MGIC Investment Profile
MGIC Investment Corporation (MGIC), through its wholly-owned subsidiaries, provides private mortgage insurance, other mortgage credit risk management solutions, and ancillary services.
MGIC was licensed in all 50 states of the United States, the District of Columbia, Puerto Rico and Guam. During 2023, the company wrote new insurance in each of those jurisdictions.
2024 Business Strategies
The company’s business strategies continue to be to maximize the value the company creates through its mortgage credit enhancement activities; differentiate itself through the company’s customer experience; establish a competitive advantage through the company’s digital and analytical capabilities; excel at acquiring, managing and distributing mortgage credit risk; and foster an environment that embraces diversity.
Products and Services
Mortgage Insurance
In general, there are two principal types of private mortgage insurance: ‘primary’ and ‘pool’.
Primary Insurance
Primary insurance provides mortgage default protection on individual loans and covers a percentage of the unpaid loan principal, delinquent interest and certain expenses associated with the default and subsequent foreclosure on the mortgage or sale of the underlying property (collectively, the ‘claim amount’). In addition to the loan principal, the claim amount is affected by the mortgage note rate and the time necessary to complete the foreclosure or sale process. The insurer generally pays the coverage percentage of the claim amount specified in the primary policy but has the option to pay 100% of the claim amount and acquire title to the property. Primary insurance is generally written on first mortgage loans secured by owner occupied ‘single-family’ homes, which are one-to-four family homes and condominiums. Primary insurance can be written on first liens secured by non-owner occupied single-family homes, which are referred to in the home mortgage lending industry as investor loans, and on vacation or second homes. Primary coverage can be used on any type of residential mortgage loan instrument approved by the mortgage insurer.
For loans sold to a GSE, the coverage percentage must comply with the requirements established by the particular GSE to which the loan is delivered. The GSEs have different loan purchase programs that allow different levels of mortgage insurance coverage. In 2023, a substantial majority of the company’s volume was on loans with GSE standard or higher coverage.
For loans that are not sold to the GSEs, the lender determines the coverage percentage from those that the company offers. Higher coverage percentages generally result in increased severity, which is the amount paid on a claim. The company charges higher premium rates for higher coverage percentages.
Mortgage insurance for loans secured by one-family, primary residences can be canceled under the Homeowners Protection Act (‘HOPA’).
Pool and Other Insurance
Pool insurance is generally used as an additional ‘credit enhancement’ for certain secondary market mortgage transactions. Pool insurance generally covers the amount of the loss on a defaulted mortgage loan that exceeds the claim payment under the primary coverage, if primary insurance is required on that mortgage loan, as well as the total loss on a defaulted mortgage loan which did not require primary insurance. Pool insurance may have a stated aggregate loss limit for a pool of loans and may also have a deductible under which no losses are paid by the insurer until losses on the pool of loans exceed the deductible.
Other Products and Services
Contract Underwriting
A non-insurance subsidiary of the company provides contract underwriting services for lenders, pursuant to which loans are underwritten to conform to prescribed guidelines. The guidelines might be the lender's own guidelines or the guidelines of Fannie Mae, Freddie Mac or a non-GSE investor. These services are provided for loans that require private mortgage insurance, as well as for loans that do not require private mortgage insurance.
Customers
Originators of residential mortgage loans, such as savings institutions, commercial banks, mortgage brokers, credit unions, mortgage bankers, and other lenders have historically determined the placement of mortgage insurance written and as a result are the company’s customers.
Sales and Marketing
The company’s employees sell its insurance products throughout the United States, Puerto Rico, and Guam.
Competition
For most of the company’s business, the company and other private mortgage insurers compete directly with federal and state governmental and quasi-governmental agencies that sponsor government-backed mortgage insurance programs, principally the Federal Housing Administration, the U.S. Department of Veterans Affairs (VA), and the U.S. Department of Agriculture.
Regulation
The company is indirectly, but significantly, impacted by regulations affecting purchasers of mortgage loans, such as the GSEs, and regulations affecting governmental insurers, such as the Federal Housing Administration and the VA, and lenders.
History
MGIC Investment Corporation, a Wisconsin corporation, was founded in 1957.
