MGIC Investment (MTG) Financials

MGIC Investment’s financial statements show a highly profitable company with strong recurring operating cash flow, but earnings and capital levels have softened from their 2024 highs. The latest quarter also highlights the importance of share repurchases to per-share results, as diluted shares outstanding have fallen substantially.

• Profitability remains strong. Q2 2026 net income was $182.1 million, or $0.86 per diluted share. Although earnings declined from Q2 2025, MTG has remained consistently profitable across the reported periods, with quarterly net income generally ranging from approximately $165 million to $204 million since early 2024.
• Operating cash flow continues to cover capital returns. Q2 2026 operating cash flow was $185.0 million, up slightly from $183.0 million in Q2 2025. This comfortably funded $184.7 million of share repurchases and $31.6 million of dividends when considered alongside the company’s liquid investment portfolio.
• Share repurchases are materially supporting EPS. Diluted shares outstanding fell to 210.9 million in Q2 2026 from 238.0 million in Q2 2025 and 263.995 million in Q4 2024. The lower share count helped lift diluted EPS to $0.86 from $0.81 year over year, despite lower net income.
• Premium income remains relatively resilient. Q2 2026 premiums earned were $238.1 million, only modestly below $244.3 million in Q2 2025. Premiums have remained above $235 million in each of the reported 2025 and 2026 quarters, indicating a relatively stable core insurance revenue stream.
• Claims costs improved sequentially. Property and liability insurance claims declined to $11.0 million in Q2 2026 from $33.2 million in Q1 2026. This improvement helped reduce total non-interest expense to $56.6 million from $81.4 million sequentially and supported the quarter’s stronger net income.
• Debt has been stable. Long-term debt was $646.9 million at June 30, 2026, broadly unchanged from $645.4 million in Q2 2025 and $643.6 million in Q1 2024. The company has not meaningfully increased debt while continuing to return capital to shareholders.
• Investment liquidity remains substantial. Trading account securities totaled $5.72 billion at the end of Q2 2026, representing the majority of MTG’s $6.53 billion asset base. Investment purchases and sales were also closely balanced during the quarter, suggesting active portfolio management rather than a large net liquidation.

There are also several areas investors should monitor. Q2 2026 revenue declined to $295.4 million from $304.2 million in the restated Q2 2025 results, while pretax income fell to $229.9 million from $246.1 million. The company’s results also include meaningful investment gains, which can fluctuate with market conditions.

• Investment gains remain an important earnings contributor. Net realized and unrealized investment gains were $59.5 million in Q2 2026, equal to roughly one-fifth of total revenue. Gains have been relatively consistent in recent quarters, but they are market-sensitive and may not be as dependable as premium income.
• Cash balances have declined as capital returns accelerated. Cash and restricted cash totaled $215.1 million at June 30, 2026, down from $298.9 million a year earlier. This decline coincided with $184.7 million of quarterly repurchases and $31.6 million of dividends, although MTG still holds a large portfolio of investment securities.
• Reported historical figures include restatements and calculated periods. Several 2024 and 2025 income and cash-flow figures were restated in later filings, and some quarterly statements are identified as calculated rather than reported. Investors should rely on the latest restated comparisons when assessing long-term trends.

• Year-over-year earnings are weakening. Q2 2026 net income fell 5.4% from $192.5 million in restated Q2 2025, while pretax income declined 6.6%. Total revenue decreased 2.9%, suggesting that operating momentum has moderated despite continued profitability.
• Equity has contracted while liabilities have increased. Total common equity declined to $5.01 billion at June 30, 2026, from $5.15 billion a year earlier, while total liabilities rose to $1.51 billion from $1.39 billion. This reduced the equity cushion and pushed liabilities to approximately 30% of equity, compared with about 27% one year earlier.
• Core cash has trended lower over the longer period. Cash and due from banks declined from $431.3 million in Q1 2024 to $207.3 million in Q2 2026. Although MTG’s securities portfolio provides significant liquidity, the decline in immediately available cash reflects the company’s aggressive buyback and dividend program.
• Capital returns can exceed quarterly free cash generation. In Q2 2026, repurchases and dividends totaled $216.3 million, exceeding operating cash flow of $185.0 million. The difference was funded through existing cash and investment-portfolio activity, which could become less flexible if earnings or investment values weaken.
• Insurance claims can be volatile. Claims expense was $11.0 million in Q2 2026, but it reached $33.2 million in Q1 2026 and $109.9 million in the restated Q2 2025 presentation. This variability can materially affect quarterly earnings and makes individual-quarter comparisons less predictable.

Overall, MTG retains a strong balance sheet relative to its debt, recurring premium income and substantial investment liquidity. However, the recent decline in revenue, equity and cash balances means investors should determine whether aggressive repurchases are sustainable without weakening financial flexibility.