Breaking Down MGIC Investment Corporation (MTG) Financial Health: Key Insights for Investors

You're looking at MGIC Investment Corporation (MTG) right now, trying to reconcile a strong bottom line with a slightly softer top-line figure, and honestly, that's the right tension to hold. The company just posted a Q3 2025 net income of $191.1 million, translating to an impressive $0.83 earnings per share (EPS), which handily beat analyst forecasts. But still, total revenue came in at $304.5 million, a small miss that flags the near-term challenge of a slower mortgage market. Here's the quick math: MGIC's core business is durable, demonstrated by a 14.8% annualized return on equity (ROE) and a massive portfolio that now holds over $300.8 billion of primary insurance in force as of September 30, 2025. Plus, they're serious about capital return, repurchasing 7.0 million shares for $187.9 million in the quarter, which is a clear, defintely positive action for shareholders. We need to dig into how they maintain this profitability-is it pure underwriting discipline, or are we seeing the limits of the mortgage origination market finally bite?

Revenue Analysis

If you're looking at MGIC Investment Corporation (MTG), the key takeaway is that their revenue engine is stable but seeing a mild contraction, largely due to the nature of their core business. For the third quarter of 2025, total revenue came in at $304.5 million, a slight dip of -0.7% compared to the same quarter last year. This isn't a major shock, but it demands a closer look at the components, especially their primary source: mortgage insurance premiums.

The revenue stream for MGIC Investment Corporation is defintely not complex; it's dominated by two main sources. The vast majority of their income comes from net premiums earned, which is the money they collect from providing private mortgage insurance (PMI). The rest is essentially investment income from their substantial investment portfolio.

Here's the quick math on the Q3 2025 breakdown, showing how reliant the company is on its core insurance operation:

• Net Premiums Earned: $241.8 million (This represents about 79.4% of total revenue).
• Net Investment Income: $62.2 million (This makes up about 20.4% of total revenue).

Net premiums earned totaled $241.8 million in Q3 2025, down slightly from the $243.3 million recorded in Q3 2024. This minor decrease is a clear signal of the near-term market risk: higher interest rates have slowed down both new mortgage originations and refinancing activity, which, in turn, impacts the volume of new insurance written (NIW). New insurance written for the quarter was $16.5 billion, a small increase from the prior quarter's $16.4 billion, but still down from the $17.2 billion reported in Q3 2024.

On the flip side, their investment portfolio is holding steady, providing a solid counter-balance. Net investment income saw a slight increase of +0.2% year-over-year, reaching $62.2 million in Q3 2025. This income stream is crucial because it's less sensitive to the immediate housing market fluctuations than their premium revenue. You should always monitor this segment, as it provides a buffer against cyclical downturns in the mortgage market.

The overall revenue story is one of resilience in a challenging market. While the total revenue of $304.5 million missed analyst estimates slightly, the core business remains a cash generator. For a deeper dive into the company's profitability and capital structure, you should read our full analysis: Breaking Down MGIC Investment Corporation (MTG) Financial Health: Key Insights for Investors.

For a quick comparison of the primary revenue drivers, see the table below:

The slight revenue contraction is a function of the market, not a failure of execution.

Profitability Metrics

The core takeaway from MGIC Investment Corporation (MTG)'s recent performance is simple: the company is a high-margin business, translating premium revenue into bottom-line profit with remarkable efficiency. For the third quarter of 2025 (Q3 2025), the company reported a net income of $191.1 million on revenue of approximately $304.5 million, underscoring its ability to manage risk and costs effectively.

This strong performance is best viewed through three key profitability lenses. Since MGIC Investment Corporation is an insurer, we look closely at underwriting margin, which is essentially their 'gross profit' from the insurance business, and their adjusted operating margin.

• Net Profit Margin: The net profit margin for Q3 2025 stood at a stellar 61.96%.
• Adjusted Operating Margin: This margin, which strips out non-core items, was 77.2% for Q3 2025.
• Underwriting Margin: Based on Q3 2025 net premiums earned of $241.8 million and total underwriting expenses (losses incurred plus operating expenses) of $58.7 million, the underwriting margin is roughly 75.7%.

That 61.96% net margin is defintely a statement of capital efficiency.

Operational Efficiency and Cost Management

Operational efficiency is where MGIC Investment Corporation shines, and it's a major driver of those high margins. The company's business model-private mortgage insurance-has inherently low variable costs once a policy is written, leading to high operating leverage. This is evident in the Q3 2025 adjusted operating margin of 77.2%, which is a slight dip from the 82.9% seen in Q3 2024, but still exceptionally high.

A key factor in maintaining this is strict cost control. Other underwriting and operating expenses were contained at $47.8 million in Q3 2025, down from $53 million in the prior year's quarter, indicating management is actively trimming the fat even as the business grows. This focus on operational excellence, combined with disciplined risk management, is what turns premium dollars into such a large amount of net income.

Profitability Trends and Industry Comparison

While the margins are strong, it's important to look at the trend. Net income for Q3 2025 was $191.1 million, a decrease from the $200.0 million reported in Q3 2024. This minor decline is largely attributable to a swing in losses incurred, net, which moved from a favorable benefit in Q3 2024 to a $10.9 million loss incurred in Q3 2025, driven by an increase in new delinquency notices.

To be fair, this is the nature of the insurance business; loss development will fluctuate. Still, the overall profitability remains robust, especially when compared to the broader private mortgage insurance (PMI) industry.

In the insurance world, we use the combined ratio (loss ratio + expense ratio) to gauge underwriting profitability-lower is better. The industry's aggregate combined ratio from 2019 to 2023 was around 28%, which implies an average underwriting profit margin of about 72%. MGIC Investment Corporation's Q3 2025 adjusted operating margin of 77.2% puts it comfortably ahead of this industry benchmark, demonstrating a competitive advantage in risk selection and expense management.

Here's the quick math on profitability over the last year:

What this estimate hides is the long-term durability of the book of business, which is supported by the company's strong capital position and compliance with Private Mortgage Insurer Eligibility Requirements (PMIERs). For a deeper look at the strategic foundation, you can review Mission Statement, Vision, & Core Values of MGIC Investment Corporation (MTG).

Finance: Monitor the combined ratio trend closely next quarter to ensure the Q3 2025 loss development is an isolated event and not a sign of broader credit deterioration.

Debt vs. Equity Structure

You want to know how MGIC Investment Corporation (MTG) pays for its growth, and the answer is clear: they lean heavily on equity, not debt. This is a deliberate, conservative strategy that makes their balance sheet incredibly resilient, a major plus in the cyclical mortgage insurance business.

For the third quarter of 2025, MGIC Investment Corporation's financial leverage is remarkably low. The company's total debt is essentially its long-term debt, which stood at approximately $645 million as of June 2025, with short-term debt at virtually $0 million. This is a very clean debt profile, with the holding company's long-term obligations totaling about $650 million as of mid-2025.

Here's the quick math on their leverage: the Debt-to-Equity (D/E) ratio is a low 0.13 as of November 2025. This means for every dollar of shareholder equity, the company uses only 13 cents of debt. To be fair, for a financial company in the Insurance - Specialty sector, this is defintely a low number, sitting comfortably in the top 10% of its sector for low leverage. The median D/E ratio for MGIC Investment Corporation over the last 13 years was 0.23, so the current figure shows a sustained, conservative approach.

This low leverage is a key reason why credit rating agencies are bullish. In August 2025, Moody's Ratings upgraded the senior unsecured debt rating to Baa2 from Baa3, and in October 2025, S&P Global Ratings revised the company's outlook to Positive from Stable. A rating upgrade like that often translates to lower borrowing costs, but honestly, with so little debt, the main benefit is a massive boost to investor confidence and financial flexibility.

The company balances its financing by prioritizing equity and capital return over debt. Their total equity was approximately $5.17 billion as of September 30, 2025. They are actively managing this capital through significant shareholder returns, which is the flip side of a low-debt strategy. For example, in the third quarter of 2025 alone, MGIC Investment Corporation repurchased 7.0 million shares of common stock for $187.9 million and declared a quarterly dividend of $0.15 per share. They are generating strong net capital and giving it back to you, the shareholder, instead of chasing growth with borrowed money.

This is a company that uses its own capital to fuel its business, minimizing interest expense risk. You can see more details on the operational side of this strength in our full analysis: Breaking Down MGIC Investment Corporation (MTG) Financial Health: Key Insights for Investors.

• Long-Term Debt (Q2 2025): $645 million.
• Short-Term Debt (Q2 2025): $0 million.
• Total Equity (Q3 2025): $5.17 billion.
• Debt-to-Equity Ratio (Nov 2025): 0.13.

To summarize MGIC Investment Corporation's capital structure:

Liquidity and Solvency

You need to know if MGIC Investment Corporation (MTG) has the cash to cover its near-term obligations and weather a downturn. The short answer is yes, their liquidity position is strong, driven by excellent operational cash flow, but you should still monitor their debt load against their cash reserves.

For the trailing twelve months (TTM) ending November 2025, MGIC Investment Corporation's liquidity ratios are exceptionally healthy. The Current Ratio stands at approximately 4.51, and the Quick Ratio is about 3.28. This means the company has $4.51 in current assets for every dollar of current liabilities, and even after stripping out less-liquid assets, they still have $3.28 to cover those short-term debts. Anything over 1.0 is generally considered good; these numbers are defintely a sign of significant short-term financial strength.

Here's the quick math on what those ratios signal for working capital (current assets minus current liabilities): the trend is very positive. A high ratio like 4.51 indicates a substantial buffer, and since the Quick Ratio is also high, a large portion of their current assets are highly liquid-like cash and investments. They have more than enough working capital to manage daily operations and unexpected claims.

• Current Ratio of 4.51 shows strong short-term coverage.
• Quick Ratio of 3.28 confirms high asset liquidity.
• Working capital buffer is substantial.

Looking at the cash flow statement for the third quarter of 2025, the picture is one of robust operational performance funding significant shareholder returns. Cash flow from operating activities was a strong $215.3 million in Q3 2025, which is the lifeblood of the business and shows their core mortgage insurance operation is generating plenty of cash.

The net change in cash for Q3 2025 was actually negative at -$27.1 million, but this wasn't due to poor operations. It was largely driven by substantial financing activities, which is a key trend to watch. For example, in Q3 2025, the company repurchased 7.0 million shares of common stock for $187.9 million and paid a dividend of $0.15 per common share. They also paid a $400 million dividend to the holding company in October. This is cash being deliberately paid out to shareholders, not a sign of operational distress.

Still, a minor concern exists when you map their cash to their total debt. As of Q3 2025, MGIC Investment Corporation had cash and cash equivalents of $271.79 million, which is lower than their total debt of $645.77 million. This means that while their operating cash flow is excellent, and their short-term liquidity ratios are great, they don't have enough cash on hand to wipe out all their debt in one go. That puts some pressure on them, so you should monitor their cash flow structure and debt ratio.

To summarize the core cash flow trends for Q3 2025:

The company's liquidity is a clear strength, supported by its ability to generate significant cash from operations and its high current and quick ratios. The risk is manageable, centered on the fact that the total debt is higher than the immediate cash on hand, but the steady operating cash flow provides a strong cushion and debt coverage. For a deeper dive into who is buying and why, check out Exploring MGIC Investment Corporation (MTG) Investor Profile: Who's Buying and Why?

Valuation Analysis

You're looking at MGIC Investment Corporation (MTG) and wondering if the market has priced in all the good news, especially after a strong Q3 2025 earnings beat. The direct takeaway is that, based on traditional multiples, the stock appears to be trading near its fair value, but a deep-dive discounted cash flow (DCF) analysis suggests a potential deep discount. It's a nuanced picture, so you defintely need to look closely at the ratios.

Is MGIC Investment Corporation Overvalued or Undervalued?

The consensus among analysts leans toward a Hold rating, with a 12-month price target of $26.80, which is actually a slight downside from the recent stock price of around $28.21 as of mid-November 2025. This suggests the market has already factored in much of the company's recent operational strength. Honestly, the stock's valuation multiples are compelling, but its price action tells a story of a fully-priced asset.

Here's the quick math on the key valuation ratios based on the latest trailing twelve months (TTM) data for the 2025 fiscal year. These ratios are incredibly low for a company with a strong return on equity (ROE) of 14.40%.

• Price-to-Earnings (P/E) Ratio: The TTM P/E sits at just 9.08. For context, a P/E under 10 often flags a value stock, meaning the company is generating high earnings relative to its current share price.
• Price-to-Book (P/B) Ratio: This is at 1.23. A P/B this close to 1.0 suggests you are paying only slightly more than the company's net asset value, a very conservative valuation for a financial firm.
• Enterprise Value-to-EBITDA (EV/EBITDA): The ratio stands at 6.72. This is a low multiple, especially compared to the broader Financials sector average, indicating a cheap valuation based on operating cash flow before capital structure is considered.

What this estimate hides is the potential for a higher intrinsic value. Some models, like a Discounted Cash Flow (DCF) analysis, point to a fair value as high as $61.77 per share, suggesting the stock is trading at a substantial discount. This massive gap is usually due to differing assumptions on future growth and the discount rate applied to those cash flows.

Stock Performance and Shareholder Returns

MGIC Investment Corporation's stock price has shown strong momentum, but it's now bumping up against its 52-week high. The stock has been trading in a range of $21.94 to $29.01 over the last 12 months. Over the past year, shareholders have seen an impressive total return of about 17.1%.

The company is committed to returning capital to shareholders, which supports the valuation. In Q3 2025, they repurchased an additional 2.4 million shares for $65.7 million through late October. Plus, they consistently pay a dividend.

Here are the key dividend metrics:

A payout ratio under 20% is very conservative for a mature financial company, signaling that the dividend is safe and there's plenty of room for future increases or continued share buybacks. The dividend of $0.15 per share was declared payable on November 20, 2025. For a deeper dive into the fundamentals, check out the full post: Breaking Down MGIC Investment Corporation (MTG) Financial Health: Key Insights for Investors.

Risk Factors

You're looking for the clear-eyed view on MGIC Investment Corporation (MTG) and its risks, so here's the direct takeaway: while the company maintains a strong capital base and is actively mitigating risk, the near-term threats are centered on the U.S. housing market's affordability crisis and a subtle but important uptick in loss claims.

Honestly, the biggest external challenge for MGIC Investment Corporation is the stubborn macroeconomic environment. High interest rates, coupled with already elevated home prices, are throttling the housing market. This directly impacts the lifeblood of a mortgage insurer: new insurance written (NIW). While the company's Insurance in Force (IIF) still hit an industry milestone of over $300.8 billion as of September 30, 2025, a sustained slow down in new loan origination is a headwind to future premium growth.

Operational and Financial Headwinds

The core risk is always credit performance. In the third quarter of 2025, we saw a clear sign of pressure: the company reported losses incurred, net, of $10.9 million. This is a stark reversal from the favorable development of $(9.8) million in the same quarter last year. The jump was primarily driven by new delinquency notices, which added approximately $43.1 million to loss reserves. This means more homeowners are struggling to make payments, and the primary delinquency inventory rose to 25,747 in Q3 2025.

• Rising Delinquencies: More new claims are hitting the books.
• Market Competition: Intensifying price competition among private mortgage insurance (PMI) providers squeezes profit margins.
• Regulatory Shift: The potential transition from FICO to VantageScore in PMIERs (Private Mortgage Insurer Eligibility Requirements) is a key regulatory risk that requires careful adaptation.

Here's the quick math on the financial risk: the rise in net losses is a direct hit to profitability, contributing to Q3 2025 Net Income declining slightly to $191.1 million, down from $200.0 million in Q3 2024. This is defintely a trend to watch, not a one-off blip.

Mitigation and Capital Defenses

To be fair, MGIC Investment Corporation is not sitting still. Their risk-management strategy is robust and focuses on capital preservation and risk transfer. The company's financial steadiness is acceptable, with a very low Debt-to-Equity ratio of just 0.12, showing minimal reliance on debt. They're using reinsurance (risk transfer) aggressively to shield the balance sheet.

The key mitigation actions are concrete:

• Reinsurance Deals: They've agreed to terms on a traditional excess of loss reinsurance transaction effective December 1, 2025, providing $250 million of coverage on New Insurance Written (NIW) from 2021.
• Quota Share Adjustments: The cede rate on their 2022 quota share reinsurance transaction is decreasing from 30% to 28%, effective December 31, 2025, which should increase retained premiums.
• Capital Strength: The company's Primary Minimum Required Assets (PMIERS) stood at $5,749 million as of March 31, 2025, well above the minimum. Plus, they expect $457 million in statutory contingency reserve releases in 2025, which provides a significant capital buffer.

They are also actively managing their share count, repurchasing 7.0 million shares of common stock for $187.9 million in Q3 2025 alone, which directly supports the diluted earnings per share. This capital return is a strong signal of management's confidence in the company's financial flexibility, but it also highlights that capital return is a key focus in a slow-growth environment. You can read more about this in Breaking Down MGIC Investment Corporation (MTG) Financial Health: Key Insights for Investors.

Growth Opportunities

You're looking for where MGIC Investment Corporation (MTG) finds its future growth, and the answer is less about a booming top line and more about capital efficiency and risk-managed expansion. The company's near-term growth is defintely a story of disciplined underwriting and returning excess cash to shareholders, not dramatic revenue spikes.

The core growth driver isn't new market entry, but the compounding effect of a high-quality, in-force insurance portfolio (the Private Mortgage Insurance, or PMI, book of business). Analysts project the company's annual revenue for the 2025 fiscal year to be around $1.24 billion, a moderate increase that reflects a challenging housing market with high interest rates. Still, this steady premium income, coupled with strong credit performance, is what fuels the real value creation.

Future Projections and Capital Strategy

Because organic growth is muted by housing affordability challenges, MGIC Investment Corporation has shifted its focus to optimizing capital structure and shareholder returns. This is the clear action for investors to watch. They are a profitability powerhouse, boasting a profit margin of 61.96% and an operating margin of 81.07%, which is better than over 97% of rivals in the industry.

Here's the quick math on shareholder value: The consensus earnings per share (EPS) estimate for the 2025 fiscal year is approximately $3.18. This strong earnings generation allows for significant capital return. In the third quarter of 2025 alone, the company repurchased 7 million shares for $188 million and paid a quarterly common stock dividend of $0.15 per share. This aggressive share reduction is a direct way to boost your ownership stake and EPS over time.

• FY2025 Revenue Projection: $1.24 billion.
• FY2025 EPS Projection: $3.18.
• Q3 2025 Net Income: $191 million.

Strategic Initiatives and Competitive Edge

MGIC Investment Corporation's strategic initiatives center on risk mitigation and operational excellence, which are the bedrock of any successful financial insurer. They have a massive competitive advantage as a market leader, having achieved an industry first with over $300 billion in insurance in force. Plus, their balance sheet is robust, holding approximately $6 billion in balance sheet capital.

The company's use of reinsurance is a key strategic move (a risk management tool that transfers a portion of the insurance company's risk to another insurer). In the first half of 2025, they completed two traditional excess-of-loss reinsurance transactions providing $344 million in coverage for new policies written in 2025 and 2026. This strategy not only manages risk but also frees up regulatory capital for other uses, like those share repurchases we just discussed.

To be fair, the market is competitive, so the company is also focusing on technology and data analytics to improve risk assessment and operational efficiency. This focus on disciplined execution, rather than chasing high-risk volume, is what gives them a durable edge.

For a deeper dive into who is investing in this strategy, check out Exploring MGIC Investment Corporation (MTG) Investor Profile: Who's Buying and Why?