MGIC INVESTMENT CORP

For the period ended Dec 31, 2023. Filed Feb 21, 2024.

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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.

FY2023 · Filed Feb 21, 2024

MTG$28.60-2.6%Stored close · as of Nov 6, 2026

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Contents

Financial Statements and Supplementary Data

The following consolidated financial statements are filed pursuant to this Item 8:

Index to consolidated financial statements
	Page No.
Consolidated balance sheets at December 31, 2023 and 2022	82
Consolidated statements of operations for each of the three years in the period ended December 31, 2023	83
Consolidated statements of comprehensive income for each of the three years in the period ended December 31, 2023	84
Consolidated statements of shareholders' equity for each of the three years in the period ended December 31, 2023	85
Consolidated statements of cash flows for each of the three years in the period ended December 31, 2023	86
Notes to consolidated financial statements	87
Note 1. Nature of Business	87
Note 2. Basis of Presentation	87
Note 3. Significant Accounting Policies	88
Note 4. Earnings Per Share	93
Note 5. Investments	94
Note 6. Fair Value Measurements	98
Note 7. Debt	101
Note 8. Loss Reserves	102
Note 9. Reinsurance	105
Note 10. Other Comprehensive (Loss) Income	110
Note 11. Benefit Plans	111
Note 12. Income Taxes	117
Note 13. Shareholders' Equity	118
Note 14. Statutory Information	118
Note 15. Share-based Compensation	120
Note 16. Leases	121
Note 17. Litigation and Contingencies	121
Report of Independent Registered Public Accounting Firm (Auditor Firm ID: 238)	122

MGIC INVESTMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
	December 31,
(In thousands) · Note · 2023 · 2022
Assets
Investment portfolio: · 5 / 6
Fixed income, available-for-sale, at fair value (amortized cost 2023 - $5,939,483; 2022 - $5,859,688)		$5,601,540	$5,342,667	(1)
Short-term, fixed income, available-for-sale, at fair value (amortized cost 2023 - $121,539; 2022 - $67,097)		121,573	67,031	(1)
Equity securities, at fair value (cost, 2023 - $16,025; 2022 - $15,924)		14,771	14,140
Other invested assets, at cost		850	850
Total investment portfolio		5,738,734	5,424,688
Cash and cash equivalents		363,666	327,384
Restricted cash and cash equivalents		6,978	5,529
Accrued investment income		58,774	55,178
Reinsurance recoverable on loss reserves	9	33,302	28,240
Reinsurance recoverable on paid losses	9	9,896	18,081
Premiums receivable		58,499	58,000
Home office and equipment, net		38,755	41,419
Deferred insurance policy acquisition costs		14,591	19,062
Deferred income taxes, net	12	79,782	124,769
Other assets		135,403	111,443
Total assets		$6,538,380	$6,213,793
Liabilities and shareholders' equity
Liabilities:
Loss reserves	8	$505,379	$557,988
Unearned premiums		157,779	195,289
Senior notes	7	643,196	641,724
Convertible junior subordinated debentures	7	—	21,086
Other liabilities		160,009	154,966
Total liabilities		1,466,363	1,571,053
Contingencies	17
Shareholders' equity:	13
Common stock ($1.00 par value, shares authorized 1,000,000; shares issued 2023 - 371,353; 2022 - 371,353; shares outstanding 2023 - 272,494; 2022 - 293,433)		371,353	371,353
Paid-in capital		1,808,113	1,798,842
Treasury stock at cost (shares 2023 - 98,859; 2022 - 77,920)		(1,384,293)	(1,050,238)
Accumulated other comprehensive income (loss), net of tax	10	(316,281)	(481,511)
Retained earnings		4,593,125	4,004,294
Total shareholders' equity		5,072,017	4,642,740
Total liabilities and shareholders' equity		$6,538,380	$6,213,793

(1) Certain amounts have been reclassified to conform with current year presentation

MGIC INVESTMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
	Years Ended December 31,
(In thousands, except per share data)	Note	2023	2022	2021
Revenues:
Premiums written:
Direct		$1,105,027	$1,108,570	$1,123,117
Assumed		12,835	8,535	8,924
Ceded	9	(202,821)	(156,373)	(163,031)
Net premiums written		915,041	960,732	969,010
Decrease (increase) in unearned premiums		37,510	46,401	45,409
Net premiums earned	9	952,551	1,007,133	1,014,419
Investment income, net of expenses	5	214,740	167,476	156,438
Net gains (losses) on investments and other financial instruments	5	(14,141)	(7,463)	5,861
Other revenue		1,952	5,639	8,957
Total revenues		1,155,102	1,172,785	1,185,675
Losses and expenses:
Losses incurred, net	8 / 9	(20,856)	(254,565)	64,577
Amortization of deferred insurance policy acquisition costs		10,820	12,366	12,602
Other underwriting and operating expenses, net		226,004	236,697	198,445
Loss on debt extinguishment	7	—	40,199	36,914
Interest expense	7	36,905	48,054	71,360
Total losses and expenses		252,873	82,751	383,898
Income before tax		902,229	1,090,034	801,777
Provision for income taxes	12	189,280	224,685	166,794
Net income		$712,949	$865,349	$634,983
Earnings per share:	4
Basic		$2.51	$2.83	$1.90
Diluted		$2.49	$2.79	$1.85
Weighted average common shares outstanding - basic	4	283,605	305,847	334,330
Weighted average common shares outstanding - diluted	4	287,155	311,229	351,308

MGIC INVESTMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
	Years Ended December 31,
(In thousands)	Note	2023	2022	2021
Net income		$712,949	$865,349	$634,983
Other comprehensive income (loss), net of tax:	10
Change in unrealized investment gains and losses	5	141,548	(558,534)	(122,099)
Benefit plans adjustment	11	23,682	(42,674)	24,975
Other comprehensive income (loss), net of tax		165,230	(601,208)	(97,124)
Comprehensive income		$878,179	$264,141	$537,859

MGIC INVESTMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
	Years Ended December 31,
(In thousands)	Note	2023	2022	2021
Common stock
Balance, beginning and end of year		371,353	371,353	371,353
Paid-in capital
Balance, beginning of year		1,798,842	1,794,906	1,862,042
Cumulative effect of debt with conversion options accounting standards update		—	—	(68,289)
Balance, beginning of period, as adjusted		1,798,842	1,794,906	1,793,753
Conversion of 9% Debentures, net of tax	7	(5,315)	—	—
Reissuance of treasury stock, net under share-based compensation plans		(17,021)	(20,835)	(15,956)
Equity compensation		31,607	24,771	17,109
Balance, end of year		1,808,113	1,798,842	1,794,906
Treasury stock
Balance, beginning of year		(1,050,238)	(675,265)	(393,326)
Purchases of common stock	13	(343,819)	(385,714)	(290,818)
Reissuance of treasury stock, net under share-based compensation plans		9,764	10,741	8,879
Balance, end of year		(1,384,293)	(1,050,238)	(675,265)
Accumulated other comprehensive income (loss)
Balance, beginning of year		(481,511)	119,697	216,821
Other comprehensive income (loss)	10	165,230	(601,208)	(97,124)
Balance, end of year		(316,281)	(481,511)	119,697
Retained earnings
Balance, beginning of year		4,004,294	3,250,691	2,642,096
Cumulative effect of debt with conversion options accounting standards update		—	—	68,289
Balance, beginning of period, as adjusted		4,004,294	3,250,691	2,710,385
Net income		712,949	865,349	634,983
Cash dividends	13	(124,118)	(111,746)	(94,677)
Balance, end of year		4,593,125	4,004,294	3,250,691
Total shareholders' equity		$5,072,017	$4,642,740	$4,861,382

MGIC INVESTMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
	Years Ended December 31,
(In thousands)	2023	2022	2021
Cash flows from operating activities:
Net income	$712,949	$865,349	$634,983
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and other amortization	35,230	54,252	66,014
Deferred tax expense (benefit)	1,065	(4,367)	5,188
Equity compensation	31,607	24,771	17,109
Loss on debt extinguishment	—	40,199	36,914
Net (gains) losses on investments and other financial instruments	14,141	7,463	(5,861)
Change in certain assets and liabilities:
Accrued investment income	(3,596)	(3,276)	(1,905)
Reinsurance recoverable on loss reserves	(5,062)	38,665	28,137
Reinsurance recoverable on paid losses	8,185	18,194	(35,606)
Premiums receivable	(499)	(1,460)	(496)
Deferred insurance policy acquisition costs	4,471	2,609	(110)
Profit commission receivable	5,108	4,724	(19,245)
Loss reserves	(52,609)	(325,534)	2,985
Unearned premiums	(37,510)	(46,401)	(45,409)
Return premium accrual	(4,400)	(11,800)	7,200
Current income taxes	(4,143)	(8,549)	5,429
Other, net	8,025	(4,827)	990
Net cash provided by operating activities	712,962	650,012	696,317
Cash flows from investing activities:
Purchases of investments	(1,469,540)	(674,406)	(1,531,129)
Proceeds from sales of investments	376,598	399,661	473,904
Proceeds from maturity of fixed income securities	913,415	688,484	900,591
Proceeds from sale of property and equipment	2,336	—	—
Additions to property and equipment	(1,999)	(3,254)	(4,115)
Net cash (used in) provided by investing activities	(179,190)	410,485	(160,749)
Cash flows from financing activities:
Conversion / purchase of convertible junior subordinated debentures	(28,637)	(89,118)	(98,610)
Redemption of 5.75% senior notes	—	(242,296)	—
Repayment of FHLB advance	—	(155,000)	—
Cash portion of loss on debt extinguishment	—	(39,514)	(36,914)
Repurchase of common stock	(337,182)	(385,573)	(290,818)
Dividends paid	(122,965)	(110,947)	(94,219)
Payment of withholding taxes related to share-based compensation net share settlement	(7,257)	(10,094)	(6,729)
Net cash used in financing activities	(496,041)	(1,032,542)	(527,290)
Net increase in cash and cash equivalents and restricted cash and cash equivalents	37,731	27,955	8,278
Cash and cash equivalents and restricted cash and cash equivalents at beginning of year	332,913	304,958	296,680
Cash and cash equivalents and restricted cash and cash equivalents at end of year	$370,644	$332,913	$304,958

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