  if such  inclusion  is required by Rule
     14a-8 under the Exchange Act.


                         ARTICLE III. BOARD OF DIRECTORS

          3.01 General Powers; Number and Classification; Vacancy.

          (a) All corporate  powers shall be exercised by or under the authority
of, and the business and affairs of the  corporation  shall be managed under the
direction of, the Board of Directors.

          (b) The number of directors of the corporation  shall be not less than
7 nor more than 17, as  determined  from time to time by the Board of Directors,
divided into three  substantially equal classes and designated as Class I, Class
II and Class  III,  respectively.  Commencing  at a Special  Meeting  to be held
promptly  after the  adoption of these  Bylaws,  a class of  directors  shall be
elected to Class I for a term to expire at the 1992 Annual  Meeting,  a class of
directors  shall be elected to Class II for a term to expire at the 1993  Annual
Meeting  and a class of  directors  shall be  elected to Class III for a term to
expire at the 1994 Annual Meeting and, in each case,  until their successors are
duly qualified and elected.  At each Annual Meeting thereafter the successors to
the class of  directors  whose term shall  expire at the time of Annual  Meeting
shall be elected to hold office until the third succeeding  Annual Meeting,  and
until  their  successors  are duly  qualified  and  elected or until  there is a
decrease in the number of directors  that takes effect after the  expiration  of
their term.

          (c) Any  vacancy  occurring  in the Board of  Directors,  including  a
vacancy  created by an increase in the number of  directors,  shall be filled by
the affirmative vote of a majority of the directors then in office,  though less
than a quorum of the Board of Directors,  or by a sole remaining  director.  Any
director so elected  shall serve until the next  election of the class for which
such  director  shall  have been  chosen and until his  successor  shall be duly
qualified and elected.

          3.02.  Resignations and  Qualifications.  A director may resign at any
time by delivering  written  notice which  complies with the Wisconsin  Business
Corporation  Law to the Board of Directors,  the Chairman of the Board or to the
corporation.  A director's resignation is effective when the notice is delivered
unless  the notice  specifies  a later  effective  date.  Directors  need not be
residents of the State of Wisconsin or shareholders of the corporation.


                                      -12-

<PAGE>

          3.03.  Regular  Meetings.  A regular meeting of the Board of Directors
shall be held without other notice than this Bylaw  immediately after the Annual
Meeting. The place of such regular meeting shall be the same as the place of the
Annual  Meeting  which  precedes  it,  or such  other  suitable  place as may be
announced to directors at or before such Annual Meeting.  The Board of Directors
may provide,  by resolution,  the date, time and place, either within or without
the State of Wisconsin,  for the holding of additional  regular  meetings of the
Board of Directors without other notice than such resolution.

          3.04. Special Meetings. Special meetings of the Board of Directors may
be  called  by or at the  request  of the  Chairman  of  the  Board,  President,
Secretary or any two directors.  The Chairman of the Board, the President or the
Secretary  may  designate  any  place,  either  within or  without  the State of
Wisconsin,  as the place for holding any such special meeting. If no designation
is made,  the place of meeting  shall be the  principal  business  office of the
corporation in the State of Wisconsin.

          3.05 Notice;  Waiver. Notice of each meeting of the Board of Directors
(unless  otherwise  provided in or  pursuant to Section  3.03) shall be given to
each  director  not less than 24 hours  prior to the  meeting  by  giving  oral,
telephonic  or  written  notice to a  director  communicated  in  person,  or by
telegram, facsimile or other form of wire or wireless communication, or not less
than 48 hours prior to a meeting by  delivering,  sending by private  carrier or
mailing  written  notice to the  business  address  or such  other  address as a
director shall have  designated in writing filed with the Secretary.  If mailed,
such notice shall be deemed to be effective  when deposited in the United States
mail so addressed with postage thereon prepaid.  If notice be given by telegram,
such notice  shall be deemed to be effective  when the telegram  addressed as in
case of notice by mail is delivered to the telegraph company. If notice is given
by private carrier,  such notice shall be deemed to be effective when the notice
addressed  as in case of notice by mail is  delivered  to the  private  carrier.
Whenever  any notice  whatever is  required  to be given to any  director of the
corporation under the articles of incorporation of the corporation, these Bylaws
or any provision of the Wisconsin Business  Corporation Law, a waiver thereof in
writing,  signed  at any  time,  whether  before  or after  the date and time of
meeting, by the director entitled to such notice,  shall be deemed equivalent to
the giving of such notice.  The corporation shall retain any such waiver as part
of its permanent corporate records, but only for so long as such other permanent
corporate records are maintained.  A director's  attendance at, or participation
in, a meeting  waives  any  required  notice to him of the  meeting  unless  the
director at the beginning of the meeting or promptly upon his arrival objects to
holding  the  meeting  or  transacting  business  at the  meeting  and  does not
thereafter  vote for or assent  to  action  taken at the  meeting.  Neither  the
business to be transacted at, nor the purpose of, any regular or special meeting
of the Board of Directors need be specified in the notice,  or waiver of notice,
of such meeting.

          3.06.  Quorum.  Except as otherwise provided by the Wisconsin Business
Corporation  Law,  the articles of  incorporation  of the  corporation  or these
Bylaws,  a majority  of the  number of  directors  fixed in  Section  3.01 shall
constitute a quorum for the  transaction of business at any meeting of the Board
of  Directors,  but a majority of the directors  present  (though less than such
quorum)  may  adjourn any  meeting of the Board of  Directors  or any  committee
thereof, as the case may be, from time to time without further notice. Except as
otherwise


                                      -13-

<PAGE>
provided  by  the   Wisconsin   Business   Corporation   Law,  the  articles  of
incorporation  or by these  Bylaws,  a quorum of any  committee  of the Board of
Directors created pursuant to Section 3.12 hereof shall consist of a majority of
the number of directors  appointed to serve on the committee,  but a majority of
the members  present  (though  less than a quorum) may adjourn the meeting  from
time to time without further notice.

          3.07.  Manner of  Acting.  The act of the  majority  of the  directors
present at a meeting at which a quorum is present  shall be the act of the Board
of  Directors,  unless the act of a greater  number is required by the Wisconsin
Business  Corporation  Law, the articles of incorporation of this corporation or
these Bylaws.

          3.08.  Conduct of  Meetings.  The  Chairman  of the Board,  and in his
absence, the Vice Chairman of the Board, and in their absence, the President and
in their absence, a Vice President in the order provided under Section 4.08, and
in their  absence,  any director  chosen by the  directors  present,  shall call
meetings of the Board of  Directors,  but in the absence of the  Secretary,  the
presiding  officer may appoint any  Assistant  Secretary  or any director or any
other person present to act as secretary of the meeting.  Minutes of any regular
or special  meeting of the Board of Directors  shall be prepared and distributed
to each director.

          3.09.  Compensation.  The  Board  of  Directors,  irrespective  of any
personal interest of any of its members, may establish  reasonable  compensation
of all  directors  for services to the  corporation  as  directors,  officers or
otherwise, or may delegate such authority to an appropriate committee. The Board
of Directors also shall have authority to provide for, or to delegate  authority
to an appropriate  committee to provide for, reasonable pensions,  disability or
death  benefits,  and other  benefits or payments,  to  directors,  officers and
employees  and to their  estates,  families,  dependents,  or  beneficiaries  on
account of prior services rendered by such directors,  officers and employees to
the corporation.

          3.10.  Unanimous  Consent  Without  Meeting.  Any action  required  or
permitted by the articles of incorporation  of the corporation,  these Bylaws or
any provision of the Wisconsin Business Corporation Law to be taken by the Board
of Directors (or any committee  thereof  created  pursuant to Section 3.12) at a
meeting may be taken  without a meeting if a consent in writing,  setting  forth
the action so taken, shall be signed by all members of the Board of Directors or
of the  committee,  as the case may be, then in office.  Any such consent action
may be signed in  separate  counterparts  and shall be  effective  when the last
director or committee member signs the consent,  unless the consent  specifies a
different effective date.

          3.11.  Presumption  of Assent.  A director of the  corporation  who is
present at a meeting of the Board of Directors or any committee thereof of which
he is a  member  at which  action  on any  corporate  matter  is taken  shall be
presumed  to have  assented  to the action  taken  unless  any of the  following
occurs:  (a) the  director  objects at the  beginning of the meeting or promptly
upon his arrival to holding the meeting or transacting  business at the meeting;
(b) the director's dissent or abstention from the action taken is entered in the
minutes  of the  meeting;  or (c) the  director  delivers  written  notice  that
complies  with  the  Wisconsin  Business  Corporation  Law  of  his  dissent  or
abstention to the presiding officer of the meeting before its adjournment or


                                      -14-

<PAGE>
to the corporation  immediately after adjournment of the meeting.  Such right to
dissent  or  abstain  shall not apply to a  director  who voted in favor of such
action.

          3.12. Committees.

          (a) (i) An Executive Committee  consisting of three or more members of
the Board of  Directors  be and it hereby is created.  The Board of Directors by
the  affirmative  vote of a majority of the number of directors fixed in Section
3.01, shall designate the members of the Executive Committee,  one of whom shall
be designated by the Board of Directors as Chairman of the Executive  Committee.
The Executive  Committee  shall have and may exercise all powers of the Board of
Directors in the management of the business and affairs of the corporation  when
the Board of Directors is not in session; provided,  however, that the Executive
Committee shall have no power or authority to take action on behalf of the Board
of  Directors  to the extent  limited in Section  3.12(b) of these Bylaws or the
Wisconsin Business  Corporation Law. The Board of Directors shall have the power
at any time to fill  vacancies  in, to change the members of, or to dissolve the
Executive  Committee by the affirmative vote of a majority of the directors then
in office,  though  less than a quorum of the Board of  Directors,  or by a sole
remaining director.

          (ii) Notice of each meeting of the Executive  Committee shall be given
to each member  thereof in  accordance  with Section  3.05.  The  attendance  or
participation  of a committee  member at a meeting shall  constitute a waiver of
required  notice to him of such  meeting,  unless  the  committee  member at the
beginning  of the  meeting or promptly  upon his arrival  objects to holding the
meeting or transacting  business at the meeting and does not thereafter vote for
or assent to action taken at the meeting.  Neither the business to be transacted
at, not the purpose of, any meeting of the Executive Committee need be specified
in the notice, or waiver of notice, of such meeting.

          (iii) The act of the  majority of the members  present at a meeting at
which a quorum is present  shall be the act of the Executive  Committee,  unless
the act of a greater  number is required by the Wisconsin  Business  Corporation
Law or by the articles incorporation of the corporation or these Bylaws.

          (iv) The Chairman of the Executive Committee, and, in his absence, any
member  chosen by the members  present,  shall call  meetings  of the  Executive
Committee  to order and shall act as  chairman  of the  meeting.  The  presiding
officer may appoint any member or other  person  present to act as  secretary of
the meeting.  Unless otherwise  provided by the Wisconsin  Business  Corporation
Law, the articles of  incorporation  of the  corporation  or these  Bylaws,  the
Executive  Committee  shall  fix its own  rules  governing  the  conduct  of its
activities and shall keep and report to the Board of Directors  regular  minutes
of the  proceedings of the Executive  Committee for  subsequent  approval by the
Board of Directors.

          (b) The Board of Directors by  resolution  adopted by the  affirmative
vote of a  majority  of the  number  of  directors  fixed  in  Section  3.01 may
designate  one or  more  other  committees,  appoint  members  of the  Board  of
Directors to serve on the committees and designate other members of the Board of
Directors to serve as alternates.  Alternate  members of a


                                      -15-

<PAGE>

committee shall take the place of any absent member or members at any meeting of
such  committee  upon request of the  Chairman of the Board or the  President or
upon request of the chairman of such  meeting.  Each  committee  (other than the
Executive  Committee) shall consist of two or more directors  elected by, and to
serve at the pleasure of, the Board of Directors.  A committee may be authorized
to exercise  the  authority of the Board of  Directors,  except that a committee
(including  the  Executive  Committee)  may  not do any  of the  following:  (a)
authorize distributions;  (b) approve or propose to shareholders action that the
Wisconsin Business Corporation Law requires to be approved by shareholders;  (c)
fill  vacancies  on the Board of  Directors  or,  unless the Board of  Directors
provides by  resolution  that  vacancies  on a committee  shall be filled by the
affirmative vote of the remaining committee members, on any Board committee; (d)
amend the articles of  incorporation  of the  corporation;  (e) adopt,  amend or
repeal  these  Bylaws;  (f) approve a plan of merger not  requiring  shareholder
approval;  (g) authorize or approve reacquisition of shares, except according to
a formula or method  prescribed by the Board of Directors;  and (h) authorize or
approve the  issuance or sale or contract for sale of shares,  or determine  the
designation  and relative  rights,  preferences  and  limitations  of a class or
series of shares,  except that the Board of Directors  may authorize a committee
to do so within limits  prescribed by the Board of Directors.  Unless  otherwise
provided  by the Board of  Directors  in  creating  the  committee,  a committee
(including the Executive  Committee) may employ  counsel,  accountants and other
consultants to assist it in the exercise of its authority.  Notices of committee
meetings  shall be given to committee  members in compliance  with Section 3.05.
Each such  committee  shall  fix its own  rules  governing  the  conduct  of its
activities  and  shall  make  such  reports  to the  Board of  Directors  of its
activities as the Board of Directors may request.

          3.13.   Telephonic   Meetings.   Except   as   herein   provided   and
notwithstanding  any  place  set forth in the  notice  of the  meeting  or these
Bylaws,  members of the Board of Directors (and any committees  thereof  created
pursuant to Section 3.12) may participate in regular or special  meetings by, or
through the use of, any means of  communication  by which all  participants  may
simultaneously hear each other, such as by conference telephone. If a meeting is
conducted by such means,  then at the commencement of such meeting the presiding
officer shall inform the participating  directors that a meeting is taking place
at which official  business may be transacted.  Any  participant in a meeting by
such means shall be deemed present in person at such meeting. If action is to be
taken at any meeting held by such means on any of the  following:  (a) a plan of
merger or share exchange;  (b) a sale,  lease,  exchange or other disputation of
substantial property or assets of the corporation;  (c) a voluntary  dissolution
or the  revocation  of voluntary  dissolution  proceedings;  or (d) a filing for
bankruptcy,  then the identity of each  director  participating  in such meeting
must be verified by the disclosure at such meeting by each such director of each
such director's  social security number to the secretary of the meeting before a
vote may be taken on any of the foregoing matters. For purposes of the preceding
clause  (b),  the  phrase  "sale,  lease,   exchange  or  other  disposition  of
substantial  property or assets" shall mean any sale,  lease,  exchange or other
disposition  of  property or assets of the  corporation  having a net book value
equal  to 10% or  more  of the  net  book  value  of  the  total  assets  of the
corporation  on and as of the close of the fiscal  year last ended  prior to the
date of such meeting and as to which  financial  statements  of the  corporation
have been prepared.

                              ARTICLE IV. OFFICERS


                                      -16-

<PAGE>

          4.01.  Number.  The principal  offices of the  corporation  shall be a
President,  one or more Vice Presidents,  as authorized from time to time by the
Board of  Directors,  a  Controller,  a Secretary and a Treasurer and such other
officers  and agents as the Board of Directors  may from time to time  determine
necessary,  each of whom shall be chosen by the Board of Directors. The Board of
Directors  may also from time to time elect or  appoint a Chairman  of the Board
and a Vice Chairman of the Board.  The Board of Directors may also authorize any
duly authorized  officer to appoint one or more officers or assistant  officers.
Any number of offices may be held by the same person.

          4.02.  Election and Term of Office. The officers of the corporation to
be elected by the Board of  Directors  shall be  elected  annually  at the first
meeting  of the Board of  Directors  held  after  each  Annual  Meeting.  If the
election of officers  shall not be held at such meeting,  such election shall be
held as soon thereafter as practicable. Each officer shall hold office until his
successor  shall have been duly chosen or until his prior death,  resignation or
removal.

          4.03.  Removal.  The Board of  Directors  may remove any officer  and,
unless  restricted  by the Board of  Directors or these  Bylaws,  an officer may
remove any officer or assistant officer appointed by that officer,  at any time,
with or without cause and  notwithstanding  the contract rights,  if any, of the
officer  removed.  The election or  appointment of an officer does not of itself
create contract rights.

          4.04. Resignations and Vacancies.

          (a) An  officer  may  resign at any time by  delivering  notice to the
corporation  that  complies  with the Wisconsin  Business  Corporation  Law. The
resignation  shall be effective when the notice is delivered,  unless the notice
specifies a later effective date and the corporation accepts the later effective
date.

          (b) A vacancy in the office of President, Secretary or Treasurer shall
be filled by the Board of  Directors  for the  unexpired  portion of the term. A
vacancy in any other office may also be filled by the Board of Directors, should
it deem it necessary to do so. If a resignation  of an officer is effective at a
later date as contemplated by this Section 4.04, the Board of Directors may fill
the pending vacancy before the effective date if the Board of Directors provides
that the successor may not take office until the effective date.

          4.05.  Chairman of the Board.  The  Chairman  of the Board,  if one is
elected,  shall  preside at all Annual  Meetings  and  Special  Meetings,  if he
desires to do so, and at all  meetings of the Board of  Directors.  The Chairman
shall  have  authority  to sign,  execute  and  acknowledge,  on  behalf  of the
corporation, all deeds, mortgages, bonds, stock certificates, contracts, leases,
reports  and all other  departments  or  instruments  necessary  or proper to be
executed in the course of the corporation's  regular business, or which shall be
authorized by the Board of Directors.

          4.06.  Vice Chairman of the Board.  The Vice Chairman of the Board, if
one shall be elected or  appointed,  shall in the absence of the Chairman of the
Board,  perform the duties


                                      -17-

<PAGE>

and  functions  of the Chairman of the Board.  He shall also in general  perform
such other  duties and  functions  as may be delegated or assigned to him by the
Board of Directors or the Chairman of the Board.

          4.07. President. The President shall be the Chief Executive Officer of
the corporation. Subject to the control of the Board of Directors, the President
shall,  in  general,  supervise  and  control  the  business  and affairs of the
corporation. The President shall have authority, subject to such rules as may be
prescribed  by the Board of  Directors,  to appoint  and remove  such agents and
employees of the  corporation  as he shall deem  necessary,  to prescribe  their
powers, duties and compensation and to delegate authority to them. He shall have
authority to sign,  execute and acknowledge,  on behalf of the corporation,  all
deeds,  mortgages,  contracts,  leases,  reports  and  all  other  documents  or
instruments   necessary   or  proper  to  be  executed  in  the  course  of  the
corporation's  regular  business,  or which shall be authorized by resolution of
the Board of Directors; and, except as otherwise provided by law or the Board of
Directors,  he may authorize any Executive  Vice President or any Vice President
or other officer or agent of the  corporation to sign,  execute and  acknowledge
such  documents  or  instruments  in his place and  stead.  In  general he shall
perform  all duties  incident  to the office of  President  and Chief  Executive
Officer and such other  duties as may be assigned or  delegated  by the Board of
Directors from time to time.

          4.08. The Vice  Presidents.  The Board of Directors shall elect one or
more Vice  Presidents  as it shall deem  necessary  for the  carrying out of the
corporation's  business,  some of  whom  may be  designated  as  Executive  Vice
Presidents and some of whom may be designated as Senior Vice Presidents.  In the
absence of the  President or in the event of his death,  inability or refusal to
act, the Vice President (or, in the event there be more than one Vice President,
giving  priority to any Executive Vice  Presidents,  and then to any Senior Vice
Presidents (in the order of their respective  priorities),  but otherwise in the
order  designated  by the  Board  of  Directors  or in the  absence  of any such
designation,  then in  order  of  choosing)  shall  perform  the  duties  of the
President  and,  when so acting,  shall have all the powers of and be subject to
all  restrictions  upon the  President.  Any Vice  President  shall perform such
duties and have such  authority,  as,  from time to time,  may be  delegated  or
assigned to him by the President, or by the Board of Directors. The execution of
any  instrument of the  corporation  by any Vice  President  shall be conclusive
evidence  as to  third  parties  of his  authority  to act in the  stead  of the
President.

          4.09. The Secretary.  The Secretary shall: (a) keep the minutes of the
Annual  Meetings  and  Special  Meetings  and  other  meetings  of the  Board of
Directors in one or more books provided for that purpose  (including  records of
consent  actions  taken  by the  shareholders  or the  Board  of  Directors  (or
committees  thereof) without a meeting;  (b) see that all notices are duly given
in  accordance  with  the  provisions  of these  Bylaws  or as  required  by the
Wisconsin  Business  Corporation Law; (c) be custodian of the corporate  records
and of the seal of the  corporation  and see that the seal of the corporation is
affixed to all  documents  the  execution of which on behalf of the  corporation
under its seal is duly authorized;  (d) maintain a record of the shareholders of
the corporation,  in a form that permits  preparation of a list of the names and
addresses of all shareholders, by class or series of shares, if any, and showing
the number and class or series of shares, if any, held by each shareholder;  (e)
sign with the President, or a Vice


                                      -18-

<PAGE>

President,  certificates  for shares of the  corporation,  the issuance of which
shall have been  authorized by  resolution  of the Board of Directors;  (f) have
general  charge  of the  stock  transfer  books of the  corporation;  and (g) in
general  perform all duties  incident to the office of  Secretary  and have such
other duties and exercise  such  authority as from time to time may be delegated
or  assigned  to him by the  President,  any  Vice  President  or the  Board  of
Directors.

          4.10. The Treasurer.  The Treasurer shall: (a) have charge and custody
of and be  responsible  for all funds and  securities  of the  corporation;  (b)
receive and give receipts for moneys due and payable to the corporation from any
source whatsoever, and deposit all such moneys in the name of the corporation in
such  banks,  trust  companies  or other  depositories  as shall be  selected in
accordance  with the provisions of Section 5.04; and (c) in general  perform all
of the duties incident to the office of Treasurer and have such other duties and
exercise such other  authority as from time to time may be delegated or assigned
to him by the  President,  any Vice  President  or the  Board of  Directors.  If
required  by the Board of  Directors,  the  Treasurer  shall give a bond for the
faithful discharge of his duties in such sum and with such surety or sureties as
the Board of Directors shall determine.

          4.11. Controller.  Subject to the control and supervision of the Board
of Directors,  the  Controller  shall have charge of the books of account of the
corporation  and maintain  appropriate  accounting  records and he shall perform
such other duties and exercise such other  authority as from time to time may be
delegated  or assigned to him by the Board of  Directors,  the  President or the
Vice President responsible for financial matters.

          4.12. Assistant Secretaries and Assistant  Treasurers.  There shall be
such number of Assistant  Secretaries  and Assistant  Treasurers as the Board of
Directors may from time to time  authorize.  The Assistant  Secretaries may sign
with  the  President  or  a  Vice  President  certificates  for  shares  of  the
corporation, the issuance of which shall have been authorized by a resolution of
the Board of Directors. The Assistant Treasurers shall respectively, if required
by the Board of Directors, give bonds for the faithful discharge of their duties
in such sums and with such sureties as the Board of Directors  shall  determine.
The Assistant  Secretaries and Assistant Treasurers,  in general,  shall perform
such duties and have such  authority  as shall from time to time be delegated or
assigned to them by the  Secretary  or the  Treasurer,  respectively,  or by the
President, any Vice President or the Board of Directors.

          4.13.  Other  Assistants and Acting  Officers.  The Board of Directors
shall have the power to appoint,  or to authorize any duly appointed  officer of
the corporation to appoint, any person to act as assistant to any officer, or as
agent for the corporation in his stead, or to perform the duties of such officer
whenever for any reason it is impracticable  for such officer to act personally,
and such assistant or acting officer or other agent so appointed by the Board of
Directors  or an  authorized  officer  shall have the power to  perform  all the
duties of the office to which he is so appointed to be assistant, or as to which
he is so  appointed  to act,  except as such power may be  otherwise  defined or
restricted by the Board of Directors or the appointing officer.

          4.14. Salaries.  The salaries of the principal officers shall be fixed
from  time to time by the  Board  of  Directors  or,  except  in the case of the
Chairman  of the  Board,  the  Vice


                                      -19-

<PAGE>

Chairman of the Board,  President or any  Executive  Vice  President,  by a duly
authorized  committee thereof,  and no officer shall be prevented from receiving
such salary by reason of the fact that he is also a director of the corporation.

                       ARTICLE V. CONTRACTS, LOANS, CHECKS
                      AND DEPOSITS; SPECIAL CORPORATE ACTS

          5.01.  Contracts.  The Board of Directors may authorize any officer or
officers,  agent or agents, to enter into any contract or execute or deliver any
instrument  in  the  name  of  and  on  behalf  of  the  corporation,  and  such
authorization may be general or confined to specific  instances.  In the absence
of other  designation,  all deeds,  mortgages and  instruments  of assignment or
pledge made by the corporation  shall be executed in the name of the corporation
by the  President  or any Vice  President  and by the  Secretary,  an  Assistant
Secretary,  the  Treasurer  or  an  Assistant  Treasurer;  the  Secretary  or an
Assistant Secretary,  when necessary or required, shall affix the corporate seal
thereto;  and when so executed no other  party to such  instrument  or any third
party shall be required to make any inquiry  into the  authority  of the signing
officer or officers.

          5.02. Loans. No loans shall be contracted on behalf of the corporation
and no evidences of indebtedness  shall be issued in its name unless  authorized
by or under  the  authority  of a  resolution  of the Board of  Directors.  Such
authorization may be general or confined to specific instances.

          5.03. Checks,  Drafts, Etc. All checks, drafts or other orders for the
payment of money, notes or other evidences of indebtedness issued in the name of
the corporation, shall be signed by such officer or officers, agent or agents of
the  corporation  and in such manner as shall from time to time be determined by
or under the authority of a resolution of the Board of Directors.

          5.04.  Deposits.  All funds of the corporation not otherwise  employed
shall be deposited  from time to time to the credit of the  corporation  in such
banks,  trust companies or other depositories as may be selected by or under the
authority of a resolution of the Board of Directors.

          5.05. Voting of Securities Owned by the Corporation. Subject always to
the specific directions of the Board of Directors,  any share or shares of stock
or other securities  issued by any other  corporation and owned or controlled by
the  corporation  may be voted at any meeting of security  holders of such other
corporation  by the  President  or by any  Vice  President  who may be  present.
Whenever,  in the  judgment of the  President  or of any Vice  President,  it is
desirable for the  corporation to execute a proxy or written  consent in respect
to any  share  or  shares  of  stock or other  securities  issued  by any  other
corporation  and  owned  by the  corporation,  such  proxy or  consent  shall be
executed in the name of the  corporation  by the  President or by any one of the
Vice  Presidents  and, if  required,  should be attested by the  Secretary or an
Assistant   Secretary  under  the  corporate  seal  without   necessity  of  any
authorization by the Board of Directors. Any person or persons designated in the
manner above stated as the proxy or proxies


                                      -20-

<PAGE>

of the corporation shall have full right,  power and authority to vote the share
or shares of stock issued by such other corporation and owned by the corporation
the same as such share or shares might be voted by the corporation.

          5.06. No Nominee Procedures. The corporation has not established,  and
nothing in these Bylaws shall be deemed to  establish,  any procedure by which a
beneficial owner of the corporation's  shares that are registered in the name of
a nominee is  recognized by the  corporation  as the  shareholder  under Section
180.0723 of the Wisconsin Business Corporation Law.

             ARTICLE VI. CERTIFICATES FOR SHARES AND THEIR TRANSFER

          6.01. Certificates for Shares. Certificates representing shares of the
corporation  shall  be in such  form  consistent  with  the  Wisconsin  Business
Corporation  Law,  as shall  be  determined  by the  Board  of  Directors.  Such
certificates  shall be signed by the  President or a Vice  President  and by the
Treasurer  or  an  Assistant  Treasurer  or by  the  Secretary  or an  Assistant
Secretary.  All  certificates  for shares  shall be  consecutively  numbered  or
otherwise  identified.  The name and  address  of the  person to whom the shares
represented  thereby  are  issued,  with the number of shares and date of issue,
shall be  registered  upon the  stock  transfer  books of the  corporation.  All
certificates  surrendered to the  corporation for transfer shall be canceled and
no new  certificate  shall be issued  until the  former  certificate  for a like
number of shares shall have been surrendered and canceled, except as provided in
Section 6.06.

          6.02. Facsimile Signature and Seal. The seal of the corporation on any
certificates  for shares may be a facsimile.  The signatures of the President or
Vice  President and the Treasurer or Assistant  Treasurer or the Secretary or an
Assistant  Secretary upon a certificate  may be facsimiles if the certificate is
manually countersigned (a) by a transfer agent other than the corporation or its
employee, or (b) by a registrar other than the corporation or its employee.

          6.03.   Signature  by  Former  Officers.   The  validity  of  a  share
certificate  is not  affected  if a person who signed  the  certificate  (either
manually or in facsimile) no longer holds office when the certificate is issued.
If any officer, who has signed or whose facsimile signature has been placed upon
any  certificate  for  shares,  has  ceased  to  be  such  officer  before  such
certificate is issued,  it may be issued by the corporation with the same effect
as if he were such officer at the date of its issue.

          6.04.  Transfer of Shares.  Prior to due  presentment of a certificate
for shares for registration of transfer the corporation may treat the registered
owner of such  shares as the person  exclusively  entitled  to vote,  to receive
notifications  and  otherwise to exercise all the rights and powers of an owner.
Where a certificate for shares is presented to the corporation with a request to
register for transfer,  the corporation  shall not be liable to the owner or any
other person suffering loss as a result of such  registration of transfer if (a)
there  were  on  the  certificate  the  necessary  endorsements,   and  (b)  the
corporation  had no duty to inquire into adverse  claims or has  discharged  any
such  duty.  The  corporation  may  require   reasonable   assurance  that  such
endorsements   are  genuine  and  effective  and  compliance   with  such  other
regulations as may be prescribed under the authority of the Board of Directors.


                                      -21-

<PAGE>

          6.05.  Restrictions  on  Transfer.  The face or  reverse  side of each
certificate  representing  shares  shall  bear  a  conspicuous  notation  of any
restriction imposed by the corporation upon the transfer of such shares.

          6.06. Lost, Destroyed or Stolen  Certificates.  The Board of Directors
may  direct a new  certificate  or  certificates  to be  issued  in place of any
certificate or certificates  theretofore  issued by the  corporation  alleged to
have been lost,  stolen or  destroyed,  upon the making of an  affidavit of that
fact by the  person  claiming  the  certificate  of stock to be lost,  stolen or
destroyed. When authorizing such issue of a new certificate or certificates, the
Board of Directors may, in its  discretion  and as a condition  precedent to the
issuance  thereof,  require  the  person  requesting  such  new  certificate  or
certificates, or his or her legal representative, to give the corporation a bond
in such sum as it may  direct as  indemnity  against  any claim that may be made
against the  corporation  with respect to the  certificate  alleged to have been
lost, stolen or destroyed.

          6.07.  Consideration for Shares.  The Board of Directors may authorize
shares to be issued for  consideration  consisting of any tangible or intangible
property  or benefit  to the  corporation,  including  cash,  promissory  notes,
services  performed,  contracts for services to be performed or other securities
of the corporation. Before the corporation issues shares, the Board of Directors
shall determine that the consideration received or to be received for the shares
to be  issued is  adequate.  The  determination  of the  Board of  Directors  is
conclusive  insofar as the adequacy of consideration  for the issuance of shares
relates to whether the shares are validly issued,  fully paid and nonassessable.
The  corporation  may  place in escrow  shares  issued in whole or in part for a
contract for future services or benefits,  a promissory  note, or other property
to be issued in the future, or make other  arrangements to restrict the transfer
of the shares,  and may credit  distributions  in respects of the shares against
their purchase price, until the services are performed, the benefits or property
are received or the promissory  note is paid. If the services are not performed,
the benefits or property are not  received or the  promissory  note is not paid,
the  corporation  may  cancel,  in whole  or in part,  the  shares  escrowed  or
restricted and the distributions credited.

          6.08. Stock  Regulations.  The Board of Directors shall have the power
and authority to make all such further rules and  regulations  not  inconsistent
with the statues of the State of Wisconsin as it may deem  expedient  concerning
the issue, transfer and registration of certificates  representing shares of the
corporation.

                                ARTICLE VII. SEAL

          7.01.  The Board of Directions  shall provide a corporate seal for the
corporation which shall be circular in form and shall have inscribed thereon the
name  of the  corporation,  and  the  state  of  incorporation  and  the  words,
"Corporate Seal."

                          ARTICLE VIII. INDEMNIFICATION


                                      -22-

<PAGE>

          8.01. Certain Definitions.  All capitalized terms used in this Article
VIII and not otherwise  hereinafter  defined in this Section 8.01 shall have the
meaning  set forth in Section  180.0850  of the  Statute.  The  following  terms
(including  any plural forms thereof) used in this Article VIII shall be defined
as follows:

          (a) "Affiliate" shall include,  without  limitation,  any corporation,
partnership,  joint venture,  employee  benefit plan,  trust or other enterprise
that directly or indirectly through one or more  intermediaries,  controls or is
controlled by, or is under common control with, the Corporation.

          (b)  "Authority"  shall mean the entity  selected  by the  Director or
Officer to  determine  his or her right to  indemnification  pursuant to Section
8.04.

          (c) "Board"  shall mean the entire then  elected and serving  Board of
Directors of the  Corporation,  including all members thereof who are Parties to
the subject Proceeding or any related Proceeding.

          (d)  "Breach of Duty" shall mean the  Director or Officer  breached or
failed to perform his or her duties to the  Corporation and his or her breach of
or failure to perform those duties is  determined,  in  accordance  with Section
8.04, to constitute  misconduct  under Section  180.0851 (2) (a) 1, 2, 3 or 4 of
the Statute.

          (e)  "Corporation,"  as used  herein and as defined in the Statute and
incorporated  by reference  into the  definitions  of certain other  capitalized
terms used herein, shall mean this Corporation,  including,  without limitation,
any  successor  corporation  or entity  to this  Corporation  by way of  merger,
consolidation or acquisition of all or substantially all of the capital stock or
assets of this Corporation.

          (f)  "Director  or  Officer"  shall have the  meaning set forth in the
Statute;  provided,  that,  for  purposes  of this  Article  VIII,  it  shall be
conclusively  presumed  that any  Director  or Officer  serving  as a  director,
officer, partner, trustee, member of any governing or decision-making committee,
employee  or agent of an  Affiliate  shall be so serving  at the  request of the
Corporation.

          (g)  "Disinterested  Quorum"  shall mean a quorum of the Board who are
not Parties to the subject Proceeding or any related Proceeding.

          (h) "Party" shall have the meaning set forth in the Statute; provided,
that, for purposes of this Article VIII, the term "Party" shall also include any
Director or Officer or  employee  who is or was a witness in a  Proceeding  at a
time when he or she has not otherwise been formally named a Party thereto.

          (i)  "Proceeding"  shall have the  meaning  set forth in the  Statute;
provided,  that,  in  accordance  with  Section  180.0859 of the Statute and for
purposes of this  Article  VIII,  the term  "Proceeding"  shall also include all
Proceedings  (i) brought under (in whole or in part) the


                                      -23-

<PAGE>

Securities  Act of 1933, as amended,  the Exchange Act, their  respective  state
counterparts,  and/or  any  rule  or  regulation  promulgated  under  any of the
foregoing;  (ii) brought  before an  Authority  or  otherwise to enforce  rights
hereunder;  (iii) any appeal from a Proceeding; and (iv) any Proceeding in which
the  Director or Officer is a  plaintiff  or  petitioner  because he or she is a
Director or Officer;  provided,  however,  that any such  Proceeding  under this
subsection (iv) must be authorized by a majority vote of a Disinterested Quorum.

          (j)  "Statute"  shall  mean  Sections   180.0850   through   180.0859,
inclusive,  of the Wisconsin Business  Corporation Law as the same shall then be
in  effect,  including  any  amendments  thereto,  but,  in the case of any such
amendment, only to the extent such amendment permits or requires the Corporation
to provide broader indemnification rights than the Statute permitted or required
the Corporation to provide prior to such amendment.

          8.02 Mandatory  Indemnification.  To the fullest  extent  permitted or
required by the Statute,  the Corporation  shall indemnify a Director or Officer
against all Liabilities  incurred by or on behalf of such Director or Officer in
connection with a Proceeding in which the Director or Officer is a Party because
he or she is a Director or Officer.

          8.03. Procedural Requirements.

          (a) A Director or Officer who seeks indemnification under Section 8.02
shall make a written  request  therefor to the  Corporation.  Subject to Section
8.03 (b),  within 60 days of the  Corporation's  receipt  of such  request,  the
Corporation shall pay or reimburse the Director or Officer for the entire amount
of  Liabilities  incurred  by the  Director  or Officer in  connection  with the
subject Proceeding (net of any Expenses  previously advanced pursuant to Section
8.05).

          (b) No indemnification shall be required to be paid by the Corporation
pursuant to Section 8.02 if,  within such 120-day  period,  (i) a  Disinterested
Quorum,  by a majority  vote  thereof,  determines  that the Director or Officer
requesting  indemnification  engaged in misconduct constituting a Breach of Duty
of (ii) a Disinterested Quorum cannot be obtained.

          (c) In either  case of  nonpayment  pursuant to Section  8.03(b),  the
Board shall immediately  authorize by resolution that an Authority,  as provided
in  Section  8.04,   determine  whether  the  Director's  or  Officer's  conduct
constituted a Breach of Duty and, therefore,  whether  indemnification should be
denied hereunder.

          (d) (i) If the Board does not  authorize an Authority to determine the
Director's or Officer's right to  indemnification  hereunder within such 120-day
period and/or (ii) if  indemnification of the requested amount of Liabilities is
paid by the Corporation, then it shall be conclusively presumed for all purposes
that a Disinterested  Quorum has  affirmatively  determined that the Director or
Officer did not engage in misconduct  constituting  a Breach of Duty and, in the
case of subsection (i) above (but not subsection (ii)),  indemnification  by the
Corporation of the requested amount of Liabilities shall be paid to the Director
or Officer immediately.

          8.04. Determination of Indemnification.


                                      -24-

<PAGE>

          (a) If the Board  authorizes an Authority to determine a Director's or
Officer's right to  indemnification  pursuant to Section 8.03, then the Director
or Officer  requesting  indemnification  shall have the  absolute  discretionary
authority to select one of the following as such Authority:

          (i) An independent legal counsel; provided, that such counsel shall be
     mutually  selected by such  Director or Officer and by a majority vote of a
     Disinterested Quorum or, if a Disinterested Quorum cannot be obtained, then
     by a majority vote of the Board; or

          (ii) A  panel  of  three  arbitrators  selected  from  the  panels  of
     arbitrators   of  the  American   Arbitration   Association  in  Milwaukee,
     Wisconsin;  provided,  that (A) one  arbitrator  shall be  selected by such
     Director or Officer,  the second arbitrator shall be selected by a majority
     vote of a  Disinterested  Quorum or, if a  Disinterested  Quorum  cannot be
     obtained,  then by a majority vote of the Board,  and the third  arbitrator
     shall be selected by the two previously  selected  arbitrators,  and (B) in
     all  other  respects,   such  panel  shall  be  governed  by  the  American
     Arbitration Association's then existing Commercial Arbitration Rules.

          (b) In any such  determination  by the selected  Authority there shall
exist a rebuttable  presumption that the Director's or Officer's conduct did not
constitute  a Breach  of Duty and that  indemnification  against  the  requested
amount of Liabilities is required. The burden of rebutting such a presumption by
clear and convincing  evidence  shall be on the  Corporation or such other party
asserting that such indemnification should not be allowed.

          (c) The Authority shall make its determination within 60 days of being
selected and shall submit a written opinion of its conclusion  simultaneously to
both the Corporation and the Director or Officer.

          (d) If the  Authority  determines  that  indemnification  is  required
hereunder,  the Corporation shall pay the entire requested amount of Liabilities
(net of any Expenses  previously  advanced pursuant to Section 8.05),  including
interest thereon at a reasonable rate, as determined by the Authority, within 10
days of receipt of the Authority's opinion;  provided, that, if it is determined
by the  Authority  that a Director  or Officer is  entitled  to  indemnification
against Liabilities' incurred in connection with some claims, issues or matters,
but  not as to  other  claims,  issues  or  matters,  involved  in  the  subject
Proceeding,  the Corporation  shall be required to pay (as set forth above) only
the amount of such requested Liabilities as the Authority shall deem appropriate
in light of all of the circumstances of such Proceeding.

          (e)  The  determination  by  the  Authority  that  indemnification  is
required hereunder shall be binding upon the Corporation regardless of any prior
determination that the Director or Officer engaged in a Breach of Duty.


                                      -25-

<PAGE>

          (f) All  Expenses  incurred in the  determination  process  under this
Section 8.04 by either the  Corporation  or the Director or Officer,  including,
without limitation, all Expenses of the selected Authority, shall be paid by the
Corporation.

          8.05. Mandatory Allowance of Expenses.

          (a) The Corporation shall pay or reimburse from time to time or at any
time,  within 10 days after the receipt of the  Director's or Officer's  written
request  therefor,  the  reasonable  Expenses of the Director or Officer as such
Expenses are incurred; provided, the following conditions are satisfied:

          (i) The Director or Officer  furnishes to the  Corporation an executed
     written  certificate  affirming his or her good faith belief that he or she
     has not engaged in misconduct which constitutes a Breach of Duty; and

          (ii) The Director or Officer furnishes to the Corporation an unsecured
     executed  written  agreement to repay any advances  made under this Section
     8.05 if it is ultimately  determined by an Authority  that he or she is not
     entitled to be indemnified by the Corporation for such Expenses pursuant to
     Section 8.04.

          (b) If the  Director  or Officer  must repay any  previously  advanced
Expenses  pursuant to this Section  8.05,  such Director or Officer shall not be
required to pay interest on such amounts.

          8.06. Indemnification and Allowance of Expenses of Certain Others.

          (a) The Board may,  in its sole and  absolute  discretion  as it deems
appropriate,  pursuant  to a majority  vote  thereof,  indemnify  a director  or
officer of an Affiliate (who is not otherwise  serving as a Director or Officer)
against all Liabilities,  and shall advance the reasonable Expenses, incurred by
such director or officer in a Proceeding to the same extent hereunder as if such
director or officer incurred such  Liabilities  because he or she was a Director
or Officer,  if such director or officer is a Party thereto because he or she is
or was a director or officer of the Affiliate.

          (b) The Corporation  shall indemnify an employee who is not a Director
or  Officer,  to the  extent  he or she has been  successful  on the  merits  or
otherwise  in  defense  of a  Proceeding,  for  all  Expenses  incurred  in  the
Proceeding  if the employee was a Party because he or she was an employee of the
Corporation.

          (c) The Board may,  in its sole and  absolute  discretion  as it deems
appropriate,  pursuant to a majority vote thereof,  indemnify (to the extent not
otherwise provided in Section 8.06(b) hereof) against  Liabilities  incurred by,
and/or  provide for the  allowance  of  reasonable  Expenses  of, an employee or
authorized agent of the Corporation acting within the scope of his or her duties
as such and who is not otherwise a Director or Officer.


                                      -26-

<PAGE>

          8.07.  Insurance.  The Corporation may purchase and maintain insurance
on behalf of a Director or Officer or any  individual  who is or was an employee
or authorized agent of the Corporation against any Liability asserted against or
incurred by such  individual  in his or her capacity as such or arising from his
or her status as such,  regardless  of whether  the  Corporation  is required or
permitted to indemnify against any such Liability under this Article VIII.

          8.08.  Severability.  If any  provision  of this Article VIII shall be
deemed  invalid  or  inoperative,  or  if  a  court  of  competent  jurisdiction
determines  that any of the  provisions of this Article VIII  contravene  public
policy,  this Article VIII shall be construed so that the  remaining  provisions
shall not be affected,  but shall remain in full force and effect,  and any such
provisions  which are invalid or inoperative or which  contravene  public policy
shall  be  deemed,  without  further  action  or  deed  by or on  behalf  of the
Corporation,  to be modified,  amended  and/or  limited,  but only to the extent
necessary to render the same valid and enforceable;  it being understood that it
is the  Corporation's  intention to provide the  Directors and Officers with the
broadest  possible  protection  against personal  liability  allowable under the
Statute.

          8.09.  Nonexclusively  of  Article  VIII.  The  rights of a  Director,
Officer or employee (or any other person)  granted under this Article VIII shall
not  be  deemed  exclusive  of  any  other  rights  to  indemnification  against
Liabilities or allowance of Expenses which the Director, Officer or employee (or
such  other  person)  may be  entitled  to under any  written  agreement,  Board
resolution,  vote of shareholders  of the  Corporation or otherwise,  including,
without  limitation,  under the Statute.  Nothing contained in this Article VIII
shall be deemed to limit the  Corporation's  obligations  to  indemnify  against
Liabilities  or allow  Expenses  to a Director,  Officer or  employee  under the
Statute.

          8.10.  Contractual  Nature of Article  VIII;  Repeal or  Limitation of
Rights.  This  Article  VIII  shall  be  deemed  to be a  contract  between  the
Corporation  and each Director,  Officer and employee of the Corporation and any
repeal or other  limitation  of this Article VIII or any repeal or limitation of
the  Statute  or any  other  applicable  law  shall  not  limit  any  rights  of
indemnification  against  Liabilities  or allowance of Expenses then existing or
arising  out of events,  acts or  omissions  occurring  prior to such  repeal or
limitation,  including, without limitation, the right to indemnification against
Liabilities or allowance of Expenses for Proceedings commenced after such repeal
or  limitation  to enforce this  Article VIII with regard to acts,  omissions or
events arising prior to such repeal or limitation.

                             ARTICLE IX. FISCAL YEAR

          9.01. The fiscal year of the corporation shall be the calendar year.


                                      -27-

<PAGE>

                              ARTICLE X. AMENDMENTS

          10.01. By Shareholders.  Except as otherwise  provided in the articles
of  incorporation  of the  corporation  or these  Bylaws,  these  Bylaws  may be
altered,  amended or repealed and new Bylaws may be adopted by the  shareholders
at any Annual Meeting or Special Meeting at which a quorum is in attendance.

          10.02. By Directors.  Except as otherwise  provided in the articles of
incorporation  of the  corporation  or these  Bylaws,  these  Bylaws may also be
altered,  amended  or  repealed  and new  Bylaws  may be adopted by the Board of
Directors by affirmative  vote of a majority of the number of directors  present
at any  meeting  at which a quorum is in  attendance;  provided,  however,  that
notice of any  proposal  to take any such  action  shall have been given to each
director  not less than 72 hours  prior to the meeting by one of the methods set
forth  in  Section  3.05;  but no Bylaw  adopted  by the  shareholders  shall be
amended,  repealed or readopted  by the Board of  Directors  unless the Bylaw so
adopted so permits.

          10.03.  Implied  Amendments.  Except  as  otherwise  provided  in  the
articles of incorporation  of the corporation or these Bylaws,  any action taken
or authorized by the  shareholders or by the Board of Directors,  which would be
inconsistent  with the  Bylaws  then in  effect  but is taken or  authorized  by
affirmative  vote of not  less  than the  number  of  shares  or the  number  of
directors  required to amend the Bylaws so that the Bylaws  would be  consistent
with such  action,  shall be given the same effect as though the Bylaws had been
temporarily  amended or  suspended  so far,  but only so far, as is necessary to
permit the specific action so taken or authorized.




                                      -28-



                                                                    EXHIBIT 10.7
                                                                    ------------

                           MGIC INVESTMENT CORPORATION
                      1991 STOCK INCENTIVE PLAN, AS AMENDED

          1. Purpose. The purpose of the MGIC Investment  Corporation 1991 Stock
Incentive  Plan,  as  amended  to March 6, 1997 and as  proposed  to be  further
amended in  accordance  with  amendments  adopted  by the Board (as  hereinafter
defined) on March 6, 1997 (the "Amended Plan"), is to secure for MGIC Investment
Corporation  (the "Company") and its subsidiaries the benefits of the additional
incentive  inherent in the  ownership of the Company's  Common Stock,  $1.00 par
value (the "Common Stock"),  by certain key employees and executive  officers of
the Company and its subsidiaries and directors of the Company, who are important
to the  success  and the growth of the  business  of the Company and to help the
Company secure and retain the services of such persons.  In addition to granting
stock options ("Options"), the Amended Plan provides for a deposit share program
("Deposit Share Program") and for the award of Common Stock,  subject to certain
terms,  conditions and restrictions  ("Restricted  Stock").  It is intended that
certain of the  Options  issued  pursuant to the  Amended  Plan will  constitute
incentive  stock  Options  ("Incentive  Stock  Options")  within the  meaning of
Section
 422 of the Internal  Revenue Code of 1986, as amended (the "Code"),  and
the remainder of the Options issued pursuant to the Amended Plan will constitute
nonstatutory  Options. The Options and Restricted Stock are hereinafter referred
to collectively as "Awards".

          2. Administration.

          (a) Stock  Award  Committee.  The Amended  Plan shall be  administered
     under  the  supervision  of the  Board of  Directors  of the  Company  (the
     "Board"),  which shall exercise its powers,  to the extent herein provided,
     through the agency of the Stock Award  Committee (the  "Committee"),  which
     shall consist of at least two members and shall be appointed from among the
     members of the Board.  Any member of the Committee may resign or be removed
     by the Board and new members may be appointed  by the Board.  Additionally,
     the  Committee  shall be  constituted  so as to  satisfy  at all  times the
     outside  director  requirement of Code Section  162(m) and the  regulations
     thereunder or any substitute provision therefor.

          (b) Rules and Regulations. The Committee, from time to time, may adopt
     rules and  regulations  for carrying out the provisions and purposes of the
     Amended Plan. The  interpretation  and construction of any provision of the
     Amended Plan by the Committee shall be final, conclusive and binding on all
     interested  parties.  In  order  to  carry  out its  responsibilities,  the
     Committee  may execute such  documents and enter into such  agreements  and
     make all  determinations  deemed  necessary or advisable to effectuate  the
     purposes of the Amended Plan.



<PAGE>

          (c) Authority. The Committee shall have all the powers vested in it by
     the terms of the Amended Plan, such powers to include  exclusive  authority
     (subject to the terms of the Amended Plan and applicable law) to select the
     persons to be granted Awards under the Amended Plan, to determine the type,
     size and terms of Awards to be made to each person  selected,  to determine
     the time when  Awards  will be  granted  and to  establish  objectives  and
     conditions for earning Awards.  The Committee shall determine which Options
     are to be Incentive Stock Options and which are to be nonstatutory  Options
     and  shall in each case  enter  into a written  Option  agreement  with the
     recipient  thereof  (an  "Option  Agreement")  setting  forth the terms and
     conditions  of the  grant  and  the  exercise  of the  subject  Option,  as
     determined  by the  Committee in  accordance  with the Amended Plan. To the
     extent that the aggregate fair market value of Common Stock with respect to
     which Incentive Stock Options under the Amended Plan and any other plans of
     the  Company  or  its  subsidiaries  are  exercisable  by an  Employee  (as
     hereinafter  defined) for the first time during any  calendar  year exceeds
     $100,000,  such Options shall be treated as Options which are not Incentive
     Stock  Options.  To the  extent  the Code is  amended  from time to time to
     provide additional or different limitations on the grant of Incentive Stock
     Options,  the  foregoing  limitation  shall  be  considered  to be  amended
     accordingly.   The  Committee  shall  have  full  power  and  authority  to
     administer  and  interpret  the  Amended  Plan  and to  adopt  such  rules,
     regulations,  agreements, guidelines and instruments for the administration
     of the Amended  Plan and for the conduct of its  business as the  Committee
     deems necessary or advisable. The Committee's interpretation of the Amended
     Plan,  and all  actions  taken  and  determinations  made by the  Committee
     pursuant to the powers vested in it, shall be conclusive and binding on all
     parties   concerned,   including  the  Company,   its   subsidiaries,   its
     shareholders, Participants (as defined in Section 4 below) and any employee
     of the Company or its  subsidiaries.  The Committee may delegate  duties to
     any person or persons; provided, that, no delegation of duties is permitted
     with respect to (i) any grant,  award or other acquisition from the Company
     if the person or persons to whom duties are delegated would not satisfy the
     standard of Rule 16b-3(d)(1) under the Securities  Exchange Act of 1934, as
     amended,  or any  substitute  provision  therefor  or the  requirements  of
     Section  162(m) of the Code and (ii) any  disposition to the Company if the
     person or  persons to whom  duties  are  delegated  would not  satisfy  the
     standard of Rule 16b-3(d)(1).

          (d) Records.  The  Committee  shall  maintain a written  record of its
     proceedings.  A majority of the Committee members shall constitute a quorum
     for any meeting.  Any  determination or action of the Committee may be made
     or taken by a  majority  of the  members  present at any such  meeting,  or
     without a meeting by a resolution or written memorandum concurred in by all
     of the members then in office.


                                      -2-

<PAGE>

          3. Stock Subject to Awards.  The aggregate  number of shares of Common
Stock for which  Awards may be granted  under the Amended  Plan shall not exceed
7,000,000 shares,  subject to adjustment as provided in Section 8 below. If, and
to the extent that,  Options  granted under the Amended Plan terminate or expire
without having been exercised,  or shares of Restricted  Stock under the Amended
Plan are forfeited,  the shares covered by such terminated or expired Options or
forfeited  Restricted  Stock,  as the case may be, may be the subject of further
grants under the Amended Plan.  Restricted  Stock granted under the Amended Plan
and shares issued upon the exercise of any Option granted under the Amended Plan
may be, at the Company's  discretion,  shares of authorized and unissued  Common
Stock,  shares  of  issued  Common  Stock  held  in the  Company's  treasury  or
reacquired shares or any combination thereof. The foregoing notwithstanding, the
maximum number of shares of Restricted  Stock for which Awards may be granted is
400,000 shares.

          4. Persons Eligible. Under the Amended Plan, (i) Awards may be granted
to any key  employee or  executive  officer of the Company who is an employee of
the Company or its subsidiaries,  including any employee who is also a member of
the Board (an "Employee")  and (ii) shares of Restricted  Stock shall be awarded
to each  Non-Employee  Director  under the Deposit  Share  Program,  as provided
herein.  "Non-Employee  Director"  means a  member  of the  Board  who is not an
employee of the Company or of any person,  directly or indirectly,  controlling,
controlled  by or under  common  control with the Company and is not a member of
the Board  representing  a holder of any class of securities of the Company.  In
determining  the  Employees  to whom  Awards are to be granted and the number of
shares to be covered by an Award,  the Committee  shall take into  consideration
the Employee's present and potential  contribution to the success of the Company
and such other  factors  as the  Committee  may deem  proper  and  relevant.  An
Employee  receiving an Award,  and a Non-Employee  Director  receiving shares of
Restricted Stock under the Amended Plan are individually hereinafter referred to
as a "Participant". In no event may Awards be granted to any one Participant for
more than twenty percent (20%) of the aggregate number of shares of Common Stock
for which  Awards may be granted  under the  Amended  Plan,  including  for this
purpose Awards granted to such  Participant  which are  subsequently  cancelled,
forfeited or otherwise terminated.

          5. Provisions Applicable to Options.

          (a) Price and Type of  Options.  The  purchase  price of each share of
     Common  Stock under any Option  granted  under the Amended Plan shall be as
     determined by the Committee in its sole  discretion,  but shall not be less
     than the Fair Market Value thereof  (determined  in a manner  equivalent to
     the determination under Section 6(e), unless in the case of Incentive Stock
     Options,  the Code  requires a different  method,  in which case the method
     required by the Code shall be followed for Incentive  Stock Options) on the
     date of grant.  The type of Option  granted  shall be as  determined by the
     Committee, but any Incentive Stock Options granted shall be subject to such
     terms and conditions as are required for the  qualification  as such by the
     Code on the date of grant. Any Options


                                      -3-

<PAGE>
     granted  under the Amended  Plan shall be clearly  identified  as Incentive
     Stock Options or nonstatutory stock Options.

          (b) Exercisability of Options.  The Committee shall determine when and
     to what extent an Option shall be vested, including continuation of vesting
     after retirement at a specified age and with a specified number of years of
     service;  and  may  provide  for  Options  to be  vested  based  upon  such
     performance  related  goals as the Committee in its sole  discretion  deems
     appropriate   ("Performance   Goals").  The  Committee  may,  in  its  sole
     discretion, also provide that some or all Options granted shall immediately
     become vested or  exercisable  as of a date fixed by the  Committee  upon a
     change in control of the  Company  as  defined by the  Committee  or in the
     event  of a sale,  lease or  transfer  of all or  substantially  all of the
     Company's assets, equity securities or businesses, or merger, consolidation
     or other business  combination of the Company. The Committee may also if it
     so elects make any such action  contingent  upon  consummation of the event
     which prompted the action.

          (c)  Termination  of Options.  The  unexercised  portion of any Option
     granted  under the Amended  Plan shall  automatically  and  without  notice
     terminate  and become null and void at the time of the earliest to occur of
     the following:

               (i) Thirty (30) days after the  termination of the  Participant's
          employment  with the  Company  and all  subsidiaries  thereof  for any
          reason (including,  without limitation,  disability, or termination by
          the Company and all subsidiaries thereof, with or without cause) other
          than by reason of the Participant's death, retirement from the Company
          and all  subsidiaries  thereof after  reaching age 55 and after having
          been  employed by the Company or any  subsidiary  thereof for at least
          seven (7) years or a leave of absence approved by the Company;

               (ii) (x) except as  provided  in (y),  three  hundred  sixty-five
          (365) days after the termination of the Participant's  employment with
          the   Company   and  all   subsidiaries   thereof  by  reason  of  the
          Participant's death, or by reason of the Participant's retirement from
          the Company and all  subsidiaries  thereof  after  reaching age 55 and
          after having been  employed by the Company or any  subsidiary  thereof
          for at least seven (7) years;  or (y) in the case of such  retirement,
          such longer period as the Committee may provide for a Participant;

               (iii)Thirty  (30) days after expiration or termination of a leave
          of absence  approved by the  Company  unless the  Participant  becomes
          reemployed  with the  Company or any  subsidiary  prior to such 30-day
          period


                                      -4-

<PAGE>

          in which event the Option shall continue in effect in accordance  with
          its terms;

               (iv)  The  expiration  of  the  Option  Period  (as   hereinafter
          defined); or

               (v) In  whole  or in  part,  at such  earlier  time  or upon  the
          occurrence of such earlier  event as the  Committee in its  discretion
          may have provided upon the granting of such Option.

          (d) Term of Options. The term of each Option granted under the Amended
Plan will be for such period (herein  referred to as the "Option Period") of not
less than  seven (7)  years  and not more than ten (10)  years as the  Committee
shall  determine.  With respect to Incentive  Stock  Options,  such term may not
exceed ten (10) years or such other term provided in the Code. Each Option shall
be subject to earlier termination as described under "Termination of Options" in
subparagraph  (c) above.  An Option shall be considered  granted on the date the
Committee  acts to grant the  Option or such date  thereafter  as the  Committee
shall specify.

          (e) Exercise of Options. Options granted under the Amended Plan may be
exercised by the  Participant,  as to all or part of the shares covered thereby,
in accordance with the terms of such Participant's  Option Agreement.  A partial
exercise of an Option may not be made with respect to fewer than ten (10) shares
unless the shares  purchased  are the total number then  available  for purchase
under the Option.  A Participant  shall  exercise such Option by delivering  ten
(10) days' (or such shorter  period as the Company  shall  permit) prior written
notice of the  exercise  thereof  on a form  prescribed  by the  Company  to the
Secretary  of the  Company at its  principal  office,  specifying  the number of
shares to be purchased.  The purchase  price of the shares as to which an Option
shall be exercised  shall be paid in full in cash or its  equivalent at the time
of exercise.

          The Participant shall be responsible for paying all withholding taxes,
if any,  applicable to any Option  exercise and the Company shall have the right
to take any action  necessary to insure that the  Participant  pays the required
withholding  taxes.  Upon payment of the Option  purchase price and the required
withholding  taxes,  the  Company  shall cause a  certificate  for the shares so
purchased to be delivered to the Participant.

          (f) Stock Withholding.  Notwithstanding  the terms of subparagraph (e)
above, a Participant shall be permitted to satisfy the Company's withholding tax
requirements  by electing to have the Company  withhold  shares of Common  Stock
otherwise  issuable to the  Participant  or to deliver to the Company  shares of
Common  Stock  having  a fair  market  value on the date  income  is  recognized
pursuant  to the  exercise  of an  Option  equal to the  amount  required  to be
withheld.  The election  shall be made in writing and shall be made according to
such rules and in such form as the Committee may determine.


                                      -5-

<PAGE>

          (g)  Exercise  of  Options   following   Participant's   Death.  If  a
Participant dies ("Deceased Participant") while in the employ of the Company, or
during any longer  period  applicable  to a Deceased  Participant  under Section
5(c)(ii)(y),  and if the Deceased  Participant's  death occurs prior to the date
the Option  terminates,  regardless of whether the Option is subject to exercise
under the terms of the Option,  such Option shall become  immediately vested and
exercisable by the personal  representative  of the Deceased  Participant or the
person to whom the  Deceased  Participant's  rights  under the  Option  would be
transferred by law or applicable laws of descent and distribution. The Committee
may also provide as to Options  outstanding as of January 1, 1994 for a right to
surrender the Option to the Company at a price equal to the  difference  between
the aggregate Option price and the fair value of the Common Stock subject to the
Option as of the  Deceased  Participant's  death.  The  surrender  shall also be
subject to such terms and  conditions as are determined by the Committee and set
forth in the Option Agreement.

          (h)  Non-Transferability  of  Options.  Except to the extent as may be
permitted  under  rules  established  by the  Committee,  an Option or any right
evidenced  thereby shall not be transferable  otherwise than by will or the laws
of descent and distribution,  and shall be exercisable  during the Participant's
lifetime only by him or by his guardian or legal representative.

          (i)  Rights of  Participant.  The  Participant  shall have none of the
rights of a shareholder of the Company with respect to the shares subject to any
Option  granted under the Amended Plan until a certificate or  certificates  for
such shares shall have been issued upon the exercise of any Option.

          6.  Restricted  Stock  Awards.   The  Committee  may  make  awards  of
Restricted Stock  ("Restricted Stock Awards") to Participants who are Employees,
and shall make Awards to  Non-Employee  Directors,  subject to the provisions of
this Section 6.

          (a)  Restricted  Stock  Agreements.  Restricted  Stock Awards shall be
     evidenced by Restricted Stock agreements  ("Restricted  Stock  Agreements")
     which shall conform to the requirements of the Amended Plan and may contain
     such other  provisions (such as provisions for the protection of Restricted
     Stock  in  the  event  of   mergers,   consolidations,   dissolutions   and
     liquidations  affecting either the Restricted Stock Agreement or the Common
     Stock issued thereunder) as the Committee shall deem advisable.

          (b) Payment of Restricted Stock Awards.  Restricted Stock Awards shall
     be made by  delivering  to the  Participant  or an Escrow Agent (as defined
     below) a certificate or certificates for such shares of Restricted Stock of
     the Company, as determined by the Committee  ("Restricted  Shares"),  which
     Restricted Shares shall be registered in the name of such Participant.  The
     Participant  shall have all of the rights of a holder of Common


                                      -6-

<PAGE>

          Stock  with  respect  to  such  Restricted  Shares  except  as to such
          restrictions as appear on the face of the  certificate.  The Committee
          may  designate  the Company or one or more of its  employees to act as
          custodian or escrow agent for the certificates ("Escrow Agent").

          (c) Terms,  Conditions and  Restrictions.  Restricted  Shares shall be
     subject to such terms and  conditions,  including  vesting  and  forfeiture
     provisions,  if any, and to such restrictions  against resale,  transfer or
     other  disposition as may be provided in this Amended Plan and,  consistent
     therewith,  as may be determined by the Committee at such time as it grants
     a Restricted Stock Award to a Participant.  Any new or different Restricted
     Shares or other securities resulting from any adjustment of such Restricted
     Shares  pursuant  to Section 8 hereof  shall be subject to the same  terms,
     conditions  and  restrictions  as  the  Restricted  Shares  prior  to  such
     adjustment.  The  Committee  may  in  its  discretion,  remove,  modify  or
     accelerate the release of restrictions on any Restricted Shares as it deems
     appropriate.  In the event of the  Participant's  death,  all  transfers or
     other restrictions to which the Participant's Restricted Shares are subject
     shall   immediately   lapse,   and   the   Deceased   Participant's   legal
     representative  or  person  receiving  such  Restricted  Shares  under  the
     Deceased  Participant's  will or under the laws of descent and distribution
     shall  take  such  Restricted  Shares  free of any such  transfer  or other
     restrictions.

          (d) Dividends and Voting Rights.  Except as otherwise  provided by the
     Committee,  during the  restricted  period the  Participant  shall have the
     right to receive  dividends from and to vote the  Participant's  Restricted
     Shares.

          (e) Deposit Share  Program.  Subject to the provisions set forth below
     and  subject  to  rules  established  by  the  Committee,  pursuant  to the
     Company's Deposit Share Program,  (1) Employees may elect to acquire shares
     of Common Stock with a Fair Market Value up to a percentage  designated  by
     the Committee of cash bonuses under the  Company's  incentive  compensation
     programs designated by the Committee,  and (2) Non-Employee Directors shall
     be entitled  to acquire  shares of Common  Stock with a Fair  Market  Value
     equal to up to 100% of the compensation of such  Non-Employee  Director for
     service as a director of the Company,  including for service as a member of
     a Committee of the Board, during the preceding calendar year (in each case,
     "Deposit  Shares").  Deposit  Shares shall be issued in an amount which the
     Deposit Share  Participant  (as defined in Section 6(e)(i) below) elects to
     use to acquire  Common  Stock  (subject to limits  provided in this Section
     6(e))  divided by the Fair Market  Value of a share of Common  Stock on the
     Award Date (as defined in Section 6(e)(ii) below). For purposes hereof, the
     term "Fair Market Value" shall be as determined  by the  Committee,  except
     that during any period the Common Stock is traded on a recognized exchange,
     Fair Market  Value shall be based upon the last sales price of Common Stock
     on the  principal  securities  exchange  on which the same is traded on the
     Award Date or if no sales of Common  Stock  have taken  place on such date,
     the last sales  price on the first date


                                      -7-

<PAGE>
     following the Award Date on which sales occur.  Deposit Share  Participants
     electing to deposit Deposit Shares with the Company under the Deposit Share
     Program and receive  Restricted Stock Awards in connection  therewith shall
     do so as follows:

          (i) The  Committee  shall notify each  Participant  who is an Employee
     selected to participate in the Deposit Share Program and each  Non-Employee
     Director (such Employees and Non-Employee Directors together referred to as
     "Deposit  Share  Participants")  of  the  maximum  amount  which  they  are
     permitted to use to acquire  Common  Stock to be deposited  with the Escrow
     Agent,  and Deposit Share  Participants may choose to deposit any number of
     Deposit  Shares they are  permitted to deposit  under the  Committee  rules
     (Deposit Shares so acquired and deposited are herein sometimes  referred to
     as the "Original Deposit").

          (ii) Deposit Share  Participants must make their irrevocable  election
     on or  before  the  date  designated  by the  Committee  or if no  date  is
     designated,  then at least  thirty (30) days prior to the Award  Date.  The
     Award  Date  ("Award  Date")  for  each  year  in  which  a  Deposit  Share
     Participant is eligible to receive  Deposit Shares shall be February 15, or
     the Monday following  February 15 in any year in which February 15 falls on
     a Saturday or Sunday,  unless the  Committee  designates a different  Award
     Date. The Award Date for Employees and  Non-Employee  Directors need not be
     the same.  The  Committee  shall have the  discretion  to waive any date or
     deadline established pursuant to this section. The Committee may also allow
     a Deposit Share Participant who is an Employee to acquire Deposit Shares in
     lieu of a bonus,  or to  deliver  a check  equal to the  dollar  amount  of
     bonuses  for which the  Deposit  Share  Participant  may  purchase  Deposit
     Shares,  in which case the full amount of the cash bonus  (less  applicable
     withholding)  will be paid to the Employee and the Employee shall deliver a
     check  to the  Company,  subject  to  the  limitations  established  by the
     Committee.

          (iii) All  elections  shall be in writing and filed with the Committee
     or its designee.  Such elections  may, if permitted by the Committee,  also
     specify one of the  following  alternatives  regarding  the manner in which
     dividends are paid on all deposited stock (including Deposit Shares, shares
     purchased with dividends,  if any, and matching Restricted Shares (but only
     if the Committee allows dividends on such Restricted  Shares to be paid and
     credited)):

               (1) Dividends  shall be  accumulated  by the Escrow Agent for the
          purchase  of  additional  shares for the Deposit  Share  Participant's
          account; or

               (2)  Dividends  shall  be paid  currently  to the  Deposit  Share
          Participant.


                                      -8-

<PAGE>

     A Deposit Share Participant shall be deemed to have elected Alternative (1)
     unless or until the Deposit Share  Participant  delivers  written notice to
     the Company selecting  Alternative (2) as the method by which dividends are
     to be paid and credited.

          (iv) As soon as practicable following an Original Deposit, the Company
     shall  match the Deposit  Shares  deposited  with the Escrow  Agent for the
     Deposit Share Participant's  account by depositing (1) for an Employee,  up
     to one (1) Restricted Share for each Deposit Share in the Original Deposit,
     as determined by the Committee,  and (2) for a Non-Employee  Director,  one
     and  one-half  (1-1/2)  Restricted  Share  for  each  Deposit  Share in the
     Original  Deposit.  Restricted  Shares shall be  distributed to the Deposit
     Share  Participant  entitled thereto as promptly as practicable  after they
     vest.

          (v) With respect to Employees,  the Restricted Shares deposited by the
     Company  shall  vest in  accordance  with the  schedule  determined  by the
     Committee.  With respect to Non-Employee  Directors,  the Restricted Shares
     shall vest on the third  anniversary  of the date of the  Award.  Awards of
     Restricted   Stock  that  are  not  vested  shall  be  forfeited  upon  the
     Non-Employee  Director  ceasing to be a  director  of the  Company  for any
     reason,  except in the case of death, as hereinafter  provided in Section 6
     (e)  (ix),  except  in the  case of a  Permissible  Event  (as  hereinafter
     defined)  or  except  as  otherwise   provided  by  the  Committee.   If  a
     Non-Employee  Director  ceases to be a director by reason of a  Permissible
     Event,  the Restricted  Shares shall continue to vest during the balance of
     the  three-year  vesting  period if (1) no later than the date on which the
     Non-Employee  Director  ceases  to  be  a  director  of  the  Company,  the
     Non-Employee  Director  enters into an agreement  approved by the Committee
     under  which the  Non-Employee  Director  agrees  not to  compete  with the
     Company or its  subsidiaries  during the balance of such period and (2) the
     Non-Employee  Director  complies with the agreement.  Any Restricted Shares
     that do not vest by reason of a Permissible Event shall be forfeited unless
     otherwise  provided  by the  Committee.  A  Permissible  Event shall be any
     termination of service as a director of the Company by reason of:

               (1) the  Non-Employee  Director  being  ineligible  for continued
          service as a director of the Company  under the  Company's  retirement
          policy; or

               (2)  the  Non-Employee  Director's  taking  a  position  with  or
          providing  services  to  a  governmental,  charitable  or  educational
          institution whose policies prohibit  continued service on the Board or
          due to the  fact  that  continued  service  as a  director  would be a
          violation of law.


                                      -9-

<PAGE>

     The  Company  may,  in  its  sole  discretion,  provide  that  some  or all
     Restricted Stock shall immediately  become vested in the circumstances with
     respect to immediate vesting of Options contemplated by Section 5(b).

          (vi) Shares purchased with dividends paid on deposited stock (Original
     Deposit,  Restricted  Stock or any shares  purchased with dividends) may be
     withdrawn from a Deposit Share Participant's account at any time.

          (vii) A Deposit Share Participant's  interests in the Original Deposit
     or the Restricted Stock may not be sold,  pledged,  assigned or transferred
     in any manner,  other than by will or the laws of descent and distribution,
     so long as such  shares  are held by the Escrow  Agent,  and any such sale,
     pledge,  assignment  or other  transfer  shall be null and void;  provided,
     however,  a pledge  of the  Deposit  Share  Participant's  interest  in the
     Original  Deposit  or a  transfer  of such  Participant's  interest  in the
     Original Deposit (any permitted  transfer not being considered a withdrawal
     of the  Original  Deposit) or in the  Restricted  Stock may be permitted in
     accordance  with rules which the  Committee  may  establish.  To the extent
     Restricted  Shares become vested, at the same time as Restricted Shares are
     released  by the Escrow  Agent,  the  Escrow  Agent  shall  also  release a
     percentage  (computed to the nearest whole percent) of the Original Deposit
     equal to the number of Restricted  Shares then being  released,  divided by
     the number of  Restricted  Shares  deposited by the Company with respect to
     the Original Deposit.

          (viii) Any or all of the  Original  Deposit  may be  withdrawn  at any
     time. Such withdrawal shall cause a forfeiture of any non-vested Restricted
     Shares  attributable  to the Deposit  Shares being  withdrawn.  Any Deposit
     Shares  withdrawn  shall be  deemed to have been  withdrawn  under  Section
     6(e)(vi)  to the  extent  there are any such  shares,  and then  under this
     Section 6(e)(viii).

          (ix) In the event the employment with the Company or its  subsidiaries
     of a Deposit Share  Participant who is an Employee is terminated during the
     vesting  period by reason of the Deposit  Share  Participant's  death,  the
     vesting  requirements  shall  be  deemed  fulfilled  upon  the date of such
     termination of employment.  In the event a Non-Employee  Director's service
     as a director of the  Company is  terminated  during the vesting  period by
     reason of the Non-Employee Director's death, the vesting requirements shall
     be deemed to be fulfilled on the date of such termination of service.

          (x) In the event the employment with the Company and its  subsidiaries
     of a Deposit Share  Participant who is an Employee is terminated during the
     vesting period for any reason other than death, the Restricted  Shares,  to
     the extent not  otherwise  vested,  shall  automatically  be forfeited  and
     returned to the Company


                                      -10-

<PAGE>
     unless the Committee shall, in its sole discretion, otherwise provide.

          (xi) At the  request  of a  Non-Employee  Director  who has during the
     preceding  calendar  year  elected to defer  compensation  described in the
     first sentence of Section 6(e) into Phantom Stock (as defined  below),  the
     amount that would  otherwise  be  deposited  shall be reduced by the amount
     specified  by such  Director up to the amount of  compensation  so deferred
     (the "Reduction Amount").  For purposes of determining the number of shares
     of  Restricted  Stock to be  matched  for  such a  Director  under  Section
     6(e)(iv),  the Original  Deposit  shall be deemed to be equal to the sum of
     the amount, if any, actually  deposited plus the Reduction Amount,  divided
     by the Fair Market Value.  For all other  purposes of Section 6(e),  (A) in
     the case of a  Non-Employee  Director who makes an actual  deposit and also
     has a Reduction Amount,  the Original Deposit shall be determined only with
     respect to the amount actually deposited,  and (B) a Non-Employee  Director
     who makes no actual  deposit  shall be deemed to have no Original  Deposit.
     "Phantom  Stock"  means a phantom  stock  account with respect to shares of
     Common  Stock  under  a  deferred  compensation  plan of the  Company  that
     provides  that no  distribution  or transfer  may be made from such account
     during the vesting  period  applicable to the  Non-Employee  Director under
     Section   6(e)(v)  above  other  than  a  distribution   arising  from  the
     Non-Employee Director ceasing to be a director of the Company.

          7. Right to  Terminate  Employment.  Nothing in the Amended Plan or in
any Award  granted  under the Amended Plan to a  Participant  who is an Employee
shall confer upon any such  Participant  the right to continue in the employment
of  the  Company  or  affect  the  right  of the  Company  to  terminate  such a
Participant's  employment  at any time,  nor cause any Award  granted  to become
exercisable as a result of the election by the Company of its right to terminate
at any  time the  employment  of such a  Participant  subject,  however,  to the
provisions  of  any  agreement  of  employment  between  the  Company  and  such
Participant.  Nothing in the Amended  Plan or in any Award of  Restricted  Stock
under the Amended Plan to a Participant  who is a  Non-Employee  Director  shall
confer upon such Director the right to continue as a member of the Board.

          8. Dilution and Other  Adjustments.  In the event of any change in the
outstanding  shares  of  the  Company  ("capital  adjustment")  for  any  reason
including,   but  not   limited   to,   any   stock   split,   stock   dividend,
recapitalization, merger, consolidation, reorganization, combination or exchange
of shares or other similar event,  an adjustment in the number or kind of shares
of  Common  Stock  subject  to,  the  Option  price  per  share  under,  and (if
appropriate)  the terms and  conditions  of,  any  outstanding  Award,  shall be
modified or  provided  for by the  Committee  in a manner  consistent  with such
capital adjustment, and the shares reserved for issuance under this Amended Plan
shall likewise be modified.  The  determination  of the Committee as to any such
adjustment shall be conclusive and binding for all purposes of the Amended Plan.


                                      -11-

<PAGE>

          9. Form of Agreements with Participants.  Each Option Agreement and/or
Restricted Stock Agreement to be executed by a Participant shall be in such form
as the Committee shall in its discretion determine.

          10. Legend on Certificates; Restrictions on Transfer. The Company may,
to the extent  deemed  necessary or  advisable,  endorse an  appropriate  legend
referring  to any  restrictions  imposed by state law or the  Securities  Act of
1933, as amended,  upon the certificate or certificates  representing any shares
issued or transferred to the Participant pursuant to Awards.

          11.  Securities Act Compliance.  Notwithstanding  any provision of the
Amended Plan to the contrary,  the Committee  shall take whatever  action it may
consider  necessary or appropriate to comply with the Securities Act of 1933, as
amended,  or any other then applicable  securities law,  including  limiting the
granting and exercise of Options or the issuance of shares thereunder.

          12.  Amendment,  Expiration and Termination of the Amended Plan. Under
the Amended Plan, Awards may be granted at any time and from time to time before
the  tenth  anniversary  date of  adoption  of  amendments  to this  Plan by the
Company's  Board of  Directors  on January 27, 1994 (the date on which this Plan
was last previously amended) at which time the Amended Plan will expire,  except
as to Awards then outstanding. The foregoing notwithstanding, no Incentive Stock
Options may be granted  after  January 1, 2001.  The Amended Plan will remain in
effect with respect to outstanding  Awards until such Awards have been exercised
or have  expired,  as the case may be. The  Amended  Plan may be  terminated  or
modified  at any time by the Board of  Directors  before the  expiration  of the
Amended  Plan,  except  with  respect to any Awards then  outstanding  under the
Amended Plan, provided that any increase in the maximum number of shares subject
to Awards  specified in Section 3 or in Section 4 hereof shall be subject to the
approval of the Company's shareholders unless made pursuant to the provisions of
Section 8 hereof.  No amendment of the Amended Plan shall  adversely  affect any
right of any Participant with respect to any Award theretofore granted under the
Amended Plan.

          13.  Effective  Date.  If the  Amended  Plan  is not  approved  by the
Company's   shareholders  prior  to  September  1,  1997,  the  MGIC  Investment
Corporation 1991 Stock Incentive Plan as in effect immediately prior to March 6,
1997 shall remain in effect and shall not be deemed to have been amended.

          14.  Governing Law. The Amended Plan and any Option  Agreement  and/or
Restricted Stock Agreement shall be governed by and construed in accordance with
the internal  substantive laws, and not the choice of law rules, of the State of
Wisconsin. 



                                      -12-


                                                                    EXHIBIT 10.8
                                                                    ------------

                              EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as of
the first day of January,  2000 by and between  WILLIAM H. LACY,  an  individual
currently residing at 1797 Shalom Drive, West Bend, Wisconsin 53095 (hereinafter
referred  to as "Lacy"),  on behalf of himself and his agents,  representatives,
heirs,  executors,  attorneys,  administrators,   successors  and  assigns;  and
MORTGAGE GUARANTY INSURANCE CORPORATION, a stock insurance company organized and
existing  under  the  laws  of  the  State  of  Wisconsin,  with  its  principal
administrative offices located at 250 East Kilbourn Avenue, Milwaukee, Wisconsin
53202 (hereinafter referred to as the "Company").


                                   WITNESSETH:

     WHEREAS,  Lacy was employed by the Company as its Chairman  until  December
31, 1999; and in connection with Lacy's  retirement as an officer of the Company
and its affiliates,  which was effective as of the close of business on December
31,  1999,  Lacy and the Company  desire to continue the  employment  of Lacy as
Special  Advisor  until  January  31,  2005,  on the  terms and  subject  to the
conditions set forth herein.

     NOW,  THEREFORE,  in consideration of the foregoing and the mutual promises
contained herein, and for other good
 and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged,  Lacy and the Company hereby agree
as follows:

     1.  Confirmation of Officer  Retirement;  Continuation of Employment.  Lacy
hereby confirms that he has retired from and resigned his officer positions with
the Company and all parent, subsidiary,  and affiliated corporations,  effective
as of the close of the  Company's  business on December  31, 1999 (the  "Offices
Retirement  Date").  Lacy's retirement as an officer shall not be deemed to be a
termination  of  employment,  and Lacy shall  continue his  employment  with the
Company  hereunder and shall provide advice and counsel to the Company's  senior
management  regarding the Company's  operations  and such other  services to the
Company  commensurate with Lacy's prior position and status,  substantially on a
full-time  basis  consistent  with Lacy's past  practice,  in each case,  to the
extent requested by the Chief Executive  Officer or a person  designated by him,
for a period  ending at the close of business on January 31,  2005.  Lacy agrees
that he has no right to continue his  employment  after January 31, 2005. To the
extent feasible,  Lacy will be entitled to perform the services  required hereby
from his home.

     2. Base  Salary.  Subject to the terms and  conditions  of this  Agreement,
following the Offices Retirement Date, the Company shall pay Lacy as follows:

          (a) Base Salary.  Beginning on January 1, 2000,  the Company shall pay
Lacy a base salary at an annualized  rate of $500,000.00  ("Base  Salary") until
the earlier of: (i)



<PAGE>
termination of Lacy's  employment with the Company  pursuant to Section 9 below,
or (ii)  January  31,  2005,  at which time the  Company  shall stop making such
payments.

          (b) Amount and Timing of Payments.  All Base Salary  payments  will be
paid in bi-weekly  installments on such dates as the Company  generally pays its
other employees.  The first and last such  installments  will be prorated if the
installment period is less than two full weeks.

          (c) Deductions.  The Company will deduct from all Base Salary payments
all legally  required payroll  deductions,  including but not limited to federal
and  state  income  tax and FICA  withholding,  as well as all  other  customary
deductions elected by Lacy.

     3. Pension Plan.  During the period in which Base Salary  payments are made
to Lacy,  he will  participate  in the Company's  pension plan and  Supplemental
Executive Retirement Program ("SERP") as an employee of the Company.

     4.  Profit  Sharing  Plan.  Lacy will be  entitled  to  participate  in the
Company's  profit  sharing  plan for each year  during  the period in which Base
Salary  payments are made,  provided he remains  eligible to receive Base Salary
payments as of December 31st of such year. Lacy's participation in the Company's
profit  sharing  plan for each such year  shall be to the same  extent  as,  and
subject to the same terms and  conditions  that apply to, other active full time
employees of the Company,  provided  Lacy has complied with all of the terms and
conditions of Sections 7 and 8 below. The Company's profit sharing  contribution
to Lacy for  such  year  will be based  solely  upon the  eligible  compensation
received by Lacy from the Company during such year. Lacy also  acknowledges  and
agrees that he will not be entitled to receive any profit sharing  contributions
for any calendar year after 2004.

     5.  Insurance.  During the period in which Base Salary payments are made to
Lacy,  he will be eligible to  participate  in the  Company's  group  health and
dental insurance plans, as well as the Company's long term disability  insurance
plan.  During such period,  the Company will provide such insurance  benefits to
Lacy  on the  same  basis  it  provides  these  benefits  to all  other  Company
employees,  including,  but not limited to,  those terms and  conditions  of the
plans  requiring  the  payment  by the  employee  of the  employee's  portion of
insurance  premiums.  During such period, the Company also shall continue to pay
the  Company's  portion of the premium for Lacy's  split-dollar  life  insurance
coverage  and  supplementary  long-term  disability  insurance  coverage for the
calendar years of 2000 through 2004, inclusive.  (No split-dollar life insurance
coverage  or  supplementary  long-term  disability  insurance  coverage  will be
purchased  by the Company for Lacy for any period after 2004.) To the extent the
Company's long-term disability insurance plan, as in effect on January 31, 2005,
provides a feature  allowing a terminating  Company employee to convert coverage
under  the plan to an  individual  policy,  the  Company  will take no action to
impair Lacy's  ability to exercise any right he may have under the plan to elect
such conversion,  provided, however, that any such conversion shall be at Lacy's
sole option, cost and expense.


                                      -2-

<PAGE>

     6. No Other  Compensation or Benefits.  Lacy  acknowledges and agrees that,
except as is  specifically  provided for in this Agreement and any written stock
option  agreements  he may have  previously  entered  into with MGIC  Investment
Corporation,  he will not be entitled to receive from the Company (or any of its
parent or affiliated  corporations)  any salary,  wages,  bonuses (except to the
extent a bonus is  awarded to him with  respect  to the year  ended  December31,
1999),  contributions,  insurance,  stock option  rights,  or other  benefits or
compensation  of any kind,  whatsoever.  Without  limiting the generality of the
foregoing,  Lacy acknowledges and agrees that he will not be entitled to receive
any severance  compensation  or other bonuses,  incentive  payments,  or similar
payments  at any time  after the date of this  Agreement,  except  as  otherwise
expressly set forth herein.

     7. Return of Confidential Information.  On or prior to January 31, 2005 (or
if this  Agreement is earlier  terminated or the Company so requests in writing,
as promptly as  practicable  thereafter),  Lacy shall  return to the Company all
written or otherwise tangible MGIC Confidential Information in his possession or
subject to his  control.  For  purposes  of this  Agreement,  MGIC  Confidential
Information  shall include,  without  limitation,  all business  information and
records  that  relate to the  Company or any of its direct or  indirect  parent,
subsidiary or affiliated companies, which are not known to the public generally.
MGIC Confidential Information shall include,  without limitation,  all originals
and all  full or  partial  copies  of any  written  or  electronically  captured
materials  received  (from the  Company  or any third  party),  sent,  reviewed,
developed  or  prepared  by Lacy  during the course of his  employment  with the
Company, all financial statements and other accounting or financial information,
customer lists,  customer  profiles,  customer  buying  records,  sales records,
market  surveys,  marketing  plans and  information,  short-term  and long-range
business plans,  compensation and benefit  information,  supplier lists,  claims
information,  risk management  information,  underwriting  information,  product
information,  business  methods  and  operations,  research,  studies,  reports,
manuals,  correspondence,  memoranda,  forms, systems,  procedures, and computer
records and software, of whatever nature, regardless of form. During the term of
Lacy's  employment  with  the  Company  and for a  period  of  three  (3)  years
thereafter,  Lacy will not retain,  disclose or deliver to any third  person any
MGIC Confidential Information.

     8. Compliance with Terms of Non-Compete  Agreements.  In  consideration  of
various stock options and/or other  consideration  previously granted to Lacy by
MGIC Investment  Corporation or the Company,  Lacy executed numerous non-compete
agreements for the benefit of MGIC  Investment  Corporation  and/or the Company,
including,  but not  necessarily  limited to an Agreement  Not to Compete  dated
February 14, 1990,  an Agreement Not to Compete dated May 29, 1991, an Agreement
Not to Compete dated March 3, 1994,  an Agreement Not to Compete dated  February
19, 1997,  and an Agreement Not to Compete dated May 29, 1991 (the  "Non-Compete
Agreements"). Lacy agrees to comply with the terms of the Non-Compete Agreements
and  agrees  that both MGIC  Investment  Corporation  and the  Company  shall be
entitled to enforce the terms and conditions of the Non-Compete Agreements.


                                      -3-

<PAGE>

     9.  Termination.  Lacy's  employment  with the Company  will  automatically
terminate  on January 31,  2005,  without  any  further  action or notice by the
Company,  unless (i)  terminated  earlier  pursuant to the terms and  conditions
hereof, (ii) Lacy earlier terminates such employment in writing, which he may do
in his sole discretion or (iii) Lacy dies, in which event Lacy's employment will
terminate on the date of Lacy's death.  The Company  shall not terminate  Lacy's
employment  prior to January  31,  2005,  except  upon the  following  terms and
conditions:

          (a) Breach of Any Non-Compete  Agreement.  The Company may immediately
terminate Lacy's employment upon written notice to Lacy if Lacy breaches any one
or more of the Non-Compete Agreements described in Section 8 above.

          (b) Breach of this Agreement.  The Company may  immediately  terminate
Lacy's  employment upon written notice to Lacy if Lacy  materially  breaches the
agreements of Lacy set forth in Sections 1 or 7 (last sentence) above.

Lacy  acknowledges and agrees that termination of Lacy's employment for a breach
referred to in Sections 9(a) or (b) above is in addition to, and not in lieu of,
all other remedies available to the Company or MGIC Investment Corporation under
applicable law or in equity arising from such breach.

     10.  Severability.  If any  term or  provision  of this  Agreement,  or the
application  thereof,  shall to any extent be invalid or unenforceable,  and the
intent of the parties  hereto in entering into this  Agreement is not materially
frustrated  or  negated  thereby,  the  remainder  of  this  Agreement,  or  the
application of such term or provision to circumstances other than those to which
it is invalid or  unenforceable,  shall not be  affected  thereby,  and shall be
enforced to the full extent permitted by law.

     11. Binding  Effect.  This Agreement shall be binding upon and inure to the
benefit of the parties  hereto and their  respective  successors  and  permitted
assigns,  except  that  no  assignment  or  other  transfer  of  any  rights  or
obligations under this Agreement shall be effective  without the prior,  express
written consent of the other party hereto.

     12. Title and Headings.  The title and section  headings of this  Agreement
have been inserted for convenience of reference only,  shall not be deemed to be
a part of this  Agreement,  and shall not be  construed  to  limit,  expand,  or
otherwise modify the effect of any provision of this Agreement.

     13. No  Assignment.  This  Agreement  may not be assigned  by either  party
without the prior, express, written consent of the other party hereto.


                                      -4-

<PAGE>

     14.  Governing  Law.  This  Agreement  shall be governed by,  construed and
interpreted under the internal laws of the State of Wisconsin, without reference
to such State's conflict of laws principles.

     15. Notices.  Except as otherwise  expressly  provided herein,  any notice,
demand, or other communication which either party desires or is required to give
to the other party in  connection  with this  Agreement  shall be in writing and
shall be either served  personally,  sent by Federal Express  overnight  courier
service,  or sent by prepaid United States mail  (certified  with return receipt
requested), addressed to the other party as follows:

          To Lacy:          William H. Lacy
                            1797 Shalom Drive
                            West Bend, Wisconsin 53095

          To Company:       Mortgage Guaranty Insurance Corporation
                            250 East Kilbourn Avenue
                            Milwaukee, Wisconsin 53202
                            Attention: Chief Executive Officer

                            With a copy to:

                            Mortgage Guaranty Insurance Corporation
                            250 East Kilbourn Avenue
                            Milwaukee, Wisconsin 53202
                            Attention: General Counsel and Vice President-Human
                                       Resources

Such notice shall be deemed given upon such personal delivery, courier delivery,
or mailing.  Either party may at anytime change its address for notice  purposes
hereunder by providing the other party with written notice,  as provided herein,
of the new address.

     16. Waiver.  Failure or delay by any party to enforce  compliance  with any
term or condition of this  Agreement  shall not constitute a waiver of such term
or condition.  A waiver of any breach or default under this Agreement  shall not
constitute a waiver of any subsequent breach or default.

     17.  Amendments.  No  modification  or amendment of this Agreement shall be
binding unless in writing and signed by the party sought to be bound.

     18. Entire Agreement.  Each of the parties hereby  acknowledges that it has
read this  Agreement  and  understands  and  agrees to be bound by its terms and
conditions.  This  Agreement and is the complete and exclusive  statement of the
agreement  between the parties  hereto which  supersedes  all prior  agreements,
offers,  proposals,  understandings and other communications between the parties
hereto, oral or written, regarding the terms of


                                      -5-

<PAGE>
Lacy's  retirement as an officer of the Company and MGIC Investment  Corporation
and the terms on which Lacy's  employment  will  continue and may be  terminated
hereafter,  and no other  agreement  concerning  such  subject  matter  shall be
binding upon the Company  unless in writing and signed by an authorized  officer
of the Company.

     IN WITNESS WHEREOF, Lacy and the Company have executed this Agreement as of
the date first set forth above.

WILLIAM H. LACY                          MORTGAGE GUARANTY INSURANCE
                                         CORPORATION


____________________________________     By:__________________________________
                                              Curt S. Culver
                                              Chief Executive Officer



                                      -6-




                                                                    EXHIBIT 10.9
                                                                    ------------

                           MGIC INVESTMENT CORPORATION
                             STOCK OPTION AGREEMENT


          STOCK OPTION  AGREEMENT,  dated as of January 26,  2000,  between MGIC
Investment  Corporation,  a Wisconsin  corporation  (the  "Company") and the key
employee or executive officer of the Company or a subsidiary  thereof whose name
is set forth on the signature page hereof (the "Employee").

          WHEREAS,  the Company is of the  opinion  that its  interests  will be
advanced by encouraging and enabling key employees and executive officers of the
Company and its  subsidiaries to acquire Common Stock, par value $1.00 per share
of the Company  ("Common  Stock"),  through  stock options and believes that the
granting of such options will  stimulate  the efforts of the key  employees  and
executive  officers,  strengthen  their  desire to  remain in the  employ of the
Company and its  subsidiaries  or  affiliates,  provide  them with a more direct
interest  in its  welfare,  and to that end the  Company  duly  adopted the MGIC
Investment  Corporation 1991 Stock Incentive Plan, as amended (herein called the
"Amended Plan") attached hereto as Exhibit A; and

          WHEREAS,  the Board of Directors  acting  through the  Committee (or a
subcommittee  thereof) has determined that it is in furtherance of the objective

of the Plan, and in the best  interests of the Company,  to grant a stock option
to the Employee to purchase the number of shares of Common Stock hereinafter set
forth;

          NOW  THEREFORE,  in  consideration  of the foregoing and of the mutual
covenants hereinafter set forth, and other good and valuable consideration,  the
parties hereto agree as follows:

          1. The Company hereby grants to the Employee, as a matter of incentive
and to  encourage  stock  ownership  in the  Company,  the right and option (the
"Stock  Option")  to  purchase  from the  Company,  on the terms and  conditions
hereinafter  set forth,  the  number of shares of Common  Stock set forth on the
signature page hereof (the "Option Shares"),  at a purchase price of $______ per
share (the "Option  Price") and  exercisable  as hereinafter  stated;  provided,
however, that such number of shares and/or Option Price is subject to adjustment
as provided in Section 6 of this Stock Option Agreement.  The Stock Option shall
be exercisable in whole or in part, to the extent  provided in Section 4 hereof.
As a  condition  of the  grant of the  Stock  Option,  Employee  must  execute a
covenant  not to compete in the form of Exhibit B hereto.  The Stock Option is a
nonstatutory  stock option and not an Incentive  Stock Option within the meaning
of Section 422 of the Internal Revenue Code of 1986, as amended.


<PAGE>

          2. The Stock Option,  and any part thereof,  shall be exercised by the
giving of ten days' (or such  shorter  period as the Company  may permit)  prior
written  notice of exercise to the  Secretary  of the Company  accompanied  by a
letter,  generally  in the form of  Exhibit C hereto,  specifying  the number of
whole Option  Shares to be purchased and  accompanied  by payment in full of the
aggregate  Option Price for the number of Option  Shares to be  purchased.  Such
notice  shall be deemed to have been given when  hand-delivered,  telecopied  or
mailed,  first class postage  prepaid,  and,  subject to Section 4(c),  shall be
irrevocable and  unconditional  once given.  The aggregate Option Price for such
Option Shares may be paid either by cash or a certified or bank cashier's  check
payable to the order of the Company, or as otherwise permitted by the Company.

          The Employee shall be  responsible  for paying all  withholding  taxes
applicable to the exercise of any Stock Option. The Company shall have the right
to take any action  necessary  to insure  that the  Employee  pays the  required
withholding  taxes.  Upon payment of the  aggregate  Option Price for the Option
Shares and the required  withholding  taxes,  the Company shall cause the Option
Shares so  purchased  to be delivered  to the  Employee.  The Optionee  shall be
permitted to satisfy the Company's  tax  withholding  requirements  by making an
election (the  "Election") to have the Company  withhold Option Shares otherwise
issuable to the Optionee,  or to deliver to the Company  shares of Common Stock,
having a fair market value on the date income is recognized  with respect to the
exercise of the Stock  Option (the "Tax Date")  equal in amount to the amount to
be so withheld.  If the number of shares of Common Stock determined  pursuant to
the  preceding  sentence  includes  a  fractional  share,  the  number of shares
withheld or  delivered  shall be reduced to the next lower whole  number and the
Optionee  shall  deliver to the Company cash or its  equivalent  in lieu of such
fractional share, or otherwise make arrangements satisfactory to the Company for
payment of such amount.  The Election shall be irrevocable  and must be received
by the Secretary of the Company at his corporate  office prior to the Optionee's
Tax Date.  The Election  shall be made in writing and be made  according to such
rules and  regulations  and in such form as the  Committee  shall  determine and
shall be  subject  to  approval  (including  approval  given in  advance  of the
Election) by the Committee.

          3. Neither the Employee nor his legal  representative shall be or have
any rights or privileges  of a  shareholder  of the Company in respect of any of
the Option  Shares  issuable upon exercise of this Stock Option unless and until
such Option Shares shall have been issued upon the exercise of the Stock Option.

          4. (a) Stock  Options  shall be deemed to have been  granted as of the
date of this  Stock  Option  Agreement  (the  "Grant  Date")  and  shall  become
exercisable or vested as follows:

          (i) The  portion  of the  Option  Shares  which  shall  vest or become
     exercisable  on each of the next five one-year  anniversaries  of the Grant
     Date (each such  anniversary  referred to herein as an "Anniversary  Date")
     shall be equal to the number of Option Shares awarded hereunder  multiplied
     by a fraction,  the  numerator  of which is the  earnings  per share of the
     Company for

                                      -2-


<PAGE>

     the fiscal year ending  immediately  prior to such Anniversary Date and the
     denominator  of which is  $31.21,  provided,  however,  that the  Company's
     earnings  per share for any such fiscal year shall be deemed to be zero for
     the purpose of determining the numerator of the fraction referred to in the
     preceding sentence if such earnings per share are greater than zero and not
     ten  percent  higher  than  the  Company's   earnings  per  share  for  the
     immediately  preceding  fiscal  year.1 For purposes  hereof,  "earnings per
     share"  means  the  amount  of  earnings  (net  of   extraordinary   items)
     attributable to each share of the Company's Common Stock  outstanding (on a
     fully  diluted  basis),  all as determined  in  accordance  with  generally
     accepted accounting principles;

          (ii) Without  limiting the discretion of the Committee to act in other
     cases,  if a "Change in Control of the  Company"  (as  defined in the Annex
     attached  hereto) occurs,  the Stock Option shall be exercisable in full as
     of the date thereof;

          (iii) At the request of the Employee,  the chief financial  officer of
     the Company in consultation with the Committee will determine the number of
     Option  Shares  that have  become  exercisable  and  provide a  certificate
     setting forth the basis for such determination; and

          (iv) In the  event  that  some or all of the  Option  Shares  have not
     vested pursuant to Section 4(a)(i) above or other  provisions of this Stock
     Option Agreement,  such unvested Option Shares shall vest as of January 26,
     2009.

          (b) If the Employee's  employment with the Company  terminates for any
reason other than death as provided in Section  4(e) below,  the Stock Option to
the extent not  exercisable  or vested as of the date of  termination  shall not
become  exercisable  or vested as a result of events  (including  the passage of
time or the achievement of another Anniversary Date) occurring subsequent to the
date of termination  unless a different  result occurs in or pursuant to Section
4(e) below.  Except as provided in or pursuant to Section 4(e) below, the vested
but  unexercised  portion of the Stock  Option shall  automatically  and

---------------
          1 By way of  example,  if the  Company's  earnings  per  share for the
fiscal years ending December 31, 2000 through  December 31, 2004 are as shown in
the earnings per share column in the table below,  the  percentage of the option
shares which would vest on each Anniversary Date is as shown in the vesting line
of the table:

                                                                      Cumulative
                          12/31/00 12/31/01 12/31/02 12/31/03 12/31/04   Vesting
Earnings per share          $4.81    $5.53    $5.97    $6.69    $7.83

Vesting on the next         15.4%    17.7%      -0-    21.4%    25.1%      79.6%
Anniversary Date 
followingfiscal year end

                                      -3-

<PAGE>

without  notice  terminate  and become null and void at the time of the earliest
date (the "Termination Date") to occur of the following:

          (i)  Thirty  (30)  days  after  the   termination  of  the  Employee's
     employment  with the  Company and all  subsidiaries  thereof for any reason
     (including without limitation, disability or termination by the Company and
     all  subsidiaries  thereof,  with or without cause) other than by reason of
     the  Employee's  death or a leave of absence  approved by the Company or by
     reason of the Employee's  retirement from the Company and all  subsidiaries
     thereof after reaching age 55 and after having been employed by the Company
     or any  subsidiary  thereof for an  aggregate  period of at least seven (7)
     years; or

          (ii) Three Hundred  Sixty-Five (365) days following the termination of
     the Employee's  employment with the Company and all subsidiaries thereof by
     reason of the Employee's  death or by reason of the  Employee's  retirement
     from the Company and all  subsidiaries  thereof  after  reaching age 55 and
     after having been employed by the Company or any subsidiary  thereof for an
     aggregate period of at least seven (7) years; or

          (iii) Thirty (30) days after  expiration or  termination of a leave of
     absence approved by the Company unless the Employee becomes reemployed with
     the  Company  prior to such 30-day  period in which event the Stock  Option
     shall continue in effect in accordance with its terms; or

          (iv) January 26, 2010.

          (c) The  Committee,  in its sole  discretion,  may  from  time to time
accelerate or waive any conditions to the exercise of the Stock Option.

          (d) If the  Employee  dies while in the  employ of the  Company or any
subsidiary,  then, regardless of whether the Stock Option is subject to exercise
under Section 4(a) above, the Stock Option shall become  immediately  vested and
exercisable by the personal representative of the Employee or the person to whom
the  Employee's  rights  under  the  Stock  Option  are  transferred  by  law or
applicable laws of descent and distribution.

          (e)  (i) If  the  Employee's  employment  with  the  Company  and  all
subsidiaries  terminates by reason of retirement after reaching age 62 and after
having been employed by the Company or any  subsidiary  thereof for an aggregate
period of at least seven (7) years,  (A) the Stock Option shall continue to vest
during the balance of the vesting  period if (x) no later than the date on which
employment  terminates,  the Employee  enters into an agreement with the Company
(which  agreement shall be drafted by and acceptable to the Company) under which
the Employee agrees not to compete with the Company and its subsidiaries  during
the balance of such  period and for one year  thereafter,  and (y) the  Employee
complies  with such  agreement,  and (B) if the  conditions  in  clause  (A) are


                                      -4-

<PAGE>

satisfied,  (x) upon the  Employee's  death any  unvested  portion  of the Stock
Option  shall  become   immediately  vested  and  exercisable  by  the  personal
representative  or  other  person  referred  to in  Section  4(d)  and  (y)  the
Termination  Date shall be 365 days after the date on which the last  vesting of
the Stock Option occurs (including vesting as a result of death) or, if earlier,
the date specified in Section 4(b)(iv), except that if the Employee was employed
by  a  combination  of  the  Company  or  any  subsidiary  and  WMAC  Investment
Corporation  or any of its  subsidiaries  for  an  aggregate  continuous  period
(disregarding any break in service of less than three months) of at least twenty
(20)  years,  the  Termination  Date  shall be the  date  specified  in  Section
4(b)(iv).

          (ii)  If  the   Employee's   employment   with  the  Company  and  all
subsidiaries  terminates by reason of retirement after reaching age 55 and after
having been employed by the Company or any subsidiary for an aggregate period of
at least seven (7) years,  without  creating any implication  that the Committee
may not act in other cases, the Committee may take action in its sole discretion
to  provide  that the Stock  Option,  or a  portion  thereof  determined  by the
Committee, shall become vested upon the Employee's death, shall continue to vest
during the balance of the vesting  period and shall  continue to be  exercisable
after termination of employment, all as contemplated in Subsection 4(e)(i) above
if the  Employee  complies  with  the  conditions  in  clauses  (x)  and  (y) of
Subsection 4(e)(i).

          (iii)  If  the  Employee  enters  into  a   noncompetition   agreement
contemplated  by Subsection  4(e)(i) or (ii) and  thereafter  breaches the terms
thereof,  the  Termination  Date  shall  occur on the date of the breach and any
portion of the Stock Option that is not then vested shall not become exercisable
or vested thereafter.

          5. Nothing herein  contained  shall confer upon the Employee the right
to continue in the  employment of the Company or affect the right of the Company
to terminate  the  Employee's  employment at any time, or permit the exercise of
this Stock  Option as a result of the Company  electing to terminate at any time
the  employment  of the Employee  subject,  however,  to the  provisions  of any
written  agreement  of  employment  between the Company  and the  Employee.  The
Employee  acknowledges that a termination of employment could occur at a time at
which the portion of the Stock  Option that is not  exercisable  or vested could
have substantial  value and that as a result of such  termination,  the Employee
will not be able to realize  such value nor will the Employee be entitled to any
compensation  on account of such value. In addition,  the Employee  acknowledges
that a termination  of employment  will likely cause the vested but  unexercised
portion of the Stock Option to terminate  earlier than it otherwise would,  with
the result  that the value to the  Employee of having a longer  exercise  period
will be lost without any compensation to the Employee on account of such loss.

          6. In the event of any change in the outstanding shares of the Company
("capital  adjustment") for any reason,  including but not limited to, any stock
split, stock dividend, recapitalization, merger, consolidation,  reorganization,
combination or exchange of shares or other similar  event,  an adjustment in the
number or kind of shares of Common  Stock  subject  to this  Stock  Option,  the
Option Price under this Stock Option and the


                                      -5-

<PAGE>
Company's  cumulative  earnings per share target for purposes of Section 4(a)(i)
hereof shall be made by the Committee in a manner  consistent  with such capital
adjustment.  The  determination of the Committee as to any such adjustment shall
be conclusive and binding for all purposes of this Stock Option Agreement.

          7. Notwithstanding any provision of this Stock Option Agreement to the
contrary,  the Committee may take whatever  action it may consider  necessary or
appropriate to comply with the Securities Act of 1933, as amended,  or any other
applicable  securities law,  including limiting the exercisability of this Stock
Option or the issuance of Option Shares hereunder.

          8. This Stock  Option may not be  exercised  if the  issuance  of such
Option Shares upon such exercise would  constitute a violation of any applicable
Federal or state  securities law or other law or  regulation.  As a condition to
the exercise of this Stock Option,  the Company may require the Employee to make
any  representation  and  warranty  to the  Company  as may be  required  by any
applicable law or regulation.

          9.  Except as herein  otherwise  provided,  the Stock  Option  and any
rights and  privileges  conferred  by this Stock Option  Agreement  shall not be
transferred,  assigned, pledged or hypothecated in any way (whether by operation
of law or  otherwise)  and shall not be subject  to  execution,  attachment,  or
similar process. Upon any attempt so to transfer,  assign, pledge,  hypothecate,
or otherwise dispose of the Stock Option, or of any right or privilege conferred
hereby,  contrary to the provisions hereof, or upon the levy of an attachment or
similar  process  upon the rights and  privileges  conferred  hereby,  the Stock
Option and the rights and privileges  conferred hereby shall immediately  become
null and void.

          10. This Stock Option shall be deemed to have been granted pursuant to
the  Amended  Plan and is subject to the terms and  provisions  thereof.  In the
event of any conflict between the terms hereof and the provisions of the Amended
Plan, the terms and  conditions of the Amended Plan shall  prevail.  Any and all
terms used herein, unless otherwise  specifically defined herein, shall have the
meaning ascribed to them in the Amended Plan.

          11. This Stock Option Agreement shall be binding upon and inure to the
benefit of the parties hereto and any successors to the business of the Company,
but  neither  this Stock  Option  Agreement  nor any rights  hereunder  shall be
assignable by the Employee.

          12. All decisions or  interpretations of the Committee with respect to
any question arising under the Amended Plan or under this Stock Option Agreement
shall be binding,  conclusive  and final.  As a condition of the granting of the
Stock Option, the Employee agrees, for himself and his personal representatives,
that any  dispute  or  disagreement  which may arise  under or as a result of or
pursuant to this Stock Option  Agreement shall be determined by the Committee in
its sole  discretion,  and  that  any  interpretation  or  determination  by the
Committee shall be final, binding and conclusive.


                                      -6-

<PAGE>

          13. The waiver by the Company of any  provision  of this Stock  Option
Agreement shall not operate as or be construed to be a subsequent  waiver of the
same provisions or waiver of any other provision hereof.

          14. Except as herein  otherwise  provided,  this Stock Option shall be
irrevocable  before the Termination Date and its validity and construction shall
be governed by the laws of the State of  Wisconsin  (excluding  the  conflict of
laws provisions of such laws).

          The Employee hereby acknowledges his acceptance of the Stock Option by
executing the duplicate of this Stock Option Agreement in the space provided and
returning  it to the  Secretary  of the Company as directed by the  Company.  By
accepting this Stock Option  Agreement,  the Employee,  and each person claiming
under or  through  him,  shall be  conclusively  deemed  to have  indicated  his
acceptance  and  ratification  of, and  consent  to, any action  taken under the
Amended Plan by the Company or the Committee.

                                    MGIC INVESTMENT CORPORATION


                                    By: ________________________________________
                                          President and Chief Executive Officer

                                    ACCEPTED BY:

                                    --------------------------------------------
                                    Name of Employee:__________________________
                                    Number of Shares: _________________________


                                      -7-

<PAGE>

                                      ANNEX

       Definition of "Change in Control of the Company" and Related Terms


          1.  Change in  Control  of the  Company.  A "Change  in Control of the
Company"  shall be deemed to have  occurred  if an event set forth in any one of
the following paragraphs shall have occurred:

                    (i) any  Person  (other  than (A) the  Company or any of its
          subsidiaries,  (B) a trustee  or other  fiduciary  holding  securities
          under  any  employee  benefit  plan  of  the  Company  or  any  of its
          subsidiaries,   (C)  an  underwriter  temporarily  holding  securities
          pursuant to an offering of such securities or (D) a corporation owned,
          directly  or  indirectly,  by  the  shareholders  of  the  Company  in
          substantially  the same proportions as their ownership of stock in the
          Company  ("Excluded  Persons"))  is or becomes the  Beneficial  Owner,
          directly or indirectly, of securities of the Company (not including in
          the  securities  beneficially  owned  by such  Person  any  securities
          acquired  directly from the Company or its  Affiliates  after July 22,
          1999,  pursuant to express  authorization by the Board of Directors of
          the Company (the "Board") that refers to this exception)  representing
          50% or more of either the then  outstanding  shares of common stock of
          the  Company  or the  combined  voting  power  of the  Company's  then
          outstanding  voting  securities  entitled  to  vote  generally  in the
          election of directors; or

                    (ii) the  following  individuals  cease  for any  reason  to
          constitute  a majority of the number of  directors of the Company then
          serving: (A) individuals who, on July 22, 1999,  constituted the Board
          and  (B)  any  new  director  (other  than a  director  whose  initial
          assumption  of office is in  connection  with an actual or  threatened
          election contest, including but not limited to a consent solicitation,
          relating to the election of  directors  of the Company,  as such terms
          are used in Rule  14a-11  of  Regulation  14A  under  the  Act)  whose
          appointment or election by the Board or nomination for election by the
          Company's  shareholders  was approved by a vote of at least two-thirds
          (2/3) of the directors  then still in office who either were directors
          on July 22, 1999, or whose initial appointment, election or nomination
          for  election  as a director  which  occurred  after July 22, 1999 was
          approved  by such vote of the  directors  then  still in office at the
          time of such  initial  appointment,  election or  nomination  who were
          themselves  either directors on July 22, 1999 or initially  appointed,
          elected or nominated by such two-thirds  (2/3) vote as described above
          ad infinitum  (collectively  the  "Continuing  Directors");  provided,
          however,  that  individuals who are appointed to the Board pursuant to
          or in accordance with the terms of an agreement  relating to a merger,
          consolidation,  or share exchange involving the Company (or any direct
          or  indirect  subsidiary  of the  Company)  shall  not  be  Continuing
          Directors for purposes of this Agreement until after such


                                      -8-

<PAGE>
          individuals  are first  nominated  for  election by a vote of at least
          two-thirds  (2/3) of the then Continuing  Directors and are thereafter
          elected as directors by the  shareholders  of the Company at a meeting
          of   shareholders   held  following   consummation   of  such  merger,
          consolidation,  or share exchange;  and, provided further, that in the
          event the  failure of any such  persons  appointed  to the Board to be
          Continuing  Directors  results in a Change in Control of the  Company,
          the subsequent  qualification of such persons as Continuing  Directors
          shall  not alter the fact  that a Change  in  Control  of the  Company
          occurred; or

                    (iii) a  merger,  consolidation  or  share  exchange  of the
          Company with any other corporation is consummated or voting securities
          of the Company are issued in connection  with a merger,  consolidation
          or share exchange of the Company (or any direct or indirect subsidiary
          of the Company)  pursuant to applicable  stock exchange  requirements,
          other than (A) a merger,  consolidation  or share exchange which would
          result  in the  voting  securities  of the  Company  entitled  to vote
          generally in the election of directors  outstanding  immediately prior
          to  such  merger,   consolidation  or  share  exchange  continuing  to
          represent (either by remaining  outstanding or by being converted into
          voting  securities of the surviving  entity or any parent  thereof) at
          least 50% of the combined voting power of the voting securities of the
          Company or such  surviving  entity or any parent  thereof  entitled to
          vote  generally  in the election of directors of such entity or parent
          outstanding  immediately  after such  merger,  consolidation  or share
          exchange, or (B) a merger, consolidation or share exchange effected to
          implement a recapitalization  of the Company (or similar  transaction)
          in which no Person  (other than an Excluded  Person) is or becomes the
          Beneficial Owner, directly or indirectly, of securities of the Company
          (not including in the securities beneficially owned by such Person any
          securities  acquired directly from the Company or its Affiliates after
          July 22,  1999,  pursuant to express  authorization  by the Board that
          refers to this  exception)  representing  at least 50% of the combined
          voting  power of the  Company's  then  outstanding  voting  securities
          entitled to vote generally in the election of directors; or

                    (iv)  the  sale  or  disposition  by the  Company  of all or
          substantially  all of the Company's  assets (in one  transaction  or a
          series of related  transactions  within  any period of 24  consecutive
          months),  other than a sale or  disposition  by the  Company of all or
          substantially  all of the  Company's  assets  to an entity of which at
          least  75% of the  combined  voting  power  of the  voting  securities
          entitled to vote  generally in the  election of directors  immediately
          after  such  sale  are  owned by  Persons  in  substantially  the same
          proportions  as their  ownership of the Company  immediately  prior to
          such sale.


                                      -9-

<PAGE>

          2.  Related  Definitions.  For purposes of this Annex,  the  following
terms, when capitalized, shall have the following meanings:

                    (i) Act. The term "Act" means the Securities Exchange Act of
          1934, as amended.

                    (ii)  Affiliate and  Associate.  The terms  "Affiliate"  and
          "Associate" shall have the respective  meanings ascribed to such terms
          in Rule l2b-2 of the General Rules and Regulations under the Act.

                    (iii)Beneficial  Owner.  A Person  shall be deemed to be the
          "Beneficial Owner" of any securities:

                              (a)  which  such  Person  or any of such  Person's
                    Affiliates or Associates  has the right to acquire  (whether
                    such  right is  exercisable  immediately  or only  after the
                    passage of time) pursuant to any  agreement,  arrangement or
                    understanding,  or upon the exercise of  conversion  rights,
                    exchange rights, rights,  warrants or options, or otherwise;
                    provided,  however,  that a Person  shall not be deemed  the
                    Beneficial Owner of, or to beneficially  own, (A) securities
                    tendered  pursuant to a tender or exchange  offer made by or
                    on behalf of such Person or any of such Person's  Affiliates
                    or Associates  until such tendered  securities  are accepted
                    for purchase,  or (B)  securities  issuable upon exercise of
                    Rights issued pursuant to the terms of the Company's  Rights
                    Agreement,  dated as of July 22,  1999,  between the Company
                    and Firstar Bank  Milwaukee,  N.A.,  as amended from time to
                    time (or any  successor  to such Rights  Agreement),  at any
                    time before the issuance of such securities;

                              (b)  which  such  Person  or any of such  Person's
                    Affiliates or Associates,  directly or  indirectly,  has the
                    right to vote or dispose of or has "beneficial ownership" of
                    (as  determined  pursuant to Rule l3d-3 of the General Rules
                    and Regulations  under the Act),  including  pursuant to any
                    agreement, arrangement or understanding;  provided, however,
                    that a Person shall not be deemed the  Beneficial  Owner of,
                    or to beneficially own, any security under this Subsection 1
                    (c)  as  a   result   of  an   agreement,   arrangement   or
                    understanding  to  vote  such  security  if  the  agreement,
                    arrangement  or  understanding:  (A)  arises  solely  from a
                    revocable  proxy or consent given to such Person in response
                    to a public proxy or consent  solicitation made pursuant to,
                    and in accordance with, the applicable rules and regulations
                    under  the Act  and (B) is not  also  then  reportable  on a
                    Schedule l3D under the Act (or any  comparable  or successor
                    report); or

                              (c)  which are  beneficially  owned,  directly  or
                    indirectly,  by any other  Person  with which such Person or
                    any of  such  Person's  Affiliates  or  Associates  has  any
                    agreement,  arrangement or


                                      -10-

<PAGE>
                    understanding for the purpose of acquiring,  holding, voting
                    (except  pursuant  to a  revocable  proxy  as  described  in
                    Subsection  1(c) (ii)  above)  or  disposing  of any  voting
                    securities of the Company.

                    (iv) Person.  The term "Person"  shall mean any  individual,
          firm,  partnership,   corporation  or  other  entity,   including  any
          successor (by merger or  otherwise) of such entity,  or a group of any
          of the foregoing acting in concert.



                                      -11-

<PAGE>
                           MGIC INVESTMENT CORPORATION
                             STOCK OPTION AGREEMENT

          STOCK  OPTION  AGREEMENT,  dated  as of  May  5,  1999,  between  MGIC
Investment  Corporation,  a Wisconsin  corporation  (the  "Company") and the key
employee or executive officer of the Company or a subsidiary  thereof whose name
is set forth on the signature page hereof (the "Employee").

          WHEREAS,  the Company is of the  opinion  that its  interests  will be
advanced by encouraging and enabling key employees and executive officers of the
Company and its  subsidiaries to acquire Common Stock, par value $1.00 per share
of the Company  ("Common  Stock"),  through  stock options and believes that the
granting of such options will  stimulate  the efforts of the key  employees  and
executive  officers,  strengthen  their  desire to  remain in the  employ of the
Company and its  subsidiaries  or  affiliates,  provide  them with a more direct
interest  in its  welfare,  and to that end the  Company  duly  adopted the MGIC
Investment  Corporation  1991 Stock  Incentive  Plan,  as amended  (the  "Plan")
attached hereto as Exhibit A; and

          WHEREAS,  the Board of Directors  acting  through the  Committee (or a
subcommittee  thereof) has determined that it is in furtherance of the objective
of the Plan, and in the best  interests of the Company,  to grant a stock option
to the Employee to purchase the number of shares of Common Stock hereinafter set
forth;

          NOW  THEREFORE,  in  consideration  of the foregoing and of the mutual
covenants hereinafter set forth, and other good and valuable consideration,  the
parties hereto agree as follows:

          1. The Company hereby grants to the Employee, as a matter of incentive
and to  encourage  stock  ownership  in the  Company,  the right and option (the
"Stock  Option")  to  purchase  from the  Company,  on the terms and  conditions
hereinafter  set forth,  the  number of shares of Common  Stock set forth on the
signature page hereof (the "Option Shares"), at a purchase price of $_______ per
share  (the  "Option  Price"),  exercisable  as  hereinafter  stated;  provided,
however, that such number of shares and/or Option Price is subject to adjustment
as provided in Section 6 of this Stock Option Agreement.  The Stock Option shall
be exercisable in whole or in part, to the extent  provided in Section 4 hereof.
As a  condition  of the grant of the Stock  Option,  Employee  must  execute  an
agreement not to compete in the form of Exhibit B hereto.  The Stock Option is a
nonstatutory  stock option and not an Incentive  Stock Option within the meaning
of Section 422 of the Internal Revenue Code of 1986, as amended.

          2. The Stock Option,  and any part thereof,  shall be exercised by the
giving of ten days' (or such  shorter  period as the Company  may permit)  prior
written  notice of exercise to the  Secretary  of the Company  accompanied  by a
letter,  generally  in the form of  Exhibit C hereto,  specifying  the number of
whole Option  Shares to be purchased and  accompanied  by payment in full of the
aggregate  Option  Price  for the  number of Option  Shares to be  purchased.  A
partial  exercise of the Stock Option may not be made with respect to fewer than
ten (10) Option Shares  unless the Option Shares  purchased are the total number
then available for purchase under the


                                      -1-

<PAGE>

Stock   Option.   Such   notice   shall  be  deemed  to  have  been  given  when
hand-delivered,  telecopied or mailed, first class postage prepaid, and, subject
to  Section  4(c),  shall be  irrevocable  and  unconditional  once  given.  The
aggregate  Option  Price for such Option  Shares may be paid either by cash or a
certified or bank  cashier's  check  payable to the order of the Company,  or as
otherwise permitted by the Company.

          The Employee shall be  responsible  for paying all  withholding  taxes
applicable to the exercise of any Stock Option. The Company shall have the right
to take any action  necessary  to insure  that the  Employee  pays the  required
withholding  taxes.  Upon payment of the  aggregate  Option Price for the Option
Shares and the required withholding taxes, the Company shall cause a certificate
for the Option Shares so purchased to be delivered to the Employee. The Optionee
shall be permitted to satisfy the  Company's  tax  withholding  requirements  by
making an election (the  "Election") to have the Company  withhold Option Shares
otherwise  issuable  to the  Optionee,  or to deliver to the  Company  shares of
Common Stock,  having a fair market value on the date income is recognized  with
respect to the  exercise of the Stock Option (the "Tax Date") equal in amount to
the amount to be so withheld. If the number of shares of Common Stock determined
pursuant to the preceding  sentence  includes a fractional  share, the number of
shares withheld or delivered shall be reduced to the next lower whole number and
the Optionee shall deliver to the Company cash or its equivalent in lieu of such
fractional share, or otherwise make arrangements satisfactory to the Company for
payment of such amount.  The Election shall be irrevocable  and must be received
by the Secretary of the Company at his corporate  office prior to the Optionee's
Tax Date.  The Election  shall be made in writing and be made  according to such
rules and regulations, if any, and in such form as the Committee shall determine
and shall be subject to  approval  (including  approval  given in advance of the
Election) by the Committee.

          3. Neither the Employee nor his legal  representative shall be or have
any rights or privileges  of a  shareholder  of the Company in respect of any of
the Option Shares  issuable upon exercise of the Stock Option unless and until a
certificate or  certificates  for such Option Shares shall have been issued upon
the exercise of the Stock Option.

          4. (a) The Stock Option shall be deemed to have been granted as of the
date of this Stock Option  Agreement and shall become  exercisable  or vested as
follows:

                    (i) The percentage of the Option Shares which shall vest and
          may be  exercised  by the  Employee  shall be as set forth  below with
          respect to the given date:



                                      -2-

<PAGE>

                  Date:                       Percent Exercisable or Vested:
                  -----                       ------------------------------
          Prior to May 5, 2000                              0%
               May 5, 2000                                  20%
               May 5, 2001                                  40%
               May 5, 2002                                  60%
               May 5, 2003                                  80%
               May 5, 2004                                 100%

          For  purposes  of the  foregoing,  vesting  shall  occur  on the  date
          specified and in the percentage indicated; and

                    (ii) If a change in control  occurs,  the Stock Option shall
          be  exercisable  in full as of the date  thereof.  For  this  purpose,
          "change  in  control"  shall mean (x) any event  which  results in the
          legal or beneficial ownership in one person or group of persons acting
          in concert of shares of Common Stock of the Company  representing more
          than  fifty  percent  (50%)  of the  outstanding  Common  Stock of the
          Company on the date of such  event or (y) a  transaction  between  the
          Company and  another  person as a result of which less than a majority
          of the combined voting power of the  then-outstanding  common stock of
          the Company or such person  immediately  after the transaction is held
          in the  aggregate  by the  holders  of  common  stock  of the  Company
          immediately prior to the transaction. Without creating any implication
          that this sentence is necessary for the following result to occur, for
          purposes of determining whether a change in control has occurred,  (x)
          shares of Common Stock of the Company  include  shares of common stock
          of  any  successor  to  the  Company  and  ownership  of  such  shares
          immediately  after such event  shall be deemed to have  resulted  from
          such event. It is understood that if a change in control occurs,  this
          Section  4(a)(ii)  shall apply even if the  transaction  by which such
          change in control occurs is also described in Section 4(c).

          (b) If the Employee's  employment with the Company  terminates for any
reason other than death as provided in Section  4(e) below,  the Stock Option to
the extent not  exercisable  or vested as of the date of  termination  shall not
become  exercisable  or vested as a result of events  (including  the passage of
time or the  achievement of another  anniversary  date for vesting and exercise)
occurring subsequent to the date of termination unless a different result occurs
in or  pursuant  to Section  4(f)  below.  Except as  provided in or pursuant to
Section 4(f) below, the vested but unexercised portion of the Stock Option shall
automatically  and without notice terminate and become null and void at the time
of the earliest date (the "Termination Date") to occur of the following:

                    (i) Thirty (30) days after the termination of the Employee's
          employment  with the  Company  and all  subsidiaries  thereof  for any
          reason (including without limitation, disability or termination by the
          Company and all subsidiaries thereof,


                                      -3-

<PAGE>

          with or without cause) other than by reason of the Employee's death or
          a leave  of  absence  approved  by the  Company  or by  reason  of the
          Employee's  retirement from the Company and all  subsidiaries  thereof
          after reaching age 55 and after having been employed by the Company or
          any subsidiary  thereof for an aggregate  period of at least seven (7)
          years; or

                    (ii)  Three  Hundred  Sixty-Five  (365) days  following  the
          termination  of the  Employee's  employment  with the  Company and all
          subsidiaries thereof by reason of the Employee's death or by reason of
          the  Employee's  retirement  from  the  Company  and all  subsidiaries
          thereof  after  reaching age 55 and after having been  employed by the
          Company or any subsidiary  thereof for an aggregate period of at least
          seven (7) years; or

                    (iii) Thirty (30) days after  expiration or termination of a
          leave of absence  approved by the Company unless the Employee  becomes
          reemployed with the Company prior to such 30-day period in which event
          the Stock  Option  shall  continue  in effect in  accordance  with its
          terms; or

                    (iv) May 5, 2009.

          (c) In the event of a sale,  lease or transfer of all or substantially
all of the  Company's  assets,  equity  securities  or  businesses,  or  merger,
consolidation or other business combination involving the Company, the Committee
may in its  discretion  elect to  declare  that all or any  portion of the Stock
Option  is  immediately  exercisable  and to take  all such  action  as it deems
necessary in connection  therewith and  thereafter the Employee may exercise the
Stock Option to such extent, contingent upon the consummation of such event, and
the Stock Option,  if and to the extent so exercised,  shall be deemed exercised
immediately prior to such consummation.

          (d) The  Committee,  in its sole  discretion,  may  from  time to time
accelerate or waive any conditions to the exercise of the Stock Option.

          (e) If the  Employee  dies while in the  employ of the  Company or any
subsidiary  then,  regardless of whether the Stock Option is subject to exercise
under Section 4(a) above, the Stock Option shall become  immediately  vested and
exercisable by the personal representative of the Employee or the person to whom
the  Employee's  rights  under  the  Stock  Option  are  transferred  by  law or
applicable laws of descent and distribution.

          (f)  (i) If  the  Employee's  employment  with  the  Company  and  all
subsidiaries  terminates by reason of retirement after reaching age 62 and after
having been employed by the Company or any  subsidiary  thereof for an aggregate
period of at least seven (7) years,  (A) the Stock Option shall continue to vest
during the balance of the vesting  period if (x) no later than the date on which
employment  terminates,  the Employee  enters into an agreement with the Company
(which  agreement shall be drafted by and acceptable to the Company) under which
the Employee agrees not to compete with the Company and its subsidiaries  during
the balance of such  period and for one year  thereafter,  and (y) the  Employee
complies  with such  agreement,


                                      -4-

<PAGE>
and (B) if the conditions in clause (A) are  satisfied,  (x) upon the Employee's
death any unvested portion of the Stock Option shall become  immediately  vested
and  exercisable by the personal  representative  or other person referred to in
Section  4(e) and (y) the  Termination  Date shall be 365 days after the date on
which the last vesting of the Stock Option occurs (including vesting as a result
of death) or, if earlier, the date specified in Section 4(b)(iv); except that if
the Employee was employed by a combination  of the Company or any subsidiary and
WMAC  Investment  Corporation  or  any  of its  subsidiaries  for  an  aggregate
continuous period  (disregarding any break in service of less than three months)
of at least twenty (20) years,  the Termination Date shall be the date specified
in Section 4(b)(iv); and

          (ii)  If  the   Employee's   employment   with  the  Company  and  all
subsidiaries  terminates by reason of retirement after reaching age 55 and after
having been employed by the Company or any subsidiary for an aggregate period of
at least seven (7) years,  without  creating any implication  that the Committee
may not act in other cases, the Committee may take action in its sole discretion
to  provide  that the Stock  Option,  or a  portion  thereof  determined  by the
Committee, shall become vested upon the Employee's death, shall continue to vest
during the balance of the vesting  period and shall  continue to be  exercisable
after termination of employment, all as contemplated in Subsection 4(f)(i) above
if the  Employee  complies  with  the  conditions  in  clauses  (x)  and  (y) of
Subsection 4(f)(i).

          (iii)  If  the  Employee  enters  into  a   noncompetition   agreement
contemplated  by Subsection  4(f)(i) or (ii) and  thereafter  breaches the terms
thereof,  the  Termination  Date  shall  occur on the date of the breach and any
portion of the Stock Option that is not then vested shall not become exercisable
or vested thereafter.

          5. Nothing herein  contained  shall confer upon the Employee the right
to continue in the  employment of the Company or affect the right of the Company
to terminate  the  Employee's  employment at any time, or permit the exercise of
the Stock  Option as a result of the Company  electing to  terminate at any time
the  employment  of the Employee  subject,  however,  to the  provisions  of any
agreement of employment between the Company and the Employee.

          6. In the event of any change in the outstanding shares of the Company
("capital  adjustment") for any reason,  including but not limited to, any stock
split, stock dividend, recapitalization, merger, consolidation,  reorganization,
combination or exchange of shares or other similar  event,  an adjustment in the
number or kind of shares of Common Stock subject to the Stock Option, the Option
Price  under  the  Stock  Option  shall  be made by the  Committee  in a  manner
consistent with such capital  adjustment.  The determination of the Committee as
to any such adjustment  shall be conclusive and binding for all purposes of this
Stock Option Agreement.

          7. Notwithstanding any provision of this Stock Option Agreement to the
contrary,  the Committee may take whatever  action it may consider  necessary or
appropriate to comply with the Securities Act of 1933, as amended,  or any other
applicable  securities law,  including  limiting the exercisability of the Stock
Option or the issuance of Option Shares hereunder.

          8. The Stock  Option  may not be  exercised  if the  issuance  of such
Option Shares upon such exercise would  constitute a violation of any applicable
Federal  or state  securities  law


                                      -5-

<PAGE>
or other law or regulation.  As a condition to the exercise of the Stock Option,
the Company may require the Employee to make any  representation and warranty to
the Company as may be required by any applicable law or regulation.

          9. Except as herein  otherwise  provided or as otherwise  permitted by
the Committee,  the Stock Option and any rights and privileges conferred by this
Stock  Option  Agreement  shall  not  be  transferred,   assigned,   pledged  or
hypothecated in any way (whether by operation of law or otherwise) and shall not
be subject to execution,  attachment, or similar process. Upon any attempt so to
transfer, assign, pledge, hypothecate, or otherwise dispose of the Stock Option,
or of any  right or  privilege  conferred  hereby,  contrary  to the  provisions
hereof, or upon the levy of an attachment or similar process upon the rights and
privileges  conferred  hereby,  the Stock  Option and the rights and  privileges
conferred hereby shall immediately become null and void.

          10. The Stock Option shall be deemed to have been granted  pursuant to
the Plan and is subject to the terms and provisions thereof. In the event of any
conflict  between the terms hereof and the provisions of the Plan, the terms and
conditions  of the Plan shall  prevail.  Any and all terms used  herein,  unless
otherwise  specifically  defined herein, shall have the meaning ascribed to them
in the Plan.

          11. This Stock Option Agreement shall be binding upon and inure to the
benefit of the parties hereto and any successors to the business of the Company,
but  neither  this Stock  Option  Agreement  nor any rights  hereunder  shall be
assignable  by the  Employee,  except as may be permitted  pursuant to Section 9
above.

          12. All decisions or  interpretations of the Committee with respect to
any question  arising under the Plan or under this Stock Option  Agreement shall
be binding,  conclusive  and final.  As a condition of the granting of the Stock
Option, the Employee agrees, for himself and his personal representatives,  that
any dispute or disagreement  which may arise under or as a result of or pursuant
to this Stock Option  Agreement shall be determined by the Committee in its sole
discretion,  and that any interpretation or determination by the Committee shall
be final, binding and conclusive.

          13. The waiver by the Company of any  provision  of this Stock  Option
Agreement shall not operate as or be construed to be a subsequent  waiver of the
same provisions or waiver of any other provision hereof.

          14.  Except as herein  otherwise  provided,  the Stock Option shall be
irrevocable  before the Termination Date and its validity and construction shall
be governed by the laws of the State of Wisconsin.


                                      -6-

<PAGE>


          The Employee hereby acknowledges his acceptance of the Stock Option by
executing the duplicate of this Stock Option Agreement in the space provided and
returning  it to the  Secretary  of the Company as directed by the  Company.  By
accepting this Stock Option  Agreement,  the Employee,  and each person claiming
under or  through  him,  shall be  conclusively  deemed  to have  indicated  his
acceptance and  ratification of, and consent to, any action taken under the Plan
by the Company or the Committee.

                                        MGIC INVESTMENT CORPORATION


                                        By:___________________________________
                                           President

                                        ACCEPTED BY:
 
                                        _______________________________________
                                        Name of Employee:______________________
                                        Number of Shares:______________________


                                      -7-





                                                                   EXHIBIT 10.10
                                                                   -------------

                           MGIC INVESTMENT CORPORATION

                                 INCENTIVE AWARD
                        RESTRICTED STOCK AWARD AGREEMENT


          THIS  AGREEMENT  is made and entered  into as of the date set forth on
the  signature  page  hereof  by and  between  MGIC  INVESTMENT  CORPORATION,  a
Wisconsin  corporation  (the  "Company"),  and the employee of the Company whose
signature is set forth on the signature page hereof (the "Employee").

                              W I T N E S S E T H :

          WHEREAS, the Company has adopted the MGIC Investment  Corporation 1991
Stock  Incentive Plan, as amended (the "Plan") to permit shares of the Company's
common stock, $1.00 par value per share (the "Stock"),  to be awarded to certain
key employees of the Company and any  subsidiary  (collectively,  "Participating
Company"); and

          WHEREAS,  the Employee is a key employee of a  Participating  Company,
and the Company  desires the Employee to remain in such employ and to further an
opportunity  for the  Employee's  stock  ownership  in the  Company  in order to
increase the Employee's proprietary interest in the success of the Company;

          NOW, THEREFORE,  in consideration of the premises and of the covenants
and agreements  herein set forth, the parties hereby mutually covenant and agree
as follows:

          1. Award of Restricted Stock.  Subject to the terms and conditions
 set
forth herein,  the Company awards the Employee the number of shares of Stock set
forth on the signature page hereof (the "Restricted Stock").

          2.  Restrictions.  Except as otherwise provided herein, the Restricted
Stock may not be sold,  transferred or otherwise alienated or hypothecated until
the date set forth on the signature page hereof (the "Release Date").

          3.  Escrow.  Shares  of  Restricted  Stock  shall be issued as soon as
practicable  in the name of the  Employee  but  shall be held in  escrow  by the
Company,  as escrow agent.  Upon issuance of such shares,  (i) the Company shall
give the Employee a receipt for the  Restricted  Stock held in escrow which will
state  that the  Company  holds  such  Stock in escrow  for the  account  of the
Employee,  subject to the terms of this  Agreement,  and (ii) the Employee shall
give the Company a stock power for such Stock duly  endorsed in blank which will
be held in escrow for use in the event such  Stock is  forfeited  in whole or in
part.  Unless forfeited as provided  herein,  Restricted Stock shall cease to be
held in  escrow  and  certificates  for such  Stock  shall be  delivered  to the
Employee,  or in the  case of his  death,  to his  Beneficiary  (as 


                                      -1-

<PAGE>
hereinafter  defined) on the Release Date or upon any other  termination  of the
restrictions imposed by Paragraph 2 hereof.

          4. Transfer After Release Date; Securities Law Restrictions. Except as
otherwise   provided   herein,   Restricted  Stock  shall  become  free  of  the
restrictions  of Paragraph 2 and be freely  transferable  by the Employee on the
Release Date.  Notwithstanding the foregoing or anything to the contrary herein,
the Employee agrees and  acknowledges  with respect to any Restricted Stock that
has not been registered under the Securities Act of 1933, as amended (the "Act")
(i) he will not sell or otherwise  dispose of such Stock  except  pursuant to an
effective  registration  statement  under  the  Act  and  any  applicable  state
securities  laws, or in a transaction  which,  in the opinion of counsel for the
Company,  is exempt from such registration,  and (ii) a legend will be placed on
the certificates or other evidence for the Restricted Stock to such effect.

          5.   Termination  of  Employment  Due  to  Death.  If  the  Employee's
employment with all Participating Companies is terminated because of death prior
to  the  Release  Date,  the  restrictions  of  Paragraph  2  applicable  to the
Restricted  Stock shall terminate on the date of death and such Restricted Stock
shall  be free  of such  restrictions  and,  except  as  otherwise  provided  in
Paragraph 4 hereof, freely transferable.

          6.  Termination  of  Employment  Other  Than  Due  to  Death.  If  the
Employee's  employment with the Company is terminated  prior to the Release Date
for any reason other than death,  all Restricted Stock shall be forfeited to the
Company on the date of such  termination  unless the Stock Award Committee which
administers the Plan (the "Committee") determines, on such terms and conditions,
if any, as the  Committee  may impose,  that all or a portion of the  Restricted
Stock shall be released to the  Employee  and the  restrictions  of  Paragraph 2
applicable thereto shall terminate. Absence of the Employee on leave approved by
a duly elected  officer of the Company,  other than the  Employee,  shall not be
considered a termination of employment during the period of such leave.

          7.  Beneficiary.  (a) The person whose name  appears on the  signature
page hereof after the caption  "Beneficiary" or any successor  designated by the
Employee in accordance herewith (the person who is the Employee's Beneficiary at
the time of his death herein referred to as the "Beneficiary") shall be entitled
to  receive  the  Restricted  Stock  to be  released  to the  Beneficiary  under
Paragraphs  3 and 5 as a result of the death of the  Employee.  The Employee may
from time to time  revoke or change his  Beneficiary  without the consent of any
prior Beneficiary by filing a new designation with the Committee.  The last such
designation received by the Committee shall be controlling;  provided,  however,
that no designation,  or change or revocation thereof, shall be effective unless
received by the Committee prior to the Employee's  death,  and in no event shall
any designation be effective as of a date prior to such receipt.

          (b) If no such Beneficiary  designation is in effect at the time of an
Employee's  death, or if no designated  Beneficiary  survives the Employee or if
such designation  conflicts with law, the Employee's estate shall be entitled to
receive the Restricted 


                                      -2-

<PAGE>
Stock upon the death of the  Employee.  If the  Committee  is in doubt as to the
right of any person to receive  such  Restricted  Stock,  the Company may retain
such Stock and any  distributions  thereon,  without  liability for any interest
thereon,  until the Committee  determines the person  entitled  thereto,  or the
Company may deliver such Restricted Stock and any  distributions  thereon to any
court  of  appropriate  jurisdiction  and  such  delivery  shall  be a  complete
discharge of the liability of the Company therefor.

          8.  Restricted  Stock  Legend.  In addition  to any legends  placed on
certificates  for Restricted  Stock or other evidence of ownership of Restricted
Stock under  Paragraph 4 hereof,  each  certificate  or such other  evidence for
shares of Restricted Stock shall bear the following legend:

          "The  sale or  other  transfer  of  these  shares  of  stock,  whether
          voluntary,  or by operation of law, is subject to certain restrictions
          set forth in the MGIC Investment Corporation 1991 Stock Incentive Plan
          and  a  Restricted  Stock  Award  Agreement  between  MGIC  Investment
          Corporation and the registered  owner hereof.  A copy of such Plan and
          such  Agreement may be obtained from the Secretary of MGIC  Investment
          Corporation."

When the  restrictions  imposed by  Paragraph 2 hereof  terminate,  the Employee
shall be entitled to have the foregoing legend removed from such Stock.

          9. Voting  Rights;  Dividends and Other  Distributions.  (a) While the
Restricted  Stock is subject to restrictions  under Paragraph 2 and prior to any
forfeiture  thereof,  the  Employee  may  exercise  full  voting  rights for the
Restricted Stock registered in his name and held in escrow hereunder.

          (b) While the Restricted  Stock is subject to the  restrictions  under
Paragraph 2 and prior to any forfeiture thereof,  the Employee shall be entitled
to  receive  all  dividends  and other  distributions  paid with  respect to the
Restricted Stock. If any such dividends or distributions are paid in Stock, such
shares  shall be subject to the same  restrictions  as the shares of  Restricted
Stock  with  respect to which they were paid,  including  the  requirement  that
Restricted Stock be held in escrow pursuant to Paragraph 3 hereof.

          (c) Subject to the  provisions of this  Agreement,  the Employee shall
have,  with  respect to the  Restricted  Stock,  all other  rights of holders of
Stock.

          10. Tax Withholding.  (a) It shall be a condition of the obligation of
the Company to issue or release from escrow  Restricted Stock to the Employee or
the  Beneficiary,  and the Employee  agrees,  that the Employee shall pay to the
Company upon its demand,  such amount as may be requested by the Company for the
purpose of satisfying its liability to withhold federal,  state, or local income
or other taxes incurred by reason of the award of the  Restricted  Stock or as a
result of the termination of the restrictions on such Stock hereunder.


                                      -3-

<PAGE>

          (b) If the Employee  does not make an election  under Section 83(b) of
the Internal  Revenue Code of 1986, as amended,  with respect to the  Restricted
Stock awarded hereunder,  the Employee may satisfy the Company's withholding tax
requirements  by electing to have the Company  withhold that number of shares of
Restricted Stock otherwise  deliverable to the Employee from escrow hereunder or
to deliver to the  Company a number of shares of Stock,  in each case,  having a
fair market value (as  determined by the  Committee) on the Tax Date (as defined
below)  equal to the minimum  amount  required to be withheld as a result of the
termination of the  restrictions on such Restricted  Stock. The election must be
in writing and be delivered to the Company  prior to the Tax Date. If the number
of shares so calculated to be withheld  shall  include a fractional  share,  the
Employee  shall  deliver cash in lieu of such  fractional  share.  All elections
shall be made in a form  approved  by the  Committee  and  shall be  subject  to
disapproval,  in whole or in part, by the Committee.  As used herein, "Tax Date"
means the date on which the  Employee  must  include  in his  gross  income  for
federal income tax purposes the fair market value of the  Restricted  Stock over
the purchase price therefor.

          11.  Adjustments  in Event of  Change  in  Stock.  In the event of any
change in the outstanding shares of Stock ("capital adjustment") for any reason,
including   but  not   limited   to,   any   stock   splits,   stock   dividend,
recapitalization, merger, consolidation, reorganization, combination or exchange
of shares or other similar event which, in the judgment of the Committee,  could
distort the implementation of the Plan or the realization of its objectives, the
Committee may make such adjustments in the shares of Restricted Stock subject to
this Agreement, or in the terms, conditions or restrictions of this Agreement as
the Committee deems equitable.

          12.  Change in Control.  If a "Change in Control of the  Company"  (as
defined in Annex  attached  hereto)  occurs,  the  restrictions  of  Paragraph 2
applicable to the Restricted  Stock shall terminate on the date of the Change in
Control of the Company and such date shall be deemed to be the Release Date.

          13.  Powers of Company Not Affected.  The existence of the  Restricted
Stock  shall  not  affect in any way the  right or power of the  Company  or its
stockholders   to  make   or   authorize   any   combination,   subdivision   or
reclassification  of the  Stock or any  reorganization,  merger,  consolidation,
business  combination,  exchange  of shares,  or other  change in the  Company's
capital  structure or its business,  or any issue of bonds,  debentures or stock
having rights or preferences  equal,  superior or affecting the Restricted Stock
or the rights thereof, or dissolution or liquidation of the Company, or any sale
or transfer of all or any part of its assets or business, or any other corporate
act  or  proceeding,   whether  of  a  similar   character  or  otherwise.   The
determination of the Committee as to any such adjustment shall be conclusive and
binding for all  purposes of this  Agreement.  Nothing  herein  contained  shall
confer  upon  the  Employee  any  right to  continue  in the  employment  of any
Participating  Company  or  interfere  with or limit in any way the right of any
Participating  Company  to  terminate  the  Employee's  employment  at any time,
subject,  however,  to the provisions of any agreement of employment between any
Participating Company and the Employee.


                                      -4-

<PAGE>

          14. Interpretation by Committee.  The Employee agrees that any dispute
or  disagreement  which may arise in  connection  with this  Agreement  shall be
resolved by the Committee,  in its sole discretion,  and that any interpretation
by  the  Committee  of  the  terms  of  this  Agreement  or  the  Plan  and  any
determination made by the Committee under this Agreement or the Plan may be made
in the sole  discretion  of the  Committee  and  shall be  final,  binding,  and
conclusive.  Any  such  determination  need  not be  uniform  and  may  be  made
differently among Employees awarded Restricted Stock.

          15. Miscellaneous.  (a) This Agreement shall be governed and construed
in  accordance  with the laws of the State of Wisconsin  applicable to contracts
made and to be performed therein between residents thereof.

          (b) The waiver by the Company of any provision of this Agreement shall
not operate or be construed to be a subsequent  waiver of the same  provision or
waiver of any other provision hereof.

          (c) The Restricted Stock shall be deemed to have been awarded pursuant
to the Plan and is subject to the terms and conditions  thereof. In the event of
any conflict  between the terms hereof and the provisions of the Plan, the terms
and conditions of the Plan shall prevail. Any and all terms used herein,  unless
specifically defined herein shall have the meaning ascribed to them in the Plan.

          (d) Any  notice,  filing or  delivery  hereunder  or with  respect  to
Restricted  Stock  shall be given to the  Employee  at  either  his  usual  work
location or his home address as  indicated  in the records of the  Company,  and
shall be given to the  Committee  or the  Company at 250 East  Kilbourn  Avenue,
Milwaukee 53202, Attention:  Secretary. All such notices shall be given by first
class mail, postage pre-paid, or by personal delivery.

          (e) This  Agreement  shall be binding upon and inure to the benefit of
the Company and its  successors  and assigns and shall be binding upon and inure
to  the   benefit  of  the   Employee,   the   Beneficiary   and  the   personal
representative(s)  and heirs of the  Employee,  except that the Employee may not
transfer  any  interest  in any  Restricted  Stock  prior to the  release of the
restrictions imposed by Paragraph 2.




                                      -5-

<PAGE>

          IN WITNESS  WHEREOF,  the  Company has caused  this  instrument  to be
executed by its duly authorized officer and its corporate seal hereunto affixed,
and the Employee has hereunto affixed his hand and seal, all on the day and year
set forth below.


                                    MGIC INVESTMENT CORPORATION


(CORPORATE SEAL)                    By: ________________________________________
                                    Title: President and Chief Executive Officer


                                    _____________________________________ (SEAL)
                                    Name:

                                    No. of Shares of Restricted Stock:_________

                                    Date of Agreement:

                                    Release Date:

                                    Beneficiary:________________________________

                                    Address of Beneficiary:

                                    ____________________________________________

                                    ____________________________________________


                                    Beneficiary Tax Identification
                                    No:_________________________________________


                                      -6-

<PAGE>

                                      ANNEX

       Definition of "Change in Control of the Company" and Related Terms


          1.  Change in  Control  of the  Company.  A "Change  in Control of the
Company"  shall be deemed to have  occurred  if an event set forth in any one of
the following paragraphs shall have occurred:

                    (i) any  Person  (other  than (A) the  Company or any of its
          subsidiaries,  (B) a trustee  or other  fiduciary  holding  securities
          under  any  employee  benefit  plan  of  the  Company  or  any  of its
          subsidiaries,   (C)  an  underwriter  temporarily  holding  securities
          pursuant to an offering of such securities or (D) a corporation owned,
          directly  or  indirectly,  by  the  shareholders  of  the  Company  in
          substantially  the same proportions as their ownership of stock in the
          Company  ("Excluded  Persons"))  is or becomes the  Beneficial  Owner,
          directly or indirectly, of securities of the Company (not including in
          the  securities  beneficially  owned  by such  Person  any  securities
          acquired  directly from the Company or its  Affiliates  after July 22,
          1999,  pursuant to express  authorization by the Board of Directors of
          the Company (the "Board") that refers to this exception)  representing
          50% or more of either the then  outstanding  shares of common stock of
          the  Company  or the  combined  voting  power  of the  Company's  then
          outstanding  voting  securities  entitled  to  vote  generally  in the
          election of directors; or

                    (ii) the  following  individuals  cease  for any  reason  to
          constitute  a majority of the number of  directors of the Company then
          serving: (A) individuals who, on July 22, 1999,  constituted the Board
          and  (B)  any  new  director  (other  than a  director  whose  initial
          assumption  of office is in  connection  with an actual or  threatened
          election contest, including but not limited to a consent solicitation,
          relating to the election of  directors  of the Company,  as such terms
          are used in Rule  14a-11  of  Regulation  14A  under  the  Act)  whose
          appointment or election by the Board or nomination for election by the
          Company's  shareholders  was approved by a vote of at least two-thirds
          (2/3) of the directors  then still in office who either were directors
          on July 22, 1999, or whose initial appointment, election or nomination
          for  election  as a director  which  occurred  after July 22, 1999 was
          approved  by such vote of the  directors  then  still in office at the
          time of such  initial  appointment,  election or  nomination  who were
          themselves  either directors on July 22, 1999 or initially  appointed,
          elected or nominated by such two-thirds  (2/3) vote as described above
          ad infinitum  (collectively  the  "Continuing  Directors");  provided,
          however,  that  individuals who are appointed to the Board pursuant to
          or in accordance with the terms of an agreement  relating to a merger,
          consolidation,  or share exchange involving the Company (or any direct
          or  indirect  subsidiary  of the  Company)  shall  not  be  Continuing
          Directors for purposes of this Agreement until after such  individuals
          are first  nominated  for  election  by a vote of at least  two-thirds
          (2/3) of the then Continuing  Directors and are thereafter  elected as


                                      -7-

<PAGE>

          directors  by  the  shareholders  of  the  Company  at  a  meeting  of
          shareholders    held   following    consummation   of   such   merger,
          consolidation,  or share exchange;  and, provided further, that in the
          event the  failure of any such  persons  appointed  to the Board to be
          Continuing  Directors  results in a Change in Control of the  Company,
          the subsequent  qualification of such persons as Continuing  Directors
          shall  not alter the fact  that a Change  in  Control  of the  Company
          occurred; or

                    (iii) a  merger,  consolidation  or  share  exchange  of the
          Company with any other corporation is consummated or voting securities
          of the Company are issued in connection  with a merger,  consolidation
          or share exchange of the Company (or any direct or indirect subsidiary
          of the Company)  pursuant to applicable  stock exchange  requirements,
          other than (A) a merger,  consolidation  or share exchange which would
          result  in the  voting  securities  of the  Company  entitled  to vote
          generally in the election of directors  outstanding  immediately prior
          to  such  merger,   consolidation  or  share  exchange  continuing  to
          represent (either by remaining  outstanding or by being converted into
          voting  securities of the surviving  entity or any parent  thereof) at
          least 50% of the combined voting power of the voting securities of the
          Company or such  surviving  entity or any parent  thereof  entitled to
          vote  generally  in the election of directors of such entity or parent
          outstanding  immediately  after such  merger,  consolidation  or share
          exchange, or (B) a merger, consolidation or share exchange effected to
          implement a recapitalization  of the Company (or similar  transaction)
          in which no Person  (other than an Excluded  Person) is or becomes the
          Beneficial Owner, directly or indirectly, of securities of the Company
          (not including in the securities beneficially owned by such Person any
          securities  acquired directly from the Company or its Affiliates after
          July 22,  1999,  pursuant to express  authorization  by the Board that
          refers to this  exception)  representing  at least 50% of the combined
          voting  power of the  Company's  then  outstanding  voting  securities
          entitled to vote generally in the election of directors; or

                    (iv)  the  sale  or  disposition  by the  Company  of all or
          substantially  all of the Company's  assets (in one  transaction  or a
          series of related  transactions  within  any period of 24  consecutive
          months),  other than a sale or  disposition  by the  Company of all or
          substantially  all of the  Company's  assets  to an entity of which at
          least  75% of the  combined  voting  power  of the  voting  securities
          entitled to vote  generally in the  election of directors  immediately
          after  such  sale  are  owned by  Persons  in  substantially  the same
          proportions  as their  ownership of the Company  immediately  prior to
          such sale.

          2.  Related  Definitions.  For purposes of this Annex,  the  following
terms, when capitalized, shall have the following meanings:

                    (i) Act. The term "Act" means the Securities Exchange Act of
          1934, as amended.


                                      -8-

<PAGE>

                    (ii)  Affiliate and  Associate.  The terms  "Affiliate"  and
          "Associate" shall have the respective  meanings ascribed to such terms
          in Rule l2b-2 of the General Rules and Regulations under the Act.

                    (iii)  Beneficial  Owner. A Person shall be deemed to be the
          "Beneficial Owner" of any securities:

                              (a)  which  such  Person  or any of such  Person's
                    Affiliates or Associates  has the right to acquire  (whether
                    such  right is  exercisable  immediately  or only  after the
                    passage of time) pursuant to any  agreement,  arrangement or
                    understanding,  or upon the exercise of  conversion  rights,
                    exchange rights, rights,  warrants or options, or otherwise;
                    provided,  however,  that a Person  shall not be deemed  the
                    Beneficial Owner of, or to beneficially  own, (A) securities
                    tendered  pursuant to a tender or exchange  offer made by or
                    on behalf of such Person or any of such Person's  Affiliates
                    or Associates  until such tendered  securities  are accepted
                    for purchase,  or (B)  securities  issuable upon exercise of
                    Rights issued pursuant to the terms of the Company's  Rights
                    Agreement,  dated as of July 22,  1999,  between the Company
                    and Firstar Bank  Milwaukee,  N.A.,  as amended from time to
                    time (or any  successor  to such Rights  Agreement),  at any
                    time before the issuance of such securities;

                              (b)  which  such  Person  or any of such  Person's
                    Affiliates or Associates,  directly or  indirectly,  has the
                    right to vote or dispose of or has "beneficial ownership" of
                    (as  determined  pursuant to Rule l3d-3 of the General Rules
                    and Regulations  under the Act),  including  pursuant to any
                    agreement, arrangement or understanding;  provided, however,
                    that a Person shall not be deemed the  Beneficial  Owner of,
                    or to beneficially own, any security under this Subsection 1
                    (c)  as  a   result   of  an   agreement,   arrangement   or
                    understanding  to  vote  such  security  if  the  agreement,
                    arrangement  or  understanding:  (A)  arises  solely  from a
                    revocable  proxy or consent given to such Person in response
                    to a public proxy or consent  solicitation made pursuant to,
                    and in accordance with, the applicable rules and regulations
                    under  the Act  and (B) is not  also  then  reportable  on a
                    Schedule l3D under the Act (or any  comparable  or successor
                    report); or

                              (c)  which are  beneficially  owned,  directly  or
                    indirectly,  by any other  Person  with which such Person or
                    any of  such  Person's  Affiliates  or  Associates  has  any
                    agreement,  arrangement or understanding  for the purpose of
                    acquiring,  holding,  voting (except pursuant to a revocable
                    proxy  as  described  in  Subsection  1(c)  (ii)  above)  or
                    disposing of any voting securities of the Company.


                                      -9-

<PAGE>

                    (iv) Person.  The term "Person"  shall mean any  individual,
          firm,  partnership,   corporation  or  other  entity,   including  any
          successor (by merger or  otherwise) of such entity,  or a group of any
          of the foregoing acting in concert.



                                      -10-


<PAGE>

                           MGIC INVESTMENT CORPORATION

                        RESTRICTED STOCK AWARD AGREEMENT

          THIS  AGREEMENT  is made and entered  into as of the date set forth on
the  signature  page  hereof  by and  between  MGIC  INVESTMENT  CORPORATION,  a
Wisconsin  corporation  (the "Company"),  and the  non-employee  director of the
Company  whose  signature  is  set  forth  on the  signature  page  hereof  (the
"Non-Employee Director").


                              W I T N E S S E T H:

          WHEREAS,  the MGIC  Investment  Corporation  1991 Stock Incentive Plan
(hereinafter  referred  to, as amended,  as the "Plan"),  permits  shares of the
Company's common stock,  $1.00 par value per share (the "Stock"),  to be awarded
under its Deposit  Share  Program to  non-employee  directors of the Company who
elect to participate in the Program; and

          WHEREAS,  the Non-Employee  Director has elected to participate in the
Program.

          NOW, THEREFORE,  in consideration of the premises and of the covenants
and agreements  herein set forth, the parties hereby mutually covenant and agree
as follows:

          1.  Award of Restricted Stock. Subject to the terms and conditions set
forth herein, the Company hereby awards the Non-Employee  Director the number of
shares of Stock set forth on the signature page hereof (the "Restricted Stock").

          2.  Restrictions.  Except as otherwise provided herein, the Restricted
Stock may not be sold,  transferred or otherwise alienated or hypothecated until
the date set forth on the signature page hereof (the "Release Date").  Shares of
Restricted  Stock may be transferred by gift pursuant to the "Rules for Transfer
of Awards Under the 1991 Stock  Incentive  Plan"  attached to this  Agreement as
Exhibit A (the  "Rules").  Any  person to whom  shares of  Restricted  Stock are
transferred  pursuant  to  the  Rules  is  herein  referred  to as a  "Permitted
Transferee."

          3.  Escrow.  Certificates  for shares  of  Restricted  Stock  shall be
issued as soon as practicable in the name of the Non-Employee Director but shall
be held in escrow  by the  Company,  as  escrow  agent.  Upon  issuance  of such
certificates, (i) the Company shall give the Non-Employee Director a receipt for
the Restricted Stock held in escrow which will state that the Company holds such
Stock in escrow for the  account of the  Non-Employee  Director,  subject to the
terms of this  Agreement,  and (ii) the  Non-Employee  Director  shall  give the
Company a stock  power for such Stock duly  endorsed in blank which will be held
in escrow  for use in the event  such  Stock is  forfeited  in whole or in part.
Unless forfeited as provided herein,  Restricted Stock shall cease to be held in
escrow and  certificates  for such Stock  which have not been  transferred  to a
Permitted Transferee shall be delivered to the Non-Employee  Director, or in the
case of his


                                      -1-

<PAGE>

death, to his  Beneficiary (as hereinafter  defined) on the Release Date or upon
any other termination of the restrictions imposed by Paragraph 2 hereof.

          4.  Transfer After Release Date;  Securities Law Restrictions.  Except
as  otherwise  provided  herein,  Restricted  Stock  shall  become  free  of the
restrictions  of  Paragraph  2 and be freely  transferable  by the  Non-Employee
Director on the Release Date.  Notwithstanding  the foregoing or anything to the
contrary herein, the Non-Employee  Director agrees and acknowledges with respect
to any Restricted Stock that has not been registered under the Securities Act of
1933, as amended (the "Act"),  that (i) the Non-Employee  Director will not sell
or otherwise dispose of such Stock except pursuant to an effective  registration
statement  under  the Act and any  applicable  state  securities  laws,  or in a
transaction  which,  in the opinion of counsel for the  Company,  is exempt from
such registration,  and (ii) a legend will be placed on the certificates for the
Restricted Stock to such effect.

          5.  Termination  of  Directorship  Due to Death.  If the  Non-Employee
Director  ceases to be a director of the  Company by reason of the  Non-Employee
Director's  death,  (a)  the  restrictions  of  Paragraph  2  applicable  to the
Restricted  Stock  shall  terminate  and (b) the  vesting  requirements  for the
Restricted  Shares  shall  be  deemed  to  be  fulfilled  on  the  date  of  the
Non-Employee Director's death.

          6.  Forfeiture.  Awards of Restricted  Stock  hereunder  that have not
vested shall be forfeited by the  Non-Employee  Director and shall revert to the
Company upon the  Non-Employee  Director ceasing to be a director of the Company
for any reason other than the  Non-Employee  Director's  death or a "Permissible
Event,"  unless  otherwise  provided by the  Committee.  A Permissible  Event is
termination  of  service  as a  director  of the  Company  by  reason of (a) the
Non-Employee  Director being  ineligible for continued  service as a director of
the Company  under the  Company's  retirement  policy,  or (b) the  Non-Employee
Director's  taking a position  with or  providing  services  to a  governmental,
charitable or educational  institution whose policies prohibit continued service
on the Company's Board of Non-Employee Directors or under circumstances in which
that continued service as a director of the Company would be a violation of law.
If the Non-Employee Director ceases to be a director of the Company by reason of
a Permissible  Event,  the  Restricted  Stock shall  continue to vest during the
balance  of the  Restricted  Period  if (1) no later  than the date on which the
Non-Employee  Director ceases to be a director of the Company,  the Non-Employee
Director  enters into an  agreement  approved by the  Committee  under which the
Non-Employee Director agrees not to compete with the Company or its subsidiaries
during the balance of such  period and (2) the  Non-Employee  Director  complies
with  the  agreement.  All  Restricted  Stock  that  does  not so vest  shall be
forfeited to the Company, unless otherwise determined by the Committee.

          7.  Beneficiary.  (a) The person whose name  appears on the  signature
page hereof after the caption  "Beneficiary" or any successor  designated by the
Non-Employee Director in accordance herewith (the person who is the Non-Employee
Director's  Beneficiary  at the  time of his  death  herein  referred  to as the
"Beneficiary")  shall be entitled to receive the vested  Restricted  Stock to be
released to the Beneficiary under Paragraphs 3 and 5 as a result of the death of
the  Non-Employee  Director.  The  Non-Employee  Director  may from time to time
revoke or change


                                      -2-

<PAGE>

the  Beneficiary  without the consent of any prior  Beneficiary  by filing a new
designation  with the  Committee.  The last  such  designation  received  by the
Committee  shall be controlling;  provided,  however,  that no  designation,  or
change  or  revocation  thereof,  shall  be  effective  unless  received  by the
Committee prior to the Non-Employee  Director's death, and in no event shall any
designation  be  effective  as of a date  prior  to  such  receipt.  If no  such
Beneficiary  designation is in effect at the time of an Non-Employee  Director's
death, or if no designated  Beneficiary survives the Non-Employee Director or if
such designation conflicts with law, the Non-Employee Director's estate shall be
entitled  to receive  the  Restricted  Stock upon the death of the  Non-Employee
Director.

          (b)  A  Permitted   Transferee   shall  be  entitled  to  designate  a
Beneficiary  with respect to the shares of Restricted  Stock  transferred to the
Permitted  Transferee by completing the appropriate portion of the election form
contemplated by Paragraph 5 of the Rules (the "Election Form"). Such Beneficiary
shall be entitled to receive the vested  Restricted  Stock to be released  under
Paragraphs  3 and 5 as a result of the  death of the  Non-Employee  Director  or
otherwise to be released hereunder if, in either case, the Permitted  Transferee
dies,  prior to such  release.  The Permitted  Transferee  may from time to time
revoke or change such Beneficiary  without the consent of any prior  Beneficiary
by  filing a new  designation  with the  Committee.  The last  such  designation
received by the  Committee  shall be  controlling,  provided,  however,  that no
designation, or change or revocation thereof, shall be effective unless received
by the Committee prior to the  Non-Employee  Director's  death,  and in no event
shall any  designation  be effective as of a date prior to such  receipt.  If no
such   designated   Beneficiary   survives  the   Permitted   Transferee,   such
Beneficiary's  estate, of if such designation  conflicts with law, the Permitted
Transferee's  estate, shall be entitled to receive the Restricted Stock released
hereunder.

          (c) If the  Committee  is in doubt as to the  right of any  person  to
receive  such  Restricted  Stock,  the Company  may retain  such Stock,  without
liability for any interest  thereon,  until the Committee  determines the person
entitled thereto,  or the Company may deliver such Restricted Stock to any court
of appropriate  jurisdiction and such delivery shall be a complete  discharge of
the liability of the Company therefor.

          8.  Certificate   Legend.   In  addition  to  any  legends  placed  on
certificates for Restricted Stock under Paragraph 4 hereof, each certificate for
shares of Restricted Stock shall bear the following legend:

          "The sale or other transfer of the shares of stock represented by this
          certificate,  whether voluntary, or by operation of law, is subject to
          certain restrictions set forth in the MGIC Investment Corporation 1991
          Stock  Incentive  Plan,  as  amended,  and a  Restricted  Stock  Award
          Agreement between MGIC Investment Corporation and the registered owner
          hereof.  A copy of such Plan and such  Agreement  may be obtained from
          the Secretary of MGIC Investment Corporation."


                                      -3-

<PAGE>

When the  restrictions  imposed by Paragraph 2 hereof  terminate,  the foregoing
legend  shall be  removed  from the  certificates  representing  such Stock upon
request of the  Non-Employee  Director  or a Permitted  Transferee  for whom the
shares have been transferred.

          9. Voting Rights; Dividends and Other Distributions.

          (a)  While the  Restricted  Stock is  subject  to  restrictions  under
Paragraph 2 and prior to any forfeiture thereof,  the Non-Employee  Director may
exercise full voting rights for the Restricted  Stock registered in his name and
held in escrow hereunder.

          (b) While the Restricted  Stock is subject to the  restrictions  under
Paragraph 2 and prior to any forfeiture thereof, the Non-Employee Director shall
be entitled to receive all dividends and other  distributions  paid with respect
to the  Restricted  Stock.  If any such dividends or  distributions  are paid in
Stock,  such shares shall be subject to the same  restrictions  as the shares of
Restricted Stock with respect to which they were paid, including the requirement
that Restricted Stock be held in escrow pursuant to Paragraph 3 hereof.

          (c) Subject to the  provisions  of this  Agreement,  the  Non-Employee
Director shall have, with respect to the Restricted  Stock,  all other rights of
holders of Stock.

          10.  Adjustments  in Event of  Change  in  Stock.  In the event of any
change in the outstanding shares of Stock ("capital adjustment") for any reason,
including   but  not   limited   to,   any   stock   splits,   stock   dividend,
recapitalization, merger, consolidation, reorganization, combination or exchange
of shares or other similar event which, in the judgment of the Committee,  could
distort the implementation of the Plan or the realization of its objectives, the
Committee may make such adjustments in the shares of Restricted Stock subject to
this Agreement, or in the terms, conditions or restrictions of this Agreement as
the Committee deems equitable.

          11.  Change in Control.  If a "Change in Control of the  Company"  (as
defined in Annex  attached  hereto)  occurs,  the  restrictions  of  Paragraph 2
applicable to the Restricted  Stock shall terminate on the date of the Change in
Control of the Company.

          12.  Powers of Company Not Affected.  The existence of the  Restricted
Stock  shall  not  affect in any way the  right or power of the  Company  or its
stockholders   to  make   or   authorize   any   combination,   subdivision   or
reclassification  of the  Stock or any  reorganization,  merger,  consolidation,
business  combination,  exchange  of shares,  or other  change in the  Company's
capital  structure or its business,  or any issue of bonds,  debentures or stock
having rights or preferences  equal,  superior or affecting the Restricted Stock
or the rights thereof, or dissolution or liquidation of the Company, or any sale
or transfer of all or any part of its assets or business, or any other corporate
act  or  proceeding,   whether  of  a  similar   character  or  otherwise.   The
determination of the Committee as to any such adjustment shall be conclusive and
binding for all purposes of this Agreement. Nothing herein shall confer upon the
Non-Employee  Director the right to continue as a member of the Company's  Board
of Directors.


                                      -4-

<PAGE>

          13. Interpretation by Committee. The Non-Employee Director agrees that
any dispute or  disagreement  which may arise in connection  with this Agreement
shall  be  resolved  by the  Committee,  in its  sole  discretion,  and that any
interpretation  by the Committee of the terms of this  Agreement or the Plan and
any determination  made by the Committee under this Agreement or the Plan may be
made in the sole  discretion of the Committee and shall be final,  binding,  and
conclusive.  Any  such  determination  need  not be  uniform  and  may  be  made
differently among Non-Employee Directors awarded Restricted Stock.

          14. Miscellaneous.

          (a) This Agreement  shall be governed and construed in accordance with
the laws of the  State  of  Wisconsin  applicable  to  contracts  made and to be
performed therein between residents thereof.

          (b) The waiver by the Company of any provision of this Agreement shall
not operate or be construed to be a subsequent  waiver of the same  provision or
waiver of any other provision hereof.

          (c) The Restricted Stock shall be deemed to have been awarded pursuant
to the Plan and is subject to the terms and conditions  thereof. In the event of
any conflict  between the terms hereof and the provisions of the Plan, the terms
and conditions of the Plan shall prevail. Any and all terms used herein,  unless
specifically defined herein shall have the meaning ascribed to them in the Plan.

          (d) Any  notice,  filing or  delivery  hereunder  or with  respect  to
Restricted  Stock shall be given to the  Non-Employee  Director at either his or
her address as indicated  in the records of the Company to which  communications
are generally  sent to him or her;  shall be given to a Permitted  Transferee at
his  address  as  indicated  in the  Election  Form;  and  shall be given to the
Committee  or  the  Company  at  250  East  Kilbourn  Avenue,  Milwaukee  53202,
Attention:  Secretary.  All such  notices  shall be given by first  class  mail,
postage pre-paid, or by personal delivery.

          (e) This  Agreement  shall be binding upon and inure to the benefit of
the Company and its  successors  and assigns and shall be binding upon and inure
to the benefit of the  Non-Employee  Director,  any  Permitted  Transferee,  the
Beneficiary  and the personal  representative(s)  and heirs of the  Non-Employee
Director, except that the Non-Employee Director may not transfer any interest in
any  Restricted  Stock  prior to the  release  of the  restrictions  imposed  by
Paragraph 2 other than as provided in Paragraph 2.

          (f) The term  "certificate"  as used  herein  with regard to shares of
Restricted  Stock,  includes  electronic  registration  in  the  system  of  the
Company's transfer agent for the Stock.

          15.  Deposit Share Program.  In the event of any conflict  between the
terms hereof and the terms and  conditions  of Section 6(e) of the Plan relating
to the Deposit  Share  Program,  the terms and  conditions of Section 6(e) shall
prevail.


                                      -5-

<PAGE>

          16. Permitted Transferee.  In the event Shares of Restricted Stock are
transferred to a Permitted Transferee, (i) the provisions of Paragraphs 3, 4, 9,
and 13 shall apply  mutatis  muntandis to the shares so  transferred  and to the
Permitted Transferee; (ii) the provisions of Paragraphs 5, 8, 10, 11, 12, 14 and
15 shall  continue to apply  without  any change  with  respect to the shares so
transferred;  and (iii) the  provisions  of Paragraph 6 shall  continue to apply
without any change with  respect to the shares so  transferred,  except that the
shares to be forfeited  shall be those shares of Restricted  Stock that have not
vested and which are held by the Permitted Transferee.

          IN WITNESS  WHEREOF,  the  Company has caused  this  instrument  to be
executed by its duly  authorized  officer,  and the  Non-Employee  Director  has
hereunto affixed his hand and seal, all on the day and year set forth below.

MGIC INVESTMENT CORPORATION


By:_______________________________  ____________________________________________
                                             

                                    No. of Shares of Restricted Stock:_________

                                    Date of Agreement:

                                    Award Date:

                                    Release Date:

                                    Beneficiary:_______________________________
          

                                    Address of Beneficiary:

                                    ____________________________________________
                                    ____________________________________________

                                    Beneficiary's Tax Identification
                                    Number:____________________________________


                                      -6-

<PAGE>

                                      ANNEX

       Definition of "Change in Control of the Company" and Related Terms

          1.  Change in  Control  of the  Company.  A "Change  in Control of the
Company"  shall be deemed to have  occurred  if an event set forth in any one of
the following paragraphs shall have occurred:

                    (i) any  Person  (other  than (A) the  Company or any of its
          subsidiaries,  (B) a trustee  or other  fiduciary  holding  securities
          under  any  employee  benefit  plan  of  the  Company  or  any  of its
          subsidiaries,   (C)  an  underwriter  temporarily  holding  securities
          pursuant to an offering of such securities or (D) a corporation owned,
          directly  or  indirectly,  by  the  shareholders  of  the  Company  in
          substantially  the same proportions as their ownership of stock in the
          Company  ("Excluded  Persons"))  is or becomes the  Beneficial  Owner,
          directly or indirectly, of securities of the Company (not including in
          the  securities  beneficially  owned  by such  Person  any  securities
          acquired  directly from the Company or its  Affiliates  after July 22,
          1999,  pursuant to express  authorization by the Board of Directors of
          the Company (the "Board") that refers to this exception)  representing
          50% or more of either the then  outstanding  shares of common stock of
          the  Company  or the  combined  voting  power  of the  Company's  then
          outstanding  voting  securities  entitled  to  vote  generally  in the
          election of directors; or

                    (ii) the  following  individuals  cease  for any  reason  to
          constitute  a majority of the number of  directors of the Company then
          serving: (A) individuals who, on July 22, 1999,  constituted the Board
          and  (B)  any  new  director  (other  than a  director  whose  initial
          assumption  of office is in  connection  with an actual or  threatened
          election contest, including but not limited to a consent solicitation,
          relating to the election of  directors  of the Company,  as such terms
          are used in Rule  14a-11  of  Regulation  14A  under  the  Act)  whose
          appointment or election by the Board or nomination for election by the
          Company's  shareholders  was approved by a vote of at least two-thirds
          (2/3) of the directors  then still in office who either were directors
          on July 22, 1999, or whose initial appointment, election or nomination
          for  election  as a director  which  occurred  after July 22, 1999 was
          approved  by such vote of the  directors  then  still in office at the
          time of such  initial  appointment,  election or  nomination  who were
          themselves  either directors on July 22, 1999 or initially  appointed,
          elected or nominated by such two-thirds  (2/3) vote as described above
          ad infinitum  (collectively  the  "Continuing  Directors");  provided,
          however,  that  individuals who are appointed to the Board pursuant to
          or in accordance with the terms of an agreement  relating to a merger,
          consolidation,  or share exchange involving the Company (or any direct
          or  indirect  subsidiary  of the  Company)  shall  not  be  Continuing
          Directors for purposes of this Agreement until after such  individuals
          are first  nominated  for  election  by a vote of at least  two-thirds
          (2/3) of the then Continuing  Directors and are thereafter  elected as
          directors  by  the  shareholders  of  the  Company  at  a  meeting  of
          shareholders    held


                                      -7-

<PAGE>

          following  consummation  of  such  merger,  consolidation,   or  share
          exchange;  and, provided further, that in the event the failure of any
          such persons appointed to the Board to be Continuing Directors results
          in a Change in Control of the Company, the subsequent qualification of
          such persons as Continuing  Directors  shall not alter the fact that a
          Change in Control of the Company occurred; or

                    (iii) a  merger,  consolidation  or  share  exchange  of the
          Company with any other corporation is consummated or voting securities
          of the Company are issued in connection  with a merger,  consolidation
          or share exchange of the Company (or any direct or indirect subsidiary
          of the Company)  pursuant to applicable  stock exchange  requirements,
          other than (A) a merger,  consolidation  or share exchange which would
          result  in the  voting  securities  of the  Company  entitled  to vote
          generally in the election of directors  outstanding  immediately prior
          to  such  merger,   consolidation  or  share  exchange  continuing  to
          represent (either by remaining  outstanding or by being converted into
          voting  securities of the surviving  entity or any parent  thereof) at
          least 50% of the combined voting power of the voting securities of the
          Company or such  surviving  entity or any parent  thereof  entitled to
          vote  generally  in the election of directors of such entity or parent
          outstanding  immediately  after such  merger,  consolidation  or share
          exchange, or (B) a merger, consolidation or share exchange effected to
          implement a recapitalization  of the Company (or similar  transaction)
          in which no Person  (other than an Excluded  Person) is or becomes the
          Beneficial Owner, directly or indirectly, of securities of the Company
          (not including in the securities beneficially owned by such Person any
          securities  acquired directly from the Company or its Affiliates after
          July 22,  1999,  pursuant to express  authorization  by the Board that
          refers to this  exception)  representing  at least 50% of the combined
          voting  power of the  Company's  then  outstanding  voting  securities
          entitled to vote generally in the election of directors; or

                    (iv)  the  sale  or  disposition  by the  Company  of all or
          substantially  all of the Company's  assets (in one  transaction  or a
          series of related  transactions  within  any period of 24  consecutive
          months),  other than a sale or  disposition  by the  Company of all or
          substantially  all of the  Company's  assets  to an entity of which at
          least  75% of the  combined  voting  power  of the  voting  securities
          entitled to vote  generally in the  election of directors  immediately
          after  such  sale  are  owned by  Persons  in  substantially  the same
          proportions  as their  ownership of the Company  immediately  prior to
          such sale.

          2.  Related  Definitions.  For purposes of this Annex,  the  following
terms, when capitalized, shall have the following meanings:

                    (i) Act. The term "Act" means the Securities Exchange Act of
          1934, as amended.


                                      -8-

<PAGE>

                    (ii)  Affiliate and  Associate.  The terms  "Affiliate"  and
          "Associate" shall have the respective  meanings ascribed to such terms
          in Rule l2b-2 of the General Rules and Regulations under the Act.

                    (iii)  Beneficial  Owner. A Person shall be deemed to be the
          "Beneficial Owner" of any securities:

                              (a)  which  such  Person  or any of such  Person's
                    Affiliates or Associates  has the right to acquire  (whether
                    such  right is  exercisable  immediately  or only  after the
                    passage of time) pursuant to any  agreement,  arrangement or
                    understanding,  or upon the exercise of  conversion  rights,
                    exchange rights, rights,  warrants or options, or otherwise;
                    provided,  however,  that a Person  shall not be deemed  the
                    Beneficial Owner of, or to beneficially  own, (A) securities
                    tendered  pursuant to a tender or exchange  offer made by or
                    on behalf of such Person or any of such Person's  Affiliates
                    or Associates  until such tendered  securities  are accepted
                    for purchase,  or (B)  securities  issuable upon exercise of
                    Rights issued pursuant to the terms of the Company's  Rights
                    Agreement,  dated as of July 22,  1999,  between the Company
                    and Firstar Bank  Milwaukee,  N.A.,  as amended from time to
                    time (or any  successor  to such Rights  Agreement),  at any
                    time before the issuance of such securities;

                              (b)  which  such  Person  or any of such  Person's
                    Affiliates or Associates,  directly or  indirectly,  has the
                    right to vote or dispose of or has "beneficial ownership" of
                    (as  determined  pursuant to Rule l3d-3 of the General Rules
                    and Regulations  under the Act),  including  pursuant to any
                    agreement, arrangement or understanding;  provided, however,
                    that a Person shall not be deemed the  Beneficial  Owner of,
                    or to beneficially own, any security under this Subsection 1
                    (c)  as  a   result   of  an   agreement,   arrangement   or
                    understanding  to  vote  such  security  if  the  agreement,
                    arrangement  or  understanding:  (A)  arises  solely  from a
                    revocable  proxy or consent given to such Person in response
                    to a public proxy or consent  solicitation made pursuant to,
                    and in accordance with, the applicable rules and regulations
                    under  the Act  and (B) is not  also  then  reportable  on a
                    Schedule l3D under the Act (or any  comparable  or successor
                    report); or

                              (c)  which are  beneficially  owned,  directly  or
                    indirectly,  by any other  Person  with which such Person or
                    any of  such  Person's  Affiliates  or  Associates  has  any
                    agreement,  arrangement or understanding  for the purpose of
                    acquiring,  holding,  voting (except pursuant to a revocable
                    proxy  as  described  in  Subsection  1(c)  (ii)  above)  or
                    disposing of any voting securities of the Company.


                                      -9-

<PAGE>

                    (iv) Person.  The term "Person"  shall mean any  individual,
          firm,  partnership,   corporation  or  other  entity,   including  any
          successor (by merger or  otherwise) of such entity,  or a group of any
          of the foregoing acting in concert.


                                      -10-




                                                                   EXHIBIT 10.11
                                                                   -------------

                             EXECUTIVE BONUS PLAN OF
                           MGIC INVESTMENT CORPORATION
                                 (the "Company")


The  Executive  Bonus  Plan of the  Company  in  effect  for 2000  (which is not
contained  in a formal  plan  document),  applies  to  certain  officers  of the
Company,  including the executive officers of the Company identified in the Form
10-K for the year ended  December 31, 1999.  Under the Executive  Bonus Plan, if
the  Company  achieves  a minimum  level of net income  for 2000,  an  executive
officer will be eligible for a bonus,  depending  upon the  executive  officer's
individual  performance,  within  various ranges of up to 200% of such executive
officer's  base  salary,  depending  on the range  applicable  to the  executive
officer.






                                                                   EXHIBIT 10.17
                                                                   -------------

                KEY EXECUTIVE EMPLOYMENT AND SEVERANCE AGREEMENT

          THIS  AGREEMENT  is  made  and  entered  into  as of  the  ___  day of
___________, by and between MGIC Investment Corporation, a Wisconsin corporation
(hereinafter referred to as the "Company"), and the person whose name appears on
the signature page hereof (hereinafter referred to as "Executive").

                               W I T N E S S E T H

          WHEREAS,  the Executive is employed by the Company and/or a subsidiary
of the Company (hereinafter referred to collectively as the "Employer") in a key
executive  capacity and the Executive's  services are valuable to the conduct of
the business of the Company;

          WHEREAS,  the  Company  desires  to  continue  to  attract  and retain
dedicated and skilled  management  employees in a period of actual and potential
industry   consolidation  and  changes  in  regulatory  barriers  regarding  the
ownership of insurance companies, consistent with achieving a transaction in the
best interests of its shareholders in any change in control of the Company;

          WHEREAS,  the Company recognizes that circumstances may arise in which
a change in control of the Company  occurs,  through  acquisition  or otherwise,
thereby causing a potential conflict of interest between the Company's needs for
the
 Executive to remain focused on the Company's  business and for the necessary
continuity  in management  prior to and  following a change in control,  and the
Executive's  reasonable  personal concerns  regarding future employment with the
Employer  and  economic  protection  in the  event  of loss of  employment  as a
consequence of a change in control;

          WHEREAS,  the Company and the Executive are desirous that any proposal
for a change in control or  acquisition of the Company will be considered by the
Executive  objectively  and with  reference  only to the best  interests  of the
Company and its shareholders;

          WHEREAS,  the Executive  will be in a better  position to consider the
Company's  best  interests  if the  Executive  is afforded  reasonable  economic
security,  as  provided  in  this  Agreement,   against  altered  conditions  of
employment which could result from any such change in control or acquisition;

          WHEREAS,  the Executive  possesses  intimate knowledge of the business
and affairs of the Company and has acquired certain confidential information and
data with respect to the Company; and

          WHEREAS, the Company desires to insure,  insofar as possible,  that it
will continue to have the benefit of the Executive's services and to protect its
confidential information and goodwill.

          NOW,  THEREFORE,  in  consideration of the foregoing and of the mutual
covenants and agreements  hereinafter  set forth,  the parties  hereto  mutually
covenant and agree as follows:

<PAGE>

          1. Definitions.

                    (a) Act.  For  purposes  of this  Agreement,  the term "Act"
          means the Securities Exchange Act of 1934, as amended.

                    (b) Affiliate and Associate. For purposes of this Agreement,
          the  terms  "Affiliate"  and  "Associate"  shall  have the  respective
          meanings ascribed to such terms in Rule l2b-2 of the General Rules and
          Regulations under the Act.

                    (c)  Beneficial  Owner.  For purposes of this  Agreement,  a
          Person shall be deemed to be the "Beneficial Owner" of any securities:

                              (i)  which  such  Person  or any of such  Person's
                    Affiliates or Associates  has the right to acquire  (whether
                    such  right is  exercisable  immediately  or only  after the
                    passage of time) pursuant to any  agreement,  arrangement or
                    understanding,  or upon the exercise of  conversion  rights,
                    exchange rights, rights,  warrants or options, or otherwise;
                    provided,  however,  that a Person  shall not be deemed  the
                    Beneficial Owner of, or to beneficially  own, (A) securities
                    tendered  pursuant to a tender or exchange  offer made by or
                    on behalf of such Person or any of such Person's  Affiliates
                    or Associates  until such tendered  securities  are accepted
                    for purchase,  or (B)  securities  issuable upon exercise of
                    Rights issued pursuant to the terms of the Company's  Rights
                    Agreement,  dated as of July 22,  1999,  between the Company
                    and Firstar Bank  Milwaukee,  N.A.,  as amended from time to
                    time (or any  successor  to such Rights  Agreement),  at any
                    time before the issuance of such securities;

                              (ii)  which  such  Person or any of such  Person's
                    Affiliates or Associates,  directly or  indirectly,  has the
                    right to vote or dispose of or has "beneficial ownership" of
                    (as  determined  pursuant to Rule l3d-3 of the General Rules
                    and Regulations  under the Act),  including  pursuant to any
                    agreement, arrangement or understanding;  provided, however,
                    that a Person shall not be deemed the  Beneficial  Owner of,
                    or to beneficially own, any security under this Subsection 1
                    (c)  as  a   result   of  an   agreement,   arrangement   or
                    understanding  to  vote  such  security  if  the  agreement,
                    arrangement  or  understanding:  (A)  arises  solely  from a
                    revocable  proxy or consent given to such Person in response
                    to a public proxy or consent  solicitation made pursuant to,
                    and in accordance with, the applicable rules and regulations
                    under  the Act  and (B) is not  also  then  reportable  on a
                    Schedule l3D under the Act (or any  comparable  or successor
                    report); or

                              (iii) which are  beneficially  owned,  directly or
                    indirectly,  by any other  Person  with which such Person or
                    any of  such  Person's  Affiliates  or  Associates  has  any
                    agreement,  arrangement or understanding  for the purpose of
                    acquiring,  holding,  voting (except pursuant to a revocable
                    proxy  as  described  in  Subsection  1(c)  (ii)  above)  or
                    disposing of any voting securities of the Company.


                                      -2-

<PAGE>

                    (d) Cause.  "Cause" for  termination  by the Employer of the
          Executive's  employment in connection  with a Change in Control of the
          Company shall,  for purposes of this Agreement,  be limited to (i) the
          engaging by the  Executive  in  intentional  conduct not taken in good
          faith which has caused  demonstrable  and serious  financial injury to
          the Employer,  as evidenced by a determination  in a binding and final
          judgment,  order or  decree  of a court or  administrative  agency  of
          competent  jurisdiction,  in effect after  exhaustion  or lapse of all
          rights of appeal,  in an action,  suit or  proceeding,  whether civil,
          criminal, administrative or investigative; (ii) conviction of a felony
          (as  evidenced  by binding  and final  judgment,  order or decree of a
          court of competent  jurisdiction,  in effect after  exhaustion  of all
          rights of appeal) which substantially  impairs the Executive's ability
          to  perform  his  duties or  responsibilities;  and  (iii)  continuing
          willful  and  unreasonable  refusal by the  Executive  to perform  the
          Executive's duties or responsibilities  (unless  significantly changed
          without the Executive's consent).

                    (e) Change in Control of the  Company.  A "Change in Control
          of the Company" shall be deemed to have occurred if an event set forth
          in any one of the following paragraphs shall have occurred:

                              (i) any Person  (other than (A) the Company or any
                    of  its  subsidiaries,  (B) a  trustee  or  other  fiduciary
                    holding  securities  under any employee  benefit plan of the
                    Company  or  any  of its  subsidiaries,  (C) an  underwriter
                    temporarily  holding  securities  pursuant to an offering of
                    such  securities  or (D) a  corporation  owned,  directly or
                    indirectly,   by  the   shareholders   of  the   Company  in
                    substantially  the same  proportions  as their  ownership of
                    stock in the Company ("Excluded Persons")) is or becomes the
                    Beneficial Owner,  directly or indirectly,  of securities of
                    the Company (not  including in the  securities  beneficially
                    owned by such Person any securities  acquired  directly from
                    the Company or its Affiliates after July 22, 1999,  pursuant
                    to express  authorization  by the Board of  Directors of the
                    Company  (the  "Board")  that  refers  to  this   exception)
                    representing  50% or more of  either  the  then  outstanding
                    shares of common stock of the Company or the combined voting
                    power of the Company's then  outstanding  voting  securities
                    entitled to vote generally in the election of directors; or

                              (ii)  the  following  individuals  cease  for  any
                    reason to  constitute  a majority of the number of directors
                    of the Company then serving:  (A)  individuals  who, on July
                    22,  1999,  constituted  the Board and (B) any new  director
                    (other than a director whose initial assumption of office is
                    in connection with an actual or threatened election contest,
                    including  but  not  limited  to  a  consent   solicitation,
                    relating to the election of  directors  of the  Company,  as
                    such terms are used in Rule 14a-11 of  Regulation  14A under
                    the Act)  whose  appointment  or  election  by the  Board or
                    nomination  for election by the Company's  shareholders  was
                    approved  by a vote  of at  least  two-thirds  (2/3)  of the
                    directors  then still in office who either were directors on
                    July 22, 1999,  or whose  initial  appointment,  election or
                    nomination  for election as a director  which occurred after
                    July 22,  1999 was  approved  by such vote of the  directors
                    then   still  in  office   at  the  time  of  such   initial
                    appointment,  election  or  nomination  who were  themselves
                    either 


                                      -3-

<PAGE>

                    directors on July 22, 1999 or initially  appointed,  elected
                    or  nominated  by such  two-thirds  (2/3) vote as  described
                    above   ad   infinitum    (collectively    the   "Continuing
                    Directors");  provided,  however,  that  individuals who are
                    appointed to the Board pursuant to or in accordance with the
                    terms of an agreement  relating to a merger,  consolidation,
                    or share  exchange  involving  the Company (or any direct or
                    indirect  subsidiary of the Company) shall not be Continuing
                    Directors  for purposes of this  Agreement  until after such
                    individuals are first nominated for election by a vote of at
                    least two-thirds (2/3) of the then Continuing  Directors and
                    are thereafter  elected as directors by the  shareholders of
                    the  Company at a meeting  of  shareholders  held  following
                    consummation  of  such  merger,   consolidation,   or  share
                    exchange;  and,  provided  further,  that in the  event  the
                    failure  of any such  persons  appointed  to the Board to be
                    Continuing  Directors  results in a Change in Control of the
                    Company,  the  subsequent  qualification  of such persons as
                    Continuing  Directors shall not alter the fact that a Change
                    in Control of the Company occurred; or

                              (iii) a merger, consolidation or share exchange of
                    the Company with any other  corporation  is  consummated  or
                    voting  securities  of the Company are issued in  connection
                    with  a  merger,  consolidation  or  share  exchange  of the
                    Company  (or  any  direct  or  indirect  subsidiary  of  the
                    Company) pursuant to applicable stock exchange requirements,
                    other  than (A) a merger,  consolidation  or share  exchange
                    which would result in the voting  securities  of the Company
                    entitled to vote  generally  in the  election  of  directors
                    outstanding immediately prior to such merger,  consolidation
                    or  share  exchange   continuing  to  represent  (either  by
                    remaining  outstanding  or by being  converted  into  voting
                    securities of the surviving entity or any parent thereof) at
                    least  50% of  the  combined  voting  power  of  the  voting
                    securities  of the Company or such  surviving  entity or any
                    parent thereof entitled to vote generally in the election of
                    directors of such entity or parent  outstanding  immediately
                    after such merger, consolidation or share exchange, or (B) a
                    merger,   consolidation   or  share  exchange   effected  to
                    implement  a  recapitalization  of the  Company  (or similar
                    transaction)  in which no  Person  (other  than an  Excluded
                    Person) is or becomes  the  Beneficial  Owner,  directly  or
                    indirectly,  of securities of the Company (not  including in
                    the  securities   beneficially  owned  by  such  Person  any
                    securities   acquired  directly  from  the  Company  or  its
                    Affiliates   after  July  22,  1999,   pursuant  to  express
                    authorization  by the Board that  refers to this  exception)
                    representing  at least 50% of the  combined  voting power of
                    the Company's then outstanding voting securities entitled to
                    vote generally in the election of directors; or

                              (iv) the sale or disposition by the Company of all
                    or  substantially  all  of  the  Company's  assets  (in  one
                    transaction or a series of related  transactions  within any
                    period  of 24  consecutive  months),  other  than a sale  or
                    disposition  by the Company of all or  substantially  all of
                    the


                                      -4-

<PAGE>

                    Company's  assets  to an entity of which at least 75% of the
                    combined voting power of the voting  securities  entitled to
                    vote  generally  in the  election of  directors  immediately
                    after such sale are owned by Persons  in  substantially  the
                    same   proportions   as  their   ownership  of  the  Company
                    immediately prior to such sale.

                    (f) Code.  For purposes of this  Agreement,  the term "Code"
          means the Internal  Revenue  Code of 1986,  including  any  amendments
          thereto or successor tax codes thereof.

                    (g) Covered Termination.  Subject to Subsection 2(b) hereof,
          for purposes of this Agreement,  the term "Covered  Termination" means
          any  termination of the Executive's  employment  during the Employment
          Period  where  the  Notice  of  Termination  is  delivered  on, or the
          Termination  Date  is,  any date  prior  to the end of the  Employment
          Period.

                    (h) Employment  Period.  Subject to Subsection  2(b) hereof,
          for purposes of this Agreement,  the term "Employment  Period" means a
          period  commencing  on the date of a Change in Control of the Company,
          and  ending at 11:59  p.m.  Central  Time on the  earlier of the third
          anniversary of such date or the Executive's Normal Retirement Date.

                    (i)  Good  Reason.  For  purposes  of  this  Agreement,  the
          Executive  shall have "Good Reason" for  termination  of employment in
          connection with a Change in Control of the Company in the event of:

                              (i) any breach of this  Agreement by the Employer,
                    including  specifically  any breach by the  Employer  of the
                    agreements  contained  in Sections 4, 5, or 6 hereof,  other
                    than an isolated,  insubstantial and inadvertent failure not
                    occurring in bad faith that the Employer  remedies  promptly
                    after receipt of notice thereof given by the Executive;

                              (ii) the  removal of the  Executive  from,  or any
                    failure to reelect or reappoint the Executive to, any of the
                    offices  held with MGIC on the date of the Change in Control
                    of the Company (or if the Executive then held no office with
                    MGIC, then with the Company),  except in the event that such
                    removal or failure  to reelect or  reappoint  relates to the
                    termination  by the Employer of the  Executive's  employment
                    for Cause or by reason of disability  pursuant to Section 12
                    hereof;  it is  understood  that  if a  description  of  the
                    Executive's job function is part of the title of his office,
                    e.g., "Vice President--Capital Markets,  --Claims,--Managing
                    Director,--Risk  Management" or the like,  such  description
                    shall be disregarded  in  determining  whether the Executive
                    has been removed  from, or not reelected or appointed to, an
                    office  under this clause  (ii),  but this clause  shall not
                    affect  the  Executive's  rights  under  clause (i) above by
                    virtue of Section 4 hereof with respect to any change in the
                    Executive's job function;

                              (iii) a material  reduction in the aggregate level
                    of support services, staff, secretarial and other comparable
                    assistance  directly  available to the Executive  during the
                    90-day  period prior to the Change in Control of


                                      -5-

<PAGE>

                    the Company if such reduction  makes the  performance of the
                    Executive's  job functions  materially  more  difficult than
                    during such 90-day period; or

                              (iv)   failure  by  the   Company  to  obtain  the
                    Agreement  referred to in Section  17(a)  hereof as provided
                    therein.

                    (j) MGIC.  For purposes of this  Agreement,  the term "MGIC"
          means Mortgage Guaranty Insurance Corporation.

                    (k) Normal  Retirement Date. For purposes of this Agreement,
          the  term  "Normal  Retirement  Date"  means  the  date on  which  the
          Executive  can retire from  service  with the  Employer  and  commence
          receiving  retirement payments within 31 days thereafter,  without any
          reduction in such payments on account of early  retirement,  under the
          primary  qualified  defined  benefit  pension plan  applicable  to the
          Executive,  or any  successor  plan,  as in  effect on the date of the
          Change in Control of the Company.

                    (l)  Person.  For  purposes  of  this  Agreement,  the  term
          "Person" shall mean any individual, firm, partnership,  corporation or
          other entity, including any successor (by merger or otherwise) of such
          entity, or a group of any of the foregoing acting in concert.

                    (m) Termination Date. For purposes of this Agreement, except
          as  otherwise  provided in  Subsection  2(b),  Subsection  10(b),  and
          Subsection 17(a) hereof,  the term "Termination Date" means (i) if the
          Executive's  employment is terminated by the  Executive's  death,  the
          date of death;  (ii) if the  Executive's  employment  is terminated by
          reason of  voluntary  early  retirement,  as agreed in  writing by the
          Employer and the Executive, the date of such early retirement which is
          set  forth  in  such  written  agreement;  (iii)  if  the  Executive's
          employment is terminated  for purposes of this  Agreement by reason of
          disability  pursuant to Section 12 hereof,  the earlier of thirty days
          after the Notice of  Termination  is given or one day prior to the end
          of the  Employment  Period;  (iv)  if the  Executive's  employment  is
          terminated by the Executive  voluntarily (other than for Good Reason),
          the date the Notice of  Termination is given;  (v) if the  Executive's
          employment is terminated by the Employer for Cause, the earlier of ten
          days after the Notice of  Termination is given or one day prior to the
          end of the Employment Period;  and (vi) if the Executive's  employment
          is  terminated  by the Employer  (other than for Cause or by reason of
          disability pursuant to Section 12 hereof) or by the Executive for Good
          Reason,  the earlier of thirty days after the Notice of Termination is
          given  or  one  day  prior  to  the  end  of  the  Employment  Period.
          Notwithstanding the foregoing,

                              (1)  If  termination  is  for  Cause  pursuant  to
                    Subsection  1(d)(iii) of this Agreement and if the Executive
                    has cured the conduct  constituting  such Cause as described
                    by the  Employer  in its Notice of  Termination  within such
                    ten-day or shorter period,  then the Executive's  employment
                    hereunder   shall  continue  as  if  the  Employer  had  not
                    delivered its Notice of Termination;  provided, however, the
                    right of the Executive to cure such conduct shall apply only
                    to the  first  Notice  of  Termination  indicating  that the
                    termination is for Cause.


                                      -6-

<PAGE>

                              (2)  If  the  party   receiving   the   Notice  of
                    Termination  notifies the other party that a dispute  exists
                    concerning the  termination  within the  appropriate  period
                    following receipt thereof and it is finally  determined that
                    the reason  asserted in such Notice of  Termination  did not
                    exist,  then  (i)  if  such  Notice  was  delivered  by  the
                    Executive,  the Executive will be deemed to have voluntarily
                    terminated his employment and the Termination  Date shall be
                    the  earlier  of the date  fifteen  days after the Notice of
                    Termination  is  given  or one day  prior  to the end of the
                    Employment Period and (ii) if delivered by the Company,  the
                    Company  will be deemed  to have  terminated  the  Executive
                    other than by reason of death, disability or Cause.

          2. Termination or Cancellation Prior to Change in Control.

                    (a) Subject to Subsection 2(b) hereof,  the Employer and the
          Executive  shall each retain the right to terminate the  employment of
          the Executive at any time prior to a Change in Control of the Company.
          Subject  to  Subsection  2(b)  hereof,  in the event  the  Executive's
          employment is terminated  prior to a Change in Control of the Company,
          this  Agreement  shall be  terminated  and cancelled and of no further
          force  and  effect,  and any and all  rights  and  obligations  of the
          parties hereunder shall cease.

                    (b)   Anything   in   this   Agreement   to   the   contrary
          notwithstanding,  if a Change in Control of the Company  occurs and if
          the Executive's employment with the Employer is terminated (other than
          a  termination  due to the  Executive's  death or as a  result  of the
          Executive's disability) during the period of 90 days prior to the date
          on which the  Change in Control of the  Company  occurs,  and if it is
          reasonably  demonstrated  by the Executive  that such  termination  of
          employment (i) was at the request of a third party who has taken steps
          reasonably  calculated to effect a Change in Control of the Company or
          (ii) otherwise arose in connection with or in anticipation of a Change
          in Control of the  Company,  then for all  purposes of this  Agreement
          such   termination   of   employment   shall  be  deemed  a   "Covered
          Termination,"  "Notice  of  Termination"  shall be deemed to have been
          given,  and the  "Employment  Period" shall be deemed to have begun on
          the  date  of  such  termination  which  shall  be  deemed  to be  the
          "Termination  Date"  and the  date of the  Change  of  Control  of the
          Company for purposes of this Agreement.

          3.  Employment  Period;  Vesting of Certain  Benefits.  If a Change in
Control of the Company  occurs when the  Executive is employed by the  Employer,
(a) the Employer  will continue  thereafter  to employ the Executive  during the
Employment  Period,  and the Executive will remain in the employ of the Employer
in accordance  with and subject to the terms and  provisions of this  Agreement,
and (b) (i) the Company shall cause all  restrictions on restricted stock awards
made to the  Executive  prior to the  Change in  Control  to lapse such that the
Executive is fully and immediately  vested in his or her restricted stock at the
time at which the Change in Control of the Company occurs,  and (ii) the Company
shall cause all unexercised  stock options granted to the Executive prior to the
Change in Control to be fully vested and  exercisable  in full at such time. Any
termination of the Executive's  employment during the Employment Period, whether
by the Company or the Employer, shall be deemed a termination by the Company for
purposes of this Agreement.


                                      -7-

<PAGE>

          4. Duties.  During the  Employment  Period,  the  Executive (a) shall,
devote the Executive's  best efforts and all of the  Executive's  business time,
attention and skill to the business and affairs of the Employer and (b) shall be
entitled to  materially  the same job  function as held by the  Executive at the
time of the Change in Control of the  Company or in such other job  function  or
functions as shall be mutually  agreed upon in writing by the  Executive and the
Employer  from  time to time.  The  services  which are to be  performed  by the
Executive  hereunder are to be rendered in the same  metropolitan  area in which
the Executive was employed at the date of such Change in Control of the Company,
or in such other place or places as shall be mutually  agreed upon in writing by
the  Executive and the Employer  from time to time.  Any travel  incident to the
Executive's  job  function  shall  not be  deemed  to  result in a breach of the
immediately preceding sentence by the Company.

          5. Compensation.  During the Employment Period, the Executive shall be
compensated as follows:

                    (a) The Executive  shall  receive,  at reasonable  intervals
          (but not less often than monthly) and in accordance with such standard
          policies  as may be in  effect  immediately  prior  to the  Change  in
          Control of the Company,  an annual base salary in cash  equivalent  of
          not less than the Executive's  highest annual base salary in effect at
          any time during the 90-day period  immediately  prior to the Change in
          Control  of the  Company,  or if prior to the Change in Control of the
          Company,  the Employer had approved an increase in such base salary to
          take effect after the Change in Control of the Company, at such higher
          rate  beginning on the date on which such  increase was to take effect
          (which base salary shall,  unless  otherwise  agreed in writing by the
          Executive, include the current receipt by the Executive of any amounts
          which,  prior to the Change in Control of the Company,  the  Executive
          had elected to defer,  whether  such  compensation  is deferred  under
          Section  401(k) of the Code or  otherwise),  subject to  adjustment as
          hereinafter  provided  in Section 6 (such  salary  amount as  adjusted
          upward from time to time is hereafter  referred to as the "Annual Base
          Salary").

                    (b) The Executive shall be reimbursed, at such intervals and
          in accordance  with such standard  policies that were in effect at any
          time  during  the  90-day  period  immediately  prior to the Change in
          Control of the Company,  for any and all monies advanced in connection
          with the Executive's  employment for reasonable and necessary expenses
          incurred by the Executive on behalf of the Employer,  including travel
          expenses.

                    (c) The Executive and/or the Executive's family, as the case
          may be, shall be included,  to the extent eligible  thereunder  (which
          eligibility  shall not be conditioned on the Executive's  salary grade
          or on any other  requirement  which  excludes  persons  of  comparable
          status to the Executive  unless such  exclusion was in effect for such
          plan or an  equivalent  plan at any  time  during  the  90-day  period
          immediately prior to the Change in Control of the Company), in any and
          all plans providing benefits for the Employer's  salaried employees in
          general,   including   but  not  limited  to  group  life   insurance,
          hospitalization,  medical,  dental,  profit  sharing  and stock  bonus
          plans.

                    (d) The  Executive  shall  annually  be entitled to not less
          than the amount of paid vacation and not fewer than the highest number
          of paid holidays to which the  Executive was entitled  annually at any
          time  during  the  90-day  period  immediately  prior to the Change in
          Control of the Company.


                                      -8-

<PAGE>

                    (e) The Executive  shall be included in all plans  providing
          additional benefits to executives of the Employer of comparable status
          and position to the  Executive,  including but not limited to deferred
          compensation,  split-dollar life insurance,  supplemental  retirement,
          stock  option,   stock  appreciation,   stock  bonus  and  similar  or
          comparable  plans, and shall receive fringe benefits made available to
          executives  of the Employer of  comparable  status and position to the
          Executive;  provided,  that, the Employer's  obligation to include the
          Executive in bonus or incentive compensation plans shall be determined
          by Subsection 5(g) hereof.

                    (f)  The  aggregate   annual  value  of  the  benefits  made
          available to the Executive  pursuant to Subsections 5(c) and (e) shall
          not be less  than 75% of the  highest  aggregate  annual  value of the
          benefits of the type  referred to in such  Subsections  that were made
          available  to the  Executive  at any time  during  the  90-day  period
          immediately prior to the Change in Control of the Company, except that
          if executives based in the United States of Affiliated Companies whose
          status and position with such Companies are  approximately  comparable
          to the Executive do not generally  receive stock  options,  restricted
          stock or other  stock-based  compensation,  during any period in which
          the  Executive  does  not  receive  such  benefits,  (i)  the  highest
          aggregate  value of the  benefits  during such 90-day  period shall be
          computed  without regard the value of stock options,  restricted stock
          or other  stock-based  compensation,  and (ii) the  percentage  in the
          preceding  portion of this  sentence  shall be  increased to 100% from
          75%.  The term  "Affiliated  Companies"  means  companies  that become
          Affiliates of the Employer as a result of the Change in Control of the
          Company.

                    (g)(i) To assure that the Executive will have an opportunity
          to earn annual incentive compensation after a Change in Control of the
          Company,  the  Executive  shall  be  included  in a bonus  plan of the
          Employer which shall satisfy the standards described below (such plan,
          the  "Post-Change  Bonus Plan").  Bonuses under the Post-Change  Bonus
          Plan shall be payable  annually with respect to achieving  such annual
          financial  or other goals  reasonably  related to the  business of the
          Employer (or, in the case of an Executive whose primary responsibility
          is sales of the  products  of the  Employer  or an  Affiliate,  to the
          extent  so  provided  by the  Employer  or the  Affiliate,  reasonably
          related to such sales) as the Employer shall  establish (the "Goals"),
          all of which Goals that are  determinable  under  objective  standards
          shall be  attainable  on a annual  basis with  approximately  the same
          degree of  probability  as the  comparable  goals under the Employer's
          bonus plan or plans as in effect at any time during the 90-day  period
          immediately prior to the Change in Control of the Company (whether one
          or more,  the  "Pre-Change  Company  Bonus  Plan")  and in view of the
          Employer's existing and projected financial and business circumstances
          applicable at the time. The  determination of whether any of the Goals
          that are  determinable  under  subjective  standards has been achieved
          shall be made by the Compensation  Committee (as hereinafter defined).
          In the event a majority of the members of the  Compensation  Committee
          are  not  persons  who  were  on the  Compensation  Committee  or were
          officers  of MGIC  during the 90-day  period  prior to the date of the
          Change in Control of the Company or the highest  ranking member of the
          Compensation  Committee  is not a person  who was on the  Compensation
          Committee  during  such  90-day  period,  none of the  Goals  shall be
          subjective.  The term  "Compensation  Committee"  means  the  Board of
          Directors  of the  Company,  an  appropriate  committee  thereof  or a
          committee comprised of members of management of the Employer,  in each
          case, in accordance with the Company's practice prior to the Change in
          Control of the  Company  with  respect  to  executives  of  comparable
          position to the Executive.

                                      -9-

<PAGE>

                    (ii) The maximum  amount of the bonus (the  "Bonus  Amount")
          that the  Executive  is eligible to earn under the  Post-Change  Bonus
          Plan shall be no less than the product of the Executive's  Annual Base
          Salary  multiplied  by a  percentage  that  is at  least  75%  of  the
          percentage that  determined the Executive's  maximum award provided in
          the  Pre-Change  Company  Bonus Plan (such maximum bonus amount herein
          referred  to as the  "Targeted  Bonus"),  and in the  event  the Goals
          (other than any objective  Goal) are not achieved such that the entire
          Targeted  Bonus is not  payable,  the Bonus Plan shall  provide  for a
          payment of a Bonus  Amount  equal to a portion of the  Targeted  Bonus
          reasonably  related to that portion of the Goals which were  achieved.
          The Bonus Amount  earned shall be paid within 75 days after the end of
          the  related  fiscal  year;  at  the  option  of the  Employer,  up to
          one-third of the Bonus Amount may be paid in  restricted  stock if the
          class  of  stock  of  which  such  restricted   stock  is  a  part  is
          publicly-traded  in an active  market in the  United  States  and such
          stock becomes fully vested by continued employment for a period of not
          more than one year after the date on which the Bonus Amount is paid.

          6. Annual Compensation Adjustments.  During the Employment Period, the
Compensation  Committee (as defined in Subsection  5(g)(i) hereof) will consider
and appraise,  annually,  the contributions of the Executive to the Company, and
in accordance with the Company's  practice prior to the Change in Control of the
Company, good faith consideration shall be given to the upward adjustment of the
Executive's Annual Base Salary, annually.

          7. Termination For Cause or Without Good Reason. If there is a Covered
Termination for Cause or due to the Executive's  voluntarily  terminating his or
her employment  other than for Good Reason (any such  terminations to be subject
to the procedures set forth in Section 13 hereof),  then the Executive  shall be
entitled to receive only Accrued Benefits pursuant to Section 9(a) hereof.

          8. Termination Giving Rise to a Termination Payment.

                    (a) If there is a Covered  Termination  by the Executive for
          Good Reason, or by the Company other than by reason of (i) death, (ii)
          disability  pursuant  to Section 12 hereof,  or (iii)  Cause (any such
          terminations  to be subject to the  procedures set forth in Section 13
          hereof),  then the  Executive  shall be entitled  to receive,  and the
          Company shall promptly pay,  Accrued  Benefits and, in lieu of further
          Annual Base Salary for periods  following  the  Termination  Date,  as
          liquidated  damages and additional  severance pay and in consideration
          of the covenant of the Executive set forth in Subsection 14(a) hereof,
          the Termination Payment pursuant to Subsection 9(b) hereof.

                    (b) If there is a Covered  Termination  and the Executive is
          entitled to Accrued  Benefits and the  Termination  Payment,  then the
          Company  shall  provide  to the  Executive  the  following  additional
          benefits:

                              (i) The Executive shall receive, at the expense of
                    the Company,  outplacement  services,  on an  individualized
                    basis  at  a  level  of   service   commensurate   with  the
                    Executive's status with the Company immediately prior to the
                    date of the Change in Control of the Company (or, if higher,
                    immediately  prior  to the  termination  of the  Executive's
                    employment),  provided by a nationally  recognized executive
                    placement  firm


                                      -10-

<PAGE>

                    selected  by the  Company;  provided  that  the  cost to the
                    Company  of  such  services  shall  not  exceed  10%  of the
                    Executive's Annual Base Salary.

                              (ii)   Until  the   earlier  of  the  end  of  the
                    Employment Period or such time as the Executive has obtained
                    new  employment  and is  covered  by  benefits  which in the
                    aggregate  are at least  equal  in  value  to the  following
                    benefits, the Executive shall continue to be covered, at the
                    expense  of the  Company,  by the  same or  equivalent  life
                    insurance,  hospitalization,  medical and dental coverage as
                    was  required   hereunder  with  respect  to  the  Executive
                    immediately  prior to the date the Notice of  Termination is
                    given.

                              (iii) The Company  shall cause the Executive to be
                    fully and  immediately  vested in his or her accrued benefit
                    under  any  supplemental  executive  retirement  plan of the
                    Employer  providing  benefits for the Executive (the "SERP")
                    and in any restricted  stock paid as part of the Executive's
                    Bonus Amount as contemplated by Subsection 5(g)(ii).

                              (iv) If the  Executive  is not fully vested in all
                    accrued benefits under any defined  contribution  retirement
                    plan of the  Employer,  the  Company  shall  make a lump sum
                    payment  to  the   Executive  in  an  amount  equal  to  the
                    difference   between   the  fully   vested   amount  of  the
                    Executive's   account   balances  under  such  plan  at  the
                    Termination  Date and the vested  amount of such balances at
                    such time.

                              (v) The Company shall  reimburse the Executive for
                    up to  an  aggregate  of  $10,000  in  (A)  tax  preparation
                    assistance  fees for the tax year in which  the  Termination
                    Payment  is made and (B) fees and  expenses  of  consultants
                    and/or legal or accounting advisors engaged by the Executive
                    to  advise  the  Executive  as to  matters  relating  to the
                    computation  of benefits  due and payable  under  Subsection
                    9(b).

          9. Payments.

                    (a) Accrued  Benefits.  For purposes of this Agreement,  the
          Executive's  "Accrued  Benefits" shall include the following  amounts,
          payable as described  herein:  (i) all Annual Base Salary for the time
          period ending with the Termination  Date; (ii)  reimbursement  for any
          and all monies advanced in connection with the Executive's  employment
          for  reasonable  and necessary  expenses  incurred by the Executive on
          behalf of the Employer for the time period ending with the Termination
          Date; (iii) any and all other cash earned through the Termination Date
          and  deferred  at the  election  of the  Executive  or pursuant to any
          deferred  compensation plan then in effect; (iv) a lump sum payment of
          the bonus or incentive compensation otherwise payable to the Executive
          with respect to the year in which  termination  occurs under all bonus
          or incentive  compensation  plan or plans in which the  Executive is a
          participant;  and (v) all other  payments  and  benefits  to which the
          Executive (or in the event of the Executive's  death,  the Executive's
          surviving spouse or other beneficiary) may be entitled as compensatory
          fringe  benefits or under any benefit plan of the Employer,  excluding
          severance  payments under any Employer  severance policy,  practice or
          agreement in effect  immediately prior to the Change in Control of the
          Company.  Payment  of 


                                      -11-

<PAGE>

          Accrued  Benefits  shall  be made  promptly  in  accordance  with  the
          Company's  prevailing practice with respect to Subsections 9(a)(i) and
          (ii) or, with respect to Subsections 9(a)(iii), (iv) and (v), pursuant
          to the  terms  of the  benefit  plan  or  practice  establishing  such
          benefits.

                    (b) Termination Payment and Other Payments.

                              (i) The  Termination  Payment  shall be an  amount
                    equal to (A) the Executive's  Annual Base Salary (determined
                    as of the time of the Change in Control of the  Company  or,
                    if  higher,  immediately  prior to the date  the  Notice  of
                    Termination  is  given)  plus  (B) an  amount  equal  to the
                    greater of the  Executive's  Targeted  Bonus for the year in
                    which the Termination Date occurs or the bonus the Executive
                    received  (x) for the year in which the Change in Control of
                    the  Company  occurred or (y) for the year prior to the year
                    in which the Change in Control of the Company occurred (each
                    year described in clauses (x) and (y) is herein  referred to
                    as  a  "Prior  Year")  plus  (C)  an  amount  equal  to  the
                    "actuarial  equivalent" (as defined in the Company's defined
                    benefit  pension  plan  on the  determination  date)  of the
                    Executive's  benefit accruals under the pension plan and the
                    SERP  for,  whichever  is  greater,  the year in  which  the
                    Termination Date occurs or a Prior Year plus an amount equal
                    to the Company's  matching  contribution  and profit sharing
                    contribution under the Company's defined contribution profit
                    sharing and savings plan for, whichever is greater, the year
                    in which the  Termination  Date  occurs or a Prior Year (the
                    aggregate  amount set forth in (A), (B) and (C) hereof shall
                    hereafter  be  referred to as "Annual  Cash  Compensation"),
                    times (D) two less, if the Termination Date occurs more than
                    three  months  after the date of Change  in  Control  of the
                    Company,  the  portion  of the  Employment  Period  that has
                    elapsed at the  Termination  Date (measured by the number of
                    months  that  have  elapsed  from the date of the  Change in
                    Control of the Company to the  Termination  Date  divided by
                    33); provided,  however,  that such amount shall not be less
                    than the  severance  benefits to which the  Executive  would
                    have been entitled  under the Company's  severance  policies
                    and practices in effect  immediately  prior to the Change in
                    Control of the Company.  The  Termination  Payment  shall be
                    paid to the Executive in cash  equivalent  ten (10) business
                    days after the Termination Date. Such lump sum payment shall
                    not be reduced by any present value or similar  factor,  and
                    the  Executive  shall not be required to mitigate the amount
                    of the Termination  Payment by securing other  employment or
                    otherwise,  nor will such Termination  Payment be reduced by
                    reason of the Executive securing other employment or for any
                    other reason.  The Termination  Payment shall be in lieu of,
                    and acceptance by the Executive of the  Termination  Payment
                    shall  constitute the  Executive's  release of any rights of
                    Executive to, any other severance payments under any Company
                    severance policy, practice or agreement.

                              (ii)  Notwithstanding  any other provision of this
                    Agreement,   if  any  portion  of  any  payment  under  this
                    Agreement,  or under any other agreement with or plan of the
                    Employer,  including  payments  that


                                      -12-

<PAGE>

                    may be deemed to have  occurred  on account  of  accelerated
                    vesting of  restricted  stock or stock options under Section
                    3(b)  hereof  (in the  aggregate  "Total  Payments"),  would
                    constitute an "excess parachute  payment," the Company shall
                    pay  the  Executive  an  additional  amount  (the  "Gross-Up
                    Payment") such that the net amount retained by the Executive
                    after deduction of any excise tax imposed under Section 4999
                    of the Code, any interest charges or penalties in respect of
                    the  imposition  of such  excise  tax (but not any  federal,
                    state or local income tax, or  employment  tax) on the Total
                    Payments,  and any  federal,  state  and local  income  tax,
                    employment tax, and excise tax upon the payment provided for
                    by this  Subsection  9(b)(ii),  shall be equal to the  Total
                    Payments.  For  purposes  of  determining  the amount of the
                    Gross-Up  Payment,  the  Executive  shall be  deemed  to pay
                    federal  income  tax and  employment  taxes  at the  highest
                    marginal rate of federal income and  employment  taxation in
                    the  calendar  year in which the  Gross-Up  Payment is to be
                    made  and  state  and  local  income  taxes  at the  highest
                    marginal  rate of taxation in the state and  locality of the
                    Executive's domicile for income tax purposes on the date the
                    Gross-Up  Payment is made,  net of the maximum  reduction in
                    federal income taxes that may be obtained from the deduction
                    of such state and local taxes.

                              (iii) For  purposes of this  Agreement,  the terms
                    "excess  parachute  payment" and "parachute  payments" shall
                    have the  meanings  assigned to them in Section  280G of the
                    Code and  such  "parachute  payments"  shall  be  valued  as
                    provided  therein.   Present  value  for  purposes  of  this
                    Agreement  shall be calculated  in  accordance  with Section
                    1274(b)(2)  of  the  Code  (or  any  successor   provision).
                    Promptly  following a Covered  Termination  or notice by the
                    Company  to the  Executive  of its  belief  that  there is a
                    payment or benefit due the Executive which will result in an
                    excess  parachute  payment as defined in Section 280G of the
                    Code (or if the  Company  fails to give such  notice and the
                    Executive  furnishes  notice to the  Company  setting  forth
                    computations in reasonable detail supporting the Executive's
                    belief that there has been such an excess parachute payment,
                    promptly  after  such  notice by the  Executive  unless  the
                    Executive  has  withdrawn  such notice  after the  Company's
                    response  to  such  computations),  the  Executive  and  the
                    Company, at the Company's expense,  shall obtain the opinion
                    (which need not be unqualified) of nationally recognized tax
                    counsel  ("National Tax Counsel")  selected by the Company's
                    independent  auditors  and  reasonably   acceptable  to  the
                    Executive  (which  may be  regular  outside  counsel  to the
                    Company),  which  opinion  sets  forth (i) the amount of the
                    Base Period  Income,  (ii) the amount and  present  value of
                    Total  Payments,  (iii) the amount and present  value of any
                    excess  parachute  payments,  and  (iv)  the  amount  of any
                    Gross-Up Payment. As used in this Agreement,  the term "Base
                    Period  Income"  means an  amount  equal to the  Executive's
                    "annualized includible  compensation for the base period" as
                    defined in Section  280G(d)(1) of the Code.  For purposes of
                    such  opinion,  the  value of any  noncash  benefits  or any
                    deferred  payment  or  benefit  shall be  determined  by the
                    Company's   independent  auditors  in  accordance  with  the
                    principles of


                                      -13-

<PAGE>

                    Section  280G(d)(3)  and (4) of the Code  (or any  successor
                    provisions),  which  determination  shall be  evidenced in a
                    certificate  of such  auditors  addressed to the Company and
                    the Executive.  The opinion of National Tax Counsel shall be
                    addressed to the Company and the Executive  and,  subject to
                    any  adjustment  pursuant to Subsection  9(b)(iv),  shall be
                    binding upon the Company and the Executive. If such National
                    Tax  Counsel so  requests  in  connection  with the  opinion
                    required by this Subsection 9(b) of Section 9, the Executive
                    and the Company shall obtain, at the Company's expense,  and
                    the  National  Tax Counsel may rely on, the advice of a firm
                    of recognized executive  compensation  consultants as to the
                    reasonableness of any item of compensation to be received by
                    the  Executive  solely  with  respect  to its  status  under
                    Section  280G of the  Code and the  regulations  thereunder.
                    Within  five (5)  days  after  the  National  Tax  Counsel's
                    opinion is received by the  Company and the  Executive,  the
                    Company  shall pay (or cause to be paid) or  distribute  (or
                    cause  to be  distributed)  to or  for  the  benefit  of the
                    Executive  such  amounts  as are then  due to the  Executive
                    under this Agreement.

                              (iv) In the  event  that  upon  any  audit  by the
                    Internal  Revenue  Service,  or by a state or  local  taxing
                    authority,  of the Total  Payments  or Gross-Up  Payment,  a
                    change is finally determined to be required in the amount of
                    taxes paid by the Executive,  appropriate  adjustments shall
                    be made under this  Agreement such that the net amount which
                    is payable to the  Executive  after  taking into account the
                    provisions  of Section  4999 of the Code shall  reflect  the
                    intent of the parties as expressed in this Section 9, in the
                    manner  determined  by the  National  Tax  Counsel.

                              (v)  The   Company   agrees   to  bear  all  costs
                    associated  with,  and to indemnify and hold  harmless,  the
                    National  Tax  Counsel  of and  from  any  and  all  claims,
                    damages,  and  expenses  resulting  from or  relating to its
                    determinations  pursuant to this Subsection 9(b), except for
                    claims,   damages  or  expenses  resulting  from  the  gross
                    negligence or willful misconduct of such firm.

          10. Death.

                    (a) Except as provided in Subsection  10(b)  hereof,  in the
          event of a  Covered  Termination  due to the  Executive's  death,  the
          Executive's  estate,  heirs and  beneficiaries  shall  receive all the
          Executive's Accrued Benefits through the Termination Date.

                    (b) In the  event  the  Executive  dies  after a  Notice  of
          Termination  is given (i) by the Company or (ii) by the  Executive for
          Good Reason, the Executive's estate,  heirs and beneficiaries shall be
          entitled to the  benefits  described in  Subsection  10(a) hereof and,
          subject  to the  provisions  of this  Agreement,  to such  Termination
          Payment as the Executive would have been entitled to had the Executive
          lived.  For purposes of this Subsection  10(b),  the Termination  Date
          shall be the earlier of thirty days following the giving of the Notice
          of Termination, or one day prior to the end of the Employment Period.


                                      -14-

<PAGE>

          11.  Retirement.  If, during the Employment  Period, the Executive and
the Employer  shall execute an agreement  providing for the early  retirement of
the Executive from the Employer,  or the Executive  shall  otherwise give notice
that he is voluntarily choosing to retire early from the Employer, the Executive
shall receive Accrued Benefits through the Termination Date;  provided,  that if
the Executive's  employment is terminated by the Executive for Good Reason or by
the Company other than by reason of death, disability or Cause and the Executive
also, in connection with such  termination,  elects voluntary early  retirement,
the Executive shall also be entitled to receive a Termination  Payment  pursuant
to Subsection 8(a) hereof.

          12. Termination for Disability. If, during the Employment Period, as a
result of the Executive's disability due to physical or mental illness or injury
(regardless  of whether such illness or injury is  job-related),  the  Executive
shall have been  absent from the  Executive's  duties  hereunder  on a full-time
basis for a period of six  consecutive  months and, within thirty days after the
Company  notifies the  Executive  in writing  that it intends to  terminate  the
Executive's  employment  (which  notice  shall  not  constitute  the  Notice  of
Termination  contemplated  below),  the Executive shall not have returned to the
performance  of the  Executive's  duties  hereunder  on a full-time  basis,  the
Company may terminate the Executive's  employment for purposes of this Agreement
pursuant to a Notice of Termination  given in accordance with Section 13 hereof.
If the  Executive's  employment  is  terminated  on account  of the  Executive's
disability in accordance with this Section,  the Executive shall receive Accrued
Benefits in accordance with Subsection 9(a) hereof and shall remain eligible for
all  benefits  provided by any long term  disability  programs of the Company in
effect at the time of such termination.

          13. Termination Notice and Procedure.  Any Covered  Termination by the
Company or the Executive (other than a termination of the Executive's employment
that is a Covered  Termination  by virtue of  Subsection  2(b) hereof)  shall be
communicated by a written notice of termination ("Notice of Termination") to the
Executive,  if such Notice is given by the Company,  and to the Company, if such
Notice  is  given  by  the  Executive,  all in  accordance  with  the  following
procedures and those set forth in Section 23 hereof:

                    (a) If such  termination  is for  disability,  Cause or Good
          Reason,  the Notice of Termination shall indicate in reasonable detail
          the  facts  and  circumstances  alleged  to  provide  a basis for such
          termination.

                    (b) If the Notice is given by the Executive for Good Reason,
          the Executive may cease  performing  his duties  hereunder on or after
          the date fifteen days after the delivery of Notice of Termination  and
          shall in any event cease  employment on the  Termination  Date. If the
          Notice  is  given  by  the  Company,  then  the  Executive  may  cease
          performing  his duties  hereunder on the date of receipt of the Notice
          of Termination, subject to the Executive's rights hereunder.

                    (c)  To the  extent  provided  by  Subsection  1(m)(1),  the
          Executive  shall have ten days,  or such longer  period as the Company
          may  determine  to be  appropriate,  to cure any  conduct  or act,  if
          curable, alleged to provide grounds for termination of the Executive's
          employment for Cause under this Agreement  pursuant to Subsection 1(d)
          (iii) hereof.


                                      -15-

<PAGE>

                    (d)  The  recipient  of  any  Notice  of  Termination  shall
          personally  deliver  or mail in  accordance  with  Section  23  hereof
          written  notice of any dispute  relating to such Notice of Termination
          to the party  giving such Notice  within  fifteen  days after  receipt
          thereof;  provided,  however,  that if the Executive's  conduct or act
          alleged to provide grounds for termination by the Company for Cause is
          curable,  then such period shall be thirty days.  After the expiration
          of such period, the contents of the Notice of Termination shall become
          final and not subject to dispute.

          14. Further Obligations of the Executive.

                    (a) Competition.  The Executive agrees that, in the event of
          any Covered  Termination  where the  Executive  is entitled to Accrued
          Benefits and the Termination  Payment,  the Executive shall not, for a
          period expiring twelve months after the Termination Date,  without the
          prior  written   approval  of  the   Company's   Board  of  Directors,
          participate  in the  management of, be employed by or own any business
          enterprise  at a location  within the United  States  that  engages in
          substantial  competition with MGIC, where such  enterprise's  revenues
          from any such  competitive  activities  amount  to 10% or more of such
          enterprise's  net revenues and sales for its most  recently  completed
          fiscal year; provided,  however, that nothing in this Subsection 14(a)
          shall prohibit the Executive from owning stock or other  securities of
          a competitor  amounting  to less than five percent of the  outstanding
          capital stock of such competitor.

                    (b)  Confidentiality.  During and following the  Executive's
          employment by the Company,  the Executive shall hold in confidence and
          not  directly or  indirectly  disclose or use or copy or make lists of
          any  confidential  information  or  proprietary  data  of the  Company
          (including that of the Employer),  except to the extent  authorized in
          writing by the Board of  Directors  of the  Company or required by any
          court or  administrative  agency,  other  than to an  employee  of the
          Company or a person to whom  disclosure  is  reasonably  necessary  or
          appropriate  in connection  with the  performance  by the Executive of
          duties as an executive of the Company.  Confidential information shall
          not  include  any  information  known  generally  to the public or any
          information of a type not otherwise considered confidential by persons
          engaged  in the same  business  or a  business  similar to that of the
          Company.  All  records,  files,  documents  and  materials,  or copies
          thereof,  relating to the business of the Company  which the Executive
          shall prepare,  or use, or come into contact with, shall be and remain
          the sole property of the Company and shall be promptly returned to the
          Company upon termination of employment with the Company.

          15.  Expenses  and  Interest.  If,  after a Change in  Control  of the
Company, (i) a dispute arises with respect to the enforcement of the Executive's
rights under this Agreement, (ii) any arbitration proceeding shall be brought to
enforce or interpret any provision  contained  herein or to recover  damages for
breach hereof,  or (iii) any legal  proceeding  shall be brought with respect to
the arbitration  provisions  hereof,  in each case so long as, and to the extent
that, the Executive  prevails in such  proceeding,  the Executive  shall recover
from the  Company  the  reasonable  attorneys'  fees  and  necessary  costs  and
disbursements  incurred  as a  result  of  the  dispute,  arbitration  or  legal
proceeding as to which the Executive has prevailed ("Expenses"), and prejudgment
interest on any  arbitration  award obtained by the Executive  calculated at the
rate of interest announced by Firstar Bank Milwaukee, N.A., Milwaukee, Wisconsin
(or its successor), from time to time at its prime or base lending rate from the
date that payments to him or her should have been made under this Agreement. Any
dispute as to the  reasonableness  of the  Expenses  incurred,  or the extent to
which the Executive has prevailed, shall be resolved by the arbitrator.


                                      -16-

<PAGE>

          16. Payment Obligations Absolute.  The Company's obligation during and
after the  Employment  Period to pay the  Executive  the amounts and to make the
benefit  and  other   arrangements   provided   herein  shall  be  absolute  and
unconditional and shall not be affected by any circumstances, including, without
limitation, any setoff, counterclaim,  recoupment,  defense or other right which
the Company may have against him or anyone  else.  Except as provided in Section
15 of this Agreement, all amounts payable by the Company hereunder shall be paid
without  notice or demand.  Each and every payment made hereunder by the Company
shall be final, and the Company will not seek to recover all or any part of such
payment from the Executive,  or from whomsoever may be entitled thereto, for any
reason whatsoever.

          17. Successors.

                    (a)  If the  Company  sells,  assigns  or  transfers  all or
          substantially  all of its  business and assets to any Person or if the
          Company merges into or consolidates  or otherwise  combines (where the
          Company does not survive such  combination)  with any Person (any such
          event, a "Sale of Business"), then the Company shall assign all of its
          right,  title and  interest in this  Agreement  as of the date of such
          event to such  Person,  and the Company  shall cause such  Person,  by
          written agreement (an "Assumption Agreement"), to expressly assume and
          agree to perform from and after the date of such assignment all of the
          terms,  conditions and  provisions  imposed by this Agreement upon the
          Company,  and the Assumption  Agreement shall be in form and substance
          reasonably satisfactory to the Executive (but if at the time of a Sale
          of Business, the chief executive officer of the Company or any officer
          of Company who is among the next four highest ranking  officers of the
          Company has a Key Executive  Employment and Severance  Agreement,  and
          any of such officers approves the Assumption Agreement, the Executive,
          if not one of such five officers, shall be deemed to have approved the
          Assumption Agreement).  Failure of the Company to obtain an Assumption
          Agreement  prior to the effective  date of such Sale of Business shall
          be a breach of this Agreement  constituting  "Good Reason"  hereunder,
          except that for purposes of  implementing  the foregoing the date upon
          which  such Sale of  Business  becomes  effective  shall be deemed the
          Termination  Date.  In case of such  assignment  by the Company and of
          assumption  and agreement by such Person,  as used in this  Agreement,
          "Company"  shall  thereafter  mean  such  Person  which  executes  and
          delivers the Assumption  Agreement or which otherwise becomes bound by
          all the terms and  provisions  of this  Agreement by operation of law,
          and this  Agreement  shall inure to the benefit of, and be enforceable
          by, such Person.  The Executive  shall, in his or her  discretion,  be
          entitled  to proceed  against any or all of such  Persons,  any Person
          which  theretofore was such a successor to the Company and the Company
          (as so defined)  in any action to enforce any rights of the  Executive
          hereunder. Except as provided in this Subsection 17(a), this Agreement
          shall not be assignable by the Company.  This  Agreement  shall not be
          terminated by the voluntary or involuntary dissolution of the Company.

                    (b) This  Agreement  and all rights of the  Executive  shall
          inure to the benefit of and be enforceable by the Executive's personal
          or  legal  representatives,   executors,   administrators,  heirs  and
          beneficiaries.  All amounts payable to the Executive under Sections 7,
          8, 9, 10,  11, 12 and 15 hereof if the  Executive  had lived  shall be
          paid,  in the  event  of the  Executive's  death,  to the  Executive's
          estate,  heirs  and  representatives;   provided,  however,  that  the
          foregoing  shall not be  construed  to modify any terms of any benefit
          plan of the  Employer,  as such terms are in effect on the date of the
          Change in Control of the Company, that expressly govern benefits under
          such plan in the event of the Executive's death.


                                      -17-

<PAGE>

          18.  Severability.  The provisions of this Agreement shall be regarded
as  divisible,  and if any of said  provisions  or any part hereof are  declared
invalid or unenforceable by a court of competent jurisdiction,  the validity and
enforceability  of the  remainder  of such  provisions  or parts  hereof and the
applicability thereof shall not be affected thereby.

          19. Contents of Agreement; Waiver of Rights; Amendment. This Agreement
sets forth the entire  understanding  between the parties hereto with respect to
the subject matter hereof,  and the Executive hereby waives all rights under any
prior or other  agreement or  understanding  between the parties with respect to
such subject matter.  Any implication to the contrary in the preceding  sentence
notwithstanding,  this Agreement  shall not affect the  Executive's  obligations
under  non-competition  or  confidentiality  agreement  with  the  Company,  the
Employer  or MGIC.  This  Agreement  may not be amended or  modified at any time
except by written instrument executed by the Company and the Executive.

          20.  Withholding.  The Company  shall be  entitled  to  withhold  from
amounts  to be paid to the  Executive  hereunder  any  federal,  state  or local
withholding  or other taxes or charges which it is from time to time required to
withhold;  provided,  that the amount so  withheld  shall not exceed the minimum
amount  required to be withheld by law. The Company shall be entitled to rely on
an opinion of the  National  Tax  Counsel  if any  question  as to the amount or
requirement of any such withholding shall arise.

          21.  Certain  Rules of  Construction.  No party shall be considered as
being responsible for the drafting of this Agreement for the purpose of applying
any rule construing  ambiguities  against the drafter or otherwise.  No draft of
this Agreement  shall be taken into account in construing  this  Agreement.  Any
provision of this  Agreement  which  requires an  agreement in writing  shall be
deemed to require that the writing in question be signed by the Executive and an
authorized representative of the Company.

          22.  Governing  Law;  Resolution of Disputes.  This  Agreement and the
rights  and  obligations  hereunder  shall  be  governed  by  and  construed  in
accordance with the laws of the State of Wisconsin  applicable to contracts made
therein  between  residents  thereof.  Any dispute arising out of this Agreement
shall be determined by arbitration  under the rules of the American  Arbitration
Association then in effect.  The venue for the arbitration (and any legal action
to enforce the foregoing obligation to arbitrate) shall be Milwaukee,  Wisconsin
or, if the Executive is not then residing or working in the Milwaukee, Wisconsin
metropolitan  area, in the judicial district  encompassing the city in which the
Executive resides;  provided, that, if the Executive is not then residing in the
United States, the election of the Executive with respect to such venue shall be
either Milwaukee,  Wisconsin or in the judicial district  encompassing that city
in the United States among the thirty cities having the largest  population  (as
determined  by the most  recent  United  States  Census  data  available  at the
Termination Date) which is closest to the Executive's residence. For purposes of
any legal action to enforce the foregoing  obligation to arbitrate,  the parties
consent to  personal  jurisdiction  in each trial  court in the  selected  venue
having subject matter jurisdiction notwithstanding their residence or situs, and
each party  irrevocably  consents  to service of process in the manner  provided
hereunder for the giving of notices.

          23.  Notice.  Notices  given  pursuant to this  Agreement  shall be in
writing and, except as otherwise  provided by Subsection 13(d) hereof,  shall be
deemed given when actually


                                      -18-

<PAGE>

received by the Executive or actually received by the Company's Secretary or any
officer of the Company other than the Executive.  If mailed,  such notices shall
be mailed  by  United  States  registered  or  certified  mail,  return  receipt
requested,  addressee  only,  postage  prepaid,  if  to  the  Company,  to  MGIC
Investment Corporation,  Attention: Secretary (or President, if the Executive is
then Secretary), 250 East Kilbourn Avenue, Milwaukee,  Wisconsin 53202, or if to
the Executive,  at the address set forth below the Executive's signature to this
Agreement,  or to such  other  address  as the party to be  notified  shall have
theretofore given to the other party in writing.

          24. No Waiver.  No waiver by either party at any time of any breach by
the other party of, or  compliance  with,  any  condition  or  provision of this
Agreement to be performed by the other party shall be deemed a waiver of similar
or  dissimilar  provisions  or  conditions  at the  same  time or any  prior  or
subsequent time.

          25. Headings. The headings herein contained are for reference only and
shall  not  affect  the  meaning  or  interpretation  of any  provision  of this
Agreement.

          IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.

                                        MGIC INVESTMENT CORPORATION

                                        By: ___________________________________
                                           Name:    Curt S. Culver
                                           Title:   President

                                        Attest: _______________________________
                                           Name:     Jeffrey H. Lane
                                           Title:    Secretary

                                        EXECUTIVE:

                                        _________________________________(SEAL)

                                        Address: ______________________________
                                                 ______________________________




                                      -19-




                                                                      EXHIBIT 11
                                                                      ----------

                  MGIC INVESTMENT CORPORATION AND SUBSIDIARIES
               STATEMENT RE COMPUTATION OF PER SHARE EARNINGS (1)
              For The Years Ended December 31, 1999, 1998 and 1997


                                               1999        1998        1997
                                               ----        ----        ----
                                          (In thousands, except per share data)
BASIC EARNINGS PER SHARE

Average common shares outstanding              108,061     112,135     116,332
                                             =========   =========    =========

Net income                                   $ 470,201   $ 385,465    $ 323,750
                                             =========   =========    =========

Net income per share                         $    4.35   $    3.44    $    2.78
                                             =========   =========    =========
DILUTED EARNINGS PER SHARE
Adjusted shares outstanding:
 Average common shares outstanding             108,061     112,135      116,332
 Net shares to be issued upon exercise of
  common stock equivalents                       1,197       1,447        1,592
                                             ---------   ---------    ---------

   Adjusted shares outstanding                 109,258     113,582      117,924
                                             =========   =========    =========

Net income                                   $ 470,201   $ 385,465    $ 323,750
                                             =========   =========    =========

Net income per share                         $    4.30   $    3.39    $    2.75
                                             =========   =========    =========


(1) Per  Statement of Financial  Accounting  Standards  No. 128,  "Earnings  Per
Share".







                                                                      EXHIBIT 13
                                                                      ----------

MGIC  INVESTMENT  CORPORATION &  SUBSIDIARIES  -- YEARS ENDED DECEMBER 31, 1999,
1998, 1997, 1996 AND 1995

-----------------Five-Year Summary of Financial Information---------------------


<TABLE>
<CAPTION>
                                                   1999             1998            1997             1996            1995
                                               --------------   --------------  --------------   -------------   -------------

                                                               (In thousands of dollars, except per share data)
Summary of Operations
Revenues:
<S>                                            <C>              <C>             <C>              <C>             <C>         
   Net premiums written......................  $     792,345    $     749,161   $     690,248    $    588,927    $    480,312
                                               ==============   ==============  ==============   =============   =============

   Net premiums earned.......................  $     792,581    $     763,284   $     708,744    $    617,043    $    506,500
   Investment income, net....................        153,071          143,019         123,602         105,355          87,543
   Realized investment gains, net............          3,406           18,288           3,261           1,220           1,496
   Other revenue.............................         47,697           47,075          32,665          22,013          22,347
                                               --------------   --------------  --------------   -------------   -------------
     Total revenues..........................        996,755          971,666         868,272         745,631         617,886
                                               --------------   --------------  --------------   -------------   -------------

Losses and expenses:
   Losses incurred, net......................         97,196          211,354         242,362         234,350         189,982
   Underwriting and other expenses...........        200,779          190,031         157,194         146,483         137,559
   Interest expense..........................         20,402           18,624           6,399           3,793           3,821
   Ceding commission.........................         (2,632)          (2,928)         (3,056)         (4,023)         (4,885)
                                               --------------   --------------  --------------   -------------   -------------
     Total losses and expenses...............        315,745          417,081         402,899         380,603         326,477
                                               --------------   --------------  --------------   -------------   -------------

Income before tax............................        681,010          554,585         465,373         365,028         291,409
Provision for income tax.....................        210,809          169,120         141,623         107,037          83,844
                                               --------------   --------------  --------------   -------------   -------------
Net income...................................  $     470,201    $     385,465   $     323,750    $    257,991    $    207,565
                                               ==============   ==============  ==============   =============   =============

Weighted average common shares
   outstanding (in thousands) (1)............        109,258          113,582         117,924         119,046         118,567
                                               ==============   ==============  ==============   =============   =============

Diluted earnings per share (1)...............  $        4.30    $        3.39   $        2.75    $       2.17    $       1.75
                                               ==============   ==============  ==============   =============   =============

Dividends
 per share (1)......................  $         .10    $         .10   $        .095    $        .08    $        .08
                                               ==============   ==============  ==============   =============   =============

Balance sheet data
   Total investments.........................  $   2,789,734    $   2,779,706   $   2,416,740    $  2,036,234    $  1,687,221
   Total assets..............................      3,104,393        3,050,541       2,617,687       2,222,315       1,874,719
   Loss reserves.............................        641,978          681,274         598,683         514,042         371,032
   Long-term notes payable...................        425,000          442,000         237,500               -          35,799
   Shareholders' equity......................      1,775,989        1,640,591       1,486,782       1,366,115       1,121,392
   Book value per share......................          16.79            15.05           13.07           11.59            9.56


(1)  In May 1997, the Company  declared a two-for-one  stock split of the common stock in the form of a 100% stock  dividend.
     The additional  shares were issued on June 2, 1997.  Prior year shares,  dividends per share and earnings per share have
     been restated to reflect the split.

-----------------------------------------------------------------------------------------------------------------------------

A brief description of the Company's business is contained in Note 1 to the Consolidated Financial Statements of the Company,
page eighteen.
</TABLE>



                                                                one

<PAGE>


MGIC  INVESTMENT  CORPORATION &  SUBSIDIARIES  -- YEARS ENDED DECEMBER 31, 1999,
1998, 1997, 1996 AND 1995

-----------------Five-Year Summary of Financial Information---------------------

<TABLE>
<CAPTION>
                                                   1999             1998            1997             1996            1995
                                               --------------   --------------   -------------   -------------   -------------

<S>                                            <C>              <C>             <C>              <C>             <C>         
New primary insurance written ($ millions)...  $      46,953    $      43,697    $     32,250    $     32,756    $     30,277
New primary risk written ($ millions)........         11,422           10,850           8,305           8,305           7,599
New pool risk written ($ millions)...........            564              618             394               2               1

Insurance in force (at year-end) ($ millions)
   Direct primary insurance..................        147,607          137,990         138,497         131,397         120,341
   Direct primary risk.......................         35,623           32,891          32,175          29,308          25,502
   Direct pool risk..........................          1,557            1,133             590             232             254

Primary loans in default ratios
   Policies in force.........................      1,370,020        1,320,994       1,342,976       1,299,038       1,219,304
   Loans in default..........................         29,761           29,253          28,493          25,034          19,980
   Percentage of loans in default............         2.17%            2.21%            2.12%           1.93%           1.64%

Insurance operating ratios (GAAP)
   Loss ratio................................         12.3%            27.7%            34.2%           38.0%           37.5%
   Expense ratio.............................         19.7%            19.6%            18.4%           21.6%           24.6%
                                               --------------   --------------   -------------   -------------   -------------
   Combined ratio............................         32.0%            47.3%            52.6%           59.6%           62.1%
                                               ==============   ==============   =============   =============   =============

Risk-to-capital ratios (statutory)
   Combined insurance subsidiaries...........         12.9:1           13.6:1           16.4:1          18.8:1          19.9:1
   MGIC......................................         11.9:1           12.9:1           15.7:1          18.1:1          19.1:1

</TABLE>




                                                                two

<PAGE>


                      Management's Discussion and Analysis

Results of Consolidated Operations
1999 Compared with 1998

Net income for 1999 was $470.2 million, compared with $385.5 million in 1998, an
increase of 22%.  Diluted  earnings per share for 1999 was $4.30,  compared with
$3.39 in 1998,  an increase of 27%.  Included in the 1999  diluted  earnings per
share was $0.02 for realized  gains  compared  with $0.10 for realized  gains in
1998.  The  percentage  increase  in diluted  earnings  per share was  favorably
affected by the lower adjusted shares  outstanding in 1999 as a result of common
stock repurchased by the Company in the second half of 1998 and during the third
quarter of 1999.

The amount of new  primary  insurance  written by  Mortgage  Guaranty  Insurance
Corporation ("MGIC") during 1999 was $47.0 billion,  compared with $43.7 billion
in 1998.  Refinancing activity decreased to 25% of new primary insurance written
in 1999, compared to 31% in 1998 as a result of the increasing mortgage interest
rate environment of the second half of 1999.

The $47.0 billion of new primary insurance written during 1999 was offset by the
cancellation  of $37.4  billion of  insurance  in force,  and  resulted in a net
increase of $9.6 billion in primary insurance in force,  compared to new primary
insurance  written of $43.7 billion,  cancellation  of $44.2 billion,  and a net
decrease of $0.5  billion in insurance  in force  during  1998.  Direct  primary
insurance in force was $147.6  billion at December 31, 1999,  compared to $138.0
billion at December 31, 1998.

In addition to providing  direct primary  insurance  coverage,  the Company also
insures  pools of mortgage  loans.  New pool risk written  during 1999 and 1998,
which was virtually  all agency pool  insurance,  was $563.8  million and $618.1
million,  respectively.  The Company's direct pool risk in force at December 31,
1999 was $1.6 billion compared to $1.1 billion at December 31, 1998.

In  December  1999,  a  complaint  seeking  class  action  status on behalf of a
nationwide  class of home  mortgage  borrowers was filed against MGIC in Federal
District Court in Augusta,  Georgia (the "RESPA  Litigation").  The complaint in
the RESPA  Litigation  alleges  that MGIC  violated  the Real Estate  Settlement
Procedures  Act ("RESPA") by providing  agency pool  insurance and entering into
other transactions with lenders that were not properly priced, in return for the
referral of mortgage  insurance.  The complaint seeks damages of three times the
amount of the mortgage  insurance  premiums that have been paid and that will be
paid for the mortgage  insurance  that is found to be involved in a violation of
RESPA. In February 2000, MGIC answered the complaint and denied liability. There
can be no assurance,  however, that the ultimate outcome of the RESPA Litigation
will not materially affect the Company.

Cancellation  activity has  historically  been affected by the level of mortgage
interest rates, with  cancellations  generally moving inversely to the change in
the  direction of interest  rates.  Cancellations  decreased  during 1999 due to
increasing  mortgage  interest  rates which  resulted in an increase in the MGIC
persistency  rate  (percentage  of  insurance  remaining  in force from one year
prior) to 72.9% at December  31, 1999,  from 68.1% at December 31, 1998.  Future
cancellation activity could be somewhat higher than it otherwise would have been
as a result  of  legislation  that  went  into  effect  in July  1999  regarding
cancellation of mortgage insurance.

Net premiums written increased 6% to $792.3 million in 1999, from $749.2 million
in 1998. Net premiums earned increased 4% to $792.6 million in 1999, from $763.3
million in 


                                     three

<PAGE>

1998. The increases  were  primarily a result of a higher  percentage of renewal
premiums on mortgage loans with deeper  coverages and the growth in insurance in
force offset by an increase in ceded premiums to $26.2 million in 1999, compared
to $14.8  million in 1998,  primarily  due to an  increase  in captive  mortgage
reinsurance.

Mortgages  (newly  insured  during 1999 or 1998) equal to  approximately  32% of
MGIC's new  insurance  written  during  1999 were  subject  to captive  mortgage
reinsurance  and  similar  arrangements   compared  to  16%  during  1998.  Such
arrangements  entered into during a reporting period  customarily  include loans
newly insured in a prior reporting  period.  As a result,  the percentages cited
above  would be  lower if only the  current  reporting  period's  newly  insured
mortgages  subject to such  arrangements  were  included.  The percentage of new
insurance  written  subject  to captive  mortgage  reinsurance  arrangements  is
expected  to  increase  during  2000 as new  transactions  are  consummated.  At
December  31,  1999  approximately  15% of MGIC's  risk in force was  subject to
captive  reinsurance  and similar  arrangements  compared to 7% at December  31,
1998. In a February 1999 circular  letter,  the New York Department of Insurance
said it was in the process of developing  guidelines  that would  articulate the
parameters  under which captive  mortgage  reinsurance is permissible  under New
York insurance law. The complaint in the RESPA Litigation alleges that MGIC pays
"inflated" captive mortgage reinsurance premiums in violation of RESPA.

During the first  quarter of 1999,  Fannie Mae and Freddie Mac ("GSEs")  changed
their mortgage  insurance  requirements for certain mortgages  approved by their
automated  underwriting  services. The changes permit lower coverage percentages
on these  loans than the deeper  coverage  percentages  that went into effect in
1995. MGIC's premium rates vary with the depth of coverage. While lower coverage
percentages result in lower premium revenue,  lower coverage  percentages should
also  result  in lower  incurred  losses at the same  level of claim  incidence.
MGIC's results could also be affected to the extent the GSEs are compensated for
assuming  default risk that would  otherwise be insured by the private  mortgage
insurance industry. The GSEs have programs under which a delivery fee is paid to
them, with mortgage  insurance coverage reduced below the coverage that would be
required in the absence of the delivery fee.

In  partnership  with mortgage  insurers,  the GSEs are also  beginning to offer
programs  under  which,  on  delivery of an insured  loan to a GSE,  the primary
coverage is restructured  to an initial  shallow tier of coverage  followed by a
second  tier that is  subject to an overall  loss  limit and,  depending  on the
program, some compensation may be paid to the GSE for services.  Because lenders
receive  guaranty  fee relief from the GSEs on  mortgages  delivered  with these
restructured  coverages,   participation  in  these  programs  is  competitively
significant to mortgage insurers.

In March 1999,  the Office of Federal  Housing  Enterprise  Oversight  ("OFHEO")
released a proposed  risk-based  capital  stress  test for the GSEs.  One of the
elements of the  proposed  stress test is that future claim  payments  made by a
private  mortgage  insurer on GSE loans are reduced below the amount provided by
the mortgage  insurance policy to reflect the risk that the insurer will fail to
pay. Claim payments from an insurer whose claims-paying  ability rating is `AAA'
are subject to a 10% reduction over the 10-year period of the stress test, while
claim  payments from a `AA' rated  insurer,  such as MGIC,  are subject to a 20%
reduction.  The effect of the  differentiation  among insurers is to require the
GSEs to have  additional  capital for  coverage  on loans  provided by a private
mortgage insurer


                                      four

<PAGE>

whose  claims-paying  rating is less than  `AAA.' As a  result,  if  adopted  as
proposed,  there is an incentive for the GSEs to use private mortgage  insurance
provided by a `AAA' rated insurer.  The Company does not believe there should be
a reduction in claim payments from private  mortgage  insurance nor should there
be a distinction  between `AAA' and `AA' rated private  mortgage  insurers.  The
proposed  stress test  covers  many  topics in  addition  to capital  credit for
private mortgage insurance and is not expected to become final for some time. If
the stress test  ultimately  gives the GSEs an incentive  to use `AAA'  mortgage
insurance,  MGIC may need  `AAA'  capacity,  which in turn  would  entail  using
capital to support such a facility as well as additional  expenses.  The Company
cannot predict  whether the portion of the stress test  discussed  above will be
adopted in its present form.

Investment income for 1999 was $153.1 million, an increase of 7% over the $143.0
million in 1998.  This  increase was  primarily the result of an increase in the
amortized cost of average  investment assets to $2.7 billion for 1999, from $2.5
billion for 1998, an increase of 11%. The portfolio's average pre-tax investment
yield was 5.6% in 1999 and 1998. The portfolio's  average  after-tax  investment
yield was 4.9% in 1999 and 1998.  The  Company  realized  gains of $3.4  million
during 1999  compared to $18.3  million in 1998.  The decrease is primarily  the
result of gains on the sale of equity  securities  in 1998  compared  to no such
gains in 1999.

Other  revenue,  which is composed of various  components,  was $47.7 million in
1999, compared with $47.1 million in 1998. The change is primarily the result of
an  increase  in  equity   earnings  from   Credit-Based   Asset  Servicing  and
Securitization  LLC and Litton Loan  Servicing LP  (collectively,  "C-BASS"),  a
joint venture with Enhance Financial Services Group Inc. ("Enhance"),  offset by
equity losses from two joint ventures  formed in 1999,  Sherman  Financial Group
LLC,  ("Sherman,"  another joint venture with Enhance) and Customers Forever LLC
("Customers  Forever," a joint venture with Marshall & Ilsley Corporation) and a
decrease in contract underwriting revenue.

C-BASS engages in the  acquisition  and  resolution of delinquent  single-family
residential  mortgage loans ("mortgage loans").  C-BASS also purchases and sells
mortgage-backed  securities  ("mortgage  securities"),  interests in real estate
mortgage  investment conduit residuals and performs mortgage loan servicing.  In
addition,  C-BASS  issues  mortgage-backed  debt  securities  collateralized  by
mortgage  loans and mortgage  securities.  C-BASS's  results of  operations  are
affected by the timing of these securitization  transactions.  Substantially all
of C-BASS's  mortgage-related  assets do not have readily  ascertainable  market
values and as a result their value for financial statement purposes is estimated
by the management of C-BASS. Market value adjustments could impact the Company's
share of C-BASS's results of operations.

At December 31, 1999 the Company had  contributed  approximately  $54 million of
capital to C-BASS. Total combined assets of C-BASS at December 31, 1999 and 1998
were  approximately  $934  million  and  $623  million,  respectively,  of which
approximately $773 million and $550 million, respectively, were mortgage-related
assets,  including open trades.  Total liabilities at December 31, 1999 and 1998
were  approximately  $744  million  and  $468  million,  respectively,  of which
approximately  $617  million  and  $459  million,  respectively,   were  funding
arrangements,  including accrued interest. For the years ended December 31, 1999
and 1998, revenues of approximately $112 million and $70 million,  respectively,
and  expenses  of  approximately  $72  million  and $44  million,  respectively,


                                      five

<PAGE>

resulted in income  before tax of  approximately  $40  million and $26  million,
respectively.

Sherman is engaged in the business of  purchasing,  servicing  and  securitizing
delinquent  unsecured  consumer  assets such as credit card loans and Chapter 13
bankruptcy  debt. A  substantial  portion of Sherman's  consolidated  assets are
investments  in  receivable  portfolios  that do not have readily  ascertainable
market  values and as a result their value for financial  statement  purposes is
estimated by the management of Sherman.  Market value  adjustments  could impact
the Company's share of Sherman's results of operations.

Customers  Forever,  established  during  the  third  quarter  of  1999,  is  an
Internet-focused   transaction   service  company  dedicated  to  helping  large
residential  mortgage  servicers  retain and  enhance  relationships  with their
customers nationwide.

Net losses incurred  decreased 54% to $97.2 million in 1999, from $211.4 million
in  1998.  Such  decrease  was  primarily  due  to  generally   strong  economic
conditions,  improvement in the California real estate market, and MGIC's claims
mitigation efforts,  which in the aggregate resulted in a decline in losses paid
and led the Company to reduce its  estimate  of the claim rate and the  severity
(the "reserve factors") for loans in both the primary and pool notice inventory.
Partially  offsetting  the  reduction in reserve  factors was an increase in the
primary insurance notice inventory from 29,253 at December 31, 1998 to 29,761 at
December 31, 1999 and an increase in pool insurance  notice inventory from 6,524
at  December  31,  1998 to 11,638 at  December  31,  1999.  The  reasons for the
decrease in net losses incurred  discussed  above  contributed to an increase in
the redundancy in prior year loss reserves.  The redundancy  results from actual
claim rates and actual  claim  amounts  being lower than those  estimated by the
Company when  originally  establishing  the reserve at December  31,  1998.  For
additional  information,  see Note 6 of the Notes to the Consolidated  Financial
Statements.

At December 31, 1999,  65% of the primary  insurance in force was written during
the last three years,  compared to 60% at December 31, 1998.  The highest  claim
frequency years have typically been the third through fifth years after the year
of loan  origination.  However,  the pattern of claims  frequency  for refinance
loans may be different from the historical pattern of other loans.

Underwriting  and other  expenses  increased  6% in 1999 to $200.8  million from
$190.0  million in 1998.  This increase was primarily due to the increase in new
primary insurance written and the related underwriting expenses.

Interest  expense in 1999  increased to $20.4 million from $18.6 million in 1998
due to a higher  weighted  average  outstanding  notes  payable  balance in 1999
compared to 1998.

The Company utilized financial derivative transactions during 1999 consisting of
interest  rate  swaps to  reduce  and  manage  interest  rate  risk on its notes
payable. Earnings on such transactions aggregated approximately $3.8 million and
were netted against interest expense. In 1998, earnings on an interest rate swap
and premium income on three put-swaptions aggregating approximately $0.5 million
for all such transactions were netted against interest expense.

The consolidated  insurance operations loss ratio was 12.3% for 1999 compared to
27.7% for 1998.  The  consolidated  insurance  operations  expense and  combined
ratios were 19.7% and 32.0%, respectively, for 1999 compared to 19.6% and 47.3%,
respectively, for 1998.


                                      six

<PAGE>

The  effective tax rate was 31.0% in 1999,  compared with 30.5% in 1998.  During
both  years,  the  effective  tax  rate was  below  the  statutory  rate of 35%,
reflecting  the  benefits  of  tax-preferenced  investment  income.  The  higher
effective  tax rate in 1999  resulted  from a lower  percentage  of total income
before tax being generated from tax-preferenced investments in 1999.

1998 Compared with 1997

Net income for 1998 was $385.5 million, compared with $323.8 million in 1997, an
increase of 19%.  Diluted  earnings per share for 1998 was $3.39,  compared with
$2.75 in 1997, an increase of 23%. The percentage  increase in diluted  earnings
per share was favorably  affected by the lower  adjusted  shares  outstanding in
1998 as a result of common stock  repurchased  by the Company in the second half
of 1997 and during 1998.

The  amount of new  primary  insurance  written  by MGIC  during  1998 was $43.7
billion,  compared with $32.2 billion in 1997. Reflecting the favorable mortgage
interest rate environment that prevailed  throughout 1998,  refinancing activity
accounted for 31% of new primary insurance  written in 1998,  compared to 15% in
1997.

The $43.7 billion of new primary insurance written during 1998 was offset by the
cancellation  of $44.2  billion of  insurance  in force,  and  resulted in a net
decrease of $0.5 billion in primary insurance in force,  compared to new primary
insurance  written of $32.2 billion,  cancellation  of $25.1 billion,  and a net
increase of $7.1  billion in insurance  in force  during  1997.  Direct  primary
insurance in force was $138.0  billion at December 31, 1998,  compared to $138.5
billion at December 31, 1997. In addition to providing direct primary  insurance
coverage,  the  Company  also  insures  pools of mortgage  loans.  New pool risk
written during 1998 and 1997, which was virtually all agency pool insurance, was
$618.1 million and $394.4 million,  respectively. The Company's direct pool risk
in force at December  31, 1998 was $1.1  billion  compared to $590.3  million at
December 31, 1997.

Cancellation  activity has  historically  been affected by the level of mortgage
interest  rates and  increased  during 1998 due to favorable  mortgage  interest
rates  which  resulted in a decrease  in the MGIC  persistency  rate to 68.1% at
December 31, 1998, from 80.9% at December 31, 1997.

Net premiums written increased 9% to $749.2 million in 1998, from $690.2 million
in 1997. Net premiums earned increased 8% to $763.3 million in 1998, from $708.7
million in 1997. The increases were primarily a result of a higher percentage of
renewal premiums on mortgage loans with deeper coverages.

For a  discussion  of captive  mortgage  reinsurance  and similar  arrangements,
certain programs with the GSEs regarding mortgage insurance and proposed capital
regulations for the GSEs, see the 1999 compared with 1998 discussion.

Investment  income  for 1998 was $143.0  million,  an  increase  of 16% over the
$123.6 million in 1997. This increase was primarily the result of an increase in
the amortized cost of average  investment  assets to $2.5 billion for 1998, from
$2.1 billion for 1997, an increase of 16%. The increase was partially  offset by
a decrease in the portfolio's  average pre-tax  investment yield to 5.6% in 1998
from 5.8% in 1997. The portfolio's  average after-tax  investment yield was 4.9%
for 1998 compared to 5.0% for 1997. The Company  realized gains of $18.3 million
during 1998  compared to $3.3 million in 1997.  The  increase


                                     seven

<PAGE>
is primarily the result of the sale of equity securities in 1998.

Other  revenue was $47.1  million in 1998,  compared with $32.7 million in 1997.
The  increase is  primarily  the result of an increase in contract  underwriting
revenue of $11.8 million and an increase of $5.3 million in equity earnings from
C-BASS, a joint venture with Enhance Financial  Services Group Inc., offset by a
$2.7 million  reduction in fee-based  services under  government  contracts.  In
accordance with generally accepted accounting principles,  C-BASS is required to
mark to market its mortgage  related assets which,  including open trades,  were
$550 million at December 31, 1998.  Substantially all of these  mortgage-related
assets do not have  readily  ascertainable  market  values and as a result their
value for financial statement purposes is estimated by the management of C-BASS.
Market  valuation  adjustments  could  impact the  Company's  share of  C-BASS's
results of operations.

Net losses incurred decreased 13% to $211.4 million in 1998, from $242.4 million
in  1997.  Such  decrease  was  primarily  attributable  to an  increase  in the
redundancy in prior year loss reserves,  generally favorable economic conditions
throughout  the  country  and only a moderate  increase  in the  primary  notice
inventory  from 28,493 at December 31, 1997 to 29,253 at December 31, 1998.  The
redundancy  results from actual claim rates and actual claim amounts being lower
than those estimated by the Company when originally  establishing the reserve at
December 31, 1997.  The pool notice  inventory  increased from 2,098 at December
31, 1997 to 6,524 at December 31, 1998,  attributable  to defaults on new agency
pool  insurance  written  during 1997 and 1998. At December 31, 1998, 60% of the
primary insurance in force was written during the last three years,  compared to
57% at December 31, 1997. The highest claim  frequency years have typically been
the third through fifth years after the year of loan origination.  However,  the
pattern  of claims  frequency  for  refinance  loans may be  different  from the
historical pattern of other loans.

Underwriting  and other  expenses  increased 21% in 1998 to $190.0  million from
$157.2 million in 1997. This increase was primarily due to increases  associated
with contract and field office underwriting  expenses and an increase in premium
tax due to higher premiums written.

Interest  expense in 1998  increased to $18.6  million from $6.4 million in 1997
due to higher  outstanding  notes  payable,  the  proceeds of which were used to
repurchase common stock.

The Company entered into financial derivative  transactions in 1998,  consisting
of interest rate swaps and put-swaptions to reduce and manage interest rate risk
on its notes  payable.  In 1998,  earnings on an interest  rate swap and premium
income on three  put-swaptions  aggregating  approximately  $0.5 million for all
such transactions were netted against interest expense.

The consolidated  insurance operations loss ratio was 27.7% for 1998 compared to
34.2% for 1997.  The  consolidated  insurance  operations  expense and  combined
ratios were 19.6% and 47.3%, respectively, for 1998 compared to 18.4% and 52.6%,
respectively, for 1997.

The  effective tax rate was 30.5% in 1998,  compared with 30.4% in 1997.  During
both  years,  the  effective  tax  rate was  below  the  statutory  rate of 35%,
reflecting  the  benefits  of  tax-preferenced  investment  income.  The  higher
effective  tax rate in 1998  resulted  from a lower  percentage  of total income
before tax being generated from tax-preferenced investments in 1998.


                                     eight

<PAGE>

Financial Condition

Consolidated  total  investments  were $2.8  billion at  December  31,  1999 and
December 31, 1998.  During 1999,  positive net cash flow of  approximately  $220
million was offset by unrealized losses on securities marked to market of $208.2
million. The Company generated consolidated cash flows from operating activities
of $455.0 million during 1999, compared to $411.8 million generated during 1998.
The  difference  between the $220 million of positive net cash flow and the $455
million of positive cash flow from operating  activities is primarily the result
of cash used in  financing  activities.  The  increase in  operating  cash flows
during 1999 compared to 1998 is due primarily to an increase in renewal premiums
and  investment  income and a decrease  in losses  paid offset by an increase in
underwriting  expenses.  As of December 31, 1999, the Company had $107.7 million
of short-term  investments  with  maturities of 90 days or less,  and 75% of the
portfolio was invested in tax-preferenced  securities.  In addition, at December
31,  1999,  based on book value,  the  Company's  fixed income  securities  were
approximately  99%  invested  in  `A'  rated  and  above,   readily   marketable
securities,  concentrated  in maturities of less than 15 years.  At December 31,
1999 the Company had $15.4 million of investments in equity securities  compared
to $4.6 million at December 31, 1998.

At December 31, 1999, the Company had no derivative financial instruments in its
investment  portfolio.  The Company places its  investments in instruments  that
meet high credit  quality  standards,  as specified in the Company's  investment
policy  guidelines;  the policy also limits the amount of credit exposure to any
one issue,  issuer and type of  instrument.  At December 31,  1999,  the average
duration of the Company's investment portfolio was 6.6 years. The effect of a 1%
increase/decrease   in   market   interest   rates   would   result  in  a  6.6%
decrease/increase in the value of the Company's fixed income portfolio.

The Company's  investments in joint ventures  increased $26.2 million from $75.3
million at December 31, 1998 to $101.5  million at December 31, 1999 as a result
of additional investments of $13.6 million and equity earnings of $12.6 million.

Consolidated  loss reserves  decreased 6% to $642.0 million at December 31, 1999
from $681.3 million at December 31, 1998,  reflecting a reduction in the primary
and pool reserve factors  partially  offset by increases in the primary and pool
insurance  notice  inventories all of which were discussed  earlier.  Consistent
with industry practices, the Company does not establish loss reserves for future
claims on insured loans which are not currently in default.

Consolidated  unearned  premiums  decreased  $2.3 million from $183.7 million at
December 31, 1998, to $181.4 million at December 31, 1999,  primarily reflecting
the continued high level of monthly premium policies written (for which there is
no unearned  premium) offset by an increase in unearned premiums for agency pool
insurance written.

Consolidated  shareholders'  equity  increased  to $1.8  billion at December 31,
1999,  from $1.6 billion at December 31, 1998,  an increase of 8%. This increase
consisted of $470.2 million of net income during 1999 and $11.9 million from the
reissuance of treasury  stock,  offset by the  repurchase  of $200.5  million of
outstanding  common shares,  unrealized  losses on  investments,  net of tax, of
$135.3 million and dividends declared of $10.8 million.


                                      nine

<PAGE>

Liquidity and Capital Resources

The  Company's  consolidated  sources of funds  consist  primarily  of  premiums
written and  investment  income.  Funds are applied  primarily to the payment of
claims  and   expenses.   Approximately   71%  of   underwriting   expenses  are
personnel-related costs, most of which are considered by the Company to be fixed
costs over the short term.  Approximately  6% of  operating  expenses  relate to
occupancy  costs,  which are fixed  costs.  Substantially  all of the  remaining
operating expenses are considered by the Company to be variable in nature,  with
data processing costs and taxes, licenses and fees representing approximately 3%
and 8%,  respectively,  of  total  operating  expenses.  The  Company  generated
positive cash flows of approximately  $455.0 million,  $411.8 million and $374.0
million  in 1999,  1998 and  1997,  respectively,  as shown on the  Consolidated
Statement  of Cash  Flows.  Positive  cash  flows are  invested  pending  future
payments of claims and other expenses.  Cash-flow  shortfalls,  if any, could be
funded through sales of short-term  investments and other  investment  portfolio
securities.

During 1999, 1998 and 1997, the Company  repurchased  approximately 3.6 million,
5.3 million and 4.7 million  shares,  respectively,  of its  outstanding  common
stock at a cost of  approximately  $201 million,  $247 million and $248 million,
respectively.  Funds to  repurchase  the shares in 1997 and 1998 were  primarily
provided by borrowings under credit facilities  evidenced by notes payable.  The
shares repurchased in 1999 were funded with a $150 million special dividend from
MGIC and cash flow.  The  Company  cannot  predict  whether  it will  repurchase
additional shares in 2000.

The 1997 and 1998 credit facilities provide up to $200 million and $225 million,
respectively,  of  availability  at December 31, 1999. The 1997 credit  facility
will  decrease by $25 million each year through June 20, 2001.  Any  outstanding
borrowings under this facility mature on June 20, 2002. The 1998 credit facility
will  decrease by $25 million each year through  June 9, 2002.  Any  outstanding
borrowings  under this  facility  mature on June 9, 2003.  The  Company  has the
option on notice to  lenders,  to prepay  any  borrowings  under the  agreements
subject  to  certain  provisions.  In  addition  to the  1997  and  1998  credit
facilities,  the Company entered into a $100 million credit facility in November
1999.  At December 31, 1999,  there were no  outstanding  borrowings  under this
facility.

MGIC had guaranteed  one half of a $50 million  credit  facility for C-BASS that
was repaid in July 1999. MGIC is  guaranteeing  one half of a $50 million credit
facility  for  Sherman  that is  scheduled  to expire in June 2000.  The Company
expects it will provide additional funding to the joint ventures.

MGIC  is  the   principal   insurance   subsidiary   of  the   Company.   MGIC's
risk-to-capital  ratio was 11.9:1 at  December  31,  1999  compared to 12.9:1 at
December 31,  1998.  The  decrease  was due to MGIC's  increased  policyholders'
reserves,  partially offset by the net additional risk in force of $2.5 billion,
net of reinsurance, during 1999.

The Company's  combined insurance  risk-to-capital  ratio was 12.9:1 at December
31, 1999,  compared to 13.6:1 at December 31, 1998.  The decrease was due to the
same reasons as described above.

The  risk-to-capital  ratios set forth  above have been  computed on a statutory
basis.   However,  the  methodology  used  by  the  rating  agencies  to  assign
claims-paying  ability  ratings  permits  less  leverage  than  under  statutory
requirements.  As a result,  the  amount of  capital  required  under


                                      ten

<PAGE>

statutory  regulations may be lower than the capital  required for rating agency
purposes.  In addition to capital  adequacy,  the rating agencies consider other
factors in determining a mortgage insurer's claims-paying rating,  including its
competitive  position,  business outlook,  management,  corporate strategy,  and
historical and projected operating performance.

The Company is a holding company and the payment of dividends from its insurance
subsidiaries  is restricted by insurance  regulation.  For a discussion of these
restrictions, see Note 11 of the Notes to the Consolidated Financial Statements.

For certain material risks of the Company's business, see "Risk Factors" below.

Risk Factors

The Company and its business may be materially affected by the factors discussed
below. These factors may also cause actual results to differ materially from the
results contemplated by forward looking statements that the Company may make.

Reductions  in the volume of low down payment  home  mortgage  originations  may
adversely affect the amount of private  mortgage  insurance (PMI) written by the
PMI  industry.  The factors that affect the volume of low down payment  mortgage
originations include:

o    the level of home mortgage interest rates,

o    the health of the domestic  economy as well as  conditions  in regional and
     local economies,

o    housing affordability,

o    population trends, including the rate of household formation,

o    the rate of home price  appreciation,  which in times of heavy  refinancing
     affects whether refinance loans have loan-to-value ratios that require PMI,
     and

o    government housing policy encouraging loans to first-time homebuyers.

By selecting alternatives to PMI, lenders and investors may adversely affect the
amount of PMI written by the PMI industry. These alternatives include:

o    government  mortgage  insurance  programs,  including  those of the Federal
     Housing Administration and the Veterans Administration,

o    holding mortgages in portfolio and self-insuring,

o    use of credit  enhancements by investors,  including Fannie Mae and Freddie
     Mac, other than PMI or using other credit  enhancements in conjunction with
     reduced levels of PMI coverage, and

o    mortgage  originations  structured to avoid PMI,  such as a first  mortgage
     with  an  80%  loan-to-value  ratio  and  a  second  mortgage  with  a  10%
     loan-to-value  ratio  (referred to as an 80-10-10 loan) rather than a first
     mortgage with a 90% loan-to-value ratio.

Fannie Mae and Freddie Mac have a material  impact on the PMI industry.  Because
Fannie  Mae and  Freddie  Mac are the  largest  purchasers  of low down  payment
conventional  mortgages,  the  business  practices  of these  GSEs have a direct
effect  on  private  mortgage  insurers.   These  practices  affect  the  entire
relationship between the GSEs and mortgage insurers and include:


                                     eleven

<PAGE>

o    the level of PMI coverage, subject to the limitations of the GSEs' charters
     when PMI is used as the  required  credit  enhancement  on low down payment
     mortgages,

o    whether the GSE influences the mortgage lender's  selection of the mortgage
     insurer providing coverage and, if so, any transactions that are related to
     that selection,

o    whether a GSE will give mortgage  lenders an incentive to select a mortgage
     insurer which has a `AAA' claims-paying  ability rating to benefit from the
     lower capital required of the GSE under OFHEO's proposed stress test when a
     mortgage is insured by a `AAA' company,

o    the  underwriting  standards  that  determine  what loans are  eligible for
     purchase by the GSEs,  which thereby affect the quality of the risk insured
     by the mortgage insurer, as well as the availability of mortgage loans,

o    the terms on which  mortgage  insurance  coverage  can be  canceled  before
     reaching the cancellation thresholds established by law, and

o    the  circumstances  in which  mortgage  servicers  must perform  activities
     intended  to  avoid  or  mitigate  loss  on  insured   mortgages  that  are
     delinquent.

The Company  expects the level of competition  within the PMI industry to remain
intense.  Competition  for PMI premiums  occurs not only among private  mortgage
insurers  but  increasingly  with  mortgage  lenders  through  captive  mortgage
reinsurance  transactions in which a lender's  affiliate  reinsures a portion of
the insurance  written by a private mortgage insurer on mortgages  originated by
the lender.  The level of competition within the PMI industry has also increased
as many large  mortgage  lenders  have  reduced  the number of private  mortgage
insurers  with whom they do  business  at the same time as  consolidation  among
mortgage  lenders has increased the share of the mortgage lending market held by
large lenders.

Changes in interest rates, house prices and cancellation policies may materially
affect  persistency.  In each year,  most of MGIC's  premiums are from insurance
that has been written in prior years. As a result,  the length of time insurance
remains in force is an important determinant of revenues.  The factors affecting
persistency of the insurance in force include:

o    the level of current  mortgage  interest  rates  compared  to the  mortgage
     coupon rates on the insurance in force,  which affects the vulnerability of
     the insurance in force to refinancings, and

o    mortgage insurance  cancellation  policies of mortgage investors along with
     the rate of home price appreciation experienced by the homes underlying the
     mortgages in the insurance in force.

The strong  economic  climate that has existed  throughout the United States for
some time has favorably  impacted  losses and  encouraged  competition to assume
default  risk.  Losses  result from events that  adversely  affect a  borrower's
ability to continue to make mortgage payments, such as unemployment, and whether
the home of a borrower  who  defaults on his  mortgage can be sold for an amount
that will cover  unpaid  principal  and  interest  and the expenses of the sale.
Favorable  economic  conditions  generally  reduce the likelihood that borrowers
will lack sufficient income to pay their mortgages and also favorably affect the
value of homes,  thereby reducing and in some cases even eliminating a loss from
a mortgage  default.  A significant  deterioration in economic  conditions would
adversely  affect  MGIC's  losses.  The low  level of losses  that has  recently
prevailed in the private


                                     twelve


<PAGE>

mortgage  insurance  industry has encouraged  competition to assume default risk
through captive  reinsurance  arrangements,  self-insurance,  80-10-10 loans and
other means.

Litigation  against mortgage lenders and settlement  service  providers has been
increasing. In recent years, consumers have brought a growing number of lawsuits
against home mortgage lenders and settlement  service providers seeking monetary
damages. In particular,  MGIC is a defendant in a lawsuit filed in December 1999
alleging violations of the Real Estate Settlement Procedures Act ("RESPA").  The
lawsuit  seeks  damages  of three  times the  amount of the  mortgage  insurance
premiums  that have been paid and that will be paid for the  mortgage  insurance
that is found to be involved in a violation of RESPA.  There can be no assurance
that the lawsuit  against  MGIC will not have a material  adverse  effect on the
Company.

The  pace  of  change  in the  home  mortgage  lending  and  mortgage  insurance
industries will likely accelerate. The Company expects the processes involved in
home mortgage lending will continue to evolve through greater use of technology.
This evolution  could effect  fundamental  changes in the way home mortgages are
distributed.  Affiliates  of lenders who are regulated  depositary  institutions
gained expanded  insurance powers under financial  modernization and the capital
markets may emerge as providers of insurance  in  competition  with  traditional
insurance  companies.  These trends and others increase the level of uncertainty
attendant  to the PMI  business,  demand  rapid  response  to change and place a
premium on innovation.



                                    thirteen

<PAGE>

                   MGIC INVESTMENT CORPORATION & SUBSIDIARIES
                  YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997

                      Consolidated Statement of Operations

<TABLE>
<CAPTION>
                                                                     1999                1998               1997
                                                                 --------------     ---------------    ---------------
REVENUES:                                                          (In thousands of dollars, except per share data)
   Premiums written:
<S>                                                              <C>                <C>                <C>          
     Direct....................................................  $     816,351      $     755,620      $     692,134
     Assumed...................................................          2,215              8,352             11,597
     Ceded (note 7)............................................        (26,221)           (14,811)           (13,483)
                                                                 --------------     ---------------    ---------------

   Net premiums written........................................        792,345            749,161            690,248
   Decrease in unearned premiums...............................            236             14,123             18,496
                                                                 --------------     ---------------    ---------------

   Net premiums earned (note 7)................................        792,581            763,284            708,744

   Investment income, net of expenses (note 4).................        153,071            143,019            123,602
   Realized investment gains, net (note 4).....................          3,406             18,288              3,261
   Other revenue...............................................         47,697             47,075             32,665
                                                                 --------------     ---------------    ---------------

     Total revenues............................................        996,755            971,666            868,272
                                                                 --------------     ---------------    ---------------

LOSSES AND EXPENSES:
   Losses incurred, net (notes 6 and 7)........................         97,196            211,354            242,362
   Underwriting and other expenses.............................        200,779            190,031            157,194
   Interest expense............................................         20,402             18,624              6,399
   Ceding commission (note 7)..................................         (2,632)            (2,928)            (3,056)
                                                                 --------------     ---------------    ---------------

     Total losses and expenses.................................        315,745            417,081            402,899
                                                                 --------------     ---------------    ---------------

Income before tax..............................................        681,010            554,585            465,373
Provision for income tax (note 10).............................        210,809            169,120            141,623
                                                                 --------------     ---------------    ---------------

Net income.....................................................  $     470,201      $     385,465      $     323,750
                                                                 ==============     ===============    ===============

Earnings per share (note 11):
   Basic.......................................................  $        4.35      $        3.44      $        2.78
                                                                 ===============    ===============    ===============

   Diluted.....................................................  $        4.30      $        3.39      $        2.75
                                                                 ===============    ===============    ===============

</TABLE>



              See accompanying notes to consolidated financial statements.


                                                             fourteen

<PAGE>

                   MGIC INVESTMENT CORPORATION & SUBSIDIARIES
                           December 31, 1999 and 1998

                           Consolidated Balance Sheet


<TABLE>
<CAPTION>

                                                                                    1999                  1998
                                                                               ----------------     -----------------
ASSETS                                                                               (In thousands of dollars)
------
Investment portfolio (note 4):
   Securities, available-for-sale, at market value:
<S>                                                                            <C>                  <C>             
     Fixed maturities........................................................  $     2,666,562      $      2,602,870
     Equity securities.......................................................           15,426                 4,627
     Short-term investments..................................................          107,746               172,209
                                                                               ----------------     -----------------

       Total investment portfolio............................................        2,789,734             2,779,706

Cash ........................................................................            2,322                 4,650
Accrued investment income....................................................           46,713                41,477
Reinsurance recoverable on loss reserves (note 7)............................           35,821                45,527
Reinsurance recoverable on unearned premiums (note 7)........................            6,630                 8,756
Home office and equipment, net...............................................           32,880                32,400
Deferred insurance policy acquisition costs..................................           22,350                24,065
Investments in joint ventures (note 8).......................................          101,545                75,246
Other assets.................................................................           66,398                38,714
                                                                               ----------------     -----------------

       Total assets..........................................................  $     3,104,393      $      3,050,541
                                                                               ================     =================

LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Liabilities:
   Loss reserves (notes 6 and 7).............................................  $       641,978      $        681,274
   Unearned premiums (note 7)................................................          181,378               183,739
   Notes payable (note 5)....................................................          425,000               442,000

   Other liabilities.........................................................           80,048               102,937
                                                                               ----------------     -----------------

       Total liabilities.....................................................        1,328,404             1,409,950
                                                                               ----------------     -----------------

Contingencies (note 13)

Shareholders' equity (note 11):
   Common stock,  $1 par value,  shares  authorized  300,000,000;
     shares issued 121,110,800; outstanding 1999 - 105,798,034;
     1998 - 109,003,032......................................................          121,111               121,111
   Paid-in surplus...........................................................          211,593               217,022
   Treasury stock (shares at cost 1999 - 15,312,766;
     1998 - 12,107,768)......................................................         (665,707)             (482,465)
   Accumulated other comprehensive income - unrealized 
     (depreciation) appreciation in investments, net of tax (note 2).........          (40,735)               94,572
   Retained earnings (note 11)...............................................        2,149,727             1,690,351
                                                                               ----------------     -----------------

     Total shareholders' equity..............................................        1,775,989             1,640,591
                                                                               ----------------     -----------------

     Total liabilities and shareholders' equity..............................  $     3,104,393      $      3,050,541
                                                                               ================     =================

</TABLE>


              See accompanying notes to consolidated financial statements.


                                                              fifteen

<PAGE>

                   MGIC INVESTMENT CORPORATION & SUBSIDIARIES
                  Years Ended December 31, 1999, 1998 and 1997

                 Consolidated Statement of Shareholders' Equity


<TABLE>
<CAPTION>
                                                                                Accumulated               
                                                                                   other                
                                      Common        Paid-in       Treasury     comprehensive    Retained     Comprehensive
                                       stock        surplus         stock      income(note 2)   earnings        income
                                    ------------  ------------   ------------  --------------  ------------  -------------
                                                                  (In thousands of dollars)

<S>                                 <C>           <C>            <C>           <C>             <C>           <C>
Balance, December 31, 1996......... $   121,111   $   207,984    $   (7,073)   $      40,685   $ 1,003,408

Net income.........................           -             -             -                -       323,750   $    323,750
Unrealized investment gains, net...           -             -             -           43,300             -         43,300
                                                                                                             -------------
Comprehensive income...............           -             -             -                -             -   $    367,050
                                                                                                             =============
Dividends declared.................           -             -      (248,426)               -       (11,029)
Reissuance of treasury stock.......           -        10,515         2,557                -             -
                                    ------------  ------------   ------------  --------------  ------------

Balance, December 31, 1997.........     121,111       218,499      (252,942)          83,985     1,316,129

Net income.........................           -             -             -                -       385,465   $    385,465
Unrealized investment gains, net...           -             -             -           10,587             -         10,587
                                                                                                             -------------
Comprehensive income...............           -             -             -                -             -   $    396,052
                                                                                                             =============
Dividends declared.................           -             -             -                -       (11,243)
Repurchase of outstanding common
  shares...........................           -             -      (246,840)               -             -
Reissuance of treasury stock.......           -        (1,477)       17,317                -             -
                                    ------------  ------------   ------------  --------------  ------------

Balance, December 31, 1998.........     121,111       217,022      (482,465)          94,572     1,690,351

Net income.........................           -             -             -                -       470,201   $    470,201
Unrealized investment losses, net..           -             -             -         (135,307)            -       (135,307)
                                                                                                             -------------
Comprehensive income...............           -             -             -                -             -   $    334,894
                                                                                                             =============
Dividends declared.................           -             -             -                -       (10,825)
Repurchase of outstanding common
  shares...........................           -             -      (200,533)               -             -
Reissuance of treasury stock.......           -        (5,429)       17,291                -             -
                                    ------------  ------------   ------------  --------------  ------------

Balance, December 31, 1999......... $   121,111   $   211,593    $ (665,707)   $     (40,735)  $ 2,149,727
                                    ============  ============   ============  ==============  ============
</TABLE>


              See accompanying notes to consolidated financial statements.


                                                              sixteen

<PAGE>

                   MGIC INVESTMENT CORPORATION & SUBSIDIARIES
                  Years Ended December 31, 1999, 1998 and 1997

                      Consolidated Statement of Cash Flows

<TABLE>
<CAPTION>
                                                                           1999                1998               1997
                                                                      ----------------    ---------------    ----------------
                                                                                    (In thousands of dollars)
Cash flows from operating activities:
<S>                                                                   <C>                 <C>                <C>           
   Net income.......................................................  $      470,201      $      385,465     $      323,750
   Adjustments to reconcile net income to net cash provided by
     operating activities:
       Amortization of deferred insurance policy
         acquisition costs..........................................          16,822              20,717             21,373
       Increase in deferred insurance policy acquisition costs......         (15,107)            (17,626)           (16,573)
       Depreciation and other amortization..........................          11,746               7,742              8,187
       Increase in accrued investment income........................          (5,236)             (5,992)            (2,122)
       Decrease (increase) in reinsurance recoverable on
         loss reserves..............................................           9,706             (19,112)             3,412
       Decrease in reinsurance recoverable on unearned
         premiums...................................................           2,126                 483              2,506
       (Decrease) increase in loss reserves.........................         (39,296)             82,591             84,641
       Decrease in unearned premiums................................          (2,361)            (14,566)           (21,002)
       Equity earnings in joint ventures............................         (12,700)            (12,420)            (7,100)
       Other........................................................          19,114             (15,500)           (23,023)
                                                                      ----------------    ---------------    ----------------

Net cash provided by operating activities...........................         455,015             411,782            374,049
                                                                      ----------------    ---------------    ----------------

Cash flows from investing activities:
   Purchase of equity securities....................................         (14,035)             (3,886)          (112,780)
   Purchase of fixed maturities.....................................      (1,223,599)           (916,129)          (685,217)
   Investments in joint ventures....................................         (13,599)            (33,426)            (7,350)
   Proceeds from sale of equity securities..........................           4,150             116,164              9,971
   Proceeds from sale or maturity of fixed maturities...............         949,723             529,358            447,284
                                                                      ----------------    ---------------    ----------------

Net cash used in investing activities...............................        (297,360)           (307,919)          (348,092)
                                                                      ----------------    ---------------    ----------------

Cash flows from financing activities:
   Dividends paid to shareholders...................................         (10,825)            (11,243)           (11,029)
   Net (decrease) increase in notes payable.........................         (17,000)            204,500            202,076
   Reissuance of treasury stock.....................................           3,912               6,953              7,073
   Repurchase of common stock.......................................        (200,533)           (246,840)          (248,426)
                                                                      ----------------    ---------------    ----------------

Net cash used in financing activities...............................        (224,446)            (46,630)           (50,306)
                                                                      ----------------    ---------------    ----------------

Net increase (decrease) in cash and cash equivalents................         (66,791)             57,233            (24,349)
Cash and cash equivalents at beginning of year......................         176,859             119,626            143,975
                                                                      ----------------    ---------------    ----------------

Cash and cash equivalents at end of year............................  $      110,068      $      176,859     $      119,626
                                                                      ================    ===============    ================
</TABLE>


              See accompanying notes to consolidated financial statements.


                                                             seventeen

<PAGE>

MGIC Investment Corporation & Subsidiaries -- December 31, 1999, 1998 and 1997

Notes to Consolidated Financial Statements

1.     Nature of business

    MGIC Investment Corporation  ("Company") is a holding company which, through
Mortgage Guaranty Insurance Corporation ("MGIC") and several other subsidiaries,
is principally engaged in the mortgage insurance business.  The Company provides
mortgage  insurance to lenders  throughout the United States to protect  against
loss from  defaults on low down  payment  residential  mortgage  loans.  Through
certain other  non-insurance  subsidiaries,  the Company also  provides  various
services for the mortgage finance  industry,  such as contract  underwriting and
portfolio analysis.

    At December  31,  1999,  the  Company's  direct  primary  insurance in force
(representing  the  current  principal  balance of all  mortgage  loans that are
currently  insured)  and  direct  primary  risk in  force,  excluding  Wisconsin
Mortgage Assurance  Corporation  ("WMAC"),  was approximately $147.6 billion and
$35.6 billion,  respectively.  In addition to providing direct primary insurance
coverage, the Company also insures pools of mortgage loans. The Company's direct
pool risk in force at December 31, 1999 was approximately $1.6 billion.

    On December 31, 1998,  the Company  purchased WMAC from a third party for $2
million. MGIC contributed an additional $13 million of capital to WMAC to comply
with minimum regulatory capital  requirements.  WMAC wrote mortgage insurance on
first mortgages  collateralized by one- to four-family residences until February
28, 1985 at which time it ceased  writing new business.  WMAC's  direct  primary
insurance in force,  direct  primary risk in force and direct pool risk in force
was approximately $2.3 billion, $0.6 billion and $0.4 billion,  respectively, at
December 31, 1999. (See note 7.)

2.  Basis of presentation and summary of significant accounting policies

    The  preparation  of  financial  statements  in  conformity  with  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that  affect the  reported  amounts of assets and  liabilities  and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates.

Principles of consolidation
    The  consolidated   financial   statements  include  the  accounts  of  MGIC
Investment  Corporation  and its  wholly-owned  subsidiaries.  All  intercompany
transactions have been eliminated. The Company's 48% investments in Credit-Based
Asset   Servicing  and   Securitization   LLC  and  Litton  Loan   Servicing  LP
(collectively,  "C-BASS") and 45.5%  investment in Sherman  Financial Group LLC,
("Sherman"),  joint ventures with Enhance Financial  Services Group Inc. and 47%
investment in Customers Forever LLC, ("Customers Forever"), a joint venture with
Marshall  & Ilsley  Corporation,  are  accounted  for on the  equity  method and
recorded on the balance sheet as  investments in joint  ventures.  The Company's
equity  earnings from these joint ventures are included in other  revenue.  (See
note 8.)

Investments
    The Company  categorizes its investment  portfolio  according to its ability
and intent to hold the  investments to maturity.  Investments  which the Company
does not have the ability and intent to hold to maturity  are  considered  to be
available-for-sale  and must be recorded at market and the  unrealized  gains or
losses  recognized as an increase or decrease to  shareholders'  equity.  During
1997, 1998 and 1999, the Company's entire investment portfolio was classified as
available-for-sale.  Realized investment gains and losses are reported in income
based upon specific identification of securities sold. (See note 4.)

Home office and equipment
    Home  office  and  equipment  is carried  at cost net of  depreciation.  For
financial  statement  reporting  purposes,   depreciation  is  determined  on  a
straight-line basis for the home office,  equipment and data processing hardware
over  estimated  lives  of 45,  5 and 3  years,  respectively.  For  income  tax
purposes, the Company uses accelerated depreciation methods.

    Home office and equipment is shown net of accumulated  depreciation of $31.5
million and $45.2 million at December 31, 1999 and 1998, respectively.

                                    eighteen

<PAGE>

Deferred insurance policy acquisition costs
    The cost of acquiring insurance policies,  including  compensation,  premium
taxes and other underwriting  expenses,  is deferred, to the extent recoverable,
and  amortized as the related  premiums are earned.  No expenses are deferred on
monthly premium policies.

Loss reserves
    Reserves are established for reported  insurance  losses and loss adjustment
expenses  based on when  notices  of  default  on  insured  mortgage  loans  are
received. Reserves are also established for estimated losses incurred on notices
of default not yet reported by the lender.  Consistent with industry  practices,
the Company does not establish  loss reserves for future claims on insured loans
which are not currently in default. Reserves are established by management using
estimated  claims rates and claims  amounts in  estimating  the  ultimate  loss.
Amounts for salvage  recoverable  are  considered  in the  determination  of the
reserve  estimates.  Adjustments  to  reserve  estimates  are  reflected  in the
financial  statements  in the  years in which  the  adjustments  are  made.  The
liability for reinsurance assumed is based on information provided by the ceding
companies. (See note 6.)

Income recognition
    The insurance  subsidiaries  write policies  which are guaranteed  renewable
contracts at the insured's option on a single,  annual or monthly premium basis.
The  insurance  subsidiaries  have no ability to  reunderwrite  or reprice these
contracts.  Premiums  written on a single  premium  basis and an annual  premium
basis are  initially  deferred as unearned  premium  reserve and earned over the
policy  term.  Premiums  written  on  policies  covering  more than one year are
amortized  over the  policy  life in  accordance  with the  expiration  of risk.
Premiums  written on annual  policies  are earned on a monthly  pro rata  basis.
Premiums written on monthly policies are earned as the premiums are due.

    Fee income of the  non-insurance  subsidiaries is earned as the services are
provided.

Income taxes
    The Company and its  subsidiaries  file a  consolidated  federal  income tax
return.  A formal tax  sharing  agreement  exists  between  the  Company and its
subsidiaries. Each subsidiary determines income taxes based upon the utilization
of all tax  deferral  elections  available.  This assumes Tax and Loss Bonds are
purchased  and held to the extent they would have been  purchased  and held on a
separate  company  basis  since  the tax  sharing  agreement  provides  that the
redemption  or  non-purchase  of such bonds  shall not  increase  such  member's
separate taxable income and tax liability on a separate company basis.

    Federal tax law permits mortgage guaranty insurance companies to deduct from
taxable income, subject to certain limitations, the amounts added to contingency
loss  reserves.  Generally,  the amounts so deducted must be included in taxable
income in the tenth subsequent year. The deduction is allowed only to the extent
that U.S. government  non-interest  bearing Tax and Loss Bonds are purchased and
held in an amount equal to the tax benefit  attributable to such deduction.  The
Company  accounts  for these  purchases as a payment of current  federal  income
taxes.

    Deferred  income  taxes  are  provided  under  the  liability  method  which
recognizes  the future tax  effects of  temporary  differences  between  amounts
reported  in the  financial  statements  and the tax bases of these  items.  The
expected  tax effects are  computed at the current  federal tax rate.  (See note
10.)

Benefit plans
    The Company has a  non-contributory  defined  benefit  pension plan covering
substantially all employees.  Retirement  benefits are based on compensation and
years of service. The Company's policy is to fund pension cost as required under
the Employee Retirement Income Security Act of 1974. (See note 9.)

    The Company accrues the estimated costs of retiree medical and life benefits
over the period during which  employees  render the service that  qualifies them
for benefits.  The Company  offers both medical and dental  benefits for retired
employees and their spouses.  Benefits are generally  funded on a  pay-as-you-go
basis. (See note 9.)

Reinsurance
    Loss  reserves and unearned  premiums are reported  before taking credit for
amounts ceded under reinsurance  treaties.  Ceded loss reserves are reflected as
"Reinsurance   recoverable  on  loss  reserves."  Ceded  unearned  premiums  are
reflected as "Reinsurance recoverable on unearned premiums." The Company

                                    nineteen

<PAGE>

remains contingently liable for all reinsurance ceded. (See note 7.)

Earnings per share
    The  Company's  basic  and  diluted  earnings  per share  ("EPS")  have been
calculated in accordance  with Statement of Financial  Accounting  Standards No.
128,  Earnings Per Share ("SFAS 128").  The Company's net income is the same for
both basic and diluted EPS. Basic EPS is based on the weighted-average number of
common shares outstanding.  Diluted EPS is based on the weighted-average  number
of common shares outstanding and common stock equivalents which would arise from
the  exercise  of  stock  options.  The  following  is a  reconciliation  of the
weighted-average  number of shares used for basic EPS and diluted EPS. (See note
11.)

                                   Years Ended December 31,
                               ---------------------------------
                                 1999        1998       1997
                                 ----        ----       ----
                                    (shares in thousands)
Weighted-average shares -
   Basic EPS                    108,061     112,135    116,332
Common stock equivalents          1,197       1,447      1,592
                               ----------  ---------  ----------
Weighted-average shares -
   Diluted EPS                  109,258     113,582    117,924
                               ==========  =========  ==========

Statement of cash flows
    For  purposes  of the  consolidated  statement  of cash  flows,  the Company
considers  short-term   investments  to  be  cash  equivalents,   as  short-term
investments have original maturities of three months or less.

Comprehensive income
    The Company  adopted  Statement of Financial  Accounting  Standards No. 130,
Reporting   Comprehensive  Income.  The  Company's  other  comprehensive  income
consists of the change in unrealized appreciation (depreciation) on investments,
net of tax. Realized  investment gains of $3.4 million and $18.3 million in 1999
and  1998,  respectively,  include  sales of  securities  which  had  unrealized
appreciation  of $27.9  million and $19.0 million at December 31, 1998 and 1997,
respectively.

Recent accounting pronouncements
    In June 1998, the Financial  Accounting  Standards Board issued Statement of
Financial  Accounting  Standards No. 133, Accounting for Derivative  Instruments
and Hedging  Activities  ("SFAS  133"),  which will be effective  for all fiscal
quarters  of all fiscal  years  beginning  after June 15,  2000.  The  statement
establishes  accounting and reporting  standards for derivative  instruments and
for hedging activities. Management does not anticipate adoption of SFAS 133 will
have a  significant  effect  on  the  Company's  results  of  operations  or its
financial position due to its limited use of derivative  instruments.  (See note
4.)

Reclassifications
    Certain  reclassifications  have  been  made in the  accompanying  financial
statements to 1998 and 1997 amounts to allow for consistent financial reporting.

3.     Related party transactions

    The Northwestern  Mutual Life Insurance  Company ("NML") held  approximately
11% of the common  stock of the  Company  at  December  31,  1999.  The  Company
contracts with Northwestern  Mutual Investment  Services,  Inc., a subsidiary of
NML, for investment portfolio  management.  The Company incurred expense of $1.0
million,  $1.0  million and $1.1  million for these  services in 1999,  1998 and
1997, respectively.

    The Company  provided certain services to C-BASS during 1999, 1998 and 1997,
and Customers  Forever in 1999 in exchange for an immaterial  amount of fees. In
addition,  C-BASS  provided  certain  services  to the  Company  during  1999 in
exchange for an immaterial amount of fees.

                                     twenty

<PAGE>
4.     Investments

    The following  table  summarizes  the Company's  investments at December 31,
1999 and 1998:

<TABLE>
<CAPTION>
                                                                                                                       Financial
                                                                                  Amortized           Market           Statement
                                                                                     Cost             Value              Value
                                                                                -------------     --------------     -------------
                                                                                            (In thousands of dollars)
At December 31, 1999:
--------------------
   Securities, available-for-sale:
<S>                                                                             <C>               <C>                <C>          
     Fixed maturities.......................................................... $   2,732,451     $    2,666,562     $   2,666,562
     Equity securities.........................................................        12,203             15,426            15,426
     Short-term investments....................................................       107,746            107,746           107,746
                                                                                --------------    ---------------    --------------
   Total investment portfolio.................................................. $   2,852,400     $    2,789,734     $   2,789,734
                                                                                ==============    ===============    ==============
At December 31, 1998:
--------------------
   Securities, available-for-sale:
     Fixed maturities.......................................................... $   2,460,418     $    2,602,870     $   2,602,870
     Equity securities.........................................................         1,583              4,627             4,627
     Short-term investments....................................................       172,209            172,209           172,209
                                                                                --------------    ---------------    --------------
   Total investment portfolio.................................................. $   2,634,210     $    2,779,706     $   2,779,706
                                                                                ==============    ===============    ==============
</TABLE>


    The  amortized cost and market value of investments at December 31, 1999 are
as follows:

<TABLE>
<CAPTION>
                                                                                     Gross             Gross
                                                                 Amortized         Unrealized        Unrealized          Market
December 31, 1999:                                                  Cost             Gains             Losses            Value
-----------------                                              ---------------   ---------------   ---------------   ---------------
                                                                                    (In thousands of dollars)
<S>                                                            <C>               <C>               <C>               <C>           
U.S. Treasury securities and obligations of U.S. government
   corporations and agencies.................................. $     163,663     $         305     $      (9,162)    $      154,806
Obligations of states and political subdivisions..............     2,195,031            25,196           (71,323)         2,148,904
Corporate securities..........................................       466,204               469           (11,406)           455,267
Mortgage-backed securities....................................         1,366                 -                (8)             1,358
Debt securities issued by foreign sovereign governments.......        13,933                55               (15)            13,973
                                                               ---------------   ---------------   ---------------   ---------------
   Total debt securities......................................     2,840,197            26,025           (91,914)         2,774,308

Equity securities.............................................        12,203             3,223                 -             15,426
                                                               ---------------   ---------------   ---------------   ---------------
   Total investment portfolio................................. $   2,852,400     $      29,248     $     (91,914)    $    2,789,734
                                                               ===============   ===============   ===============   ===============
</TABLE>


    The  amortized cost and market value of investments at December 31, 1998 are
as follows:

<TABLE>
<CAPTION>
                                                                                     Gross             Gross
                                                                 Amortized         Unrealized        Unrealized          Market
December 31, 1998:                                                  Cost             Gains             Losses            Value
-----------------                                              ---------------   ---------------   ---------------   ---------------
                                                                                    (In thousands of dollars)
<S>                                                            <C>               <C>               <C>               <C>           
U.S. Treasury securities and obligations of U.S. government
   corporations and agencies.................................. $      65,811     $       5,746     $        (141)    $       71,416
Obligations of states and political subdivisions..............     2,030,847           120,033            (1,290)         2,149,590
Corporate securities..........................................       518,965            16,819              (100)           535,684
Mortgage-backed securities....................................         1,120                16                (3)             1,133
Debt securities issued by foreign sovereign governments.......        15,884             1,372                 -             17,256
                                                               ---------------   ---------------   ---------------   ---------------
   Total debt securities......................................     2,632,627           143,986            (1,534)         2,775,079

Equity securities.............................................         1,583             3,044                 -              4,627
                                                               ---------------   ---------------   ---------------   ---------------
   Total investment portfolio................................. $   2,634,210     $     147,030     $      (1,534)    $    2,779,706
                                                               ===============   ===============   ===============   ===============
</TABLE>


                                                            twenty-one

<PAGE>
    The  amortized  cost and market  values of debt  securities  at December 31,
1999, by contractual maturity, are shown below. Debt securities consist of fixed
maturities  and short-term  investments.  Expected  maturities  will differ from
contractual  maturities  because  borrowers may have the right to call or prepay
obligations with or without call or prepayment penalties.

                                 Amortized         Market
                                    Cost            Value
                                -------------    ------------
                                 (In thousands of dollars)
Due in one year or less........ $   116,762      $   116,852
Due after one year through
  five years...................     458,897          462,135
Due after five years through
  ten years....................     886,841          881,439
Due after ten years............   1,376,331        1,312,524
                                -------------    ------------
                                  2,838,831        2,772,950
Mortgage-backed securities.....       1,366            1,358
                                -------------    ------------
Total at December 31, 1999..... $ 2,840,197      $ 2,774,308
                                =============    ============

    Net investment income is comprised of the following:

                           1999         1998         1997
                        -----------  -----------   ----------
                             (In thousands of dollars)
Fixed maturities....... $  144,614   $  133,307    $ 117,448
Equity securities......        975        1,133          485
Short-term investments.      8,865        9,603        6,813
Other .................         46           79           65
                        -----------  -----------   ----------
Investment income......    154,500      144,122      124,811
Investment expenses....     (1,429)      (1,103)      (1,209)
                        -----------  -----------   ----------
Net investment income.. $  153,071   $  143,019    $ 123,602
                        ===========  ===========   ==========

    The net realized  investment  gains  (losses)  and change in net  unrealized
appreciation (depreciation) of investments are as follows:

                                  1999         1998         1997
                               ---------    ----------   ----------
                                   (In thousands of dollars)
Net realized investment gains
  (losses), on sale of
  investments:
    Fixed maturities........  $   3,409    $    8,349   $    3,734
    Equity securities.......          -         9,941         (472)
    Short-term investments..         (3)           (2)          (1)
                              ----------   ----------   ----------
                                  3,406        18,288        3,261
                              ----------   ----------   ----------
Change in net unrealized 
  appreciation (depreciation):
    Fixed maturities........   (208,338)       25,631       56,934
    Equity securities.......        179        (9,339)       9,677
    Short-term investments..          -             -            -
                              ----------   ----------   ----------
                               (208,159)       16,292       66,611
                              ----------   ----------   ----------
Net realized investment
  gains (losses) and change
  in net unrealized
  appreciation (depreciation) $(204,753)   $   34,580   $   69,872
                              ==========   ==========   ==========
    The  gross  realized  gains  and the  gross  realized  losses  on  sales  of
available-for-sale   securities   were   $14.5   million   and  $11.1   million,
respectively, in 1999, $22.7 million and $4.4 million, respectively, in 1998 and
$5.7 million and $2.4 million, respectively, in 1997.

    The tax  expense  (benefit)  of the changes in net  unrealized  appreciation
(depreciation)  was ($72.9)  million,  $5.7 million and $23.3  million for 1999,
1998 and 1997, respectively.

<PAGE>

5.  Notes payable

    During  1999,  1998 and 1997,  the  Company  repurchased  approximately  3.6
million,  5.3 million and 4.7 million shares,  respectively,  of its outstanding
common  stock  at  a  cost  of  approximately   $201,  $247  and  $248  million,
respectively.  Funds to  repurchase  the shares in 1997 and 1998 were  primarily
provided by borrowings under credit facilities  evidenced by notes payable.  The
shares repurchased in 1999 were funded with a $150 million special dividend from
MGIC and cash flow.

    The 1997 and 1998  credit  facilities  provide up to $200  million  and $225
million,  respectively,  of  availability  at December 31, 1999. The 1997 credit
facility  will  decrease by $25 million each year  through  June 20,  2001.  Any
outstanding  borrowings  under this facility  mature on June 20, 2002.  The 1998
credit facility will decrease by $25 million each year through June 9, 2002. Any
outstanding  borrowings  under this facility mature on June 9, 2003. The Company
has the  option  on notice  to  lenders,  to  prepay  any  borrowings  under the
agreements subject to certain provisions.

    At December 31, 1999, the Company's outstanding balance of the notes payable
on the 1997 and 1998  credit  facilities  were $200  million  and $225  million,
respectively,  which  approximated  market value. The interest rate on the notes
payable varies based on LIBOR and at December 31, 1999 and December 31, 1998 the
rate was 6.17% and 5.80%,  respectively.  The weighted  average interest rate on
the notes payable for borrowings  under the 1997 and 1998 credit  

                                   twenty-two

<PAGE>
agreements  was 5.57% and 5.86% per annum for the years ended  December 31, 1999
and 1998,  respectively.  Interest  payments  on the notes  payable  were  $22.0
million  and $17.7  million  for the years  ended  December  31,  1999 and 1998,
respectively.  In addition to the 1997 and 1998 credit  facilities,  the Company
entered into a $100 million  credit  facility in November  1999. At December 31,
1999, there were no outstanding borrowings under this facility.

    Under  the  terms  of the  credit  facilities,  the  Company  must  maintain
shareholders'  equity of at least $1  billion  and MGIC must  maintain  a claims
paying  ability  rating of `AA-' or better  with  Standard & Poor's  Corporation
("S&P").  At December 31, 1999, the Company had  shareholders'  equity of $1,776
million and MGIC had a claims paying ability rating of `AA+' from S&P.

    During the twelve months ended  December  1999,  the Company  utilized three
interest  rate swaps each with a notional  amount of $100  million to reduce and
manage  interest  rate risk on a portion  of the  variable  rate debt  under the
credit facilities. With respect to all such transactions, the notional amount of
$100  million  represents  the  stated  principal  balance  used as a basis  for
calculating  payments. On the swaps, the Company receives and pays amounts based
on rates that can be fixed or variable depending on the terms negotiated. Two of
the swaps renew  monthly and one expires in October  2000.  Earnings  during the
twelve months ended December 1999 on the swaps of approximately $3.8 million are
netted against interest expense in the Consolidated Statement of Operations.

    During 1998, the Company earned approximately $0.2 million as a result of an
interest rate swap with a $100 million  notional  amount entered into during the
fourth  quarter of 1998.  In addition,  during the fourth  quarter of 1998,  the
Company  sold  three  successive  $100  million   put-swaptions  for  investment
purposes.  All three  put-swaptions  expired  unexercised,  the last expiring on
January 6, 1999.  Premium income in 1998 on the  put-swaptions  of approximately
$0.3  million and the $0.2  million of earnings on the swap were netted  against
interest expense in the 1998 Consolidated Statement of Operations.

6.  Loss reserves

    Loss reserve activity was as follows:
                           1999          1998          1997
                        ------------  ------------  ------------
                               (In thousands of dollars)
Reserve at beginning
  of year               $  681,274    $  598,683    $  514,042
Less reinsurance
  recoverable.........      45,527        26,415        29,827
                        ------------  ------------  ------------
Net reserve at
  beginning of year...     635,747       572,268       484,215
Reserve transfer (1)..         833           538           537
                        ------------  ------------  ------------
Adjusted reserve at
  beginning of year...     636,580       572,806       484,752

Losses incurred:
  Losses and LAE
    incurred in respect of
    default notices 
    received in:
      Current year....     333,193       377,786       360,623
      Prior years (2).    (235,997)     (166,432)     (118,261)
                        ------------  ------------  ------------
        Subtotal......      97,196       211,354       242,362
                        ------------  ------------  ------------
Losses paid:
  Losses and LAE paid
    in respect of default
    notices received in:
      Current year....       7,601         8,752        15,257
      Prior years.....     120,018       139,661       139,589
                        ------------  ------------  ------------
        Subtotal......     127,619       148,413       154,846
                        ------------  ------------  ------------
Net reserve at end of year 606,157       635,747       572,268
Plus reinsurance
  recoverables........      35,821        45,527        26,415
                        ------------  ------------  ------------
Reserve at end of year  $  641,978    $  681,274    $  598,683
                        ============  ============  ============

(1)  Received  in  conjunction  with the  cancellation  of  certain  reinsurance
treaties. (See note 7.)
(2) A negative  number for a prior year indicates a redundancy of loss reserves,
and a positive number for a prior year indicates a deficiency of loss reserves.

<PAGE>

    The top portion of the table above shows losses  incurred on default notices
received in the current  year and in prior  years,  respectively.  The amount of
losses  incurred  relating  to default  notices  received  in the  current  year
represents the estimated  amount to be ultimately paid on such default  notices.
The amount of losses  incurred  relating  to default  notices  received in prior
years  represents an adjustment made in the current year for defaults which were
included in the loss reserve at the end of the prior year.

    Current year losses  incurred  decreased  from 1998 to 1999 primarily due to
generally strong economic conditions,  improvement in the California real estate
market,  and MGIC's claims  mitigation  efforts  which

                                  twenty-three

<PAGE>
resulted in a decline in losses paid and a  reduction  in both  primary and pool
reserve factors.  Partially  offsetting the reduction in factors was an increase
in the primary  insurance  notice  inventory from 29,253 at December 31, 1998 to
29,761 at December 31, 1999 and an increase in pool insurance  notice  inventory
from 6,524 at December  31, 1998 to 11,638 at December  31,  1999.  These events
contributed to an increase in the redundancy in prior year loss reserves.

    The  favorable  development  of the  reserves  in  1999,  1998  and  1997 is
reflected  in the prior year line,  and results  from the actual claim rates and
actual  claim  amounts  being lower than those  estimated  by the  Company  when
originally  establishing  the  reserve  at  December  31,  1998,  1997 and 1996,
respectively.

    The lower portion of the table above shows the breakdown between claims paid
on default notices  received in the current year and default notices received in
prior years. Since it takes, on average, about twelve months for a default which
is not cured to develop  into a paid  claim,  most losses paid relate to default
notices received in prior years.

7.     Reinsurance

    The Company cedes a portion of its business to reinsurers and records assets
for reinsurance recoverable on estimated reserves for unpaid losses and unearned
premiums.  Business  written  between 1985 and 1993 is ceded under various quota
share  reinsurance  agreements with several  reinsurers.  The Company receives a
ceding  commission in connection with this  reinsurance.  Beginning in 1997, the
Company cedes business to captive  reinsurance  subsidiaries of certain mortgage
lenders primarily under excess of loss reinsurance agreements.

    During 1997,  1998 and 1999,  MGIC signed  agreements  with WMAC and certain
WMAC  reinsurers  to assume all of the  reinsurers'  interest  in WMAC  mortgage
insurance  writings,  which had been previously ceded to those reinsurers.  As a
result,  the portion of WMAC's  insurance in force  reinsured by MGIC  increased
from approximately 65 percent to approximately 68 percent. (See note 1.)

    As a result  of the  purchase  of WMAC on  December  31,  1998,  reinsurance
recoverable on loss reserves as shown in the Consolidated Balance Sheet includes
approximately $19 million and $26 million of reinsured loss reserves at December
31, 1999 and December 31, 1998, respectively.

    The effect of  reinsurance  on  premiums  earned and losses  incurred  is as
follows:

                           1999           1998           1997
                        ------------   ------------   ------------
                                (In thousands of dollars)
Premiums earned:
  Direct..............  $  810,974     $  770,775     $  712,069
  Assumed.............       7,008          9,670         12,665
  Ceded ..............     (25,401)       (17,161)       (15,990)
                        ------------   ------------   ------------

  Net premiums earned.  $  792,581     $  763,284     $  708,744
                        ============   ============   ============

Losses incurred:
  Direct..............  $   94,920     $  216,340     $  247,137
  Assumed.............      (1,332)        (3,234)         3,683
  Ceded ..............       3,608         (1,752)        (8,458)
                        ------------   ------------   ------------

  Net losses incurred.  $   97,196     $  211,354     $  242,362
                        ============   ============   ============

<PAGE>

8.  Investments in joint ventures

    C-BASS engages in the acquisition and resolution of delinquent single-family
residential  mortgage loans ("mortgage loans").  C-BASS also purchases and sells
mortgage-backed  securities  ("mortgage  securities"),  interests in real estate
mortgage  investment conduit residuals and performs mortgage loan servicing.  In
addition,  C-BASS  issues  mortgage-backed  debt  securities  collateralized  by
mortgage  loans  and  mortgage   securities.   Substantially   all  of  C-BASS's
mortgage-related assets do not have readily ascertainable market values and as a
result  their  value  for  financial  statement  purposes  is  estimated  by the
management of C-BASS.  Market value adjustments could impact the Company's share
of C-BASS's results of operations.

    At December 31, 1999 the Company had contributed  approximately  $54 million
of capital to C-BASS.  Total combined  assets of C-BASS at December 31, 1999 and
1998 were  approximately $934 million and $623 million,  respectively,  of which
approximately $773 million and $550 million, respectively, were mortgage-related
assets,  including open trades.  Total liabilities at December 31, 1999 and 1998
were  approximately  $744  million  and  $468  million,  respectively,  of which
approximately  $617  million  and  $459  million,  respectively,   were  funding
arrangements,  including accrued interest.

                                  twenty-four


<PAGE>

For the years ended December 31, 1999 and 1998,  revenues of approximately  $112
million and $70 million, respectively, and expenses of approximately $72 million
and $44 million,  respectively,  resulted in income before tax of  approximately
$40 million and $26 million, respectively. MGIC had guaranteed one half of a $50
million credit facility for C-BASS that was repaid in July 1999.

    Sherman is engaged in the business of purchasing, servicing and securitizing
delinquent  unsecured  consumer  assets such as credit card loans and Chapter 13
bankruptcy  debt. A  substantial  portion of Sherman's  consolidated  assets are
investments  in  receivable  portfolios  that do not have readily  ascertainable
market  values and as a result their value for financial  statement  purposes is
estimated by the management of Sherman.  Market value  adjustments  could impact
the Company's share of Sherman's results of operations. At December 31, 1999 the
Company had contributed  approximately $9 million of capital to Sherman. MGIC is
guaranteeing one half of a $50 million Sherman credit facility that is scheduled
to expire in June 2000.

    Customers  Forever  is  an  Internet-focused   transaction  service  company
dedicated to helping large  residential  mortgage  servicers  retain and enhance
relationships with their customers nationwide.  At December 31, 1999 the Company
had contributed approximately $7 million of capital to Customers Forever.

    The Company  expects  that it will provide  additional  funding to the joint
ventures.

9.  Benefit plans

<TABLE>
    The following  tables provide  reconciliations  of the changes in the benefit  obligation,  fair value of plan assets and
funded status of the pension and other postretirement benefit plans:
<CAPTION>
                                                                                                          Other Postretirement
                                                                               Pension Benefits                 Benefits
                                                                           --------------------------   --------------------------
                                                                              1999           1998          1999          1998
                                                                           ------------   -----------   ------------  ------------
                                                                                         (In thousands of dollars)
Reconciliation of benefit obligation:
------------------------------------
<S>                                                                        <C>            <C>           <C>           <C>        
Benefit obligation at beginning of year..................................  $   66,280     $   51,190    $   23,010    $    19,364
   Service cost..........................................................       5,869          4,064         2,041          1,612
   Interest cost.........................................................       4,677          3,959         1,644          1,357
   Actuarial (gain) loss.................................................      (5,917)         7,908        (2,044)           883
   Benefits paid.........................................................        (938)          (841)         (139)          (206)
                                                                           ------------   -----------   ------------  ------------

Benefit obligation at end of year........................................  $   69,971     $   66,280    $   24,512    $    23,010
                                                                           ============   ===========   ============  ============

Reconciliation of fair value of plan assets:
-------------------------------------------
Fair value of plan assets at beginning of year...........................  $   73,822     $   57,578    $   11,045    $     8,632
   Actual return on plan assets..........................................       6,390          9,895           422          1,141
   Employer contributions................................................       7,574          7,190         1,863          1,272
   Benefits paid.........................................................        (938)          (841)            -              -
                                                                           ------------   -----------   ------------  ------------

Fair value of plan assets at end of year.................................  $   86,848     $   73,822    $   13,330    $    11,045
                                                                           ============   ===========   ============  ============

Reconciliation of funded status:
-------------------------------
Benefit obligation at end of year........................................  $  (69,971)    $  (66,280)   $  (24,512)   $   (23,010)
Fair value of plan assets at end of year.................................      86,848         73,822        13,330         11,045
                                                                           ------------   -----------   ------------  ------------
Funded status at end of year.............................................      16,877          7,542       (11,182)       (11,965)
</TABLE>



                                                            twenty-five

<PAGE>

                         Notes continued

<TABLE>
<CAPTION>
<S>                                                                        <C>            <C>           <C>           <C>        
   Unrecognized net actuarial gain.......................................     (12,011)        (4,741)       (4,959)        (3,145)
   Unrecognized net transition obligation................................          31             63         6,889          7,419
   Unrecognized prior service cost.......................................       2,359          2,542             -              -
                                                                           ------------   -----------   ------------  ------------

Prepaid (accrued) benefit cost...........................................  $    7,256     $    5,406    $   (9,252)   $    (7,691)
                                                                           ============   ===========   ============  ============
</TABLE>


    The following table provides the components of net periodic benefit cost for
the pension and other postretirement benefit
plans:

<TABLE>
<CAPTION>
                                                                                                   Other Postretirement
                                                          Pension Benefits                               Benefits
                                              -----------------------------------------  -----------------------------------------
                                                 1999          1998           1997          1999           1998          1997
                                              ------------  ------------   ------------  ------------   ------------  ------------
                                                                           (In thousands of dollars)
<S>                                           <C>           <C>            <C>           <C>            <C>           <C>        
Service cost................................  $    5,869    $     4,064    $    3,569    $     2,041    $    1,612    $     1,379
Interest cost...............................       4,677          3,959         3,169          1,644         1,357          1,267
Expected return on plan assets..............      (5,543)        (4,674)       (3,521)          (844)         (696)          (506)
Recognized net actuarial gain...............           -              -             -            (17)         (170)           (67)
Amortization of transition obligation.......          32             32            32            530           530            530
Amortization of prior service cost..........         183            183           (20)             -             -              -
                                              ------------  ------------   ------------  ------------   ------------  ------------

Net periodic benefit cost...................  $    5,218    $     3,564    $    3,229    $     3,354    $    2,633    $     2,603
                                              ============  ============   ============  ============   ============  ============
</TABLE>


    The assumptions used in the measurement of the Company's pension  and  other
postretirement  benefit obligations are shown in the following table:

<TABLE>
<CAPTION>

                                                                                                      Other Postretirement
                                                          Pension Benefits                               Benefits
                                              -----------------------------------------  -----------------------------------------
                                                 1999          1998           1997          1999           1998          1997
                                              ------------  ------------  -------------  ------------   ------------  ------------
Weighted-average interest rate assumptions
 as of December 31:
<S>                                                 <C>            <C>           <C>            <C>           <C>            <C> 
     Discount rate..........................        7.5%           7.0%          7.5%           7.5%          7.0%           7.5%
     Expected return on plan assets.........        7.5%           7.5%          7.5%           7.5%          7.5%           7.5%
     Rate of compensation increase..........        6.0%           6.0%          6.0%            N/A           N/A            N/A
</TABLE>



    Plan assets consist of fixed maturities and equity  securities.  The Company
is amortizing the unrecognized  transition  obligation for other  postretirement
benefits  over 20  years.  The  assumed  health  care  cost  trend  rate used in
measuring the accumulated  postretirement  benefit obligation is 6.5% decreasing
to 6% for 2000 and remaining  level  thereafter.  A 1% change in the health care
trend rate assumption would have the following  effects on other  postretirement
benefits:

                                    1-Percentage     1-Percentage
                                        Point           Point
                                      Increase         Decrease
                                    ------------     ------------
                                      (In thousands of dollars)
-------------------------------
Effect on total service and
  interest cost components....        $   843         $  (706)
Effect on postretirement
  benefit obligation..........          4,960          (4,138)

<PAGE>

    The Company has a profit sharing and 401(k)  savings plan for employees.  At
the discretion of the Board of Directors,  the Company may make a profit sharing
contribution  of up  to  5% of  each  participant's  compensation.  The  Company
provides  a  matching  401(k)  savings  contribution  on  employees'  before-tax
contributions  at a rate of 80% of the first $1,000  contributed  and 40% of the
next  $2,000  contributed.  Profit  sharing  costs  and the  Company's  matching
contributions  to the 401(k)  savings plan were $5.3  million,  $5.0 million and
$3.8 million in 1999, 1998 and 1997, respectively.

10. Income taxes

    The components of the net deferred tax (asset)  liability as of December 31,
1999 and 1998 are recorded on the  Consolidated  Balance  Sheet as part of other
assets or other liabilities and are as follows:

                                              1999              1998
                                           -----------       -----------
                                             (In thousands of dollars)
Unearned premium reserves................   $ (17,726)        $ (16,897)



                                   twenty-six


<PAGE>

Deferred policy acquisition costs....       7,822         8,423
Loss reserves........................      (8,119)      (11,688)
Unrealized appreciation in
  investments........................     (21,933)       50,923
Contingency reserve..................      29,029         4,473
Other ...............................      (4,521)       (6,700)
                                      -----------    -----------

Net deferred tax (asset) liability... $   (15,448)   $   28,534
                                      ===========    ===========

    At December 31, 1999, gross deferred tax assets and liabilities  amounted to
$84.8  million and $69.4  million,  respectively.  Management  believes that all
gross  deferred  tax assets at  December  31, 1999 are fully  realizable  and no
valuation reserve has been established.

    The following summarizes the components of the provision for income tax:

                           1999          1998          1997
                        -----------   -----------   -----------
                              (In thousands of dollars)
Federal:
  Current.............. $   179,423   $  171,244    $  147,983
  Deferred.............      28,874       (4,198)       (7,833)
State   ...............       2,512        2,074         1,473
                        -----------   -----------   -----------

Provision for income
  tax                   $   210,809   $  169,120    $  141,623
                        ===========   ===========   ===========

    The  Company  paid $173.1  million,  $160.6  million  and $151.1  million in
federal income tax in 1999,  1998 and 1997,  respectively.  At December 31, 1999
and 1998, the Company owned $704.1 million and $600.8 million,  respectively, of
tax and loss bonds.

    The  reconciliation of the tax provision computed at the federal tax rate of
35% to the reported provision for income tax is as follows:

                                1999          1998          1997
                            -----------   -----------   -----------
                                 (In thousands of dollars)
Tax provision computed
  at federal tax rate.....  $  238,354    $ 194,105     $ 162,881
(Decrease) increase in
  tax provision resulting
  from:
    Tax exempt
      municipal bond
      interest............     (31,851)     (28,973)      (24,926)
    Other, net............       4,306        3,988         3,668
                            -----------   -----------   -----------

Provision for income tax    $  210,809    $  169,120    $  141,623
                            ===========   ===========   ===========

    The Internal  Revenue Service has completed  examining the Company's  income
tax returns  through  1994.  The results of these  examinations  had no material
effect on the financial statements.

11. Shareholders' equity and dividend restrictions

    The Company's insurance subsidiaries are subject to statutory regulations as
to maintenance of policyholders'  surplus and payment of dividends.  The maximum
amount of dividends that the insurance  subsidiaries may pay in any twelve-month
period  without  regulatory  approval  by  the  Office  of the  Commissioner  of
Insurance of the State of Wisconsin ("OCI") is the lesser of adjusted  statutory
net  income  or 10% of  statutory  policyholders'  surplus  as of the  preceding
calendar year end. Adjusted  statutory net income is defined for this purpose to
be the greater of statutory net income,  net of realized  investment  gains, for
the calendar  year  preceding  the date of the dividend or statutory net income,
net of realized  investment  gains,  for the three calendar years  preceding the
date of the dividend less  dividends  paid within the first two of the preceding
three calendar years.  As a result of the $150 million special  dividend paid by
MGIC in 1999,  MGIC is  required  to  obtain  regulatory  approval  prior to the
payment of dividends in 2000. The other  insurance  subsidiaries  of the Company
can pay $6.3 million of dividends in 2000 without such regulatory approval.

<PAGE>

    Certain of the Company's  non-insurance  subsidiaries also have requirements
as to  maintenance  of net  worth.  These  restrictions  could  also  affect the
Company's ability to pay dividends.

    In 1999,  1998 and 1997, the Company paid dividends of $10.8 million,  $11.2
million and $11.0 million,  respectively  or $.10 per share in 1999 and 1998 and
$.095 per share in 1997.

    The principles used in determining  statutory  financial amounts differ from
generally accepted accounting  principles ("GAAP"),  primarily for the following
reasons:

     Under statutory accounting practices, mortgage guaranty insurance companies
     are required to maintain contingency loss reserves equal to 50% of premiums
     earned.  Such amounts  cannot be withdrawn for a period of ten years except
     as permitted by insurance  regulations.  Contingency  loss reserves are not
     reflected as liabilities under GAAP.

                                     twenty-seven

<PAGE>

     Under statutory  accounting  practices,  insurance policy acquisition costs
     are charged  against  operations in the year  incurred.  Under GAAP,  these
     costs are  deferred  and  amortized  as the  related  premiums  are  earned
     commensurate with the expiration of risk.

     Statutory financial  statements only include a provision for current income
     taxes  due,  and  purchases  of Tax and Loss  Bonds  are  accounted  for as
     investments.  GAAP financial  statements provide for deferred income taxes,
     and  purchases  of Tax and Loss Bonds are  recorded  as payments of current
     income taxes.

     Under statutory accounting practices, fixed maturity investments are valued
     at amortized cost. Under GAAP, those investments which the Company does not
     have the  ability  and  intent to hold to  maturity  are  considered  to be
     available for sale and are recorded at market,  with the unrealized gain or
     loss  recognized,  net of tax, as an increase or decrease to  shareholders'
     equity.

    The statutory net income,  equity and the contingency  reserve  liability of
the  insurance  subsidiaries  (excluding  the  non-insurance  companies)  are as
follows:

 Year Ended           Net                    Contingency
December 31,         Income       Equity       Reserve
--------------     -----------  ------------ ------------
                         (In thousands of dollars)
    1999           $ 296,287    $ 637,234    $  2,253,418
    1998             187,535      585,280       1,939,626
    1997             144,963      394,274       1,625,810

    The differences  between the statutory net income and equity presented above
for the  insurance  subsidiaries  and the  consolidated  net  income  and equity
presented on a GAAP basis primarily  represent the differences  between GAAP and
statutory  accounting  practices,  and the  effect  of the  treasury  shares  on
consolidated equity.

    The Company has two stock  option plans which  permit  certain  officers and
employees to purchase common stock at specified prices. A summary of activity in
the stock option plans during 1997, 1998 and 1999 is as follows:

                                    Average         Shares
                                    Exercise      Subject to
                                     Price          Option
                                   -----------   -------------
Outstanding, December 31, 1996...  $    10.40       2,604,626

   Granted.......................       37.04       1,592,000
   Exercised.....................        9.08        (532,332)
   Canceled......................       31.19         (29,420)
                                   -----------     -----------

Outstanding, December 31, 1997...       22.09       3,634,874

   Granted.......................       62.28         109,500
   Exercised.....................       10.99        (478,848)
   Canceled......................       33.99         (70,002)
                                   -----------     -----------

Outstanding, December 31, 1998...       24.87       3,195,524

   Granted.......................       42.29         791,750
   Exercised.....................        8.74        (413,930)
   Canceled......................       45.94         (17,200)
                                   -----------     -----------

Outstanding, December 31, 1999...  $    30.52       3,556,144
                                   ===========     ===========

<PAGE>

    The exercise price of the options  granted in 1997,  1998 and 1999 was equal
to the  market  value  of the  stock  on the  date of  grant.  The  options  are
exercisable  between one and ten years after the date of grant.  At December 31,
1999,  2,895,028  shares were  available for future grant under the stock option
plans.

    The Company adopted the disclosure-only provisions of Statement of Financial
Accounting  Standards No. 123,  Accounting for Stock-Based  Compensation  ("SFAS
123").  Had  compensation  cost  for  the  Company's  stock  option  plans  been
determined  based on the fair value method  described by SFAS 123, the Company's
net  income and  earnings  per share  would  have been  reduced to the pro forma
amounts indicated below (in thousands, except per share data):

                               Year Ended December 31,
                        --------------------------------------
                           1999         1998          1997
                        -----------   ----------   -----------
Net income              $  464,793    $ 381,689    $  320,416

Earnings per share:
   Basic                $     4.30    $    3.40    $     2.75
   Diluted              $     4.25    $    3.36    $     2.72

    The fair  value of these  options  was  estimated  at grant  date  using the
Black-Scholes   option  pricing  model  with  the  following   weighted  average
assumptions for each year:


                                     twenty-eight

<PAGE>

                                Year Ended December 31,
                          -------------------------------------
                             1999         1998         1997
                          -----------  -----------  -----------
Risk free interest rate     6.00%        6.37%        6.44%
Expected life..........   6.38 years   6.82 years   6.88 years
Expected volatility....     29.72%       27.98%       28.07%
Expected dividend yield     0.17%        0.17%        0.16%

    The  following  is a summary of stock  options  outstanding  at December 31,
1999:

                     Options Outstanding            Options Exercisable
                 -----------------------------     --------------------
                            Remaining    Average             Average
Exercise                    Average      Exercise            Exercise
Price Range       Shares    Life(yrs.)    Price     Shares     Price
---------------  ---------  ----------   --------  ---------  ---------
$2.50-$3.45       356,000      1.0         $3.44     356,000    $  3.44

$9.63-$20.88      815,260      3.9         15.36     810,060      15.35

$26.69-$46.06   2,264,984      8.0         38.40     528,254      36.11

$60.25-$68.63     119,900      8.7         65.21      26,890      65.01
                 ---------  ----------   --------  ---------   ---------

Total           3,556,144      6.4        $30.52   1,721,204    $ 20.03
                =========    =========   ========  =========   =========

    At December 31, 1998 and 1997, option shares of 1,751,725 and 1,540,076 were
exercisable at an average exercise price of $14.01 and $8.56, respectively.  The
Company  also  granted an  immaterial  amount of equity  instruments  other than
options during 1998 and 1999.

    On June 2,  1997 the  Company  effected  a  two-for-one  stock  split of the
Company's  common  stock in the form of a 100%  stock  dividend.  Per  share and
certain equity amounts set forth in the  accompanying  financial  statements and
notes have been adjusted to take into account the stock split.

    The Company adopted a Shareholder  Rights Plan on July 22, 1999. Under terms
of the plan, on August 9, 1999, Common Share Purchase Rights were distributed as
a dividend at the rate of one Common Share Purchase  Right for each  outstanding
share of the Company's  Common Stock.  The  "Distribution  Date" occurs ten days
after an  announcement  that a person  has  acquired  15  percent or more of the
Company's  Common  Stock  (the date on which such an  acquisition  occurs is the
"Shares  Acquisition  Date" and a person  who makes  such an  acquisition  is an
"Acquiring  Person"),  or ten business days after a person announces or begins a
tender offer in which  consummation of such offer would result in ownership by a
person of 15 percent or more of the Common Stock. The Rights are not exercisable
until the Distribution  Date. Each Right will initially entitle  shareholders to
buy one-half of one share of the Company's  Common Stock at a Purchase  Price of
$225 per full share (equivalent to $112.50 for each one-half share),  subject to
adjustment. If there is an Acquiring Person, then each Right (subject to certain
limitations)  will entitle its holder to purchase,  at the Rights'  then-current
Purchase  Price,  a number of shares of Common Stock of the Company (or if after
the Shares Acquisition Date, the Company is acquired in a business  combination,
common shares of the acquiror)  having a market value at the time equal to twice
the  Purchase  Price.  The  Rights  will  expire on July 22,  2009,  subject  to
extension.  The Rights are  redeemable at a price of $.001 per Right at any time
prior to the time a person  becomes an  Acquiring  Person.  Other  than  certain
amendments,  the Board of Directors may amend the Rights in any respect  without
the consent of the holders of the Rights.

12. Leases

    The Company leases certain office space as well as data processing equipment
and autos  under  operating  leases  that  expire  during the next seven  years.
Generally, all rental payments are fixed.

<PAGE>

    Total rental expense under operating  leases was $5.5 million,  $5.4 million
and $5.3 million in 1999, 1998 and 1997, respectively.

    At December 31, 1999, minimum future operating lease payments are as follows
(in thousands of dollars):

     2000........................... $  4,072
     2001...........................    3,324
     2002...........................    2,158
     2003...........................    1,056
     2004...........................      403
     2005 and thereafter............      387
                                     --------

          Total..................... $ 11,400
                                     ========

13.    Contingencies

    The Company is involved in litigation in the ordinary course of business. In
the opinion of management,  the ultimate disposition of this litigation

                                  twenty-nine


<PAGE>

                               Notes (continued)


will not  have a  material  adverse  effect  on the  financial  position  of the
Company.

    In  addition,  on December 17,  1999,  a class  action  complaint  was filed
against MGIC in Federal  District  Court for the  Southern  District of Georgia,
Augusta  division,  alleging  that  MGIC  violated  the Real  Estate  Settlement
Procedures Act by entering into various transactions with lenders (including GSE
pool insurance,  captive mortgage  reinsurance and contract  underwriting)  that
were not properly priced, in return for the referral of mortgage  insurance.  On
December  24,  1999,  the  Company  issued a press  release  saying that it will
aggressively  defend  against  this  lawsuit  and in due course  will answer the
complaint and deny liability.




                                     thirty

<PAGE>

 
                      Report of Independent Accountants



To the Board of Directors & Shareholders of
MGIC Investment Corporation

    In our opinion, the accompanying  consolidated balance sheet and the related
consolidated statements of operations, of shareholders' equity and of cash flows
present  fairly,  in all  material  respects,  the  financial  position  of MGIC
Investment Corporation and Subsidiaries (the "Company") at December 31, 1999 and
1998,  and the results of their  operations and their cash flows for each of the
three years in the period ended December 31, 1999, in conformity with accounting
principles  generally accepted in the United States.  These financial statements
are the  responsibility of the Company's  management;  our  responsibility is to
express  an  opinion  on these  financial  statements  based on our  audits.  We
conducted our audits of these  statements in accordance with auditing  standards
generally accepted in the United States,  which require that we plan and perform
the audit to obtain reasonable  assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence  supporting the amounts and  disclosures  in the financial  statements,
assessing the  accounting  principles  used and  significant  estimates  made by
management,  and evaluating the overall  financial  statement  presentation.  We
believe  that our audits  provide a reasonable  basis for the opinion  expressed
above.


/s/ PricewaterhouseCoopers LLP
Milwaukee, Wisconsin

January 12, 2000



                                   thirty-one


<PAGE>

                       Unaudited quarterly financial data

<TABLE>
<CAPTION>
                                                                            Quarter                                     1999
                                                 ---------------------------------------------------------------
                       1999                         First            Second           Third           Fourth            Year
----------------------------------------------   -------------    -------------    -------------   -------------    -------------
                                                                (In thousands of dollars, except per share data)

<S>                                              <C>              <C>              <C>             <C>              <C>         
Net premiums written...........................  $    184,011     $    196,374     $    207,582    $    204,378     $    792,345
Net premiums earned............................       193,981          194,766          200,042         203,792          792,581
Investment income, net of expenses.............        36,915           38,627           39,303          38,226          153,071
Losses incurred, net...........................        44,232           30,941           19,533           2,490           97,196
Underwriting and other expenses................        53,233           51,949           48,289          47,308          200,779
Net income.....................................       100,418          112,934          122,909         133,940          470,201
Earnings per share (a):
   Basic.......................................           .92             1.04             1.13            1.27             4.35
   Diluted.....................................           .91             1.02             1.11            1.25             4.30

<CAPTION>
                                                                            Quarter                                     1998
                                                 ---------------------------------------------------------------
                       1998                         First            Second           Third           Fourth            Year
----------------------------------------------   -------------    -------------    -------------   -------------    -------------
                                                                (In thousands of dollars, except per share data)

<S>                                              <C>              <C>              <C>             <C>              <C>         
Net premiums written...........................  $    176,487     $    186,663     $    190,567    $    195,444     $    749,161
Net premiums earned............................       189,821          189,248          191,066         193,149          763,284
Investment income, net of expenses.............        34,389           35,325           36,461          36,844          143,019
Losses incurred, net...........................        59,438           52,514           51,487          47,915          211,354
Underwriting and other expenses................        45,158           45,532           46,498          52,843          190,031
Net income.....................................        94,047           95,212           96,492          99,714          385,465
Earnings per share (a):
   Basic.......................................           .83              .83              .87             .91             3.44
   Diluted.....................................           .81              .82              .86             .91             3.39

(a) Due to the use of weighted average shares  outstanding when calculating  earnings per share, the sum of the quarterly per
    share data may not equal the per share data for the year.

</TABLE>



                                                            thirty-two

<PAGE>

                            Shareholder Information


MGIC Stock
----------
MGIC  Investment  Corporation  Common  Stock is  listed  on the New  York  Stock
Exchange  under the symbol MTG. At December  31, 1999,  105,798,034  shares were
outstanding.  The  following  table sets forth for 1998 and 1999 by quarter  the
high and low sales  prices of the Common  Stock on the New York  Stock  Exchange
Composite Tape.

                      1998                      1999
            -------------------------  ------------------------
Quarters       High         Low           High         Low

1st         $  74.5000  $  62.0000     $ 45.625    $  30.125
2nd            69.0000     55.3750       51.625       34.750
3rd            65.4375     36.8750       56.750       40.250
4th            48.2500     24.2500       62.750       46.500

In 1998 and 1999 the Company declared and paid the following cash dividends:

                  1998                1999
            -----------------   ------------------
Quarters
1st           $   .025             $   .025
2nd               .025                 .025
3rd               .025                 .025
4th               .025                 .025
              =============        ============
              $   .100             $   .100
              =============        ============

As of  February  14,  2000,  the number of  shareholders  of record was 313.  In
addition,  there were  approximately  24,900 beneficial owners of shares held by
brokers and fiduciaries.






                                                                      EXHIBIT 21
                                                                      ----------

                           MGIC INVESTMENT CORPORATION

               DIRECT AND INDIRECT SUBSIDIARIES AND JOINT VENTURES
                        OF MGIC INVESTMENT CORPORATION/1


      1.     MGIC Assurance Corporation

      2.     MGIC Credit Assurance Corporation

      3.     MGIC Insurance Services Corporation

      4.     MGIC Investor Services Corporation

      5.     MGIC Mortgage Insurance Corporation

      6.     MGIC Mortgage Marketing Corporation

      7.     MGIC Mortgage Reinsurance Corporation

      8.     MGIC Mortgage Securities Corporation

      9.     MGIC Reinsurance Corporation

     10.     MGIC Reinsurance Corporation of Wisconsin

     11.     MGIC Residential Reinsurance Corporation

     12.     MGIC Surety Corporation

     13.     Mortgage Guaranty Insurance Corporation

     14.     Wisconsin Mortgage Assurance Corporation

     15.     Credit-Based Asset Servicing and Securitization LLC/2

     16.     Sherman Financial Group LLC/2

     17.     Customers Forever LLC/3


---------------------
1    Except as otherwise  noted in Footnotes 2 and 3, all  companies  listed are
     100%  directly  or  indirectly   owned  by  the   registrant  and  all  are
     incorporated in Wisconsin.
2    Less than 50% owned and organized under Delaware law.
3    Less than 50% owned and organized under Wisconsin law.







                                                                      EXHIBIT 23
                                                                      ----------


                       CONSENT OF INDEPENDENT ACCOUNTANTS
                       ----------------------------------

We  hereby  consent  to the  incorporation  by  reference  in  the  Registration
Statements  listed  below of MGIC  Investment  Corporation  of our report  dated
January 12, 2000 relating to the financial statements, which appears in the 1999
Annual Report to  Shareholders,  which is  incorporated in this Annual Report on
Form 10-K. We also consent to the incorporation by reference of our report dated
January 12, 2000 relating to the financial statement schedules, which appears in
this Form 10-K.

     1.   Registration Statement on Form S-8 (Registration No. 33-42120)

     2.   Registration Statement on Form S-8 (Registration No. 33-43543)




PRICEWATERHOUSECOOPERS LLP


Milwaukee, Wisconsin
March 24, 2000







<TABLE> <S> <C>

<ARTICLE>                                           7
<LEGEND>
     THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM 
FORM 10-K FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1999 AND IS 
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER>                                   1,000
       
<S>                             <C>
<PERIOD-TYPE>                   12-MOS
<FISCAL-YEAR-END>                              DEC-31-1999
<PERIOD-END>                                   DEC-31-1999
<DEBT-HELD-FOR-SALE>                             2666562
<DEBT-CARRYING-VALUE>                                  0
<DEBT-MARKET-VALUE>                                    0
<EQUITIES>                                         15426
<MORTGAGE>                                             0
<REAL-ESTATE>                                          0
<TOTAL-INVEST>                                   2789734
<CASH>                                            110068
<RECOVER-REINSURE>                                     0
<DEFERRED-ACQUISITION>                             22350
<TOTAL-ASSETS>                                   3104393
<POLICY-LOSSES>                                   641978
<UNEARNED-PREMIUMS>                               181378
<POLICY-OTHER>                                         0
<POLICY-HOLDER-FUNDS>                                  0
<NOTES-PAYABLE>                                   425000
<PREFERRED-MANDATORY>                                  0
<PREFERRED>                                            0
<COMMON>                                          121111
<OTHER-SE>                                       1654878
<TOTAL-LIABILITY-AND-EQUITY>                     3104393
<PREMIUMS>                                        792581
<INVESTMENT-INCOME>                               153071
<INVESTMENT-GAINS>                                  3406
<OTHER-INCOME>                                     47697
<BENEFITS>                                         97196
<UNDERWRITING-AMORTIZATION>                         1715
<UNDERWRITING-OTHER>                              199064
<INCOME-PRETAX>                                   681010
<INCOME-TAX>                                      210809
<INCOME-CONTINUING>                               470201
<DISCONTINUED>                                         0
<EXTRAORDINARY>                                        0
<CHANGES>                                              0
<NET-INCOME>                                      470201
<EPS-BASIC>                                       4.35
<EPS-DILUTED>                                       4.30
<RESERVE-OPEN>                                         0
<PROVISION-CURRENT>                                    0
<PROVISION-PRIOR>                                      0
<PAYMENTS-CURRENT>                                     0
<PAYMENTS-PRIOR>                                       0
<RESERVE-CLOSE>                                        0
<CUMULATIVE-DEFICIENCY>                                0
        

</TABLE>