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What changed in MGIC INVESTMENT CORP's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of MGIC INVESTMENT CORP's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+540 added−527 removedSource: 10-K (2025-02-26) vs 10-K (2024-02-21)

Top changes in MGIC INVESTMENT CORP's 2024 10-K

540 paragraphs added · 527 removed · 454 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

120 edited+12 added−12 removed141 unchanged
Biggest changeThe DEI Executive Council has undertaken a number of initiatives since its inception, including: • Recognizing ten DEI observances through co-worker education, engagement, action, and charitable contributions • Launching DEI workshops and dialogue sessions • Prioritizing DEI in all-company meetings and engaging executive leadership in ongoing advocacy and endorsement TOTAL REWARDS AND TALENT PRACTICES Our total rewards program is designed to provide a competitive package of benefits and compensation elements that recognize the unique needs of our workforce and their families.
Biggest changeTOTAL REWARDS AND TALENT PRACTICES Our total rewards program is designed to provide a competitive package of benefits and compensation elements that recognize the unique needs of our workforce and their families. All full-time MGIC co-workers are eligible to participate in our health program, in addition to a comprehensive medical, dental and vision plan.
The revised Model Act includes requirements relating to, among other things: (i) capital and minimum capital requirements, and contingency reserves; (ii) restrictions on mortgage insurers’ investments in notes secured by mortgages; (iii) prudent underwriting standards and formal underwriting guidelines; (iv) the establishment of formal, internal “Mortgage Guaranty Quality Control Programs” with respect to in-force business; and (v) reinsurance and prohibitions on captive reinsurance arrangements.
The revised Model Act includes requirements relating to, among other things: (i) capital and minimum capital requirements, and contingency reserves; (ii) restrictions on mortgage insurers’ investments in notes secured by mortgages; (iii) prudent underwriting standards and formal underwriting guidelines; (iv) the establishment of formal, internal “Mortgage Guaranty Quality Control Programs” with respect to in-force business; and (v) reinsurance and prohibitions on captive reinsurance arrangements.
For additional information, see our risk factors in Item 1A , including the one titled “The premiums we charge may not be adequate to compensate us for our liabilities for losses and as a result any inadequacy could materially affect our financial condition and results of operations.” Underwriting Insurance Applications Applications for mortgage insurance are submitted to us through both our delegated and non-delegated options.
For additional information, see our risk factors in Item 1A , including the one titled “The premiums we charge may not be adequate to compensate us for our liabilities for losses and as a result any inadequacy could materially affect our financial condition and results of operations.” Underwriting Insurance Applications Applications for mortgage insurance are submitted to us through both our delegated and non-delegated submission options.
The Board has delegated oversight for the following sustainability matters to the following committees, who regularly report their actions to the Board: • Risk Management Committee: Mortgage Credit Risk, including risks associated with climate change. • Management Development, Nominating and Governance Committee: Corporate governance and human capital management policies such as executive compensation; succession planning; recruitment, retention and development of management resources; workforce planning, recruitment morale and talent; diversity and inclusion initiatives; and work environment, including health and safety. • Securities Investment Committee: Our investment portfolio; such oversight may include consideration of sustainability factors. • Audit Committee: Disclosure controls and procedures relating to financial reports made to the SEC and corporate sustainability reports. • Business Transformation and Technology Committee: Cybersecurity and business continuity.
The Board has delegated oversight for the following sustainability matters to the following committees, who regularly report their actions to the Board: • Risk Management Committee: Mortgage Credit Risk, including risks associated with climate change. • Management Development, Nominating and Governance Committee: Corporate governance and human capital management policies such as executive compensation; succession planning; recruitment, management recruitment, retention, training and development; workforce planning, recruitment, morale and talent; diversity and inclusion initiatives; and work environment, including health and safety. • Securities Investment Committee: Our investment portfolio; such oversight may include consideration of sustainability factors. • Audit Committee: Disclosure controls and procedures relating to financial reports made to the SEC and corporate sustainability reports. • Business Transformation and Technology Committee: Cybersecurity and business continuity.
QUOTA SHARE TRANSACTIONS Our QSR Transactions are with unaffiliated reinsurers. As of December 31, 2023, our QSR transactions cover most of our insurance written from 2021 through 2024, and a smaller percentage of our insurance written from 2025. The weighted average coverage percentage of our QSR transactions was 32.0%, based on risk in force as of December 31, 2023.
QUOTA SHARE TRANSACTIONS Our QSR Transactions are with unaffiliated reinsurers. As of December 31, 2024, our QSR transactions cover most of our insurance written from 2021 through 2024, and a smaller percentage of our insurance written from 2025. The weighted average coverage percentage of our QSR transactions was 32.0%, based on risk in force as of December 31, 2024.
The private mortgage insurance industry is greatly impacted by macroeconomic conditions that affect home loan originations and credit performance of home loans, including unemployment rates, home prices, restrictions on mortgage credit due to underwriting standards, interest rates, household formations and homeownership rates.
The private mortgage insurance industry is greatly impacted by macroeconomic conditions that affect home loan originations and credit performance of home loans, including recession, unemployment rates, home prices, restrictions on mortgage credit due to underwriting standards, interest rates, household formations and homeownership rates.
Risk Management and Controls The Company has established enterprise-wide policies, procedures and processes to allow it to identify, assess, monitor and manage the Company’s various risks. Management of these risks is an interdepartmental endeavor, with oversight by the Chief Risk Officer and the SMOC.
Risk Management and Controls The Company has established enterprise-wide policies, procedures and processes to allow it to identify, assess, monitor and manage the Company’s various risks. Management of these risks is an interdepartmental endeavor, with oversight by the Chief Financial Officer and Chief Risk Officer, and the SMOC.
MGIC Investment Corporation 2023 Form 10-K | 21 MGIC Investment Corporation and Subsidiaries For further information about our reinsurance agreements, including the Company's early termination rights, see Note 9 – “Reinsurance,” to our consolidated financial statements in Item 8, and our risk factor titled "Reinsurance may be unavailable at current levels and prices, and/or the GSEs may reduce the amount of capital credit we receive for our reinsurance transactions" in Item 1A.
MGIC Investment Corporation 2024 Form 10-K | 21 MGIC Investment Corporation and Subsidiaries For further information about our reinsurance agreements, including the Company's early termination rights, see Note 9 – “Reinsurance,” to our consolidated financial statements in Item 8, and our risk factor titled "Reinsurance may be unavailable at current levels and prices, and/or the GSEs may reduce the amount of capital credit we receive for our reinsurance transactions" in Item 1A.
Wisconsin, our domiciliary state, has adopted the Risk Management and Own Risk and Solvency Assessment Act, which requires, among other things, that we conduct an Own Risk and Solvency Assessment ("ORSA"), at least annually, to assess the material risks associated with our business and our current and estimated projected future solvency position; and maintain a risk management MGIC Investment Corporation 2023 Form 10-K | 23 MGIC Investment Corporation and Subsidiaries framework to assess, monitor, manage and report on material risks.
Wisconsin, our domiciliary state, has adopted the Risk Management and Own Risk and Solvency Assessment Act, which requires, among other things, that we conduct an Own Risk and Solvency Assessment ("ORSA"), at least annually, to assess the material risks associated with our business and our current and estimated projected future solvency position; and maintain a risk management MGIC Investment Corporation 2024 Form 10-K | 23 MGIC Investment Corporation and Subsidiaries framework to assess, monitor, manage and report on material risks.
Under our current master policy terms, an insured can include accumulated interest only for the first three years the loan is delinquent. MGIC Investment Corporation 2023 Form 10-K | 19 MGIC Investment Corporation and Subsidiaries Other determinants of claim severity are the amount of the mortgage loan, the coverage percentage on the loan, loss mitigation efforts, and local market conditions.
Under our current master policy terms, an insured can include accumulated interest only for the first three years the loan is delinquent. MGIC Investment Corporation 2024 Form 10-K | 19 MGIC Investment Corporation and Subsidiaries Other determinants of claim severity are the amount of the mortgage loan, the coverage percentage on the loan, loss mitigation efforts, and local market conditions.
MGIC Investment Corporation 2023 Form 10-K | 20 MGIC Investment Corporation and Subsidiaries We also establish reserves to provide for the estimated costs of settling claims, general expenses of administering the claims settlement process, legal fees and other fees (“loss adjustment expenses”), and for losses and loss adjustment expenses from delinquencies that have occurred, but have not yet been reported to us (IBNR).
MGIC Investment Corporation 2024 Form 10-K | 20 MGIC Investment Corporation and Subsidiaries We also establish reserves to provide for the estimated costs of settling claims, general expenses of administering the claims settlement process, legal fees and other fees (“loss adjustment expenses”), and for losses and loss adjustment expenses from delinquencies that have occurred, but have not yet been reported to us (IBNR).
COMMUNITY INVOLVEMENT Our commitment to community is formalized under the banner of Giving Back, Together , and in 2023 included providing financial and in-kind support for organizations that support housing, youth programs, and the arts in our community and nationwide. We also provided paid time off for co-workers to volunteer or work at election polling places. H.
COMMUNITY INVOLVEMENT Our commitment to community is formalized under the banner of Giving Back, Together , and in 2024 included providing financial and in-kind support for organizations that support housing, youth programs, and the arts in our community and nationwide. We also provided paid time off for co-workers to volunteer or work at election polling places. H.
On February 22, 2023, the FHA announced a 30-basis point decrease in its mortgage insurance premium rates. This rate reduction has negatively impacted our NIW. We are unable to predict the extent of any further impact on our NIW or how the factors that affect the FHA's share of NIW will change in the future.
In 2023, the FHA announced a 30-basis point decrease in its mortgage insurance premium rates. This rate reduction has negatively impacted our NIW. We are unable to predict the extent of any further impact on our NIW or how the factors that affect the FHA's share of NIW will change in the future.
In 2023, a substantial majority of our volume was on loans with GSE standard or higher coverage. For loans that are not sold to the GSEs, the lender determines the coverage percentage from those that we offer. Higher coverage percentages generally result in increased severity, which is the amount paid on a claim.
In 2024, a substantial majority of our volume was on loans with GSE standard or higher coverage. For loans that are not sold to the GSEs, the lender determines the coverage percentage from those that we offer. Higher coverage percentages generally result in increased severity, which is the amount paid on a claim.
Beginning in 2013, we aligned most of our underwriting requirements with Fannie Mae and Freddie Mac for loans that receive and are processed in accordance with certain approval recommendations from a GSE automated underwriting system. Our underwriting requirements are available on our website at http://www.mgic.com/underwriting/index.html.
Beginning in 2013, we aligned most of our underwriting requirements with Fannie Mae and Freddie Mac for loans that receive and are processed in accordance with certain approval recommendations from a GSE automated underwriting system. Our underwriting requirements are available on our website at http://www.mgic.com/underwriting.
There can be no assurance that other federal laws and regulations affecting these institutions and entities will not change, or that new legislation or regulations will not be adopted which will adversely affect the private mortgage insurance industry. MGIC Investment Corporation 2023 Form 10-K | 25 MGIC Investment Corporation and Subsidiaries G.
There can be no assurance that other federal laws and regulations affecting these institutions and entities will not change, or that new legislation or regulations will not be adopted which will adversely affect the private mortgage insurance industry. MGIC Investment Corporation 2024 Form 10-K | 25 MGIC Investment Corporation and Subsidiaries G.
Additionally, HOPA requires mortgage insurance to terminate automatically when the principal balance of the loan is first scheduled to reach 78% of the original MGIC Investment Corporation 2023 Form 10-K | 11 MGIC Investment Corporation and Subsidiaries value of the property and the borrower is current on loan payments or thereafter becomes current.
Additionally, HOPA requires mortgage insurance to terminate MGIC Investment Corporation 2024 Form 10-K | 11 MGIC Investment Corporation and Subsidiaries automatically when the principal balance of the loan is first scheduled to reach 78% of the original value of the property and the borrower is current on loan payments or thereafter becomes current.
The majority of loans we insured prior to 2014 (which represent 37% of the loans in the delinquency inventory) are covered by master policy terms that, except under certain circumstances, do not limit the number of years of accumulated interest that an insured may include in a claim.
The majority of loans we insured prior to 2014 (which represent 29% of the loans in the delinquency inventory) are covered by master policy terms that, except under certain circumstances, do not limit the number of years of accumulated interest that an insured may include in a claim.
Paul-Bloomington 1.9 % Phoenix-Mesa-Scottsdale 1.8 % Total 27.5 % The percentages shown above for various metropolitan-based statistical areas can be affected by changes, from time to time, in the federal government’s definition of a core-based statistical area.
Paul-Bloomington 1.9 % Phoenix-Mesa-Scottsdale 1.8 % Total 27.3 % The percentages shown above for various metropolitan-based statistical areas can be affected by changes, from time to time, in the federal government’s definition of a core-based statistical area.
Policy Year The following table sets forth the dispersion and certain statistics associated with our primary IIF and RIF as of December 31, 2023, by year(s) of policy origination since we began operations in 1985. Primary insurance in force and risk in force by policy year ($ in billions) Insurance in Force Risk In Force Weighted Avg.
Policy Year The following table sets forth the dispersion and certain statistics associated with our primary IIF and RIF as of December 31, 2024, by year(s) of policy origination since we began operations in 1985. Primary insurance in force and risk in force by policy year ($ in billions) Insurance in Force Risk In Force Weighted Avg.
MGIC Investment Corporation 2023 Form 10-K | 15 MGIC Investment Corporation and Subsidiaries SALES AND MARKETING AND COMPETITION Sales and Marketing Our employees sell our insurance products throughout the United States, Puerto Rico, and Guam. Competition Our competition includes other mortgage insurers, governmental agencies and products designed to eliminate the need to purchase private mortgage insurance.
MGIC Investment Corporation 2024 Form 10-K | 15 MGIC Investment Corporation and Subsidiaries SALES AND MARKETING AND COMPETITION Sales and Marketing Our employees sell our insurance products throughout the United States, Puerto Rico, and Guam. Competition Our competition includes other mortgage insurers, governmental agencies and products designed to eliminate the need to purchase private mortgage insurance.
The primary delinquency inventory in those same jurisdictions at December 31, 2023 and 2022 appears in “Management’s Discussion and Analysis – Consolidated Results of Operations – Losses and expenses – Loss Reserves,” in Item 7 . Claims Claims result from delinquencies that are not cured. .
The primary delinquency inventory in those same jurisdictions at December 31, 2024 and 2023 appears in “Management’s Discussion and Analysis – Consolidated Results of Operations – Losses and expenses – Loss Reserves,” in Item 7 . Claims Claims result from delinquencies that are not cured.
See our risk factors “We may not continue to meet the GSEs’ mortgage insurer eligibility requirements and our returns may decrease as we are required to maintain significantly more capital in order to maintain our eligibility” and “State Capital requirements may prevent us from continuing to write new insurance on an uninterrupted basis” in Item 1A, for information about regulations governing our capital adequacy and our expectations regarding our future capital position.
See our risk factors “We may not continue to meet the GSEs’ mortgage insurer eligibility requirements and our returns may decrease as we are required to maintain significantly more capital in order to maintain our eligibility” and “ State Capital requirements may prevent us from continuing to write new insurance on an uninterrupted basis” in Item 1A, for information about regulations governing our capital adequacy and our expectations regarding our future capital position.
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. MGIC Investment Corporation 2023 Form 10-K | 10 MGIC Investment Corporation and Subsidiaries B.
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. MGIC Investment Corporation 2024 Form 10-K | 10 MGIC Investment Corporation and Subsidiaries B.
For more information about the business practices of the GSEs that impact our business, see our risk factor titled "Changes in the business practices of Fannie Mae and Freddie Mac ("the GSEs"), federal legislation that changes their charters or a restructuring of the GSEs could reduce our revenues or increase our losses .
For more information about the business practices of the GSEs that impact our business, see our risk factor titled "Changes in the business practices of Fannie Mae and Freddie Mac ("the GSEs"), federal legislation that changes their charters or a restructuring of the GSEs could reduce our revenues or increase our losses . " in Item 1A .
Specifically relating to mortgage insurance, (1) Fannie Mae’s Plan includes the creation of special purpose credit program(s) ("SPCPs") targeted to historically underserved borrowers with a goal of lowering costs for such borrowers through lower than standard mortgage insurance requirements; and (2) Freddie Mac’s Plan includes plans to work with mortgage insurers to look for ways to lower mortgage costs, the creation of SPCPs targeted to historically underserved borrowers, and the planned purchase of loans originated through lender-created SPCPs.
Specifically relating to mortgage insurance, (1) Fannie Mae’s Plan includes the creation of special purpose credit program(s) ("SPCPs") targeted to historically underserved borrowers and the support of locally-controlled SPCPs with a goal of lowering costs for such borrowers through lower than standard mortgage insurance requirements; and (2) Freddie Mac’s Plan includes plans to work with mortgage insurers to look for ways to lower mortgage costs, the creation of SPCPs targeted to historically underserved borrowers, and the planned purchase of loans originated through lender-created SPCPs.
MGIC Investment Corporation 2023 Form 10-K | 8 MGIC Investment Corporation and Subsidiaries OVERVIEW OF THE PRIVATE MORTGAGE INSURANCE INDUSTRY AND ITS OPERATING ENVIRONMENT We established the modern PMI industry in 1957 to provide a private market alternative to federal government insurance programs.
MGIC Investment Corporation 2024 Form 10-K | 8 MGIC Investment Corporation and Subsidiaries OVERVIEW OF THE PRIVATE MORTGAGE INSURANCE INDUSTRY AND ITS OPERATING ENVIRONMENT We established the modern PMI industry in 1957 to provide a private market alternative to federal government insurance programs.
For further information, see our risk factors in Item 1A , including the ones titled “Because we establish loss reserves only upon a loan delinquency rather than based on estimates of our ultimate losses on risk in force, losses may have a disproportionate adverse effect on our earnings in certain periods,” and “Because loss reserve estimates are subject to uncertainties, paid claims may be substantially different than our loss reserves.” Our losses incurred were $(20.9) million in 2023, compared to $(254.6) million and $64.6 million in 2022 and 2021, respectively.
For further information, see our risk factors in Item 1A , including the ones titled “Because we establish loss reserves only upon a loan delinquency rather than based on estimates of our ultimate losses on risk in force, losses may have a disproportionate adverse effect on our earnings in certain periods,” and “Because loss reserve estimates are subject to uncertainties, paid claims may be substantially different than our loss reserves.” Our losses incurred were $(14.9) million in 2024, compared to $(20.9) million and $(254.6) million in 2023 and 2022, respectively.
MGIC Investment Corporation 2023 Form 10-K | 12 MGIC Investment Corporation and Subsidiaries MORTGAGE INSURANCE PORTFOLIO Geographic Dispersion The following tables reflect the percentage of primary RIF in the top 10 jurisdictions and top 10 metropolitan statistical areas at December 31, 2023.
MGIC Investment Corporation 2024 Form 10-K | 12 MGIC Investment Corporation and Subsidiaries MORTGAGE INSURANCE PORTFOLIO Geographic Dispersion The following tables reflect the percentage of primary RIF in the top 10 jurisdictions and top 10 metropolitan statistical areas at December 31, 2024.
Primary delinquency rate by jurisdiction 2023 2022 2021 Florida * 2.8 % 3.1 % 3.7 % Texas 2.5 % 2.3 % 3.1 % Illinois * 2.7 % 2.6 % 3.4 % Pennsylvania * 2.1 % 2.2 % 2.5 % California 2.3 % 2.2 % 3.2 % New York * 3.4 % 3.5 % 4.3 % Ohio * 2.2 % 2.2 % 2.4 % Michigan 2.3 % 1.9 % 2.4 % Georgia 2.5 % 2.3 % 3.1 % New Jersey * 2.6 % 2.9 % 4.1 % North Carolina 1.7 % 1.7 % 2.3 % Maryland 2.3 % 2.4 % 3.3 % Indiana * 2.5 % 2.3 % 2.8 % Minnesota 1.6 % 1.6 % 2.0 % Virginia 1.4 % 1.4 % 1.9 % All other jurisdictions 2.0 % 2.0 % 2.6 % Note: Asterisk denotes jurisdictions in the table above that predominately use a judicial foreclosure process, which generally increases the amount of time it takes for a foreclosure to be completed.
Primary delinquency rate by jurisdiction 2024 2023 2022 Florida * 3.7 % 2.8 % 3.1 % Texas 2.6 % 2.5 % 2.3 % Illinois * 2.9 % 2.7 % 2.6 % Pennsylvania * 2.2 % 2.1 % 2.2 % California 2.5 % 2.3 % 2.2 % Ohio * 2.3 % 2.2 % 2.2 % Michigan 2.5 % 2.3 % 1.9 % New York * 3.1 % 3.4 % 3.5 % Georgia 2.9 % 2.5 % 2.3 % North Carolina 2.3 % 1.7 % 1.7 % New Jersey * 2.5 % 2.6 % 2.9 % Indiana * 2.7 % 2.5 % 2.3 % Maryland 2.2 % 2.3 % 2.4 % Minnesota 1.8 % 1.6 % 1.6 % South Carolina * 3.3 % 2.6 % 2.4 % All other jurisdictions 2.0 % 2.0 % 2.0 % Note: Asterisk denotes jurisdictions in the table above that predominately use a judicial foreclosure process, which generally increases the amount of time it takes for a foreclosure to be completed.
Inside Mortgage Finance estimates that in 2023, the VA accounted for 21.5% of all low down payment residential mortgages that were subject to FHA, VA, USDA or primary private mortgage insurance, compared to 24.5% in 2022 and 30.2% in 2021. Since 2012, the VA's market share has been as high as 30.9% (in 2020).
Inside Mortgage Finance estimates that in 2024, the VA accounted for 24.5% of all low down payment residential mortgages that were subject to FHA, VA, USDA or primary private mortgage insurance, compared to 21.5% in 2023 and 24.5% in 2022. Since 2012, the VA's market share has been as high as 30.9% (in 2020).
The weighted average “decision FICO score” at loan origination for NIW in 2023 was 753 compared to 747 in 2022. The FICO score for a loan with multiple borrowers is the lowest of the borrowers’ decision FICO scores.
The weighted average “decision FICO score” at loan origination for NIW in 2024 was 747 compared to 753 in 2023. The FICO score for a loan with multiple borrowers is the lowest of the borrowers’ decision FICO scores.
The rating agency issuing the financial strength rating can withdraw or change its rating at any time. At the time that this annual report was finalized, the financial strength of MGIC was rated A- (with a positive outlook) by A.M.
The rating agency issuing the financial strength rating can withdraw or change its rating at any time. At the time that this annual report was finalized, the financial strength of MGIC was rated A (with a stable outlook) by A.M.
Whether a claim results from an uncured delinquency depends, in large part, on the borrower’s equity in the home at the time of delinquency, the borrower’s or the lender’s ability to sell the home for an amount sufficient to satisfy all amounts due under the mortgage and the willingness and ability of the borrower and lender to enter into a loan modification that provides for a cure of the delinquency.
Whether a claim results from an uncured delinquency depends, in large part, on the willingness and ability of the borrower and lender to enter into a loan modification that provides for a cure of the delinquency 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.
MGIC's “policyholder position” includes its net worth or surplus and its contingency reserve. At December 31, 2023, MGIC’s risk-to-capital ratio was 10.2 to 1, below the maximum allowed by the jurisdictions with State Capital Requirements, and its policyholder position was $3.6 billion above the required MPP of $2.2 billion.
MGIC's “policyholder position” includes its net worth or surplus and its contingency reserve. At December 31, 2024, MGIC’s risk-to-capital ratio was 10.0 to 1, below the maximum allowed by the jurisdictions with State Capital Requirements, and its policyholder position was $3.6 billion above the required MPP of $2.2 billion.
The high 2021 volume resulted, in part, from historically low interest rates driving sustained borrower demand, including for refinances, and the effect that the COVID-19 pandemic had on demand for homes.
The high 2022 volume resulted, in part, from historically low interest rates driving sustained borrower demand, including for refinances, and the effect that the COVID-19 pandemic had on demand for homes.
Reinsurance Agreements We have in place quota share reinsurance ("QSR") and excess of loss reinsurance ("XOL") transactions providing various amounts of coverage on our risk in force as of December 31, 2023.
Reinsurance Agreements We have in place quota share reinsurance ("QSR") and excess of loss reinsurance ("XOL") transactions providing various amounts of coverage on our risk in force as of December 31, 2024.
Asset-backed and mortgage-backed securities are not included in these maturity categories as the expected maturities may be different from the stated maturities depending upon the periodic payments during the life of the security. Asset-backed securities represent 13% of the investment portfolio (CLOs represent 6%, CMBS represent 4% and other asset-backed securities represent 3%).
Asset-backed and mortgage-backed securities are not included in these maturity categories as the expected maturities may be different from the stated maturities depending upon the periodic payments during the life of the security. Asset-backed securities represent 10% of the investment portfolio (CLOs represent 3%, CMBS represent 4% and other asset-backed securities represent 3%).
As of December 31, 2023, our principal mortgage insurance subsidiary, MGIC, was licensed in all 50 states of the United States, the District of Columbia, Puerto Rico and Guam.
As of December 31, 2024, our principal mortgage insurance subsidiary, MGIC, was licensed in all 50 states of the United States, the District of Columbia, Puerto Rico and Guam.
Characteristics of primary risk in force December 31, 2023 December 31, 2022 Primary RIF (In billions) : $ 77.2 $ 76.5 Loan-to-value ratios: 95.01% and above 15.7 % 15.2 % 90.01 - 95.00% 52.4 % 52.0 % 85.01 - 90.00% 27.2 % 27.2 % 80.01 - 85.00% 4.5 % 5.4 % 80% and below 0.2 % 0.2 % Total 100.0 % 100.0 % Debt-to-income ratios: 45.01% and above 17.5 % 15.6 % 38.01% - 45.00% 31.8 % 31.6 % 38% and below 50.7 % 52.8 % Total 100.0 % 100.0 % Loan Type: Fixed (1) 99.6 % 99.5 % ARMs (2) 0.4 % 0.5 % Total 100.0 % 100.0 % Original Insured Loan Amount: (3) Conforming loan limit and below 97.3 % 97.3 % Non-conforming 2.7 % 2.7 % Total 100.0 % 100.0 % Mortgage Term: 15-years and under 0.7 % 1.1 % Over 15 years 99.3 % 98.9 % Total 100.0 % 100.0 % Property Type: Single-family detached 86.7 % 86.9 % Condominium/Townhouse/Other attached 12.6 % 12.5 % Other (4) 0.7 % 0.6 % Total 100.0 % 100.0 % Occupancy Status: Owner occupied 98.1 % 97.8 % Second home 1.8 % 2.1 % Investor property 0.1 % 0.1 % Total 100.0 % 100.0 % Documentation: Reduced: (5) Stated 0.5 % 0.6 % No 0.2 % 0.2 % Full documentation 99.3 % 99.2 % Total 100.0 % 100.0 % MGIC Investment Corporation 2023 Form 10-K | 14 MGIC Investment Corporation and Subsidiaries Characteristics of primary risk in force December 31, 2023 December 31, 2022 FICO Score: (6) 760 and greater 43.1 % 42.2 % 740 - 759 17.9 % 17.7 % 720 - 739 14.1 % 14.1 % 700 - 719 10.8 % 11.1 % 680 - 699 7.3 % 7.7 % 660 - 679 3.2 % 3.3 % 640 - 659 1.8 % 1.9 % 639 and less 1.8 % 2.0 % Total 100.0 % 100.0 % (1) 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 then increased thereafter to the original interest rate), ARMs in which the initial interest rate is fixed for at least five years, and balloon payment mortgages (a loan with a maturity, typically five to seven years, that is shorter than the loan’s amortization period).
Characteristics of primary risk in force December 31, 2024 December 31, 2023 Primary RIF (In billions) : $ 78.8 $ 77.2 Loan-to-value ratios: 95.01% and above 16.6 % 15.7 % 90.01 - 95.00% 53.1 % 52.4 % 85.01 - 90.00% 26.5 % 27.2 % 80.01 - 85.00% 3.5 % 4.5 % 80% and below 0.3 % 0.2 % Total 100.0 % 100.0 % Debt-to-income ratios: 45.01% and above 19.8 % 17.5 % 38.01% - 45.00% 32.0 % 31.8 % 38% and below 48.2 % 50.7 % Total 100.0 % 100.0 % Loan Type: Fixed (1) 99.6 % 99.6 % ARMs (2) 0.4 % 0.4 % Total 100.0 % 100.0 % Original Insured Loan Amount: (3) Conforming loan limit and below 97.6 % 97.3 % Non-conforming 2.4 % 2.7 % Total 100.0 % 100.0 % Mortgage Term: 15-years and under 0.5 % 0.7 % Over 15 years 99.5 % 99.3 % Total 100.0 % 100.0 % Property Type: Single-family detached 86.6 % 86.7 % Condominium/Townhouse/Other attached 12.5 % 12.6 % Other (4) 0.9 % 0.7 % Total 100.0 % 100.0 % Occupancy Status: Owner occupied 98.3 % 98.1 % Second home 1.6 % 1.8 % Investor property 0.1 % 0.1 % Total 100.0 % 100.0 % Documentation: Reduced: (5) Stated 0.5 % 0.5 % No 0.1 % 0.2 % Full documentation 99.4 % 99.3 % Total 100.0 % 100.0 % MGIC Investment Corporation 2024 Form 10-K | 14 MGIC Investment Corporation and Subsidiaries Characteristics of primary risk in force December 31, 2024 December 31, 2023 FICO Score: (6) 760 and greater 43.9 % 43.1 % 740 - 759 18.0 % 17.9 % 720 - 739 14.2 % 14.1 % 700 - 719 10.6 % 10.8 % 680 - 699 7.0 % 7.3 % 660 - 679 3.1 % 3.2 % 640 - 659 1.6 % 1.8 % 639 and less 1.6 % 1.8 % Total 100.0 % 100.0 % (1) 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 then increased thereafter to the original interest rate), ARMs in which the initial interest rate is fixed for at least five years, and balloon payment mortgages (a loan with a maturity, typically five to seven years, that is shorter than the loan’s amortization period).
In 2023, MGIC paid $600 million in dividends to the holding company. For further information, see Note 14 – “Statutory Information,” to our consolidated financial statements in Item 8. Mortgage insurance premium rates are 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.
In 2024, MGIC paid $750 million in dividends to the holding company. For further information, see Note 14 – “Statutory Information,” to our consolidated financial statements in Item 8. Mortgage insurance premium rates are 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.
The primary delinquency rate for the top 15 jurisdictions (based on December 31, 2023 delinquency inventory) at December 31, 2023, 2022, and 2021 appears in table the below.
The primary delinquency rate for the top 15 jurisdictions (based on December 31, 2024 delinquency inventory) at December 31, 2024, 2023, and 2022 appears in the table below.
For information about the credit ratings of securities in our investment portfolio, see "Balance Sheet Review" in Item 7 . Investment Operations At December 31, 2023, the sectors represented in our investment portfolio were as shown in the table below: Investment portfolio - sectors Percentage of Portfolio’s Fair Value 1. Corporate 44% 2. Tax-Exempt Municipals 10% 3.
For information about the credit ratings of securities in our investment portfolio, see "Balance Sheet Review" in Item 7 . Investment Operations At December 31, 2024, the sectors represented in our investment portfolio were as shown in the table below: Investment portfolio - sectors Percentage of Portfolio’s Fair Value 1. Corporate 47% 2. Tax-Exempt Municipals 10% 3.
Future regulation is expected to address the use of algorithms, artificial intelligence and data and analytics to determine pricing and for other purposes.
Future regulation is expected to address the use of algorithms, artificial intelligence and data and analytics in underwriting to determine pricing and for other purposes.
The number of “on-call” co-workers can vary substantially, primarily as a result of changes in demand for contract underwriting services. In recent years, the number of “on-call” co-workers has ranged from fewer than 10 to more than 110.
The number of “on-call” co-workers can vary substantially, primarily as a result of changes in demand for our services. In recent years, the number of “on-call” co-workers has ranged from fewer than 10 to more than 110.
Top 10 jurisdictions – RIF California 8.6 % Texas 7.7 % Florida 6.7 % Pennsylvania 5.1 % Illinois 4.1 % Virginia 3.9 % North Carolina 3.7 % Ohio 3.6 % Georgia 3.5 % New York 3.5 % Total 50.4 % Top 10 metropolitan-based statistical areas – RIF New York-Newark-Jersey City 4.3 % Washington-Arlington-Alexandria 4.1 % Chicago-Naperville-Arlington Heights 3.3 % Atlanta-Sandy Springs-Roswell 2.6 % Philadelphia-Camden-Wilmington 2.6 % Dallas-Fort Worth 2.4 % Los Angeles-Long Beach-Anaheim 2.3 % Houston-Woodlands-Sugar Land 2.2 % Minneapolis-St.
Top 10 jurisdictions – RIF California 9.0 % Texas 8.0 % Florida 6.7 % Pennsylvania 5.2 % Illinois 4.1 % Virginia 3.8 % New York 3.6 % Ohio 3.5 % North Carolina 3.4 % Maryland 3.3 % Total 50.6 % Top 10 metropolitan-based statistical areas – RIF New York-Newark-Jersey City 4.3 % Washington-Arlington-Alexandria 4.0 % Chicago-Naperville-Elgin 3.2 % Philadelphia-Camden-Wilmington 2.6 % Dallas-Fort Worth-Arlington 2.6 % Atlanta-Sandy Springs-Roswell 2.4 % Los Angeles-Long Beach-Anaheim 2.4 % Houston-The Woodlands-Sugar Land 2.1 % Minneapolis-St.
In performing this general responsibility, the Council has discretion to: adopt the Company’s general strategy with respect to sustainability matters; identify current and emerging sustainability issues that may affect the Company’s business, strategy, operations, performance, or public image; make recommendations regarding policies, practices, procedures, or disclosures to address sustainability matters; oversee the Company’s internal and external reporting and disclosures surrounding sustainability matters; and advise on material concerns of shareholders or stakeholders regarding sustainability matters.
In performing this general responsibility, the Council has discretion to: adopt the Company’s general strategy with respect to sustainability matters; identify current and emerging sustainability issues that may affect the Company’s business, strategy, operations, performance, or public image; make recommendations regarding policies, practices, procedures, or disclosures to address sustainability matters; oversee the Company’s corporate sustainability and related disclosures surrounding sustainability matters; and advise on material concerns of shareholders or stakeholders regarding sustainability matters.
Primary insurance and risk in force (In billions) 2023 2022 2021 2020 2019 Primary IIF $ 293.5 $ 295.3 $ 274.4 $ 246.6 $ 222.3 Primary RIF 77.2 76.5 69.3 61.8 57.2 For loans sold to a GSE, the coverage percentage must comply with the requirements established by the particular GSE to which the loan is delivered.
Primary insurance and risk in force (In billions) 2024 2023 2022 2021 2020 Primary IIF $ 295.4 $ 293.5 $ 295.3 $ 274.4 $ 246.6 Primary RIF 78.8 77.2 76.5 69.3 61.8 For loans sold to a GSE, the coverage percentage must comply with the requirements established by the particular GSE to which the loan is delivered.
For information about losses incurred from 2021 to 2023, including the amounts of losses incurred that are associated with delinquency notices received in the reporting year compared to losses incurred associated with delinquency notices received in prior years, see Note 8 – "Loss Reserves" to our consolidated financial statements in Item 8 . D.
For information about losses incurred from 2022 to 2024, including the amounts of losses incurred that are associated with delinquency notices received in the reporting year compared to losses incurred associated with delinquency notices received in prior years, see Note 8 – "Loss Reserves" to our consolidated financial statements in Item 8 . D.
In recent years, the mortgage insurance industry has materially reduced its use of standard rate cards, which were fairly consistent among competitors, and correspondingly increased its use of (i)"risk based pricing systems" that use a spectrum of filed rates to allow for formulaic, risk-based pricing based on multiple attributes that may be quickly adjusted within certain parameters, and (ii) customized rate plans.
In recent years, the mortgage insurance industry has materially reduced its use of standard rate cards, which were fairly consistent among competitors, and correspondingly increased its use of (i)"risk based pricing systems" that use a spectrum of filed rates to allow for formulaic, risk-based pricing based on multiple attributes that may be quickly adjusted within certain parameters, and (ii) customized rate plans pursuant to which rates may be available to customers for a defined period of time.
The FHA, VA and USDA sponsor government-backed mortgage insurance programs, and it is estimated that during 2023, they accounted for a combined approximately 55.9% of the total low down payment residential mortgages which were subject to FHA, VA, USDA or primary private mortgage insurance, compared to 52.8% in 2022.
The FHA, VA and USDA sponsor government-backed mortgage insurance programs, and it is estimated that during 2024, they accounted for a combined approximately 58.9% of the total low down payment residential mortgages which were subject to FHA, VA, USDA or primary private mortgage insurance, compared to 55.9% in 2023.
A dividend is extraordinary when the proposed dividend amount, plus dividends paid in the twelve months preceding the dividend payment date exceed the ordinary dividend level. In 2024, MGIC can pay $64 million of ordinary dividends without OCI approval, before taking into consideration dividends paid in the preceding twelve months.
A dividend is extraordinary when the proposed dividend amount, plus dividends paid in the twelve months preceding the dividend payment date exceed the ordinary dividend level. In 2025, MGIC can pay $97 million of ordinary dividends without OCI approval, before taking into consideration dividends paid in the preceding twelve months.
Our underwriters are authorized to approve loans that do not meet all of our underwriting requirements under certain circumstances. Exposure to Catastrophic Losses The PMI industry experienced catastrophic losses in the mid-to-late 1980s, similar to the losses we experienced in 2007-2013.
We may approve loans that do not meet all of our underwriting requirements under certain circumstances. Exposure to Catastrophic Losses The PMI industry experienced catastrophic losses in the mid-to-late 1980s, similar to the losses we experienced in 2007-2013.
Relatively few claims are typically received during the first two years following issuance of coverage on a loan. The highest level of claim activity has typically occurred in the third and fourth years after the year of loan origination.
Claims received are generally lower during the first two years following issuance of coverage on a loan. The highest level of claim activity has typically occurred in the third and fourth years after the year of loan origination.
As of December 31, 2023, approximately 92% of our investment portfolio (excluding cash and cash equivalents) was managed by two external investment managers, although we maintain overall control of investment policy and strategy. We maintain direct management of the remainder of our investment portfolio.
As of December 31, 2024, approximately 94% of our investment portfolio (excluding cash and cash equivalents) was managed by two external investment managers, although we maintain overall control of investment policy and strategy. We maintain direct management of the remainder of our investment portfolio.
MORTGAGE CREDIT RISK We believe that mortgage credit risk is materially affected by: • the condition of the economy, including the direction of change in home prices and employment, in the area in which the property is located; • the borrower’s credit profile, including the borrower’s credit history, DTI ratio and cash reserves, and the willingness of a borrower with sufficient resources to make mortgage payments when the mortgage balance exceeds the value of the home; • the loan product, which encompasses the LTV ratio, the type of loan instrument, including whether the instrument provides for fixed or variable payments and the amortization schedule, the type of property and the purpose of the loan; • origination practices of lenders and the percentage of coverage on insured loans; and • the size of insured loans.
MORTGAGE CREDIT RISK We believe that mortgage credit risk is materially affected by: • the condition of the economy, including the direction of change in home prices and employment, in the area in which the property is located; • the borrower’s credit profile, including the borrower’s credit history, DTI ratio and cash reserves, and the willingness of a borrower with sufficient resources to make mortgage payments when the mortgage balance exceeds the value of the home; • the loan product, which encompasses the LTV ratio, the type of loan instrument, including whether the instrument provides for fixed or variable payments and the amortization schedule, the type of property (including its use) and the purpose of the loan; • origination practices of lenders and the percentage of coverage on insured loans; and MGIC Investment Corporation 2024 Form 10-K | 17 MGIC Investment Corporation and Subsidiaries • the size of insured loans.
We believe that we currently compete with other private mortgage insurers based on premium rates, underwriting requirements, financial strength (including based on credit or financial strength ratings), customer relationships, name recognition, reputation, strength of management teams and field organizations, the ancillary products and services provided to lenders, and the effective use of technology and innovation in the delivery and servicing of our mortgage insurance products.
We believe that we currently compete with other private mortgage insurers based on premium rates, underwriting requirements, financial strength (including based on credit or financial strength ratings), customer relationships, name recognition, reputation, strength of management teams and field organizations, and the effective use of technology and innovation in the delivery and servicing of our mortgage insurance products. The U.S.
In 2023, $284 billion of mortgages were insured with primary coverage by private mortgage insurers, compared to $405 for the full year of 2022, and $585 billion for full year 2021.
In 2024, $299 billion of mortgages were insured with primary coverage by private mortgage insurers, compared to $284 billion for the full year of 2023, and $405 billion for the full year of 2022.
Various factors affect the frequency and amount of claims, including local home prices and employment levels, and interest rates. If a delinquency goes to claim, any renewal premiums collected to insure the loan during the time period between the last paid installment and the claim payment is returned to the servicer along with the claim payment.
Various factors affect the frequency and amount of claims, including local home prices, employment levels, and interest rates. If a delinquency results in a paid claim, any renewal premiums collected to insure the loan for the time period following the last paid installment is returned to the servicer along with the claim payment.
MGIC Investment Corporation 2023 Form 10-K | 26 MGIC Investment Corporation and Subsidiaries PART I
MGIC Investment Corporation 2024 Form 10-K | 26 MGIC Investment Corporation and Subsidiaries PART I
GNMA and other agency mortgage-backed securities represent 7% of the investment portfolio. Our pre-tax yield was 3.7%, 3.0%, and 2.5% for 2023, 2022, and 2021, respectively, and our after-tax yield was 3.0%, 2.5%, and 2.1% for 2023, 2022, and 2021, respectively.
GNMA and other agency mortgage-backed securities represent 6% of the investment portfolio. Our pre-tax yield was 4.0%, 3.7%, and 3.0% for 2024, 2023, and 2022, respectively, and our after-tax yield was 3.2%, 3.0%, and 2.5% for 2024, 2023, and 2022, respectively.
During 2023, we wrote new insurance in each of those jurisdictions. 2024 BUSINESS STRATEGIES Our business strategies continue to be to 1) maximize the value we create through our mortgage credit enhancement activities; 2) differentiate ourselves through our customer experience; 3) establish a competitive advantage through our digital and analytical capabilities; 4) excel at acquiring, managing and distributing mortgage credit risk and the related capital; 5) maintain financial strength through economic cycles; and 6) foster an environment that embraces diversity and best positions our people to succeed. 2023 ACCOMPLISHMENTS Following are several of our 2023 accomplishments that furthered our business strategies. • Earned $713 million of net income ($2.49 per diluted share) for the year, compared to $865 million ($2.79 per diluted share) in 2022. • Expanded our reinsurance program by securing quota share reinsurance covering the majority of our 2024 NIW, entered into a $330 million excess of loss reinsurance agreement executed through a mortgage insurance linked notes transaction in the capital market, and placed a forward-commitment excess of loss reinsurance agreement covering 2023 NIW.
During 2024, we wrote new insurance in each of those jurisdictions. 2025 BUSINESS STRATEGIES Our business strategies continue to be to 1) maximize the value we create through our mortgage credit enhancement activities; 2) differentiate ourselves through our customer experience; 3) establish a competitive advantage through our digital and analytical capabilities; 4) excel at acquiring, managing and distributing mortgage credit risk and the related capital; 5) maintain financial strength through economic cycles; and 6) foster an environment that embraces diversity and best positions our people to succeed. 2024 ACCOMPLISHMENTS Following are several of our 2024 accomplishments that furthered our business strategies. • Earned $763 million of net income ($2.89 per diluted share) for the year, compared to $713 million ($2.49 per diluted share) in 2023. • Expanded our reinsurance program by finalizing quota share reinsurance covering the majority of our 2025 and 2026 NIW and placing a forward-commitment excess of loss reinsurance agreement covering 2024 NIW.
Wisconsin has also adopted the annual enterprise risk reporting, group capital calculation, and "Corporate Governance Disclosure" requirements of the NAIC Model Act.
Wisconsin has also adopted the annual enterprise risk reporting, group capital calculation, and "Corporate Governance Disclosure" requirements of the relevant NAIC model laws and regulations.
" in Item 1A INDIRECT REGULATION We are also indirectly, but significantly, impacted by regulations affecting purchasers of mortgage loans, such as the GSEs, and regulations affecting governmental insurers, such as the FHA and the VA, and lenders.
INDIRECT REGULATION We are also indirectly, but significantly, impacted by regulations affecting purchasers of mortgage loans, such as the GSEs, and regulations affecting government insurers, such as the FHA and the VA, and lenders.
Human Capital Our talent practices reflect a commitment to creating a positive co-worker experience. In 2023, we continued to support our co-workers in their career journeys and worked to further connect them to each other and the community. As of December 31, 2023, we had 627 co-workers not including "on-call" and part-time co-workers.
Human Capital Our talent practices reflect a commitment to creating a positive co-worker experience. We continue to support our co-workers in their career journeys and work to further connect them to each other and the community. As of December 31, 2024, we had 555 co-workers not including "on-call" and part-time co-workers.
Taxable Municipals 23% 4. Asset-Backed 13% 5. U.S. government and agency debt 3% 6. GNMA and other agency mortgage-backed securities 7% 100% We have no derivative financial instruments in our investment portfolio.
Taxable Municipals 22% 4. Asset-Backed 10% 5. U.S. government and agency debt 5% 6. GNMA and other agency mortgage-backed securities 6% 100% We have no derivative financial instruments in our investment portfolio.
The U.S. PMI industry currently consists of six active mortgage insurers and their affiliates, including MGIC. Our market share (as measured by NIW) was 16.3% in 2023, compared to 18.9% in 2022. (source: Inside Mortgage Finance ).
PMI industry currently consists of six active mortgage insurers and their affiliates, including MGIC. Our market share (as measured by NIW) was 18.6% in 2024, compared to 16.3% in 2023. (source: Inside Mortgage Finance ).
The guidelines specify that a residential mortgage loan originated with a loan-to-value ratio 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.
The guidelines specify that a residential mortgage loan originated with loan-to-value ratios above certain levels 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.
E. Investment Portfolio POLICY AND STRATEGY At December 31, 2023, the fair value of our investment portfolio was approximately $5.7 billion. In addition, at December 31, 2023, our total assets included approximately $364 million of cash and cash equivalents.
E. Investment Portfolio POLICY AND STRATEGY At December 31, 2024, the fair value of our investment portfolio was approximately $5.9 billion. In addition, at December 31, 2024, our total assets included approximately $229 million of cash and cash equivalents.
The percentage of NIW on loans representing refinances was 2% for 2023, compared to 3% for 2022 and 20% for 2021.
The percentage of NIW on loans representing refinances was 4% for 2024, compared to 2% for 2023 and 3% for 2022.
During 2023, 2022 and 2021, the single premium plan represented approximately 4%, 4% and 7%, respectively, of our NIW. The monthly premium plan represented approximately 96%, 96% and 93%, respectively. The annual premium plan represented less than 1% of NIW in each of those years.
During 2024, 2023 and 2022, the single premium plan represented approximately 2%, 4% and 4%, respectively, of our NIW. The monthly premium plan represented approximately 98%, 96% and 96%, respectively. The annual premium plan represented less than 1% of NIW in each of those years.
At December 31, 2023 and 2022, approximately 60.4% and 67.9%, respectively, of our IIF was subject to quota share reinsurance ("QSR") transactions. In 2023 and 2022, approximately 86.8% and 87.4%, respectively, of our NIW was subject to QSR transactions.
At December 31, 2024 and 2023, approximately 68.2% and 60.4%, respectively, of our IIF was subject to quota share reinsurance transactions. In 2024 and 2023, approximately 86.9% and 86.8%, respectively, of our NIW was subject to QSR transactions.
MGIC Investment Corporation 2023 Form 10-K | 24 MGIC Investment Corporation and Subsidiaries As the most significant purchasers and sellers of conventional mortgage loans and beneficiaries of private mortgage insurance, the GSEs impose financial and other requirements on private mortgage insurers in order for them to be eligible to insure loans sold to the GSEs (these requirements are referred to as the "PMIERs", as discussed above).
As the most significant purchasers and sellers of conventional mortgage loans and beneficiaries of private mortgage insurance, the GSEs impose financial and other requirements on private mortgage insurers in order for them to be eligible to insure loans sold to the GSEs (these requirements are referred to as the "PMIERs", as discussed above).
Securities with stated maturities due within up to one year, after one year and up to five years, after five years and up to ten years, and after ten years, represented 11%, 26%, 30%, and 14%, respectively, of the total fair value of our fixed income investment securities.
Securities with stated maturities due within up to one year, after one year and up to five years, after five years and up to ten years, and after ten years, represented 12%, 28%, 28%, and 15%, respectively, of the total fair value of our fixed income investment securities.
MGIC Investment Corporation 2023 Form 10-K | 18 MGIC Investment Corporation and Subsidiaries Delinquency statistics for the MGIC book December 31, 2023 2022 2021 2020 2019 Primary Insurance: Insured loans in force 1,139,796 1,180,419 1,164,984 1,126,079 1,079,578 Delinquent loans 25,650 26,387 33,290 57,710 30,028 Delinquency rate – all loans 2.25% 2.22% 2.80% 5.11% 2.78% Delinquent loans in our claims received inventory 302 267 211 159 538 Different geographical areas may experience different delinquency rates due to varying localized economic conditions from year to year and the amount of time it takes for foreclosures to be completed for uncured delinquencies.
Delinquency statistics for the MGIC book December 31, 2024 2023 2022 2021 2020 Primary Insurance: Insured loans in force 1,118,308 1,139,796 1,180,419 1,164,984 1,126,079 Delinquent loans 26,791 25,650 26,387 33,290 57,710 Percentage of loans delinquent (delinquency rate) 2.40% 2.25% 2.22% 2.80% 5.11% Delinquent loans in our claims received inventory 319 302 267 211 159 Different geographical areas may experience different delinquency rates due to varying localized economic conditions from year to year and the amount of time it takes for foreclosures to be completed for uncured delinquencies.
In 2023, our total revenues were $1.2 billion and our primary NIW was $46.1 billion. As of December 31, 2023, our direct primary IIF was $293.5 billion and our direct primary RIF was $77.2 billion. For further information about our results of operations, see our consolidated financial statements in Item 8 and our MD&A in Item 7.
In 2024, our total revenues were $1.2 billion and our primary NIW was $55.7 billion. As of December 31, 2024, our direct primary IIF was $295.4 billion and our direct primary RIF was $78.8 billion. For further information about our results of operations, see our consolidated financial statements in Item 8 and our MD&A in Item 7 .
For most of our business, we and other private mortgage insurers compete directly with federal and state governmental and quasi-governmental agencies that sponsor government-backed mortgage insurance programs, principally the FHA, VA and USDA.
MGIC Investment Corporation 2024 Form 10-K | 9 MGIC Investment Corporation and Subsidiaries For most of our business, we and other private mortgage insurers compete directly with federal and state governmental and quasi-governmental agencies that sponsor government-backed mortgage insurance programs, principally the FHA, VA and USDA.
At December 31, 2023, approximately $918 million of investments and cash and cash equivalents was held by our parent company, and the remainder was held by our subsidiaries, primarily MGIC.
At December 31, 2024, approximately $1.1 billion of investments and cash and cash equivalents was held by our parent company, and the remainder was held by our subsidiaries, primarily MGIC.
As of December 31, 2023, our direct pool RIF was $256 million ($186 million on pool policies with aggregate loss limits and $70 million on pool policies without aggregate loss limits).
As of December 31, 2024, our direct pool RIF was $226 million ($177 million on pool policies with aggregate loss limits and $49 million on pool policies without aggregate loss limits), compared to $256 million ($186 million on pool policies with aggregate loss limits and $70 million on pool policies without aggregate loss limits) at December 31, 2023.
Under the delegated option, applications are submitted to us electronically and we rely upon the lender’s representations and warranties that the data submitted is true, accurate and consistent with the documents in the lender's loan origination file, when making our insurance decision. If the loan data submitted meets the underwriting requirements, a commitment to insure the loan is immediately issued.
Under the delegated option, applications are submitted to us electronically and we rely upon the lender’s representations and warranties that the data submitted is true, accurate and consistent with the documents in the lender's loan origination file, when making our insurance decision. Non-delegated applications are submitted with documents from the lender’s loan origination file.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOther sources of holding company cash inflow include investment income and raising capital in the public markets. The payment of dividends on our common shares in the future depends largely on the earnings and cash flows of MGIC, and is additionally subject to regulatory approval as described below.
Biggest changeDividends and other permitted distributions from MGIC are the holding company's primary source of funds used to meet ongoing cash requirements, including future debt service payments, repurchases of its shares, payment of dividends to our shareholders, and other expenses. Other sources of holding company cash inflow include investment income and raising capital in the public markets.
Pandemics and other disasters, such as hurricanes, tornadoes, earthquakes, wildfires and floods, or other events related to climate change, could trigger an economic downturn in the affected areas, or in areas with similar risks, which could result in a decrease in home prices and an increased claim rate and claim severity in those areas.
Pandemics and other disasters, such as hurricanes, tornadoes, earthquakes, wildfires and floods, or other events related to climate change, could trigger an economic downturn in the affected areas, or in areas with similar risks, which could result in a decrease in home prices, an increased claim rate and increased claim severity in those areas.
While we have information security policies and systems in place to secure our information technology systems and to prevent unauthorized access to or disclosure of sensitive information, there can be no assurance with respect to our systems and those of our third-party vendors that unauthorized access to the systems or disclosure of the sensitive information, either through the actions of third parties or employees, will not occur.
While we have information security policies and systems in place to secure our information technology systems and to prevent unauthorized access to or disclosure of sensitive information, there can be no assurance with respect to our systems and those of our third-party vendors that unauthorized access to the systems or disclosure of sensitive information, either through the actions of third parties or employees, will not occur.
Best is A- (with a positive outlook), from Moody’s is A3 (with a stable outlook) and from Standard & Poor’s is A- (with a stable outlook) . • Financial strength ratings may also play a greater role if the GSEs no longer operate in their current capacities, for example, due to legislative or regulatory action.
Best is A (with a stable outlook), from Moody’s is A3 (with a positive outlook) and from Standard & Poor’s is A- (with a stable outlook) . • Financial strength ratings may also play a greater role if the GSEs no longer operate in their current capacities, for example, due to legislative or regulatory action.
Factors that influence the FHA’s market share include relative rates and fees, underwriting guidelines and loan limits of the FHA, VA, private mortgage insurers and the GSEs; changes to the GSEs' business practices; lenders' perceptions of legal risks under FHA versus GSE programs; flexibility for the FHA to establish new products as a result of federal legislation and programs; returns expected to be obtained by lenders for Ginnie Mae securitization of FHA-insured loans compared to those obtained from selling loans to the GSEs for securitization; and differences in policy terms, such as the ability of a borrower to cancel insurance coverage under certain circumstances.
Factors that influence market share include relative rates and fees, underwriting guidelines and loan limits of the FHA, VA, private mortgage insurers and the GSEs; changes to the GSEs' business practices; lenders' perceptions of legal risks under FHA versus GSE programs; flexibility for the FHA to establish new products as a result of federal legislation and programs; returns expected to be obtained by lenders for Ginnie Mae securitization of FHA-insured loans compared to those obtained from selling loans to the GSEs for securitization; and differences in policy terms, such as the ability of a borrower to cancel insurance coverage under certain circumstances.
For example: we rely on information provided to us by lenders that was obtained from certain of the GSEs’ automated appraisal and income verification tools, which may produce results that differ from the results that would have been determined using different methods; we accept GSE appraisal waivers for certain refinance loans; and we accept GSE appraisal flexibilities that allow property valuations in certain transactions to be based on appraisals that do not involve an onsite or interior inspection of the property.
For example: we rely on information provided to us by lenders that was obtained from certain of the GSEs’ automated appraisal and income verification tools, which may produce results that differ from the results that would have been determined using different methods; we accept GSE appraisal waivers for certain loans; and we accept GSE appraisal flexibilities that allow property valuations in certain transactions to be based on appraisals that do not involve an onsite or interior inspection of the property.
In addition to advising the CEO, the General Counsel will also convene an established committee whose members include the General Counsel, Chief Financial Officer, Senior Vice President of Investor Relations, and Chief Accounting Officer in order to determine if the event is a material cybersecurity incident so as to trigger an Item 1.05 filing on Form 8-K.
In addition to advising the CEO, the General Counsel will also convene an established committee whose members include the General Counsel, Chief Financial and Risk Officer, Senior Vice President of Investor Relations, and Chief Accounting Officer in order to determine if the event is a material cybersecurity incident so as to trigger an Item 1.05 filing on Form 8-K.
If we fail to timely and successfully implement and integrate the new technology systems, if the third party providers upon which we are reliant do not perform as expected, if our legacy systems fail to operate as required, or if the upgraded systems and/or transformed and automated business processes do not operate as expected, it could have a material adverse impact on our business, business prospects and results of operations.
If we fail to timely and successfully implement and integrate the new technology systems, if the third party providers upon which we are reliant do not perform as expected, if our legacy systems fail to operate as required, or if the upgraded systems and/or transformed and automated business processes do not operate as expected, it could have a material adverse impact on our business and results of operations.
The factors that may affect the volume of low down payment mortgage originations include the health of the U.S. economy; conditions in regional and local economies and the level of consumer confidence; the health and stability of the financial services industry; restrictions on mortgage credit due to more stringent underwriting standards, liquidity issues or risk-retention and/or capital requirements affecting lenders; the level of home mortgage interest rates; housing affordability; new and existing housing availability; the rate of household formation, which is influenced, in part, by population and immigration trends; homeownership rates; the rate of home price appreciation, which in times of heavy refinancing can affect whether refinanced loans have LTV ratios that require private mortgage insurance; and government housing policy encouraging loans to first-time homebuyers.
The factors that may affect the volume of low down payment mortgage originations include the health of the U.S. economy; conditions in regional and local economies and the level of consumer confidence; the health and stability of the financial services industry; restrictions on mortgage credit due to more stringent underwriting standards, liquidity issues or risk-retention and/or capital requirements affecting lenders; the level of home mortgage interest rates; housing affordability; new and existing housing availability; the rate of household formation, which is influenced, in part, by population and immigration trends; homeownership rates; the rate of home price appreciation, which in times of heavy refinancing can affect whether refinanced loans have LTV ratios that require private mortgage insurance; tax policy; and government housing policy encouraging equitable housing and loans to first-time homebuyers.
Other business practices of the GSEs that affect the mortgage insurance industry include: MGIC Investment Corporation 2023 Form 10-K | 27 MGIC Investment Corporation and Subsidiaries • The GSEs' private mortgage insurer eligibility requirements ("PMIERs"), the financial requirements of which are discussed in our risk factor titled “We may not continue to meet the GSEs’ private mortgage insurer eligibility requirements and our returns may decrease if we are required to maintain more capital in order to maintain our eligibility.” • The capital and collateral requirements for participants in the GSEs' alternative forms of credit enhancement discussed in our risk factor titled "The amount of insurance we write could be adversely affected if lenders and investors select alternatives to private mortgage insurance or are unable to obtain capital relief for mortgage insurance." • The level of private mortgage insurance coverage, subject to the limitations of the GSEs’ charters, when private mortgage insurance is used as the required credit enhancement on low down payment mortgages (the GSEs generally require a level of mortgage insurance coverage that is higher than the level of coverage required by their charters; any change in the required level of coverage will impact our new risk written). • The amount of loan level price adjustments and guaranty fees (which result in higher costs to borrowers) that the GSEs assess on loans that require private mortgage insurance.
Business practices of the GSEs that affect the mortgage insurance industry include: MGIC Investment Corporation 2024 Form 10-K | 27 MGIC Investment Corporation and Subsidiaries • The GSEs' private mortgage insurer eligibility requirements ("PMIERs"), the financial requirements of which are discussed in our risk factor titled “We may not continue to meet the GSEs’ private mortgage insurer eligibility requirements and our returns may decrease if we are required to maintain more capital in order to maintain our eligibility.” • The capital and collateral requirements for participants in the GSEs' alternative forms of credit enhancement discussed in our risk factor titled "The amount of insurance we write could be adversely affected if lenders and investors select alternatives to private mortgage insurance or are unable to obtain capital relief for mortgage insurance." • The level of private mortgage insurance coverage, subject to the limitations of the GSEs’ charters, when private mortgage insurance is used as the required credit enhancement on low down payment mortgages (the GSEs generally require a level of mortgage insurance coverage that is higher than the level of coverage required by their charters; any change in the required level of coverage will impact our new risk written). • The amount of loan level price adjustments and guaranty fees (which result in higher costs to borrowers) that the GSEs assess on loans that require private mortgage insurance.
For more information about state capital requirements, see our risk factor titled “ State capital requirements may prevent us from continuing to write new insurance on an uninterrupted basis .” For information about regulation of data privacy, see our risk factor titled “ We could be materially adversely affected by a cybersecurity breach or failure of information security controls .” For more details about the various ways in which our subsidiaries are regulated, see “Business - Regulation” in Item 1 of our Annual Report on Form 10-K for the year ended December 31, 2022.
For more information about state capital requirements, see our risk factor titled “ State capital requirements may prevent us from continuing to write new insurance on an uninterrupted basis .” For information about regulation of data privacy, see our risk factor titled “ We could be materially adversely affected by a cybersecurity breach or failure of information security controls .” For more details about the various ways in which our subsidiaries are regulated, see “Business - Regulation” in Item 1 of our Annual Report on Form 10-K for the year ended December 31, 2023.
The focus of the new FHFA leadership on increasing homeownership opportunities for borrowers is likely to have this effect. Lenders could pressure mortgage insurers to insure such loans, which are expected to experience higher claim rates.
The focus of the FHFA leadership on increasing homeownership opportunities for borrowers is likely to have this effect. Lenders could pressure mortgage insurers to insure such loans, which are expected to experience higher claim rates.
Refinance transactions on single premium policies benefit our premium yield due to the impact of accelerated earned premium from cancellation prior to their estimated life. Recent low levels of refinance transactions have reduced that benefit.
Refinance transactions on single premium policies benefit the yield due to the impact of accelerated earned premium from cancellation prior to their estimated life. Recent low levels of refinance transactions have reduced that benefit.
The revised Model Act includes requirements relating to, among other things: (i) capital and minimum capital requirements, and contingency reserves; (ii) restrictions on mortgage insurers’ investments in notes secured by mortgages; (iii) prudent underwriting standards and formal underwriting guidelines; (iv) the establishment of formal, internal “Mortgage Guaranty Quality Control Programs” with respect to in-force business; and (v) reinsurance and prohibitions on captive reinsurance arrangements.
The updated Model Act includes requirements relating to, among other things: (i) capital and minimum capital requirements, and contingency reserves; (ii) restrictions on mortgage insurers’ investments in notes secured by mortgages; (iii) prudent underwriting standards and formal underwriting guidelines; (iv) the establishment of formal, internal “Mortgage Guaranty Quality Control Programs” with respect to in-force business; and (v) reinsurance and prohibitions on captive reinsurance arrangements.
We could be similarly affected by threats against our vendors and/or third-parties with whom we share information. Globally, attacks are expected to continue accelerating in both frequency and sophistication with increasing use by actors of tools and techniques that may hinder the Company’s ability to identify, investigate and recover from incidents.
We could be similarly affected by threats against our vendors and/or third-parties with whom we share information. Globally, attacks are expected to continue accelerating in both frequency and sophistication with increasing use by actors of tools and techniques that may hinder our ability to identify, investigate and recover from incidents.
See our risk factor titled “ Changes in the business practices of Fannie Mae and Freddie Mac's ("the GSEs"), federal legislation that changes their charters or a restructuring of the GSEs could reduce our revenues or increase our losses” for a discussion of various business practices of the GSEs that may be changed, including through expansion or modification of these programs.
See our risk factor titled “ Changes in the business practices of Fannie Mae and Freddie Mac ("the GSEs"), federal legislation that changes their charters or a restructuring of the GSEs could reduce our revenues or increase our losses” for a discussion of various business practices of the GSEs that may be changed, including through expansion or modification of these programs.
While there has been no disruption in our premium receipts through the fourth quarter of 2023, servicers who experience future liquidity issues may be less likely to advance premiums to us on policies covering delinquent loans or to remit premiums on policies covering loans that are not delinquent.
While there has been no disruption in our premium receipts through the fourth quarter of 2024, servicers who experience future liquidity issues may be less likely to advance premiums to us on policies covering delinquent loans or to remit premiums on policies covering loans that are not delinquent.
Reinsurance may be unavailable at current levels and prices, and/or the GSEs may reduce the amount of capital credit we receive for our reinsurance transactions. We have in place QSR and XOL reinsurance transactions providing various amounts of coverage on our risk in force as of December 31, 2023.
Reinsurance may be unavailable at current levels and prices, and/or the GSEs may reduce the amount of capital credit we receive for our reinsurance transactions. We have in place QSR and XOL reinsurance transactions providing various amounts of coverage on our risk in force as of December 31, 2024.
Specifically relating to mortgage insurance, (1) Fannie Mae’s Plan includes the creation of special purpose credit program(s) ("SPCPs") targeted to historically underserved borrowers with a goal of lowering costs for such borrowers through lower than standard mortgage insurance requirements; and (2) Freddie Mac’s Plan includes plans to work with mortgage insurers to look for ways to lower mortgage costs, the creation of SPCPs targeted to historically underserved borrowers, and the planned purchase of loans originated through lender-created SPCPs.
Specifically relating to mortgage insurance, (1) Fannie Mae’s Plan includes the creation of special purpose credit program(s) ("SPCPs") targeted to historically underserved borrowers and the support of locally-controlled SPCPs with a goal of lowering costs for such borrowers through lower than standard mortgage insurance requirements; and (2) Freddie Mac’s Plan includes plans to work with mortgage insurers to look for ways to lower mortgage costs, the creation of SPCPs targeted to historically underserved borrowers, and the planned purchase of loans originated through lender-created SPCPs.
In our opinion, based on the facts known at this time, the ultimate resolution of these ordinary course disputes and legal proceedings will not have a material adverse effect on our financial position or results of operations.
In our opinion, based on the facts known at this time, the ultimate resolution of these ordinary course disputes and legal proceedings will not have a material adverse effect on our financial condition or results of operations.
MGIC's “policyholder position” includes its net worth, or surplus, and its contingency reserve. At December 31, 2023, MGIC’s risk-to-capital ratio was 10.2 to 1, below the maximum allowed by the jurisdictions with State Capital Requirements, and its policyholder position was $3.6 billion above the required MPP of $2.2 billion.
MGIC's “policyholder position” includes its net worth, or surplus, and its contingency reserve. At December 31, 2024, MGIC’s risk-to-capital ratio was 10.0 to 1, below the maximum allowed by the jurisdictions with State Capital Requirements, and its policyholder position was $3.6 billion above the required MPP of $2.2 billion.
Regarding the concentration of our new business, our top ten customers accounted for approximately 37% and 33% in the twelve months ended December 31, 2023 and December 31, 2022, respectively. We monitor various competitive and economic factors while seeking to balance both profitability and market share considerations in developing our pricing strategies.
Regarding the concentration of our new business, our top ten customers accounted for approximately 37% in the twelve months ended December 31, 2024 and December 31, 2023, respectively. We monitor various competitive and economic factors while seeking to balance both profitability and market share considerations in developing our pricing strategies.
Risk Factors Relating to Our Business Generally If our risk management programs are not effective in identifying, or adequate in controlling or mitigating, the risks we face, or if the models used in our businesses are inaccurate, it could have a material adverse impact on our business, results of operations and financial condition.
Risk Factors Relating to Our Business Generally If our risk management programs are not effective in identifying, or adequate in controlling or mitigating, the risks we face, or if the models we use are inaccurate, it could have a material adverse impact on our business, results of operations and financial condition.
With this program, MGIC seeks to prevent, detect, and respond to unauthorized access, use, or disclosure of confidential information. MGIC’s Information Risk Management (IRM) team is responsible for safeguarding the organization's information assets, data, and technology infrastructure from security threats and vulnerabilities.
With the ISP, MGIC seeks to prevent, detect, and respond to unauthorized access, use, or disclosure of confidential information. MGIC’s Information Risk Management (IRM) team is responsible for safeguarding the organization's information assets, data, and technology infrastructure from security threats and vulnerabilities.
When home prices increase, interest rates increase and/or the percentage of our NIW from purchase transactions increases, our NIW on mortgages with higher LTV ratios and higher DTI ratios may increase. Our NIW on mortgages with LTV ratios greater than 95% was 12% in 2023 and 2022.
When home prices increase, interest rates increase and/or the percentage of our NIW from purchase transactions increases, our NIW on mortgages with higher LTV ratios and higher DTI ratios may increase. Our NIW on mortgages with LTV ratios greater than 95% was 14% in 2024 and 12% in 2023.
Approximately 71% of our NIW during 2023 and 72% of our 2022 NIW was originated under delegated underwriting programs pursuant to which the loan originators had authority on our behalf to underwrite the loans for our mortgage insurance.
Approximately 71% of our NIW during 2024 and 2023 was originated under delegated underwriting programs pursuant to which the loan originators had authority on our behalf to underwrite the loans for our mortgage insurance.
Although we are currently unaware of a direct impact on MGIC, this could potentially become a competitive disadvantage in the future. • Downgrades to our ratings or the ratings of our mortgage insurance subsidiary could adversely affect our cost of funds, liquidity, and access to capital markets .
Although we are currently unaware of a direct impact on MGIC, this could potentially become a competitive disadvantage in the future. • Downgrades to our ratings or the ratings of our mortgage insurance subsidiary could adversely affect our cost of funds, liquidity, and access to capital markets . We are subject to the risk of legal proceedings.
Although our investment portfolio consists mostly of highly-rated fixed income investments, our investment portfolio is affected by general economic conditions and tax policy, which may adversely affect the markets for credit and interest-rate-sensitive securities, including the extent and timing of investor participation in these markets, the level and volatility of interest rates and credit spreads and, consequently, the value of our fixed income securities.
Although our investment portfolio consists mostly of high quality, investment-grade fixed income investments, our investment portfolio is affected by general economic conditions and tax policy, which may adversely affect the markets for credit and interest-rate-sensitive securities, including the extent and timing of investor participation in these markets, the level and volatility of interest rates and credit spreads and, consequently, the value of our fixed income securities.
Due to the increased frequency and severity of natural disasters, some homeowners' insurers are withdrawing from certain states or areas that they deem to be high risk.
Due to the increased frequency and severity of natural disasters, some homeowners' insurers are increasing premium rates or withdrawing from certain states or areas that they deem to be high risk.
In addition to the risk factors described herein, the following factors may have an adverse impact on the market price for our common stock: changes in general conditions in the economy, the mortgage insurance industry or the financial stability of markets and financial services industry; announcements by us or our competitors of acquisitions or strategic initiatives; our actual or anticipated quarterly and annual operating results; changes in expectations of future financial performance (including incurred losses on our insurance in force); changes in estimates of securities analysts or rating agencies; actual or anticipated changes in our share repurchase program or dividends; changes in operating performance or market valuation of companies in the mortgage insurance industry; the addition or departure of key personnel; changes in tax law; and adverse press or news announcements affecting us or the industry.
In addition to the risk factors described herein, the following factors may have an adverse impact on the market price for our common stock: changes in general conditions in the economy or the housing market, the mortgage insurance industry or the financial stability of markets and financial services industry; announcements by us or our competitors of acquisitions or strategic initiatives; our actual or anticipated quarterly and annual operating results; changes in expectations of future financial performance (including incurred losses on our insurance in force); changes in estimates of securities analysts or rating agencies; actual or anticipated changes in our share repurchase program or dividends; changes in operating performance or market valuation of companies in the mortgage insurance industry; the addition or departure of key personnel; failure to establish and maintain effective internal controls over financial reporting, changes in tax law; and adverse press or news announcements affecting us or the industry.
This may cause liquidity issues, especially for non-bank servicers (who service approximately 47% of the loans underlying our IIF as of December 31, 2023) because they do not have the same sources of liquidity that bank servicers have.
This may cause liquidity issues, especially for non-bank servicers (who service approximately 55% of the loans underlying our IIF as of December 31, 2024) because they do not have the same sources of liquidity that bank servicers have.
The outcome of future legal and regulatory proceedings, inquiries or other matters could result in adverse judgments, settlements, fines, injunctions, restitutions or other relief which could require significant expenditures or have a material adverse effect on our business prospects, results of operations and financial condition.
Additional lawsuits, legal and regulatory proceedings and inquiries or other matters may arise in the future. The outcome of future legal and regulatory proceedings, inquiries or other matters could result in adverse judgments, settlements, fines, injunctions, restitutions or other relief which could require significant expenditures or have a material adverse effect on our business, results of operations and financial condition.
Updates may include topics such as management’s efforts to identify and monitor risks, investments to improve the Company’s detection and response systems, the results of risk assessments, compliance with controls, vendor oversight, strategic technology planning, and if necessary, the status of any new, ongoing, or prior cybersecurity incident. The CISO also periodically attends the BTTC meetings.
Updates may include topics such as management’s efforts to identify and monitor risks, investments to improve the Company’s detection and response systems, the results of risk assessments, compliance with controls, vendor oversight, strategic technology planning, and if necessary, the status of any new, ongoing, or prior cybersecurity incident.
Our annual persistency rate was 86.1% at December 31, 2023, 82.2% at December 31, 2022, and 66.0% at December 31, 2021. Since 2018, our annual persistency rate ranged from a high of 86.3% at September 30, 2023 to a low of 60.7% at March 31, 2021.
Our annual persistency rate was 84.8% at December 31, 2024, 86.1% at December 31, 2023, and 82.2% at December 31, 2022. Since 2018, our annual persistency rate ranged from a high of 86.3% at September 30, 2023, to a low of 60.7% at March 31, 2021.
MGIC Investment Corporation 2023 Form 10-K | 39 MGIC Investment Corporation and Subsidiaries Item 1B. Unresolved Staff Comments None. Item 1C. Cybersecurity MGIC’s Information Security Program includes information security policies, annual risk assessments and analyses, threat monitoring and alerting, vulnerability management, incident response, and data loss prevention controls.
MGIC Investment Corporation 2024 Form 10-K | 40 MGIC Investment Corporation and Subsidiaries Item 1B. Unresolved Staff Comments None. Item 1C. Cybersecurity RISK MANAGEMENT AND STRATEGY MGIC’s Information Security Program (ISP) includes information security policies, annual risk assessments and analyses, threat monitoring and alerting, vulnerability management, incident response, and data loss prevention controls.
MGIC Investment Corporation 2023 Form 10-K | 28 MGIC Investment Corporation and Subsidiaries The financial requirements of the PMIERs require a mortgage insurer’s “Available Assets” (generally only the most liquid assets of an insurer) to equal or exceed its “Minimum Required Assets” (which are generally based on an insurer’s book of risk in force and calculated from tables of factors with several risk dimensions, reduced for credit given for risk ceded under reinsurance agreements).
The financial requirements of the PMIERs require a mortgage insurer’s “Available Assets” (generally only the most liquid assets of an insurer) to equal or exceed its “Minimum Required Assets” (which are generally based on an insurer’s book of risk in force and calculated from tables of factors with several risk dimensions, reduced for credit given for risk ceded under reinsurance agreements).
We believe we currently compete with other private mortgage insurers based on premium rates, underwriting requirements, financial strength (including based on credit or financial strength ratings), customer relationships, name recognition, reputation, strength of management teams and field organizations, the MGIC Investment Corporation 2023 Form 10-K | 36 MGIC Investment Corporation and Subsidiaries ancillary products and services provided to lenders, and the effective use of technology and innovation in the delivery and servicing of our mortgage insurance products.
We believe we currently compete with other private mortgage insurers based on premium rates, underwriting requirements, financial strength (including based on credit or financial strength ratings), customer relationships, name recognition, reputation, strength of management teams and field organizations, the ancillary products and services provided to lenders, and the effective use of technology and innovation in the delivery and servicing of our mortgage insurance products.
Such attacks may also increase as a result of retaliation by threat actors against actions taken by the U.S. and other countries in connection with wars and other global events. The Company operates under a hybrid workforce model and such model may be more vulnerable to security breaches.
Cyber attacks may additionally increase as a result of retaliation by threat actors against actions taken by the U.S. and other countries in connection with wars and other global events. We operate under a hybrid workforce model and such model may be more vulnerable to security breaches.
In recent years, the industry has materially reduced its use of standard rate cards, which were fairly consistent among competitors, and correspondingly increased its use of (i) pricing systems that use a spectrum of filed rates to allow for formulaic, risk-based pricing based on multiple attributes that may be quickly adjusted within certain parameters, and (ii) customized rate plans.
The industry has materially reduced its use of standard rate cards, which were fairly consistent among competitors, and correspondingly increased its use of (i) pricing systems that use a spectrum of filed rates to allow for formulaic, risk-based pricing based on multiple attributes that may be quickly adjusted within certain parameters, and (ii) customized rate plans pursuant to which rates may be available to customers for a defined period of time.
Based on our interpretation of the PMIERs, as of December 31, 2023, MGIC’s Available Assets totaled $5.8 billion, or $2.4 billion in excess of its Minimum Required Assets. MGIC is in compliance with the PMIERs and eligible to insure loans purchased by the GSEs.
Based on our interpretation of the PMIERs, as of December 31, 2024, MGIC’s Available Assets totaled $5.8 billion, or $2.2 billion in excess of its Minimum Required Assets. MGIC is in compliance with the PMIERs and eligible to insure loans purchased by the GSEs. In August 2024, the GSEs issued updates to the calculation of Available Assets.
The increased use, by the private mortgage insurance industry, of risk-based pricing systems that establish premium MGIC Investment Corporation 2023 Form 10-K | 29 MGIC Investment Corporation and Subsidiaries rates based on more attributes than previously considered, and of algorithms, artificial intelligence and data and analytics, has led to additional regulatory scrutiny of premium rates and of other matters such as discrimination in pricing and underwriting, data privacy and access to insurance.
The increased use by the private mortgage insurance industry of risk-based pricing systems that establish premium rates based on more attributes than previously considered, and of algorithms, artificial intelligence and data and analytics, has led to additional regulatory scrutiny of premium rates and of other matters such as discrimination in pricing and underwriting, data privacy and access to insurance.
These services are subject to federal and state regulation. Our failure to meet the standards set forth in the applicable regulations would subject us to potential regulatory action.
These services are subject to contractual obligations and federal and state regulation. Our failure to meet the standards set forth in the applicable contracts or regulations would subject us to potential litigation or regulatory action.
Although the 12 month change in home prices recently reached historically high rates, the rate of growth is moderating: it increased by 6.5% in the first eleven months of 2023, after increasing 6.8%, and 17.8% in 2022 and 2021, respectively.
Although the 12 month change in home prices recently reached historically high rates, the rate of growth is moderating: it increased by 4.1% in the first 11 months of 2024, after increasing 6.7%, 6.8%, and 17.8% in 2023, 2022, and 2021, respectively.
We are subject to comprehensive regulation, including by state insurance departments. Many regulations are designed for the protection of our insured policyholders and consumers, rather than for the benefit of investors.
We are subject to comprehensive regulation and other requirements, which we may fail to satisfy. We are subject to comprehensive regulation, including by state insurance departments. Many regulations are designed for the protection of our insured policyholders and consumers, rather than for the benefit of investors.
The seasonally-adjusted Purchase-Only U.S. Home Price Index of the Federal Housing Finance Agency (the “FHFA”), which is based on single-family properties whose mortgages have been purchased or securitized by Fannie Mae or Freddie Mac, indicates that home prices increased 0.3% nationwide in November, 2023 compared to October, 2023.
Home Price Index of the Federal Housing Finance Agency (the “FHFA”), which is based on single-family properties whose mortgages have been purchased or securitized by Fannie Mae or Freddie Mac, indicates that home prices increased .3% nationwide in November, 2024 compared to October, 2024.
Therefore, if our MGIC Investment Corporation 2023 Form 10-K | 34 MGIC Investment Corporation and Subsidiaries direct risk-in-force increases through increases in NIW, or if our mix of business changes to include loans with higher LTV ratios or lower FICO scores, for example, all other things equal, we will be required to hold more Available Assets in order to maintain GSE eligibility.
Therefore, if our direct risk-in-force increases through increases in NIW, or if our mix of business changes to include loans with higher LTV ratios or lower FICO scores, for example, all other things equal, we will be required to hold more Available Assets in order to maintain GSE eligibility.
Mortgage insurers, including MGIC, have in the past been involved in litigation and regulatory actions related to alleged violations of the anti-referral fee provisions of the Real Estate Settlement Procedures Act ("RESPA"), and the notice provisions of the Fair Credit Reporting Act ("FCRA").
Mortgage insurers, including MGIC, have MGIC Investment Corporation 2024 Form 10-K | 29 MGIC Investment Corporation and Subsidiaries in the past been involved in litigation and regulatory actions related to alleged violations of the anti-referral fee provisions of the Real Estate Settlement Procedures Act ("RESPA"), and the notice provisions of the Fair Credit Reporting Act ("FCRA").
As a result, they reduce the risk-based capital that we are required to hold to support the risk and they allow us to earn higher returns on risk-based capital for our business than we would without them. However, market conditions impact the availability and cost of reinsurance.
As a result, they reduce the risk-based capital that we are required to hold to support the risk and they allow us to earn higher returns on risk-based capital for our business than we would without them. MGIC Investment Corporation 2024 Form 10-K | 30 MGIC Investment Corporation and Subsidiaries However, market conditions impact the availability and cost of reinsurance.
For other factors that could decrease the demand for mortgage insurance, see our risk factor titled “The amount of insurance we write could be adversely affected if lenders and investors select alternatives to private mortgage insurance or are unable to obtain capital relief for mortgage insurance.” MGIC Investment Corporation 2023 Form 10-K | 31 MGIC Investment Corporation and Subsidiaries The amount of insurance we write could be adversely affected if lenders and investors select alternatives to private mortgage insurance or are unable to obtain capital relief for mortgage insurance.
For other factors that could decrease the demand for mortgage insurance, see our risk factor titled “The amount of insurance we write could be adversely affected if lenders and investors select alternatives to private mortgage insurance or are unable to obtain capital relief for mortgage insurance.” The amount of insurance we write could be adversely affected if lenders and investors select alternatives to private mortgage insurance or are unable to obtain capital relief for mortgage insurance.
Generally, the longer a loan is delinquent before a claim is received, the greater the severity. Foreclosure moratoriums and forbearance programs increase the average time it takes to receive claims. Economic conditions may differ from region to region.
Generally, the longer a loan is delinquent before a claim is received, the greater the severity. Foreclosure moratoriums and forbearance programs increase the average time it takes to receive claims.
Threats have the potential to jeopardize the information processed and stored in, and transmitted through, our computer systems and networks and otherwise cause interruptions or malfunctions in our operations, which could result in damage to our reputation, financial losses, litigation, increased costs, regulatory penalties or customer dissatisfaction.
Threats have the potential to jeopardize the information processed and stored in, and transmitted through, our computer systems and networks and otherwise cause interruptions or MGIC Investment Corporation 2024 Form 10-K | 34 MGIC Investment Corporation and Subsidiaries malfunctions in our operations, which could result in damage to our reputation, financial losses, litigation, increased costs, regulatory penalties or customer dissatisfaction.
In the event of a suspected or threatened cybersecurity incident, the Company’s Chief Information Security Officer (“CISO”) determines whether to activate the Company’s Cyber Incident Response Team (“CIRT”), composed of different subject matter experts from applicable domains such as network, infrastructure, and application areas in order to evaluate the technical issues relative to the incident.
In the event of a suspected or threatened cybersecurity incident, the CISO determines whether to activate the Company’s Cyber Incident Response Team (“CIRT”), composed of different subject matter experts from applicable domains such as network, infrastructure, and application areas in order to evaluate the technical issues relative to the incident. The CIRT is overseen by the CISO.
A higher than expected persistency rate may decrease the profitability from single premium policies because they will remain in force longer and may increase the incidence of claims that was MGIC Investment Corporation 2023 Form 10-K | 32 MGIC Investment Corporation and Subsidiaries estimated when the policies were written.
A higher than expected persistency rate may decrease the profitability from single premium policies because they will remain in force longer and may increase the incidence of claims that was estimated when the policies were written.
If any capital contributions to our subsidiaries are required, such contributions would decrease our holding company cash and investments. Your ownership in our company may be diluted by additional capital that we raise.
MGIC Investment Corporation 2024 Form 10-K | 39 MGIC Investment Corporation and Subsidiaries If any capital contributions to our subsidiaries are required, such contributions would decrease our holding company cash and investments. Your ownership in our company may be diluted by additional capital that we raise.
If our Available Assets fall below our Minimum Required Assets, we would not be in compliance with the PMIERs. The PMIERs provide a list of remediation actions for a mortgage insurer's non-compliance, with additional actions possible in the GSEs' discretion. At the extreme, the GSEs may suspend or terminate our eligibility to insure loans purchased by them.
The PMIERs provide a list of remediation actions for a mortgage insurer's non-compliance, with additional actions possible in the GSEs' discretion. At the extreme, the GSEs may suspend or terminate our eligibility to insure loans purchased by them.
Our risk-to-capital ratio and MPP reflect credit for the risk ceded under our reinsurance agreements with unaffiliated reinsurers . If MGIC is not allowed an agreed level of credit under the State Capital Requirements, MGIC may terminate the reinsurance transactions, without penalty.
Our risk-to-capital ratio and MPP reflect credit for the risk ceded under our reinsurance agreements with unaffiliated reinsurers . If MGIC is not allowed an agreed level of credit under the State Capital Requirements, MGIC may terminate the reinsurance transactions, without penalty. In 2023, the NAIC adopted a revised Mortgage Guaranty Insurance Model Act.
As of December 31, 2023, mortgages with these characteristics in our primary risk in force included mortgages with LTV ratios greater than 95% (16%), mortgages with borrowers having FICO scores below 680 (7%), including those with borrowers having FICO scores of 620-679 (6%), mortgages with limited underwriting, including limited borrower documentation (1%), and mortgages with borrowers having DTI ratios greater than 45% (or where no ratio is available) (18%), each attribute is determined at the time of loan origination.
As of December 31, 2024, mortgages with these characteristics in our primary risk in force included mortgages with LTV ratios greater than 95% (17%), mortgages with borrowers having FICO scores below 680 (6%), including those with borrowers having FICO scores of 620-679 (6%), mortgages with limited underwriting, including limited borrower documentation (1%), and mortgages with borrowers having DTI ratios greater than 45% (or where no ratio is available) (20%).
The percentage of our NIW from all single premium policies was 4.0% in 2023. Beginning in 2012, the annual percentage of our NIW from single policies has been as low as 4.3% in 2022 and as high as 20.4% in 2015.
Beginning in 2012, the annual percentage of our NIW from single premium policies has been as low as 2.4% in 2024 and as high as 20.4% in 2015.
In 2022 the GSEs each published Equitable Housing Finance Plans ("Plans"). Updated Plans were subsequently published by each GSE in April 2023. The Plans seek to advance equity in housing finance over a three-year period and include potential changes to the GSEs’ business practices and policies.
Updated Plans were published by the GSEs in the spring of 2024. The Plans seek to advance equity in housing finance over a three-year period and include potential changes to the GSEs’ business practices and policies.
The GSEs also possess substantial market power, which enables them to influence our business and the mortgage insurance industry in general. It is uncertain what role the GSEs, FHA and private capital, including private mortgage insurance, will play in the residential housing finance system in the future. The timing and impact on our business of any resulting changes are uncertain.
It is uncertain what role the GSEs, FHA and private capital, including private mortgage insurance, will play in the residential housing finance system in the future. The timing and impact on our business of any resulting changes are uncertain.
Our underwriting requirements are available on our website at http://www.mgic.com/underwriting/index.html. Even when home prices are stable or rising, mortgages with certain characteristics have higher probabilities of claims.
Our underwriting requirements are available on our website at http://www.mgic.com/underwriting. MGIC Investment Corporation 2024 Form 10-K | 35 MGIC Investment Corporation and Subsidiaries Even when home prices are stable or rising, mortgages with certain characteristics have higher probabilities of claims.
For more information, see the above discussion of the GSEs' Equitable Housing Plans and our risk factor titled “ Changes in interest rates, house prices or mortgage insurance cancellation requirements may change the length of time that our policies remain in force .” • The programs established by the GSEs intended to avoid or mitigate loss on insured mortgages and the circumstances in which mortgage servicers must implement such programs. • The terms that the GSEs require to be included in mortgage insurance policies for loans that they purchase, including limitations on the rescission rights of mortgage insurers. • The extent to which the GSEs intervene in mortgage insurers’ claims paying practices, rescission practices or rescission settlement practices with lenders. • The maximum loan limits of the GSEs compared to those of the Federal Housing Administration ("FHA") and other investors. • The benchmarks established by the FHFA for loans to be purchased by the GSEs, which can affect the loans available to be insured.
" • The programs established by the GSEs intended to avoid or mitigate loss on insured mortgages and the circumstances in which mortgage servicers must implement such programs. • The terms that the GSEs require to be included in mortgage insurance policies for loans that they purchase, including limitations on the rescission rights of mortgage insurers. • The extent to which the GSEs intervene in mortgage insurers’ claims paying practices, rescission practices or rescission settlement practices with lenders. • The maximum loan limits of the GSEs compared to those of the Federal Housing Administration ("FHA") and other investors. • The benchmarks established by the FHFA for loans to be purchased by the GSEs, which can affect the loans available to be insured.
As a result, the length of time insurance remains in force, which is generally measured by persistency (the percentage of our insurance remaining in force from one year prior), is a significant determinant of our revenues.
In each year, most of our premiums earned are from insurance that has been written in prior years. As a result, the length of time insurance remains in force, which is generally measured by annual persistency (the percentage of our insurance remaining in force from one year prior), is a significant determinant of our revenues.
Depending on the actual life of a single premium policy and its premium rate relative to that of a monthly premium policy, a single premium policy may generate more or less premium than a monthly premium policy over its life.
Depending on the actual life of a single premium policy and its premium rate relative to that of a monthly premium policy, a single premium policy may generate more or less premium than a monthly premium policy over its life. The percentage of our NIW from all single premium policies was 2.4% in 2024.
The VA's share of the low down payment residential mortgages that were subject to FHA, VA, USDA or primary private mortgage insurance was 21.5% in 2023, 24.5% in 2022, and 30.2% in 2021. Beginning in 2012, the VA’s share has been as low as 22.8% (in 2013) and as high as 30.9% (in 2020).
The VA's share of the low down payment residential mortgages that were subject to FHA, VA, USDA or primary private mortgage insurance was 24.5% in 2024, 21.5% in 2023, and 24.5% in 2022. Since 2012, the VA's market share has been as high as 30.9% (in MGIC Investment Corporation 2024 Form 10-K | 32 MGIC Investment Corporation and Subsidiaries 2020).
In those cases, until settlement negotiations or legal proceedings are concluded it is possible that we will record an additional loss. Our success depends, in part, on our ability to manage risks in our investment portfolio. Our investment portfolio is an important source of revenue and is our primary source of claims paying resources.
In those cases, until settlement negotiations or legal proceedings are concluded it is possible that we will record an additional loss. MGIC Investment Corporation 2024 Form 10-K | 38 MGIC Investment Corporation and Subsidiaries Our success depends, in part, on our ability to manage risks in our investment portfolio.
Pandemics and other disasters could also lead to increased reinsurance rates or reduced availability of reinsurance. This may cause us to retain more risk than we otherwise would retain and could negatively affect our compliance with the financial requirements of State Capital Requirements and the PMIERs.
This may cause us to retain more risk than we otherwise would and could negatively affect our compliance with the financial requirements of State Capital Requirements and the PMIERs. Similarly, pandemics and other disasters may impact the value of and cause volatility in our investment portfolio, which could also negatively affect our compliance with the financial requirements of PMIERs.
You should read the rest of these risk factors for information about matters that could negatively affect MGIC’s compliance with State Capital Requirements and its claims paying resources. If the volume of low down payment home mortgage originations declines, the amount of insurance that we write could decline.
You should read the rest of these risk factors for information about matters that could negatively affect MGIC’s compliance with State Capital Requirements and its claims paying resources.
If a cybersecurity incident were to occur, it could affect our operations, results of operations, or financial condition as described in our Risk Factors titled “Information technology system failures or interruptions may materially impact our operations and/or adversely affect our financial results” and “We could be materially adversely affected by a cybersecurity breach or failure of information security controls." The CISO partners with the Company’s Risk Department to promote alignment of cybersecurity risk management strategy with the broader risk management strategy for the organization.
For additional information about risks related to cybersecurity, see our risk factors titled “Information technology system failures or interruptions may materially impact our operations and/or adversely affect our financial results” and “We could be materially adversely affected by a cybersecurity breach or failure of information security controls." GOVERNANCE The CISO reports to the CIO and partners with the Company’s Risk, Audit, Legal and Compliance Departments to promote alignment of cybersecurity risk management strategy with the broader risk management strategy for the organization.
The risks related to our models may increase when we change assumptions, methodologies, or modeling platforms. Moreover, we may use information we receive through enhancements to refine or otherwise change existing assumptions and/or methodologies. Information technology system failures or interruptions may materially impact our operations and/or adversely affect our financial results.
Moreover, we may use information we receive through enhancements to refine or otherwise change existing assumptions and/or methodologies. Information technology system failures or interruptions may materially impact our operations and/or adversely affect our financial results. We are heavily dependent on our information technology systems to conduct our business.
Our NIW on mortgages with DTI ratios greater than 45% was 26% in 2023 and 21% in 2022. From time to time, we change the processes we use to underwrite loans.
Our NIW on mortgages with DTI ratios greater than 45% was 29% in 2024 and 26% in 2023. Our NIW on mortgages with borrowers having FICO scores less than 680 was 4.0% in 2024 and 4.2% in 2023. From time to time, we change the processes we use to underwrite loans.
Loans with more than one of these attributes accounted for 5% of our primary risk in force as of December 31, 2023, and 4% of our primary risk in force as of December 31, 2022 and December 31, 2021.
Each attribute is determined at the time of loan origination. Loans with more than one of these attributes accounted for 5% of our primary risk in force as of December 31, 2024, and 5% and 4% of our primary risk in force as of December 31, 2023 and December 31, 2022, respectively.
The PMIERs include financial requirements, as well as business, quality control and certain transaction approval requirements. The PMIERs provide that the GSEs may amend any provision of the PMIERs or impose additional requirements with an effective date specified by the GSEs.
The PMIERs provide that the GSEs may amend any provision of the PMIERs or impose additional requirements with an effective date specified by the GSEs.
The failure of our systems and technology, or our disaster recovery and business continuity plans, to operate effectively could affect our ability to provide our products and services to customers, reduce efficiency, or cause delays in operations. Significant capital investments might be required to remediate any such problems.
Our ability to efficiently operate our business depends significantly on the reliability and capacity of our systems and technology. The failure of our systems and technology, or our disaster recovery and business continuity plans, to operate effectively could affect our ability to provide our products and services to customers, reduce efficiency, or cause delays in operations.
The CIRT is overseen by the CISO. If necessary, the CIRT may engage third-party cybersecurity experts to evaluate and/or remediate the incident.
If necessary, the CIRT may engage third-party cybersecurity experts to evaluate and/or remediate the incident. If and when the CIRT is activated, the CISO will inform the Company's Chief Information Officer (CIO).
In July 2023, the Federal Reserve Board, Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency proposed a revised regulatory capital rule that would impose higher capital standards on large U.S. banks.
The VA's 2023 market share was the lowest since 2013 (22.8%). The VA program offers 100% LTV ratio loans for qualifying borrowers. In July 2023, the Federal Reserve Board, Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency proposed a revised regulatory capital rule that would impose higher capital standards on large U.S. banks.
On February 22, 2023, the FHA announced a 30-basis point decrease in its mortgage insurance premium rates. This rate reduction has negatively impacted our NIW. We are unable to predict the extent of any further impact on our NIW or how the factors that affect the FHA's share of NIW will change in the future.
In February, 2023 the FHA announced a 30-basis point decrease in its mortgage insurance premium rates. This rate reduction has negatively impacted our NIW. The extent of the future impact of this rate reduction, or that of any other future government-supported mortgage insurance program premium changes, on our NIW is uncertain.
A premium deficiency would be recorded if the present value of expected future losses and expenses exceeds the present value of expected future premiums and already established loss reserves on the applicable loans. As a result, future losses incurred on loans that are not currently delinquent may have a material impact on future results as delinquencies emerge.
Losses that may occur from loans that are not delinquent are not reflected in our financial statements, except when a "premium deficiency" is recorded. A premium deficiency would be recorded if the present value of expected future losses and expenses exceeds the present value of expected future premiums and already established loss reserves on the applicable loans.
Also, the associated input data, assumptions, and calculations may not always be correct or accurate and the controls we have in place to mitigate these risks may not be effective in MGIC Investment Corporation 2023 Form 10-K | 33 MGIC Investment Corporation and Subsidiaries all cases.
Also, the associated input data, assumptions, and calculations may not always be correct or accurate and the controls we have in place to mitigate these risks may not be effective in all cases. The risks related to our models may increase when we change assumptions, methodologies, or modeling platforms.
Generally, we cannot cancel mortgage insurance coverage or adjust renewal premiums during the life of a policy. As a result, higher than anticipated claims generally cannot be offset by premium increases on policies in force or mitigated by our non-renewal or cancellation of insurance coverage.
As a result, changes in economic conditions or the practices of the GSEs, higher than anticipated claims, or other unexpected events generally cannot be addressed by premium increases on policies in force or mitigated by our non-renewal or cancellation of insurance coverage.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeNet losses and LAE paid (in millions) 2023 2022 Total primary (excluding settlements) $ 39 $ 35 NPL settlements 1 8 Pool — — Direct losses paid 40 43 Reinsurance (1) (1) Net losses paid 39 42 LAE 7 8 Net losses and LAE paid before terminations 46 50 Reinsurance terminations (1) (9) (18) Net losses and LAE paid $ 37 $ 32 Average claim paid (2) $ 29,405 $ 26,715 (1) See Note 9 - "Reinsurance" for additional information on our reinsurance terminations (2) Excludes amounts paid in NPL settlements The primary average claim paid can vary materially from period to period based upon a variety of factors, including the local market conditions, average loan amount, average coverage percentage, the amount of time between delinquency and claim filing, and our loss mitigation efforts on loans for which claims are paid.
Biggest changeThe primary average claim paid can vary materially from period to period based upon a variety of factors, including the local market conditions, average loan amount, average coverage percentage, the amount of time between delinquency and claim filing, and our loss mitigation efforts on loans for which claims are paid.
The credit risk of a security is evaluated through analysis of the security's underlying fundamentals, including the issuer's sector, scale, profitability, debt coverage, and ratings. The investment policy guidelines limit the amount of our credit exposure to any one issue, issuer and type of instrument.
The credit risk of a security is evaluated through analysis of the security's underlying fundamentals, including the issuer's sector, scale, profitability, debt coverage, and ratings. Our investment policy guidelines limit the amount of our credit exposure to any one issue, issuer and type of instrument.
As discussed in our Risk Factor titled “Because we establish loss reserves only upon a loan delinquency rather than based on estimates of our ultimate losses on risk in force, losses may have a disproportionate adverse effect on our earnings in certain periods” if we have not received a notice of delinquency with respect to a loan and if we have not estimated the loan to be delinquent as of December 31, 2023, through our IBNR reserve, then we have not yet recorded an incurred loss with respect to that loan.
As discussed in our risk factor titled “Because we establish loss reserves only upon a loan delinquency rather than based on estimates of our ultimate losses on risk in force, losses may have a disproportionate adverse effect on our earnings in certain periods” if we have not received a notice of delinquency with respect to a loan and if we have not estimated the loan to be delinquent as of December 31, 2024, through our IBNR reserve, then we have not yet recorded an incurred loss with respect to that loan.
The ability to raise capital in the public markets is subject to prevailing market conditions, investor demand for the securities to be issued, and our deemed creditworthiness. Over the next twelve months the principal demand on holding company resources will be interest payments on our 5.25% Notes approximating $34.0 million, based on the debt outstanding at December 31, 2023.
The ability to raise capital in the public markets is subject to prevailing market conditions, investor demand for the securities to be issued, and our deemed creditworthiness. Over the next twelve months the principal demand on holding company resources will be interest payments on our 5.25% Notes approximating $34.0 million, based on the debt outstanding at December 31, 2024.
REINSURANCE TRANSACTIONS Quota Share Reinsurance Our quota share reinsurance affects various lines of our statements of operations and therefore we believe it should be analyzed by reviewing its total effect on our pre-tax income, as described below. è We cede a fixed percentage of premiums earned and received on insurance covered by the transactions. è We receive the benefit of a profit commission through a reduction in the premiums we cede.
REINSURANCE TRANSACTIONS Quota Share Reinsurance Our quota share reinsurance affects various lines of our statements of operations and therefore we believe it should be analyzed by reviewing its total effect on our pre-tax income, described as follows. è We cede a fixed percentage of premiums earned and received on insurance covered by the transactions. è We receive the benefit of a profit commission through a reduction in the premiums we cede.
Although not anticipated in the near term, we may also contribute funds to our insurance operations to comply with the PMIERs or the State Capital Requirements. See “ Overview – Capital ” above for a discussion of these requirements. DEBT AT SUBSIDIARIES MGIC did not have any outstanding debt obligations at December 31, 2023.
Although not anticipated in the near term, we may also contribute funds to our insurance operations to comply with the PMIERs or the State Capital Requirements. See “ Overview – Capital ” above for a discussion of these requirements. DEBT AT SUBSIDIARIES MGIC did not have any outstanding debt obligations at December 31, 2024.
This asset allocation is informed by, and based on, the following factors: è economic and market outlooks; è diversification effects; è security duration; è liquidity; è capital considerations; and è income tax rates. The average duration and embedded investment yield of our investment portfolio as of December 31, 2023 and 2022 is shown in the following table.
This asset allocation is informed by, and based on, the following factors: è economic and market outlooks; è diversification effects; è security duration; è liquidity; è capital considerations; and è income tax rates. The average duration and embedded investment yield of our investment portfolio as of December 31, 2024 and 2023 is shown in the following table.
MGIC Investment Corporation 2023 Form 10-K | 72 MGIC Investment Corporation and Subsidiaries LIQUIDITY AND CAPITAL RESOURCES CONSOLIDATED CASH FLOW ANALYSIS We have three primary types of cash flows: (1) operating cash flows, which consist mainly of cash generated by our insurance operations and income earned on our investment portfolio, less amounts paid for claims, interest expense and operating expenses, (2) investing cash flows related to the purchase, sale and maturity of investments and purchases of property and equipment and (3) financing cash flows generally from activities that impact our capital structure, such as changes in debt and shares outstanding, and dividend payments.
MGIC Investment Corporation 2024 Form 10-K | 73 MGIC Investment Corporation and Subsidiaries LIQUIDITY AND CAPITAL RESOURCES CONSOLIDATED CASH FLOW ANALYSIS We have three primary types of cash flows: (1) operating cash flows, which consist mainly of cash generated by our insurance operations and income earned on our investment portfolio, less amounts paid for claims, interest expense and operating expenses, (2) investing cash flows related to the purchase, sale and maturity of investments and purchases of property and equipment and (3) financing cash flows generally from activities that impact our capital structure, such as changes in debt and shares outstanding, and dividend payments.
The decrease in loss reserves is primarily due to favorable development of $208.5 million on previously received delinquency notices, partially offset by loss reserves established on new delinquency notices. The reinsurance recoverable on loss reserves is impacted by the change in direct reserves and the percentage of our delinquency inventory covered by reinsurance transactions.
The decrease in loss reserves is primarily due to favorable development of $212.5 million on previously received delinquency notices, partially offset by loss reserves established on new delinquency notices. The reinsurance recoverable on loss reserves is impacted by the change in direct reserves and the percentage of our delinquency inventory covered by reinsurance transactions.
E - Estimated, F- Forecast Source: Fannie Mae and MBA estimates/forecasts as of January 2024. Amounts represent the average of all sources. The total estimated mortgage insurance volume is shown below.
E - Estimated, F- Forecast Source: Fannie Mae and MBA estimates/forecasts as of January 2025. Amounts represent the average of all sources. The total estimated mortgage insurance volume is shown below.
Capital Adequacy PMIERs As of December 31, 2023, MGIC’s Available Assets under the PMIERs totaled approximately $5.8 billion, an excess of approximately $2.4 billion over its Minimum Required Assets; and MGIC is in compliance with the requirements of the PMIERs and eligible to insure loans delivered to or purchased by the GSEs.
CAPITAL ADEQUACY PMIERs As of December 31, 2024, MGIC’s Available Assets under the PMIERs totaled approximately $5.8 billion, an excess of approximately $2.2 billion over its Minimum Required Assets; and MGIC is in compliance with the requirements of the PMIERs and eligible to insure loans delivered to or purchased by the GSEs.
Our effective tax rate for 2023 and 2022 approximated the federal statutory income tax rate of 21%. See Note 12 – “Income Taxes” to our consolidated financial statements for a discussion of our tax position.
Our effective tax rate for 2024 and 2023 approximated the federal statutory income tax rate of 21%. See Note 12 – “Income Taxes” to our consolidated financial statements for a discussion of our tax position.
For further information about the importance of MGIC’s ratings and rating methodologies, see our risk factor titled “Competition or changes in our relationships with our customers could reduce our revenues, reduce our premium yields and / or increase our losses” in Item 1A.
Best A Stable For further information about the importance of MGIC’s ratings and rating methodologies, see our risk factor titled “Competition or changes in our relationships with our customers could reduce our revenues, reduce our premium yields and / or increase our losses” in Item 1A .
MGIC Investment Corporation 2023 Form 10-K | 53 MGIC Investment Corporation and Subsidiaries EXPLANATION AND RECONCILIATION OF OUR USE OF NON-GAAP FINANCIAL MEASURES 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.
MGIC Investment Corporation 2024 Form 10-K | 54 MGIC Investment Corporation and Subsidiaries EXPLANATION AND RECONCILIATION OF OUR USE OF NON-GAAP FINANCIAL MEASURES NON-GAAP FINANCIAL MEASURES We believe that use of the Non-GAAP financial 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.
MGIC Investment Corporation 2023 Form 10-K | 56 MGIC Investment Corporation and Subsidiaries MGIC's estimated market share within the PMI industry is shown in the table below. Our risk-based pricing engine, MiQ, allows for frequent granular pricing changes including those to address our view of emerging and evolving market conditions and risk.
MGIC Investment Corporation 2024 Form 10-K | 57 MGIC Investment Corporation and Subsidiaries MGIC's estimated market share within the PMI industry is shown in the table below. Our risk-based pricing engine, MiQ, allows for frequent granular pricing changes including those to address our view of emerging and evolving market conditions and risk.
Even though the accounting standard, ASC 944, regarding accounting and reporting by insurance entities specifically excluded mortgage insurance from its guidance relating to loss reserves, we establish loss reserves using the general principles contained in the insurance standard.
Although the accounting standard, ASC 944, regarding accounting and reporting by insurance entities specifically excluded mortgage insurance from its guidance relating to loss reserves, we establish loss reserves using the general principles contained in the insurance standard.
We also have purchase obligations totaling approximately $14.1 million which consist primarily of contracts related to our continued investment in our information technology infrastructure in the normal course of business. The majority of these obligations are under contracts that give us cancellation rights with notice.
We also have purchase obligations totaling approximately $11.6 million which consist primarily of contracts related to our continued investment in our information technology infrastructure in the normal course of business. The majority of these obligations are under contracts that give us cancellation rights with notice.
MGIC Investment Corporation 2023 Form 10-K | 77 MGIC Investment Corporation and Subsidiaries CRITICAL ACCOUNTING ESTIMATES The accounting estimate described below requires significant judgments and estimates in the preparation of our consolidated financial statements. LOSS RESERVES The estimation of case loss reserves is subject to inherent uncertainty and requires significant judgement by management.
MGIC Investment Corporation 2024 Form 10-K | 78 MGIC Investment Corporation and Subsidiaries CRITICAL ACCOUNTING ESTIMATES The accounting estimate described below requires significant judgments and estimates in the preparation of our consolidated financial statements. LOSS RESERVES The estimation of case loss reserves is subject to inherent uncertainty and requires significant judgement by management.
Financing activities The following list highlights the major sources and uses of cash flow from financing activities: Sources + Proceeds from debt and/or common stock issuances Uses - Repayment/repurchase of debt - Repurchase of common stock - Payment of dividends to shareholders - Payment of withholding taxes related to share-based compensation net share settlement Net cash flows used in financing activities in 2023 primarily reflects the repurchases of our common stock, dividends to shareholders, and the conversion of our 9% Debentures.
Financing activities The following list highlights the major sources and uses of cash flow from financing activities: Sources + Proceeds from debt and/or common stock issuances Uses - Repayment/repurchase of debt - Repurchase of common stock - Payment of dividends to shareholders - Payment of withholding taxes related to share-based compensation net share settlement Net cash flows used in financing activities in 2024 primarily reflects the repurchases of our common stock, dividends to shareholders, and the payment of withholding taxes related to share-based compensation net share settlement.
The primary delinquency inventory by policy year at December 31, 2023 and 2022 appears in the following table.
The primary delinquency inventory by policy year at December 31, 2024 and 2023 appears in the following table.
The following table shows the security ratings of our fixed income investments as of December 31, 2023 and 2022.
The following table shows the security ratings of our fixed income investments as of December 31, 2024 and 2023.
Net cash flows provided by investing activities in 2023 primarily reflects purchases of fixed income securities during the period that exceeded sales and maturities of fixed income securities during the period as cash from operations was available for additional investment.
Net cash flows used in investing activities in 2024 and 2023, primarily reflects purchases of fixed income securities during the period that exceeded sales and maturities of fixed income securities during the period as cash from operations was available for additional investment.
A positive number for a prior year indicates a deficiency of loss reserves. See Note 8 – “Loss Reserves” to our consolidated financial statements for a discussion of recent loss development. MGIC Investment Corporation 2023 Form 10-K | 79
A positive number for a prior year indicates a deficiency of loss reserves. See Note 8 – “Loss Reserves” to our consolidated financial statements for a discussion of recent loss development. MGIC Investment Corporation 2024 Form 10-K | 80
Investments outlook The Federal Open Market Committee (“FOMC”) raised the federal funds rate four times throughout 2023 from 4.50% to 5.50% as it balanced maintaining a sufficiently restrictive monetary policy to return inflation to its long-run target, while also achieving its employment goals. In January, 2024, the FOMC held the federal funds rate at 5.25% to 5.50%.
Investments outlook The Federal Open Market Committee (“FOMC”) reduced the federal funds rate three times throughout 2024 from 5.50% to 4.50% as it balanced maintaining a sufficiently restrictive monetary policy to return inflation to its long-run target, while also achieving its employment goals. In January, 2025, the FOMC held the federal funds rate at 4.25% to 4.50%.
Portfolio duration and embedded investment yield December 31, 2023 2022 Effective Duration (in years) 3.8 4.0 Pre-tax yield (1) 3.7% 3.0% After-tax yield (1) 3.0% 2.5% (1) Embedded investment yield is calculated on a yield-to-worst basis.
Portfolio duration and embedded investment yield December 31, 2024 2023 Effective Duration (in years) 3.9 3.8 Pre-tax yield (1) 4.0% 3.7% After-tax yield (1) 3.2% 3.0% (1) Embedded investment yield is calculated on a yield-to-worst basis.
MGIC Investment Corporation 2023 Form 10-K | 59 MGIC Investment Corporation and Subsidiaries CONSOLIDATED RESULTS OF OPERATIONS The following section of the MD&A provides a comparative discussion of our Consolidated Results of Operations for the two-year period ended December 31, 2023.
MGIC Investment Corporation 2024 Form 10-K | 60 MGIC Investment Corporation and Subsidiaries CONSOLIDATED RESULTS OF OPERATIONS The following section of the MD&A provides a comparative discussion of our Consolidated Results of Operations for the two-year period ended December 31, 2024.
MGIC Investment Corporation 2023 Form 10-K | 60 MGIC Investment Corporation and Subsidiaries Ceded premiums earned, net of profit commission and assumed premiums è Ceded premiums earned, net of profit commission adversely impact our net premium yield. Ceded premiums earned, net of profit commission, are associated with the QSR Transactions and the XOL Transactions.
MGIC Investment Corporation 2024 Form 10-K | 61 MGIC Investment Corporation and Subsidiaries Ceded premiums earned, net of profit commission and assumed premiums è Ceded premiums earned, net of profit commission adversely impact our net premium yield. Ceded premiums earned, net of profit commission, are associated with the QSR Transactions and the XOL Transactions.
Premium Yield Year Ended December 31, (in basis points) 2023 2022 In force portfolio yield (1) 38.5 39.4 Premium refunds (0.1) 0.1 Accelerated earnings on single premium policies 0.4 1.0 Total direct premium yield 38.8 40.5 Ceded premiums earned, net of profit commission and assumed premiums (2) (6.5) (5.2) Net premium yield 32.3 35.3 (1) Total direct premiums earned, excluding premium refunds and accelerated premiums from single premium policy cancellations divided by average primary insurance in force.
Premium Yield Year Ended December 31, (in basis points) 2024 2023 In force portfolio yield (1) 38.4 38.5 Premium refunds 0.0 (0.1) Accelerated earnings on single premium policies 0.3 0.4 Total direct premium yield 38.7 38.8 Ceded premiums earned, net of profit commission and assumed premiums (2) (5.7) (6.5) Net premium yield 33.0 32.3 (1) Total direct premiums earned, excluding premium refunds and accelerated premiums from single premium policy cancellations divided by average primary insurance in force.
Year Ended December 31, 2023 2022 Underwriting expense ratio 25.5 % 25.2 % The underwriting expense ratio is the ratio, expressed as a percentage, of the underwriting and operating expenses, net and amortization of DAC of our combined insurance operations (which excludes underwriting and operating expenses of our non-insurance subsidiaries) to net premiums written.
Year Ended December 31, 2024 2023 Underwriting expense ratio 23.0 % 25.5 % The underwriting expense ratio is the ratio, expressed as a percentage, of the underwriting and operating expenses, net and amortization of DAC of our combined insurance operations (which excludes underwriting and operating expenses of our non-insurance subsidiaries) to net premiums written.
The following table provides information related to our QSR Transactions for 2023 and 2022.
The following table provides information related to our QSR Transactions for 2024 and 2023.
The following tables provides information about loans with one or more of the following characteristics associated with our NIW: LTV ratios greater than 95%, mortgages with borrowers having FICO scores below 680, including those with borrowers having FICO scores of 620-679, and mortgages with borrowers having DTI ratios greater than 45%, each attribute as determined at the time of loan origination.
The following table provides information about loans with one or more of the following characteristics associated with our NIW: LTV ratios greater than 95%, mortgages with borrowers having FICO scores below 680, and mortgages with borrowers having DTI ratios greater than 45%, each attribute as determined at the time of loan origination.
Primary NIW by FICO score Years Ended December 31, (% of primary NIW) 2023 2022 760 and greater 49.9 % 43.1 % 740 - 759 18.3 % 18.5 % 720 - 739 13.4 % 14.9 % 700 - 719 9.0 % 10.9 % 680 - 699 5.2 % 7.3 % 660 - 679 2.8 % 3.3 % 640 - 659 1.0 % 1.3 % 639 and less 0.4 % 0.7 % Total 100 % 100 % Primary NIW by loan-to-value Years Ended December 31, (% of primary NIW) 2023 2022 95.01% and above 12.2 % 12.3 % 90.01% to 95.00% 45.5 % 49.3 % 85.01% to 90.00% 30.8 % 28.0 % 80.01% to 85% 11.5 % 10.4 % Total 100 % 100 % Primary NIW by debt-to-income ratio Years Ended December 31, (% of primary NIW) 2023 2022 45.01% and above 26.4 % 21.3 % 38.01% to 45.00% 32.3 % 32.3 % 38.00% and below 41.3 % 46.4 % Total 100 % 100 % Primary NIW by policy payment type Years Ended December 31, (% of primary NIW) 2023 2022 Monthly premiums 96.0 % 95.7 % Single premiums 4.0 % 4.3 % Annual Premiums — % — % MGIC Investment Corporation 2023 Form 10-K | 57 MGIC Investment Corporation and Subsidiaries Primary NIW by type of mortgage Years Ended December 31, (% of primary NIW) 2023 2022 Purchases 98.2 % 97.4 % Refinances 1.8 % 2.6 % We consider a variety of loan characteristics when accessing the risk of a loan.
Primary NIW by FICO score Years Ended December 31, (% of primary NIW) 2024 2023 760 and greater 50.9 % 49.9 % 740 - 759 17.4 % 18.3 % 720 - 739 13.5 % 13.4 % 700 - 719 9.1 % 9.0 % 680 - 699 5.2 % 5.2 % 660 - 679 2.8 % 2.8 % 640 - 659 0.8 % 1.0 % 639 and less 0.3 % 0.4 % Total 100 % 100 % Primary NIW by loan-to-value Years Ended December 31, (% of primary NIW) 2024 2023 95.01% and above 13.7 % 12.2 % 90.01% to 95.00% 47.3 % 45.5 % 85.01% to 90.00% 27.7 % 30.8 % 80.01% to 85% 11.3 % 11.5 % Total 100 % 100 % Primary NIW by debt-to-income ratio Years Ended December 31, (% of primary NIW) 2024 2023 45.01% and above 28.9 % 26.4 % 38.01% to 45.00% 31.6 % 32.3 % 38.00% and below 39.5 % 41.3 % Total 100 % 100 % Primary NIW by policy payment type Years Ended December 31, (% of primary NIW) 2024 2023 Monthly premiums 97.6 % 96.0 % Single premiums 2.4 % 4.0 % Annual Premiums 0.0 % 0.0 % Total 100 % 100 % MGIC Investment Corporation 2024 Form 10-K | 58 MGIC Investment Corporation and Subsidiaries Primary NIW by type of mortgage Years Ended December 31, (% of primary NIW) 2024 2023 Purchases 96.0 % 98.2 % Refinances 4.0 % 1.8 % Total 100 % 100 % We consider a variety of loan characteristics when assessing the risk of a loan.
MGIC Investment Corporation 2023 Form 10-K | 78 MGIC Investment Corporation and Subsidiaries Historically, it has not been uncommon for us to experience variability in the development of the loss reserves through the end of the following year at this level or higher, as shown by the historical development of our loss reserves in the table below: Historical development of loss reserves (In thousands) Losses incurred related to prior years (1) Reserve at end of prior year 2023 (208,514) 557,988 2022 (404,130) 883,522 2021 (60,015) 880,537 2020 19,604 555,334 2019 (71,006) 674,019 (1) A negative number for a prior year indicates a redundancy of loss reserves.
MGIC Investment Corporation 2024 Form 10-K | 79 MGIC Investment Corporation and Subsidiaries Historically, it has not been uncommon for us to experience variability in the development of the loss reserves through the end of the following year at this level or higher, as shown by the historical development of our loss reserves in the table below: Historical development of loss reserves (In thousands) Losses incurred related to prior years (1) Reserve at end of prior year 2024 (212,476) 505,379 2023 (208,514) 557,988 2022 (404,130) 883,522 2021 (60,015) 880,537 2020 19,604 555,334 (1) A negative number for a prior year indicates a redundancy of loss reserves.
Loss reserves in future periods will also be dependent on the number of loans reported to us as delinquent. Prior to the COVID-19 pandemic, losses followed a seasonal trend in which the second half of the year has weaker credit performance than the first half, with higher new notice activity and a lower cure rate.
Loss reserves in future periods will also be dependent on the number of loans reported to us as delinquent. Generally, losses follow a seasonal trend in which the second half of the year has weaker credit performance than the first half, with higher new notice activity and a lower cure rate.
The increase in statutory policyholders' position was primarily due to an increase in statutory contingency reserves and net income during 2023, offset by dividends paid to our holding company of $600 million. Our risk-to-capital ratio will increase if the percentage increase in capital exceeds the percentage decrease in insured risk.
The increase in statutory policyholders' position was primarily due to an increase in net income in 2024, offset by a decrease in statutory contingency reserves and dividends paid to our holding company of $750 million. Our risk-to-capital ratio will increase if the percentage increase in capital exceeds the percentage decrease in insured risk.
For example, as of December 31, 2023, assuming all other factors remain constant, a $1,000 increase/decrease in the average claim severity reserve factor would change the reserve amount by approximately +/- $8 million. A one percentage point increase/decrease in the average claim rate reserve factor would change the reserve amount by approximately +/- $16 million.
For example, as of December 31, 2024, assuming all other factors remain constant, a $1,000 increase/decrease in the average claim severity reserve factor would change the reserve amount by approximately +/- $7 million. A one percentage point increase/decrease in the average claim rate reserve factor would change the reserve amount by approximately +/- $18 million.
The increase is primarily due to an increase in loans from recent years which generally have larger loan balances. LOSS RESERVES The gross reserves as of December 31, 2023, and 2022 appear in the table below.
The increase is primarily due to an increase in loans from recent years having generally larger loan balances. LOSS RESERVES The gross reserves as of December 31, 2024, and 2023 appear in the table below.
MGIC Investment Corporation 2023 Form 10-K | 69 MGIC Investment Corporation and Subsidiaries BALANCE SHEET REVIEW The following sections focus on the assets and liabilities experiencing major developments in 2023.
MGIC Investment Corporation 2024 Form 10-K | 70 MGIC Investment Corporation and Subsidiaries BALANCE SHEET REVIEW The following sections focus on the assets and liabilities experiencing major developments in 2024.
As of December 31, 2023, modifications accounted for approximately 3.6% of our total primary RIF, compared to 4.2% at December 31, 2022. Loans associated with 87.3% of all our modifications were current as of December 31, 2023.
As of December 31, 2024, loans with modifications accounted for approximately 3.0% of our total primary RIF, compared to 3.6% at December 31, 2023. Loans associated with 87.6% of all our modifications were current as of December 31, 2024.
MGIC Investment Corporation 2023 Form 10-K | 74 MGIC Investment Corporation and Subsidiaries Capital Structure The following table summarizes our capital structure as of December 31, 2023, and 2022.
MGIC Investment Corporation 2024 Form 10-K | 75 MGIC Investment Corporation and Subsidiaries Capital Structure The following table summarizes our capital structure as of December 31, 2024, and 2023.
Number of Missed Payments of Delinquency Inventory 2004 and prior 3,392 2,072 18 2005-2008 10,807 7,008 17 2009-2015 2,607 1,414 11 2016 1,824 954 9 2017 2,518 1,365 9 2018 3,118 1,750 8 2019 3,080 1,550 7 2020 5,028 2,383 6 2021 8,754 4,237 5 2022 5,150 2,605 5 2023 547 312 3 Total 46,825 25,650 11 Claim rate on new notices (1) 7.5 % December 31, 2022 Policy Year New Delinquency Notices Received in the Year Ended Delinquency Inventory Avg.
Number of Missed Payments of Delinquency Inventory 2004 and prior 3,392 2,072 18 2005-2008 10,807 7,008 17 2009-2015 2,607 1,414 11 2016 1,824 954 9 2017 2,518 1,365 9 2018 3,118 1,750 8 2019 3,080 1,550 7 2020 5,028 2,383 6 2021 8,754 4,237 5 2022 5,150 2,605 5 2023 547 312 3 Total 46,825 25,650 11 Claim rate on new notices (1) 7.5 % (1) Claim rate at the time new delinquency notices are received as a full year weighted average rate.
UNEARNED PREMIUM Our unearned premium decreased to $157.8 million as of December 31, 2023 from $195.3 million as of December 31, 2022 primarily due to the run-off of unearned premium on our existing portfolio of single premium policies, partially offset by new premium written on single premium policies.
UNEARNED PREMIUM Our unearned premium decreased to $120.4 million as of December 31, 2024 from $157.8 million as of December 31, 2023 primarily due to the run-off of unearned premium on our existing portfolio of single premium policies, partially offset by new premium written on single premium policies.
Estimated total of PMI, FHA, USDA, and VA primary mortgage insurance (in billions) Year Ended December 31, 2023 Year Ended December 31, 2022 Primary mortgage insurance $643 $858 Source: Inside Mortgage Finance - February 15, 2024 or SEC filings.
Estimated total of PMI, FHA, USDA, and VA primary mortgage insurance (in billions) Year Ended December 31, 2024 Year Ended December 31, 2023 Primary mortgage insurance $727 $643 Source: Inside Mortgage Finance - February 21, 2025 or SEC filings.
Summary of consolidated cash flows Years ended December 31, (In thousands) 2023 2022 Total cash provided by (used in): Operating activities $ 712,962 $ 650,012 Investing activities (179,190) 410,485 Financing activities (496,041) (1,032,542) Increase (decrease) in cash and cash equivalents and restricted cash and cash equivalents $ 37,731 $ 27,955 Operating activities The following list highlights the major sources and uses of cash flow from operating activities: Sources + Premiums received + Loss payments from reinsurers + Investment income Uses - Claim payments - Premium ceded to reinsurers - Interest expense - Operating expenses - Tax payments Our largest source of cash is from premiums received from our insurance policies, which we receive on a monthly installment basis for most policies.
Summary of consolidated cash flows Years ended December 31, (In thousands) 2024 2023 Total cash provided by (used in): Operating activities $ 725,032 $ 712,962 Investing activities (142,005) (179,190) Financing activities (719,044) (496,041) Increase (decrease) in cash and cash equivalents and restricted cash and cash equivalents $ (136,017) $ 37,731 Operating activities The following list highlights the major sources and uses of cash flow from operating activities: Sources + Premiums received + Loss payments from reinsurers + Investment income Uses - Claim payments - Premium ceded to reinsurers - Interest expense - Operating expenses - Tax payments Our largest source of cash is from premiums received from our insurance policies, which we receive on a monthly installment basis for most policies.
As of December 31, 2023, our portfolio had a fair value of $5.7 billion compared to $5.4 billion at December 31, 2022.
As of December 31, 2024, our portfolio had a fair value of $5.9 billion compared to $5.7 billion at December 31, 2023.
Risk-to-capital - MGIC December 31, (In millions, except ratio) 2023 2022 RIF - net (1) $ 58,832 $ 56,292 Statutory policyholders' surplus $ 636 $ 921 Statutory contingency reserve 5,131 4,597 Statutory policyholders' position $ 5,767 $ 5,518 Risk-to-capital 10.2:1 10.2:1 (1) RIF – net, as shown in the table above, is net of reinsurance and exposure on policies currently delinquent ($1.6 billion at December 31, 2023 and $1.4 billion at December 31, 2022) and for which case loss reserves have been established.
Risk-to-capital - MGIC December 31, (In millions, except ratio) 2024 2023 RIF - net (1) $ 58,213 $ 58,832 Statutory policyholders' surplus $ 973 $ 636 Statutory contingency reserve 4,833 5,131 Statutory policyholders' position $ 5,806 $ 5,767 Risk-to-capital 10.0:1 10.2:1 (1) RIF – net, as shown in the table above, is net of reinsurance and exposure on policies currently delinquent ($1.8 billion at December 31, 2024 and $1.6 billion at December 31, 2023) and for which case loss reserves have been established.
Settlements include amounts paid in settlement of disputes for claims paying practices and/or commutations of policies. See Note 8 – “Loss Reserves” to our consolidated financial statements and “ Critical Accounting Estimates ” below for a discussion of our losses incurred and claims paying practices (including curtailments).
Settlements include amounts paid in settlement of disputes for claims paying practices and/or commutations of policies. See Note 8 – “Loss Reserves” to our consolidated financial statements and “ Critical Accounting Estimates ” below for a discussion of our losses incurred and claims paying practices (including curtailments). The table below shows the number of consecutive months a borrower is delinquent.
While a higher interest rate environment may continue to adversely impact the fair values of existing fixed income investments, it presents an opportunity for continued investment into securities with yields in excess of the book yield on our portfolio. Increases in market-based portfolio yields are expected to result in higher net investment income in future periods.
While a higher interest rate environment may continue to adversely impact the fair values of existing fixed income investments, it presents an opportunity for continued investment into securities with yields in excess of the book yield on our portfolio.
The PMI industry's market share in 2023 decreased compared to the market share in 2022. Estimated primary MI market share (% of total primary MI volume) Year Ended December 31, 2023 Year Ended December 31, 2022 PMI 44.1% 47.2% FHA 33.2% 26.7% VA 21.5% 24.5% USDA 1.2% 1.6% Source: Inside Mortgage Finance - February 15, 2024 or SEC filings.
The PMI industry's market share in 2024 decreased compared to the market share in 2023. Estimated primary MI market share (% of total primary MI volume) Year Ended December 31, 2024 Year Ended December 31, 2023 PMI 41.1% 44.1% FHA 33.5% 33.2% VA 24.5% 21.5% USDA 0.9% 1.2% Source: Inside Mortgage Finance - February 21, 2025 or SEC filings.
See Note 7 - "Debt" for further information on our outstanding debt obligations and transactions impacting our consolidated financial statements in 2023 and 2022. Liquidity analysis - holding company As of December 31, 2023, and December 31, 2022, we had approximately $918 million and $647 million, respectively, in cash and investments at our holding company.
See Note 7 - "Debt" for further information on our outstanding debt obligations and transactions impacting our consolidated financial statements in 2024 and 2023. Liquidity analysis - holding company As of December 31, 2024, and December 31, 2023, we had approximately $1.1 billion and $0.9 billion, respectively, in cash and investments at our holding company.
(2) Ceded premiums for reinsurance cancellation activities decreased the premium yield by 0.5 bps in 2023 and 0.1 bps in 2022. Assumed premiums include those from our participation in GSE CRT programs, of which the impact on the net premium yield was 0.4 bps in 2023 and 0.3 bps in 2022.
(2) Ceded premiums for reinsurance cancellation activities resulted in a decrease of 0.5 bps in 2023. Assumed premiums include those from our participation in GSE CRT programs, of which the impact on the net premium yield was 0.5 bps in 2024 and 0.4 bps in 2023.
Our gross reserves are reduced by reinsurance recoverable on loss reserves to calculate a net reserve balance. Loss reserves decreased to $505.4 million as of December 31, 2023, from $558.0 million of December 31, 2022. Reinsurance recoverables on loss reserves were $33.3 million and $28.2 million as of December 31, 2023 and December 31, 2022, respectively.
Our gross reserves are reduced by reinsurance recoverable on loss reserves to calculate a net reserve balance. Loss reserves decreased to $462.7 million as of December 31, 2024, from $505.4 million of December 31, 2023. Reinsurance recoverables on loss reserves were $47.3 million and $33.3 million as of December 31, 2024 and December 31, 2023, respectively.
Accelerated earnings on single premium policies è The lower level of refinance transactions have reduced the benefit from accelerated earned premium from cancellation of single premium policies prior to their estimated policy life.
Accelerated earnings on single premium policies è A low level of refinance transactions reduces the benefit from accelerated earned premium from cancellation of single premium policies prior to their estimated policy life.
MGIC Investment Corporation 2023 Form 10-K | 65 MGIC Investment Corporation and Subsidiaries Under our current master policy terms, an insured can include accumulated interest when filing a claim only for the first three years the loan is delinquent. In each case, the insured must comply with its obligations under the terms of the applicable master policy.
Under our current master policy terms, an insured can include accumulated interest when filing a claim only for the first three years the loan is delinquent. In each case, the insured must comply with its obligations under the terms of the applicable master policy.
MGIC Investment Corporation 2023 Form 10-K | 61 MGIC Investment Corporation and Subsidiaries Covered Risk The percentages of our NIW, new risk written, IIF, and RIF subject to our QSR Transactions as shown in the following table will vary from period to period in part due to the mix of our risk written during the period and the number of active QSR Transactions.
Covered Risk The percentages of our NIW, new risk written, IIF, and RIF subject to our QSR Transactions as shown in the following table will vary from period to period in part due to the mix of our risk written during the period and the number of active QSR Transactions.
Losses incurred, net increased to $(20.9) million compared to $(254.6) million in 2022. While new delinquency notices added $187.7 million to losses incurred in 2023, our re-estimation of loss reserves on previously received delinquency notices resulted in favorable development of approximately $208.5 million.
Losses incurred, net increased to $(14.9) million compared to $(20.9) million in 2023. While new delinquency notices added $197.6 million to losses incurred in 2024, our re-estimation of loss reserves on previously received delinquency notices resulted in favorable development of approximately $212.5 million.
MGIC Investment Corporation 2023 Form 10-K | 70 MGIC Investment Corporation and Subsidiaries Fixed income security ratings % of fixed income securities at fair value Security Ratings (1) Period AAA AA A BBB December 31, 2023 12% 34% 35% 19% December 31, 2022 18% 28% 34% 20% (1) Ratings are provided by one or more of: Moody's, Standard & Poor's and Fitch Ratings.
MGIC Investment Corporation 2024 Form 10-K | 71 MGIC Investment Corporation and Subsidiaries Fixed income security ratings Security Ratings (1) Period AAA AA A BBB December 31, 2024 10% 34% 36% 20% December 31, 2023 12% 34% 35% 19% (1) Ratings are provided by one or more of: Moody's, Standard & Poor's and Fitch Ratings.
The terms of our 5.25% Notes are contained in a Supplemental Indenture, dated as of August 12, 2020, between us and U.S. Bank National Association, as trustee, which is included as an exhibit to our 8-K filed with the SEC on August 12, 2020, and in the Indenture dated as of October 15, 2000 between us and the trustee.
Bank National Association, as trustee, which is included as an exhibit to our 8-K filed with the SEC on August 12, 2020, and in the Indenture dated as of October 15, 2000 between us and the trustee.
The majority of loans insured prior to 2014 (which represent 37% of the loans in the delinquency inventory) are covered by master policy terms that, except under certain circumstances, do not limit the number of years that an insured can include interest when filing a claim.
MGIC Investment Corporation 2024 Form 10-K | 66 MGIC Investment Corporation and Subsidiaries The majority of loans insured prior to 2014 (which represent 29% of the loans in the delinquency inventory) are covered by master policy terms that, except under certain circumstances, do not limit the number of years that an insured can include interest when filing a claim.
Our estimate of refundable premium on our delinquency inventory fluctuates with changes in our delinquency inventory and our estimate of the number of loans in our delinquency inventory that will result in a claim.
Our estimate of refundable premium on our delinquency inventory fluctuates with changes in our delinquency inventory and our estimate of the number of loans in our delinquency inventory that will result in a claim. Lower levels of claims received results in a lower level of premium refunds.
At December 31, 2023 our Home Re Transactions provided $1.2 billion of loss coverage on a portfolio of policies having an in force date from July 1, 2016 through March 31, 2019, from January 1, 2020 through December 31, 2021,and from June 1, 2022 through August 31, 2023; all dates inclusive.
At December 31, 2024 our Home Re Transactions provided $829.4 million of loss coverage on a portfolio of policies having an in force date from August 1, 2020 through December 31, 2021, and from June 1, 2022 through August 31, 2023; all dates inclusive.
Our direct pool RIF was $256 million ($186 million on pool policies with aggregate loss limits and $70 million on pool policies without aggregate loss limits) at December 31, 2023 compared to $276 million ($196 million on pool policies with aggregate loss limits and $80 million on pool policies without aggregate loss limits) at December 31, 2022.
Our direct pool RIF was $226 million ($177 million on pool policies with aggregate loss limits and $49 million on pool policies without aggregate loss limits) at December 31, 2024 compared to $256 million ($186 million on pool policies with aggregate loss limits and $70 million on pool policies without aggregate loss limits) at December 31, 2023.
An increase in third party property sales, prior to claim settlement has resulted in a decrease in the average claim paid and the average claim paid as a percentage of exposure in recent years. With the onset of the COVID-19 pandemic, the level of claims received decreased.
An increase in third party property sales, prior to claim settlement has resulted in a decrease in the average claim paid and the average claim paid as a percentage of exposure in recent years.
NEW INSURANCE WRITTEN The following tables provide information about loan characteristics associated with our NIW. The percentage of our NIW with DTI ratios over 45% and LTVs over 95% will fluctuate based on the mortgage conditions that could include the percentage of NIW from purchase transactions, changes in home prices, changes in mortgage rates, and GSE activities.
The percentage of our NIW with DTI ratios over 45% and LTVs over 95% will fluctuate based on the mortgage conditions that could include the percentage of NIW from purchase transactions, changes in home prices, changes in interest rates, and GSE activities.
Refer to Note 9 - "Reinsurance" to our consolidated financial statements for additional information on our reinsurance transactions. The PMIERs generally require us to hold significantly more Minimum Required Assets for delinquent loans than for performing loans and the Minimum Required Assets required to be held increases as the number of payments missed on a delinquent loan increases.
The PMIERs generally require us to hold significantly more Minimum Required Assets for delinquent loans than for performing loans and the Minimum Required Assets required to be held increases as the number of payments missed on a delinquent loan increases.
Primary NIW by number of attributes discussed above Years Ended December 31, (% of primary NIW) 2023 2022 One 34.3 % 31.5 % Two or More 4.2 % 3.6 % IIF AND RIF Our IIF was flat in 2023, compared to 2022. Our IIF increased 7.6% in 2022 as NIW was partially offset by cancellations.
Primary NIW by number of attributes discussed above Years Ended December 31, (% of primary NIW) 2024 2023 One 36.3 % 34.3 % Two or More 5.0 % 4.2 % IIF AND RIF Our IIF increased in 2024 compared to 2023.
We seek to manage our exposure to interest rate risk and volatility by maintaining a diverse mix of securities with an intermediate duration profile and generally hold fixed income investments until maturity.
The changes in unrealized investment gains and losses generally do not alter the management of our investment portfolio. We seek to manage our exposure to interest rate risk and volatility by maintaining a diverse mix of securities with an intermediate duration profile and generally hold fixed income investments until maturity.
Financial Strength Ratings MGIC financial strength ratings MAC financial strength ratings Rating Agency Rating Outlook Rating Agency Rating Outlook Moody's Investors Service A3 Stable A.M. Best A- Positive Standard and Poor's Rating Services (1) A- Stable A.M. Best A- Positive (1) MGIC's Standard and Poor's Rating was upgraded to A- in January of 2024.
FINANCIAL STRENGTH RATINGS MGIC financial strength ratings MAC financial strength ratings Rating Agency Rating Outlook Rating Agency Rating Outlook Moody's Investors Service A3 Positive Standard and Poor's Rating Services A- Stable Standard and Poor's Rating Services A- Stable A.M. Best A Stable A.M.
We expect net losses and LAE paid to increase, however, the magnitude and timing of the increases are uncertain. MGIC Investment Corporation 2023 Form 10-K | 66 MGIC Investment Corporation and Subsidiaries The table below presents our net losses and LAE paid for 2023 and 2022.
We expect net losses and LAE paid to increase, however, the magnitude and timing of the increases are uncertain. The table below presents our net losses and LAE paid for 2024 and 2023.
We plan to continuously comply with the PMIERs through our operational activities or through the contribution of funds from our holding company, subject to demands on the holding company's resources, as outlined above. RISK-TO-CAPITAL We compute our risk-to-capital ratio on a separate company statutory basis, as well as on a combined insurance operations basis.
We plan to continuously comply with the PMIERs through our operational activities or through the contribution of funds from our holding company, subject to demands on the holding company's resources, as outlined above.
We invest our net cash flow in various investment securities that earn interest. We also use cash to pay for our ongoing expenses such as salaries, debt interest, professional services and occupancy costs.
We expect net losses and LAE paid to increase, however, the magnitude and timing of the increases are uncertain. We invest our net cash flow in various investment securities that earn interest. We also use cash to pay for our ongoing expenses such as salaries, debt interest, professional services and occupancy costs.
Our investment portfolio was invested in comparable security types for the years ended December 31, 2023 and December 31, 2022. See Note 5 – “Investments” to our consolidated financial statements for additional disclosure on our investment portfolio.
If three ratings are available, the middle rating is used, otherwise the lowest rating is used. Our investment portfolio was invested in comparable security types for the years ended December 31, 2024 and December 31, 2023. See Note 5 – “Investments” to our consolidated financial statements for additional disclosure on our investment portfolio.
Net cash provided by operating activities in 2023 increased compared to 2022 primarily due to a decrease in income tax payments, a decrease in underwriting and operating expenses paid, a decrease in interest payments, and an increase in investment income collected. This was offset by a decrease in premiums received and an increase in loss payments.
Net cash provided by operating activities in 2024 increased compared to 2023 primarily due to an increase in investment income, an increase in premiums written, partially offset by an increase in underwriting and operating expenses paid, and an increase in loss payments.
Home price appreciation experienced in recent years has allowed some borrowers to cure their delinquencies through the sale of their property. In addition, an increase in third party property sales prior to claim settlement has resulted in a decrease in the average claim paid on the claims we do receive.
Net losses and LAE paid in recent years has been positively impacted by home price appreciation that has allowed more delinquent loans to cure through the sale of the property. In addition, an increase in third party property sales prior to claim settlement, has resulted in a decrease in the average claim paid on the claims we do receive.
MGIC Investment Corporation 2023 Form 10-K | 67 MGIC Investment Corporation and Subsidiaries The primary delinquency inventory for the top 15 jurisdictions (based on December 31, 2023 delinquency inventory) at December 31, 2023, and 2022 appears in table the below.
The primary delinquency inventory for the top 15 jurisdictions (based on December 31, 2024 delinquency inventory) at December 31, 2024, and 2023 appears in table the below.
Primary delinquency inventory by jurisdiction 2023 2022 Florida * 2,100 2,414 Texas 2,094 1,935 Illinois * 1,684 1,640 Pennsylvania * 1,433 1,525 California 1,354 1,336 New York * 1,342 1,399 Ohio * 1,246 1,322 Michigan 1,115 965 Georgia 955 954 New Jersey * 774 841 North Carolina 705 753 Maryland 680 719 Indiana * 645 622 Minnesota 566 573 Virginia 538 582 All other jurisdictions 8,419 8,807 Total 25,650 26,387 Note: Asterisk denotes jurisdictions in the table above that predominately use a judicial foreclosure process, which generally increases the amount of time it takes for a foreclosure to be completed.
Primary delinquency inventory by jurisdiction 2024 2023 Florida * 2,648 2,100 Texas 2,207 2,094 Illinois * 1,762 1,684 Pennsylvania * 1,504 1,433 California 1,499 1,354 Ohio * 1,268 1,246 Michigan 1,231 1,115 New York * 1,229 1,342 Georgia 1,025 955 North Carolina 880 705 New Jersey * 753 774 Indiana * 690 645 Maryland 655 680 Minnesota 616 566 South Carolina * 597 517 All other jurisdictions 8,227 8,440 Total 26,791 25,650 Note: Asterisk denotes jurisdictions in the table above that predominately use a judicial foreclosure process, which generally increases the amount of time it takes for a foreclosure to be completed.
See Note 13 - "Shareholders' Equity" for further information. CAPITALIZATION Debt obligations - holding company As of December 31, 2023, our holding company's debt obligations was $650 million in aggregate principal amount consisting of our 5.25% Notes due in 2028.
These changes were partially offset by repurchases of our common stock and dividends paid to shareholders in 2024. See Note 13 - "Shareholders' Equity" for further information. Debt obligations - holding company As of December 31, 2024, our holding company's debt obligations was $650 million in aggregate principal amount consisting of our 5.25% Notes due in 2028.
With the smaller origination market, higher persistency rate, and continued high credit quality for NIW expected in 2024, we expect our in force portfolio premium yield to remain relatively flat during 2024. See " Overview – Factors Affecting Our Results " above for additional factors that also influence the amount of net premiums written and earned in a year.
We expect our in force portfolio premium yield will remain relatively flat in 2025 driven by sustained high credit quality and an elevated annual persistency. See " Overview – Factors Affecting Our Results " above for additional factors that also influence the amount of net premiums written and earned in a year.
LOSSES AND EXPENSES Year Ended December 31, (In millions) 2023 2022 % Change Losses incurred, net $ (20.9) $ (254.6) (92) Amortization of deferred policy acquisition costs 10.8 12.4 (13) Other underwriting and operating expenses, net 226.0 236.7 (5) Loss on debt extinguishment — 40.2 (100) Interest expense 36.9 48.1 (23) Total losses and expenses (1) $ 252.9 $ 82.8 206 (1) May not foot due to rounding LOSSES INCURRED, NET As discussed in “Critical Accounting Estimates” below and consistent with industry practices, we establish case loss reserves for future claims on delinquent loans that were reported to us as two payments past due and have not become current or resulted in a claim payment.
LOSSES AND EXPENSES Year Ended December 31, (In thousands) 2024 2023 % Change Losses incurred, net $ (14,861) $ (20,856) 29 Amortization of deferred policy acquisition costs 8,957 10,820 (17) Other underwriting and operating expenses, net 209,324 226,004 (7) Interest expense 35,602 36,905 (4) Total losses and expenses $ 239,022 $ 252,873 (5) LOSSES INCURRED, NET As discussed in “Critical Accounting Estimates” below and consistent with industry practices, we establish case loss reserves for future claims on delinquent loans that were reported to us as two payments past due and have not become current or resulted in a claim payment.
SHAREHOLDER'S EQUITY The increase in shareholders' equity is primarily due to net income and an increase in the fair value of our investment portfolio, partially offset by repurchases of our common stock and dividends paid to shareholders in 2023.
SHAREHOLDER'S EQUITY The increase in shareholders' equity is primarily due to net income and a decrease in the accumulated other comprehensive losses reported in shareholders' equity related to the fair value of our investment portfolio and net changes in our benefit plan assets and obligations, partially offset by repurchases of our common stock and dividends paid to shareholders in 2024.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

8 edited+1 added−5 removed0 unchanged
Biggest changeColson has served as our Executive Vice President and Chief Financial Officer since 2019. Before then, he had been MGIC's Vice President – Finance during 2019 and its Assistant Treasurer from 2016 to 2019. He joined MGIC in 2014 and prior to becoming Assistant Treasurer, he held positions in its Risk Management Department. Before joining MGIC, Mr.
Biggest changeMaggio, 56 Executive Vice President, General Counsel and Secretary of MGIC Investment Corporation and MGIC Mr. Mattke has served as our Chief Executive Officer since 2019. Before then, he had been the Company’s Chief Financial Officer from 2014 to 2019, and its Controller from 2009 to 2014. He joined the Company in 2006.
Item 4. Mine Safety Disclosures Not Applicable. MGIC Investment Corporation 2023 Form 10-K | 41 MGIC Investment Corporation and Subsidiaries Information About Our Executive Officers Certain information with respect to our executive officers as of February 21, 2024 is set forth below: Executive officers of the registrant Name and Age Title Timothy J.
Item 4. Mine Safety Disclosures Not Applicable. MGIC Investment Corporation 2024 Form 10-K | 42 MGIC Investment Corporation and Subsidiaries Information About Our Executive Officers Certain information with respect to our executive officers as of February 26, 2025 is set forth below: Executive officers of the registrant Name and Age Title Timothy J.
Mattke, 48 Chief Executive Officer and Director of MGIC Investment Corporation and MGIC Salvatore A. Miosi, 57 President and Chief Operating Officer of MGIC Investment Corporation and MGIC Nathan H. Colson, 40 Executive Vice President and Chief Financial Officer of MGIC Investment Corporation and MGIC Paula C.
Mattke, 49 Chief Executive Officer and Director of MGIC Investment Corporation and MGIC Salvatore A. Miosi, 58 President and Chief Operating Officer of MGIC Investment Corporation and MGIC Nathan H. Colson, 41 Executive Vice President and Chief Financial Officer and Chief Risk Officer of MGIC Investment Corporation and MGIC Paula C.
Maggio had been Executive Vice President, General Counsel and Secretary of Retail Properties of America, Inc. from 2016 to 2018, Executive Vice President, General Counsel and Secretary of Strategic Hotels & Resorts, Inc. (SHR) from 2012 to 2015, and in various other leadership roles with SHR since joining that firm in 2000. Prior to joining SHR, Ms.
Maggio joined the Company in 2018 and has served as Executive Vice President, General Counsel and Secretary since then. Prior to joining the Company, Ms. Maggio had been Executive Vice President, General Counsel and Secretary of Retail Properties of America, Inc. from 2016 to 2018, Executive Vice President, General Counsel and Secretary of Strategic Hotels & Resorts, Inc.
He served as Senior Vice President – Business Strategy and Operations of MGIC from 2015 to 2017, and Vice President – Marketing from 2004 to 2015. Mr. Miosi joined the company in 1988 and has also held a variety of leadership positions in the operations, technology and marketing divisions. Mr.
Miosi joined the company in 1988 and has also held a variety of leadership positions in the operations, technology and marketing divisions. Mr. Colson has served as our Executive Vice President and Chief Financial and Risk Officer since April of 2024.
Mattke was with PricewaterhouseCoopers LLP, the Company’s independent registered accounting firm. Mr. Miosi has served as our President and Chief Operating Officer since 2019. Before then, he had been Executive Vice President – Business Strategy and Operations since 2017.
Prior to becoming Controller, he was Assistant Controller of MGIC beginning in 2007 and prior to that was a manager in MGIC’s accounting department. Before joining MGIC, Mr. Mattke was with PricewaterhouseCoopers LLP, the Company’s independent registered accounting firm. Mr. Miosi has served as our President and Chief Operating Officer since 2019.
Colson was with PricewaterhouseCoopers LLP, the Company’s independent registered accounting firm. Ms. Maggio joined the Company in 2018 and has served as Executive Vice President, General Counsel and Secretary since then. Prior to joining the Company, Ms.
He has been with MGIC since 2014, serving as Assistant Treasurer from 2016 to 2019, Vice President–Finance from January 2019 through July 2019, and as Chief Financial Officer from July 2019 to April 2024. Before joining MGIC, Mr. Colson was with PricewaterhouseCoopers LLP, the Company’s independent registered accounting firm. Ms.
Candelmo had been Senior Vice President of Enterprise Information Services with SunTrust Bank since 2008. Prior to joining SunTrust, Mr. Candelmo had held various other leadership roles within the information technology discipline. MGIC Investment Corporation 2023 Form 10-K | 42 MGIC Investment Corporation and Subsidiaries PART II
(SHR) from 2012 to 2015, and in various other leadership roles with SHR since joining that firm in 2000. Prior to joining SHR, Ms. Maggio had been in private legal practice from 1994-2000. MGIC Investment Corporation 2024 Form 10-K | 43 MGIC Investment Corporation and Subsidiaries PART II
Removed
Maggio, 55 Executive Vice President, General Counsel and Secretary of MGIC Investment Corporation and MGIC Steven M. Thompson, 61 Executive Vice President and Chief Risk Officer of MGIC Robert J. Candelmo, 60 Senior Vice President and Chief Information Officer of MGIC Mr. Mattke has served as our Chief Executive Officer since 2019.
Added
Before then, he had been Executive Vice President – Business Strategy and Operations since 2017. He served as Senior Vice President – Business Strategy and Operations of MGIC from 2015 to 2017, and Vice President – Marketing from 2004 to 2015. Mr.
Removed
Before then, he had been the Company’s Chief Financial Officer from 2014 to 2019, and its Controller from 2009 to 2014. He joined the Company in 2006. Prior to his becoming Controller, he was Assistant Controller of MGIC beginning in 2007 and prior to that was a manager in MGIC’s accounting department. Before joining MGIC, Mr.
Removed
Maggio had been in private legal practice from 1994-2000. Mr. Thompson has served as MGIC's Executive Vice President and Chief Risk Officer since 2019. Before then, he had been Interim Chief Risk Officer during 2019, and Vice President Credit Policy and Pricing from 2016 to 2019.
Removed
He joined MGIC in 1998 and prior to being named Vice President Credit Policy and Pricing, he held several management positions in its Risk Management Department, including Vice President – Risk Management from 2000 to 2016. On November 6, 2023, Mr. Thompson provided notice of his intent to retire, effective March 22, 2024. Mr.
Removed
Colson will assume responsibility for overseeing the Risk Management Department upon Mr. Thompson's retirement. Mr. Candelmo has served as MGIC's Senior Vice President and Chief Information Officer since 2019. He joined MGIC in 2014 as its Vice President – Chief Technology Officer. Prior to joining MGIC, Mr.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeShare repurchases Period Beginning Period Ending Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced plans or programs Approximate dollar value of shares that may yet be purchased under the program (1) 10/1/2023 10/31/2023 2,627,520 $ 16.86 2,627,520 $ 352,143,837 11/1/2023 11/30/2023 2,372,521 $ 17.48 2,372,521 $ 310,661,722 12/1/2023 12/31/2023 1,982,517 $ 18.63 1,982,517 $ 273,735,272 6,982,558 $ 17.57 6,982,558 (1) In April 2023, our Board of Directors authorized a share repurchase program under which as of December 31, 2023 we may repurchase up to an additional $274 million of our common stock through July 1, 2025.
Biggest changeShare repurchases Period Beginning Period Ending Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced plans or programs Approximate dollar value of shares that may yet be purchased under the program (1) 10/1/2024 10/31/2024 2,850,785 $ 25.39 2,850,785 $ 578,140,811 11/1/2024 11/30/2024 2,074,259 $ 24.85 2,074,259 $ 526,603,758 12/1/2024 12/31/2024 2,843,639 $ 24.41 2,843,639 $ 457,182,054 7,768,683 $ 24.89 7,768,683 (1) In April 2024, our Board of Directors authorized a share repurchase program under which as of December 31, 2024 we may repurchase up to an additional $457 million of our common stock through December 31, 2026.
Repurchases may be made from time to time on the open market (including through 10b5-1 plans) or through privately negotiated transactions. The repurchase program may be suspended for periods or discontinued at any time. MGIC Investment Corporation 2023 Form 10-K | 43 MGIC Investment Corporation and Subsidiaries
Repurchases may be made from time to time on the open market (including through 10b5-1 plans) or through privately negotiated transactions. The repurchase program may be suspended for periods or discontinued at any time. MGIC Investment Corporation 2024 Form 10-K | 44 MGIC Investment Corporation and Subsidiaries
In addition, we estimate there are approximately 90,250 beneficial owners of shares held by brokers and fiduciaries. Information regarding equity compensation plans is contained in Item 12 . (b) Not applicable. (c) Issuer Purchases of Equity Securities The following table provides information about purchases of MGIC Investment Corporation common stock by us during the three months ended December 31, 2023.
In addition, we estimate there are approximately 147,400 beneficial owners of shares held by brokers and fiduciaries. Information regarding equity compensation plans is contained in Item 12 . (b) Not applicable. (c) Issuer Purchases of Equity Securities The following table provides information about purchases of MGIC Investment Corporation common stock by us during the three months ended December 31, 2024.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities (a) Our Common Stock is listed on the New York Stock Exchange under the symbol “MTG.” As of February 16, 2024, the number of shareholders of record was 177.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities (a) Our Common Stock is listed on the New York Stock Exchange under the symbol “MTG.” As of February 21, 2025, the number of shareholders of record was 148.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changePremiums earned are also impacted by the amount of accelerated premiums from single premium policy cancellations, which generally decrease as refinance activity decreases. Our unearned premium decreased to $157.8 million at December 31, 2023 from $195.3 million at December 31, 2022.
Biggest changeWe expect our in force portfolio premium yield to remain relatively flat in 2025 and we expect our net premiums written and earned to decrease in 2025, driven by an increase in ceded premiums. Premiums earned are also impacted by the amount of accelerated premiums from single premium policy cancellations, which generally decrease as refinance activity decreases.
Historically, the first few years after loans are originated are a period of relatively low claims, with claims increasing substantially for several years subsequent and then declining, although annual persistency, the condition of the economy, including unemployment and housing prices, and other factors can affect this pattern.
Historically, the first few years after loans are originated are a period of relatively low claims, with claims increasing substantially for several years subsequent and then declining. Annual persistency, the condition of the economy, including unemployment and housing prices, and other factors can affect this pattern.
GSE Reform The FHFA has been the conservator of the GSEs since 2008 and has the authority to control and direct their operations. Given that the Director of the FHFA is removable by the President at will, the agency's agenda, policies and actions are influenced by the then-current administration.
GSE Reform The FHFA has been the conservator of the GSEs since 2008 and has the authority to control and direct their operations. Given that the Director of the FHFA is removable by the President at will, the agency's agenda, policies and actions are influenced by the current administration.
FACTORS AFFECTING OUR RESULTS Our current and future business, results of operations and financial condition are impacted by macroeconomic conditions, such as rising interest rates, home prices, housing demand, level of employment, inflation, pandemics, restrictions and costs on mortgage credit, and other factors.
FACTORS AFFECTING OUR RESULTS Our current and future business, results of operations and financial condition are impacted by macroeconomic conditions, such as interest rates, home prices, housing demand, level of employment, inflation, pandemics, restrictions on and costs of mortgage credit, and other factors.
We could be similarly affected by threats against our vendors and/or third-parties with whom we share information. Globally, attacks are expected to continue accelerating in both frequency and sophistication with increasing use by actors of tools and techniques that may hinder the Company’s ability to identify, investigate and recover from incidents.
We could be similarly affected by threats against our vendors and/or third-parties with whom we share information. Globally, attacks are expected to continue accelerating in both frequency and sophistication with increasing use by actors of tools, techniques, and technological advances that may hinder the Company’s ability to identify, investigate and recover from incidents.
Comparisons between 2022 and 2021 have been omitted from this Form 10-K, but can be found in "Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC.
Comparisons between 2023 and 2022 have been omitted from this Form 10-K, but can be found in "Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC.
Many factors affect NIW, including the volume of low down payment home mortgage originations and competition to provide credit enhancement on those mortgages from the FHA, the VA, other mortgage insurers, and other alternatives to mortgage insurance, including GSE programs that may reduce or eliminate the demand for mortgage insurance.
Many factors affect NIW, including the volume of low down payment home mortgage originations and competition to provide credit enhancement on those mortgages from the FHA, the VA, and other mortgage insurers. Other alternatives to mortgage insurance also impact NIW, including GSE programs that may reduce or eliminate the demand for mortgage insurance.
Cancellations of single premium policies, which are generally non-refundable, result in immediate recognition of any remaining unearned premium. • Premium rates, which are affected by product type, competitive pressures, the risk characteristics of the insured loans, the percentage of coverage on the insured loans, and PMIERs capital requirements.
Cancellations of single premium policies, which are generally non-refundable, result in immediate recognition of any remaining unearned premium. • Premium rates, which vary by product type, the risk characteristics of the insured loans, competitive pressures, the percentage of coverage on the insured loans, and PMIERs capital requirements.
MGIC's "policyholder position" includes its net worth or surplus and its contingency reserve. At December 31, 2023, MGIC’s risk-to-capital ratio was 10.2 to 1, below the maximum allowed by the jurisdictions with State Capital Requirements, and its policyholder position was $3.6 billion above the required MPP of $2.2 billion.
MGIC's "policyholder position" includes its net worth or surplus and its contingency reserve. At December 31, 2024, MGIC’s risk-to-capital ratio was 10.0 to 1, below the maximum allowed by the jurisdictions with State Capital Requirements, and its policyholder position was $3.6 billion above the required MPP of $2.2 billion.
Based on our application of PMIERs, MGIC's Available Assets under PMIERs totaled $5.8 billion, an excess of $2.4 billion over its Minimum Required Assets at December 31, 2023. BUSINESS OUTLOOK FOR 2024 Our outlook for 2024 should be viewed against the backdrop of the business environment discussed above.
Based on our application of PMIERs, MGIC's Available Assets under PMIERs totaled $5.8 billion, an excess of $2.2 billion over its Minimum Required Assets at December 31, 2024. BUSINESS OUTLOOK FOR 2025 Our outlook for 2025 should be viewed against the backdrop of the business environment discussed above.
At this time, we expect MGIC to continue to comply with the current State Capital Requirements; however, refer to our risk factor titled “ State capital requirements may prevent us from continuing to write new insurance on an uninterrupted basis ” in Item 1A for more information about matters that could negatively impact our compliance with State Capital Requirements.
At this time, we expect MGIC to continue to comply with the current State Capital Requirements; however, refer to our risk factor titled “State capital requirements may prevent us from continuing to write new insurance on an uninterrupted basis” in Item 1A for more information about matters that could negatively impact our compliance with State Capital Requirements.
The following is a discussion and analysis of the financial conditions and results of operations for the years ended December 31, 2023 and 2022, including comparisons between 2023 and 2022.
The following is a discussion and analysis of the financial conditions and results of operations for the years ended December 31, 2024 and 2023, including comparisons between 2024 and 2023.
MGIC Investment Corporation 2023 Form 10-K | 47 MGIC Investment Corporation and Subsidiaries Government programs PMI also competes against government mortgage insurance programs such as the FHA, VA, and USDA, primarily for lower FICO score business. The combined market share of primary mortgage insurance written by government programs continues to exceed that written by PMI in both 2023 and 2022.
MGIC Investment Corporation 2024 Form 10-K | 48 MGIC Investment Corporation and Subsidiaries Government programs PMI also competes against government mortgage insurance programs such as the FHA, VA, and USDA, primarily for lower FICO score business. The combined market share of primary mortgage insurance written by government programs continues to exceed that written by PMI in both 2024 and 2023.
In addition, business under customized rate plans is awarded by certain customers for only limited periods of time. As a result, our NIW may fluctuate more than it had in the past. IIF Our IIF decreased 0.6% in 2023 and is expected to remain relatively flat in 2024.
In addition, business under customized rate plans is awarded by certain customers for only limited periods of time. As a result, our NIW may fluctuate more than it had in the past. IIF Our IIF increased 0.6% in 2024 and is expected to remain relatively flat in 2025.
MGIC Investment Corporation 2023 Form 10-K | 49 MGIC Investment Corporation and Subsidiaries The financial requirements of the PMIERs require a mortgage insurer’s “Available Assets” (generally only the most liquid assets of an insurer) to equal or exceed its “Minimum Required Assets” (which are based on an insurer’s book of risk in force and are calculated from tables of factors with several risk dimensions, reduced for credit given for risk ceded under reinsurance transactions, and subject to a floor amount).
The financial requirements of the PMIERs require a mortgage insurer’s “Available Assets” (generally only the most liquid assets of an insurer) to equal or exceed its “Minimum Required Assets” (which are generally based on an insurer’s book of risk in force and MGIC Investment Corporation 2024 Form 10-K | 50 MGIC Investment Corporation and Subsidiaries calculated from tables of factors with several risk dimensions, reduced for credit given for risk ceded under reinsurance agreements, and subject to a floor amount).
As of January 2024, the total average mortgage origination forecasts from Fannie Mae and the MBA indicate mortgage originations of $2.0 trillion in 2024, compared to an estimated $1.6 trillion in 2023. Both purchase originations and refinance transactions are forecasted to increase in 2024 when compared to 2023. We are expecting NIW to increase slightly in 2024 compared to 2023.
As of January 2025, the total average mortgage origination forecasts from Fannie Mae and the MBA indicate mortgage originations of $2.0 trillion in 2025, compared to an estimated $1.7 trillion in 2024. Both purchase originations and refinance transactions are forecasted to increase in 2025 when compared to 2024. We are expecting NIW to increase slightly in 2025 compared to 2024.
MGIC Investment Corporation 2023 Form 10-K | 45 OVERVIEW This Overview of the MD&A highlights selected information and may not contain all of the information that is important to readers of this Annual Report. Hence, this Overview is qualified by the information that appears elsewhere in this Annual Report, including the other portions of the MD&A.
MGIC Investment Corporation 2024 Form 10-K | 46 OVERVIEW This Overview of the MD&A highlights selected information and may not contain all of the information that is important to readers of this Annual Report. Hence, this Overview is qualified by the information that appears elsewhere in this Annual Report, including the other portions of the MD&A.
We believe that we currently compete with other private mortgage insurers based on premium rates, underwriting requirements, financial strength (including based on credit or financial strength ratings), customer relationships, name recognition, reputation, strength of management teams and field organizations, the ancillary products and services provided to lenders, and the effective use of technology and innovation in the delivery and servicing of our mortgage insurance products.
We believe that we currently compete with other private mortgage insurers based on premium rates, underwriting requirements, financial strength (including based on credit or financial strength ratings), customer relationships, name recognition, reputation, strength of management teams and field organizations, and the effective use of technology and innovation in the delivery and servicing of our mortgage insurance products.
Employee compensation expenses are variable due to share-based compensation, changes in benefits, and changes in headcount (which can fluctuate due to volume of NIW). See Note 9 – “Reinsurance” to our consolidated financial statements for a discussion of ceding commission on our QSR Transactions.
Employee compensation expenses are variable due to share-based compensation, changes in benefits, and changes in headcount (which can fluctuate due to volume of NIW). See Note 9 – “Reinsurance” and Note 18 – “Segment Reporting” to our consolidated financial statements for a discussion of ceding commission on our QSR Transactions and discussion on significant segment expenses.
The level of new delinquencies has historically followed a seasonal pattern, with new delinquencies in the first part of the year lower than new delinquencies in the latter part of the year. The state of the economy, local housing markets, and various other factors, including pandemics, may result in delinquencies not following the typical pattern.
The level of new delinquencies has historically followed a seasonal pattern, with new delinquencies in the first half of the year lower than new delinquencies in the latter half of the year. The state of the economy, local housing markets, pandemics, natural disasters, and various other factors may result in delinquencies not following the typical pattern.
Through MGIC, the principal subsidiary of MGIC Investment Corporation, we serve lenders throughout the United States helping families achieve homeownership sooner by making affordable low-down-payment mortgages a reality through the use of private mortgage insurance. At December 31, 2023 MGIC had $293.5 billion of primary IIF.
Through MGIC, the principal subsidiary of MGIC Investment Corporation, we serve lenders throughout the United States helping families achieve homeownership sooner by making affordable low-down-payment mortgages a reality through the use of private mortgage insurance. At December 31, 2024 MGIC had $295.4 billion of primary IIF.
For information about the possible effects of such changes, see our risk factors titled " If the volume of low down payment home mortgage originations declines, the amount of insurance that we write could decline ,” “ Downturns in the domestic economy or declines in home prices may result in more homeowners defaulting and our losses increasing, with a corresponding decrease in our returns, ” and “ Changes in interest rates, house prices or mortgage insurance cancellation requirements may change the length of time that our policies remain in force ." Mortgage insurance market The strong credit quality of our insurance portfolio reflects several years of favorable housing fundamentals and in our view, generally favorable risk characteristics on our recently insured loans.
For information about the possible effects of such changes, see our risk factors titled " If the volume of low down payment home mortgage originations declines, the amount of insurance that we write could decline ,” and “ Downturns in the domestic economy or declines in home prices may result in more homeowners defaulting and our losses increasing, with a corresponding decrease in our returns. ” Mortgage insurance market The strong credit quality of our insurance portfolio reflects several years of favorable housing fundamentals, and in our view, generally favorable risk characteristics on our recently insured loans.
In 2024, MGIC can pay $64 million of ordinary dividends without OCI approval, before taking into consideration dividends paid in the preceding twelve months. In 2023 and 2022, MGIC paid a cash and/or investment security dividend of $600 million and $800 million, respectively, to our holding company.
In 2025, MGIC can pay $97 million of ordinary dividends without OCI approval, before taking into consideration dividends paid in the preceding twelve months. In 2024 and 2023, MGIC paid a cash and/or investment security dividend of $750 million and $600 million, respectively, to our holding company.
Losses incurred are generally affected by: • The state of the economy, including unemployment and housing values, each of which affects the likelihood that loans will become delinquent and whether loans that are delinquent cure their delinquency. • The product mix of the in force book, with loans having higher risk characteristics generally resulting in higher delinquencies and claims. • The size of loans insured, with higher average loan amounts on delinquent loans tending to increase incurred losses. • The percentage of coverage on insured loans, with deeper average coverage on delinquent loans tending to increase incurred losses. • The rate at which we rescind policies or curtail claims.
Losses incurred are generally affected by: • The state of the economy, including unemployment and housing values, each of which affects the likelihood that loans will become delinquent and whether loans that are delinquent cure their delinquency. • The product mix of the in force book, with loans having higher risk characteristics generally resulting in higher delinquencies and claims. • The size of loans insured, with higher average loan amounts on delinquent loans tending to increase incurred losses. • The percentage of coverage on insured loans, with deeper average coverage on delinquent loans tending to increase incurred losses. • The distribution of claims over the life of a book.
Pricing practices In recent years, the industry has materially reduced its use of standard rate cards, which were fairly consistent among competitors, and correspondingly increased its use of (i) "risk-based pricing systems" that use a spectrum of filed rates to allow for formulaic, risk-based pricing based on multiple attributes that may be quickly adjusted within certain parameters, and (ii) customized rate plans.
The industry has materially reduced its use of standard rate cards, which were fairly consistent among competitors, and correspondingly increased its use of (i) "risk-based pricing systems" that use a spectrum of filed rates to allow for formulaic, risk-based pricing based on multiple attributes that may be quickly adjusted within certain parameters, and (ii) customized rate plans pursuant to which rates may be available to customers for a defined period of time.
The revised Model Act includes requirements relating to, among other things: (i) capital and minimum capital requirements, and contingency reserves; (ii) restrictions on mortgage insurers’ investments in notes secured by mortgages; (iii) prudent underwriting standards and formal underwriting guidelines; (iv) the establishment of formal, internal “Mortgage Guaranty Quality Control Programs” with respect to in-force business; and (v) reinsurance and prohibitions on captive reinsurance arrangements.
The updated Model Act includes requirements relating to, among other things: (i) capital and minimum capital requirements, and contingency reserves; (ii) restrictions on mortgage insurers’ investments in notes secured by mortgages; (iii) prudent underwriting standards and formal underwriting guidelines; (iv) the establishment of formal, internal “Mortgage Guaranty Quality Control Programs” with respect to in-force business; and (v) reinsurance MGIC Investment Corporation 2024 Form 10-K | 51 MGIC Investment Corporation and Subsidiaries and prohibitions on captive reinsurance arrangements.
The percentage of our NIW with DTI ratios over 45% and LTVs over 95% will fluctuate based on the mortgage conditions that could include the percentage of NIW from purchase transactions, changes in home prices, changes in mortgage rates, and GSE activities. Refer to "Mortgage Insurance Portfolio" for information on our NIW mix during 2023.
The percentage of our NIW with DTI ratios over 45% and LTVs over 95% will fluctuate based on the mortgage conditions such as the percentage of NIW from purchase transactions, changes in home prices, changes in interest rates, and GSE activities. Refer to "Mortgage Insurance Portfolio" for information on our NIW mix during 2024.
Cancellations due to refinancings are affected by the level of current mortgage interest rates compared to the mortgage coupon rates throughout the in force book, current home values compared to values when the loans in the in force book were insured and the terms on which mortgage credit is available.
Refinance-related cancellations are influenced by the level of current mortgage interest rates compared to the mortgage coupon rates throughout the in force book, current home values relative to values when the loans in the in force book were insured and the terms on which mortgage credit is available.
On January 23, 2024, the Board of Directors declared a quarterly cash dividend to holders of the company's common stock of $0.115 per share payable on March 5, 2024, to shareholders of record at the close of business on February 15, 2024. We expect to continue to make dividend payments to shareholders in 2024.
On January 28, 2025, the Board of Directors declared a quarterly cash dividend to holders of the company's common stock of $0.13 per share payable on March 5, 2025, to shareholders of record at the close of business on February 18, 2025. We expect to continue to make dividend payments to shareholders in 2025.
The decrease in net income is primarily due to an increase in losses incurred and a decrease in net premiums earned. This was partially offset by an increase in investment income, net of expenses, a decrease in loss on debt extinguishment, and a decrease in our provision for income taxes.
The increase in net income is primarily due to an increase in investment income, net of expenses, an increase in net premiums earned, and a decrease in other underwriting and operating expenses, net. This was partially offset by an increase in losses incurred, net and an increase in our provision for income taxes.
Future dividend payments from MGIC to the holding company will continue to be determined in consultation with the board. Dividends to shareholders In the first and second quarters of 2023, we paid quarterly cash dividends of $0.10 per share to shareholders which totaled $58.8 million.
Future dividend payments from MGIC to the holding company will continue to be determined in consultation with the Board of Directors. Dividends to shareholders In the first and second quarters of 2024, we paid quarterly cash dividends of $0.115 per share to shareholders which totaled $63.3 million.
The amount received on the sale of fixed income securities is affected by the coupon rate of the security compared to the yield of comparable securities at the time of sale. • Equity securities. Investment gains and losses are accounted for as a function of the periodic change in fair value.
The amount received on the sale of fixed income securities is affected by the coupon rate of the security compared to the yield of comparable securities at the time of sale. • Equity securities. Investment gains and losses reflect the periodic change in fair value. • Financial instruments.
Losses incurred Losses incurred are the current expense that reflects claim payments, costs of settling claims, and changes in our estimates of payments that will ultimately be made as a result of delinquencies on insured loans.
MGIC Investment Corporation 2024 Form 10-K | 52 MGIC Investment Corporation and Subsidiaries Losses incurred Losses incurred are the current expense that reflects claim payments, costs of settling claims, and changes in our estimates of payments that will ultimately be made as a result of delinquencies on insured loans.
As of December 31, 2023, 67% of our primary RIF was written subsequent to December 31, 2020, 84% of our primary RIF was written subsequent to December 31, 2019, and 89% of our primary RIF was written subsequent to December 31, 2018. The pattern of claim frequency can be affected by many factors, including annual persistency and deteriorating economic conditions.
As of December 31, 2024, 50% of our primary RIF was written subsequent to December 31, 2021, 74% of our primary RIF was written subsequent to December 31, 2020, and 87% of our primary RIF was written subsequent to December 31, 2019. The pattern of claim frequency can be affected by many factors, including annual persistency and deteriorating economic conditions.
The decrease in adjusted net operating income in 2023 compared to 2022 is primarily due to a decrease in net income. The decrease in 2023 adjusted net operating income per diluted share compared to 2022 is primarily due to a decrease in adjusted net operating income, partially offset by a decrease in the number of diluted weighted average shares outstanding.
The increase in adjusted net operating income in 2024 compared to 2023 is primarily due to an increase in net income. The increase in 2024 adjusted net operating income per diluted share compared to 2023 is primarily due to an increase in adjusted net operating income and a decrease in the number of diluted weighted average shares outstanding.
Investment gains and losses on the embedded derivative on our Home Re Transactions reflect the present value impact of the variation in investment income on assets on the insurance-linked notes held by the reinsurance trusts and the contractual reference rate used to calculate the reinsurance premiums we estimate we will pay over the estimated remaining life.
Investment gains and losses on the embedded derivative on our Home Re Transactions reflect the present value impact of the variation in investment income on assets on the insurance-linked notes held by the reinsurance trusts and the contractual reference rate used to calculate the reinsurance premiums we estimate we will pay over the estimated remaining life. • Gains and losses on debt extinguishment Gains and losses on debt extinguishment result from discretionary activities that are undertaken to enhance our capital position and / or improve our debt profile.
Share repurchase programs Repurchases may be made from time to time on the open market (including through 10b5-1 plans) or through privately negotiated transactions. The repurchase programs may be suspended for periods or discontinued at any time. We repurchased approximately 21.7 million shares in 2023 using approximately $340.6 million of holding company resources.
Share repurchase programs Repurchases may be made from time to time on the open market (including through 10b5-1 plans) or through privately negotiated transactions. The repurchase programs may be suspended for periods or discontinued at any time. We repurchased approximately 25.3 million shares in 2024 for $566.6 million.
We expect net investment income in 2024 to increase in comparison to 2023, primarily due to higher average investment yields. The amount of investment income will be impacted by the MGIC Investment Corporation 2023 Form 10-K | 48 MGIC Investment Corporation and Subsidiaries change in the yield we can earn on investments and the level of invested assets.
We expect net investment income in 2025 to be relatively flat in comparison to 2024. The amount of investment income will be impacted by the change in the yield we can earn on investments MGIC Investment Corporation 2024 Form 10-K | 49 MGIC Investment Corporation and Subsidiaries and the level of invested assets.
MGIC Investment Corporation 2023 Form 10-K | 51 MGIC Investment Corporation and Subsidiaries Investment income Our investment portfolio is composed principally of investment grade fixed income securities. The principal factors that influence investment income are the size of the portfolio and its yield.
Investment income Our investment portfolio is composed principally of investment grade fixed income securities. The principal factors that influence investment income are the size of the portfolio and its yield.
All information technology systems are potentially vulnerable to damage or interruption from a variety of sources, including by cyber attacks, such as those involving ransomware. We regularly defend against threats to our data and systems, including malware and computer virus attacks, unauthorized access, system failures and disruptions.
All information technology systems are potentially vulnerable to damage or interruption from a variety of sources, including by cyber attacks, such as those involving ransomware. The Company discovers vulnerabilities and regularly blocks attempts at unauthorized access to its systems, through threats such as malware and computer virus attacks, unauthorized access, system failures and disruptions.
In 2022, we repurchased approximately 27.8 million shares of our common stock using approximately $385.7 million of holding company resources. In 2024, we expect share repurchase programs will remain our primary means of returning capital to shareholders. The following table shows details of our share repurchase programs.
In 2023, we repurchased approximately 21.7 million shares of our common stock for $340.6 million of holding company resources. In 2025, we expect share repurchase programs will remain our primary means of returning capital to shareholders. The following table shows details of our share repurchase program.
The favorable development for both periods primarily resulted from a decrease in the expected claim rate on previously received delinquencies. Home price appreciation experienced in recent years has allowed some borrowers to cure their delinquencies through the sale of their property.
The favorable development for both periods primarily resulted from a decrease in the expected claim rate on previously received delinquencies. Home price appreciation in recent years has allowed some borrowers to cure their delinquencies through the sale of their property. Underwriting and other expenses, net were $209.3 million, compared to $226.0 million in the prior year.
Cancellations also result from policy rescissions, which require us to return any premiums received on the rescinded policies, and claim payments, which require us to return any premium received on the related policies from the date of default on the insured loans.
Policy rescissions also cause cancellations requiring us to return any premiums received, from the date of default, on the rescinded policies and claim payments.
Diluted income per share decreased primarily due to a decrease in net income, partially offset by a decrease in the number of diluted weighted average shares outstanding. Adjusted net operating income for 2023 was $724.4 million (2022: $904.8 million) and adjusted net operating income per diluted share was $2.53 (2022: $2.91).
Diluted income per share increased primarily due to an increase in net income and a decrease in the number of diluted weighted average shares outstanding. Adjusted net operating income for 2024 was $768.5 million (2023: $724.4 million) and adjusted net operating income per diluted share was $2.91 (2023: $2.53).
Extinguishing our outstanding debt obligations early through these discretionary activities may result in losses primarily driven by the payment of consideration in excess of our carrying value, and the write off of unamortized debt issuance costs on the extinguished portion of the debt.
Extinguishing our outstanding debt obligations early through these discretionary MGIC Investment Corporation 2024 Form 10-K | 53 MGIC Investment Corporation and Subsidiaries activities may result in gains or losses primarily driven by differences in the payment of consideration from the carrying value, and the write off of unamortized debt issuance costs on the extinguished portion of the debt.
Net investment income in 2023 was $214.7 million, compared with $167.5 million in the prior year. The increase in net investment income was due to an increase of 80 basis points in the average investment yield. Losses incurred, net were $(20.9) million, compared with $(254.6) million for the prior year.
The increase in net investment income was due to an increase of 42 basis points in the average investment yield. Losses incurred, net were $(14.9) million, compared with $(20.9) million in the prior year.
In the third and fourth quarters of 2023, we paid quarterly cash dividends of $0.115 per share which totaled $65.3 million.
In the third and fourth quarters of 2024, we paid quarterly cash dividends of $0.13 per share which totaled $67.8 million.
For information about possible effects, please refer to our Risk Factor titled “ Pandemics, hurricanes and other disasters may impact our incurred losses, the amount and timing of paid claims, our inventory of notices of default and our Minimum Required Assets under PMIERs. ” Our results of operations are affected by: Premiums written and earned Premiums written and earned in a year are influenced by: • NIW, which increases IIF.
For information about possible effects, please refer to our risk factor titled “ Pandemics, hurricanes and other disasters may adversely impact our results of operations and financial condition. ” Our results of operations are affected by: Premiums written and earned Premiums written and earned in a year are influenced by: • NIW, which increases IIF.
While new delinquency notices added $187.7 million to losses incurred in 2023, our re-estimation of loss reserves on previously received delinquency notices resulted in favorable development of $208.5 million. In 2022, new delinquency notices added approximately $149.6 million to losses incurred, offset by re-estimation of loss reserves on previously received delinquency notices resulted in favorable development of $404.1 million.
While new delinquency notices added $197.6 million to losses incurred in 2024, our re-estimation of loss reserves on previously received delinquency notices resulted in favorable development of $212.5 million. For the year ended December 31, 2023, new delinquency notices added approximately $187.7 million, our re-estimation of loss reserves on previously received delinquency notices resulted in favorable development of $208.5 million.
Premiums we cede under our quota share transactions are also impacted by the profit commission we receive. The amount of profit commission is variable year-to-year and is dependent on the amount of losses incurred ceded. In 2023, compared to 2022, the increase in ceded losses incurred decreased the profit commission we received, resulting in higher ceded premiums.
The amount of premiums we cede in 2025 will be affected by any changes in our reinsurance coverage. Premiums we cede under our quota share transactions are also impacted by the profit commission we receive. The amount of profit commission is variable year-to-year and is dependent on the amount of losses incurred ceded.
Repurchase Program Repurchased during 2023 (in millions) Authorization Remaining (in millions) at 12/31/23 Expiration Date 2021 Authorization $ 114 $ — N/A 2023 Authorization $ 226 $ 274 July 1, 2025 As of December 31, 2023, we had approximately 272.5 million shares of common stock outstanding which was a decrease of 7.2% from December 31, 2022.
Repurchase Program Repurchased during 2024 (in millions) Authorization Remaining (in millions) at 12/31/24 Expiration Date 2023 Authorization $ 274 $ — N/A 2024 Authorization $ 293 $ 457 December 31, 2026 As of December 31, 2024, we had approximately 248.4 million shares of common stock outstanding which was a decrease of 8.8% from December 31, 2023.
Our insurance in force was relatively flat during the year as a result of a lower NIW, offset by increased annual persistency.
Our insurance in force increased during the year as a result of an increase in NIW offset partially by cancellations.
Our net premiums written and earned are primarily impacted by the changes in the direct premiums written and earned noted above and by the amount of premiums we cede under our quota share and excess of loss reinsurance transactions. The amount of premiums we cede in 2024 will be affected by any changes in our reinsurance coverage.
Our unearned premium decreased to $120.4 million at December 31, 2024 from $157.8 million at December 31, 2023. Our net premiums written and earned are primarily impacted by the changes in the direct premiums written and earned noted above and by the amount of premiums we cede under our quota share and excess of loss reinsurance transactions.
Underwriting and operating expenses, net We expect underwriting and operating expenses, net to be modestly lower in 2024 compared to 2023. Income taxes We expect our 2024 effective tax rate to be approximately 21%. CAPITAL MGIC dividend payments to our holding company The ability of MGIC to pay dividends is restricted by insurance regulation.
Income taxes We expect a modest decrease in our effective tax rate in 2025 compared to 2024 due to purchases of transferable federal tax credits. CAPITAL MGIC dividend payments to our holding company The ability of MGIC to pay dividends is restricted by insurance regulation.
See Note 9 – “Reinsurance” to our consolidated financial statements for a discussion of our reinsurance transactions. Underwriting and other expenses Underwriting and other expenses includes items such as employee compensation, fees for professional and consulting services, depreciation and maintenance expense, and premium taxes, and are reported net of ceding commissions associated with our QSR Transactions.
We collectively refer to such rescissions and denials as “rescissions” and variations of this term. We call reductions to claims "curtailments." Underwriting and other expenses Underwriting and other expenses includes items such as employee compensation, fees for professional and consulting services, depreciation and maintenance expense, and premium taxes, and are reported net of ceding commissions associated with our QSR Transactions.
Competition PMI The private mortgage insurance industry is highly competitive and is expected to remain so.
Competition PMI The private mortgage insurance industry is highly competitive and is expected to remain so. Our competitors primarily include other private mortgage insurers and governmental agencies, principally the FHA and VA.
Interest expense Interest expense reflects the interest associated with our consolidated outstanding debt obligations discussed in Note 7 – “Debt” to our consolidated financial statements and under “ Liquidity and Capital Resources ” below. Other Certain activities that we do not consider being part of our fundamental operating activities may also impact our results of operations and are described below.
Interest expense Interest expense reflects the interest associated with our outstanding debt obligations discussed in Note 7 – “Debt” to our consolidated financial statements and under “ Liquidity and Capital Resources ” below.
Based on our interpretation of the PMIERs as of December 31, 2023, MGIC’s Available Assets totaled $5.8 billion, or $2.4 billion in excess of its Minimum Required Assets.
Based on our interpretation of the PMIERs as of December 31, 2024, MGIC’s Available Assets totaled $5.8 billion, or $2.2 billion in excess of its Minimum Required Assets. The update will be implemented through a 24-month phased-in approach, with a fully effective date of September 30, 2026.
The PMIERs provide that the GSEs may amend any provision of the PMIERs or impose additional requirements with an effective date specified by the GSEs.
The PMIERs provide that the GSEs may amend any provision of the PMIERs or impose additional requirements with an effective date specified by the GSEs. MGIC is in compliance with the PMIERs and eligible to insure loans purchased by the GSEs. In August 2024, the GSEs issued updates to the calculation of Available Assets.
Summary of financial results of MGIC Investment Corporation Year Ended December 31, (in millions, except per share data) 2023 2022 Change Selected statement of operations data Net premiums earned $ 952.6 $ 1,007.1 (5) % Investment income, net of expenses 214.7 167.5 28 % Losses incurred, net (20.9) (254.6) (92) % Other underwriting and operating expenses, net 226.0 236.7 (5) % Loss on debt extinguishment — 40.2 N/M Income before tax 902.2 1,090.0 (17) % Provision for income taxes 189.3 224.7 (16) % Net income 712.9 865.3 (18) % Diluted income per share $ 2.49 $ 2.79 (11) % Non-GAAP Financial Measures (1) Adjusted pre-tax operating income $ 917.8 $ 1,140.0 (19) % Adjusted net operating income 724.4 904.8 (20) % Adjusted net operating income per diluted share $ 2.53 $ 2.91 (13) % (1) See "Explanation and Reconciliation of our use of Non-GAAP Financial Measures." SUMMARY OF 2023 FINANCIAL RESULTS Net income for 2023 was $712.9 million (2022: $865.3 million) and diluted income per share was $2.49 (2022: $2.79).
Summary of financial results of MGIC Investment Corporation Year Ended December 31, (in thousands, except per share data) 2024 2023 Change Selected statement of operations data Net premiums earned $ 970,807 $ 952,551 2 % Investment income, net of expenses 244,640 214,740 14 % Losses incurred, net (14,861) (20,856) 29 % Other underwriting and operating expenses, net 209,324 226,004 (7) % Income before tax 968,709 902,229 7 % Provision for income taxes 205,715 189,280 9 % Net income 762,994 712,949 7 % Diluted income per share $ 2.89 $ 2.49 16 % Non-GAAP Financial Measures (1) Adjusted pre-tax operating income $ 975,623 $ 916,778 6 % Adjusted net operating income 768,456 724,443 6 % Adjusted net operating income per diluted share $ 2.91 $ 2.53 15 % (1) See "Explanation and Reconciliation of our use of Non-GAAP Financial Measures." SUMMARY OF 2024 FINANCIAL RESULTS Net income for 2024 was $763.0 million (2023: $712.9 million) and diluted income per share was $2.89 (2023: $2.49).
In addition, an increase in third party property sales prior to claim settlement, has resulted in a decrease in the average claim paid on the claims we do receive. We expect net losses and LAE paid to increase; however, the magnitude and timing of the increases are uncertain.
Home price appreciation in recent years has allowed some borrowers to cure their delinquencies through the sale of their property. In addition, an increase in third party property sales prior to claim settlement has resulted in a decrease in the average claim paid on the claims we do receive.
A draft of a revised Mortgage Guaranty Insurance Model Act was adopted by the Financial Condition Committee in July 2023 and by the Executive Committee and Plenary NAIC in August 2023.
In 2023, the NAIC adopted a revised Mortgage Guaranty Insurance Model Act.
NIW does not include loans previously insured by us that are modified, such as loans modified under HARP. • Cancellations, which reduce IIF.
NIW does not include loans previously insured by us that are modified, such as loans modified under HARP. • Cancellations, which reduce IIF. Cancellations from refinancings may occur when borrowers achieve the required amount of home equity through loan amortization, loan payoffs, or home price appreciation.
CYBERSECURITY As part of our business, we maintain large amounts of confidential and proprietary information both on our own servers and those of cloud computing services. This includes personal information of consumers and our employees. Personal information is subject to an increasing number of federal and state laws and regulations regarding privacy and data security, as well as contractual commitments.
Personal information is subject to an increasing number of federal and state laws and regulations regarding privacy and data security, as well as contractual commitments.
Premiums earned for 2023 were $952.6 million, compared with $1,007.1 million for the same period last year. The decrease in premiums earned compared with the prior year is primarily due to an increase in ceded premiums that was the result of a decrease in the profit commission earned on our QSR Transactions.
Premiums earned for 2024 were $970.8 million, compared with $952.6 million in the prior year. The increase in premiums earned compared with the prior year is primarily due to a decrease in ceded premiums. Net investment income in 2024 was $244.6 million, compared with $214.7 million in the prior year.
Results of operations Premiums Our direct premiums written and earned are impacted by our IIF during the period and our in force premium yield, both of which are expected to be relatively flat in 2024 when compared to 2023.
As of January 2025, forecasts from Fannie Mae and the MBA indicate a modest decrease in interest rates in 2025 compared to 2024 and the slowdown in the rate of home price appreciation. Results of operations Premiums Our direct premiums written and earned are impacted by our IIF during the period and our in force premium yield.
See Note 7 - “Debt” to our consolidated financial statements for a discussion of the 9% Debenture conversion in 2023. Our provision for income taxes decreased to $189.3 million in 2023 compared to $224.7 million in 2022 primarily due to a decrease in income before tax. Our effective tax rate for 2023 was 21.0% compared to 20.6% for 2022.
MGIC Investment Corporation 2024 Form 10-K | 47 MGIC Investment Corporation and Subsidiaries Our provision for income taxes increased to $205.7 million in 2024 compared to $189.3 million in 2023 primarily due to an increase in income before tax. Our effective tax rate for 2024 was 21.2% compared to 21.0% for 2023.
Our estimated loss reserves incorporate our estimates of future rescissions of policies and curtailments of claims, and reversals of rescissions and curtailments. We collectively refer to such rescissions and denials as “rescissions” and variations of this term. We call reductions to claims "curtailments." • The distribution of claims over the life of a book.
See Note 9 – “Reinsurance” to our consolidated financial statements for a discussion of our reinsurance transactions. • The rate at which we rescind policies or curtail claims. Our estimated loss reserves incorporate our estimates of future rescissions of policies and curtailments of claims, and reversals of rescissions and curtailments.
Removed
MGIC Investment Corporation 2023 Form 10-K | 46 MGIC Investment Corporation and Subsidiaries We did not record a loss on debt extinguishment in 2023.
Added
The decrease in underwriting and other expenses, net was primarily due to a decrease in pension expenses and a decrease in expenses related to professional and consulting services. Pension expenses were higher in 2023 due to settlement accounting charges.
Removed
In 2022, we recorded a loss on debt extinguishment of $40.2 million, related to the repurchase of a portion of our 9% Debentures, the redemption of our 5.75% Senior Notes, and the repayment of the outstanding principal balance of our FHLB advance.
Added
BUSINESS ENVIRONMENT Economic conditions Mortgage originations increased in 2024 compared to 2023, reflecting an increase in refinance volumes, attributed to a brief decline in interest rates during 2024, while purchase origination activity remained relatively flat. The level of interest rates and home prices may change in the future.
Removed
BUSINESS ENVIRONMENT Economic conditions Home purchases decreased in 2023, compared to 2022, due to higher interest rates and higher home prices. Higher interest rates also resulted in decreased refinance activity during 2023. This led to a decrease in our NIW, to $46.1 billion in 2023 compared to $76.4 billion in 2022.
Added
Pricing practices In recent years, pricing has become a key competitive factor in the private mortgage insurance market, with an increasing number of customers prioritizing the lowest premium rate available for any particular loan.
Removed
The level of interest rates and home prices may change in the future.
Added
For information about the various business practices of the GSEs that may be changed, including through expansion or modification of these programs, see our risk factor titled “ Changes in the business practices of Fannie Mae and Freddie Mac ("the GSEs"), federal legislation that changes their charters or a restructuring of the GSEs could reduce our revenues or increase our losses” in Item 1A .
Removed
In 2024, we expect interest rates to remain elevated compared to recent years and the rate of growth in home prices to continue to moderate.
Added
We expect net losses and LAE paid to increase; however, the magnitude and timing of the increases are uncertain. Underwriting and operating expenses, net We expect underwriting and operating expenses, net to be modestly lower in 2025 compared to 2024.
Removed
Our claims paid activity slowed at the start of the COVID-19 pandemic primarily due to forbearance and foreclosure moratoriums put in place, and it has not yet appreciably increased from those suppressed levels. Home price appreciation experienced in recent years has allowed some borrowers to cure their delinquencies through the sale of their property.
Added
If these changes were effective as of December 31, 2024, without a graduated implementation period, MGIC's Available Assets of $5.8 billion would decrease by approximately 1% or $50 million, and MGIC's PMIERs excess would be $2.1 billion.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAt December 31, 2023, the effective duration of our fixed income investment portfolio was 3.8 years, which means that an instantaneous parallel shift in the yield curve of 100 basis points would result in a change of 3.8% in the fair value of our fixed income portfolio.
Biggest changeAt December 31, 2024, the effective duration of our fixed income investment portfolio was 3.9 years, which means that an instantaneous parallel shift in the yield curve of 100 basis points would result in a change of 3.9% in the fair value of our fixed income portfolio.
Interest rate risk is the risk that we will incur a loss due to adverse changes in interest rates relative to the characteristics of our interest bearing assets. One of the measures used to quantify this exposure is modified duration. Modified duration measures the price sensitivity of the assets to the changes in spreads.
Interest rate risk is the risk that we will incur a loss due to adverse changes in interest rates relative to the characteristics of our interest bearing assets. One of the measures used to quantify this exposure is effective duration. Effective duration measures the price sensitivity of the assets to the changes in spreads.
For an upward shift in the yield curve, the fair value of our portfolio would decrease and for a downward shift in the yield curve, the fair value would increase. A discussion of portfolio strategy appears in "Management's Discussion and Analysis – Balance Sheet Review– Investment Portfolio" in Item 7 . MGIC Investment Corporation 2023 Form 10-K | 80
For an upward shift in the yield curve, the fair value of our portfolio would decrease and for a downward shift in the yield curve, the fair value would increase. A discussion of portfolio strategy appears in "Management's Discussion and Analysis – Balance Sheet Review– Investment Portfolio" in Item 7 . MGIC Investment Corporation 2024 Form 10-K | 81

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