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MI

MGIC INVESTMENT CORP (MTG)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 EPS of $0.83 beat S&P Global consensus by $0.09, while total revenue of $304.5M slightly missed consensus by ~$3.5M; annualized ROE was 14.8% and book value per share rose to $22.87 . EPS consensus 0.74; Revenue consensus $308.0M; EPS/# est: 4; Revenue/# est: 3; Target price consensus $27.67* [Values retrieved from S&P Global].
  • Credit performance remained strong with seasonal delinquency uptick (primary delinquency rate 2.32% vs 2.21% in Q2); favorable reserve development of $47M boosted results .
  • Capital return stayed robust: $187.9M buybacks (7.0M shares) in Q3, plus $65.7M through Oct 24; quarterly dividend maintained at $0.15 per share, and MGIC paid a $400M dividend to the holding company in October .
  • Strategic reinsurance actions: 2022 quota share cede rate cut from 30% to 28% effective Dec 31, 2025; new $250M excess-of-loss (Dec 1, 2025) and a 40% quota share for eligible NIW in 2027; S&P revised outlook to positive (Oct 27) .

What Went Well and What Went Wrong

What Went Well

  • EPS beat with adjusted net operating income per diluted share also at $0.83, reflecting strong core performance; “another quarter of strong financial results” per CEO Tim Mattke .
  • Favorable reserve development of $47M and stable in-force premium yield (38.3 bps); book yield ~4% helped steady investment income ($62M) .
  • Reinsurance program strength and expansion: PMIERS required assets reduced by ~$2.5B (~43%); new XOL and quota share arrangements position capital and risk well into 2026/2027 .

What Went Wrong

  • Revenue ($304.5M) was below S&P Global consensus ($308.0M*) due to modestly lower net premiums earned and seasonal loss emergence . Consensus values* [Values retrieved from S&P Global].
  • Primary delinquency rate rose to 2.32% (seasonal), and net premium yield declined YoY (33.4 bps in Q3’24 to 32.3 bps in Q3’25), reflecting competitive pressures .
  • Holding company liquidity decreased to $858M from $1,046M in Q2 as capital was upstreamed/returned; CFO guided full-year OpEx to high end of prior range ($195–$205M) due to pension settlement charges .

Financial Results

Headline Results vs Prior Periods and Consensus

MetricQ3 2024Q2 2025Q3 2025
Total Revenues ($USD Millions)$306.6 $304.2 $304.5
Net Income ($USD Millions)$200.0 $192.5 $191.1
Diluted EPS ($)$0.77 $0.81 $0.83
Net Premiums Earned ($USD Millions)$243.3 $244.3 $241.8
GAAP Loss Ratio (%)(4.0%) (1.2%) 4.5%
Underwriting Expense Ratio (%)22.4% 21.9% 21.1%
Annualized ROE (%)15.6% 15.0% 14.8%

Revenue Components (Mix)

Component ($USD Millions)Q3 2024Q2 2025Q3 2025
Net Premiums Earned$243.3 $244.3 $241.8
Net Investment Income$62.1 $61.0 $62.2
Net Gains (Losses) on Investments & Other Financial Instruments$(0.5) $(1.4) $162.6
Other Revenue$1.1 $0.4 $0.4
Total Revenues$306.6 $304.2 $304.5

KPIs and Portfolio Metrics

KPIQ3 2024Q2 2025Q3 2025
New Insurance Written (NIW, $B)$17.2 $16.4 $16.5
Insurance in Force (IIF, $B)$292.8 $297.0 $300.8
Annual Persistency (%)85.3% 84.7% 85.0%
Primary Delinquency Inventory (# loans)25,089 24,444 25,747
Primary IIF Delinquency Rate (%)2.24% 2.21% 2.32%
In-Force Portfolio Yield (bps)38.9 38.3 38.3
Net Premium Yield (bps)33.4 33.0 32.3
Book Value per Share ($)$20.66 $22.11 $22.87

Results vs S&P Global Consensus (Q3 2025)

MetricConsensus*ActualSurprise
EPS ($)0.74*0.83 +0.09*
Revenue ($USD Millions)308.0*304.5 (3.5)*
EPS – # of Estimates4*——
Revenue – # of Estimates3*——
Target Price ($)27.67*27.67*—

Note: *Values retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Operating ExpensesFY 2025$195–$205M (communicated earlier) Range maintained; expect toward higher end due to pension settlement charges Maintained range; bias higher
Quarterly Dividend per ShareQ4 2025$0.13 (Q2 paid) $0.15 declared, payable Nov 20, 2025 Raised
2022 Quota Share Cede RateEffective Dec 31, 202530% 28% Lowered cede rate
Excess-of-Loss ReinsuranceEffective Dec 1, 2025—$250M coverage on 2021 NIW New
Quota Share Reinsurance (2027 NIW)2027—40% quota share agreed New
Dividend from MGIC to HoldCoOct 2025—$400M paid to holding company New/Capital mobility

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2025)Current Period (Q3 2025)Trend
Capital Return (Buybacks/Dividends)Q1: 9.2M shares for $224.3M; dividend $0.13 . Q2: 7.1M shares for $180.7M; increased dividend to $0.15 .Q3: 7.0M shares for $187.9M; $0.15 dividend; $65.7M repurchases through Oct 24 .Sustained high payout; continued buybacks
Reinsurance StrategyQ1/Q2: Multiple XOL treaties and quota shares; PMIERS updates phased through Sept 2026 .New XOL ($250M), QSR 2027 (40%), 2022 cede rate cut; PMIERS required assets reduced by ~$2.5B (~43%) .Strengthening/optimizing costs
Credit Performance & DelinquenciesQ1: Delinquency rate 2.30%; strong cures . Q2: Delinquency rate 2.21%; seasonal patterns .Delinquency rate 2.32%; 13.6K new notices; 47M favorable reserve development .Seasonal uptick with strong cures
Pricing/YieldQ1/Q2: Competitive pressure; expected decline in premium yield over time .Net premium yield 32.3 bps vs 33.4 bps YoY; in-force yield stable at 38.3 bps .Gradual yield compression
Ratings/RegulatoryQ1/Q2: PMIERs excess $2.6B/$2.4B; AM Best A; FHFA policy reviews .S&P revised outlook to positive (Oct 27); AM Best affirmed A (Oct 10) .Improving external outlook

Management Commentary

  • CEO Tim Mattke: “We maintain our strong momentum… net income of $191 million and an annualized return on equity of 14.8%… grow book value per share to $22.87… returned $918 million of capital to shareholders… reduced outstanding shares by 12%… more than $300 billion of insurance in force” .
  • CFO Nathan Colson: “Re-estimation of ultimate losses on prior delinquencies resulted in $47 million of favorable loss reserve development… new notice claim rate assumption of 7.5%… investment income $62 million… book yield ~4%” .
  • CFO Nathan Colson (reinsurance): “$250 million seasoned excess of loss… 40% quota share for 2027 NIW… amended 2022 quota share to reduce ongoing costs by ~40% starting in 2026” .
  • CEO Tim Mattke: “Our reinsurance program reduced our PMIERS required assets by $2.5 billion, or approximately 43%” .

Q&A Highlights

  • Reserve methodology and claim rate: Management continued using a 7.5% claim rate on new notices; favorable reserve development of $47M driven by 2024–early 2025 delinquency cohorts .
  • Credit scoring framework: Monitoring potential use of VantageScore; awaiting GSE/PMIERS clarity; ready to adapt as the industry moves .
  • Competitive landscape/new entrants: Aware of potential entrants; barriers include PMIERS approval, capital, operations; uncertain impact .
  • Capital return philosophy: Targeting elevated payout given strong capital/credit; share repurchases approximated net income; dividend also above that .
  • Persistency vs rates: Persistency broadly flat QoQ; if rates fall, expect some headwind offset by increased NIW/refi activity .

Estimates Context

  • EPS beat: Actual $0.83 vs S&P Global consensus $0.74*; revenue miss: Actual $304.5M vs consensus $308.0M*, reflecting lower net premiums earned and seasonal losses . Consensus values* [Values retrieved from S&P Global].
  • Consensus breadth: EPS (#est) = 4*; Revenue (#est) = 3*; Target price consensus $27.67* [Values retrieved from S&P Global].
  • Implications: Upward adjustments to EPS estimates likely given stronger reserve development, while revenue expectations may remain conservative amid continued yield compression .

Key Takeaways for Investors

  • Quality of earnings: EPS outperformance driven by favorable reserve development ($47M) and stable investment income; watch sustainability of reserve favorability as the 2021–2022 vintages age .
  • Capital deployment: Management reiterated buybacks as primary return mechanism; $253.6M repurchases Q3 plus Oct-to-date, with $0.15 quarterly dividend and $400M upstream to HoldCo, supporting ongoing flexibility .
  • Risk/capital optimization: Reinsurance actions (XOL, QSR) and 2022 cede-rate reduction (30%→28%) should lower ongoing costs and support PMIERS excess; S&P positive outlook is a supportive external signal .
  • Credit trends: Seasonal delinquency increase (2.32%) but still low by historical standards with strong cures; monitor for macro-driven changes in affordability and unemployment .
  • Yield pressure: Net premium yield down YoY to 32.3 bps amid competitive pricing; expect gradual compression offset by NIW stability and persistency around mid-80s .
  • Expense guidance: FY 2025 OpEx range $195–$205M maintained, but bias to high end due to pension items; modest headwind to margin vs prior expectation .
  • Execution/technology: ICE EPC capability enhances speed-to-market for MI features, improving lender experience; supports retention/volume in competitive environment .