Document
false0000876437 0000876437 2020-02-04 2020-02-04


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
 
 
Date of Report (Date of Earliest Event Reported):
 
February 4, 2020
MGIC Investment Corporation
__________________________________________
(Exact name of registrant as specified in its charter)
Wisconsin
1-10816
39-1486475
__________________________________
(State or other jurisdiction of incorporation)
_____________________
(Commission File Number)
____________________________
(I.R.S. Employer Identification No.)
  
 
 
 
250 E. Kilbourn Avenue
Milwaukee,
Wisconsin
53202
________________________________
(Address of principal executive offices)
___________
(Zip Code)
Registrant’s telephone number, including area code:
 (414)
347-6480
 
Not Applicable
 
 
Former name or former address, if changed since last report
 

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Trading Symbol
 
Name of each exchange on which registered
Common stock
 
MTG
 
New York Stock Exchange
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]





Item 2.02 Results of Operations and Financial Condition.
The Company issued a press release on February 4, 2020 announcing its results of operations for the quarter ended and year ended December 31, 2019 and certain other information. The press release is furnished as Exhibit 99.

Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Pursuant to General Instruction B.2 to Form 8-K, the Company's February 4, 2020 press release is furnished as Exhibit 99 and is not filed.






Exhibit Index
 
 
 
Exhibit No.
 
Description
 
 
 
 
Press Release dated February 4, 2020. (Pursuant to General Instruction B.2 to Form 8-K, this press release is furnished and is not filed.)
104
 
Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document).








SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
MGIC INVESTMENT CORPORATION
 
 
 
 
 
 
Date:
February 4, 2020
By: \s\ Julie K. Sperber
 
 
 
 
 
Julie K. Sperber
 
 
Vice President, Controller and Chief Accounting Officer



Exhibit

Exhibit 99


https://cdn.kscope.io/646af95a42501bf7e4613db10047ec85-mgiclogoa06.jpg
MGIC Investment Corporation Reports Fourth Quarter 2019 Results and Announces $300 Million Share Repurchase Authorization

Fourth Quarter 2019 Net Income of $177.1 million or $0.49 per Diluted Share
Fourth Quarter 2019 Adjusted Net Operating Income (Non-GAAP) of $176.1 million or $0.49 per Diluted Share
Full Year 2019 Earnings of $673.8 million or $1.85 per Diluted Share
Full Year 2019 Adjusted Net Operating Income (Non-GAAP) of $669.7 million or $1.84 per Diluted Share

MILWAUKEE (February 4, 2020) - MGIC Investment Corporation (NYSE: MTG) today reported operating and financial results for the fourth quarter of 2019. Net income for the quarter was $177.1 million, or $0.49 per diluted share, compared with net income of $157.7 million, or $0.43 per diluted share, for the fourth quarter of 2018. Net Income for the full year of 2019 was $673.8 million, or $1.85 per diluted share, compared to $670.1 million, or $1.78 per diluted share, for the full year of 2018.
    
Adjusted net operating income for the fourth quarter of 2019 was $176.1 million, or $0.49 per diluted share, compared with $154.0 million, or $0.42 per diluted share, for the fourth quarter of 2018. We present the non-GAAP financial measure "Adjusted net operating income" to increase the comparability between periods of our financial results. Adjusted net operating income for the full year of 2019 was $669.7 million, or $1.84 per diluted share, compared to $668.7 million, or $1.78 per diluted share, for 2018. See “Use of Non-GAAP financial measures" below.

    Tim Mattke, CEO of MTG and Mortgage Guaranty Insurance Corporation ("MGIC") said, "I am pleased to report that the solid financial results of the fourth quarter capped a strong 2019 as we continued to execute on our strategies and focus on long term success. For 2019, compared to 2018, despite lower persistency our insurance in force increased more than 6%, we wrote nearly 25% more new insurance, and investment income increased. The credit performance for the new business written remains outstanding, the legacy book continued to decrease in size and contribute fewer delinquencies, and we maintained a low expense level." Mattke continued, "In 2019 we repurchased $114 million of our common stock outstanding, established a quarterly common stock dividend mid-year that distributed a total of $42 million, continued to use quota share and excess of loss reinsurance to reduce potential future earnings volatility from credit losses and enhance our returns, decreased our debt ratio, continued our positive credit ratings trajectory, and increased dividends from MGIC to our holding company to $280 million."

Mattke stated, "Reflecting our strong capital position, the Office of the Commissioner of Insurance for the State of Wisconsin approved our $70 million quarterly dividend and an additional $320 million special dividend from MGIC to our holding company, and our Board approved the repurchase of up to an additional $300 million of our common stock through the end of 2021." Mattke further added "I am excited about our ability to provide credit enhancement and low down payment solutions to lenders, GSEs and borrowers, and to deliver meaningful returns to our shareholders in 2020. We expect that our insurance in force will grow modestly, and that the number of new mortgage delinquency notices received and the amount of claims paid will continue to decline in 2020."


Investor Relations: Michael J. Zimmerman | (414) 347-6596 | mike_zimmerman@mgic.com




Fourth Quarter Summary
New insurance written of $19.3 billion, compared to $12.2 billion in the fourth quarter of 2018.
Insurance in force of $222.3 billion at December 31, 2019 increased by 2% during the quarter and 6% compared to December 31, 2018.
Primary delinquency inventory of 30,028 loans at December 31, 2019 decreased from 32,898 loans at December 31, 2018. Our primary delinquency inventory declined 9% year-over-year.
Insurance written in 2008 and before accounted for approximately 12% of the December 31, 2019 primary risk in force but accounted for 60% of the new primary delinquency notices received in the quarter.
The percentage of primary loans that were delinquent at December 31, 2019 was 2.78%, compared to 3.11% at December 31, 2018, and 4.55% at December 31, 2017. The percentage of flow primary loans that were delinquent at December 31, 2019 was 2.23%, compared to 2.47% at December 31, 2018, and 3.70% at December 31, 2017.
Persistency, or the percentage of insurance remaining in force from one year prior, was 75.8% at December 31, 2019, compared with 81.7% at December 31, 2018 and 80.1% at December 31, 2017.
The loss ratio for the fourth quarter of 2019 was 8.9%, compared to 12.7% for the third quarter of 2019 and 11.3% for the fourth quarter of 2018.
The underwriting expense ratio associated with our insurance operations for the fourth quarter of 2019 was 19.6%, compared to 17.7% for the third quarter of 2019 and 19.1% for the fourth quarter of 2018.
Net premium yield was 48.4 basis points in the fourth quarter of 2019, compared to 49.6 basis points for the third quarter of 2019 and 47.3 basis points for the fourth quarter of 2018.
MGIC paid a dividend of $70 million to our holding company during the fourth quarter of 2019.
MGIC Investment Corporation paid a $0.06 dividend per common share to shareholders during the fourth quarter of 2019.
1.4 million shares of common stock were repurchased at an average cost per share of $14.26.
Book value per common share outstanding increased by 4% during the quarter to $12.41.
_______________

First Quarter 2020 Activities

Declared a $0.06 dividend per common share
Received authorization to repurchase $300 million of our common stock through the end of 2021
Received appropriate approvals to pay a dividend of $320 million (“special dividend”) from MGIC to the holding company
Received appropriate approvals to pay a dividend of $70 million ("quarterly dividend") from MGIC to the holding company

Revenues

Total revenues for the fourth quarter of 2019 were $311.6 million, compared to $285.6 million in the fourth quarter last year. Net premiums written for the quarter were $254.0 million, compared to $248.0 million for the same period last year. Net premiums earned for the quarter were $266.3 million, compared to $245.7 million for the same period last year. The increase was due to higher average insurance in force and an increase in premiums from single premium policy cancellations, partially offset by the effect of lower premium rates. Investment income for the fourth quarter increased to $41.3 million, from $38.3 million for the same period last year, resulting from an increase in the consolidated investment portfolio.
    






Losses and expenses
    
Losses incurred    
Losses incurred in the fourth quarter of 2019 were $23.7 million, compared to $27.7 million in the fourth quarter of 2018. During the fourth quarter of 2019 there was a $24 million reduction in losses incurred due to positive development on our primary loss reserves, before reinsurance, for previously received delinquency notices, compared to a reduction of $22 million in the fourth quarter of 2018. Losses incurred in the quarter associated with delinquency notices received in the quarter reflect a lower estimated claim rate when compared to the same period of last year.

Underwriting and other expenses
Net underwriting and other expenses were $52.3 million in the fourth quarter of 2019, compared to $50.0 million in the same period last year.

Provision for income taxes
The effective income tax rate was 20.5% in the fourth quarter of 2019, compared to 19.0% in the fourth quarter of 2018. The lower rate in the fourth quarter of 2018 was primarily due to a benefit recorded for the settlement of our IRS litigation.

Capital

Total shareholders' equity was $4.3 billion and outstanding principal on borrowings was $837 million as of December 31, 2019.
MGIC's PMIERs Available Assets totaled $4.6 billion, or $1.2 billion above its Minimum Required Assets as of December 31, 2019.


Other Balance Sheet and Liquidity Metrics

Total assets were $6.2 billion as of December 31, 2019, compared to $5.7 billion as of December 31, 2018, and $5.6 billion as of December 31, 2017.
The fair value of our investment portfolio, cash and cash equivalents was $5.9 billion as of December 31, 2019, compared to $5.3 billion as of December 31, 2018, and $5.1 billion as of December 31, 2017.
Investments, cash and cash equivalents at the holding company were $325 million as of December 31, 2019, compared to $248 million as of December 31, 2018, and $216 million as of December 31, 2017.






Conference Call and Webcast Details
MGIC Investment Corporation will hold a conference call today, February 4, 2020, at 10 a.m. ET to allow securities analysts and shareholders the opportunity to hear management discuss the company’s quarterly results. The conference call number is 1-855-493-1443. The call is being webcast and can be accessed at the company's website at http://mtg.mgic.com/. A replay of the webcast will be available on the company’s website through March 4, 2020 under “Newsroom.”
About MGIC
MGIC (www.mgic.com), the principal subsidiary of MGIC Investment Corporation, serves lenders throughout the United States, Puerto Rico, and other locations helping families achieve homeownership sooner by making affordable low-down-payment mortgages a reality. At December 31, 2019, MGIC had $222.3 billion of primary insurance in force covering over one million mortgages.

This press release, which includes certain additional statistical and other information, including non-GAAP financial information, and a supplement that contains various portfolio statistics are both available on the Company's website at https://mtg.mgic.com/ under “Newsroom.”
    
From time to time MGIC Investment Corporation releases important information via postings on its corporate website, and via postings on MGIC’s website for information related to underwriting and pricing, and intends to continue to do so in the future. Such postings include corrections of previous disclosures, and may be made without any other disclosure. Investors and other interested parties are encouraged to enroll to receive automatic email alerts and Really Simple Syndication (RSS) feeds regarding new postings. Enrollment information for MGIC Investment Corporation alerts can be found at https://mtg.mgic.com/shareholder-services/email-alerts. For information about our underwriting and rate changes, see https://www.mgic.com/underwriting.
Safe Harbor Statement
Forward Looking Statements and Risk Factors:
Our actual results could be affected by the risk factors below. These risk factors should be reviewed in connection with this press release and our periodic reports to the Securities and Exchange Commission (“SEC”). These risk factors may also cause actual results to differ materially from the results contemplated by forward looking statements that we may make. Forward looking statements consist of statements which relate to matters other than historical fact, including matters that inherently refer to future events. Among others, statements that include words such as “believe,” “anticipate,” “will” or “expect,” or words of similar import, are forward looking statements. We are not undertaking any obligation to update any forward looking statements or other statements we may make even though these statements may be affected by events or circumstances occurring after the forward looking statements or other statements were made. No investor should rely on the fact that such statements are current at any time other than the time at which this press release was delivered for dissemination to the public.

In addition, the current period financial results included in this press release may be affected by additional information that arises prior to the filing of our Form 10-K for the year ended December 31, 2019.

While we communicate with security analysts from time to time, it is against our policy to disclose to them any material non-public information or other confidential information. Accordingly, investors should not assume that we agree with any statement or report issued by any analyst irrespective of the content of the statement or report, and such reports are not our responsibility.







Use of Non-GAAP financial measures
We believe that use of the Non-GAAP measures of adjusted pre-tax operating income (loss), adjusted net operating income (loss) and adjusted net operating income (loss) per diluted share facilitate the evaluation of the company's core financial performance thereby providing relevant information to investors. These measures are not recognized in accordance with accounting principles generally accepted in the United States of America (GAAP) and should not be viewed as alternatives to GAAP measures of performance.

Adjusted pre-tax operating income (loss) is defined as GAAP income (loss) before tax, excluding the effects of net realized investment gains (losses), gain (loss) on debt extinguishment, net impairment losses recognized in income (loss) and infrequent or unusual non-operating items where applicable.
    
Adjusted net operating income (loss) is defined as GAAP net income (loss) excluding the after-tax effects of net realized investment gains (losses), gain (loss) on debt extinguishment, net impairment losses recognized in income (loss), and infrequent or unusual non-operating items where applicable. The amounts of adjustments to components of pre-tax operating income (loss) are tax effected using a federal statutory tax rate of 21%.
    
Adjusted net operating income (loss) per diluted share is calculated in a manner consistent with the accounting standard regarding earnings per share by dividing (i) adjusted net operating income (loss) after making adjustments for interest expense on convertible debt, whenever the impact is dilutive, by (ii) diluted weighted average common shares outstanding, which reflects share dilution from unvested restricted stock units and from convertible debt when dilutive under the "if-converted" method.

Although adjusted pre-tax operating income (loss) and adjusted net operating income (loss) exclude certain items that have occurred in the past and are expected to occur in the future, the excluded items represent items that are: (1) not viewed as part of the operating performance of our primary activities; or (2) impacted by both discretionary and other economic or regulatory factors and are not necessarily indicative of operating trends, or both. These adjustments, along with the reasons for their treatment, are described below. Trends in the profitability of our fundamental operating activities can be more clearly identified without the fluctuations of these adjustments. Other companies may calculate these measures differently. Therefore, their measures may not be comparable to those used by us.

(1)
Net realized investment gains (losses). The recognition of net realized investment gains or losses can vary significantly across periods as the timing of individual securities sales is highly discretionary and is influenced by such factors as market opportunities, our tax and capital profile, and overall market cycles.
(2)
Gains and losses on debt extinguishment. Gains and losses on debt extinguishment result from discretionary activities that are undertaken to enhance our capital position, improve our debt profile, and/or reduce potential dilution from our outstanding convertible debt.
(3)
Net impairment losses recognized in earnings. The recognition of net impairment losses on investments can vary significantly in both size and timing, depending on market credit cycles, individual issuer performance, and general economic conditions.
(4)
Infrequent or unusual non-operating items. Our 2018 income tax expense includes amounts related to our IRS dispute and is related to past transactions which are non-recurring in nature and are not part of our primary operating activities.








MGIC INVESTMENT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
 
 
 
 
 
 
 
 
 
 
 
Three months ended December 31,
 
Twelve months ended December 31,
(In thousands, except per share data)
 
2019
 
2018
 
2019
 
2018
 
 
 
 
 
 
 
 
 
Net premiums written
 
$
254,015

 
$
248,037

 
$
1,001,308

 
$
992,262

Revenues
 
 
 
 
 
 
 
 
Net premiums earned
 
$
266,267

 
$
245,665

 
$
1,030,988

 
$
975,162

Net investment income
 
41,322

 
38,328

 
167,045

 
141,331

Net realized investment gains (losses)
 
1,320

 
(241
)
 
5,306

 
(1,353
)
Other revenue
 
2,717

 
1,881

 
10,638

 
8,708

Total revenues
 
311,626

 
285,633

 
1,213,977

 
1,123,848

Losses and expenses
 
 
 
 
 
 
 
 
Losses incurred, net
 
23,690

 
27,685

 
118,575

 
36,562

Underwriting and other expenses, net
 
52,293

 
49,983

 
194,769

 
190,143

Interest expense
 
12,934

 
13,256

 
52,656

 
52,993

Total losses and expenses
 
88,917

 
90,924

 
366,000

 
279,698

Income before tax
 
222,709

 
194,709

 
847,977

 
844,150

Provision for income taxes
 
45,599

 
36,963

 
174,214

 
174,053

Net income
 
$
177,110

 
$
157,746

 
$
673,763

 
$
670,097

Net income per diluted share
 
$
0.49

 
$
0.43

 
$
1.85

 
$
1.78









MGIC INVESTMENT CORPORATION AND SUBSIDIARIES
EARNINGS PER SHARE (UNAUDITED)
 
 
 
 
 
 
 
 
 
 
 
Three months ended December 31,
 
Year ended December 31,
(In thousands, except per share data)
 
2019
 
2018
 
2019
 
2018
Net income
 
$
177,110

 
$
157,746

 
$
673,763

 
$
670,097

Interest expense, net of tax:
 
 
 
 
 
 
 
 
9% Convertible Junior Subordinated Debentures due 2063
 
4,566

 
4,566

 
18,264

 
18,264

Diluted net income available to common shareholders
 
$
181,676

 
$
162,312

 
$
692,027

 
$
688,361

 
 
 
 
 
 
 
 
 
Weighted average shares - basic
 
348,538

 
360,111

 
352,827

 
365,406

Effect of dilutive securities:
 
 
 
 
 
 
 
 
Unvested restricted stock units
 
2,377

 
1,937

 
2,069

 
1,644

9% Convertible Junior Subordinated Debentures due 2063
 
19,028

 
19,028

 
19,028

 
19,028

Weighted average shares - diluted
 
369,943

 
381,076

 
373,924

 
386,078

Net income per diluted share
 
$
0.49

 
$
0.43

 
$
1.85

 
$
1.78








NON-GAAP RECONCILIATIONS
Reconciliation of Income before tax / Net income to Adjusted pre-tax operating income / Adjusted net operating income
 
 
 
Three months ended December 31,
 
 
 
2019
 
2018
 
(In thousands, except per share amounts)
 
Pre-tax
 
Tax Effect
 
Net
(after-tax)
 
Pre-tax
 
Tax Effect
 
Net
(after-tax)
 
Income before tax / Net income
 
$
222,709

 
$
45,599

 
$
177,110

 
$
194,709

 
$
36,963

 
$
157,746

 
Adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
Additional income tax benefit related to IRS litigation
 

 

 

 

 
3,939

 
(3,939
)
 
Net realized investment (gains) losses
 
(1,336
)
 
(281
)
 
(1,055
)
 
241

 
51

 
190

 
Adjusted pre-tax operating income / Adjusted net operating income
 
$
221,373

 
$
45,318

 
$
176,055

 
$
194,950

 
$
40,953

 
$
153,997

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of Net income per diluted share to Adjusted net operating income per diluted share
 
Weighted average shares - diluted
 
 
 
 
 
369,943

 
 
 
 
 
381,076

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income per diluted share
 
 
 
 
 
$
0.49

 
 
 
 
 
$
0.43

 
Additional income tax benefit related to IRS litigation
 
 
 
 
 

 
 
 
 
 
(0.01
)
 
Net realized investment (gains) losses
 
 
 
 
 

 
 
 
 
 

 
Adjusted net operating income per diluted share
 
 
 
 
 
$
0.49

 
 
 
 
 
$
0.42

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of Income before tax / Net income to Adjusted pre-tax operating income / Adjusted net operating income
 
 
 
Twelve months ended December 31,
 
 
 
2019
 
2018
 
(In thousands, except per share amounts)
 
Pre-tax
 
Tax Effect
 
Net
(after-tax)
 
Pre-tax
 
Tax Effect
 
Net
(after-tax)
 
Income before tax / Net income
 
$
847,977

 
$
174,214

 
$
673,763

 
$
844,150

 
$
174,053

 
$
670,097

 
Adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
Additional income tax benefit related to IRS litigation
 

 

 

 

 
2,462

 
(2,462
)
 
Net realized investment (gains) losses
 
(5,108
)
 
(1,073
)
 
(4,035
)
 
1,353

 
284

 
1,069

 
Adjusted pre-tax operating income / Adjusted net operating income
 
$
842,869

 
$
173,141

 
$
669,728

 
$
845,503

 
$
176,799

 
$
668,704

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of Net income per diluted share to Adjusted net operating income per diluted share
 
Weighted average shares - diluted
 
 
 
 
 
373,924

 
 
 
 
 
386,078

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income per diluted share
 
 
 
 
 
$
1.85

 
 
 
 
 
$
1.78

 
Additional income tax benefit related to IRS litigation
 
 
 
 
 

 
 
 
 
 
(0.01
)
 
Net realized investment (gains) losses
 
 
 
 
 
(0.01
)
 
 
 
 
 

 
Adjusted net operating income per diluted share
 
 
 
 
 
$
1.84

 
 
 
 
 
$
1.78

(1
)
(1) For the twelve months ended December 31, 2018, the Reconciliation of Net income per diluted share to Adjusted net operating income per diluted share does not foot due to rounding of the adjustments.
 






MGIC INVESTMENT CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

 
 
 
 
 
 
 
 
 
December 31,
 
December 31,
 
December 31,
(In thousands, except per share data)
 
2019
 
2018
 
2017
ASSETS
 
 
 
 
 
 
Investments (1)
 
$
5,758,320

 
$
5,159,019

 
$
4,990,561

Cash and cash equivalents
 
161,847

 
151,892

 
99,851

Restricted cash and cash equivalents
 
7,209

 
3,146

 

Reinsurance recoverable on loss reserves (2)
 
21,641

 
33,328

 
48,474

Home office and equipment, net
 
50,121

 
51,734

 
44,936

Deferred insurance policy acquisition costs
 
18,531

 
17,888

 
18,841

Deferred income taxes, net
 
5,742

 
69,184

 
234,381

Other assets
 
206,160

 
191,611

 
182,455

Total assets
 
$
6,229,571

 
$
5,677,802

 
$
5,619,499

 
 
 
 
 
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
Loss reserves (2)
 
$
555,334

 
$
674,019

 
$
985,635

Unearned premiums
 
380,302

 
409,985

 
392,934

Federal home loan bank advance
 
155,000

 
155,000

 
155,000

Senior notes
 
420,867

 
419,713

 
418,560

Convertible junior debentures
 
256,872

 
256,872

 
256,872

Other liabilities
 
151,962

 
180,322

 
255,972

Total liabilities
 
1,920,337

 
2,095,911

 
2,464,973

Shareholders' equity
 
4,309,234

 
3,581,891

 
3,154,526

Total liabilities and shareholders' equity
 
$
6,229,571

 
$
5,677,802

 
$
5,619,499

Book value per share (3)
 
$
12.41

 
$
10.08

 
$
8.51

 
 
 
 
 
 
 
(1) Investments include net unrealized gains (losses) on securities
 
$
138,285

 
$
(44,795
)
 
$
37,058

(2) Loss reserves, net of reinsurance recoverable on loss reserves
 
$
533,693

 
$
640,691

 
$
937,161

(3) Shares outstanding
 
347,308

 
355,371

 
370,567








MGIC INVESTMENT CORPORATION AND SUBSIDIARIES
 
 
 
ADDITIONAL INFORMATION - NEW INSURANCE WRITTEN
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2019
 
2018
 
Year-to-date
 
Q4
 
Q3
 
Q2
 
Q1
 
Q4
 
2019
 
2018
New primary insurance written (NIW) (billions)
$
19.3

 
$
19.1

 
$
14.9

 
$
10.1

 
$
12.2

 
$
63.4

 
$
50.5

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Monthly (including split premium plans) and annual premium plans
16.3

 
16.2

 
12.6

 
8.5

 
10.2

 
53.6

 
42.0

Single premium plans
3.0

 
2.9

 
2.3

 
1.6

 
2.0

 
9.8

 
8.5

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Direct average premium rate (bps) on NIW
 
 
 
 
 
 
 
 
 
 
 
 
 
Monthly (1)
39.0

 
42.3

 
45.6

 
49.1

 
50.2

 
43.1

 
52.8

Singles
102.7

 
112.8

 
129.6

 
141.5

 
147.0

 
118.6

 
158.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Product mix as a % of primary NIW
 
 
 
 
 
 
 
 
 
 
 
 
 
FICO < 680
3
%
 
4
%
 
6
%
 
7
%
 
8
%
 
5
%
 
7
%
>95% LTVs
9
%
 
12
%
 
16
%
 
18
%
 
17
%
 
13
%
 
16
%
>45% DTI (2)
11
%
 
12
%
 
15
%
 
18
%
 
19
%
 
14
%
 
19
%
Singles
15
%
 
15
%
 
16
%
 
16
%
 
16
%
 
16
%
 
17
%
Refinances
30
%
 
20
%
 
11
%
 
8
%
 
6
%
 
19
%
 
7
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
New primary risk written (billions)
$
4.8

 
$
4.7

 
$
3.8

 
$
2.5

 
$
3.1

 
$
15.8

 
$
12.7



(1)
Excludes loans with split and annual payments.







MGIC INVESTMENT CORPORATION AND SUBSIDIARIES
 
 
 
 
 
 
ADDITIONAL INFORMATION - INSURANCE IN FORCE and RISK IN FORCE
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2019
 
2018
 
Year-to-date
 
Q4
 
Q3
 
Q2
 
Q1
 
Q4
 
2019
 
2018
Primary Insurance In Force (IIF) (billions)
$
222.3

 
$
218.1

 
$
213.9

 
$
211.4

 
$
209.7

 
 
 
 
Total # of loans
1,079,578

 
1,075,285

 
1,065,893

 
1,059,720

 
1,058,292

 
 
 
 
Flow # of loans
1,040,667

 
1,032,936

 
1,022,157

 
1,013,291

 
1,010,944

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Premium Yield
 
 
 
 
 
 
 
 
 
 
 
 
 
Inforce portfolio yield (1)
50.3

 
51.7

 
52.2

 
52.5

 
52.7

 
51.4

 
53.1

Premium refunds
(0.6
)
 
(0.6
)
 
(0.3
)
 
(0.5
)
 
(0.5
)
 
(0.5
)
 
(0.7
)
Accelerated earnings on single premium
3.6

 
3.5

 
2.1

 
1.1

 
1.0

 
2.6

 
1.2

Total direct premium yield
53.3

 
54.6

 
54.0

 
53.1

 
53.2

 
53.5

 
53.6

Ceded premiums earned, net of profit commission and assumed premiums (2)
(4.9
)
 
(5.0
)
 
(7.5
)
 
(5.7
)
 
(5.9
)
 
(5.8
)
 
(5.4
)
Net premium yield
48.4

 
49.6

 
46.5

 
47.4

 
47.3

 
47.7

 
48.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average Loan Size of IIF (thousands)
$
205.9

 
$
202.9

 
$
200.7

 
$
199.5

 
$
198.2

 
 
 
 
Flow only
$
208.2

 
$
205.4

 
$
203.2

 
$
202.0

 
$
200.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Persistency
75.8
%
 
78.6
%
 
80.8
%
 
81.7
%
 
81.7
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Primary Risk In Force (RIF) (billions)
$
57.2

 
$
56.2

 
$
55.2

 
$
54.5

 
$
54.1

 
 
 
 
By FICO (%) (3)
 
 
 
 
 
 
 
 
 
 
 
 
 
FICO 760 & >
39
%
 
39
%
 
38
%
 
38
%
 
38
%
 
 
 
 
FICO 740-759
17
%
 
16
%
 
16
%
 
16
%
 
16
%
 
 
 
 
FICO 720-739
14
%
 
14
%
 
14
%
 
14
%
 
14
%
 
 
 
 
FICO 700-719
11
%
 
11
%
 
11
%
 
11
%
 
11
%
 
 
 
 
FICO 680-699
8
%
 
8
%
 
9
%
 
9
%
 
8
%
 
 
 
 
FICO 660-679
4
%
 
5
%
 
5
%
 
5
%
 
5
%
 
 
 
 
FICO 640-659
3
%
 
3
%
 
3
%
 
3
%
 
3
%
 
 
 
 
FICO 639 & <
4
%
 
4
%
 
4
%
 
4
%
 
5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average Coverage Ratio (RIF/IIF)
25.7
%
 
25.8
%
 
25.8
%
 
25.8
%
 
25.8
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Direct Pool RIF (millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
With aggregate loss limits
$
213

 
$
214

 
$
215

 
$
216

 
$
228

 
 
 
 
Without aggregate loss limits
$
163

 
$
173

 
$
178

 
$
186

 
$
191

 
 
 
 

(1) Total direct premiums earned, excluding accelerated premiums from premium refunds and single premium policy cancellations divided by average primary insurance in force.
(2) Ceded premiums earned, net of profit commissions and assumed premiums. Assumed premiums include our participation in GSE Credit Risk Transfer programs, of which the impact on the net premium yield was 0.2 bps in 2019 and 0.1 bps in 2018.
(3) The FICO credit score for a loan with multiple borrowers is the lowest of the borrowers’ “decision FICO scores.” A borrower’s “decision FICO score” is determined as follows: if there are three FICO scores available, the middle FICO score is used; if two FICO scores are available, the lower of the two is used; if only one FICO score is available, it is used.









MGIC INVESTMENT CORPORATION AND SUBSIDIARIES
 
ADDITIONAL INFORMATION - DELINQUENCY STATISTICS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2019
 
2018
 
 
 
Q4
 
Q3
 
Q2
 
Q1
 
Q4
 
 
Primary IIF - Delinquent Roll Forward - # of Loans
 
 
 
 
 
 
 
 
 
 
 
Beginning Delinquent Inventory
29,940

 
29,795

 
30,921

 
32,898

 
33,398

 
 
New Notices
13,694

 
14,019

 
12,915

 
13,611

 
14,097

 
 
Cures
(12,213
)
 
(12,592
)
 
(12,882
)
 
(14,348
)
 
(12,891
)
 
 
Paid claims
(922
)
 
(1,045
)
 
(1,112
)
 
(1,188
)
 
(1,304
)
 
 
Rescissions and denials
(27
)
 
(42
)
 
(47
)
 
(52
)
 
(67
)
 
 
Other items removed from inventory
(444
)
 
(195
)
 

 

 
(335
)
 
 
Ending Delinquent Inventory
30,028

 
29,940

 
29,795

 
30,921

 
32,898

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Primary IIF Delinquency Rate
2.78
%
 
2.78
%
 
2.80
%
 
2.92
%
 
3.11
%
 
 
Primary claim received inventory included in ending delinquent inventory
538

 
557

 
630

 
665

 
809

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Primary IIF - # of Delinquent Loans - Flow only
23,240

 
22,688

 
22,227

 
23,483

 
24,919

 
 
Primary IIF Delinquency Rate - Flow only
2.23
%
 
2.20
%
 
2.17
%
 
2.32
%
 
2.47
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Composition of Cures
 
 
 
 
 
 
 
 
 
 
 
Reported delinquent and cured intraquarter
4,122

 
4,397

 
3,735

 
4,884

 
4,081

 
 
Number of payments delinquent prior to cure
 
 
 
 
 
 
 
 
 
 
 
3 payments or less
5,724

 
5,631

 
6,221

 
6,506

 
5,623

 
 
4-11 payments
2,001

 
2,075

 
2,401

 
2,419

 
2,616

 
 
12 payments or more
366

 
489

 
525

 
539

 
571

 
 
Total Cures in Quarter
12,213

 
12,592

 
12,882

 
14,348

 
12,891

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Composition of Paids
 
 
 
 
 
 
 
 
 
 
 
Number of payments delinquent at time of claim payment
 
 
 
 
 
 
 
 
 
 
 
3 payments or less
2

 

 
4

 
2

 
6

 
 
4-11 payments
83

 
104

 
121

 
149

 
125

 
 
12 payments or more
837

 
941

 
987

 
1,037

 
1,173

 
 
Total Paids in Quarter
922

 
1,045

 
1,112

 
1,188

 
1,304

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Aging of Primary Delinquent Inventory
 
 
 
 
 
 
 
 
 
 
 
Consecutive months delinquent
 
 
 
 
 
 
 
 
 
 
 
      3 months or less
9,447

32
%
9,462

32
%
8,970

30
%
8,568

28
%
9,829

30
%
 
      4-11 months
9,664

32
%
9,082

30
%
8,951

30
%
9,997

32
%
9,655

29
%
 
      12 months or more
10,917

36
%
11,396

38
%
11,874

40
%
12,356

40
%
13,414

41
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of payments delinquent
 
 
 
 
 
 
 
 
 
 
 
      3 payments or less
14,895

50
%
14,690

49
%
14,071

47
%
14,129

46
%
15,519

47
%
 
      4-11 payments
8,519

28
%
8,225

27
%
8,194

28
%
8,833

28
%
8,842

27
%
 
      12 payments or
      more
6,614

22
%
7,025

24
%
7,530

25
%
7,959

26
%
8,537

26
%
 






MGIC INVESTMENT CORPORATION AND SUBSIDIARIES
 
 
ADDITIONAL INFORMATION - RESERVES and CLAIMS PAID
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2019
 
2018
 
Year-to-date
 
 
 
Q4
 
Q3
 
Q2
 
Q1
 
Q4
 
2019
 
2018
 
 
Reserves (millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Primary Direct Loss Reserves
$
546

 
$
591

 
$
610

 
$
642

 
$
660

 

 
 
 
 
Pool Direct loss reserves
9

 
11

 
11

 
12

 
13

 

 
 
 
 
Other Gross Reserves

 

 
1

 
1

 
1

 

 
 
 
 
Total Gross Loss Reserves
$
555

 
$
602

 
$
622

 
$
655

 
$
674

 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Primary Average Direct Reserve Per Delinquency
$
18,171

 
$
18,955

 
$
19,684

 
$
20,014

 
$
20,077

 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Paid Claims (millions) (1)
$
73

 
$
55

 
$
55

 
$
57

 
$
75

 
$
240

 
$
335

 
 
Total primary (excluding settlements)
42

 
47

 
52

 
52

 
62

 
193

 
282

 
 
Rescission and NPL settlements
26

 
4

 

 

 
10

 
30

 
50

 
 
Pool
2

 
1

 

 
1

 
1

 
4

 
6

 
 
Reinsurance
(1
)
 
(2
)
 
(2
)
 
(3
)
 
(2
)
 
(8
)
 
(19
)
 
 
Other
4

 
5

 
5

 
7

 
4

 
21

 
16

 
 
Reinsurance terminations (1)

 

 
(14
)
 

 

 
(14
)
 
(2
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Primary Average Claim Payment (thousands)
$
46.3

(2)
$
44.4

(2)
$
46.9

 
$
43.9

 
$
48.0

(2)
$
45.3

(2)
$
49.2

(2)
 
Flow only
$
41.2

(2)
$
39.4

(2)
$
40.0

 
$
37.6

 
$
41.6

(2)
$
39.5

(2)
$
43.6

(2)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


(1) Net paid claims, as presented, does not include amounts received in conjunction with terminations or commutations of reinsurance agreements.

(2) Excludes amounts paid in settlement disputes for claims paying practices and/or commutations of policies.







MGIC INVESTMENT CORPORATION AND SUBSIDIARIES
ADDITIONAL INFORMATION - REINSURANCE
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2019
 
2018
 
Year-to-date
 
Q4
 
Q3
 
Q2
 
Q1
 
Q4
 
2019
 
2018
Quota Share Reinsurance
 
 
 
 
 
 
 
 
 
 
 
 
 
% insurance inforce subject to reinsurance
78.5
%
 
78.4
%
 
78.2
%
 
77.8
%
 
77.5
%
 
 
 
 
% NIW subject to reinsurance
79.4
%
 
81.2
%
 
83.0
%
 
84.0
%
 
75.5
%
 
81.5
%
 
75.1
%
Ceded premiums written and earned (millions)
$
23.8

 
$
23.0

 
$
36.5

(1)
$
28.2

 
$
28.6

 
$
111.5

 
$
108.2

Ceded losses incurred (millions)
$
3.6

 
$
2.7

 
$
3.4

 
$
1.7

 
$
3.0

 
$
11.4

 
$
6.6

Ceding commissions (millions) (included in underwriting and other expenses)
$
11.0

 
$
11.0

 
$
13.4

 
$
13.4

 
$
12.9

 
$
48.8

 
$
51.1

Profit commission (millions) (included in ceded premiums)
$
31.1

 
$
32.2

 
$
37.0

 
$
38.9

 
$
36.0

 
$
139.2

 
$
147.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Excess-of-Loss Reinsurance
 
 
 
 
 
 
 
 
 
 
 
 
 
Ceded premiums earned (millions)
$
5.2

 
$
5.4

 
$
4.5

 
$
2.5

 
$
2.8

 
$
17.6

 
$
2.8

Ceded losses incurred (millions)
$

 
$

 
$

 
$

 
$

 
$

 
$

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

(1) Includes a $6.8 million termination fee paid to terminate a portion of our 2015 quota share reinsurance agreement.








MGIC INVESTMENT CORPORATION AND SUBSIDIARIES
ADDITIONAL INFORMATION: BULK STATISTICS AND MI RATIOS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2019
 
2018
 
Year-to-date
 
Q4
 
Q3
 
Q2
 
Q1
 
Q4
 
2019
 
2018
Bulk Primary Insurance Statistics
 
 
 
 
 
 
 
 
 
 
 
 
 
Insurance in force (billions)
$5.6
 
$6.0
 
$6.2
 
$6.7
 
$6.8
 
 
 
 
Risk in force (billions)
$1.6
 
$1.7
 
$1.7
 
$1.9
 
$1.9
 
 
 
 
Average loan size (thousands)
$144.1
 
$141.3
 
$141.8
 
$144.1
 
$144.8
 
 
 
 
Number of delinquent loans
6,788
 
7,252
 
7,568
 
7,438
 
7,979
 
 
 
 
Delinquency rate
17.45%
 
17.13%
 
17.31%
 
16.02%
 
16.86%
 
 
 
 
Primary paid claims (excluding settlements) (millions)
$14
 
$15
 
$16
 
$18
 
$19
 
$63
 
$83
Average claim payment (thousands)
$62.8
(2)
$60.1
 
$74.6
 
$65.1
 
$73.2
 
$65.4
(2)
$70.8