# Mgic Investment Corp: Form 10-Q for the period ended Jun 30, 2022

- Company: [Mgic Investment Corp](/companies/mtg.md) (CIK 876437)
- Form: 10-Q
- Filed: 2022-08-03
- Accepted by EDGAR: Aug 3, 2022, 16:16 ET
- Period: 2022-06-30
- Accession: 0000876437-22-000035
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/876437/000087643722000035/mtg-20220630.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/876437/000087643722000035/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2022-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2022-04-01 to 2022-06-30 | $293.1m | us-gaap:Revenues |
| Revenue | 6 months, 2022-01-01 to 2022-06-30 | $587.7m | us-gaap:Revenues |
| Income tax | 3 months, 2022-04-01 to 2022-06-30 | $66.6m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2022-01-01 to 2022-06-30 | $111.0m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2022-04-01 to 2022-06-30 | $249.3m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2022-01-01 to 2022-06-30 | $424.3m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2022-04-01 to 2022-06-30 | $0.80 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2022-01-01 to 2022-06-30 | $1.34 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2022-04-01 to 2022-06-30 | $0.81 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2022-01-01 to 2022-06-30 | $1.36 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2022-04-01 to 2022-06-30 | 313,545,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2022-01-01 to 2022-06-30 | 319,012,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2022-01-01 to 2022-06-30 | $361.7m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2022-01-01 to 2022-06-30 | $2.1m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 6 months, 2022-01-01 to 2022-06-30 | $50.8m | us-gaap:PaymentsOfDividendsCommonStock |
| Share repurchases | 6 months, 2022-01-01 to 2022-06-30 | $219.1m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2022-06-30 | $410.2m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Total assets | at 2022-06-30 | $6.60bn | us-gaap:Assets |
| Total liabilities | at 2022-06-30 | $2.03bn | us-gaap:Liabilities |
| Long-term debt | at 2022-06-30 | $917.9m | us-gaap:LongTermDebt |
| Shareholders' equity | at 2022-06-30 | $4.57bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 106,561 characters.

### Introduction

The following is management’s discussion and analysis of the financial condition and results of operations of MGIC Investment Corporation for the second quarter of 2022. As used below, “we” and “our” refer to MGIC Investment Corporation’s consolidated operations. This form 10-Q should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2021. See the “Glossary of terms and acronyms” for definitions and descriptions of terms used throughout this MD&A. Our revenues and losses could be affected by the Risk Factors referred to under “Forward Looking Statements and Risk Factors” below and they are an integral part of the MD&A.

#### Forward Looking and Other Statements

As discussed under “Forward Looking Statements and Risk Factors” below, actual results may differ materially from the results contemplated by forward looking statements. These forward looking statements speak only as of the date of this filing and are subject to change without notice. We are not undertaking any obligation to update any forward looking statements or other statements we may make in the following discussion or elsewhere in this document even though these statements may be affected by events or circumstances occurring after the forward looking statements or other statements were made. Therefore, no reader of this document should rely on these statements being current as of any time other than the time at which this document was filed with the Securities and Exchange Commission.

### Overview

*(In millions, except per share data, unaudited)*

| Summary financial results of MGIC Investment Corporation Selected statement of operations data | Three Months Ended June 30, 2022 | 2021 | % Change | Six Months Ended June 30, 2022 | 2021 | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Net premiums earned | **$255.7** | $251.5 | 2 | **$510.9** | $506.6 | 1 |
| Investment income, net of expenses | **40.3** | 41.1 | (2) | **78.6** | 79.0 | (1) |
| Losses incurred, net | **(99.1)** | 29.2 | (439) | **(118.4)** | 68.8 | (272) |
| Other underwriting and operating expenses, net | **56.4** | 53.8 | 5 | **113.9** | 101.8 | 12 |
| Loss on debt extinguishment | **6.4** | — | N/M | **28.5** | — | N/M |
| Income before tax | **315.9** | 193.9 | 63 | **535.3** | 383.5 | 40 |
| Provision for income taxes | **66.6** | 40.8 | 63 | **111.0** | 80.4 | 38 |
| Net income | **249.3** | 153.1 | 63 | **424.3** | 303.1 | 40 |
| **Diluted income per share** | **$0.80** | $0.44 | 82 | **$1.34** | $0.87 | 54 |
| **Non-GAAP Financial Measures (1)** |  |  |  |  |  |  |
| Adjusted pre-tax operating income | **$322.4** | $191.9 | 68 | **$564.4** | $378.9 | 49 |
| Adjusted net operating income | **254.4** | 151.5 | 68 | **447.3** | 299.5 | 49 |
| Adjusted net operating income per diluted share | **$0.81** | $0.44 | 84 | **$1.41** | $0.86 | 64 |

(1) See “Explanation and reconciliation of our use of Non-GAAP financial measures.”

### Summary of second quarter 2022 results

### Comparative quarterly results

We recorded second quarter 2022 net income of $249.3 million, or $0.80 per diluted share. Net income increased by $96.2 million from net income of $153.1 million in the prior year primarily reflecting decreases in losses incurred, partially offset by a higher provision for income taxes and a loss on debt extinguishment. Diluted income per share increased primarily due to an increase in net income and a decrease in diluted weighted average shares outstanding.

Adjusted net operating income for the second quarter 2022 was $254.4 million (Q2 2021: $151.5 million) and adjusted net operating income per diluted share was $0.81 (Q2 2021: $0.44). The increase in 2022 adjusted net operating income and adjusted net operating income per diluted share compared to 2021 primarily reflects higher net income.

Losses incurred, net for the second quarter of 2022 were $(99.1) million, a decrease of $128.3 million compared to the second quarter of 2021 losses incurred of $29.2 million primarily due to favorable loss reserve development. While new delinquency notices added approximately $31.9 million to losses incurred in the second quarter of 2022, our re-estimation of loss reserves on previously received delinquency notices resulted in favorable development of approximately $130.9 million primarily related to a decrease in the estimated claim rate on delinquencies. The favorable development resulted from greater than expected cures on delinquency notices received during the COVID-19 pandemic as well as delinquency notices received prior to the COVID-19 pandemic. In the second quarter of 2021, our re-estimation of loss reserves on previously received delinquency notices did not result in any significant development.

In the second quarter of 2022, the $6.4 million loss on debt extinguishment reflects a loss on the repurchase of a portion of our 9% Debentures at costs that were in excess of their carrying value.

The increase in our provision for income taxes in the second quarter of 2022 as compared to the same period in the prior year was primarily due to an increase in income before tax.

### Comparative year to date results

We recorded net income of $ 424.3 million, or $1.34 per diluted share during the first six months of 2022 compared with $303.1 million, or $0.87 per diluted share during the prior year. Net income increased by $121.2 million, or $0.47 per diluted share. The increase primarily reflected a decrease in losses incurred, partially offset by a higher provision for income taxes and losses on debt extinguishment.

Diluted income per share was higher than the prior year due to the increase in net income and a decrease in the number of our diluted weighted average shares outstanding.

Adjusted net operating income for the first six months of 2022 was $447.3 million (YTD June 30, 2021: $299.5 million) and adjusted net operating income per diluted share was $1.41 (YTD June 30, 2021: $0.86). The increase in 2022 adjusted net operating income and adjusted net operating income per diluted share compared to 2021 primarily reflects higher net income.

Losses incurred, net for the six months ended June 30, 2022 were ($118.4) million, a decrease of $187.2 million compared with losses incurred of $68.8 million for the prior year primarily due to favorable loss reserve development. While new delinquency notices added $68.2 million to losses incurred, our re-estimation of loss reserves on previously received delinquency notice resulted in favorable development of $186.6 million primarily related to a decrease in the estimated claim rate on delinquencies. The favorable development resulted from greater than expected cures on delinquency notices received during the COVID-19 pandemic as well as delinquency notices received prior to the COVID-19 pandemic. In the first six months of 2021, our re-estimation of loss reserves on previously received delinquency notices did not result in any significant development.

In the first six months of 2022, the $28.5 million loss on debt extinguishment reflects a $27.2 million loss on the repurchase of a portion of our 9% Debentures at costs in excess of their carrying value and a prepayment fee of $1.3 million on the repayment of our FHLB advance.

The increase in our provision for income taxes for the first six months of 2022 as compared to the same period in the prior year was primarily due to an increase in income before tax.

See “Consolidated Results of Operations” below for additional discussion of our results for the three and six months ended June 30, 2022 compared with the respective prior year period.

### Capital

MGIC dividend payments to our holding company

The ability of MGIC to pay dividends is restricted by insurance regulation. Amounts in excess of prescribed limits are deemed “extraordinary” and may not be paid if disapproved by the OCI. A dividend is extraordinary when the proposed dividend amount, plus dividends paid in the twelve months preceding the dividend payment date exceed the ordinary dividend level. In 2022, MGIC can pay $122 million of ordinary dividends without OCI approval, before taking into consideration dividends paid in the preceding twelve months. In the six months ended June 30, 2022, MGIC paid $400 million in dividends in cash and investments to the holding company. We did not make dividend payments to our holding company during the six months ended June 30, 2021. Future dividend payments from MGIC to the holding company will continue to be determined in consultation with the board.

Share repurchase programs

Repurchases of our common stock may be made from time to time on the open market, including through 10b5-1 plans, or through privately negotiated transactions. In the first half of 2022, we repurchased 15.7 million shares of common stock, using approximately $222 million of holding company resources. As of June 30, 2022 we had $278 million of authorization remaining to repurchase our common stock through the end of 2023 under a share repurchase program approved by our Board of Directors in October 2021. As of June 30, 2022, we had approximately 305 million shares of common stock outstanding. We did not repurchase shares during the six months ended June 30, 2021.

Dividends to shareholders

In March and May 2022, we paid quarterly dividends of $0.08 per common share to our shareholders which totaled $51 million for the year. On July 28, 2022, our Board of Directors declared a quarterly cash dividend of $0.10 per common share to shareholders of record on August 25, 2022, payable on August 11, 2022.

### GSEs

We must comply with a GSE’s PMIERS to be eligible to insure loans delivered to or purchased by that GSE. The PMIERs include financial requirements, as well as business, quality control and certain transactional approval requirements. The financial requirements of the PMIERs require a mortgage insurer’s "Available Assets" (generally only the most liquid assets of an insurer) to equal or exceed its "Minimum Required Assets" (which are based on an insurer's book of risk in force, calculated from tables of factors with several risk dimensions, reduced for credit given for risk ceded under reinsurance transactions, and subject to a floor amount). Based on our application of the PMIERs as of June 30, 2022, MGIC’s Available Assets totaled $5.8 billion, or $2.6 billion in excess of its Minimum Required Assets.

The PMIERs generally require us to hold significantly more Minimum Required Assets for delinquent loans than for performing loans and the Minimum Required Assets required to be held increases as the number of payments missed on a delinquent loan increases.

If MGIC ceases to be eligible to insure loans purchased by one or both of the GSEs, it would significantly reduce the volume of our NIW, the substantial majority of which is for loans delivered to or purchased by the GSEs. In addition to the increase in Minimum Required Assets associated with delinquent loans, factors that may negatively impact MGIC’s ability to continue to comply with the financial requirements of the PMIERs include the following:

|  |  |
| --- | --- |
| è | The GSEs may make the PMIERs more onerous in the future. The PMIERs provide that the factors that determine Minimum Required Assets will be updated periodically, or as needed if there is a significant change in macroeconomic conditions or loan performance. We do not anticipate that the regular periodic updates will occur more frequently than once every two years. The PMIERs state that the GSEs will provide notice 180 days prior to the effective date of updates to the factors; however, the GSEs may amend any portion of the PMIERs at any time. |
| è | The PMIERS may be changed in response to the final regulatory capital framework for the GSEs which was established in February 2022. |
| è | Our future operating results may be negatively impacted by the matters discussed in our Risk Factors. Such matters could decrease our revenues, increase our losses or require the use of assets, thereby creating a shortfall in Available Assets. |
| è | Should capital be needed by MGIC in the future, capital contributions from our holding company may not be available due to competing demands on holding company resources, including for repayment of debt. |

MGIC Investment Corporation - Q2 2022 \| 36

Our reinsurance transactions enable us to earn higher returns on our business than we would without them because they reduce the Minimum Required Assets we must hold under PMIERs. However, reinsurance may not always be available to us; or available on similar terms, and our reinsurance subjects us to counterparty credit risk. The calculated credit for excess of loss reinsurance transactions under PMIERs is generally based on the PMIERs requirement of the covered loans and the attachment and detachment point of the coverage. PMIERs credit is generally not given for the reinsured risk above the PMIERs requirement. Our existing reinsurance transactions are subject to periodic review by the GSEs and there is a risk we will not receive our current level of credit in future periods for the risk ceded under them. In addition, we may not receive the same level of credit under future transactions that we receive under existing transactions. If MGIC is not allowed certain levels of credit under the PMIERs, under certain circumstances, MGIC may terminate the reinsurance transactions without penalties.

### GSE reform

The FHFA has been the conservator of the GSEs since 2008 and has the authority to control and direct their operations. The increased role that the federal government has assumed in the residential housing finance system through the GSE conservatorship may increase the likelihood that the business practices of the GSEs change, including through administrative action, in ways that have a material adverse effect on us and that the charters of the GSEs are changed by new federal legislation.

It is uncertain what role the GSEs, FHA and private capital, including private mortgage insurance, will play in the residential housing finance system in the future. The timing and impact on our business of any resulting changes is uncertain. Many of the proposed changes would require Congressional action to implement and it is difficult to estimate when Congressional action would be final and how long any associated phase-in period may last.

For additional information about the business practices of the GSEs, see our Risk Factor titled “Changes in the business practices of the GSEs, federal legislation that changes their charters or a restructuring of the GSEs could reduce our revenues or increase our losses.”

### State Regulations

The insurance laws of 16 jurisdictions, including Wisconsin, our domiciliary state, require a mortgage insurer to maintain a minimum amount of statutory capital relative to its RIF (or a similar measure) in order for the mortgage insurer to continue to write new business. We refer to these requirements as the “State Capital Requirements.” While they vary among jurisdictions, the most common State Capital Requirements allow for a maximum risk-to-capital ratio of 25 to 1. A risk-to-capital ratio will increase if (i) the percentage decrease in capital exceeds the percentage decrease in insured risk, or (ii) the percentage increase in capital is less than the percentage increase in insured risk. Wisconsin does not regulate capital by using a risk-to-capital measure but instead requires an MPP. MGIC’s “policyholder position” includes its net worth or surplus and its, contingency reserve.

At June 30, 2022, MGIC’s risk-to-capital ratio was 9.7 to 1, below the maximum allowed by the jurisdictions with State Capital Requirements, and its policyholder position was $3.5 billion above the required MPP of $1.9 billion. Our risk-to-capital ratio and MPP reflect full credit for the risk ceded under our reinsurance transactions. Refer to our Risk Factor titled “State capital requirements may prevent us from continuing to write new insurance on an uninterrupted basis” for more information about matters that could negatively impact our compliance with State Capital Requirements.

### COVID-19 Pandemic

The COVID-19 pandemic materially impacted our 2020 financial results, as we reserved for losses associated with the increased delinquency notices received. While uncertain, the impact of the COVID-19 pandemic on the Company’s future business, financial results, liquidity and/or financial condition may also be material. The magnitude of the impact will be influenced by various factors, including the length and severity of the pandemic in the United States, efforts to reduce the transmission of COVID-19, the level of unemployment, and the impact of government initiatives and actions taken by the GSEs (including mortgage forbearance and modification programs) to mitigate the economic harm caused by the COVID-19 pandemic.

Forbearance for federally-insured mortgages (including those delivered to or purchased by the GSEs) whose borrowers were affected by COVID-19 allows mortgage payments to be suspended for a period generally ranging from 6 to 18 months. Historically, forbearance plans have reduced the incidence of our losses on affected loans. However, given the uncertainty surrounding the long-term economic impact of COVID-19, it is difficult to predict the ultimate effect of COVID-19 related forbearances on our loss incidence. Whether a loan delinquency will cure, including through modification, when forbearance ends will depend on the economic circumstances of the borrower at that time. The severity of losses associated with delinquencies that do not cure will depend on economic conditions at that time, including home prices.

Foreclosures on mortgages purchased or securitized by the GSEs were suspended through July 31, 2021. Under a CFPB rule that was effective through December 31, 2021, with limited exceptions, servicers were required to ensure that at least one temporary procedural safeguard had been met before referring 120-day delinquent loans for foreclosure. With the expiration of the CFPB rule, it is likely that foreclosures and claims will increase, although the timing and magnitude of such increase is uncertain.

### Factors affecting our results

As noted above, the COVID-19 pandemic may adversely affect our future business, results of operations, and financial condition. We have addressed some of the potential impacts throughout this document.

The future effects of changing climatic conditions on our business is uncertain. For information about possible effects, please refer to our Risk Factor titled “Pandemics, hurricanes and other natural disasters may impact our incurred losses, the amount and timing of paid claims, our inventory of notices of default and our Minimum Required Assets under PMIERs.”

Russia's invasion of Ukraine has increased the already-elevated inflation rate, added more pressure to strained supply chains, and has increased volatility in the domestic and global financial markets. For information about the possible effects of this on our business please refer to our Risk Factor title “The Russia-Ukraine war and/or other global events may adversely affect the U.S. economy and our business.

Our results of operations are affected by:

Premiums written and earned

Premiums written and earned in a year are influenced by:

- NIW, which increases IIF. Many factors affect NIW, including the volume of low down payment home mortgage originations and competition to provide credit enhancement on those mortgages from the FHA, the VA, other mortgage insurers, and other alternatives to mortgage insurance, including GSE programs that may reduce or eliminate the demand for mortgage insurance. NIW does not include loans previously insured by us that are modified, such as loans modified under HARP.
- Cancellations, which reduce IIF. Cancellations due to refinancings are affected by the level of current mortgage interest rates compared to the mortgage coupon rates throughout the in force book, current home values compared to values when the loans in the in force book were insured and the terms on which mortgage credit is available. Home price appreciation can give homeowners the right to cancel mortgage insurance on their loans if sufficient home equity is achieved. Cancellations also result from policy rescissions, which require us to return any premiums received on the rescinded policies and claim payments, which require us to return any premium received on the related policies from the date of default on the insured loans. Cancellations of single premium policies, which are generally non-refundable, result in immediate recognition of any remaining unearned premium.
- Premium rates, which are affected by product type, competitive pressures, the risk characteristics of the insured loans, the percentage of coverage on the insured loans, and PMIERs capital requirements. The substantial majority of our monthly and annual mortgage insurance premiums are under premium plans for which, for the first ten years of the policy, the amount of premium is determined by multiplying the initial premium rate by the original loan balance; thereafter, the premium rate resets to a lower rate used for the remaining life of the policy. The remainder of our monthly and annual premiums are under premium plans for which premiums are determined by a fixed percentage of the loan’s amortizing balance over the life of the policy.
- Premiums ceded, net of profit commission, under our QSR Transactions and premiums ceded under our excess of loss transactions. The profit commission under our QSR Transactions varies inversely with the level of ceded losses incurred on a “dollar for dollar” basis and can be eliminated at ceded loss levels higher than what we have experienced on our QSR Transactions. As a result, lower levels of losses incurred result in a higher profit commission and less benefit from ceded losses incurred; higher levels of losses incurred result in more benefit from ceded losses incurred and a lower profit commission (or for certain levels of accident year loss ratios, its elimination). See Note 4 - “Reinsurance” to our consolidated financial statements for a discussion of our reinsurance transactions.

Premiums earned are generated by the insurance that is in force during all or a portion of the period. A change in the average IIF in the current period compared to an earlier period is a factor that will increase (when the average in force is higher) or reduce (when it is lower) premiums written and earned in the current period, although this effect may be enhanced (or mitigated) by the factors discussed immediately above.

Investment income

Our investment portfolio is composed principally of investment grade fixed income securities. The principal factors that influence investment income are the size of the portfolio and its yield. As measured by amortized cost (which excludes changes in fair value, such as from changes in interest rates), the size of the investment portfolio is mainly a function of cash generated from (or used in) operations, such as net premiums written, investment income, net claim payments and expenses, and cash provided by (or used for) non-operating activities, such as debt or stock issuances or repurchases, and dividends.

Losses incurred

Losses incurred are the current expense that reflects claim payments, costs of settling claims, and changes in our estimates of payments that will ultimately be made as a result of delinquencies on insured loans. As explained under “Critical Accounting Estimates” in our 2021 10-K MD&A, except in the case of a premium deficiency reserve, we recognize an estimate of this expense only for delinquent loans. The level of new delinquencies has historically followed a seasonal pattern, with new delinquencies in the first part of the year lower than new delinquencies in the latter part of the year. The state of the economy, local housing markets and various other factors, including the COVID-19 pandemic, may result in delinquencies not following the typical pattern. Losses incurred are generally affected by:

- The state of the economy, including unemployment and housing values, each of which affects the likelihood that loans will become delinquent and whether loans that are delinquent cure their delinquency.
- The product mix of the in force book, with loans having higher risk characteristics generally resulting in higher delinquencies and claims.
- The size of loans insured, with higher average loan amounts tending to increase incurred losses.
- The percentage of coverage on insured loans, with deeper average coverage tending to increase losses incurred.
- The rate at which we rescind policies or curtail claims. Our estimated loss reserves incorporate our estimates of future rescissions of policies and curtailments of claims, and reversals of rescissions and curtailments. We collectively refer to such rescissions and denials as “rescissions” and variations of this term. We call reductions to claims “curtailments.”
- The distribution of claims over the life of a book. Historically, the first few years after loans are originated are a period of relatively low claims, with claims increasing substantially for several years subsequent and then declining, although persistency, the condition of the economy, including unemployment and housing prices, and other factors can affect this pattern. For example, a weak

economy or housing value declines can lead to claims from older books increasing, continuing at stable levels or experiencing a lower rate of decline. See further information under “Mortgage insurance earnings and cash flow cycle” below.

- Losses ceded under reinsurance transactions. See Note 4 - “Reinsurance” to our consolidated financial statements for a discussion of our reinsurance transactions.

Underwriting and other expenses

Underwriting and other expenses includes items such as employee compensation, fees for professional and consulting services, depreciation and maintenance expense, and premium taxes, and are reported net of ceding commissions associated with our QSR Transactions. Employee compensation expenses are variable due to share-based compensation, changes in benefits, and changes in headcount (which can fluctuate due to volume of NIW). See Note 4 - “Reinsurance” to our consolidated financial statements for a discussion of ceding commission on our QSR Transactions.

Interest expense

Interest expense reflects the interest associated with our consolidated outstanding debt obligations discussed in Note 3 - “Debt” to our consolidated financial statements and under “Liquidity and Capital Resources” below.

Other

Certain activities that we do not consider being part of our fundamental operating activities may also impact our results of operations and are described below.

#### Gains (losses) on investments and other financial instruments

- Fixed income securities. Investment gains and losses reflect the difference between the amount received on the sale of a fixed income security and the fixed income security’s cost basis, as well as any credit allowances and any “other than temporary” impairments recognized in earnings. The amount received on the sale of fixed income securities is affected by the coupon rate of the security compared to the yield of comparable securities at the time of sale.
- Equity securities. Investment gains and losses are accounted for as a function of the periodic change in fair value.
- Financial instruments. Investment gains and losses on the embedded derivative on our Home Re Transactions reflect the present value impact of the variation in investment income on assets on the insurance-linked notes held by the reinsurance trusts and the contractual reference rate used to calculate the reinsurance premiums we pay.

#### Loss on debt extinguishment

Gains and losses on debt extinguishment result from discretionary activities that are undertaken to enhance our capital position, improve our debt profile, and/or reduce potential dilution from our outstanding convertible debt. Extinguishing our outstanding debt obligations early through these discretionary activities may result in losses primarily driven by the payment of consideration in excess of our carrying value, and the write off of unamortized debt issuance costs on the extinguished portion of the debt.

Refer to “Explanation and reconciliation of our use of Non-GAAP financial measures” below to understand how these items impact our evaluation of our core financial performance.

### Mortgage insurance earnings and cash flow cycle

In general, the majority of any underwriting profit that a book generates occurs in the early years of the book, with the largest portion of any underwriting profit realized in the first year following the year the book was written. Subsequent years of a book may result in either underwriting profit or underwriting losses. This pattern of results typically occurs because relatively few of the incurred losses on delinquencies that a book will ultimately experience typically occur in the first few years of the book, when premium revenue is highest, while subsequent years are affected by declining premium revenues, as the number of insured loans decreases (primarily due to loan prepayments) and increasing losses. The typical pattern is also a function of premium rates generally resetting to lower levels after ten years. The state of the economy, local housing markets and various other factors, including the COVID-19 pandemic, may result in delinquencies not following the typical pattern.

### Cybersecurity

We are increasingly reliant on the efficient and uninterrupted operation of complex information technology systems. All information technology systems are potentially vulnerable to damage or interruption from a variety of sources, including by third-party cyber attacks, including those involving ransomware. The Company discovers vulnerabilities and experiences malicious attacks and other attempts to gain unauthorized access to its systems on a regular basis. Globally, attacks are expected to continue accelerating in both frequency and sophistication with increasing use by actors of tools and techniques that will hinder the Company’s ability to identify, investigate and recover from incidents. Such attacks may also increase as a result of retaliation by Russia in response to actions taken by the U.S. and other countries in connection with Russia's military invasion of Ukraine. In response to the COVID-19 pandemic, the Company transitioned to a primarily virtual workforce model and is now operating under a hybrid model. Virtual and hybrid workforce models may be more vulnerable to security breaches.

While we have information security policies and systems in place to secure our information technology systems and to prevent unauthorized access to or disclosure of sensitive information, there can be no assurance with respect to our systems and those of our third-party vendors that unauthorized access to the systems or disclosure of the sensitive information, either through the actions of third parties or employees, will not occur.

### Explanation and reconciliation of our use of non-GAAP financial measures

### Non-GAAP financial measures

We believe that use of the Non-GAAP financial measures of adjusted pre-tax operating income (loss), adjusted net operating income (loss) and adjusted net operating income (loss) per diluted share facilitate the evaluation of the company's core financial performance thereby providing relevant information to investors. These measures are not recognized in accordance with GAAP and should not be viewed as alternatives to GAAP measures of performance.

**Adjusted pre-tax operating income (loss)** is defined as GAAP income (loss) before tax, excluding the effects of net realized investment gains (losses), gain and losses on debt extinguishment, net impairment losses recognized in earnings and infrequent or unusual non-operating items where applicable.

**Adjusted net operating income (loss)** is defined as GAAP net income (loss) excluding the after-tax effects of net realized investment gains (losses), gain and losses on debt extinguishment, net impairment losses recognized in earnings, and infrequent or unusual non-operating items where applicable. The amounts of adjustments to components of pre-tax operating income (loss) are tax effected using a federal statutory tax rate of 21%.

**Adjusted net operating income (loss) per diluted share** is calculated in a manner consistent with the accounting standard regarding earnings per share by dividing (i) adjusted net operating income (loss) after making adjustments for interest expense on convertible debt, whenever the impact is dilutive by (ii) diluted weighted average common shares outstanding, which reflects share dilution from unvested restricted stock units and from convertible debt when dilutive under the “if-converted” method.

Although adjusted pre-tax operating income (loss) and adjusted net operating income (loss) exclude certain items that have occurred in the past and are expected to occur in the future, the excluded items represent items that are: (1) not viewed as part of the operating performance of our primary activities; or (2) impacted by both discretionary and other economic or regulatory factors and are not necessarily indicative of operating trends, or both. These adjustments, along with the reasons for their treatment, are described below. Trends in the profitability of our fundamental operating activities can be more clearly identified without the fluctuations of these adjustments. Other companies may calculate these measures differently. Therefore, their measures may not be comparable to those used by us.

(1) *Net realized investment gains (losses).* The recognition of net realized investment gains or losses can vary significantly across periods as the timing of individual securities sales is highly discretionary and is influenced by such factors as market opportunities, our tax and capital profile, and overall market cycles.

(2) *Gains and losses on debt extinguishment.* Gains and losses on debt extinguishment result from discretionary activities that are undertaken to enhance our capital position, improve

our debt profile, and/or reduce potential dilution from our outstanding convertible debt.

(3) *Net impairment losses recognized in earnings.* The recognition of net impairment losses on investments can vary significantly in both size and timing, depending on market credit cycles, individual issuer performance, and general economic conditions.

(4) *Infrequent or unusual non-operating items*. Items that are non-recurring in nature and are not part of our primary operating activities.

*Non-GAAP reconciliations*

*Reconciliation of Income before tax / Net income to Adjusted pre-tax operating income / Adjusted net operating income*

*(In thousands, except per share amounts)*

|  | Three Months Ended June 30, 2022 Pre-tax Tax effect Net (after-tax) |  | 2021 Pre-tax Tax effect Net (after-tax) |
| --- | ---: | ---: | ---: |
| Income before tax / Net income | **$315,891** **66,623** **$249,268** |  | $193,868 40,817 $153,051 |
| Adjustments: |  |  |  |
| Loss on debt extinguishment | **6,391** **1,342** **5,049** |  | — — — |
| Net realized investment (gains) losses | **69** **14** **55** |  | (1,927) (405) (1,522) |
| Adjusted pre-tax operating income / Adjusted net operating income | **$322,351** **$67,979** **$254,372** |  | $191,941 $40,412 $151,529 |
| **Reconciliation of Net income per diluted share to Adjusted net operating income per diluted share** |  |  |  |
| Weighted average diluted shares outstanding | **313,545** |  | 356,536 |
| Net income per diluted share | **$0.80** |  | $0.44 |
| Loss on debt extinguishment | **0.02** |  | — |
| Net realized investment (gains) losses | **—** |  | — |
| Adjusted net operating income per diluted share | **$0.81** | (1) | $0.44 |
| (1) Does not foot due to rounding. |  |  |  |
| **Reconciliation of Income before tax / Net income to Adjusted pre-tax operating income / Adjusted net operating income** |  |  |  |
|  | **Six Months Ended June 30,** |  |  |
|  | **2022** |  | 2021 |
| (In thousands, except per share amounts) | **Pre-tax** **Tax effect** **Net (after-tax)** |  | Pre-tax Tax effect Net (after-tax) |
| Income before tax / Net income | **$535,330** **$111,049** **$424,281** |  | $383,485 $80,413 $303,072 |
| Adjustments: |  |  |  |
| Loss on debt extinguishment | **28,498** **5,985** **22,513** |  | — — — |
| Net realized investment (gains) losses | **581** **122** **459** |  | (4,549) (955) (3,594) |
| Adjusted pre-tax operating income / Adjusted net operating income | **$564,409** **$117,156** **$447,253** |  | $378,936 $79,458 $299,478 |
| **Reconciliation of Net income per diluted share to Adjusted net operating income per diluted share** |  |  |  |
| Weighted average diluted shares outstanding | **319,012** |  | 356,461 |
| Net income per diluted share | **$1.34** |  | $0.87 |
| Loss on debt extinguishment | **0.07** |  | — |
| Net realized investment (gains) losses | **—** |  | (0.01) |
| Adjusted net operating income per diluted share | **$1.41** |  | $0.86 |

MGIC Investment Corporation - Q2 2022 \| 41

### Mortgage Insurance Portfolio

### Mortgage originations

The total amount of mortgage originations is generally influenced by the level of new and existing home sales, the percentage of homes purchased for cash, and the level of refinance activity. PMI market share of total mortgage originations is influenced by the mix of purchase and refinance originations. PMI market share is also impacted by the market share of total originations of the FHA, VA, USDA, and other alternatives to mortgage insurance, including GSE programs that may reduce or eliminate the demand for mortgage insurance.

NIW for the second quarter of 2022 was $24.3 billion (Q2 2021: $33.6 billion) and for the six months ended was $43.9 billion (YTD 2021: $64.4 billion). The decrease when compared with the same period last year was primarily due to a decrease in refinance transactions that required mortgage insurance.

For the remainder of the year, we expect a smaller origination market to drive a decrease in our NIW compared to 2021.

The following tables present characteristics of our primary NIW for the three and six months ended June 30, 2022 and 2021.

The percentage of our NIW with DTI ratios over 45% and LTV’s over 95% increased for the three and six months ended June 30, 2022 when compared with the same period last year. The increase was primarily driven by higher home price and interest rates, and a higher percentage of NIW from purchase transactions.

| Primary NIW by FICO score (% of primary NIW) | Three Months Ended June 30, 2022 | 2021 | Six Months Ended June 30, 2022 | 2021 |
| --- | ---: | ---: | ---: | ---: |
| 760 and greater | **41.2%** | 43.7% | **42.1%** | 45.1% |
| 740 - 759 | **19.3%** | 17.8% | **19.2%** | 17.5% |
| 720 - 739 | **15.3%** | 14.3% | **14.9%** | 13.9% |
| 700 - 719 | **11.1%** | 11.5% | **10.9%** | 11.5% |
| 680 - 699 | **7.5%** | 7.4% | **7.4%** | 7.4% |
| 660 - 679 | **3.6%** | 2.8% | **3.4%** | 2.5% |
| 640 - 659 | **1.2%** | 1.9% | **1.3%** | 1.6% |
| 639 and less | **0.8%** | 0.6% | **0.8%** | 0.5% |

We are aware of an issue of inaccurate reporting of FICO credit scores by a third-party occurring in late Q1 2022 and into the beginning of Q2 2022. At this time, we do not know the impact to the metrics shown above. However, we do not believe it will have a material impact on our business.

| Primary NIW by loan-to-value (% of primary NIW) | Three Months Ended June 30, 2022 | 2021 | Six Months Ended June 30, 2022 | 2021 |
| --- | ---: | ---: | ---: | ---: |
| 95.01% and above | **14.3%** | 12.0% | **13.0%** | 10.1% |
| 90.01% to 95.00% | **47.7%** | 41.7% | **49.6%** | 38.7% |
| 85.01% to 90.00% | **27.7%** | 30.8% | **27.2%** | 31.7% |
| 80.01% to 85.00% | **10.3%** | 15.5% | **10.2%** | 19.5% |

| Primary NIW by debt-to-income ratio (% of primary NIW) | Three Months Ended June 30, 2022 2021 | Six Months Ended June 30, 2022 2021 |
| --- | ---: | ---: |
| 45.01% and above | **21.0%** 12.9% | **19.3%** 12.4% |
| 38.01% to 45.00% | **32.1%** 30.4% | **31.9%** 29.7% |
| 38.00% and below | **46.9%** 56.7% | **48.8%** 57.9% |
| **Primary NIW by policy payment type** |  |  |
|  | Three Months Ended June 30, | Six Months Ended June 30, |
| (% of primary NIW) | **2022** 2021 | **2022** 2021 |
| Monthly premiums | **96.1%** 93.3% | **94.9%** 92.0% |
| Single premiums | **3.9%** 6.7% | **5.1%** 8.0% |
| Annual premiums | **0.0%** 0.0% | **0.0%** 0.0% |
| **Primary NIW by type of mortgage** |  |  |
|  | Three Months Ended June 30, | Six Months Ended June 30, |
| (% of primary NIW) | **2022** 2021 | **2022** 2021 |
| Purchases | **98.2%** 79.3% | **96.4%** 69.9% |
| Refinances | **1.8%** 20.7% | **3.6%** 30.1% |

### Insurance and risk in force

The amount of our IIF and RIF is impacted by the amount of NIW and cancellations of primary IIF during the period. Cancellation activity is primarily due to refinancing activity, but is also impacted by rescissions, cancellations due to claim payment, and policies cancelled when borrowers achieve the required amount of home equity. Refinancing activity has historically been affected by the level of mortgage interest rates and the level of home price appreciation. Cancellations generally move inversely to the change in the direction of interest rates, although they generally lag a change in direction.

### Persistency

Our persistency was 71.5% at June 30, 2022 compared to 62.6% at December 31, 2021 and 57.1% at June 30, 2021. Since 2000, our year-end persistency ranged from a high of 84.7% at December 31, 2009 to a low of 47.1% at December 31, 2003.

*(In billions)*

| IIF and RIF | Three Months Ended June 30, 2022 | 2021 | Six Months Ended June 30, 2022 | 2021 |
| --- | ---: | ---: | ---: | ---: |
| NIW | **$24.3** | $33.6 | **$43.9** | $64.4 |
| Cancellations | **(14.8)** | (23.3) | **(31.5)** | (49.0) |
| Increase in primary IIF | **$9.5** | $10.3 | **$12.4** | $15.4 |
| Direct primary IIF as of June 30, | **$286.8** | $262.0 | **$286.8** | $262.0 |
| Direct primary RIF as of June 30, | **$73.6** | $65.3 | **$73.6** | $65.3 |

MGIC Investment Corporation - Q2 2022 \| 42

### Credit profile of our primary RIF

Our 2009 and later books possess significantly improved risk characteristics when compared to our 2005-2008 books. Modification and refinance programs, such as HAMP and HARP, which expired at the end of 2016 and 2018, respectively, but have been replaced by other GSE modification programs, make outstanding loans more affordable to borrowers with the goal of reducing the number of foreclosures. As of June 30, 2022, loans associated with modification programs accounted for 4.6% of our total RIF, compared to 5.4% at December 31, 2021. As of June 30, 2022, 87.2% of loans associated with modifications programs were current.

The following table sets forth certain statistics associated with our primary IIF and RIF as of June 30, 2022:

*Primary insurance in force and risk in force by policy year*

*(in millions)*

| Policy Year | Insurance in Force Total | % of Total | Risk In Force Total | % of Total | Weighted Avg. Interest Rate | Delinquency Rate | Cede Rate % (1) | % of Original Remaining |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| 2004 and prior | $1,616 | 0.6% | $450 | 0.6% | 7.3% | 12.3% | 0.4% | NM |
| 2005-2008 | 12,197 | 4.3% | 3,240 | 4.4% | 6.9% | 11.0% | 3.6% | 5.0% |
| 2009-2015 | 7,927 | 2.8% | 2,158 | 2.9% | 4.3% | 4.6% | 14.2% | 4.5% |
| 2016 | 7,729 | 2.7% | 2,068 | 2.8% | 3.9% | 3.2% | 13.0% | 16.1% |
| 2017 | 8,837 | 3.1% | 2,312 | 3.1% | 4.2% | 3.9% | 0.0 % | 17.9% |
| 2018 | 9,051 | 3.1% | 2,309 | 3.1% | 4.8% | 4.5% | 0.8% | 18.1% |
| 2019 | 19,445 | 6.8% | 4,961 | 6.8% | 4.1% | 2.3% | 27.3% | 29.9% |
| 2020 | 73,331 | 25.5% | 18,119 | 24.7% | 3.1% | 0.9% | 28.4% | 64.1% |
| 2021 | 106,433 | 37.1% | 27,231 | 37.0% | 3.1% | 0.6% | 29.1% | 90.3% |
| 2022 | 40,232 | 14.0% | 10,740 | 14.6% | 4.3% | 0.1% | 30.1% | 98.7% |
| **Total** | **$286,798** | **100.0%** | **$73,588** | **100.0%** |  |  |  |  |

(1) Cede Rate % is calculated as the risk in force ceded to our QSR transactions divided by the total risk in force.

### Pool and other insurance

MGIC has written no new pool insurance since 2008; however, for a variety of reasons, including responding to capital market alternatives to PMI and customer demands, MGIC may write pool risk in the future. Our direct pool risk in force was $286 million ($198 million on pool policies with aggregate loss limits and $88 million on pool policies without aggregate loss limits) at June 30, 2022 compared to $305 million ($206 million on pool policies with aggregate loss limits and $99 million on pool policies without aggregate loss limits) at December 31, 2021. If claim payments associated with a specific pool reach the aggregate loss limit, the remaining IIF within the pool would be cancelled and any remaining delinquencies under the pool would be removed from our delinquency inventory.

In connection with the GSEs' CRT programs, an insurance subsidiary of MGIC provides insurance and reinsurance covering portions of the credit risk related to certain reference pools of mortgages acquired by the GSEs. Our RIF, as reported to us, related to these programs was approximately $288 million and $321 million as of June 30, 2022 and December 31, 2021, respectively.

### Consolidated Results of Operations

*The following section of the MD&A provides a comparative discussion of MGIC Investment Corporation’s Consolidated Results of Operations for the three and six months ended June 30, 2022 and 2021.*

### Revenues

*(in millions)*

|  | Three Months Ended June 30, 2022 | 2021 | % Change | Six Months Ended June 30, 2022 | 2021 | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Net premiums written | **$244.3** | $241.7 | 1 | **$487.0** | $483.2 | 1 |
| Net premiums earned | **$255.7** | $251.5 | 2 | **$510.9** | $506.6 | 1 |
| Investment income, net of expenses | **40.3** | 41.1 | (2) | **78.6** | 79.0 | (1) |
| Net gains (losses) on investments and other financial instruments | **(4.7)** | 2.9 | N/M | **(5.5)** | 5.2 | (206) |
| Other revenue | **1.9** | 2.3 | (17) | **3.7** | 5.0 | (26) |
| Total revenues | **$293.1** | $297.9 | (2) | **$587.7** | $595.8 | (1) |

### Net premiums written and earned

Comparative quarterly and year to date results

Premiums earned for the three and six months ended June 30, 2022 were $255.7 million and $510.9 million, respectively, compared with $251.5 million and $506.6 million, respectively, for the same comparable period last year. Net premiums written for the three and six months ended June 30, 2022 were $244.3 million and $487.0 million, respectively, compared with $241.7 million and $483.2 million, respectively, for the same comparable period last year. The increase in net premiums written and earned was due to an increase in insurance in force and a decrease in ceded premiums from our quota share reinsurance transactions, partially offset by a decrease in our premium yield compared to the same period last year.

See “Overview - Factors Affecting Our Results” above for additional factors that influenced the amount of net premiums written and earned during the periods. See “Reinsurance Transactions” below for discussion of our ceded premiums written and earned.

Premium yields

Net premium yield is net premiums earned divided by average IIF during the period and is influenced by a number of key drivers. The following table presents the key drivers of our net premium yield for each of the three and six months ended June 30, 2022 and June 30, 2021.

| Premium Yield (in basis points) |  | Three Months Ended June 30, 2022 | 2021 | Six Months Ended June 30, 2022 | 2021 |
| --- | ---: | ---: | ---: | ---: | ---: |
| In force portfolio yield | (1) | **39.4** | 42.6 | **39.5** | 43.0 |
| Premium refunds |  | **0.2** | (0.2) | **—** | (0.5) |
| Accelerated earnings on single premium policies |  | **1.1** | 3.1 | **1.4** | 3.8 |
| Total direct premium yield |  | **40.7** | 45.5 | **40.9** | 46.3 |
| Ceded premiums earned, net of profit commission and assumed premiums | (2) | **(4.5)** | (6.4) | **(4.5)** | (6.5) |
| **Net premium yield** |  | **36.2** | 39.1 | **36.4** | 39.8 |

(1) Total direct premiums earned, excluding premium refunds and accelerated premiums from single premium policy cancellations divided by average primary insurance in force.

(2) Assumed premiums include those from our participation in GSE CRT programs, of which the impact on the net premium yield was 0.3 bps for the six months ended June 30, 2022 compared to 0.4 bps for the six months ended June 30, 2021.

Changes in the net premium yield for the three and six months ended June 30, 2022 compared to the three months ended June 30, 2021 reflect the following:

|  |  |
| --- | --- |
| In force Portfolio Yield |  |
| è | A larger percentage of our IIF from book years with lower premium rates due to a decline in premium rates in recent years resulting from pricing competition, an in force book with lower risk characteristics, lower required capital, the availability of reinsurance, and certain policies undergoing premium rate resets on their ten-year anniversaries. |
| Premium Refunds |  |
| è | Premium refunds are primarily driven by claim activity and our estimate of refundable premiums on our delinquency inventory. The low level of claims received have resulted in a lower level of premium refunds. Fluctuations in our delinquency inventory and our estimate of the number of loans in our delinquency inventory that will result in a claim impact our estimate of refundable premium on our delinquency inventory. |
| Accelerated earnings on single premium policies |  |
| è | Accelerated earned premium from cancellation of single premium policies prior to their estimated policy life, primarily due to refinancing activity, increase our yield. The lower level of refinance transactions have reduced this benefit. |
| Ceded premiums earned, net of profit commission and assumed premiums |  |
| è | Ceded premiums earned, net of profit commission adversely impact our net premium yield. Ceded premiums earned, net of profit commission, are associated with the QSR Transactions and the excess of loss transactions. Assumed premiums consists primarily of premiums from GSE CRT programs. See “Reinsurance Transactions“ below for further discussion on our reinsurance transactions. |

As discussed in our Risk Factor titled “Competition or changes in our relationships with our customers could reduce our revenues, reduce our premium yields and / or increase our losses,” the private mortgage insurance industry is highly competitive and premium rates have declined over the past several years. We expect our in force portfolio yield to continue to decline as older insurance policies with higher premium rates run off and are replaced with new insurance policies which generally have lower premium rates.

### Reinsurance Transactions

Quota share reinsurance

Our quota share reinsurance affects various lines of our statements of operations and therefore we believe it should be analyzed by reviewing its total effect on our pre-tax income, described as follows.

|  |  |
| --- | --- |
| è | We cede a fixed percentage of premiums on insurance covered by the agreements. |
| è | We receive the benefit of a profit commission through a reduction in the premiums we cede. The profit commission varies inversely with the level of losses on a “dollar for dollar” basis and can be eliminated at loss levels higher than what we are currently experiencing. As a result, lower levels of ceded losses result in less benefit from ceded losses and a higher profit commission; higher levels of ceded losses result in more benefit from ceded losses and a lower profit commission (or for certain levels of accident year loss ratios, its elimination). |
| è | We receive the benefit of a ceding commission through a reduction in underwriting expenses equal to 20% of premiums ceded (before the effect of the profit commission). |
| è | We cede a fixed percentage of losses incurred on insurance covered by the agreements. |

The following table provides information related to our QSR Transactions for each of the three and six months ended June 30, 2022 and June 30, 2021.

*Quota Share Reinsurance*

*(Dollars in thousands)*

|  | Three Months Ended June 30, 2022 | 2021 | Six Months Ended June 30, 2022 | 2021 |
| --- | ---: | ---: | ---: | ---: |
| Ceded premiums written and earned, net of profit commission | **$14,995** | $33,983 | **$37,373** | $67,373 |
| % of direct premiums written | **5%** | 12% | **7%** | 12% |
| % of direct premiums earned | **5%** | 12% | **6%** | 11% |
| Profit commission | **$48,814** | $30,978 | **$87,794** | $62,922 |
| Ceding commissions | **$12,762** | $12,991 | **$25,034** | $26,058 |
| Ceded losses incurred | **$(10,430)** | $8,903 | **$(12,415)** | $17,308 |
| **Mortgage insurance portfolio:** |  |  |  |  |
| Ceded RIF (Dollars in millions) |  |  |  |  |
| 2015 QSR |  |  | **$694** | $1,187 |
| 2017 QSR |  |  | **—** | 950 |
| 2018 QSR |  |  | **—** | 956 |
| 2019 QSR |  |  | **1,302** | 2,054 |
| 2020 QSR |  |  | **4,311** | 5,523 |
| 2021 QSR |  |  | **7,101** | 3,872 |
| 2022 QSR |  |  | **3,019** | — |
| Credit Union QSR |  |  | **1,941** | 1,222 |
| Total ceded RIF |  |  | **$18,368** | $15,764 |

Ceded losses incurred for the three and six months ended June 30, 2022 reflect favorable loss reserve development on previously received delinquency notices. See "Losses Incurred, net” below for discussion of our loss reserves.

We terminated our 2017 and 2018 QSR Transactions effective December 31, 2021.

### Covered risk

The percentages of our NIW, new risk written, IIF, and RIF subject to our QSR Transactions as shown in the following table will vary from period to period in part due to the mix of our risk written during the period.

*Quota Share Reinsurance*

|  | Three Months Ended June 30, 2022 | 2021 | Six Months Ended June 30, 2022 | 2021 |
| --- | ---: | ---: | ---: | ---: |
| NIW subject to QSR Transactions | **87.7%** | 81.6% | **87.6%** | 77.8% |
| New Risk Written subject to QSR Transactions | **93.3%** | 90.4% | **93.2%** | 88.3% |
| IIF subject to QSR Transactions | **75.5%** | 74.6% | **75.5%** | 74.6% |
| RIF subject to QSR Transactions | **81.4%** | 81.6% | **81.4%** | 81.6% |

MGIC Investment Corporation - Q2 2022 \| 45

The increase in NIW and new risk written subject to quota share reinsurance increased for the three and six months ended June 30, 2022 compared to the same periods of the prior year primarily due to a decrease in refinance transactions which resulted in a decrease in NIW with LTVs less than or equal to 85% and amortization terms less than or equal to 20 years, which generally have lower coverage percentages, and are excluded from the QSR Transactions.

As of June 30, 2022, the weighted average coverage percentage of our QSR transactions was 30% based on RIF.

Excess of loss reinsurance

We have entered into an excess of loss reinsurance transaction, in the traditional reinsurance market with a panel of third-party reinsurers (the “XOL Transaction”) to provide up to $175 million of reinsurance coverage on eligible NIW in 2022. The XOL Transaction has contractual termination date after approximately ten years, with an optional termination date after seven years and quarterly thereafter. For the covered policies, we retain the first layer of the aggregate losses paid, and the reinsurers will then provide second layer coverage up to the outstanding reinsurance coverage amount. We retain losses paid in excess of the outstanding reinsurance coverage amount. The reinsurance coverage is subject to adjustment based on the risk characteristics of the covered loans. The reinsurance premiums ceded to the XOL Transaction are based off the remaining reinsurance coverage levels.

We also have aggregate excess of loss reinsurance (“Home Re Transactions”) with unaffiliated special purpose entities. As of June 30, 2022 our Home Re Transactions provided $1.8 billion of loss coverage on a portfolio of policies having an in force date from July 1, 2016 through March 31, 2019, and from January 1, 2020 through December 31, 2021; all dates inclusive. For this reinsurance coverage, we retain the first layer of the respective aggregate losses paid, and a Home Re Entity will then provide second layer coverage up to the outstanding reinsurance amount.

The current attachment, current detachment, and PMIERs required asset credit for each of our Home Re Transactions as of June 30, 2022, are as follows.

*($ In thousands)*

|  | Initial Attachment % (1) | Initial Detachment % (2) | Current Attachment % (1) | Current Detachment % (2) | PMIERs Required Asset Credit |
| --- | ---: | ---: | ---: | ---: | ---: |
| Home Re 2018-1 | 2.25% | 6.50% | 10.23% | 21.67% | $— |
| Home Re 2019-1 | 2.50% | 6.75% | 13.31% | 28.38% | — |
| Home Re 2020-1 | 3.00% | 7.50% | 5.51% | 8.76% | 31,016 |
| Home Re 2021-1 | 2.25% | 6.50% | 2.92% | 7.58% | 260,682 |
| Home Re 2021-2 | 2.10% | 6.50% | 2.42% | 7.32% | 332,664 |
| Home Re 2022-1 | 2.75% | 6.75% | 2.84% | 6.96% | 468,526 |

(1) The percentage represents the cumulative losses as a percentage of adjusted risk in force that MGIC retains prior to the ILN taking losses.

(2) The percentage represents the cumulative losses as a percentage of adjusted risk in force that must be reached before MGIC begins absorbing losses after the ILN layer

We ceded premiums on our Home Re Transactions of $18.2 million and $30.0 million, respectively, for the three and six months ended June 30, 2022, and $10.0 million and $20.3 million, respectively, for the three and six months ended June 30, 2021.

See Note 4 - “Reinsurance" to our consolidated financial statements for additional discussion of our excess of loss reinsurance.

### Investment income

Comparative quarterly and year to date results

Net investment income in the three and six months ended June 30, 2022 was $40.3 million and $78.6 million, respectively, compared with $41.1 million and $79.0 million, respectively for the comparative periods in the prior year. Net investment income was impacted by a decrease in the investment portfolio, partially offset by slightly higher yields.

### Losses and expenses

*(In millions)*

|  | Three Months Ended June 30, 2022 | 2021 | % Change | Six Months Ended June 30, 2022 | 2021 | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Losses incurred, net | **$(99.1)** | $29.2 | (439) | **$(118.4)** | $68.8 | (272) |
| Amortization of deferred policy acquisition costs | **3.0** | 3.0 | — | **5.7** | 5.7 | — |
| Other underwriting and operating expenses, net | **53.4** | 53.8 | (1) | **108.2** | 101.8 | 6 |
| Loss on debt extinguishment | **6.4** | — | N/M | **28.5** | — | N/M |
| Interest expense | **13.5** | 18.0 | (25) | **28.4** | 36.0 | (21) |
| Total losses and expenses | **$(22.8)** | $104.0 | (122) | **$52.4** | $212.3 | (75) |

### Losses incurred, net

As discussed in “Critical Accounting Policies” in our 2021 10-K MD&A, we establish case loss reserves for future claims on delinquent loans that were reported to us as two payments past due and have not become current or resulted in a claim payment. Such loans are referred to as being in our delinquency inventory. Case loss reserves are established based on estimating the number of loans in our delinquency inventory that will result in a claim payment, which is referred to as the claim rate, and further estimating the amount of the claim payment, which is referred to as claim severity.

IBNR reserves are established for delinquencies estimated to have occurred prior to the close of an accounting period, but have not yet been reported to us. IBNR reserves are established using estimated delinquencies, claim rates, and claim severities.

Estimation of losses is inherently judgmental. Changes to our estimates could result in a material impact to our consolidated results of operations and financial position, even in a stable economic environment. The conditions that affect the claim rate and claim severity include the current and future state of the domestic economy, including unemployment, and the current and future strength of local housing markets; exposure on insured loans; the amount of time between delinquency and claim filing; and curtailments and rescissions. The actual amount of the claim payments may be substantially different than our loss reserve estimates. Our estimates could be adversely affected by several factors, including a deterioration of regional or national economic conditions, including unemployment and the continued impact of the COVID-19 pandemic, leading to a reduction in borrowers’ income and thus their ability to make mortgage payments, the impact of past and future government initiatives and actions taken by the GSEs (including mortgage forbearance programs and foreclosure moratoriums), and a drop in housing values that could result in, among other things, greater losses on loans, and may affect borrower willingness to continue to make mortgage payments when the net value of the home is below the mortgage balance. Loss reserves in the future will also be dependent on the number of loans reported to us as delinquent.

Historically, losses incurred have followed a seasonal trend in which the second half of the year has weaker credit performance than the first half, with higher new notice activity and a lower cure rate. Changes in economic circumstances, including those associated with the COVID-19 pandemic, affected this pattern starting in the second quarter of 2020.

As discussed in our Risk Factors titled “The Covid-19 pandemic may materially impact our future financial results, business, liquidity and/or financial condition" and “The future impact of Covid-19 related forbearance and foreclosure mitigation activities is unknown,” the impact of the COVID-19 pandemic on our future incurred losses is uncertain and may be material. As discussed in our Risk Factor titled “Because we establish loss reserves only upon a loan delinquency rather than based on estimates of our ultimate losses on risk in force, losses may have a disproportionate adverse effect on our earnings in certain periods” if we have not received a notice of delinquency with respect to a loan and if we have not estimated the loan to be delinquent as of June 30, 2022 through our IBNR reserve, then we have not yet recorded an incurred loss with respect to that loan.

Our estimates are also affected by any agreements we enter into regarding our claims paying practices.

### Comparative quarterly results

Losses incurred, net for the second quarter of 2022 were ($99.1) million, a decrease of $128.3 million compared to the second quarter of 2021 losses incurred, net of $29.2 million primarily due to favorable loss reserve development on previously received delinquencies. While new delinquency notices added approximately $31.9 million to losses incurred in the second quarter of 2022, our re-estimation of loss reserves on previously received delinquencies resulted in favorable development of approximately $130.9 million primarily related to a decrease in the estimated claim rate on delinquencies. The favorable development resulted from greater than expected cures on delinquency notices received during the COVID-19 pandemic as well as delinquency notices received prior to the COVID-19 pandemic. In the second quarter of 2021, losses incurred were primarily related to reserves established on new notices with insignificant loss reserve development.

### Comparative year to date results

Losses incurred, net for the six months ended June 30, 2022 were ($118.4) million, a decrease of $187.2 million compared with losses incurred of $68.8 million for the comparable prior year period primarily due to favorable loss reserve development. While new delinquency notices added approximately $68.2 million to losses incurred for the six months ended June 30, 2022, our re-estimation of loss reserves on previously received delinquencies resulted in favorable development of approximately $186.6 million. The favorable development resulted from greater than expected cures on delinquency notices received during the COVID-19 pandemic as well as delinquency notices received prior to the COVID-19 pandemic. For the six months ended June 30, 2021, losses incurred were primarily related to reserves established on new notices with insignificant loss reserve development.

*Composition of losses incurred*

*(in millions)*

|  | Three Months Ended June 30, 2022 | 2021 | Six Months Ended June 30, 2022 | 2021 |
| --- | ---: | ---: | ---: | ---: |
| Current year / New notices | **$31.9** | $25.7 | **$68.2** | $67.1 |
| Prior year reserve development | **(130.9)** | 3.5 | **(186.6)** | 1.7 |
| Losses incurred, net | **$(99.0)** | $29.2 | **$(118.4)** | $68.8 |

### Loss ratio

The loss ratio is the ratio, expressed as a percentage, of the sum of incurred losses and loss adjustment expenses to net premiums earned. The loss ratio was (38.7%) and (23.2%), respectively for the three and six months ended June 30, 2022 compared with 11.6% and 13.6%, respectively for the comparative periods in the prior year. The decrease in the loss ratio for the three and six months ended June 30, 2022 compared to the respective prior year periods was primarily due to a decrease in losses incurred discussed above.

### New notice claim rate

The number of new delinquency notices received for the three months ended June 30, 2022 increased 4% from the same period last year. The estimated claim rate on delinquency notices received in the second quarter of 2022 was consistent with the new notice claim rate in 2021.

The table below presents our new delinquency notices received, delinquency inventory, percentage of loans in forbearance, and the average number of missed payments for the loans in our delinquency inventory by policy year:

*New notices and delinquency inventory during the three months ended and as of:*

*June 30, 2022*

| Policy Year | New Notices for the Three Months Ended | New Notices for the Six Months Ended | Delinquency Inventory | % of Delinquency Inventory in Forbearance | Avg. Number of Missed Payments of Delinquency Inventory |
| --- | ---: | ---: | ---: | ---: | ---: |
| 2004 and prior | 832 | 1,834 | 2,526 | 15.8% | 20 |
| 2005-2008 | 2,728 | 5,855 | 9,158 | 15.2% | 20 |
| 2009-2015 | 690 | 1,550 | 2,391 | 17.3% | 13 |
| 2016 | 475 | 1,030 | 1,450 | 20.2% | 12 |
| 2017 | 637 | 1,356 | 1,966 | 22.4% | 12 |
| 2018 | 738 | 1,553 | 2,314 | 23.7% | 11 |
| 2019 | 682 | 1,544 | 2,146 | 28.1% | 11 |
| 2020 | 1,113 | 2,428 | 2,643 | 51.9% | 8 |
| 2021 | 1,364 | 2,812 | 2,156 | 53.1% | 5 |
| 2022 | 137 | 137 | 105 | 21.0% | 2 |
| **Total** | **9,396** | **20,099** | **26,855** | **24.7%** | **14** |
| **Claim rate on new notices (1)** | **8%** |  |  |  |  |
| June 30, 2021 |  |  |  |  |  |
| Policy Year | New Notices for the Three Months Ended | New Notices for the Six Months Ended | Delinquency Inventory | % of Delinquency Inventory in Forbearance | Avg. Number of Missed Payments of Delinquency Inventory |
| 2004 and prior | 825 | 1,958 | 3,125 | 22.3% | 20 |
| 2005-2008 | 2,725 | 6,654 | 13,319 | 33.3% | 18 |
| 2009-2015 | 850 | 2,192 | 4,777 | 58.9% | 11 |
| 2016 | 567 | 1,367 | 3,079 | 68.0% | 11 |
| 2017 | 722 | 1,876 | 4,456 | 69.1% | 11 |
| 2018 | 840 | 2,181 | 5,204 | 71.4% | 10 |
| 2019 | 915 | 2,420 | 5,305 | 77.1% | 10 |
| 2020 | 1,273 | 3,066 | 3,531 | 80.2% | 7 |
| 2021 | 319 | 333 | 203 | 42.9% | 3 |
| **Total** | **9,036** | **22,047** | **42,999** | **55.4%** | **13** |
| Claim rate on new notices (1) | 8% |  |  |  |  |
| (1) Claim rate is the respective quarter or year to date weighted average rate and is rounded to the nearest whole percent. |  |  |  |  |  |

MGIC Investment Corporation - Q2 2022 \| 49

### Claims severity

Factors that impact claim severity include:

|  |  |
| --- | --- |
| è | economic conditions at time of claim filing, including home prices compared to home prices at the time of placement of coverage, |
| è | exposure of the loan, which is the unpaid principal balance of the loan times our insurance coverage percentage, |
| è | length of time between delinquency and claim filing (which impacts the amount of interest and expenses, with a longer time between default and claim filing generally increasing severity), and |
| è | curtailments. |

As discussed in Note 11 - “Loss Reserves,” our loss reserves estimates take into consideration trends over time, because the development of the delinquencies may vary from period to period without establishing a meaningful trend. In light of the forbearance and foreclosure moratorium programs associated with the COVID-19 pandemic, the average number of missed payments at the time a claim is received and expected to be received will increase throughout 2022. Although foreclosure moratoriums are expiring, under a CFPB rule that was generally effective through December 31, 2021, with limited exceptions, servicers were required to ensure that at least one temporary safeguard was met before referring 120-day delinquent loans for foreclosure. Given the expiration of the CFPB rule, it is likely that foreclosures and claims will increase, although the timing and magnitude of such increase is uncertain

The majority of loans insured prior to 2009 (which represent 43% of the loans in the delinquency inventory) are covered by master policy terms that, except under certain circumstances, do not limit the number of years that an insured can include interest when filing a claim. Under our current master policy terms, an insured can include accumulated interest when filing a claim only for the first three years the loan is delinquent. In each case, the insured must comply with its obligations under the terms of the applicable master policy.

*Claims severity trend for claims paid during the period*

| Period | Average exposure on claim paid | Average claim paid | % Paid to exposure | Average number of missed payments at claim received date |
| --- | ---: | ---: | ---: | ---: |
| **Q2 2022** | **44,106** | **27,374** | **62.1%** | **41** |
| Q1 2022 | 38,009 | 27,662 | 72.8% | 45 |
| Q4 2021 | 43,485 | 32,722 | 75.2% | 42 |
| Q3 2021 | 42,468 | 36,138 | 85.1% | 34 |
| Q2 2021 | 40,300 | 34,068 | 84.5% | 36 |
| Q1 2021 | 46,807 | 36,725 | 78.5% | 34 |
| Q4 2020 | 48,321 | 40,412 | 83.6% | 32 |
| Q3 2020 | 47,780 | 40,600 | 85.0% | 27 |
| Q2 2020 | 44,905 | 42,915 | 95.6% | 32 |
| Q1 2020 | 46,247 | 47,222 | 102.1% | 33 |
| Note: Table excludes material settlements. Settlements include amounts paid in settlement disputes for claims paying practices and/or commutations of policies. |  |  |  |  |

Claims that were resolved after the first quarter of 2020 experienced an increase in loss mitigation activities, primarily third party acquisitions (sometimes referred to as “short sales”), resulting in a decrease in the average claim paid and the average claim paid as a percentage of exposure. At the end of 2021, the average number of missed payments at the time claims were received increased as foreclosure moratoriums expired resulting in an increase in our claims received. However, at June 30, 2022, claims received are still below levels experienced prior to the second quarter of 2020. As foreclosure moratoriums and forbearance plans end, we expect to see an increase in claims received and claims paid at exposure levels above those experienced subsequent to the second quarter of 2020. The magnitude and timing of the increases are uncertain.

The length of time a loan is in the delinquency inventory (see Note 11 - “Loss Reserves,” table 11.4) can differ from the number of payments that the borrower has not made or is considered delinquent. These differences typically result from a borrower making monthly payments that do not result in the loan becoming fully current. The number of payments that a borrower is delinquent is shown in the following table.

*Delinquency inventory - number of payments delinquent*

|  | June 30, 2022 | December 31, 2021 | June 30, 2021 |
| --- | ---: | ---: | ---: |
| 3 payments or less | **9,198** | 9,529 | 8,619 |
| 4-11 payments | **8,138** | 9,208 | 14,894 |
| 12 payments or more (1) | **9,519** | 14,553 | 19,486 |
| Total | **26,855** | 33,290 | 42,999 |
| 3 payments or less | **35%** | 28% | 20% |
| 4-11 payments | **30%** | 28% | 35% |
| 12 payments or more | **35%** | 44% | 45% |
| Total | **100%** | 100% | 100% |

(1) Approximately 21%, 13%, and 10% of the primary delinquency inventory with 12 payments or more delinquent has at least 36 payments delinquent as of June 30, 2022, December 31, 2021, and June 30, 2021, respectively.

### Net losses and LAE paid

Net losses and LAE paid in the three months ended June 30, 2022 was flat compared with the same period in the prior year and decreased slightly for the six months ended June 30, 2022 compared with the six months ended June 30, 2021. Foreclosures on mortgages purchased or securitized by the GSEs were suspended through July 31, 2021. Under a CFPB rule that was effective through December 31, 2021, with limited exceptions, servicers were required to ensure that at least one temporary procedural safeguard had been met before referring 120-day delinquent loans for foreclosure. As the various foreclosure moratoriums came to an end in 2021, we expect net losses and LAE paid to increase, however, the magnitude and timing of the increases are uncertain.

The following table presents our net losses and LAE paid for the three and six months ended June 30, 2022 and 2021.

*(In millions)*

| Net losses and LAE paid | Three Months Ended June 30, 2022 | 2021 | Six Months Ended June 30, 2022 | 2021 |
| --- | ---: | ---: | ---: | ---: |
| Total primary (excluding settlements) | **$9** | $11 | **$18** | $23 |
| Claims paying practices and NPL settlements | **4** | — | **4** | — |
| Pool | **—** | — | **—** | — |
| Direct losses paid | **13** | 11 | **22** | 23 |
| Reinsurance | **(1)** | — | **(1)** | (1) |
| Net losses paid | **12** | 11 | **21** | 22 |
| LAE | **2** | 3 | **4** | 7 |
| Net losses and LAE paid | **$14** | $14 | **$25** | $29 |
| Average Claim Paid | **$27,374** | $34,058 | **$27,519** | $35,328 |

The primary average claim paid can vary materially from period to period based upon a variety of factors, including the local market conditions, average loan amount, average coverage percentage, the amount of time between delinquency and claim filing, and our loss mitigation efforts on loans for which claims are paid.

The primary average RIF on delinquent loans at June 30, 2022, December 31, 2021 and June 30, 2021 for the top 5 jurisdictions (based on the June 30, 2022 delinquency inventory) appears in the following table.

*Primary average RIF - delinquent loans*

|  | June 30, 2022 | December 31, 2021 | June 30, 2021 |
| --- | ---: | ---: | ---: |
| Florida | **$56,308** | $56,227 | $57,564 |
| Texas | **50,900** | 51,037 | 52,897 |
| Illinois | **41,193** | 40,798 | 41,423 |
| New York | **74,784** | 74,836 | 76,198 |
| Pennsylvania | **39,408** | 39,523 | 41,698 |
| All other jurisdictions | **50,603** | 51,652 | 53,871 |
| All jurisdictions | **$51,197** | $51,887 | $53,787 |

The primary average RIF on all loans was $62,735, $59,518, and $56,680 at June 30, 2022, December 31, 2021, and June 30, 2021, respectively.

### Loss reserves

Our primary delinquency inventory was 26,855 loans at June 30, 2022, representing a decrease of 19.3% from December 31, 2021 and 37.5% from June 30, 2021. Generally, a defaulted loan with more missed payments is more likely to result in a claim. We experienced a decrease in the number of delinquencies in inventory with twelve or more missed payments at June 30, 2022 and December 31, 2021 when compared to June 30, 2021. The decrease is primarily due to the increase in cure activity on delinquencies received during the COVID-19 pandemic as well as delinquency notices received prior to the COVID-19 pandemic. (See Note 11- “Loss Reserves,” table 11.4)

The gross reserves at June 30, 2022, December 31, 2021, and June 30, 2021 appear in the table below.

*Gross reserves*

| Primary: | June 30, 2022 |  | December 31, 2021 |  | June 30, 2021 |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Direct case loss reserves (in millions) | **$656** |  | $795 |  | $843 |  |
| Direct IBNR and LAE reserves | **66** |  | 82 |  | 85 |  |
| **Total primary direct loss reserves** | **$722** |  | $877 |  | $928 |  |
| Ending delinquent inventory |  | **26,855** |  | 33,290 |  | 42,999 |
| Percentage of loans delinquent (delinquency rate) |  | **2.28%** |  | 2.84% |  | 3.71% |
| Average total primary loss reserves per delinquency |  | **$26,890** |  | $26,156 |  | $21,147 |
| Primary claims received inventory included in ending delinquent inventory |  | **254** |  | 211 |  | 159 |
| **Pool (1):** |  |  |  |  |  |  |
| Direct loss reserves (in millions): |  |  |  |  |  |  |
| With aggregate loss limits | **$3** |  | $4 |  | $5 |  |
| Without aggregate loss limits | **2** |  | 2 |  | 2 |  |
| **Total pool direct loss reserves** | **$5** |  | $6 |  | $7 |  |
| Ending default inventory: |  |  |  |  |  |  |
| With aggregate loss limits |  | **272** |  | 313 |  | 348 |
| Without aggregate loss limits |  | **148** |  | 185 |  | 194 |
| Total pool ending delinquent inventory |  | **420** |  | 498 |  | 542 |
| Pool claims received inventory included in ending delinquent inventory |  | **2** |  | 1 |  | 7 |
| **Other gross reserves (2) (in millions)** | **$—** |  | $1 |  | $1 |  |

(1) Since a number of our pool policies include aggregate loss limits and/or deductibles, we do not disclose an average direct reserve per delinquency for our pool business.

(2) Other Gross Reserves includes direct and assumed reserves that are not included within our primary or pool loss reserves.

The primary delinquency inventory for the top 15 jurisdictions (based on June 30, 2022 delinquency inventory) at June 30, 2022, December 31, 2021 and June 30, 2021 appears in the following table.

*Primary delinquency inventory by jurisdiction*

|  | June 30, 2022 | December 31, 2021 | June 30, 2021 |
| --- | ---: | ---: | ---: |
| Florida \* | **2,155** | 2,948 | 4,086 |
| Texas | **2,004** | 2,572 | 3,467 |
| Illinois \* | **1,756** | 2,082 | 2,779 |
| New York \* | **1,499** | 1,674 | 1,987 |
| Pennsylvania \* | **1,488** | 1,672 | 2,062 |
| California | **1,370** | 1,852 | 2,680 |
| Ohio \* | **1,201** | 1,458 | 1,809 |
| Georgia | **983** | 1,272 | 1,736 |
| Michigan | **932** | 1,144 | 1,318 |
| New Jersey \* | **916** | 1,169 | 1,478 |
| North Carolina | **788** | 987 | 1,285 |
| Maryland | **782** | 929 | 1,242 |
| Indiana | **612** | 736 | 877 |
| Virginia | **602** | 766 | 1,028 |
| Minnesota | **600** | 725 | 928 |
| All other jurisdictions | **9,167** | 11,304 | 14,237 |
| Total | **26,855** | 33,290 | 42,999 |

Note: Asterisk denotes jurisdictions in the table above that predominately use a judicial foreclosure process, which generally increases the amount of time it takes for a foreclosure to be completed.

The primary delinquency inventory by policy year at June 30, 2022, December 31, 2021 and June 30, 2021 appears in the following table.

*Primary delinquency inventory by policy year*

| Policy year: | June 30, 2022 | December 31, 2021 | June 30, 2021 |
| --- | ---: | ---: | ---: |
| 2004 and prior | **2,526** | 2,829 | 3,125 |
| 2004 and prior % | **9%** | 8% | 7% |
| 2005 | **1,512** | 1,703 | 1,943 |
| 2006 | **2,504** | 2,928 | 3,407 |
| 2007 | **4,140** | 4,973 | 6,216 |
| 2008 | **1,002** | 1,278 | 1,753 |
| 2005 - 2008 % | **34%** | 33% | 31% |
| 2009 | **65** | 84 | 110 |
| 2010 | **47** | 56 | 74 |
| 2011 | **58** | 79 | 113 |
| 2012 | **89** | 143 | 230 |
| 2013 | **323** | 441 | 651 |
| 2014 | **751** | 1,055 | 1,416 |
| 2015 | **1,058** | 1,542 | 2,183 |
| 2009 - 2015 % | **9%** | 10% | 11% |
| 2016 | **1,450** | 2,004 | 3,079 |
| 2017 | **1,966** | 2,949 | 4,456 |
| 2018 | **2,314** | 3,412 | 5,204 |
| 2019 | **2,146** | 3,340 | 5,305 |
| 2020 | **2,643** | 3,308 | 3,531 |
| 2021 | **2,156** | 1,166 | 203 |
| 2022 | **105** | — | — |
| 2016 and later % | **48%** | 49% | 51% |
| Total | **26,855** | 33,290 | 42,999 |

On our primary business, the highest claim frequency years have typically been the third and fourth year after loan origination. However, the pattern of claim frequency can be affected by many factors, including persistency and deteriorating economic conditions. Deteriorating economic conditions, including the impacts of the COVID-19 pandemic, can result in increasing claims following a period of declining claims. As of June 30, 2022, 76% of our primary RIF was written subsequent to December 31, 2019, 83% of our primary RIF was written subsequent to December 31, 2018, and 86% of our primary RIF was written subsequent to December 31, 2017.

### COVID-19 Delinquency Activity

At March 31, 2020, before the COVID-19 pandemic impacted our delinquency inventory, our delinquency inventory was 27,384. As a result of the impacts of the COVID-19 pandemic, including the high level of unemployment and economic uncertainty resulting from measures to reduce the transmission of the COVID-19 in the second and third quarters of 2020, we experienced an increase in our delinquency inventory

Forbearance programs enacted by the GSEs provide for payment forbearance on mortgages to borrowers experiencing a hardship during the COVID-19 pandemic. As of June 30, 2022, December 31, 2021, and June 30, 2021, 25%, 33%, and 55%, respectively, of our delinquency inventory was reported as subject to a forbearance plan. We believe substantially all represent forbearances related to COVID-19. Historically, forbearance plans have reduced the incidence of our losses on affected loans. However, given the uncertainty surrounding the long-term economic impact of COVID-19, it is difficult to predict the ultimate effect of COVID-19 related forbearances on our loss incidence. Whether a loan delinquency will cure, including through modification, when forbearance ends will depend on the economic circumstances of the borrower at that time. The severity of losses associated with delinquencies that do not cure will depend on economic conditions at that time, including home prices.

### Underwriting and other expenses, net

Underwriting and other expenses includes items such as employee compensation costs, fees for professional and consulting services, depreciation and maintenance expense, and premium taxes, and are reported net of ceding commissions.

Underwriting and other expenses, net for the three and six months ended June 30, 2022 were $53.4 million and $108.2 million, respectively, compared with $53.8 million and $101.8 million, respectively, in the prior year periods. Underwriting and other expenses, net increased during the six months ended June 30, 2022 compared with the same period in the prior year primarily due to increases in expenses related to our investments in technology and data and analytics infrastructure.

|  | Three Months Ended June 30, 2022 | 2021 | Six Months Ended June 30, 2022 | 2021 |
| --- | ---: | ---: | ---: | ---: |
| Underwriting expense ratio | **22.4%** | 22.3% | **22.7%** | 21.1% |

The underwriting expense ratio is the ratio, expressed as a percentage, of the underwriting and operating expenses, net and amortization of DAC of our combined insurance operations (which excludes underwriting and operating expenses of our non-insurance subsidiaries) to net premiums written. The underwriting expense ratio in the six months ended June 30, 2022 increased due to an increase in underwriting expenses, partially offset by an increase in net premiums written.

### Provision for income taxes and effective tax rate

*(In millions, except rate)*

| Income tax provision and effective tax rate | Three Months Ended June 30, 2022 | 2021 | Six Months Ended June 30, 2022 | 2021 |
| --- | ---: | ---: | ---: | ---: |
| Income before tax | **$315.9** | $193.9 | **$535.3** | $383.5 |
| Provision for income taxes | **$66.6** | $40.8 | **$111.0** | $80.4 |
| Effective tax rate | **21.1%** | 21.1% | **20.7%** | 21.0% |

Our effective tax rate for the three and six months ended June 30, 2022 and 2021 approximated the statutory tax rate of 21%.

### Balance Sheet Review

The following sections mainly focus on the major developments on our Consolidated Balance Sheet since December 31, 2021.

### Consolidated balance sheets - Assets

*(in thousands)*

|  | June 30, 2022 | December 31, 2021 | % Change |
| --- | ---: | ---: | ---: |
| Investments | **$5,728,151** | $6,606,749 | (13) |
| Cash and cash equivalents | **419,261** | 304,958 | 37 |
| Premiums receivable | **57,547** | 56,540 | 2 |
| Reinsurance recoverable on loss reserves | **53,958** | 66,905 | (19) |
| Deferred incomes taxes, net | **75,617** | — | N/M |
| Other assets | **265,073** | 289,856 | (9) |
| **Total Assets** | **$6,599,607** | $7,325,008 | (10) |

Investments - Our investments decreased to $5.7 billion as of June 30, 2022 from $6.6 billion as of December 31, 2021. The decrease is primarily due to a decrease in the fair value of our investment portfolio due to the increase in the prevailing interest rates and the use of our investment portfolio to reduce debt outstanding.

The average duration and investment yield of our investment portfolio as of June 30, 2022, December 31, 2021, and June 30, 2021 are shown in the table below.

*Portfolio duration and embedded investment yield*

|  | June 30, 2022 | December 31, 2021 |
| --- | ---: | ---: |
| Duration (in years) | **4.6** | 4.5 |
| Pre-tax yield (1) | **2.7%** | 2.5% |
| After-tax yield (1) | **2.2%** | 2.1% |

(1) Embedded investment yield is calculated on a yield-to-worst basis.

The security ratings of our fixed income investments as of June 30, 2022, December 31, 2021, and June 30, 2021 are shown in the following table.

*Fixed income security ratings*

| Period | Security Ratings (1) AAA | AA | A | BBB |
| --- | ---: | ---: | ---: | ---: |
| **June 30, 2022** | **17%** | **27%** | **35%** | **21%** |
| December 31, 2021 | 18% | 26% | 36% | 20% |

(1) Ratings are provided by one or more of: Moody's, Standard & Poor's and Fitch Ratings. If three ratings are available, the middle rating is utilized; otherwise the lowest rating is utilized.

Cash and cash equivalents (including restricted) - Our cash and cash equivalents balance increased to $419 million as of June 30, 2022, from $305 million as of December 31, 2021, as net cash generated from operating activities was only partially offset by cash used in investing and financing activities.

Income Taxes - Our current income tax liability was $26.1 million and $3.3 million at June 30, 2022 and December 31, 2021, respectively, and is included as a component of other liabilities in our consolidated balance sheets. Our deferred tax asset was $75.6 million at June 30, 2022. Our deferred income tax liability was $39.4 million at December 31, 2021 and is included as a component of other liabilities in our consolidated balance sheets. The change in our deferred income tax asset and liability was primarily due to the tax effect of unrealized losses generated by the investment portfolio during the first six months of 2022. We owned $510.3 million and $426.3 million of tax and loss bonds at June 30, 2022 and December 31, 2021, respectively.

### Consolidated balance sheets - Liabilities and equity

*(in thousands)*

|  | June 30, 2022 | December 31, 2021 | % Change |
| --- | ---: | ---: | ---: |
| Loss reserves | **$727,178** | $883,522 | (18) |
| Unearned premiums | **217,739** | 241,690 | (10) |
| Long-term debt | **917,911** | 1,146,712 | (20) |
| Other liabilities | **163,760** | 191,702 | (15) |
| Total Liabilities | **$2,026,588** | $2,463,626 | (18) |
| Common stock | **371,353** | 371,353 | — |
| Paid-in capital | **1,791,380** | 1,794,906 | — |
| Treasury stock | **(887,959)** | (675,265) | 31 |
| Accumulated other comprehensive income (loss), net of tax | **(325,738)** | 119,697 | (372) |
| Retained earnings | **3,623,983** | 3,250,691 | 11 |
| Shareholders’ equity | **$4,573,019** | $4,861,382 | (6) |

Loss reserves - Our loss reserves include estimates of losses and settlement expenses on (1) loans in our delinquency inventory (known as case reserves), (2) IBNR delinquencies, and (3) LAE. Our gross reserves are reduced by reinsurance recoverable on loss reserves to calculate a net reserve balance. Loss reserves decreased by 18% to $727 million as of June 30, 2022, from $884 million as of December 31, 2021. Reinsurance recoverables on loss reserves were $54 million and $67 million as of June 30, 2022 and December 31, 2021, respectively. The decrease in loss reserves is primarily due to favorable development of $186.7 million on previously received delinquency notices, partially offset by loss reserves established on new delinquency notices.

Long-term debt - Our long-term debt decreased to $917.9 million as of June 30, 2022 from $1,146.7 million as of December 31, 2021. In the first six months of 2022 we repurchased $74.9 million in aggregate principal amount of our 9% Debentures and repaid the outstanding balance of the FHLB Advance of $155.0 million. In July 2022, we redeemed the $242.3 million of aggregate principal outstanding on our 5.75% Senior Notes due in 2023.

Shareholder’s Equity - The decrease in shareholders’ equity represents a decrease in the fair value of our investments portfolio, repurchases of our common stock and dividends paid, partially offset by net income in the first six months of 2022.

### Liquidity and Capital Resources

### Consolidated Cash Flow Analysis

We have three primary types of cash flows: (1) operating cash flows, which consist mainly of cash generated by our insurance operations and income earned on our investment portfolio, less amounts paid for claims, interest expense and operating expenses, (2) investing cash flows related to the purchase, sale and maturity of investments and purchases of property and equipment and (3) financing cash flows generally from activities that impact our capital structure, such as changes in debt and shares outstanding, and dividend payments. The following table summarizes our consolidated cash flows from operating, investing and financing activities:

*Summary of consolidated cash flows*

*(In thousands)*

| Total cash provided by (used in): | Six Months Ended June 30, 2022 | 2021 |
| --- | ---: | ---: |
| Operating activities | **$361,679** | $349,422 |
| Investing activities | **289,586** | (407,342) |
| Financing activities | **(536,962)** | (47,807) |
| Increase (decrease) in cash and cash equivalents and restricted cash and cash equivalents | **$114,303** | $(105,727) |

Net cash provided by operating activities for the six months ended June 30, 2022 increased compared to the same period of 2021 primarily due to decreases in losses paid and the reinsurance recoverable on paid losses. This was partially offset by increases in underwriting and operating expenses and a decrease in premiums received.

We also have purchase obligations totaling approximately $29 million which consist primarily of contracts related to our continued investment in our information technology infrastructure in the normal course of business. The majority of these obligations are under contracts that give us cancellation rights with notice. In the next twelve months we anticipate we will pay approximately $25 million for our purchase obligations.

Net cash provided by investing activities for the six months ended June 30, 2022 primarily reflects sales and maturities of fixed income and equity securities during the period that exceeded purchases as proceeds were used in financing activities. Net cash used in investing activities for the six months ended June 30, 2021 primarily reflects purchases of fixed income and equity securities during the period that exceeded sales and maturities of fixed income and equity securities during the period as cash from operations was available for additional investment.

Net cash used in financing activities for the six months ended June 30, 2022 primarily reflects repurchase of our common stock, repayment of our FHLB Advance, the repurchase of a portion of our 9% Debentures and dividends to shareholders. Net cash used in financing activities for the six months ended June 30, 2021 primarily reflects dividends to shareholders and the payment of withholding taxes related to share-based compensation net share settlement.

### Capitalization

Debt - holding company

As of June 30, 2022, our holding company’s debt obligations were $0.9 billion in aggregate principal amount consisting of our 5.75% Notes, 5.25% Notes, and 9% Debentures. In the first half of 2022 we repurchased $74.9 million in aggregate principal amount of our 9% Debentures at a purchase price of $102.0 million plus accrued interest. The repurchase of 9% Debentures resulted in a $27.2 million loss on debt extinguishment on our consolidated statement of operations and a reduction in our potentially dilutive shares by approximately 5.7 million shares. In July, we redeemed the $242.3 million of aggregate principal outstanding on our 5.75% Notes due in 2023 at a price of $248.4 million plus accrued interest. The redemption of the 5.75% Notes resulted in a $6.8 million loss on debt extinguishment, which will be recorded in the third quarter of 2022.

Liquidity analysis - holding company

As of June 30, 2022, we had approximately $690 million in cash and investments at our holding company. These resources are maintained primarily to service our debt interest expense, pay debt maturities, repurchase shares, repurchase debt, pay dividends to shareholders, and to settle intercompany obligations. While these assets are held, we generate investment income that serves to offset a portion of our cash requirements. The payment of dividends from our insurance subsidiaries are the principal sources of holding company cash inflow. MGIC is the principal source of dividends, and their payment is restricted by insurance regulation. See Note 14 - “Statutory Information” to our consolidated financial statement for additional information about MGIC’s dividend restrictions. The payment of dividends from MGIC is also influenced by our view of the appropriate level of PMIERs Available Assets to maintain in excess of Minimum Required Assets. Other sources of holding company liquidity include raising capital in the public markets. The ability to raise capital in the public markets is subject to prevailing market conditions, investor demand for the securities to be issued, and our deemed creditworthiness.

In the first six months of 2022 we paid $51 million in dividends to shareholders. On July 28, 2022, our Board of Directors declared a quarterly cash dividend of $0.10 per common share to shareholders of record on August 11, 2022, payable on August 25, 2022.

In the first six months of 2022, our holding company cash and investments increased by $27 million to $690 million as of June 30, 2022.

Significant cash and investments *inflows at our holding company* during the first six months:

- $400.0 million dividends received,
- $32.7 million intercompany tax receipts, and
- $3.9 million of investment income.

Significant cash *outflows at our holding company* during the first six months:

- $221.9 million of share repurchase transactions,
- $102.0 million of 9% Debenture repurchases,
- $50.8 million of cash dividends paid to shareholders, and
- $28.5 million of interest payments on our 5.75% Notes, 5.25% Notes, and 9% Debentures.

In the first six months of 2022, we repurchased 15.7 million shares of our common stock using $221.9 million of holding company cash. As of June 30, 2022 we had remaining authorization to repurchase $278.1 million of our common stock through the end of 2023 under a share repurchase program approved by our Board of Directors in October 2021. In July 2022, we repurchased an additional 2.1 million shares totaling $27.9 million under the remaining authorization.

MGIC paid cash dividends to our holding company of $400 million in the six months ended June 30, 2022. Future dividend payments from MGIC to the holding company will be determined in consultation with the board, and after considering any updated estimates about our business. We ask the Wisconsin OCI not to object before MGIC pays dividends to the holding company.

The net unrealized losses on our holding company investment portfolio were approximately $13.5 million at June 30, 2022 and the portfolio had a modified duration of approximately 1.7 years.

In July 2022 we redeemed the $242.3 million of aggregate principal outstanding on our 5.75% Senior Notes due in 2023. Scheduled debt maturities beyond the next twelve months include $650 of our 5.25% Notes in 2028, and $35.3 million of our 9% Debentures in 2063. Subject to certain limitations and restrictions, holders of each of the 9% Debentures may convert their notes into shares of our common stock at their option under the terms of their issuance, in which case our corresponding obligation will be eliminated.

Over the next twelve months the principal demand on holding company resources will be interest payments on our 5.25% Notes, and 9% Debentures is approximating $37 million, after giving effect to the redemption of our 5.75% Senior Notes discussed above. We believe our holding company has sufficient sources of liquidity to meet its payment obligations for the foreseeable future.

We may also use additional holding company cash to repurchase additional shares or to repurchase our outstanding debt obligations. Such repurchases may be material, may be made for cash (funded by debt) and/or exchanges for other securities, and may be made in open market purchases (including through 10b5-1 plans), privately negotiated acquisitions or other transactions. See "Overview-Capital" of this MD&A for a discussion for a discussion of our share repurchase programs.

See Note 7 – “Debt” to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2021 for additional information about the conversion terms of our 9% Debentures and the terms of our indebtedness, including our option to defer interest on our 9% Debentures. The description in Note 7 - “Debt” to our consolidated financial statements in our Annual Report on Form 10-K is qualified in its entirety by the terms of the notes and debentures.

### Debt at subsidiaries

MGIC is a member of the FHLB, which provides MGIC access to an additional source of liquidity via a secured lending facility. In the first quarter of 2022, we prepaid the outstanding principal balance of $155 million on the FHLB Advance at a prepayment price of $156.3 million, incurring a prepayment fee of $1.3 million.

### Capital Adequacy

PMIERs

As of June 30, 2022, MGIC’s Available Assets under the PMIERs totaled approximately $5.8 billion, an excess of approximately $2.6 billion over its Minimum Required Assets; and MGIC is in compliance with the requirements of the PMIERs and eligible to insure loans delivered to or purchased by the GSEs. Our reinsurance transactions provided an aggregate of approximately $2.4 billion of capital credit under the PMIERs as of June 30, 2022. Refer to Note 4 - “Reinsurance” to our consolidated financial statements for additional information on our reinsurance transactions.

The PMIERS generally require us to hold significantly more Minimum Required Assets for delinquent loans than for performing loans and the Minimum Required Assets required to be held increases as the number of payments missed on a delinquent loan increases.

Refer to “Overview - Capital - GSEs” of this MD&A and our risk factor titled “We may not continue to meet the GSEs’ private mortgage insurer eligibility requirements and our returns may decrease if we are required to maintain more capital in order to maintain our eligibility” for further discussion of PMIERs.

### Risk-to-capital

The insurance laws of 16 jurisdictions, including Wisconsin, our domiciliary state, require a mortgage insurer to maintain a minimum amount of statutory capital relative to its RIF (or a similar measure) in order for the mortgage insurer to continue to write new business. While they vary among jurisdictions, the most common State Capital Requirements allow for a maximum risk-to-capital ratio of 25 to 1.

We compute our risk-to-capital ratio on a separate company statutory basis, as well as on a combined insurance operation basis. The risk-to-capital ratio is our net RIF divided by our policyholders’ position. Our net RIF includes both primary and pool risk in force, net of reinsurance and excludes risk on policies that are currently in default and for which loss reserves have been established. The risk amount includes pools of loans with contractual aggregate loss limits and without these limits. MGIC’s policyholders’ position consists primarily of statutory policyholders’ surplus (which increases as a result of statutory net income and decreases as a result of statutory net loss and dividends paid), plus the statutory contingency reserve. The statutory contingency reserve is reported as a liability on the statutory balance sheet. A mortgage insurance company is required to make annual additions to the contingency reserve of approximately 50% of earned premiums. These contributions must generally be maintained for a period of ten years. However, with regulatory approval a mortgage insurance company may make early withdrawals from the contingency reserve when incurred losses exceed 35% of earned premiums in a calendar year.

The table below presents our risk-to-capital calculation:

*Risk-to-capital - MGIC*

*(In millions, except ratio)*

|  | June 30, 2022 | December 31, 2021 |
| --- | ---: | ---: |
| RIF - net (1) | **$52,435** | $50,298 |
| Statutory policyholders’ surplus | **1,069** | 1,217 |
| Statutory contingency reserve | **4,326** | 4,056 |
| Statutory policyholders’ position | **$5,395** | $5,273 |
| Risk-to-capital | **9.7:1** | 9.5:1 |

(1) RIF – net, as shown in the table above is net of reinsurance and exposure on policies currently delinquent ($1.5 billion at June 30, 2022 and $1.8 billion December 31, 2021) for which loss reserves have been established.

The increase in our combined insurance companies’ risk to capital in the first six months of 2022 was due to an increase in RIF, net, partially offset by an increase in statutory policyholders’ position.

For additional information regarding regulatory capital see Note 14 – “Statutory Information” to our consolidated financial statements as well as our Risk Factor titled “State Capital requirements may prevent us from continuing to write new insurance on an uninterrupted basis.”

### Financial Strength Ratings

*MGIC financial strength ratings*

|  |  |  |
| --- | --- | --- |
| **Rating Agency** | **Rating** | **Outlook** |
| Moody’s Investor Services | A3 | Stable |
| Standard and Poor’s Rating Services | BBB+ | Stable |
| A.M. Best | A- | Stable |

|  |  |  |
| --- | --- | --- |
| MAC financial strength ratings |  |  |
| **Rating Agency** | **Rating** | **Outlook** |
| A.M. Best | A- | Stable |

For further information about the importance of MGIC’s ratings, see our Risk Factor titled “Competition or changes in our relationships with our customers could reduce our revenues, reduce our premium yields and / or increase our losses.”

### Forward Looking Statements and Risk Factors

*General*: Our business, results of operations, and financial condition could be affected by the Risk Factors referred to under “Location of Risk Factors” below. These Risk Factors are an integral part of Management’s Discussion and Analysis.

These factors may also cause actual results to differ materially from the results contemplated by forward looking statements that we may make. Forward looking statements consist of statements which relate to matters other than historical fact. Among others, statements that include words such as we “believe,” “anticipate” or “expect,” or words of similar import, are forward looking statements. These Risk Factors speak only as of the date of this filing and are subject to change without notice as the Company cannot predict all risks relating to this evolving set of events. We are not undertaking any obligation to update any forward looking statements we may make even though these statements may be affected by events or circumstances occurring after the forward looking statements were made. Therefore, no reader of this document should rely on these statements being current as of any time other than the time at which this document was filed with the Securities and Exchange Commission.

While we communicate with security analysts from time to time, it is against our policy to disclose to them any material non-public information or other confidential information. Accordingly, investors should not assume that we agree with any statement or report issued by any analyst irrespective of the content of the statement or report, and such reports are not our responsibility.

Location of Risk Factors: The Risk Factors are in Item 1 A of our Annual Report on Form 10-K for the year ended December 31, 2021, as supplemented by Part II, Item 1 A of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022 and Part II, Item 1 A of this Quarterly Report on Form 10-Q. The Risk Factors in the 10-K, as supplemented by those 10‑Qs and through updating of various statistical and other information, are reproduced in Exhibit 99 to this Quarterly Report on Form 10-Q.

## Market risk

As filed, 1,844 characters.

Our investment portfolio is essentially a fixed income portfolio and is exposed to market risk. Important drivers of the market risk are credit spread risk and interest rate risk.

**Credit spread risk** is the risk that we will incur a loss due to adverse changes in credit spreads. Credit spread is the additional yield on fixed income securities above the risk-free rate (typically referenced as the yield on U.S. Treasury securities) that market participants require to compensate them for assuming credit, liquidity and/or prepayment risks.

We manage credit risk via our investment policy guidelines which primarily place our investments in investment grade securities and limit the amount of our credit exposure to any one issue, issuer and type of instrument. Guideline and investment portfolio detail is available in "Business – Section C, Investment Portfolio" in Item 1 of our Annual Report on Form 10-K for the year ended December 31, 2021.

**Interest rate risk** is the risk that we will incur a loss due to adverse changes in interest rates relative to the characteristics of our interest bearing assets.

One of the measures used to quantify this exposure is modified duration. Modified duration measures the price sensitivity of the assets to the changes in spreads. At June 30, 2022, the modified duration of our fixed income investment portfolio was 4.6 years, which means that an instantaneous parallel shift in the yield curve of 100 basis points would result in a change of 4.6% in the fair value of our fixed income portfolio. For an upward shift in the yield curve, the fair value of our portfolio would decrease and for a downward shift in the yield curve, the fair value would increase. See Note 7 – “Investments” to our consolidated financial statements for additional disclosure surrounding our investment portfolio.

## Controls and procedures

As filed, 735 characters.

Our management, with the participation of our principal executive officer and principal financial officer, has evaluated our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, our principal executive officer and principal financial officer concluded that such controls and procedures were effective as of the end of such period. There was no change in our internal control over financial reporting that occurred during the second quarter of 2022 that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Filed Aug 3, 2022.
Source: SEC EDGAR, the filing index for accession 0000876437-22-000035. Last ingested by Listed: Nov 6, 2026, 12:52 ET. No prices; not investment advice.