MGIC's Q4 2024 Earnings Call: Navigating Contradictions in Claim Rates, Expenses, and NIW Growth

These are the key contradictions discussed in MGIC Investment Corporation's latest 2024 Q4 earnings call, specifically including: Claim Rate Assumptions, Expense Reduction Strategies, and NIW Growth:



Strong Financial Performance:
- MGIC Investment Corporation reported net income of $185 million for Q4 2024, resulting in an annualized 14% return on equity.
- For the full year, net income was $763 million, compared to $730 million in the prior year.
- The solid financial results were driven by favorable credit trends and a disciplined approach to risk and capital management.

Insurance in Force and New Insurance:
- Insurance in force at the end of the quarter stood at more than $295 billion, with new insurance written in Q4 totaling $16 billion.
- Full-year new insurance totaled $56 billion, up 21% from the prior year.
- The increase in new insurance was constrained by the size of the market, but MGIC maintained a strong and balanced insurance portfolio.

Capital Management and Shareholder Returns:
- MGIC returned $750 million in dividends to the holding company and over $700 million to shareholders through dividends and share repurchases.
- The payout ratio was 92% of this year's net income, with share repurchases as the primary means of returning capital.
- The strong capital position supported elevated payout ratios, assuming stable credit performance and risk profile.

Risk and Delinquency Trends:
- Favorable reserve development of $54 million was reported, primarily due to higher cure rates on delinquency notices from 2023 and early 2024.
- The initial claim rate for new notices was adjusted to 7.3% primarily due to hurricane-related delinquencies.
- Despite a modest impact from the hurricanes, the overall credit quality of the insurance portfolio remained solid with an average FICO score of 747 at origination.