MGIC Investment Corporation Reports Third Quarter 2024 Results
Third Quarter 2024 Net Income of $200.0 million or $0.77 per Diluted Share
Third Quarter 2024 Adjusted Net Operating Income (Non-GAAP) of $200.7 million or $0.77 per Diluted Share
MILWAUKEE, Nov. 4, 2024 /PRNewswire/ -- MGIC Investment Corporation (NYSE:MTG) today reported operating and financial results for the third quarter of 2024.
Tim Mattke, CEO of MTG and Mortgage Guaranty Insurance Corporation ("MGIC") said, "We are very pleased with our third quarter financial results, generating net income of $200 million and delivering a 15.6% return on equity."
"Our disciplined approach to risk management and prudent capital management strategies together with our ability to serve our customers with quality offerings and best-in-class service continues to drive value for all of our stakeholders," concluded Mattke.
SUMMARY FINANCIAL METRICS
Quarter ended
($ in millions, except where otherwise noted)
Q3 2024
Q2 2024
Q3 2023
Net income
$ 200.0
$ 204.2
$ 182.8
Net income per diluted share
$ 0.77
$ 0.77
$ 0.64
Adjusted net operating income
$ 200.7
$ 204.9
$ 183.0
Adjusted net operating income per diluted share
$ 0.77
$ 0.77
$ 0.64
New insurance written (NIW) (billions)
$ 17.2
$ 13.5
$ 14.6
Net premiums earned
$ 243.3
$ 243.5
$ 241.3
Insurance in force (billions)
$ 292.8
$ 291.6
$ 294.3
Annual persistency
85.3 %
85.4 %
86.3 %
Losses incurred, net
$ (9.8)
$ (18.3)
$ (0.1)
Primary delinquency inventory
25,089
23,370
24,720
Primary IIF delinquency rate (count based)
2.24 %
2.09 %
2.14 %
Loss ratio
(4.0 %)
(7.5 %)
(0.0 %)
Underwriting expense ratio
22.4 %
23.1 %
22.2 %
In force portfolio yield (bps)
38.9
38.4
38.6
Net premium yield (bps)
33.4
33.4
32.9
Annualized return on equity
15.6 %
16.0 %
15.1 %
Book value per common share outstanding
$ 20.66
$ 19.58
$ 17.37
Adjust for AOCI
$ 0.80
$ 1.27
$ 1.78
Tangible book value per share
$ 21.46
$ 20.85
$ 19.15
CAPITAL AND LIQUIDITY
As of
($ in billions, except where otherwise noted)
September 30, 2024
June 30, 2024
September 30, 2023
PMIERs available assets
$ 6.0
$ 5.8
$ 6.0
PMIERs excess
$ 2.5
$ 2.4
$ 2.4
Holding company liquidity (millions)
$ 841
$ 990
$ 723
THIRD QUARTER 2024 HIGHLIGHTS
We paid a dividend of $0.13 per common share to shareholders.
We repurchased 5.2 million shares of common stock for $122.9 million.
FOURTH QUARTER 2024 HIGHLIGHTS
MGIC paid a dividend of $400 million to the holding company.
In October we repurchased an additional 2.9 million shares of our common stock for $72.4 million.
We declared a dividend of $0.13 per common share to shareholders payable on November 21, 2024, to shareholders of record at the close of business on November 7, 2024.
We have agreed upon the terms of a 40% quota share transaction with a group of unaffiliated reinsurers covering most of our 2025 and 2026 NIW.
We elected to terminate our 2021 quota share reinsurance transaction effective December 31, 2024, and we expect to incur termination fees of approximately $8 million.
Conference Call and Webcast Details
MGIC Investment Corporation will hold a conference call November 5, 2024, at 10 a.m. ET to allow securities analysts and shareholders the opportunity to hear management discuss the company's quarterly results. Individuals interested in joining by telephone should register for the call at https://register.vevent.com/register/BI7cba3b7ffba54e678ef1db238526b6e0 to receive the dial-in number and unique PIN to access the call. It is recommended that you join the call at least 10 minutes before the conference call begins. The call is also being webcast and can be accessed at the company's website at http://mtg.mgic.com/ under "Newsroom." A replay of the webcast will be available on the company's website through December 5, 2024.
About MGIC
Mortgage Guaranty Insurance Corporation (MGIC) (www.mgic.com), the principal subsidiary of MGIC Investment Corporation, serves 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 September 30, 2024, MGIC had $292.8 billion of primary insurance in force covering 1.1 million mortgages.
This press release, which includes certain additional statistical and other information, including non-GAAP financial information and a supplement that contains various portfolio statistics, are all available on the Company's website at https://mtg.mgic.com/ under "Newsroom."
From time to time MGIC Investment Corporation releases important information via postings on its corporate website, and via postings on MGIC's website for information related to underwriting and pricing, and intends to continue to do so in the future. Such postings include corrections of previous disclosures and may be made without any other disclosure. Investors and other interested parties are encouraged to enroll to receive automatic email alerts and Really Simple Syndication (RSS) feeds regarding new postings. Enrollment information for MGIC Investment Corporation alerts can be found at https://mtg.mgic.com/shareholder-services/email-alerts. For information about our underwriting and rates, see https://www.mgic.com/underwriting.
Safe Harbor Statement
Forward Looking Statements and Risk Factors:
Our actual results could be affected by the risk factors below. These risk factors should be reviewed in connection with this press release and our periodic reports to the Securities and Exchange Commission ("SEC"). These risk factors may also cause actual results to differ materially from the results contemplated by forward looking statements that we may make. Forward looking statements consist of statements which relate to matters other than historical fact, including matters that inherently refer to future events. Among others, statements that include words such as "believe," "anticipate," "will" or "expect," or words of similar import, are forward looking statements. We are not undertaking any obligation to update any forward looking statements or other statements we may make even though these statements may be affected by events or circumstances occurring after the forward looking statements or other statements were made. No investor should rely on the fact that such statements are current at any time other than the time at which this press release was delivered for dissemination to the public.
While we communicate with security analysts from time to time, it is against our policy to disclose to them any material non-public information or other confidential information. Accordingly, investors should not assume that we agree with any statement or report issued by any analyst irrespective of the content of the statement or report, and such reports are not our responsibility.
Use of Non-GAAP financial measures
We believe that use of the Non-GAAP 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. These measures are not recognized in accordance with accounting principles generally accepted in the United States of America (GAAP) and should not be viewed as alternatives to GAAP measures of performance.
Adjusted pre-tax operating income (loss) is defined as GAAP income (loss) before tax, excluding the effects of net realized investment gains (losses), gain and losses on debt extinguishment and infrequent or unusual non-operating items where applicable.
Adjusted net operating income (loss) is defined as GAAP net income (loss) excluding the after-tax effects of net realized investment gains (losses), gain and losses on debt extinguishment and infrequent or unusual non-operating items where applicable. The amounts of adjustments to components of pre-tax operating income (loss) are tax effected using a federal statutory tax rate of 21%.
Adjusted net operating income (loss) per diluted share is calculated in a manner consistent with the accounting standard regarding earnings per share by dividing (i) adjusted net operating income (loss) after making adjustments for interest expense on convertible debt, whenever the impact is dilutive, by (ii) diluted weighted average common shares outstanding, which reflects share dilution from unvested restricted stock units and from convertible debt when dilutive under the "if-converted" method.
Although adjusted pre-tax operating income (loss) and adjusted net operating income (loss) exclude certain items that have occurred in the past and are expected to occur in the future, the excluded items represent items that are: (1) not viewed as part of the operating performance of our primary activities; or (2) impacted by both discretionary and other economic or regulatory factors and are not necessarily indicative of operating trends, or both. These adjustments, along with the reasons for their treatment, are described below. Trends in the profitability of our fundamental operating activities can be more clearly identified without the fluctuations of these adjustments. Other companies may calculate these measures differently. Therefore, their measures may not be comparable to those used by us.
(1)
Net realized investment gains (losses). The recognition of net realized investment gains or losses can vary significantly across periods as the timing of individual securities sales is highly discretionary and is influenced by such factors as market opportunities, our tax and capital profile, and overall market cycles.
(2)
Gains and losses on debt extinguishment. Gains and losses on debt extinguishment result from discretionary activities that are undertaken to enhance our capital position, and/or improve our debt profile.
(3)
Infrequent or unusual non-operating items. Items that are non-recurring in nature and are not part of our primary operating activities.
MGIC INVESTMENT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended September 30,
Nine Months Ended September 30,
(In thousands, except per share data)
2024
2023
2024
2023
Net premiums written
$ 234,006
$ 234,491
$ 701,284
$ 695,907
Revenues
Net premiums earned
$ 243,340
$ 241,277
$ 729,512
$ 726,103
Net investment income
62,093
55,375
183,316
156,938
Net gains (losses) on investments and other financial instruments
583
(695)
(8,202)
(13,380)
Other revenue
633
548
1,661
1,484
Total revenues
306,649
296,505
906,287
871,145
Losses and expenses
Losses incurred, net
(9,842)
(77)
(23,559)
(11,322)
Underwriting and other expenses, net
53,290
52,932
169,142
182,080
Interest expense
8,905
9,254
26,703
28,005
Total losses and expenses
52,353
62,109
172,286
198,763
Income before tax
254,296
234,396
734,001
672,382
Provision for income taxes
54,327
51,552
155,707
143,937
Net income
$ 199,969
$ 182,844
$ 578,294
$ 528,445
Net income per diluted share
$ 0.77
$ 0.64
$ 2.17
$ 1.83
MGIC INVESTMENT CORPORATION AND SUBSIDIARIES
EARNINGS PER SHARE (UNAUDITED)
Three Months Ended September 30,
Nine Months Ended September 30,
(In thousands, except per share data)
2024
2023
2024
2023
Net income
$ 199,969
$ 182,844
$ 578,294
$ 528,445
Interest expense, net of tax:
9% Convertible Junior Subordinated Debentures
—
276
—
1,025
Diluted net income available to common shareholders
$ 199,969
$ 183,120
$ 578,294
$ 529,470
Weighted average shares - basic
258,596
281,757
264,719
286,184
Effect of dilutive securities:
Unvested restricted stock units
2,237
2,624
2,196
2,239
9% Convertible Junior Subordinated Debentures
—
1,219
—
1,501
Weighted average shares - diluted
260,833
285,600
266,915
289,924
Net income per diluted share
$ 0.77
$ 0.64
$ 2.17
$ 1.83
NON-GAAP RECONCILIATIONS
Reconciliation of Income before tax / Net income to Adjusted pre-tax operating income / Adjusted net operating income
Three Months Ended September 30,
2024
2023
(In thousands, except per share amounts)
Pre-tax
Tax Effect
Net
(after-tax)
Pre-tax
Tax Effect
Net
(after-tax)
Income before tax / Net income
$ 254,296
$ 54,327
$ 199,969
$ 234,396
$ 51,552
$ 182,844
Adjustments:
Net realized investment losses
918
193
725
237
50
187
Adjusted pre-tax operating income / Adjusted
net operating income
$ 255,214
$ 54,520
$ 200,694
$ 234,633
$ 51,602
$ 183,031
Reconciliation of Net income per diluted share to Adjusted net operating income per diluted share
Weighted average shares - diluted
260,833
285,600
Net income per diluted share
$ 0.77
$ 0.64
Net realized investment losses
—
—
Adjusted net operating income per diluted share
$ 0.77
$ 0.64
Reconciliation of Income before tax / Net income to Adjusted pre-tax operating income / Adjusted net operating income
Nine Months Ended September 30,
2024
2023
(In thousands, except per share amounts)
Pre-tax
Tax Effect
Net(after-tax)
Pre-tax
Tax Effect
Net(after-tax)
Income before tax / Net income
$ 734,001
$ 155,707
$ 578,294
$ 672,382
$ 143,937
$ 528,445
Adjustments:
Net realized investment losses
7,168
1,505
5,663
10,619
2,230
8,389
Adjusted pre-tax operating income / Adjustednet operating income
$ 741,169
$ 157,212
$ 583,957
$ 683,001
$ 146,167
$ 536,834
Reconciliation of Net income per diluted share to Adjusted net operating income per diluted share
Weighted average shares - diluted
266,915
289,924
Net income per diluted share
$ 2.17
$ 1.83
Net realized investment losses
0.02
0.03
Adjusted net operating income per diluted share
$ 2.19
$ 1.86
MGIC INVESTMENT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
September 30,
December 31,
September 30,
(In thousands, except per share data)
2024
2023
2023
ASSETS
Investments (1)
$ 5,980,348
$ 5,738,734
$ 5,596,336
Cash and cash equivalents
288,622
363,666
266,543
Restricted cash and cash equivalents
10,987
6,978
8,582
Reinsurance recoverable on loss reserves (2)
45,327
33,302
40,934
Home office and equipment, net
36,223
38,755
39,379
Deferred insurance policy acquisition costs
12,508
14,591
15,905
Deferred income taxes, net
56,023
79,782
132,030
Other assets
247,746
262,572
231,970
Total assets
$ 6,677,784
$ 6,538,380
$ 6,331,679
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Loss reserves (2)
$ 460,574
$ 505,379
$ 525,528
Unearned premiums
129,551
157,779
165,093
Senior notes
644,299
643,196
642,828
Other liabilities
149,284
160,009
143,525
Total liabilities
1,383,708
1,466,363
1,476,974
Shareholders' equity
5,294,076
5,072,017
4,854,705
Total liabilities and shareholders' equity
$ 6,677,784
$ 6,538,380
$ 6,331,679
Book value per share (3)
$ 20.66
$ 18.61
$ 17.37
(1) Investments include net unrealized gains (losses) on securities
$ (197,904)
$ (337,909)
$ (548,470)
(2) Loss reserves, net of reinsurance recoverable on loss reserves
$ 415,247
$ 472,077
$ 484,594
(3) Shares outstanding
256,216
272,494
279,475
MGIC INVESTMENT CORPORATION AND SUBSIDIARIES
ADDITIONAL INFORMATION - NEW INSURANCE WRITTEN
2024
2023
Year-to-date
Q3
Q2
Q1
Q4
Q3
2024
2023
New primary insurance written (NIW) (billions)
$ 17.2
$ 13.5
$ 9.1
$ 10.9
$ 14.6
$ 39.8
$ 35.2
Monthly (including split premium plans) and
annual premium plans
16.8
13.2
8.8
10.3
14.0
38.8
33.9
Single premium plans
0.3
0.4
0.3
0.6
0.6
1.0
1.3
Product mix as a % of primary NIW
FICO < 680
4 %
4 %
3 %
4 %
4 %
4 %
4 %
>95% LTVs
13 %
14 %
15 %
13 %
12 %
14 %
12 %
>45% DTI
29 %
29 %
28 %
30 %
28 %
29 %
25 %
Singles
2 %
3 %
3 %
5 %
