MGIC Investment (MTG) Financials

MGIC Investment (NYSE: MTG) has demonstrated stable and consistent financial performance over the last four years through Q1 2025. Key metrics from quarterly income statements, cash flow statements, and balance sheets reveal trends in revenue, expenses, cash generation, and capital management indicative of its operational strength as a mortgage insurer.

Positive Developments:

• Steady growth in premiums earned, with Q1 2025 premiums at approximately $244 million, up slightly from prior quarters and years, indicating stable underwriting activity.
• Robust net realized and unrealized capital gains, reaching $61.4 million in Q1 2025, showing effective deployment of investment assets to support earnings.
• Consistently strong net income, exemplified by $185 million in Q1 2025, maintaining profitability across quarters with positive EPS growth (Q1 2025 diluted EPS at $0.75 vs. $0.64-0.77 in prior quarters).
• Operating cash flow remains strong and growing, with Q1 2025 net cash from operating activities totaling over $223 million, supporting business operations and capital return initiatives.
• Balance sheet strength is maintained with total assets around $6.5 billion and common equity of approximately $5.1 billion as of Q1 2025, ensuring capital adequacy and regulatory compliance.
• Repeatable return of capital to shareholders through dividends and share repurchases, with dividends per share steady or growing over the periods and common stock repurchased regularly (e.g., $225 million repurchased in Q1 2025).
• Declining long-term debt interest expense stabilization around $8.9 million per quarter, reflecting manageable financing costs amid debt levels of approximately $645 million.

Neutral Observations:

• Interest income remains zero in the reported periods, consistent with the nature of the mortgage insurance business not relying on interest income but gross premiums and investment returns.
• Volume of trading account securities fluctuates with market conditions, valued around $5.9-6 billion, influencing unrealized investment gains but also exposing the company to market risk.
• Stable insurance policy acquisition and amortization costs averaging $51-59 million and $1.6-3.5 million respectively per quarter, reflecting ongoing investment in customer acquisition and intangibles amortization.

Negative or Concerning Trends:

• Property and liability insurance claims show some volatility quarter over quarter, with increases noted in Q1 2024 ($45.5 million) and Q2 2024 ($18.3 million negative value reflecting expense), highlighting potential underwriting risk.
• Cash and equivalents decreased in recent quarters from $431 million at Q1 2024 down to about $207 million in Q1 2025, suggesting liquidity pressure or capital employed in investment/security purchases and share repurchases.
• Non-interest expenses, while mostly stable, have variation with upward trends in claims and acquisition costs affecting margins; Q1 2025 non-interest expenses exhibit a $62.7 million total, higher than several prior quarters.
• Declining accumulated other comprehensive income/loss (AOCI) from nearly -$496 million in Q3 2023 to approx. -$236 million in Q1 2025 implies some market-related unrealized loss volatility on equity.

Summary:

Overall, MGIC Investment has maintained solid revenue growth, high and stable profitability, strong operating cash flow, and a fortified capital base over the recent four years. Investment gains have enhanced earnings, though some pressure from insurance claims and cash balance declines warrant monitoring. The company's strategic capital return programs and expense management demonstrate discipline and shareholder focus. For retail investors, the consistent earnings and robust balance sheet alongside controlled leverage make MTG a financially stable entity with exposure to mortgage market dynamics and investment environments.