10-K: MGIC Reports 2025 Net Income, Shareholder Returns

MGIC Investment Corporation reported $738 million in net income for 2025, alongside significant capital returns to shareholders and maintained strong financial health.

Summary

• Net income for 2025 was $738 million ($3.14 per diluted share), a decrease from $763 million ($2.89 per diluted share) in 2024.
• Adjusted net operating income for 2025 was $738.4 million ($3.14 per diluted share), down from $768.5 million ($2.91 per diluted share) in 2024.
• Total revenues remained relatively flat at $1.213 billion in 2025 compared to $1.207 billion in 2024.
• New Insurance Written (NIW) increased to $60.2 billion in 2025 from $55.7 billion in 2024.
• Direct primary Insurance In Force (IIF) grew to $303.1 billion as of December 31, 2025, from $295.4 billion in 2024.
• Direct primary Risk In Force (RIF) increased to $81.2 billion as of December 31, 2025, from $78.8 billion in 2024.
• MGIC paid $800 million in cash dividends to its holding company in 2025, a 7% increase from $750 million in 2024.
• Approximately $915 million in capital was returned to shareholders in 2025 through share repurchases and dividends.
• Repurchased 12% of shares outstanding at the beginning of 2025, totaling 30.1 million shares for $782.0 million.
• Paid shareholder dividends of $0.56 per share in 2025, a 14% increase from $0.49 per share in 2024.
• Total underwriting and other expenses, net, decreased by 8% in 2025 compared to 2024.
• MGIC maintained compliance with PMIERs, with Available Assets of $5.7 billion, exceeding Minimum Required Assets by $2.5 billion as of December 31, 2025.
• MGIC's risk-to-capital ratio was 10.0 to 1, below the maximum allowed by jurisdictions with State Capital Requirements.
• The company's investment portfolio had a fair value of approximately $5.8 billion as of December 31, 2025, with a pre-tax yield of 4.0%.

Sentiment

Score: 6

Explanation: StockSavvy.ai views this as a moderately positive report. While net income declined and losses incurred increased, the company demonstrated strong capital management, increased shareholder returns, and improved its market share within the private mortgage insurance industry, alongside positive rating agency actions. The increase in losses incurred is a concern, but the overall financial strength and strategic execution are solid.

Positives

• Net income per diluted share increased to $3.14 in 2025 from $2.89 in 2024, primarily due to a decrease in diluted weighted shares outstanding.
• New Insurance Written (NIW) increased to $60.2 billion in 2025, reflecting a higher expected market position.
• Direct primary Insurance In Force (IIF) and Risk In Force (RIF) both increased in 2025, indicating portfolio growth.
• Cash dividends from MGIC to the holding company increased by 7% to $800 million in 2025.
• Approximately $915 million in capital was returned to shareholders in 2025, including repurchasing 12% of shares outstanding and increasing shareholder dividends by 14%.
• MGIC's Financial Strength Rating was upgraded by Moody's from A3 to A2. Additionally, S&P revised its outlook to positive from stable on MGIC Investment Corporation and its core operating subsidiaries, including MGIC.
• Expanded reinsurance program provides protection from losses for both existing and future NIW, and renegotiated a seasoned reinsurance transaction to recapture attractive risk and reduce future ceded premium, enhancing risk management and diversifying capital sources.
• Sustainably reduced operating expenses by 8% in 2025 through streamlining operations, changing processes, and workflow optimization.
• Retired legacy data platforms and identified and established a new environment for MI operations technology.
• MGIC remains in compliance with PMIERs, with $2.5 billion in excess of Minimum Required Assets as of December 31, 2025.
• MGIC's risk-to-capital ratio of 10.0 to 1 is well below the maximum allowed by state regulations (25 to 1).

Negatives

• Net income decreased to $738 million in 2025 from $763 million in 2024, primarily due to an increase in losses incurred, net.
• Adjusted net operating income decreased to $738.4 million in 2025 from $768.5 million in 2024.
• Losses incurred, net, increased significantly to $48.9 million in 2025 from a *negative* $(14.9) million in 2024, indicating a shift from favorable loss development to actual incurred losses.
• The overall PMI industry's market share decreased in 2025 (38.0%) compared to 2024 (41.1%), suggesting a challenging market environment despite MGIC's individual market share gain.
• Shareholders' equity decreased slightly to $5.147 billion in 2025 from $5.172 billion in 2024, primarily due to share repurchases and dividends paid.
• The net deferred tax asset decreased significantly to $18.5 million in 2025 from $69.9 million in 2024, primarily due to changes in investment portfolio fair value and accelerated deduction of research and experimental costs.

Risks

• Economic downturns and/or declines in home prices may lead to increased losses, as the business is sensitive to macroeconomic conditions like recession, unemployment, reduction in household income, decreases in home prices, and inflation.
• Changes in the business practices of Fannie Mae and Freddie Mac (GSEs), federal legislation that changes their charters, or a restructuring of the GSEs could reduce revenues or increase losses, as the substantial majority of new insurance written is for loans purchased by the GSEs.
• Failure to continue meeting the GSEs' Private Mortgage Insurer Eligibility Requirements (PMIERs) could decrease returns or eligibility, potentially significantly reducing the volume of new business writings.
• Loss reserve estimates are subject to inherent uncertainties and significant judgment, meaning actual paid claims may differ substantially from estimates, impacting future results.
• The company is subject to comprehensive regulation and other requirements, and failure to satisfy these could lead to adverse material effects on reputation, business, and financial results.
• The effects of pandemics, severe weather events, or other disasters (including those related to climate change) may adversely impact results of operations and financial condition, potentially increasing claim rates and severities.
• Reinsurance may be unavailable at current levels and prices, or the GSEs may reduce the amount of capital credit received for reinsurance transactions, increasing retained risk and capital requirements.
• Loss reserves are established only upon loan delinquency rather than based on estimates of ultimate losses on risk in force, which could lead to disproportionate adverse effects on earnings in certain periods.
• State capital requirements may prevent the company from continuing to write new insurance on an uninterrupted basis if minimum statutory capital relative to risk in force is not maintained.
• A decline in the volume of low down payment home mortgage originations could decrease demand for mortgage insurance and limit new insurance written.
• Lenders and investors selecting alternatives to private mortgage insurance or being unable to obtain capital relief for mortgage insurance could adversely affect the amount of insurance written.
• The length of time insurance policies remain in force has a significant impact on results, with higher persistency potentially decreasing profitability from single premium policies and increasing claim incidence.
• The company is susceptible to disruptions in the servicing of mortgage loans and relies on third-party reporting, which may contain lapses or inaccuracies.
• Ineffective risk management programs or inaccurate models (including those using artificial intelligence) could have a material adverse impact on business, results of operations, and financial condition.
• A cybersecurity breach or failure of information security controls could materially adversely affect operations, reputation, and financial results, especially with increasing sophistication of attacks and use of AI.
• Underwriting practices and the mix of business written affect Minimum Required Assets under PMIERs, premium yields, and the likelihood of claims.
• Premium rates charged may not be adequate to compensate for liabilities for losses, potentially materially affecting financial condition and results of operations, especially during economic recession, high unemployment, or home price declines.
• Actual or perceived instability in the financial services industry or non-performance by financial institutions or transactional counterparties could materially impact business.
• Reliance on the management team means the business could be harmed if unable to retain qualified personnel or successfully develop/recruit replacements.
• Competition or changes in relationships with customers could reduce revenues, premium yields, and/or increase losses due to intense competition from other private mortgage insurers and governmental agencies.
• Adverse rating agency actions (downgrades) could materially impact business, eligibility as an approved insurer, and competitive position.
• The company is subject to the risk of legal proceedings, which could result in adverse judgments, settlements, fines, injunctions, restitutions, or other relief requiring significant expenditures.
• The investment portfolio is subject to credit and interest rate risk, potentially suffering reduced or low returns, and/or material realized or unrealized losses.
• The inability of insurance subsidiaries to pay dividends in sufficient amounts would harm the holding company's ability to meet obligations, pay future shareholder dividends, and/or make future share repurchases.
• Ownership in the company may be diluted by additional capital that is raised through future issuance of equity securities.
• The price of common stock may fluctuate significantly, making it difficult for holders to resell at a desired price.

Future Outlook

The company forecasts total mortgage originations to be higher in 2026, at $2.3 trillion, compared to an estimated $2.0 trillion in 2025, with both purchase originations and refinance transactions expected to increase. New Insurance Written (NIW) is expected to remain relatively flat in 2026 compared to 2025. Insurance In Force (IIF) is also expected to remain relatively flat in 2026. Net premiums written and earned are expected to decrease modestly in 2026 due to an increase in ceded premiums. Net investment income is anticipated to be relatively flat in 2026 compared to 2025. Net losses and LAE paid are expected to increase, though the magnitude and timing are uncertain. Underwriting and operating expenses, net, are expected to be relatively flat in 2026, and the effective tax rate is projected to be approximately 21%. The company expects share repurchase programs to remain the primary means of returning capital to shareholders in 2026 and plans to continue making dividend payments.

Management Comments

• Our business strategies are to maximize the value we create through our mortgage credit enhancement activities, differentiate ourselves through our customer experience, advance our competitive advantage through our digital and analytical capabilities, excel at acquiring, managing and distributing mortgage credit risk and the related capital, maintain financial strength through economic cycles, and foster an environment that attracts and retains the best talent and positions our people to succeed.
• We believe that pricing/underwriting risk for mortgage insurance is materially affected by the condition of the economy, the borrower's credit profile, the loan product, origination practices of lenders, and the size of insured loans.
• 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 reader of this annual report should rely on these statements being current at any time other than the time at which this annual report was filed with the Securities and Exchange Commission.

Industry Context

StockSavvy.ai notes that the private mortgage insurance (PMI) industry continues to be significantly shaped by the requirements and practices of Government Sponsored Enterprises (GSEs) like Fannie Mae and Freddie Mac, which are under federal conservatorship. The industry faces intense competition from five other private mortgage insurers and government-backed programs (FHA, VA, USDA), which collectively accounted for approximately 62.0% of low down payment residential mortgages in 2025, up from 58.9% in 2024. MGIC's market share within the PMI industry increased slightly to 19.4% in 2025 from 18.6% in 2024, indicating a competitive gain despite the overall PMI market share decreasing. The industry is also adapting to macroeconomic conditions, including moderating home price appreciation and evolving regulatory landscapes such as the proposed Basel III End Game and NAIC's revised Mortgage Guaranty Insurance Model Act, which could impact capital requirements and market dynamics. The increasing use of risk-based pricing systems and technological advancements like AI are driving changes in competitive strategies and regulatory scrutiny across the sector.

Comparison to Industry Standards

• MGIC's market share within the private mortgage insurance industry increased to 19.4% in 2025 from 18.6% in 2024, indicating a competitive gain against its five active private mortgage insurer competitors.
• The combined market share of FHA, VA, and USDA in low down payment residential mortgages increased to approximately 62.0% in 2025 from 58.9% in 2024, highlighting the ongoing strong competition from government-backed programs for private mortgage insurers like MGIC.
• MGIC's risk-to-capital ratio of 10.0:1 as of December 31, 2025, is significantly better than the most common state capital requirement maximum of 25:1, demonstrating strong capital adequacy relative to industry regulatory benchmarks.
• MGIC's Available Assets of $5.7 billion, exceeding Minimum Required Assets by $2.5 billion under PMIERs, indicates robust compliance with GSE eligibility requirements, a critical standard for private mortgage insurers.

Management Changes

Corporate Governance

Legal Proceedings

• The company operates in a highly regulated industry and is subject to the risk of litigation and regulatory proceedings, including those related to claims paying practices.
• Historically, the company has been involved in litigation and regulatory actions related to alleged violations of RESPA anti-referral fee provisions and FCRA notice provisions, though these did not result in material liability for MGIC.
• Contract underwriting services are subject to contractual obligations and federal/state regulation, with potential for litigation or regulatory action if standards are not met.
• The company is involved in disputes and legal proceedings in the ordinary course of business, but management believes their ultimate resolution will not have a material adverse effect on financial condition or results of operations.

Related Party Transactions

• MGIC Investment Corporation is a holding company, and its principal assets are shares of capital stock of its insurance company subsidiaries. Dividends and other permitted distributions from MGIC are the holding company's primary source of funds.
• MGIC paid $800 million in dividends to the holding company in 2025 and $750 million in 2024. These intercompany transactions are subject to regulatory approval and restrictions by the Office of the Commissioner of Insurance for the State of Wisconsin (OCI).

Stakeholder Impact

• Shareholders: Benefited from significant capital returns ($915 million in 2025) through share repurchases (12% of shares outstanding) and increased dividends ($0.56 per share, up 14%). However, net income decreased, and future capital raises could dilute ownership.
• Employees: Impacted by the 2025 Omnibus Incentive Plan designed to motivate and retain key personnel. Pension and supplemental executive retirement plans were frozen effective January 1, 2023, but participants continue to earn interest credits. The company focuses on creating a positive co-worker experience and community involvement.
• Customers (Lenders): Benefit from MGIC's continued compliance with PMIERs and strong financial strength ratings (Moody's upgrade, S&P positive outlook), ensuring eligibility to insure loans purchased by GSEs. Competition in the PMI industry, including risk-based pricing, affects customer options and rates.
• Regulatory Authorities: MGIC is subject to comprehensive state insurance regulations and GSE requirements (PMIERs). Compliance is maintained, but potential changes in regulations (e.g., NAIC Model Act, GSE reform) could impact operations and capital requirements.
• Creditors (Debt Holders): The holding company's 5.25% Senior Notes due 2028 are supported by the holding company's $1.1 billion in cash and investments and dividends from subsidiaries. The company believes it has sufficient liquidity to meet debt obligations.

Next Steps

• Continue to maximize value through mortgage credit enhancement activities.
• Differentiate through customer experience.
• Advance competitive advantage through digital and analytical capabilities.
• Excel at acquiring, managing, and distributing mortgage credit risk and related capital.
• Maintain financial strength through economic cycles.
• Foster an environment that attracts and retains talent.
• Implement new reinsurance transactions for eligible NIW in 2026 and 2027.
• Continue to make dividend payments to shareholders in 2026.
• Share repurchase programs are expected to remain the primary means of returning capital to shareholders in 2026.
• Monitor and adapt to potential changes from the NAIC's revised Mortgage Guaranty Insurance Model Act.
• Monitor and adapt to potential changes in GSE credit score modernization efforts (VantageScore 4.0 and FICO 10T implementation).

Key Dates

Recommendation

The filing presents a mixed financial picture for MGIC Investment Corporation. While the company demonstrated strong capital management, including significant share repurchases and increased dividends, and improved its market share within the PMI industry, the decline in net income and the increase in losses incurred are notable concerns. The upgrade by Moody's and positive outlook from S&P are favorable, indicating underlying financial strength. However, the competitive landscape, regulatory uncertainties, and the inherent risks of the mortgage insurance business, particularly sensitivity to economic downturns and home prices, suggest a 'hold' recommendation. Investors should monitor future trends in loss development and the impact of macroeconomic factors on the housing market and the company's profitability.

Keywords

Mortgage Insurance, Private Mortgage Insurance, PMI, SEC Filing, 10-K, Financial Results, Capital Management, Share Repurchase, Dividends, Risk Management, Underwriting, Reinsurance, GSEs, PMIERs, Housing Market, Delinquency Rates, Financial Strength Ratings, Corporate Governance, Cybersecurity, Investment Portfolio, Regulatory Compliance, Homeownership