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 first quarter of 2026. 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, 2025. 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” above, 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 second quarter of 2026. 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, 2025. 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” above, and they are an integral part of the MD&A.

Previous wording

As of March 31, 2026, we had $302.7 billion of primary insurance in force and $81.2 billion of primary risk in force.

Current wording

As of June 30, 2026, we had $304.8 billion of primary insurance in force and $81.8 billion of primary risk in force.

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 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 and subject to a floor amount). Based on our application of the PMIERs as of March 31, 2026, MGIC’s Available Assets totaled $5.8 billion, or $2.9 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 and subject to a floor amount). Based on our application of the PMIERs as of June 30, 2026, MGIC’s Available Assets totaled $5.6 billion, or $2.7 billion in excess of its Minimum Required Assets.

Previous wording

As of March 31, 2026, 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 $3.8 billion above the required MPP of $2.1 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

As of June 30, 2026, MGIC’s risk-to-capital ratio was 9.9 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 $2.1 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 product mix of the in force book, with loans having higher risk characteristics generally resulting in higher delinquencies and claims.

Current wording

•The mix of the in force book, with loans having higher risk characteristics generally resulting in higher delinquencies and claims.

Previous wording

NIW for the first quarter of 2026 was $14.4 billion (Q1 2025: $10.2 billion). The increase for the three months ended March 31, 2026 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 2026 NIW to remain relatively flat compared with 2025.

Current wording

NIW for the second quarter of 2026 was $17.8 billion (Q2 2025: $16.4 billion) and $32.2 billion for the six months ended June 30, 2026 (YTD June 30, 2025: $26.6 billion). The increase for the six months ended June 30, 2026 reflects a larger expected purchase origination market. We expect our full-year 2026 NIW to remain relatively flat compared with 2025.

Previous wording

The following tables provide information about loan characteristics associated with our NIW for the periods indicated.

Current wording

The following tables provide information about loan risk characteristics associated with our NIW for the periods indicated.

Previous wording

(1)Cede Rate % is calculated as the risk in force ceded to our QSR Transactions divided by the total risk in force.

Current wording

(1)Cede Rate % is calculated as the risk in force ceded to our QSR Transactions divided by the total direct primary risk in force.

Previous wording

Our Annual Persistency was 84.0% at March 31, 2026 compared with 84.7% at March 31, 2025. 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 83.3% at June 30, 2026 compared with 84.7% at June 30, 2025. 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

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 $478 million and $482 million as of March 31, 2026 and December 31, 2025, 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 $495 million and $482 million as of June 30, 2026 and December 31, 2025, 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 months ended March 31, 2026 and 2025.

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 six months ended June 30, 2026 and 2025.

Previous wording

The decrease in net income is primarily due to an increase in losses incurred, net and a decrease in net premiums earned, partially offset by a decrease in underwriting and other expenses, net and a decrease in the provision for income taxes. Diluted income per share increased primarily due to a decrease in the number of diluted weighted shares outstanding partially offset by a decrease in net income.

Current wording

The decrease in net income and adjusted net operating income for the three and six months ended June 30, 2026, is primarily due to an increase in losses incurred, net and a decrease in net premiums earned, partially offset by a decrease in underwriting and other expenses, net and a decrease in the provision for income taxes. Diluted income per share and adjusted operating income per diluted share increased primarily due to decreases in the number of diluted weighted shares outstanding partially offset by decreases in net income.

Previous wording

Net premiums earned for the three months ended March 31, 2026 decreased to $235.4 million from $243.7 million during the same period in the prior year. The decrease was primarily driven by an increase in ceded premiums written.

Current wording

The decrease in net premiums earned for the three and six months ended June 30, 2026, was primarily driven by an increase in ceded premiums written.

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 months ended March 31, 2026 and March 31, 2025.

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 six months ended June 30, 2026 and June 30, 2025.

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 both the three months ended March 31, 2026 and March 31, 2025.

Current wording

(2) Assumed premiums include those from our participation in GSE CRT programs, of which the impact on the net premium yield was 0.4 bps and 0.5 bps for the six months ended June 30, 2026 and June 30, 2025, respectively.

Previous wording

Ceded premiums on our XOL Transactions were $17.8 million for the three months ended March 31, 2026, and $14.7 million for the three months ended March 31, 2025.

Current wording

Ceded premiums on our XOL Transactions were $16.3 million and $34.1 million for the three and six months ended June 30, 2026, and $15.4 million and $30.1 million for the three and six months ended June 30, 2025.

Previous wording

The increase in current year losses incurred for the three months ended March 31, 2026 compared with the same period in the prior year is primarily due to an increase in new delinquencies reported and an increase in estimated severity on current year delinquencies.

Current wording

The increase in current year losses incurred for the three and six months ended June 30, 2026 compared with the same periods in the prior year is primarily due to an increase in new delinquencies reported and an increase in estimated severity on current year delinquencies.

Previous wording

A rollforward of our primary delinquency inventory for the three months ended March 31, 2026 and 2025 appears in the table below. The information concerning new notices and cures is compiled from monthly reports received from loan servicers. The level of new notice and cure activity reported in a particular month can be influenced by, among other things, the date on which a servicer generates its report, the number of business days in a month and transfers of servicing between loan servicers.

Current wording

A rollforward of our primary delinquency inventory for the three and six months ended June 30, 2026 and 2025 appears in the table below. The information concerning new notices and cures is compiled from monthly reports received from loan servicers. The level of new notice and cure activity reported in a particular month can be influenced by, among other things, the date on which a servicer generates its report, the number of business days in a month and transfers of servicing between loan servicers.

Previous wording

The majority of loans insured prior to 2014 (which represent 24% of the loans in the delinquency inventory) are covered by master policy terms that, except under certain circumstances, do not limit the number of years that an insured can include interest when filing a claim. Under our current master policy terms, an insured can include accumulated interest when filing a claim only for the first three years the loan is delinquent. In each case, the insured must comply with its obligations under the terms of the applicable master policy.

Current wording

The majority of loans insured prior to 2014 (which represent 23% of the loans in the delinquency inventory) are covered by master policy terms that, except under certain circumstances, do not limit the number of years that an insured can include interest when filing a claim. Under our current master policy terms, an insured can include accumulated interest when filing a claim only for the first three years the loan is delinquent. In each case, the insured must comply with its obligations under the terms of the applicable master policy.

Previous wording

(1)Approximately 22%, 22%, and 26% of the primary delinquency inventory delinquent for 12 consecutive months or more has been delinquent for at least 36 consecutive months as of March 31, 2026, December 31, 2025, and March 31, 2025, respectively.

Current wording

(1)Approximately 21%, 22%, and 24% of the primary delinquency inventory delinquent for 12 consecutive months or more has been delinquent for at least 36 consecutive months as of June 30, 2026, December 31, 2025, and June 30, 2025, respectively.

Previous wording

(1)Approximately 16%, 16%, and 22% of the primary delinquency inventory with 12 payments or more delinquent has at least 36 payments delinquent as of March 31, 2026, December 31, 2025, and March 31, 2025, respectively.

Current wording

(1)Approximately 14%, 16%, and 20% of the primary delinquency inventory with 12 payments or more delinquent has at least 36 payments delinquent as of June 30, 2026, December 31, 2025, and June 30, 2025, respectively.

Previous wording

The increase in net losses and LAE paid during the three months ended March 31, 2026 when compared with the same period in the prior year was primarily driven by an increase in our claims received along with an increase average claim paid. The primary average claim paid can vary materially from period to period based upon a variety of factors, including the local market conditions, average loan amount, average coverage percentage, the amount of time between delinquency and claim filing, and our loss mitigation efforts on loans for which claims are paid. Home price appreciation and pre-claim third-party sales have mitigated net losses and LAE in recent years; however, the positive impact of both factors has moderated relative to prior years. We expect net losses and LAE paid to increase; however, the magnitude and timing of their increase is uncertain.

Current wording

The increase in net losses and LAE paid during the three and six months ended June 30, 2026 when compared with the same periods in the prior year was primarily driven by an increase in our claims received along with an increase in the average claim paid. The primary average claim paid can vary materially from period to period based upon a variety of factors, including the local market conditions, average loan amount, average coverage percentage, the amount of time between delinquency and claim filing, and our loss mitigation efforts on loans for which claims are paid. Home price appreciation and pre-claim third-party sales have mitigated net losses and LAE in recent years; however, the positive impact of both factors has moderated relative to prior years. We expect net losses and LAE paid to increase; however, the magnitude and timing of their increase is uncertain.

Previous wording

The primary average RIF on all loans was $73,318, $72,995, and $70,973 at March 31, 2026, December 31, 2025, and March 31, 2025, respectively.

Current wording

The primary average RIF on all loans was $73,990, $72,995, and $71,741 at June 30, 2026, December 31, 2025, and June 30, 2025, respectively.

Previous wording

Generally, on our primary business, the third and fourth year after loan origination have been periods with the highest level of new delinquency notices. Factors such as Annual Persistency and deteriorating economic conditions can impact the level and frequency of new notices we receive during a given period. As of March 31, 2026, 46% of our primary RIF was written subsequent to December 31, 2022, 63% of our primary RIF was written subsequent to December 31, 2021, and 81% of our primary RIF was written subsequent to December 31, 2020.

Current wording

Generally, on our primary business, the third and fourth year after loan origination have been periods with the highest level of new delinquency notices. Factors such as Annual Persistency and economic conditions can impact the level and frequency of new notices we receive during a given period. As of June 30, 2026, 50% of our primary RIF was written subsequent to December 31, 2022, 66% of our primary RIF was written subsequent to December 31, 2021, and 83% of our primary RIF was written subsequent to December 31, 2020.

Previous wording

Underwriting and other expenses, net for the three months ended March 31, 2026 were $48.1 million compared with $53.1 million for the three months ended March 31, 2025. The decrease was primarily due to a decrease in outside service expenses. See Note 14 - “Segment Reporting,” to our consolidated financial statements for additional discussion of significant segment expenses.

Current wording

Underwriting and other expenses, net for the three and six months ended June 30, 2026 were $45.6 million and $93.7 million, respectively, compared with $52.1 million and $105.2 million for the three and six months ended June 30, 2025. The decreases were primarily attributable to a decrease in outside service expenses and employee costs. See Note 14 - “Segment Reporting,” to our consolidated financial statements for additional discussion of significant segment expenses.

Previous wording

The underwriting expense ratio is the ratio, expressed as a percentage, of the underwriting and operating expenses, net and amortization of DAC to net premiums written. The underwriting expense ratio for the three months ended March 31, 2026, decreased compared with the same period in the prior year primarily due to a decrease in underwriting and other expenses, net.

Current wording

The underwriting expense ratio is the ratio, expressed as a percentage, of the underwriting and operating expenses, net and amortization of DAC to net premiums written. The underwriting expense ratio for the three and six months ended June 30, 2026, decreased compared with the same periods in the prior year primarily due to a decrease in underwriting and other expenses, net.

Previous wording

The decrease in our provision for income taxes in the first quarter of 2026 as compared to the same period in the prior year was primarily due to a decrease in income before tax. The difference between our statutory tax rate of 21% and our effective tax rate of 20.1% for the three months ended March 31, 2026, was primarily due to the tax benefits recognized from the purchase of transferable federal tax credits. Our effective tax rate for the three months ended March 31, 2025, approximated the federal statutory income tax rate of 21%.

Current wording

The decrease in our provision for income taxes in the three and six months ended June 30, 2026 as compared to the same periods in the prior year was primarily due to a decrease in income before tax. Our effective tax rate for the three and six months ended June 30, 2026 and 2025, approximated the federal statutory income tax rate of 21%.

Previous wording

Cash and Cash Equivalents -Our cash and cash equivalents balance decreased to $235.1 million as of March 31, 2026, from $369.0 million as of December 31, 2025, as cash used in financing activities was only partially offset by net cash generated from operating and investing activities.

Current wording

Cash and Cash Equivalents -Our cash and cash equivalents balance decreased to $207.3 million as of June 30, 2026, from $369.0 million as of December 31, 2025, as cash used in financing activities was only partially offset by net cash generated from operating and investing activities.

Previous wording

Loss Reserves and Reinsurance Recoverable on Loss Reserves - Our loss reserves include estimates of losses and settlement expenses on (1) loans in our delinquency inventory (known as case reserves), (2) IBNR delinquencies, and (3) LAE. Our gross reserves are reduced by reinsurance recoverable on loss reserves to calculate a net reserve balance. Reinsurance recoverables on loss reserves were $73.2 million and $65.1 million as of March 31, 2026 and December 31, 2025, respectively. The reinsurance recoverable is impacted by the mix of delinquencies covered by our QSR Transactions. The increase in loss reserves, net of reinsurance recoverable, is primarily due to loss reserves established on new notices partially offset by favorable development on previously received delinquencies. See Note 8 - “Loss Reserves,” to our consolidated financial statements for additional information on the composition of our loss reserves.

Current wording

Loss Reserves and Reinsurance Recoverable on Loss Reserves - Our loss reserves include estimates of losses and settlement expenses on (1) loans in our delinquency inventory (known as case reserves), (2) IBNR delinquencies, and (3) LAE. Our gross reserves are reduced by reinsurance recoverable on loss reserves to calculate a net reserve balance. Reinsurance recoverables on loss reserves were $76.1 million and $65.1 million as of June 30, 2026 and December 31, 2025, respectively. The reinsurance recoverable is impacted by the mix of delinquencies covered by our QSR Transactions. The increase in loss reserves, net of reinsurance recoverable, is primarily due to loss reserves established on new notices partially offset by favorable development on previously received delinquencies. See Note 8 - “Loss Reserves,” to our consolidated financial statements for additional information on the composition of our loss reserves.

Previous wording

Federal Tax Credit Payable - The decrease in the federal tax credit payable in the three months ended March 31, 2026, is primarily due to payments made to third parties for amounts owed in connection with transferrable federal tax credits.

Current wording

Federal Tax Credit Payable - We have purchased transferable federal tax credits from third parties. The increase to the federal tax credit payable during the six months ended June 30, 2026, is primarily due to the purchase of additional tax credits, partially offset by the payment for amounts owed for tax credits.

Previous wording

The decrease in net cash provided by operating activities for the three months ended March 31, 2026 was primarily due to cash paid to third parties for the purchase of transferrable federal tax credits, a decrease in premiums received, and an increase in losses paid, partially offset by a decrease in underwriting expenses.

Current wording

The decrease in net cash provided by operating activities for the six months ended June 30, 2026 was primarily due to cash paid to third parties for the purchase of transferrable federal tax credits, a decrease in premiums received, and an increase in losses paid, partially offset by a decrease in underwriting expenses.

Previous wording

Net cash provided by investing activities for the three months ended March 31, 2026 and 2025, primarily reflects sales and maturities of fixed income securities that exceeded purchases of fixed income securities during the period.

Current wording

Net cash provided by investing activities for the six months ended June 30, 2026 and 2025, primarily reflects sales and maturities of fixed income securities that exceeded purchases of fixed income securities during the period.

Previous wording

Net cash used in financing activities for the three months ended March 31, 2026 and 2025, primarily reflects repurchases of our common stock, dividends to shareholders, and the payment of withholding taxes related to share-based compensation net share settlement.

Current wording

Net cash used in financing activities for the six months ended June 30, 2026 and 2025, primarily reflects repurchases of our common stock, dividends to shareholders, and the payment of withholding taxes related to share-based compensation net share settlement.

Previous wording

We also have purchase obligations totaling approximately $17.6 million which consist primarily of contracts related to our continued investment in our information technology infrastructure in the normal course of business. The majority of these obligations are under contracts that give us cancellation rights with notice. In the next twelve months we anticipate we will pay approximately $10.8 million for our purchase obligations.

Current wording

We also have purchase obligations totaling approximately $20.3 million which consist primarily of contracts related to our continued investment in our information technology infrastructure in the normal course of business. The majority of these obligations are under contracts that give us cancellation rights with notice. In the next twelve months we anticipate we will pay approximately $12.8 million for our purchase obligations.

Previous wording

As of March 31, 2026 and December 31, 2025, we had approximately $0.7 billion and $1.1 billion, respectively, in cash and investments at our holding company. These resources are maintained primarily to service our debt interest expense, pay debt maturities, repurchase shares, pay dividends to shareholders, and to settle intercompany obligations. While these assets are held, we generate investment income that serves to offset a portion of our cash requirements. The payment of dividends from MGIC are the principal source of holding company cash inflow and their payment is restricted by insurance regulation. See Note 13 - “Statutory Information” to our consolidated financial statements for additional information about MGIC’s dividend restrictions. The payment of dividends from MGIC is also influenced by our view of the appropriate level of excess PMIERs Available Assets to maintain, which can change over time. Raising capital in the public markets is another potential source of holding company liquidity. The ability to raise capital in the public markets is subject to prevailing market conditions, investor demand for the securities to be issued, and our deemed creditworthiness.

Current wording

As of June 30, 2026 and December 31, 2025, we had approximately $0.9 billion and $1.1 billion, respectively, in cash and investments at our holding company. These resources are maintained primarily to service our debt interest expense, pay debt maturities, repurchase shares, pay dividends to shareholders, and to settle intercompany obligations. While these assets are held, we generate investment income that serves to offset a portion of our cash requirements. The payment of dividends from MGIC are the principal source of holding company cash inflow and their payment is restricted by insurance regulation. See Note 13 - “Statutory Information” to our consolidated financial statements for additional information about MGIC’s dividend restrictions. The payment of dividends from MGIC is also influenced by our view of the appropriate level of excess PMIERs Available Assets to maintain, which can change over time. Raising capital in the public markets is another potential source of holding company liquidity. The ability to raise capital in the public markets is subject to prevailing market conditions, investor demand for the securities to be issued, and our deemed creditworthiness.

Previous wording

During the three months ended March 31, 2026 we repurchased 7.2 million shares for $192.6 million. Through April 24, 2026, we repurchased an additional 1.7 million shares for $47.4 million inclusive of commissions. Also, in April 2026, our Board of Directors approved a share repurchase program, authorizing us to purchase an additional $750 million of common stock prior to December 31, 2028.

Current wording

During the six months ended June 30, 2026 we repurchased 13.8 million shares for $369.2 million. Through July 24, 2026, we repurchased an additional 1.5 million shares for $42.4 million inclusive of commissions.

Previous wording

We paid dividends of $0.15 to shareholders in the first quarter of 2026. On April 23, 2026, the Board of Directors declared a quarterly cash dividend to the holders of the company’s common stock of $0.15 per share to shareholders of record on May 6, 2026. See Note 12 - “Shareholders’ Equity” to our consolidated financial statements for additional information on our share repurchase programs as well as dividends paid to shareholders.

Current wording

We paid dividends of $0.15 to shareholders in the first and second quarter of 2026. On July 23, 2026, the Board of Directors declared a quarterly cash dividend to the holders of the company’s common stock of $0.17 per share to shareholders of record on August 5, 2026. See Note 12 - “Shareholders’ Equity” to our consolidated financial statements for additional information on our share repurchase programs as well as dividends paid to shareholders.

Previous wording

Significant cash and investments inflows at our holding company during the three months ended March 31, 2026:

Current wording

Significant cash and investments inflows at our holding company during the six months ended June 30, 2026:

Previous wording

Significant cash outflows at our holding company during the three months ended March 31, 2026:

Current wording

Significant cash outflows at our holding company during the six months ended June 30, 2026:

Previous wording

•$192.4 million of net share repurchase transactions,

Current wording

•$377.1 million of net share repurchase transactions,