MGIC INVESTMENT CORP

Previous wording

The following is management’s discussion and analysis of the financial condition and results of operations of MGIC Investment Corporation for the second quarter of 2024. As used below, “we” and “our” refer to MGIC Investment Corporation’s consolidated operations. This form 10-Q should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2023. See the“Glossary of terms and acronyms” for definitions and descriptions of terms used throughout this MD&A. Our revenues and losses could be affected by the Risk Factors referred to under “Forward Looking Statements and Risk Factors” below, and they are an integral part of the MD&A.

Current wording

The following is management’s discussion and analysis of the financial condition and results of operations of MGIC Investment Corporation for the third quarter of 2024. As used below, “we” and “our” refer to MGIC Investment Corporation’s consolidated operations. This form 10-Q should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2023. See the“Glossary of terms and acronyms” for definitions and descriptions of terms used throughout this MD&A. Our revenues and losses could be affected by the Risk Factors referred to under “Forward Looking Statements and Risk Factors” below, and they are an integral part of the MD&A.

Previous wording

We recorded second quarter 2024 net income of $204.2 million, or $0.77 per diluted share. Net income increased by $13.2 million from net income of $191.1 million, or $0.66 per diluted share, in the prior year. The increase is primarily due an increase in investment income, net of expenses. This was offset partially by an increase in provision for income taxes. Diluted income per share increased primarily due to an increase in net income and a decrease in the number of diluted weighted shares outstanding.

Current wording

We recorded third quarter 2024 net income of $200.0 million, or $0.77 per diluted share. Net income increased by $17.1 million from net income of $182.8 million, or $0.64 per diluted share, in the prior year. The increase is primarily due a decrease in losses incurred, net and an increase in investment income, net of expenses. This was offset partially by an increase in provision for income taxes. Diluted income per share increased primarily due to an increase in net income and a decrease in the number of diluted weighted shares outstanding.

Previous wording

Adjusted net operating income for the second quarter 2024 was $204.9 million (Q2 2023: $196.0 million) and adjusted net operating income per diluted share was $0.77 (Q2 2023: $0.68). The increase in adjusted net operating income primarily reflects an increase in net income. The increase in adjusted net operating income per diluted share primarily reflects an increase in adjusted net operating income and a decrease in the number of diluted weighted shares outstanding.

Current wording

Adjusted net operating income for the third quarter 2024 was $200.7 million (Q3 2023: $183.0 million) and adjusted net operating income per diluted share was $0.77 (Q3 2023: $0.64). The increase in adjusted net operating income primarily reflects an increase in net income. The increase in adjusted net operating income per diluted share primarily reflects an increase in adjusted net operating income and a decrease in the number of diluted weighted shares outstanding.

Previous wording

Net investment income in the three months ended June 30, 2024, was $61.5 million, compared with $52.3 million, in the prior year. The increase in net investment income was due to an increase of 52 basis points in the average investment yields.

Current wording

Net investment income in the three months ended September 30, 2024, was $62.1 million, compared with $55.4 million, in the prior year. The increase in net investment income was due to an increase of 38 basis points in the average investment yields.

Previous wording

The increase in our provision for income taxes in the second quarter of 2024 as compared to the same period in the prior year was primarily due to an increase in income before tax.

Current wording

The increase in our provision for income taxes in the third quarter of 2024 as compared to the same period in the prior year was primarily due to an increase in income before tax.

Previous wording

We recorded net income of $378.3 million, or $1.40 per diluted share. Net income increased by $32.7 million from net income of $345.6 million, or $1.19 per diluted share in the prior year. The increase is primarily due to an increase in investment income, net of expenses, and a decrease in other underwriting and operating expenses, net. This was partially offset by an increase in provision for income taxes. Diluted income per share increased primarily due to an increase in net income and a decrease in the number of diluted weighted shares outstanding.

Current wording

We recorded net income of $578.3 million, or $2.17 per diluted share. Net income increased by $49.8 million from net income of $528.4 million, or $1.83 per diluted share in the prior year. The increase is primarily due to an increase in investment income, net of expenses, a decrease in losses incurred and a decrease in other underwriting and operating expenses, net. This was partially offset by an increase in provision for income taxes. Diluted income per share increased primarily due to an increase in net income and a decrease in the number of diluted weighted shares outstanding.

Previous wording

Adjusted net operating income for the six months ended June 30, 2024, was $383.3 million (2023: $353.8 million) and adjusted net operating income per diluted share was $1.42 (2023: $1.21). The increase in adjusted net operating income primarily reflects an increase in net income. The increase in adjusted net operating income per diluted share primarily reflects an increase in adjusted net operating income and a decrease in the number of diluted weighted average shares outstanding.

Current wording

Adjusted net operating income for the nine months ended September 30, 2024, was $584.0 million (2023: $536.8 million) and adjusted net operating income per diluted share was $2.19 (2023: $1.86). The increase in adjusted net operating income primarily reflects an increase in net income. The increase in adjusted net operating income per diluted share primarily reflects an increase in adjusted net operating income and a decrease in the number of diluted weighted average shares outstanding.

Previous wording

Net investment income in the six months ended June 30, 2024, was $121.2 million, compared with $101.6 million in the prior year. The increase in net investment income was due to an increase of 55 bps in the average investment yields.

Current wording

Net investment income in the nine months ended September 30, 2024, was $183.3 million, compared with $156.9 million in the prior year. The increase in net investment income was due to an increase of 49 bps in the average investment yields.

Previous wording

Underwriting and other expenses, net in the six months ended June 30, 2024 were $111.7 million, compared with $124.1 million for the same period last year. The decrease in underwriting and other expenses, net during the six months ended June 30, 2024 was primarily due to a decrease in pension expenses and a decrease in expenses related to professional and consulting services. Pension expenses were higher for the six months ended June 30, 2023 due to settlement accounting charges.

Current wording

Underwriting and other expenses, net in the nine months ended September 30, 2024 were $162.7 million, compared with $174.2 million for the same period last year. The decrease in underwriting and other expenses, net during the nine months ended September 30, 2024 was primarily due to a decrease in pension expenses and a decrease in expenses related to professional and consulting services. Pension expenses were higher for the nine months ended September 30, 2023 due to settlement accounting charges.

Previous wording

The increase in our provision for income taxes through June 30, 2024, as compared to the same period in the prior year was primarily due to an increase in income before tax.

Current wording

The increase in our provision for income taxes in the nine months ended September 30, 2024, as compared to the same period in the prior year was primarily due to an increase in income before tax.

Previous wording

The ability of MGIC to pay dividends is restricted by insurance regulation. Amounts in excess of prescribed limits are deemed “extraordinary” and may not be paid if disapproved by the OCI. A dividend is extraordinary when the proposed dividend amount, plus dividends paid in the twelve months preceding the dividend payment date exceed the ordinary dividend level. In 2024, MGIC can pay $64 million of ordinary dividends without OCI approval, before taking into consideration dividends paid in the preceding twelve months. In the six months ended June 30, 2024, and 2023, we made dividend payments to the holding company of $350 million and $300 million respectively. Future dividend payments to the holding company will continue to be determined in consultation with the board and after considering any updated estimates about our business, subject to regulatory approval.

Current wording

The ability of MGIC to pay dividends is restricted by insurance regulation. Amounts in excess of prescribed limits are deemed “extraordinary” and may not be paid if disapproved by the OCI. A dividend is extraordinary when the proposed dividend amount, plus dividends paid in the twelve months preceding the dividend payment date exceed the ordinary dividend level. In 2024, MGIC can pay $64 million of ordinary dividends without OCI approval, before taking into consideration dividends paid in the preceding twelve months. In the nine months ended September 30, 2024, and 2023, we made dividend payments to the holding company of $350 million and $300 million respectively. Future dividend payments to the holding company will continue to be determined in consultation with the board and after considering any updated estimates about our business, subject to regulatory approval. In October 2024, MGIC paid a $400 million dividends to our holding company.

Previous wording

Repurchases may be made from time to time on the open market (including through 10b5-1 plans) or through privately negotiated transactions. In the six months ended June 30, 2024, and for the full year of 2023, we repurchased 12.3 million and 21.7 million shares of common stock, using approximately $250.3 million and $340.6 million of holding company resources, respectively. As of June 30, 2024, we had $773.4 million of available authorization under our existing share repurchase programs. Under our April 2023 repurchase program, we have $23.4 million in remaining authorization through July 1, 2025. Under our April 2024 repurchase program we may repurchase an additional $750 million of common stock prior to December 31, 2026. As of June 30, 2024, we had approximately 261 million shares of common stock outstanding.

Current wording

Repurchases may be made from time to time on the open market (including through 10b5-1 plans) or through privately negotiated transactions. In the nine months ended September 30, 2024, and for the full year of 2023, we repurchased 17.5 million and 21.7 million shares of common stock, for $373.2 million and $340.6 million, respectively. As of September 30, 2024, we had $651 million of remaining authorization to repurchase our common stock through December 31, 2026 under a $750 million share repurchase program approved by our Board of Directors in April 2024. As of September 30, 2024, we had approximately 256 million shares of common stock outstanding.

Previous wording

In the first and second quarters of 2024, we paid quarterly cash dividends of $0.115 per share which totaled $63.3 million. On July 25, 2024, the Board of Directors declared a quarterly cash dividend to the holders of the company’s common stock of $0.13 per share to shareholders of record on August 8, 2024.

Current wording

In the first and second quarters of 2024, we paid quarterly cash dividends of $0.115 per share which totaled $63.3 million. In the third quarter, we paid quarterly cash dividends of $0.13 per share which totaled $34.2 million. On October 24, 2024, the Board of Directors declared a quarterly cash dividend to the holders of the company’s common stock of $0.13 per share to shareholders of record on November 7, 2024.

Previous wording

We must comply with a GSE’s PMIERs to be eligible to insure loans delivered to or purchased by that GSE. The PMIERs include financial requirements, as well as business, quality control and certain transaction approval requirements. The PMIERs provide that the GSEs may amend any provision of the PMIERs or impose additional requirements with an effective date specified by the GSEs. If MGIC ceases to be eligible to insure loans purchased by one or both of the GSEs, it would significantly reduce the volume of our NIW, the substantial majority of which is for loans delivered to or purchased by the GSEs.

Current wording

We must comply with a GSE’s PMIERs to be eligible to insure loans delivered to or purchased by that GSE. The PMIERs include financial requirements, as well as business, quality control and certain transaction approval requirements. The PMIERs provide that the GSEs may amend any provision of the PMIERs or impose additional requirements with an effective date specified by the GSEs.

Previous wording

The financial requirements of the PMIERs require a mortgage insurer’s "Available Assets" (generally only the most liquid assets of an insurer) to equal or exceed its "Minimum Required Assets" (which are based on an insurer's book of risk in force, calculated from tables of factors with several risk dimensions, reduced for credit given for risk ceded under reinsurance transactions, and subject to a floor amount). Based on our interpretation of the PMIERs as of June 30, 2024, MGIC’s Available Assets totaled $5.8 billion, or $2.4 billion in excess of its Minimum Required Assets.

Current wording

The financial requirements of the PMIERs require a mortgage insurer’s "Available Assets" (generally only the most liquid assets of an insurer) to equal or exceed its "Minimum Required Assets" (which are generally based on an insurer's book of risk in force and calculated from tables of factors with several risk dimensions, reduced for credit given for risk ceded under reinsurance agreements). Based on our interpretation of the PMIERs as of September 30, 2024, MGIC’s Available Assets totaled $6.0 billion, or $2.5 billion in excess of its Minimum Required Assets. MGIC is in compliance with the PMIERs and eligible to insure loans purchased by the GSEs. In August 2024, the GSEs issued updates to the calculation of Available Assets. The update will be implemented through a 24-month phased-in approach, with a fully effective date of September 30, 2026. If these changes were effective as of September 30, 2024, without a graduated implementation period, MGIC's Available Assets of $6.0 billion would decrease by approximately 1% or $50 million, and MGIC's PMIERs excess would be $2.5 billion.

Previous wording

At June 30, 2024, MGIC’s risk-to-capital ratio was 10.0 to 1, below the maximum allowed by the jurisdictions with State Capital Requirements, and its policyholder position was $3.6 billion above the required MPP of $2.2 billion. The calculation of our risk-to-capital ratio and MPP reflect full credit for the risk ceded under our reinsurance transactions. It is possible that under the revised State Capital Requirements discussed below, MGIC will not be allowed full credit for the risk ceded under such transactions. If MGIC is not allowed an agreed level of credit under either the State Capital Requirements or the PMIERs, MGIC may terminate the reinsurance transactions, without penalty.

Current wording

At September 30, 2024, MGIC’s risk-to-capital ratio was 9.6 to 1, below the maximum allowed by the jurisdictions with State Capital Requirements, and its policyholder position was $3.9 billion above the required MPP of $2.2 billion. The calculation of our risk-to-capital ratio and MPP reflect full credit for the risk ceded under our reinsurance transactions. It is possible that under the revised State Capital Requirements discussed below, MGIC will not be allowed full credit for the risk ceded under such transactions. If MGIC is not allowed an agreed level of credit under either the State Capital Requirements or the PMIERs, MGIC may terminate the reinsurance transactions, without penalty.

Previous wording

The NAIC established a Mortgage Guaranty Insurance Working Group to determine and make recommendations to the NAIC’s Financial Condition Committee as to what, if any, changes to make to the solvency and other regulations relating to mortgage guaranty insurers. A draft of a revised Mortgage Guaranty Insurance Model Act was adopted by the Financial Condition Committee in July 2023 and by the Executive Committee and Plenary NAIC in August 2023. The revised Model Act includes requirements relating to, among other things: (i) capital and minimum capital requirements, and contingency reserves; (ii) restrictions on mortgage insurers’ investments in notes secured by mortgages; (iii) prudent underwriting standards and formal underwriting guidelines; (iv) the establishment of formal, internal “Mortgage Guaranty Quality Control Programs” with respect to in-force business; and (v) reinsurance and prohibitions on captive reinsurance arrangements. It is uncertain when the revised Model Act will be adopted in any jurisdiction. The provisions of the Model Act, if adopted in their final form, are not expected to have a material adverse effect on our business. It is unknown whether any changes will be made by state legislatures prior to adoption, and the effect changes, if any, will have on the mortgage guaranty insurance market generally, or on our business. Wisconsin, where MGIC is domiciled, has begun the process to replace current MI regulations with the Model Act, though it is expected that some changes will be made before final adoption.

Current wording

In 2023, the NAIC adopted a revised Mortgage Guaranty Insurance Model Act. The updated Model Act includes requirements relating to, among other things: (i) capital and minimum capital requirements, and contingency reserves; (ii) restrictions on mortgage insurers’ investments in notes secured by mortgages; (iii) prudent underwriting standards and formal underwriting guidelines; (iv) the establishment of formal, internal “Mortgage Guaranty Quality Control Programs” with respect to in-force business; and (v) reinsurance and prohibitions on captive reinsurance arrangements. It is uncertain when the revised Model Act will be adopted in any jurisdiction. The provisions of the Model Act, if adopted in their final form, are not expected to have a material adverse effect on our business. It is unknown whether any changes will be made by state legislatures prior to adoption, and the effect changes, if any, will have on the mortgage guaranty insurance market generally, or on our business. Wisconsin, where MGIC is domiciled, has begun the process to replace current MI regulations with the Model Act, though it is expected that some changes will be made before final adoption.

Previous wording

•NIW, which increases IIF. Many factors affect NIW, including the volume of low down payment home mortgage originations and competition to provide credit enhancement on those mortgages from the FHA, the VA, other mortgage insurers, and other alternatives to mortgage insurance, including GSE programs that may reduce or eliminate the demand for mortgage insurance. NIW does not include loans previously insured by us that are modified, such as loans modified under HARP.

Current wording

•NIW, which increases IIF. Many factors affect NIW, including the volume of low down payment home mortgage originations and competition to provide credit enhancement on those mortgages from the FHA, the VA, and other mortgage insurers. Other alternatives to mortgage insurance also impact NIW, including GSE programs that may reduce or eliminate the demand for mortgage insurance. NIW does not include loans previously insured by us that are modified, such as loans modified under HARP.

Previous wording

•Cancellations, which reduce IIF. Cancellations due to refinancings are affected by the level of current mortgage interest rates compared to the mortgage coupon rates throughout the in force book, current home values compared to values when the loans in the in force book were insured and the terms on which mortgage credit is available. Home price appreciation can give homeowners the right to cancel mortgage insurance on their loans if sufficient home equity is achieved. Cancellations also result from policy rescissions, which require us to return any premiums received on the rescinded policies and claim payments, which require us to return any premium received on the related policies from the date of default on the insured loans. Cancellations of single premium policies, which are generally non-refundable, result in immediate recognition of any remaining unearned premium.

Current wording

•Cancellations, which reduce IIF. Cancellations may occur when borrowers achieve the required amount of home equity through loan amortization, loan payoffs, or home price appreciation. Refinance-related cancellations are influenced by the level of current mortgage interest rates compared to the mortgage coupon rates throughout the in force book, current home values relative to values when the loans in the in force book were insured and the terms on which mortgage credit is available. Policy rescissions, also cause cancellations, requiring us to return any premiums received, from the date of default, on the rescinded policies and claim payments. Cancellations of single premium policies, which are generally non-refundable, result in immediate recognition of any remaining unearned premium.

Previous wording

•Premium rates, which are affected by product type, competitive pressures, the risk characteristics of the insured loans, the percentage of coverage on the insured loans, and PMIERs capital requirements. The substantial majority of our monthly and annual mortgage insurance premiums are under premium plans for which, for the first ten years of the policy, the amount of premium is determined by multiplying the initial premium rate by the original loan balance; thereafter, the premium rate resets to a lower rate used for the remaining life of the policy. The remainder of our monthly and annual premiums are under premium plans for which premiums are determined by a fixed percentage of the loan’s amortizing balance over the life of the policy.

Current wording

•Premium rates, which vary by product type, the risk characteristics of the insured loans, competitive pressures, the percentage of coverage on the insured loans, and PMIERs capital requirements. The substantial majority of our monthly and annual mortgage insurance premiums are under premium plans for which, for the first ten years of the policy, the amount of premium is determined by multiplying the initial premium rate by the original loan balance; thereafter, the premium rate resets to a lower rate used for the remaining life of the policy. The remainder of our monthly and annual premiums are under premium plans for which premiums are determined by a fixed percentage of the loan’s amortizing balance over the life of the policy.

Previous wording

•The distribution of claims over the life of a book. Historically, the first few years after loans are originated are a period of relatively low claims, with claims increasing substantially for several years subsequent and then declining, although annual persistency, the condition of the economy, including unemployment and housing prices, and other factors can affect this pattern. For example, a weak economy or housing value declines can lead to claims from older books increasing, continuing at stable levels or experiencing a lower rate of decline. See further information under “Mortgage insurance earnings and cash flow cycle” below.

Current wording

•The distribution of claims over the life of a book. Historically, the first few years after loans are originated are a period of relatively low claims, with claims increasing substantially for several years subsequent and then declining. Annual persistency, the condition of the economy, including unemployment and housing prices, and other factors can affect this pattern. For example, a weak economy or housing value declines can lead to claims from older books increasing, continuing at stable levels or experiencing a lower rate of decline. See further information under “Mortgage insurance earnings and cash flow cycle” below.

Previous wording

Interest expense reflects the interest associated with our consolidated outstanding debt obligations discussed in Note 3 - “Debt” to our consolidated financial statements and under“Liquidity and Capital Resources” below.

Current wording

Interest expense reflects the interest associated with our outstanding debt obligations discussed in Note 3 - “Debt” to our consolidated financial statements and under“Liquidity and Capital Resources” below.

Previous wording

NIW for the second quarter of 2024 was $13.5 billion (Q2 2023: $12.4 billion) and $22.6 billion for the six months ended June 30, 2024 (YTD June 30, 2023: $20.6 billion). The increase reflects a higher expected market position in the current year compared with the same period in the prior year. For the full year, we expect our 2024 NIW to be slightly higher than 2023.

Current wording

NIW for the third quarter of 2024 was $17.2 billion (Q3 2023: $14.6 billion) and $39.8 billion for the nine months ended September 30, 2024 (YTD September 30, 2023: $35.2 billion). The increase reflects a higher expected market position in the current year compared with the same period in the prior year. For the full year, we expect our 2024 NIW to be slightly higher than 2023.

Previous wording

The following tables present characteristics of our primary NIW for the three and six months ended June 30, 2024 and 2023.

Current wording

The following tables present characteristics of our primary NIW for the three and nine months ended September 30, 2024 and 2023.

Previous wording

The amount of our IIF and RIF is impacted by the amount of NIW and cancellations of primary IIF during the period. Cancellation activity primarily results from loan payoff and refinancing activity, or borrowers achieving the required amount of home equity through loan amortization, principal curtailment and/or home price appreciation. Claim resolutions also impact cancellations but to a much lesser extent. Cancellations generally move inversely to the change in the direction of interest rates, although they generally lag a change in direction.

Current wording

The amount of our IIF and RIF is impacted by the amount of NIW, cancellations, and principal payments received on our primary IIF during the period. Cancellation activity primarily results from loan payoff and refinancing activity, or borrowers achieving the required amount of home equity through loan amortization, principal curtailment and/or home price appreciation. Claim resolutions also impact cancellations but to a much lesser extent. Cancellations generally move inversely to the change in the direction of interest rates, although they generally lag a change in direction.

Previous wording

Our annual persistency was 85.4% at June 30, 2024 compared to 86.1% at December 31, 2023 and 85.9% at June 30, 2023. Since 2018, our annual persistency ranged from a high of 86.3% at September 30, 2023 to a low of 60.7% at March 31, 2021. Our persistency rate is primarily affected by the level of current mortgage interest rates compared to the mortgage coupon rates on our IIF, which affects the vulnerability of the IIF to refinancing; and the current amount of equity that borrowers have in the homes underlying our IIF.

Current wording

Our annual persistency was 85.3% at September 30, 2024 compared to 86.1% at December 31, 2023 and 86.3% at September 30, 2023. Since 2018, our annual persistency ranged from a high of 86.3% at September 30, 2023 to a low of 60.7% at March 31, 2021. Our persistency rate is primarily affected by the level of current mortgage interest rates compared to the mortgage coupon rates on our IIF, which affects the vulnerability of the IIF to refinancing; and the current amount of equity that borrowers have in the homes underlying our IIF.

Previous wording

Our 2009 and later books possess significantly improved risk characteristics when compared to our 2005-2008 books. Modification and refinance programs, such as HAMP and HARP, which expired at the end of 2016 and 2018, respectively, but have been replaced by other GSE modification programs, make outstanding loans more affordable to borrowers with the goal of reducing the number of foreclosures. As of June 30, 2024, loans associated with modification programs accounted for 3.4% of our total RIF, compared to 3.6% at December 31, 2023. Loans associated with 88.3% of all our modifications were current as of June 30, 2024.

Current wording

Our 2009 and later books possess significantly improved risk characteristics when compared to our 2005-2008 books. Modification and refinance programs, such as HAMP and HARP, which expired at the end of 2016 and 2018, respectively, but have been replaced by other GSE modification programs, make outstanding loans more affordable to borrowers with the goal of reducing the number of foreclosures. As of September 30, 2024, loans associated with modification programs accounted for 3.1% of our total RIF, compared to 3.6% at December 31, 2023. Loans associated with 87.7% of all our modifications were current as of September 30, 2024.

Previous wording

MGIC has written no new pool insurance since 2008; however, for a variety of reasons, including responding to capital market alternatives to PMI and customer demands, MGIC may write pool risk in the future. Our direct pool risk in force was $233 million ($179 million on pool policies with aggregate loss limits and $54 million on pool policies without aggregate loss limits) at June 30, 2024 compared to $256 million ($186 million on pool policies with aggregate loss limits and $70 million on pool policies without aggregate loss limits) at December 31, 2023. If claim payments associated with a specific pool reach the aggregate loss limit, the remaining IIF within the pool would be cancelled and any remaining delinquencies under the pool would be removed from our delinquency inventory.

Current wording

MGIC has written no new pool insurance since 2008; however, for a variety of reasons, including responding to capital market alternatives to PMI and customer demands, MGIC may write pool risk in the future. Our direct pool risk in force was $230 million ($178 million on pool policies with aggregate loss limits and $52 million on pool policies without aggregate loss limits) at September 30, 2024 compared to $256 million ($186 million on pool policies with aggregate loss limits and $70 million on pool policies without aggregate loss limits) at December 31, 2023. If claim payments associated with a specific pool reach the aggregate loss limit, the remaining IIF within the pool would be cancelled and any remaining delinquencies under the pool would be removed from our delinquency inventory.

Previous wording

In connection with the GSEs' CRT programs, an insurance subsidiary of MGIC provides insurance and reinsurance covering portions of the credit risk related to certain reference pools of mortgages acquired by the GSEs. Our RIF, as reported to us, related to these programs was approximately $389 million and $310 million as of June 30, 2024 and December 31, 2023, respectively.

Current wording

In connection with the GSEs' CRT programs, an insurance subsidiary of MGIC provides insurance and reinsurance covering portions of the credit risk related to certain reference pools of mortgages acquired by the GSEs. Our RIF, as reported to us, related to these programs was approximately $393 million and $310 million as of September 30, 2024 and December 31, 2023, respectively.

Previous wording

The following section of the MD&A provides a comparative discussion of MGIC Investment Corporation’s Consolidated Results of Operations for the three and six months ended June 30, 2024 and 2023.

Current wording

The following section of the MD&A provides a comparative discussion of MGIC Investment Corporation’s Consolidated Results of Operations for the three and nine months ended September 30, 2024 and 2023.

Previous wording

Premiums earned for the three and six months ended June 30, 2024 were $243.5 million and $486.2 million, respectively, compared with $242.8 million and $484.8 million, for the same periods last year. Net premiums written for three and six months ended June 30, 2024 were $233.5 million and $467.3 million, respectively, compared with $231.2 million and $461.4 million, respectively, for the same periods last year.

Current wording

Premiums earned for the three and nine months ended September 30, 2024 were $243.3 million and $729.5 million, respectively, compared with $241.3 million and $726.1 million, for the same periods last year. Net premiums written for three and nine months ended September 30, 2024 were $234.0 million and $701.3 million, respectively, compared with $234.5 million and $695.9 million, respectively, for the same periods last year.

Previous wording

Net premium yield is net premiums earned divided by average IIF during the period. The following table presents the key drivers of our net premium yield for each of the three and six months ended June 30, 2024 and June 30, 2023.

Current wording

Net premium yield is net premiums earned divided by average IIF during the period. The following table presents the key drivers of our net premium yield for each of the three and nine months ended September 30, 2024 and September 30, 2023.

Previous wording

(2) Assumed premiums include those from our participation in GSE CRT programs, of which the impact on the net premium yield was 0.5 bps for the six months ended June 30, 2024 compared to 0.4 bps for the six months ended June 30, 2023.

Current wording

(3) Assumed premiums include those from our participation in GSE CRT programs, of which the impact on the net premium yield was 0.5 bps for the nine months ended September 30, 2024 compared to 0.4 bps for the nine months ended September 30, 2023.

Previous wording

The following table provides information related to our QSR Transactions for each of the three and six months ended and as of June 30, 2024 and June 30, 2023.

Current wording

The following table provides information related to our QSR Transactions for each of the three and nine months ended and as of September 30, 2024 and September 30, 2023.

Previous wording

The decrease in profit commission was primarily driven by a decrease in the percentage of our IIF covered by the QSR Transactions as discussed below and an increase in ceded losses incurred. Ceded losses incurred are impacted by the delinquencies covered by our QSR Transactions, our estimates of payments that will be ultimately made on those delinquencies, and claim payments covered by our QSR Transactions.

Current wording

The decrease in profit commission for the nine months ended September 30, 2024, was primarily driven by a decrease in the percentage of our IIF covered by the QSR Transactions as discussed below and an increase in ceded losses incurred. Ceded losses incurred are impacted by the delinquencies covered by our QSR Transactions, our estimates of payments that will be ultimately made on those delinquencies, and claim payments covered by our QSR Transactions.

Previous wording

We terminated our 2020 QSR Transaction effective December 31, 2023.

Current wording

We terminated our 2020 QSR Transaction effective December 31, 2023. We have elected to terminate our 2021 QSR transaction effective December 31, 2024, and we expect to incur an early termination fee in the fourth quarter of approximately $8 million.

Previous wording

The Home Re Transactions are executed through the issuance of insurance linked notes (“ILNs”). As of June 30, 2024 our Home Re Transactions provided $1.0 billion of loss coverage on a portfolio of policies having an in force date from July 1, 2016 through March 31, 2019, from August 1, 2020 through December 31, 2021, and from June 1, 2022 through August 31, 2023; all dates inclusive. For this reinsurance coverage, we retain the first layer of the respective aggregate losses paid, and a Home Re Entity will then provide second layer coverage up to the outstanding reinsurance amount.

Current wording

The Home Re Transactions are executed through the issuance of insurance linked notes (“ILNs”). As of September 30, 2024 our Home Re Transactions provided 0.9 billion of loss coverage on a portfolio of policies having an in force date from January 1, 2018 through March 31, 2019, from August 1, 2020 through December 31, 2021, and from June 1, 2022 through August 31, 2023; all dates inclusive. For this reinsurance coverage, we retain the first layer of the respective aggregate losses paid, and a Home Re Entity will then provide second layer coverage up to the outstanding reinsurance amount.

Previous wording

In January 2024, we exercised our optional call feature to terminate the reinsurance agreement with Home Re 2020-1, Ltd. In connection with the termination, the insurance linked notes issued by Home Re 2020-1 Ltd. were redeemed in full.

Current wording

In January and September 2024, we exercised our optional call feature to terminate the reinsurance agreement with Home Re 2020-1, Ltd. and Home Re 2018-1, Ltd., respectively. In connection with the termination, the insurance linked notes issued by Home Re 2020-1, Ltd. and Home Re 2018-1, Ltd. were redeemed in full.

Previous wording

Ceded premiums on our XOL Transactions were $16.6 million and $32.7 million, respectively, for the three and six months ended June 30, 2024, and $17.4 million and $34.4 million, respectively, for the three and six months ended June 30, 2023.

Current wording

Ceded premiums on our XOL Transactions were $16.9 million and $49.6 million, respectively, for the three and nine months ended September 30, 2024, and $17.5 million and $51.8 million, respectively, for the three and nine months ended September 30, 2023.

Previous wording

Net investment income in the three months ended June 30, 2024 and 2023 was $61.5 million and $52.3 million, respectively. Net investment income for the six months ended June 30, 2024 and 2023, was $121.2 million and $101.6 million, respectively. The increase in net investment income was primarily due to an increase of approximately 52 and 55 basis points in the average investment yields three and six months ended June 30, 2024, respectively.

Current wording

Net investment income in the three months ended September 30, 2024 and 2023 was $62.1 million and $55.4 million, respectively. Net investment income for the nine months ended September 30, 2024 and 2023, was $183.3 million and $156.9 million, respectively. The increase in net investment income was primarily due to an increase of approximately 38 and 49 basis points in the average investment yields three and nine months ended September 30, 2024, respectively.