Sign in

You're signed outSign in or to get full access.

MI

MGIC INVESTMENT CORP (MTG)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered solid profitability: net income $192.5M ($0.81 GAAP EPS) and adjusted EPS $0.82; EPS benefited from $54M favorable prior-year reserve development as cure rates continued to outperform assumptions .
  • Topline was stable with total revenues of $304.2M, slightly below S&P Global revenue consensus ($306.3M), but EPS beat consensus ($0.72) by ~$0.10 on reserve releases and disciplined expenses; net realized investment losses reduced GAAP EPS by ~$0.01 *.
  • Credit remains benign: loss ratio improved to (1.2)% (vs 3.9% in Q1 and 3.6% in Q4), primary delinquency rate declined to 2.21% from 2.30% in Q1; NIW accelerated to $16.4B, supporting Insurance in Force at $297.0B .
  • Capital return is a key catalyst: 7.1M shares repurchased for $180.7M in Q2; dividend raised 15% to $0.15; an additional $750M buyback authorization was approved in April; holding company liquidity ended Q2 at ~$1.05B .

What Went Well and What Went Wrong

  • What Went Well

    • Strong EPS beat on favorable reserve development and stable core drivers. “Cure rates on recent delinquency notices continue to exceed our expectations,” driving $54M favorable loss development in the quarter .
    • Credit and cost discipline: loss ratio improved to (1.2)% and underwriting expense ratio fell sequentially to 21.9% (22.5% in Q1) .
    • Capital return and balance sheet strength: repurchased $181M in Q2, boosted dividend to $0.15, ended Q2 with ~$1.0B holdco liquidity; management reiterated elevated payout ratios can continue if growth remains constrained and credit performance holds .

  • What Went Wrong

    • Slight revenue shortfall vs consensus ($304.2M vs $306.3M), with modest net realized investment losses (-$1.4M) weighing on total revenues *.
    • Persistency remains high (84.7%), limiting IIF churn and potentially pressuring long-term portfolio yield as older higher-rate books run off and new pricing remains competitive .
    • Management flagged seasonality and vintage aging (2021–2022 books) likely to push delinquencies higher in H2, even if levels remain low by historical standards .

Financial Results

Overall results vs prior quarters and S&P Global consensus

MetricQ4 2024Q1 2025Q2 2025
Total Revenues ($M)301.4 306.2 304.2
GAAP Diluted EPS ($)0.72 0.75 0.81
Adjusted Diluted EPS ($)0.72 0.75 0.82
S&P Global EPS Consensus ($)——0.7175*
S&P Global Revenue Consensus ($M)——306.3*
Loss Ratio (%)3.6 3.9 (1.2)
Underwriting Expense Ratio (%)20.8 22.5 21.9

Values marked with * are from S&P Global.

Operating KPIs

KPIQ4 2024Q1 2025Q2 2025
New Insurance Written (NIW) ($B)15.9 10.2 16.4
Insurance in Force ($B)295.4 293.8 297.0
Net Premiums Earned ($M)241.3 243.7 244.3
In-Force Portfolio Yield (bps)38.6 38.4 38.3
Net Premium Yield (bps)32.9 33.0 33.0
Annual Persistency (%)84.8 84.7 84.7
Primary Delinquency Rate (%)2.40 2.30 2.21
Losses Incurred, net ($M)8.7 9.6 (2.8)

Non-GAAP adjustments (context)

  • Net realized investment losses added ~$0.01 to adjusted EPS reconciliation in Q2; adjusted EPS was $0.82 vs GAAP $0.81 .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Operating ExpensesFY 2025$195–$205M$195–$205M (reiterated; includes Q2 pension lump-sum charges)Maintained
In-Force Premium YieldFY 2025“Relatively flat”“Relatively flat”Maintained
Quarterly DividendQ3 2025$0.13/sh$0.15/sh declared (payable Aug 21, 2025)Raised
Share RepurchasesThrough 2027Prior authorizationAdditional $750M authorization approved Apr 2025Increased capacity

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24, Q1’25)Current Period (Q2’25)Trend
Capital return (dividends/buybacks)Q4: $193M buybacks; Q1: $224M buybacks; ongoing $400M subsidiary dividends to holdco Q2: $181M buybacks; dividend raised to $0.15; $1.0B holdco liquidity; elevated payout ratios can continue given limited growth and strong credit More shareholder-friendly; sustained elevated payouts
Credit performance/delinquenciesLoss ratio 3.6% (Q4) → 3.9% (Q1); delinquency rate 2.40% → 2.30% Loss ratio improves to (1.2%); delinquency rate down to 2.21%; $54M favorable reserve development Better now; watch H2 seasonality/vintage aging
NIW and IIF growthQ4 NIW $15.9B; Q1 NIW $10.2B; IIF ~295B Q2 NIW $16.4B; IIF $297.0B; high persistency ~85% Stable IIF; NIW seasonally stronger
Reinsurance program (QSR/XOL)40% QSR in place; amended 2021 QSR; executed 2020 XOL Two new XOL transactions for 2025 & 2026 NIW; reinsurance reduces PMIERs by ~$2.5B (~43%) Enhanced coverage; strong PMIERs efficiency
Expenses/operationsUnderwriting expense ratio 20.8% (Q4) → 22.5% (Q1) Expense ratio 21.9%; FY OpEx guide reiterated; Q2 includes $4M pension lump-sum accounting charge Disciplined; one-off pension items
Macro/housingFHFA price growth moderating; affordability headwinds noted in prior releases Expect flat HPI nationally; regional divergence; risk-based pricing can adapt quickly Neutral-to-cautious; managing mix dynamically
Regulatory/legalPMIERs updates phasing through 2026; state capital and GSE policy watch PMIERs excess $2.4B; available assets $5.7B; minimal ~1% impact if new PMIERs calc fully effective Stable compliance; monitoring changes

Management Commentary

  • “In the second quarter, we recorded net income of $193 million and an annualized return on equity of 15%...we wrote $16 billion of new insurance. Insurance in force...$297 billion.” — CEO Tim Mattke .
  • “Cure rates on recent delinquency notices continue to exceed our expectations...we adjusted our ultimate loss expectations accordingly,” resulting in $54M favorable loss reserve development — CFO Nathan Colson .
  • “We continued to allocate excess capital to share repurchases...and paid a quarterly common stock dividend...we repurchased an additional 2.6 million shares [through July 25].” — CEO Tim Mattke .
  • “We further bolstered our reinsurance program in the second quarter with two excess of loss agreements...These complement the 40% quota share arrangements” — CFO Nathan Colson .

Q&A Highlights

  • Capital return framework: Management targets strong operating and holdco capital, and with constrained growth, expects elevated payout ratios to continue; operating-company dividends sized by ongoing results and contingency reserve constraints; preference is steady, not one-off, capital return .
  • Home prices and pricing dynamics: Expect national HPI to be roughly flat with regional divergence; risk-based pricing enables rapid, granular adjustments to pockets of risk; slowing HPA is long-term constructive for MI .
  • Operating expenses: FY OpEx guidance ($195–$205M) includes Q2’s $4M pension lump-sum accounting charge, with smaller charges anticipated later in the year; visibility provided via footnotes .

Estimates Context

  • Q2 2025 EPS: Actual $0.82 vs S&P Global consensus $0.7175 — beat of ~$0.10; Revenue: Actual $304.2M vs S&P Global consensus $306.3M — slight miss *.
  • Estimate breadth: 4 estimates for EPS and 4 for revenue [GetEstimates]*.
  • Implication: The EPS beat is primarily from favorable reserve development and cost control; revenue variance was modest and partly impacted by net investment losses .

Values marked with * are from S&P Global.

Key Takeaways for Investors

  • EPS beat driven by favorable credit development and lean expenses; reserve releases underscore benign credit in recent vintages and strong cure performance .
  • Core revenue drivers remained steady (NPE + IIF + yields), while total revenue faced a modest investment loss headwind; outlook for in-force premium yield is “relatively flat” for 2025 .
  • Loss ratio improvement to (1.2)% and a lower delinquency rate point to durable credit quality heading into H2, though seasonal uptick and vintage aging are expected .
  • Capital return is the near-term narrative: buybacks, a 15% dividend hike, and ~$1.0B holdco liquidity support continued elevated payouts if growth opportunities remain limited .
  • Reinsurance expansion (new XOLs) and PMIERs excess ($2.4B) provide capital flexibility and loss volatility protection, supporting sustained shareholder returns through the cycle .
  • Watch items: H2 delinquency seasonality, regional HPI divergence, investment income trajectory amid rate moves, and any PMIERs/GSE policy changes impacting capital credit or pricing .

S&P Global disclaimer: Consensus estimates values denoted with * were retrieved from S&P Global.