MGIC Investment Corporation Reports Third Quarter 2020 Results
Adjusted net operating income for the third quarter of 2020 was
He further stated that, "I admire the dedication of our team who remain focused on executing our business strategies, and providing critical support for our customers and the housing market, especially for first-time homebuyers. While there is still uncertainty about the timing and pace of the economic recovery and the long-term impact of loss mitigation efforts undertaken by the GSEs and loan servicers, we are cautiously optimistic about the continuing resiliency of the housing market. "
Third Quarter Summary
- We continue to maintain full operations, using the virtual workforce model activated in the first quarter of 2020, in response to the COVID-19 pandemic.
- New insurance written was
$32.8 billion , compared to$28.2 billion the second quarter and$19.1 billion in the third quarter of 2019, reflecting the resilience of the purchase mortgage market, the attractive refinance market, and our position in the market. - Persistency, or the percentage of insurance remaining in force from one year prior, was 64.5% at
September 30, 2020 , compared with 68.2% atJune 30, 2020 and 78.6% atSeptember 30, 2019 . - Insurance in force (IIF) of
$238.9 billion atSeptember 30, 2020 increased by 3.6% during the quarter and 9.5% compared toSeptember 30, 2019 . - Primary delinquency inventory of 64,418 loans at
September 30, 2020 decreased from 69,326 loans atJune 30, 2020 , but increased from 30,028 loans atDecember 31, 2019 and 29,940 loans atSeptember 30, 2019 primarily due to the adverse economic impact of COVID-19. - As of
September 30, 2020 67% of our delinquency inventory were reported to us as subject to a forbearance plans. We believe substantially all of the reported forbearance plans are COVID-19 related. - Insurance written in 2008 and prior accounted for approximately 10% of the
September 30, 2020 primary risk in force but accounted for 31% of the new primary delinquency notices received in the quarter. The primary delinquency inventory for 2008 and prior increased 2% year over year from 21,761 loans atSeptember 30, 2019 . - The percentage of primary loans that were delinquent at
September 30, 2020 was 5.79%, compared to 2.78% atDecember 31, 2019 , and 2.78% atSeptember 30, 2019 . - The loss ratio for the third quarter of 2020 was 15.9%, compared to 89.2% for the second quarter of 2020 and 12.7% for the third quarter of 2019.
- The underwriting expense ratio associated with our insurance operations for the third quarter of 2020 was 20.2%, compared to 20.1% for the second quarter of 2020 and 17.7% for the third quarter of 2019.
- Net premium yield was 43.6 basis points in the third quarter of 2020, compared to 42.7 basis points for the second quarter of 2020 and 49.6 basis points for the third quarter of 2019.
MGIC Investment Corporation paid a$0.06 dividend per common share to shareholders during the third quarter of 2020.MGIC Investment Corporation did not repurchase any shares of common stock during the third quarter of 2020.- Book value per common share outstanding increased by 7.4% from
December 31, 2019 to$13.33 and increased by 11.7% fromSeptember 30, 2019 .
_______________
Fourth Quarter 2020 Activities
- In October, MGIC entered into a
$412.9 million excess of loss reinsurance agreement (executed through an insurance linked note transaction) that covers policies issued fromJanuary 1, 2020 throughJuly 31, 2020 totaling$9.2 billion of net risk in force as ofSeptember 30, 2020 . $241.0 billion of IIF atOctober 31, 2020 , compared to$238.9 billion of IIF atSeptember 30, 2020 .- 5,228 notices of delinquency received in
October 2020 , compared to 6,038 notices of delinquency received inSeptember 2020 and 6,423 notices of delinquency received inAugust 2020 . - 8,020 cures reported in
October 2020 , compared to 8,126 cures reported inSeptember 2020 and 7,868 cures reported inAugust 2020 . - 61,521 loans in delinquency inventory at
October 31, 2020 , compared to 64,418 loans in delinquency inventory atSeptember 30, 2020 and 66,626 loans in delinquency inventory atAugust 31, 2020 . MGIC Investment Corporation declared a$0.06 dividend per common share to shareholders.
Revenues
Total revenues for the third quarter of 2020 were
Losses and expenses
Losses incurred
Net losses incurred were
Underwriting and other expenses
Net underwriting and other expenses were
Provision for income taxes
The effective income tax rate was 20.4% in the third quarter of 2020 and 20.7% in the third quarter of 2019.
Capital
- Total consolidated shareholders' equity was
$4.5 billion and consolidated outstanding principal on borrowings was$1.3 billion as ofSeptember 30, 2020 . MGIC Investment Corporation issued$650 million of its 5.25% Senior Notes due in 2028 with a 3 year call feature. A portion of the proceeds were used to repurchase$182.7 million of the 5.75% Senior notes due in 2023 and$48.1 million of the 9% Convertible Junior Debentures due in 2063. The balance of the proceeds after expenses were retained at the holding company. The transactions resulted in a pretax loss on debt extinguishment of$26.7 million that was recognized in the quarter.- MGIC's PMIERs Available Assets totaled
$5.0 billion , or$1.4 billion above its Minimum Required Assets as ofSeptember 30, 2020 . - MGIC's PMIER assets increased due to organic capital generation and the transfer of approximately
$250 million of assets from MGIC Reinsurance ofWisconsin (MRCW) to MGIC - MGIC received regulatory and GSE approval to dividend to MTG its ownership of
$133 million of MTG's 9% Convertible Junior Debentures due 2063, which eliminates approximately$12 million of future annual interest payments by MTG. The debentures were not included in MGIC's PMIERs Available Assets.
Other Balance Sheet and Liquidity Metrics
- Total consolidated assets were
$7.1 billion as ofSeptember 30, 2020 , compared to$6.2 billion as ofDecember 31, 2019 , and$6.1 billion as ofSeptember 30, 2019 . - The fair value of our consolidated investment portfolio, cash and cash equivalents was
$6.8 billion as ofSeptember 30, 2020 , compared to$5.9 billion as ofDecember 31, 2019 , and$5.8 billion as ofSeptember 30, 2019 . - Investments, cash and cash equivalents at the holding company were
$871 million as ofSeptember 30, 2020 , compared to$325 million as ofDecember 31, 2019 , and$308 million as ofSeptember 30, 2019 . - Total consolidated debt as of
September 30, 2020 was$1.2 billion , compared to$833 million as ofDecember 31, 2019 , and$832 million as ofSeptember 30, 2019 .
Conference Call and Webcast Details
About MGIC
MGIC (www.mgic.com), the principal subsidiary of
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 all available on the Company's website at https://mtg.mgic.com/ under "Newsroom."
From time to time
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
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
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.
- 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.
- 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.
- 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.
MGIC INVESTMENT CORPORATION AND SUBSIDIARIES |
||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) |
||||||||||||||||
Three Months Ended |
Nine Months Ended |
|||||||||||||||
(In thousands, except per share data) |
2020 |
2019 |
2020 |
2019 |
||||||||||||
Net premiums written |
$ |
227,954 |
$ |
259,414 |
$ |
695,346 |
$ |
747,293 |
||||||||
Revenues |
||||||||||||||||
Net premiums earned |
$ |
256,113 |
$ |
267,857 |
$ |
760,576 |
$ |
764,720 |
||||||||
Net investment income |
37,252 |
42,715 |
118,278 |
125,723 |
||||||||||||
Net realized investment gains |
2,259 |
4,205 |
10,851 |
3,986 |
||||||||||||
Other revenue |
380 |
3,606 |
7,160 |
7,921 |
||||||||||||
Total revenues |
296,004 |
318,383 |
896,865 |
902,350 |
||||||||||||
Losses and expenses |
||||||||||||||||
Losses incurred, net |
40,686 |
33,985 |
319,016 |
94,884 |
||||||||||||
Underwriting and other expenses, net |
48,528 |
48,339 |
140,482 |
142,477 |
||||||||||||
Loss on debt extinguishment |
26,736 |
— |
26,736 |
— |
||||||||||||
Interest expense |
15,725 |
12,939 |
41,580 |
39,722 |
||||||||||||
Total losses and expenses |
131,675 |
95,263 |
527,814 |
277,083 |
||||||||||||
Income before tax |
164,329 |
223,120 |
369,051 |
625,267 |
||||||||||||
Provision for income taxes |
33,518 |
46,186 |
74,388 |
128,614 |
||||||||||||
Net income |
$ |
130,811 |
$ |
176,934 |
$ |
294,663 |
$ |
496,653 |
||||||||
Net income per diluted share |
$ |
0.38 |
$ |
0.49 |
$ |
0.85 |
$ |
1.36 |
MGIC INVESTMENT CORPORATION AND SUBSIDIARIES |
||||||||||||||||
EARNINGS PER SHARE (UNAUDITED) |
||||||||||||||||
Three Months Ended |
Nine Months Ended |
|||||||||||||||
(In thousands, except per share data) |
2020 |
2019 |
2020 |
2019 |
||||||||||||
Net income |
$ |
130,811 |
$ |
176,934 |
$ |
294,663 |
$ |
496,653 |
||||||||
Interest expense, net of tax: |
||||||||||||||||
9% Convertible Junior Subordinated Debentures due 2063 |
4,161 |
4,566 |
13,293 |
13,698 |
||||||||||||
Diluted net income available to common shareholders |
$ |
134,972 |
$ |
181,500 |
$ |
307,956 |
$ |
510,351 |
||||||||
Weighted average shares - basic |
338,598 |
351,475 |
340,408 |
354,272 |
||||||||||||
Effect of dilutive securities: |
||||||||||||||||
Unvested restricted stock units |
1,377 |
2,071 |
1,492 |
1,966 |
||||||||||||
9% Convertible Junior Subordinated Debentures due 2063 |
17,220 |
19,028 |
18,489 |
19,028 |
||||||||||||
Weighted average shares - diluted |
357,195 |
372,574 |
360,389 |
375,266 |
||||||||||||
Net income per diluted share |
$ |
0.38 |
$ |
0.49 |
$ |
0.85 |
$ |
1.36 |
NON-GAAP RECONCILIATIONS |
||||||||||||||||||||||||
Reconciliation of Income before tax / Net income to Adjusted pre-tax operating income / Adjusted net operating income |
||||||||||||||||||||||||
Three Months Ended |
||||||||||||||||||||||||
2020 |
2019 |
|||||||||||||||||||||||
(In thousands, except per share amounts) |
Pre-tax |
Tax Effect |
Net |
Pre-tax |
Tax Effect |
Net (after-tax) |
||||||||||||||||||
Income before tax / Net income |
$ |
164,329 |
$ |
33,518 |
$ |
130,811 |
$ |
223,120 |
$ |
46,186 |
$ |
176,934 |
||||||||||||
Adjustments: |
||||||||||||||||||||||||
Loss on debt extinguishment |
26,736 |
5,615 |
21,121 |
— |
— |
— |
||||||||||||||||||
Net realized investment gains |
(2,624) |
(551) |
(2,073) |
(4,175) |
(877) |
(3,298) |
||||||||||||||||||
Adjusted pre-tax operating income / Adjusted |
$ |
188,441 |
$ |
38,582 |
$ |
149,859 |
$ |
218,945 |
$ |
45,309 |
$ |
173,636 |
||||||||||||
Reconciliation of Net income per diluted share to Adjusted net operating income per diluted share |
||||||||||||||||||||||||
Weighted average shares - diluted |
357,195 |
372,574 |
||||||||||||||||||||||
Net income per diluted share |
$ |
0.38 |
$ |
0.49 |
||||||||||||||||||||
Loss on debt extinguishment |
0.06 |
— |
||||||||||||||||||||||
Net realized investment gains |
(0.01) |
(0.01) |
||||||||||||||||||||||
Adjusted net operating income per diluted share |
$ |
0.43 |
$ |
0.48 |
||||||||||||||||||||
Reconciliation of Income before tax / Net income to Adjusted pre-tax operating income / Adjusted net operating income |
||||||||||||||||||||||||
Nine Months Ended |
||||||||||||||||||||||||
2020 |
2019 |
|||||||||||||||||||||||
(In thousands, except per share amounts) |
Pre-tax |
Tax Effect |
Net |
Pre-tax |
Tax Effect |
Net |
||||||||||||||||||
Income before tax / Net income |
$ |
369,051 |
$ |
74,388 |
$ |
294,663 |
$ |
625,267 |
$ |
128,614 |
$ |
496,653 |
||||||||||||
Adjustments: |
||||||||||||||||||||||||
Loss on debt extinguishment |
26,736 |
5,615 |
21,121 |
— |
— |
— |
||||||||||||||||||
Net realized investment gains |
(10,773) |
(2,262) |
(8,511) |
(3,772) |
(792) |
(2,980) |
||||||||||||||||||
Adjusted pre-tax operating income / Adjusted net operating income |
$ |
385,014 |
$ |
77,741 |
$ |
307,273 |
$ |
621,495 |
$ |
127,822 |
$ |
493,673 |
||||||||||||
Reconciliation of Net income per diluted share to Adjusted net operating income per diluted share |
||||||||||||||||||||||||
Weighted average shares - diluted |
360,389 |
375,266 |
||||||||||||||||||||||
Net income per diluted share |
$ |
0.85 |
$ |
1.36 |
||||||||||||||||||||
Loss on debt extinguishment |
0.06 |
— |
||||||||||||||||||||||
Net realized investment gains |
(0.02) |
(0.01) |
||||||||||||||||||||||
Adjusted net operating income per diluted share |
$ |
0.89 |
$ |
1.35 |
MGIC INVESTMENT CORPORATION AND SUBSIDIARIES |
||||||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
|
||||||||||||||
|
|
|
||||||||||||
(In thousands, except per share data) |
2020 |
2019 |
2019 |
|||||||||||
ASSETS |
||||||||||||||
Investments (1) |
$ |
6,365,878 |
$ |
5,758,320 |
$ |
5,681,452 |
||||||||
Cash and cash equivalents |
380,056 |
161,847 |
165,425 |
|||||||||||
Restricted cash and cash equivalents |
8,755 |
7,209 |
6,329 |
|||||||||||
Reinsurance recoverable on loss reserves (2) |
83,143 |
21,641 |
19,566 |
|||||||||||
Home office and equipment, net |
47,546 |
50,121 |
50,540 |
|||||||||||
Deferred insurance policy acquisition costs |
21,238 |
18,531 |
18,010 |
|||||||||||
Other assets |
242,894 |
211,902 |
205,429 |
|||||||||||
Total assets |
$ |
7,149,510 |
$ |
6,229,571 |
$ |
6,146,751 |
||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY |
||||||||||||||
Liabilities: |
||||||||||||||
Loss reserves (2) |
$ |
840,449 |
$ |
555,334 |
$ |
602,297 |
||||||||
Unearned premiums |
315,071 |
380,302 |
392,556 |
|||||||||||
Federal home loan bank advance |
155,000 |
155,000 |
155,000 |
|||||||||||
Senior notes |
878,838 |
420,867 |
420,578 |
|||||||||||
Convertible junior debentures |
208,814 |
256,872 |
256,872 |
|||||||||||
Other liabilities |
237,716 |
151,962 |
159,831 |
|||||||||||
Total liabilities |
2,635,888 |
1,920,337 |
1,987,134 |
|||||||||||
Shareholders' equity |
4,513,622 |
4,309,234 |
4,159,617 |
|||||||||||
Total liabilities and shareholders' equity |
$ |
7,149,510 |
$ |
6,229,571 |
$ |
6,146,751 |
||||||||
Book value per share (3) |
$ |
13.33 |
$ |
12.41 |
$ |
11.93 |
||||||||
(1) Investments include net unrealized gains on securities |
$ |
307,591 |
$ |
175,482 |
$ |
187,099 |
||||||||
(2) Loss reserves, net of reinsurance recoverable on loss reserves |
$ |
757,305 |
$ |
533,693 |
$ |
582,731 |
||||||||
(3) Shares outstanding |
338,573 |
347,308 |
348,709 |
MGIC INVESTMENT CORPORATION AND SUBSIDIARIES |
|||||||||||||||||||||||||||
ADDITIONAL INFORMATION - NEW INSURANCE WRITTEN |
|||||||||||||||||||||||||||
2020 |
2019 |
Year-to-date |
|||||||||||||||||||||||||
Q3 |
Q2 |
Q1 |
Q4 |
Q3 |
2020 |
2019 |
|||||||||||||||||||||
New primary insurance written (NIW) (billions) |
$ |
32.8 |
$ |
28.2 |
$ |
17.9 |
$ |
19.3 |
$ |
19.1 |
$ |
78.9 |
$ |
44.1 |
|||||||||||||
Monthly (including split premium plans) and annual premium |
30.6 |
24.9 |
15.2 |
16.3 |
16.2 |
70.7 |
37.3 |
||||||||||||||||||||
Single premium plans |
2.2 |
3.3 |
2.7 |
3.0 |
2.9 |
8.2 |
6.8 |
||||||||||||||||||||
Product mix as a % of primary NIW |
|||||||||||||||||||||||||||
FICO < 680 |
4 |
% |
4 |
% |
3 |
% |
3 |
% |
4 |
% |
4 |
% |
6 |
% |
|||||||||||||
>95% LTVs |
9 |
% |
9 |
% |
8 |
% |
9 |
% |
12 |
% |
9 |
% |
15 |
% |
|||||||||||||
>45% DTI |
11 |
% |
11 |
% |
13 |
% |
11 |
% |
12 |
% |
11 |
% |
15 |
% |
|||||||||||||
Singles |
7 |
% |
12 |
% |
15 |
% |
15 |
% |
15 |
% |
10 |
% |
16 |
% |
|||||||||||||
Refinances |
31 |
% |
43 |
% |
35 |
% |
30 |
% |
20 |
% |
36 |
% |
14 |
% |
|||||||||||||
New primary risk written (billions) |
$ |
7.9 |
$ |
6.6 |
$ |
4.4 |
$ |
4.8 |
$ |
4.7 |
$ |
18.9 |
$ |
11.0 |
MGIC INVESTMENT CORPORATION AND SUBSIDIARIES |
|||||||||||||||||||
ADDITIONAL INFORMATION - INSURANCE IN FORCE and RISK IN FORCE |
|||||||||||||||||||
2020 |
2019 |
||||||||||||||||||
Q3 |
Q2 |
Q1 |
Q4 |
Q3 |
|||||||||||||||
Primary Insurance In Force (IIF) (billions) |
$ |
238.9 |
$ |
230.5 |
$ |
225.5 |
$ |
222.3 |
$ |
218.1 |
|||||||||
Total # of loans |
1,111,910 |
1,092,437 |
1,083,717 |
1,079,578 |
1,075,285 |
||||||||||||||
Flow # of loans |
1,075,794 |
1,055,486 |
1,045,843 |
1,040,667 |
1,032,936 |
||||||||||||||
Premium Yield |
|||||||||||||||||||
Inforce portfolio yield (1) |
46.3 |
48.1 |
49.2 |
50.3 |
51.7 |
||||||||||||||
Premium refunds |
(0.6) |
(0.3) |
(0.7) |
(0.6) |
(0.6) |
||||||||||||||
Accelerated earnings on single premium |
5.5 |
5.9 |
3.3 |
3.6 |
3.5 |
||||||||||||||
Total direct premium yield |
51.2 |
53.7 |
51.8 |
53.3 |
54.6 |
||||||||||||||
Ceded premiums earned, net of profit commission and |
(7.6) |
(11.0) |
(5.2) |
(4.9) |
(5.0) |
||||||||||||||
Net premium yield |
43.6 |
42.7 |
46.6 |
48.4 |
49.6 |
||||||||||||||
Average Loan Size of IIF (thousands) |
$ |
214.9 |
$ |
211.0 |
$ |
208.1 |
$ |
205.9 |
$ |
202.9 |
|||||||||
Flow only |
$ |
217.3 |
$ |
213.4 |
$ |
210.4 |
$ |
208.2 |
$ |
205.4 |
|||||||||
Annual Persistency |
64.5 |
% |
68.2 |
% |
73.0 |
% |
75.8 |
% |
78.6 |
% |
|||||||||
Primary Risk In Force (RIF) (billions) |
$ |
60.4 |
$ |
58.7 |
$ |
57.9 |
$ |
57.2 |
$ |
56.2 |
|||||||||
By FICO (%) (3) |
|||||||||||||||||||
FICO 760 & > |
40 |
% |
39 |
% |
39 |
% |
39 |
% |
39 |
% |
|||||||||
FICO 740-759 |
17 |
% |
17 |
% |
17 |
% |
17 |
% |
16 |
% |
|||||||||
FICO 720-739 |
14 |
% |
14 |
% |
14 |
% |
14 |
% |
14 |
% |
|||||||||
FICO 700-719 |
11 |
% |
11 |
% |
11 |
% |
11 |
% |
11 |
% |
|||||||||
FICO 680-699 |
8 |
% |
8 |
% |
8 |
% |
8 |
% |
8 |
% |
|||||||||
FICO 660-679 |
4 |
% |
4 |
% |
4 |
% |
4 |
% |
5 |
% |
|||||||||
FICO 640-659 |
3 |
% |
3 |
% |
3 |
% |
3 |
% |
3 |
% |
|||||||||
FICO 639 & < |
3 |
% |
4 |
% |
4 |
% |
4 |
% |
4 |
% |
|||||||||
Average Coverage Ratio (RIF/IIF) |
25.3 |
% |
25.5 |
% |
25.7 |
% |
25.7 |
% |
25.8 |
% |
|||||||||
Direct Pool RIF (millions) |
|||||||||||||||||||
With aggregate loss limits |
$ |
211 |
$ |
212 |
$ |
212 |
$ |
213 |
$ |
214 |
|||||||||
Without aggregate loss limits |
$ |
139 |
$ |
148 |
$ |
156 |
$ |
163 |
$ |
173 |
(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 0.5 bps in the third quarter of 2020, 0.6 bps in the second quarter of 2020, 0.5 bps in the first quarter of 2020, and 0.2 bps in 2019. |
(3) |
The FICO credit score at the time of origination 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 |
||||||||||||||||||||
2020 |
2019 |
|||||||||||||||||||
Q3 |
Q2 |
Q1 |
Q4 |
Q3 |
||||||||||||||||
Primary IIF - Delinquent Roll Forward - # of Loans |
||||||||||||||||||||
Beginning Delinquent Inventory |
69,326 |
27,384 |
30,028 |
29,940 |
29,795 |
|||||||||||||||
New Notices |
20,924 |
57,584 |
12,398 |
13,694 |
14,019 |
|||||||||||||||
Cures |
(25,446) |
(14,964) |
(14,113) |
(12,213) |
(12,592) |
|||||||||||||||
Paid claims |
(375) |
(661) |
(897) |
(922) |
(1,045) |
|||||||||||||||
Rescissions and denials |
(11) |
(17) |
(32) |
(27) |
(42) |
|||||||||||||||
Other items removed from inventory |
— |
— |
— |
(444) |
(195) |
|||||||||||||||
Ending Delinquent Inventory |
64,418 |
(1) |
69,326 |
(1) |
27,384 |
30,028 |
29,940 |
|||||||||||||
Primary IIF Delinquency Rate |
5.79 |
% |
6.35 |
% |
2.53 |
% |
2.78 |
% |
2.78 |
% |
||||||||||
Primary claim received inventory included in |
172 |
247 |
472 |
538 |
557 |
|||||||||||||||
Primary IIF - # of Delinquent Loans - Flow only |
58,933 |
63,135 |
21,322 |
23,240 |
22,688 |
|||||||||||||||
Primary IIF Delinquency Rate - Flow only |
5.48 |
% |
5.98 |
% |
2.04 |
% |
2.23 |
% |
2.20 |
% |
||||||||||
Composition of Cures |
||||||||||||||||||||
Reported delinquent and cured intraquarter |
4,405 |
6,751 |
4,652 |
4,122 |
4,397 |
|||||||||||||||
Number of payments delinquent prior to cure |
||||||||||||||||||||
3 payments or less |
13,954 |
5,905 |
6,551 |
5,724 |
5,631 |
|||||||||||||||
4-11 payments |
6,683 |
1,961 |
2,354 |
2,001 |
2,075 |
|||||||||||||||
12 payments or more |
404 |
347 |
556 |
366 |
489 |
|||||||||||||||
Total Cures in Quarter |
25,446 |
14,964 |
14,113 |
12,213 |
12,592 |
|||||||||||||||
Composition of Paids |
||||||||||||||||||||
Number of payments delinquent at time of claim payment |
||||||||||||||||||||
3 payments or less |
1 |
3 |
1 |
2 |
— |
|||||||||||||||
4-11 payments |
49 |
58 |
107 |
83 |
104 |
|||||||||||||||
12 payments or more |
325 |
600 |
789 |
837 |
941 |
|||||||||||||||
Total Paids in Quarter |
375 |
661 |
897 |
922 |
1,045 |
|||||||||||||||
Aging of Primary Delinquent Inventory |
||||||||||||||||||||
Consecutive months delinquent |
||||||||||||||||||||
3 months or less |
15,879 |
25 |
% |
50,646 |
73 |
% |
7,567 |
28 |
% |
9,447 |
32 |
% |
9,462 |
32 |
% |
|||||
4-11 months |
37,702 |
58 |
% |
8,370 |
12 |
% |
9,535 |
35 |
% |
9,664 |
32 |
% |
9,082 |
30 |
% |
|||||
12 months or more |
10,837 |
17 |
% |
10,310 |
15 |
% |
10,282 |
37 |
% |
10,917 |
36 |
% |
11,396 |
38 |
% |
|||||
Number of payments delinquent |
||||||||||||||||||||
3 payments or less |
18,541 |
29 |
% |
51,877 |
75 |
% |
12,961 |
47 |
% |
14,895 |
50 |
% |
14,690 |
49 |
% |
|||||
4-11 payments |
38,999 |
60 |
% |
11,026 |
16 |
% |
8,178 |
30 |
% |
8,519 |
28 |
% |
8,225 |
27 |
% |
|||||
12 payments or more |
6,878 |
11 |
% |
6,423 |
9 |
% |
6,245 |
23 |
% |
6,614 |
22 |
% |
7,025 |
24 |
% |
(1) |
As of |
MGIC INVESTMENT CORPORATION AND SUBSIDIARIES |
|||||||||||||||||||||||||||||
ADDITIONAL INFORMATION - RESERVES and CLAIMS PAID |
|||||||||||||||||||||||||||||
2020 |
2019 |
Year-to-date |
|||||||||||||||||||||||||||
Q3 |
Q2 |
Q1 |
Q4 |
Q3 |
2020 |
2019 |
|||||||||||||||||||||||
Reserves (millions) |
|||||||||||||||||||||||||||||
Primary Direct Loss Reserves |
$ |
831 |
$ |
787 |
$ |
566 |
$ |
546 |
$ |
591 |
|||||||||||||||||||
Pool Direct loss reserves |
8 |
10 |
8 |
9 |
11 |
||||||||||||||||||||||||
Other Gross Reserves |
1 |
— |
1 |
— |
— |
||||||||||||||||||||||||
Total Gross Loss Reserves |
$ |
840 |
$ |
797 |
$ |
575 |
$ |
555 |
$ |
602 |
|||||||||||||||||||
Primary Average Direct Reserve Per Delinquency |
$ |
12,907 |
$ |
11,357 |
$ |
20,658 |
$ |
18,171 |
$ |
18,955 |
|||||||||||||||||||
Net Paid Claims (millions) (1) |
$ |
18 |
$ |
32 |
$ |
46 |
$ |
73 |
$ |
55 |
$ |
96 |
$ |
167 |
|||||||||||||||
Total primary (excluding |
15 |
29 |
42 |
42 |
47 |
86 |
151 |
||||||||||||||||||||||
Rescission and NPL settlements |
— |
— |
— |
26 |
4 |
— |
4 |
||||||||||||||||||||||
Pool |
— |
— |
1 |
2 |
1 |
1 |
2 |
||||||||||||||||||||||
Reinsurance |
— |
(2) |
(1) |
(1) |
(2) |
(3) |
(7) |
||||||||||||||||||||||
Other |
3 |
5 |
4 |
4 |
5 |
12 |
17 |
||||||||||||||||||||||
Reinsurance terminations (1) |
— |
— |
— |
— |
— |
— |
(14) |
||||||||||||||||||||||
Primary Average Claim Payment (thousands) |
$ |
40.6 |
$ |
42.9 |
$ |
47.2 |
$ |
46.3 |
(2) |
$ |
44.4 |
(2) |
$ |
44.5 |
$ |
45.1 |
(2) |
||||||||||||
Flow only |
$ |
37.2 |
$ |
36.7 |
$ |
41.4 |
$ |
41.2 |
(2) |
$ |
39.4 |
(2) |
$ |
39.0 |
$ |
39.0 |
(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 |
||||||||||||||||||||||||||||
2020 |
2019 |
Year-to-date |
||||||||||||||||||||||||||
Q3 |
Q2 |
Q1 |
Q4 |
Q3 |
2020 |
2019 |
||||||||||||||||||||||
Quota Share Reinsurance |
||||||||||||||||||||||||||||
% insurance inforce subject to reinsurance |
76.5 |
% |
77.0 |
% |
78.0 |
% |
78.5 |
% |
78.4 |
% |
||||||||||||||||||
% NIW subject to reinsurance |
76.0 |
% |
73.5 |
% |
71.9 |
% |
79.4 |
% |
81.2 |
% |
74.2 |
% |
82.5 |
% |
||||||||||||||
Ceded premiums written and earned (millions) |
$ |
43.5 |
$ |
61.4 |
$ |
26.8 |
$ |
23.8 |
$ |
23.0 |
$ |
131.7 |
$ |
87.7 |
(1) |
|||||||||||||
Ceded losses incurred (millions) |
$ |
20.7 |
$ |
39.0 |
$ |
5.8 |
$ |
3.6 |
$ |
2.7 |
$ |
65.5 |
$ |
7.8 |
||||||||||||||
Ceding commissions (millions) (included in underwriting and other expenses) |
$ |
12.1 |
$ |
12.0 |
$ |
11.4 |
$ |
11.0 |
$ |
11.0 |
$ |
35.5 |
$ |
37.8 |
||||||||||||||
Profit commission (millions) (included in ceded premiums) |
$ |
17.1 |
$ |
(1.2) |
$ |
30.0 |
$ |
31.1 |
$ |
32.2 |
$ |
45.9 |
$ |
108.1 |
||||||||||||||
Excess-of-Loss Reinsurance |
||||||||||||||||||||||||||||
Ceded premiums earned (millions) |
$ |
3.7 |
$ |
4.4 |
$ |
4.7 |
$ |
5.2 |
$ |
5.4 |
$ |
12.8 |
$ |
12.4 |
||||||||||||||
Ceded losses incurred (millions) |
$ |
— |
$ |
— |
$ |
— |
$ |
— |
$ |
— |
$ |
— |
$ |
— |
||||||||||||||
(1) |
Includes a |
MGIC INVESTMENT CORPORATION AND SUBSIDIARIES |
|||||||||||||
ADDITIONAL INFORMATION: BULK STATISTICS AND |
|||||||||||||
2020 |
2019 |
Year-to-date |
|||||||||||
Q3 |
Q2 |
Q1 |
Q4 |
Q3 |
2020 |
2019 |
|||||||
Bulk Primary Insurance Statistics |
|||||||||||||
Insurance in force (billions) |
|
|
|
|
|
||||||||
Risk in force (billions) |
|
|
|
|
|
||||||||
Average loan size (thousands) |
|
|
|
|
|
||||||||
Number of delinquent loans |
5,485 |
6,191 |
6,062 |
6,788 |
7,252 |
||||||||
Delinquency rate |
15.19% |
16.75% |
16.01% |
17.45% |
17.13% |
||||||||
Primary paid claims (excluding settlements) (millions) |
|
|
|
|
|
|
|
||||||
Average claim payment (thousands) |
|
|
|
|
(1) |
|
|
|
|||||
|
9.4:1 |
(2) |
9.6:1 |
10.2:1 |
9.7:1 |
9.9:1 |
|||||||
Combined Insurance Companies - Risk to Capital |
9.4:1 |
(2) |
9.5:1 |
10.2:1 |
9.6:1 |
9.8:1 |
|||||||
GAAP loss ratio (insurance operations only) |
15.9% |
89.2% |
23.4% |
8.9% |
12.7% |
41.9% |
12.4% |
||||||
GAAP underwriting expense ratio (insurance operations only) |
20.2% |
20.1% |
17.3% |
19.6% |
17.7% |
19.1% |
18.1% |
||||||