Net Income: $186 million for the first quarter. Return on Equity: Annualized 14.3%. New Insurance Written: $10 billion during the quarter. Insurance in Force: $294 billion at the end of the quarter. Annual Persistency: 85% at the end of the quarter. Share Repurchases: 9.2 million shares for $224 million in the first quarter. Common Stock Dividend: $33 million paid in the first quarter. Liquidity: $824 million at the holding company at the end of the quarter. Net Income Per Diluted Share: $0.75 compared to $0.64 last year. Adjusted Net Operating Income Per Diluted Share: $0.75 compared to $0.65 last year. Favorable Loss Reserve Development: $50 million in the quarter. Delinquency Rate: Decreased to 2.3% in the quarter. In-force Premium Yield: 38.4 basis points in the quarter. Book Value Per Share: $21.40, up 13% compared to a year ago. Net Investment Income: $61 million in the quarter. Operating Expenses: $53 million in the quarter. Reinsurance Program Impact: Reduced PMIERs required assets by $2.4 billion.

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Release Date: May 01, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

MGIC Investment Corp reported a strong net income of $186 million for the first quarter, with an annualized return on equity of 14.3%. The company successfully wrote $10 billion of new insurance during the quarter, maintaining a stable insurance in force of $294 billion. MGIC Investment Corp returned significant capital to shareholders, repurchasing 9.2 million shares for $224 million and paying a $33 million quarterly dividend. The company maintained a strong liquidity position with $824 million at the holding company by the end of the quarter. MGIC Investment Corp's reinsurance program reduced PMIERs required assets by $2.4 billion, enhancing capital efficiency and risk management.

Negative Points

Market conditions have constrained growth in insurance in force, which is expected to persist throughout the year. The account-based delinquency rate increased by 15 basis points compared to a year ago, ending the quarter at 2.3%. MGIC Investment Corp experienced a pullback in market share, with some volatility in volume compared to peers. The company anticipates a potential increase in new delinquency notices due to the aging of the 2021 and 2022 book years. Operating expenses are expected to remain high, projected to be in the range of $195 million to $205 million for the full year.

Q & A Highlights

Q: Given the uncertainty around macroeconomic conditions and tariffs, have you adjusted pricing or underwriting? How are you thinking about credit loss expectations? A: (Timothy Mattke, CEO) We consider a wide range of scenarios in our pricing strategy, not specifically targeting tariffs but the broader economic environment. This approach remains consistent regardless of current conditions. We maintain a 7.5% new notice claim rate, which is suitable for various outcomes, not pegged to specific unemployment rates.

Story Continues

Q: Can you discuss the recent volatility in market share and the factors affecting your volume compared to peers? A: (Timothy Mattke, CEO) Market share fluctuations are expected in a competitive industry. We focus on achieving good returns rather than targeting specific market share. There were no specific areas or customers that significantly impacted our volume this quarter.

Q: What was discussed in your meeting with the new FHFA Director, Bill Pulte, and how does mortgage insurance fit into his agenda? A: (Timothy Mattke, CEO) The meeting was more of an introductory session to establish a relationship. While mortgage insurance isn't a primary focus for the FHFA Director, we aim to maintain a productive relationship.

Q: Does the Rocket and Mr. Cooper merger have any implications for the mortgage insurance industry? A: (Timothy Mattke, CEO) It's uncertain how the merger will operationalize, but we don't foresee any direct impact on the mortgage insurance industry. We will monitor any changes closely.

Q: How do you view the current delinquency trends and their impact on your financials? A: (Nathaniel Colson, CFO) Our delinquency rate decreased to 2.3%, consistent with seasonal trends. We expect new delinquency notices to increase modestly due to aging book years, but overall, delinquency rates remain low by historical standards.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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