MGIC INVESTMENT CORPMTG
MGIC INVESTMENT CORP Fair Value Disclosure
Fair Value Measurements
Recurring Fair Value Measurements
The following describes the valuation methodologies generally used by the independent pricing sources, or by us, to measure financial instruments at fair value, including the general classification of such financial instruments pursuant to the valuation hierarchy.
•Fixed income securities:
U.S. Treasury Securities and Obligations of U.S. Government Corporations and Agencies: Securities with valuations derived from quoted prices for identical instruments in active markets that we can access are categorized in Level 1 of the fair value hierarchy. Securities valued by surveying the dealer community, obtaining relevant trade data, benchmark quotes and spreads and incorporating this information in the valuation process are categorized as Level 2 of the fair value hierarchy.
Corporate Debt Securities are valued by obtaining relevant trade data, benchmark quotes and spreads and broker/dealer quotes and incorporating this information into the valuation process. These securities are generally categorized in Level 2 of the fair value hierarchy.
Obligations of U.S. States & Political Subdivisions are valued by tracking, capturing, and analyzing quotes for active issues and trades reported via the Municipal Securities Rulemaking Board records. Daily briefings and reviews of current economic conditions, trading levels, spread relationships, and the slope of the yield curve provide further data for evaluation. These securities are generally categorized in Level 2 of the fair value hierarchy.
Residential Mortgage-Backed Securities ("RMBS") are valued by monitoring interest rate movements, and other pertinent data daily. Incoming market data is enriched to derive spread, yield and/or price data as appropriate, enabling known data points to be extrapolated for valuation application across a range of related securities. These securities are generally categorized in Level 2 of the fair value hierarchy.
Commercial Mortgage-Backed Securities ("CMBS") are valued using techniques that reflect market participants’ assumptions and maximize the use of relevant observable inputs including quoted prices for similar assets, benchmark yield curves and market corroborated inputs. Evaluation uses regular reviews of the inputs for securities covered, including executed trades, broker quotes, credit information, collateral attributes and/or cash flow waterfall as applicable. These securities are generally categorized in Level 2 of the fair value hierarchy.
Asset-Backed Securities ("ABS") are valued using spreads and other information solicited from market buy-and-sell-side sources, including primary and secondary dealers, portfolio managers, and research analysts. Cash flows are generated for each tranche, benchmark yields are determined, and deal collateral performance and tranche level attributes including trade activity, bids, and offers are applied, resulting in tranche specific prices. These securities are generally categorized in Level 2 of the fair value hierarchy.
Collateralized loan obligations ("CLOs") are valued by evaluating manager rating, seniority in the capital structure, assumptions about prepayment, default and recovery and their impact on cash flow generation. Loan level net asset values are determined and aggregated for tranches and as a final step prices are checked against available recent trade activity. These securities are generally categorized in Level 2 of the fair value hierarchy.
Foreign government debt is valued by surveying the dealer community, obtaining relevant trade data, benchmark quotes and spreads and incorporating this information into the valuation process. These securities are generally categorized in Level 2 of the fair value hierarchy.
Commercial Paper, with an original maturity greater than 90 days, is valued using market data for comparable instruments of similar maturity and average yields. These securities are generally categorized in Level 2 of the fair value hierarchy.
•Equity securities: Consist of actively traded, exchange-listed equity securities, including exchange traded funds (“ETFs”) and Bond Mutual Funds, with valuations derived from quoted prices for identical assets in active markets that we can access. These securities are valued in Level 1 of the fair value hierarchy.
•Cash Equivalents: Consist of money market funds and treasury bills with valuations derived from quoted prices for identical assets in active markets that we can access. These securities are valued in level 1 of the fair value hierarchy. Instruments in this category valued using market data for comparable instruments are classified as level 2 in the fair value hierarchy.
Assets measured at fair value, by hierarchy level, as of December 31, 2025 and 2024 are shown in tables 6.1a and 6.1b below. The fair value of the assets is estimated using the process described above, and in Note 2 - "Significant Accounting Policies" to the consolidated financial statements in this Form 10-K.
Assets Carried at Fair Value by Hierarchy Level as of December 31, 2025 | |||||||||||||||||||||||
| Table | 6.1a | ||||||||||||||||||||||
(In thousands) | Total Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | ||||||||||||||||||||
| U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 277,812 | $ | 241,056 | $ | 36,756 | |||||||||||||||||
| Obligations of U.S. states and political subdivisions | 1,838,764 | — | 1,838,764 | ||||||||||||||||||||
| Corporate debt securities | 2,691,272 | — | 2,691,272 | ||||||||||||||||||||
| ABS | 226,561 | — | 226,561 | ||||||||||||||||||||
| RMBS | 358,024 | — | 358,024 | ||||||||||||||||||||
| CMBS | 238,783 | — | 238,783 | ||||||||||||||||||||
| CLOs | 99,287 | — | 99,287 | ||||||||||||||||||||
| Foreign government debt | 4,067 | — | 4,067 | ||||||||||||||||||||
| Commercial paper | 56,661 | — | 56,661 | ||||||||||||||||||||
| Total fixed income securities | 5,791,231 | 241,056 | 5,550,175 | ||||||||||||||||||||
| Equity securities | 15,322 | 15,322 | — | ||||||||||||||||||||
Cash equivalents(1) | 371,219 | 363,423 | 7,796 | ||||||||||||||||||||
| Total | $ | 6,177,772 | $ | 619,801 | $ | 5,557,971 | |||||||||||||||||
Assets Carried at Fair Value by Hierarchy Level as of December 31, 2024 | |||||||||||||||||||||||
| Table | 6.1b | ||||||||||||||||||||||
(In thousands) | Total Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | ||||||||||||||||||||
| U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 260,493 | $ | 220,369 | $ | 40,124 | |||||||||||||||||
| Obligations of U.S. states and political subdivisions | 1,875,495 | — | 1,875,495 | ||||||||||||||||||||
| Corporate debt securities | 2,757,381 | — | 2,757,381 | ||||||||||||||||||||
| ABS | 156,517 | — | 156,517 | ||||||||||||||||||||
| RMBS | 350,060 | — | 350,060 | ||||||||||||||||||||
| CMBS | 235,871 | — | 235,871 | ||||||||||||||||||||
| CLOs | 200,059 | — | 200,059 | ||||||||||||||||||||
| Foreign government debt | 3,798 | — | 3,798 | ||||||||||||||||||||
| Commercial paper | 12,015 | — | 12,015 | ||||||||||||||||||||
| Total fixed income securities | 5,851,689 | 220,369 | 5,631,320 | ||||||||||||||||||||
| Equity securities | 14,762 | 14,762 | — | ||||||||||||||||||||
Cash equivalents(1) | 230,156 | 219,943 | 10,213 | ||||||||||||||||||||
| Total | $ | 6,096,607 | $ | 455,074 | $ | 5,641,533 | |||||||||||||||||
| (1) Includes restricted cash equivalents | |||||||||||||||||||||||
Additional fair value disclosures related to our investment portfolio are included in Note 5 - "Investments."
In addition to the assets carried at fair value discussed above, we have embedded derivatives carried at fair value related to our Home Re Transactions that are classified as Other liabilities or Other assets in our consolidated balance sheets. The estimated fair value related to our embedded derivatives reflects the present value impact of the variation in investment income on the assets held by the reinsurance trusts and the contractual reference rate on the Home Re Transactions used to calculate the reinsurance premiums we estimate we will pay over the estimated remaining life. These liabilities or assets are categorized in Level 3 of the fair value hierarchy. As of December 31, 2025 and 2024, the fair value of the embedded derivatives was a liability of $0.4 million. (See Note 7 - "Reinsurance" for more information about our Home Re Transactions.)
Real estate acquired through claim settlement is carried at fair value and is reported in Other assets on the consolidated balance sheet. These assets are categorized as Level 3 of the fair value hierarchy. For the years ended December 31, 2025, and 2024, purchases of real estate acquired were $5.7 million and $5.2 million, respectively. For the years ended December 31, 2025, and 2024, sales of real estate acquired were $3.1 million and $2.7 million, respectively.
Financial Assets and Liabilities Not Measured at Fair Value
Other invested assets include an investment in FHLB stock that is carried at cost, which due to restrictions that require it to be redeemed or sold only to the security issuer at par value, approximates fair value. The fair value of other invested assets is categorized as Level 2.
Financial liabilities include our outstanding debt obligation. The fair value of our 5.25% Notes was based on observable market prices and is categorized as level 2.
Table 6.2 presents the carrying value and fair value of our financial assets and liabilities disclosed, but not carried, at fair value as of December 31, 2025 and 2024.
| Financial Assets and Liabilities Not Measured at Fair Value | |||||||||||||||||||||||||||||
| Table | 6.2 | ||||||||||||||||||||||||||||
| December 31, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||
| (In thousands) | Carrying Value | Fair Value | Carrying Value | Fair Value | |||||||||||||||||||||||||
| Financial assets | |||||||||||||||||||||||||||||
| Other invested assets | $ | 1,109 | $ | 1,109 | $ | 1,109 | $ | 1,109 | |||||||||||||||||||||
| Financial liabilities | |||||||||||||||||||||||||||||
| 5.25% Senior Notes | 646,138 | 650,442 | 644,667 | 636,883 | |||||||||||||||||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 25, 2026 | Showing above |
| 2024 | Feb 26, 2025 | |
| 2023 | Feb 21, 2024 | |
| 2022 | Feb 22, 2023 | |
| 2021 | Feb 23, 2022 | |
| 2020 | Feb 23, 2021 | |
| 2019 | Feb 24, 2020 | |
| 2018 | Feb 22, 2019 | |
| 2017 | Feb 23, 2018 | |
| 2016 | Feb 21, 2017 | |
| 2015 | Feb 26, 2016 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.