MGIC Investment Corporation Reports First Quarter 2013 Results

        MGIC Investment Corporation Reports First Quarter 2013 Results

PR Newswire

MILWAUKEE, April 30, 2013

MILWAUKEE, April 30, 2013 /PRNewswire/ -- MGIC Investment Corporation
(NYSE:MTG) today reported a net loss for the quarter ended March 31, 2013 of
$72.9 million, compared with a net loss of $19.6 million for the same quarter
a year ago. Diluted loss per share was $0.31 for the quarter ending March 31,
2013, compared to diluted loss per share of $0.10 for the same quarter a year
ago.

Total revenues for the first quarter were $269.2 million, compared with $379.7
million in the first quarter last year. Net premiums written for the quarter
were $248.5 million, compared with $255.0million for the same period last
year. Realized gains in the first quarter of 2013 were $1.3 million compared
to $77.6 million for the same period last year.

New insurance written in the first quarter was $6.5 billion, compared to $4.2
billion in the first quarter of 2012. In addition, the Home Affordable
Refinance Program accounted for $3.0 billion of insurance that is not included
in the new insurance written total due to these transactions being treated as
a modification of the coverage on existing insurance in force compared to $1.3
billion in the first quarter of 2012. Persistency, or the percentage of
insurance remaining in force from one year prior, was 78.7 percent at March
31, 2013, compared with 79.8 percent at December 31, 2012, and 82.2percent at
March 31, 2012.

As of March 31, 2013, MGIC's primary insurance in force was $159.5 billion,
compared with $162.1 billion at December31, 2012, and $169.0 billion at March
31, 2012. The fair value of MGIC Investment Corporation's investment
portfolio, cash and cash equivalents was $6.2 billion at March 31, 2013,
compared with $5.3billion at December 31, 2012, and $6.4 billion at March 31,
2012. The increase from December 31, 2012 was primarily a result of the March
equity and debt offering

At March 31, 2013, the percentage of loans that were delinquent, excluding
bulk loans, was 10.91 percent, compared with 11.87 percent at December 31,
2012, and 12.84 percent at March 31, 2012. Including bulk loans, the
percentage of loans that were delinquent at March 31, 2013 was 12.83 percent,
compared to 13.90 percent at December 31, 2012, and 15.09 percent at March 31,
2012.

Losses incurred in the first quarter were $266.2 million, down from $337.1
million reported for the same period last year primarily due to fewer new
notices of default being received. Net underwriting and other expenses were
$50.0 million in the first quarter as compared to $50.3 million reported for
the same period last year.

Conference Call and Webcast Details

MGIC Investment Corporation will hold a conference call today, April 30, 2013,
at 10 a.m. ET to allow securities analysts and shareholders the opportunity to
hear management discuss the company's quarterly results. The conference call
number is 1-866-837-9780. The call is being webcast and can be accessed at the
company's website at http://mtg.mgic.com/. The webcast is also being
distributed over CCBN's Investor Distribution Network to both institutional
and individual investors. Investors can listen to the call through CCBN's
individual investor center at http://www.companyboardroom.com/ or by visiting
any of the investor sites in CCBN's Individual Investor Network. The webcast
will be available for replay on the company's website through May 30, 2013
under Investor Information.

About MGIC

MGIC (www.mgic.com), the principal subsidiary of MGIC Investment Corporation,
is the nation's largest private mortgage insurer as measured by $159.5 billion
primary insurance in force covering 1 million mortgages as of March 31, 2013.
MGIC serves lenders throughout the United States, Puerto Rico, and other
locations helping families achieve homeownership sooner by making affordable
low-down-payment mortgages a reality.

This press release, which includes certain additional statistical and other
information, including non-GAAP financial information and a supplement that
contains various portfolio statistics are both available on the Company's
website at http://mtg.mgic.com/ under Investor Information, Press Releases or
Presentations/Webcasts.

From time to time MGIC Investment Corporation releases important information
via postings on its corporate website without making any other disclosure and
intends to continue to do so in the future. Investors and other interested
parties are encouraged to enroll to receive automatic email alerts and Really
Simple Syndication (RSS) feeds regarding new postings. Enrollment information
can be found at http://mtg.mgic.comunder Investor Information.

Safe Harbor Statement

Forward Looking Statements and Risk Factors:

As used below, "we," "our" and "us" refer to MGIC Investment Corporation's
consolidated operations or to MGIC Investment Corporation, as the context
requires; "MGIC" refers to Mortgage Guaranty Insurance Corporation; and "MIC"
refers to MGIC Indemnity Corporation.

Our actual results could be affected by the risk factors below. These risk
factors should be reviewed in connection with this press release and our
periodic reports to the Securities and Exchange Commission. These risk 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, including matters that inherently refer to future events. Among others,
statements that include words such as "believe," "anticipate," "will" or
"expect," or words of similar import, are forward looking statements. We are
not undertaking any obligation to update any forward looking statements or
other statements we may make even though these statements may be affected by
events or circumstances occurring after the forward looking statements or
other statements were made. No investor should rely on the fact that such
statements are current at any time other than the time at which this press
release was issued.

In addition, the current period financial results included in this press
release may be affected by additional information that arises prior to the
filing of our Quarterly Report on Form 10-Q for the quarter ended March 31,
2013.

Capital requirements may prevent us from continuing to write new insurance on
an uninterrupted basis.

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 the risk in force (or a similar measure) in order for the
mortgage insurer to continue to write new business. We refer to these
requirements as the "Capital Requirements." While they vary among
jurisdictions, the most common Capital Requirements allow for a maximum
risk-to-capital ratio of 25 to 1. A risk-to-capital ratio will increase if the
percentage decrease in capital exceeds the percentage decrease in insured
risk. Therefore, as capital decreases, the same dollar decrease in capital
will cause a greater percentage decrease in capital and a greater increase in
the risk-to-capital ratio. Wisconsin does not regulate capital by using a
risk-to-capital measure but instead requires a minimum policyholder position
("MPP"). The "policyholder position" of a mortgage insurer is its net worth or
surplus, contingency reserve and a portion of the reserves for unearned
premiums.

During part of 2012 and 2013, MGIC's risk-to-capital ratio exceeded 25 to 1.
In March 2013, our holding company issued additional equity and convertible
debt securities and transferred $800 million to increase MGIC's capital. As a
result, at March 31, 2013, MGIC's preliminary risk-to-capital ratio was 20.4
to 1, below the maximum allowed by the jurisdictions with Capital
Requirements, and its preliminary policyholder position was $168 million above
the required MPP of $1.2billion. At March 31, 2013, the preliminary
risk-to-capital ratio of our combined insurance operations (which includes
reinsurance affiliates) was 23.1 to 1. A higher risk-to-capital ratio on a
combined basis may indicate that, in order for MGIC to continue to utilize
reinsurance arrangements with its subsidiaries or subsidiaries of our holding
company, additional capital contributions to the reinsurance affiliates could
be needed. These reinsurance arrangements permit MGIC to write insurance with
a higher coverage percentage than it could on its own under certain
state-specific requirements.

At this time, we expect MGIC to continue to comply with the current Capital
Requirements, although you should read the rest of these risk factors for
information about factors that could negatively affect such compliance. The
remainder of the discussion in this risk factor addresses circumstances that
would be significant if we were not in such compliance.

The Office of the Commissioner of Insurance of the State of Wisconsin ("OCI")
has waived MGIC's compliance with Wisconsin's Capital Requirements until
December 31, 2013 (the "OCI Waiver"). The OCI Waiver, including the
alternative capital requirements for MGIC, is summarized more fully in, and
included as an exhibit to, our Form 8-K filed with the SEC on January 24,
2012. The OCI, in its sole discretion, may modify, terminate or extend the OCI
Waiver. If the OCI modifies or terminates its waiver, or if it fails to renew
its waiver upon expiration, and if MGIC does not comply with the Capital
Requirements at that time, MGIC could be prevented from writing new business
in all jurisdictions. We cannot assure you that MGIC will comply with the
Capital Requirements in the future. If MGIC were prevented from writing new
business in all jurisdictions, our insurance operations in MGIC would be in
run-off (meaning no new loans would be insured but loans previously insured
would continue to be covered, with premiums continuing to be received and
losses continuing to be paid on those loans) until MGIC either met the Capital
Requirements or obtained a necessary waiver to allow it to once again write
new business.

MGIC applied for waivers in the other jurisdictions with Capital Requirements
and received waivers from some of them. Insurance departments, in their sole
discretion, may modify, terminate or extend their waivers of Capital
Requirements. If an insurance department other than the OCI modifies or
terminates its waiver, or if it fails to grant a waiver or renew its waiver
after expiration, and if MGIC does not comply with the Capital Requirements at
that time, MGIC could be prevented from writing new business in that
particular jurisdiction. New insurance written in the jurisdictions that have
Capital Requirements represented approximately 50% of our new insurance
written in 2012 and the first quarter of 2013. Depending on the level of
losses that MGIC experiences in the future, it is possible that regulatory
action by one or more jurisdictions, including those that do not have specific
Capital Requirements, may prevent MGIC from continuing to write new insurance
in that jurisdiction. The National Association of Insurance Commissioners
("NAIC") is reviewing the minimum capital and surplus requirements for
mortgage insurers, although it has not established a date by which it must
make proposals to change such requirements. Depending on the scope of
proposals made by the NAIC, MGIC may be prevented from writing new business in
the jurisdictions adopting such proposals. The GSEs are also developing new
capital standards for mortgage insurers. See "We may not continue to meet the
GSEs' mortgage insurer eligibility requirements."

A possible future failure by MGIC to meet the Capital Requirements will not
necessarily mean that MGIC lacks sufficient resources to pay claims on its
insurance liabilities. While we believe MGIC has sufficient claims paying
resources to meet its claim obligations on its insurance in force on a timely
basis, we cannot assure you that events that may lead MGIC to fail to meet
Capital Requirements would not also result in it not having sufficient claims
paying resources. Furthermore, our estimates of MGIC's claims paying resources
and claim obligations are based on various assumptions. These assumptions
include the timing of the receipt of claims on loans in our delinquency
inventory and future claims that we anticipate will ultimately be received,
our anticipated rescission activity, premiums, housing values and unemployment
rates. These assumptions are subject to inherent uncertainty and require
judgment by management. Current conditions in the domestic economy make the
assumptions about when anticipated claims will be received, housing values,
and unemployment rates highly volatile in the sense that there is a wide range
of reasonably possible outcomes. Our anticipated rescission activity is also
subject to inherent uncertainty due to the difficulty of predicting the amount
of claims that will be rescinded and the outcome of any legal proceedings or
settlement discussions related to rescissions. You should read the rest of
these risk factors for additional information about factors that could
negatively affect MGIC's claims paying resources.

We have in place a longstanding plan to write new business in MIC, a direct
subsidiary of MGIC, if MGIC is unable to do so. During 2012, MIC began writing
new business on the same policy terms as MGIC in the jurisdictions where MGIC
did not have active waivers of the Capital Requirements. Because MGIC again
meets the Capital Requirements, MGIC will again be writing new business in all
jurisdictions and MIC will suspend writing new business. As of March 31, 2013,
MIC had statutory capital of $450 million and risk in force of approximately
$800 million. MIC is licensed to write business in all jurisdictions and,
subject to the conditions and restrictions discussed below, has received the
necessary approvals from Fannie Mae and Freddie Mac (the "GSEs") and the OCI
to write business in all of the jurisdictions where MGIC may become unable to
do so because those jurisdictions have not waived their Capital Requirements
for MGIC.

Under an agreement in place with Fannie Mae, as amended November 30, 2012, MIC
will be eligible to write mortgage insurance through December 31, 2013, in
those jurisdictions (other than Wisconsin) in which MGIC cannot write new
insurance due to MGIC's failure to meet Capital Requirements and to obtain a
waiver of them. MIC is also approved to write mortgage insurance for 60 days
in jurisdictions that do not have Capital Requirements if a jurisdiction
notifies MGIC that, due to its financial condition, it may no longer write new
business. The agreement with Fannie Mae, including certain conditions and
restrictions to its continued effectiveness, is summarized more fully in, and
included as an exhibit to, our Form 8-K filed with the Securities and Exchange
Commission (the "SEC") on November 30, 2012. Such conditions include the
continued effectiveness of the OCI Waiver.

Under a letter from Freddie Mac that was amended and restated as of November
30, 2012, Freddie Mac approved MIC to write business only in those
jurisdictions (other than Wisconsin) where either (a) MGIC is unable to write
business because it does not meet the Capital Requirements and does not obtain
waivers of them, or (b) MGIC receives notice that it may not write business
because of that jurisdiction's view of MGIC's financial condition. This
approval of MIC, which may be withdrawn at any time, expires December 31,
2013, or earlier if a financial examination by the OCI determines that there
is a reasonable probability that MGIC will be unable to honor claim
obligations at any time in the five years after the examination, or if MGIC
fails to honor claim payments. The approval from Freddie Mac, including
certain conditions and restrictions to its continued effectiveness, is
summarized more fully in, and included as an exhibit to, our Form 8-K filed
with the SEC on November 30, 2012. Such conditions include requirements that
MIC not exceed a risk-to-capital ratio of 18:1 (at March 31, 2013, MIC's
preliminary risk-to-capital ratio was 1.8 to 1); MGIC and MIC comply with all
terms and conditions of the OCI Waiver; the OCI Waiver remain effective; and
MIC provide MGIC access to the capital of MIC in an amount necessary for MGIC
to maintain sufficient liquidity to satisfy its obligations under insurance
policies issued by MGIC.

On November 29, 2012, the OCI issued an order, effective until December 31,
2013, establishing a procedure for MIC to pay a dividend to MGIC if either of
the following two events occurs: (1) an OCI examination determines that there
is a reasonable probability that MGIC will be unable to honor its policy
obligations at any time during the five years after the examination, or (2)
MGIC fails to honor its policy obligations that it in good faith believes are
valid. If one of these events occurs, the OCI is to conduct a review (to be
completed within 60 days after the triggering event) to determine the maximum
single dividend MIC could prudently pay to MGIC for the benefit of MGIC's
policyholders, taking account of the interests of MIC's policyholders and the
general public and certain standards for dividends imposed by Wisconsin law.
Upon the completion of the review, the OCI will authorize, and MIC will pay,
such a dividend within 30 days.

We cannot assure you that the GSEs will approve or continue to approve MIC to
write new business in all jurisdictions in which MGIC may become unable to do
so, or that they will extend their approvals upon expiration. If one GSE does
not approve MIC in all jurisdictions in which MGIC becomes unable to write new
business, MIC may be able to write insurance on loans that will be sold to the
other GSE or retained by private investors. However, because lenders may not
know which GSE will purchase their loans until mortgage insurance has been
procured, lenders may be unwilling to procure mortgage insurance from MIC.
Furthermore, if we are unable to write business in all jurisdictions utilizing
a combination of MGIC and MIC, lenders may be unwilling to procure insurance
from us anywhere. In addition, a lender's assessment of the financial strength
of our insurance operations may affect its willingness to procure insurance
from us. In this regard, see "— Competition or changes in our relationships
with our customers could reduce our revenues or increase our losses."

The amount of insurance we write could be adversely affected if the definition
of Qualified Residential Mortgage results in a reduction of the number of low
down payment loans available to be insured or if lenders and investors select
alternatives to private mortgage insurance.

The financial reform legislation that was passed in July 2010 (the "Dodd-Frank
Act" or "Dodd-Frank") requires a securitizer to retain at least 5% of the risk
associated with mortgage loans that are securitized, and in some cases the
retained risk may be allocated between the securitizer and the lender that
originated the loan. This risk retention requirement does not apply to
mortgage loans that are Qualified Residential Mortgages ("QRMs") or that are
insured by the Federal Housing Administration ("FHA") or another federal
agency. In March 2011, federal regulators requested public comments on a
proposed risk retention rule that includes a definition of QRM. The proposed
definition of QRM contains many underwriting requirements, including a maximum
loan-to-value ratio ("LTV") of 80% on a home purchase transaction, a
prohibition on seller contributions toward a borrower's down payment or
closing costs, and certain limits on a borrower's debt-to-income ratio. The
LTV is to be calculated without including mortgage insurance. None of our new
risk written in 2012 or the first quarter of 2013 was on loans that would
qualify as QRMs under the March 2011 proposed rules.

The regulators also requested public comments regarding an alternative QRM
definition, the underwriting requirements of which would allow loans with a
maximum LTV of 90% and higher debt-to-income ratios than allowed under the
proposed QRM definition, and that may consider mortgage insurance in
determining whether the LTV requirement is met. We estimate that approximately
22%and 23%  of our new risk written in 2012 and the first quarter of 2013,
respectively, was on loans that would have met the alternative QRM definition.
The regulators also requested that the public comments include information
that may be used to assess whether mortgage insurance reduces the risk of
default. We submitted a comment letter, including studies to the effect that
mortgage insurance reduces the risk of default.

Under the proposed rule, because of the capital support provided by the U.S.
Government, the GSEs satisfy the Dodd-Frank risk-retention requirements while
they are in conservatorship. Therefore, under the proposed rule, lenders that
originate loans that are sold to the GSEs while they are in conservatorship
would not be required to retain risk associated with those loans. The public
comment period for the proposed rule expired in August 2011. At this time we
do not know when a final rule will be issued, although it was not expected
that the final QRM rule would be issued until the final rule defining
Qualified Mortgages ("QMs") (discussed below) was issued. The Consumer
Financial Protection Bureau (the "CFPB") issued the final QM rule on January
10, 2013.

Depending on, among other things, (a) the final definition of QRM and its
requirements for LTV, seller contributions and debt-to-income ratio, (b) to
what extent, if any, the presence of mortgage insurance would allow for a
higher LTV in the definition of QRM, and (c) whether lenders choose mortgage
insurance for non-QRM loans, the amount of new insurance that we write may be
materially adversely affected. For other factors that could decrease the
demand for mortgage insurance, see "— If the volume of low down payment home
mortgage originations declines, the amount of insurance that we write could
decline, which would reduce our revenues" and "— The implementation of the
Basel III capital accord, or other changes to our customers' capital
requirements, may discourage the use of mortgage insurance."

As noted above, on January 10, 2013, the CFPB issued the final rule defining
QM, in order to implement laws requiring lenders to consider a borrower's
ability to repay a home loan before extending credit. The QM rule prohibits
loans with certain features, such as negative amortization, points and fees in
excess of 3% of the loan amount, and terms exceeding 30 years, from being
considered QMs. The rule also establishes general underwriting criteria for
QMs including that a borrower have a total debt-to-income ratio of less than
or equal to 43%. The rule provides a temporary category of QMs that have more
flexible underwriting requirements so long as they satisfy the general product
feature requirements of QMs and so long as they meet the underwriting
requirements of the GSEs or those of the U.S. Department of Housing and Urban
Development, Department of Veterans Affairs or Rural Housing Service
(collectively, "Other Federal Agencies"). While the debt-to-income ratio
contained in our underwriting guidelines exceeds the general requirements of
the QM definition, it is within the underwriting guidelines of the GSEs. The
temporary category of QMs that meet the underwriting requirements of the GSEs
or the Other Federal Agencies will phase out when the GSEs or the Other
Federal Agencies issue their own qualified mortgage rules, if the GSEs'
conservatorship ends, and in any case after seven years. We expect that most
lenders will be reluctant to make loans that do not qualify as QMs because
they will not be entitled to the presumptions about compliance with the
ability-to-pay requirements. Given the credit characteristics presented to us,
we estimate that 99% of our new risk written in 2012 and the first quarter of
2013 was for mortgages that would have met the QM definition and 91% and 90%
of our new risk written in 2012 and the first quarter of 2013, respectively,
was for mortgages that would have met the QM definition even without the
temporary category allowed for mortgages that meet the GSEs' underwriting
requirements. In making these estimates, we have not considered the limitation
on points and fees because the information is not available to us. We do not
believe such limitation would materially affect the percentage of our new risk
written meeting the QM definition. The QM rule is scheduled to become
effective in January 2014.

Alternatives to private mortgage insurance include:

  olenders using government mortgage insurance programs, including those of
    the Federal Housing Administration, or FHA, and the Veterans
    Administration,
  olenders and other investors holding mortgages in portfolio and
    self-insuring,
  oinvestors using risk mitigation techniques other than private mortgage
    insurance, using other risk mitigation techniques in conjunction with
    reduced levels of private mortgage insurance coverage, or accepting credit
    risk without credit enhancement, and
  olenders originating mortgages using piggyback structures to avoid private
    mortgage insurance, such as a first mortgage with an 80% loan-to-value
    ratio and a second mortgage with a 10%, 15% or 20% loan-to-value ratio
    (referred to as 80-10-10, 80-15-5 or 80-20 loans, respectively) rather
    than a first mortgage with a 90%, 95% or 100% loan-to-value ratio that has
    private mortgage insurance.

The FHA substantially increased its market share beginning in 2008, and
beginning in 2011, that market share began to gradually decline. We believe
that the FHA's market share increased, in part, because private mortgage
insurers tightened their underwriting guidelines (which led to increased
utilization of the FHA's programs) and because of increases in the amount of
loan level delivery fees that the GSEs assess on loans (which result in higher
costs to borrowers). In addition, federal legislation and programs provided
the FHA with greater flexibility in establishing new products and increased
the FHA's competitive position against private mortgage insurers. We believe
that the FHA's current premium pricing, when compared to our current
credit-tiered premium pricing (and considering the effects of GSE pricing
changes), has allowed us to be more competitive with the FHA than in the
recent past for loans with high FICO credit scores. We cannot predict,
however, the FHA's share of new insurance written in the future due to, among
other factors, different loan eligibility terms between the FHA and the GSEs;
future increases in guarantee fees charged by the GSEs; changes to the FHA's
annual premiums; and the total profitability that may be realized by mortgage
lenders from securitizing loans through Ginnie Mae when compared to
securitizing loans through Fannie Mae or Freddie Mac.

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.

Substantially all of our insurance written is for loans sold to Fannie Mae and
Freddie Mac. The business practices of the GSEs affect the entire relationship
between them, lenders and mortgage insurers and include:

  othe level of private mortgage insurance coverage, subject to the
    limitations of the GSEs' charters (which may be changed by federal
    legislation), when private mortgage insurance is used as the required
    credit enhancement on low down payment mortgages,
  othe amount of loan level delivery fees (which result in higher costs to
    borrowers) that the GSEs assess on loans that require mortgage insurance,
  owhether the GSEs influence the mortgage lender's selection of the mortgage
    insurer providing coverage and, if so, any transactions that are related
    to that selection,
  othe underwriting standards that determine what loans are eligible for
    purchase by the GSEs, which can affect the quality of the risk insured by
    the mortgage insurer and the availability of mortgage loans,
  othe terms on which mortgage insurance coverage can be canceled before
    reaching the cancellation thresholds established by law,
  othe programs established by the GSEs intended to avoid or mitigate loss on
    insured mortgages and the circumstances in which mortgage servicers must
    implement such programs,
  othe terms that the GSEs require to be included in mortgage insurance
    policies for loans that they purchase, and
  othe extent to which the GSEs intervene in mortgage insurers' rescission
    practices or rescission settlement practices with lenders. For additional
    information, see "— Our losses could increase if we do not prevail in
    proceedings challenging whether our rescissions were proper or we enter
    into material resolution arrangements."

The Federal Housing Finance Agency ("FHFA") is the conservator of the GSEs and
has the authority to control and direct their operations. The increased role
that the federal government has assumed in the residential mortgage market
through the GSE conservatorship may increase the likelihood that the business
practices of the GSEs change in ways that have a material adverse effect on
us. In addition, these factors may increase the likelihood that the charters
of the GSEs are changed by new federal legislation. The Dodd-Frank Act
required the U.S. Department of the Treasury to report its recommendations
regarding options for ending the conservatorship of the GSEs. This report was
released in February 2011 and while it does not provide any definitive
timeline for GSE reform, it does recommend using a combination of federal
housing policy changes to wind down the GSEs, shrink the government's
footprint in housing finance, and help bring private capital back to the
mortgage market. Since then, Members of Congress introduced several bills
intended to scale back the GSEs, however, no legislation was enacted. As a
result of the matters referred to above, it is uncertain what role the GSEs,
FHA and private capital, including private mortgage insurance, will play in
the domestic residential housing finance system in the future or the impact of
any such changes on our business. In addition, the timing of the impact of any
resulting changes on our business is uncertain. Most meaningful 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.

The GSEs have different loan purchase programs that allow different levels of
mortgage insurance coverage. Under the "charter coverage" program, on certain
loans lenders may choose a mortgage insurance coverage percentage that is less
than the GSEs' "standard coverage" and only the minimum required by the GSEs'
charters, with the GSEs paying a lower price for such loans. In 2012 and the
first quarter of 2013, nearly all of our volume was on loans with GSE standard
or higher coverage. We charge higher premium rates for higher coverage
percentages. To the extent lenders selling loans to the GSEs in the future
choose lower coverage for loans that we insure, our revenues would be reduced
and we could experience other adverse effects.

We may not continue to meet the GSEs' mortgage insurer eligibility
requirements.

Substantially all of our insurance written is for loans sold to Fannie Mae and
Freddie Mac, each of which has mortgage insurer eligibility requirements to
maintain the highest level of eligibility, including a financial strength
rating of Aa3/AA-. Because MGIC does not meet such financial strength rating
requirements of Fannie Mae and Freddie Mac (its financial strength rating from
Moody's is B2 (on review for upgrade) and from Standard & Poor's is B (with a
stable outlook)), MGIC is currently operating with each GSE as an eligible
insurer under a remediation plan. We believe that the GSEs view remediation
plans as a continuing process of interaction with a mortgage insurer and MGIC
will continue to operate under a remediation plan for the foreseeable future.
There can be no assurance that MGIC will be able to continue to operate as an
eligible mortgage insurer under a remediation plan. In particular, the GSEs
are currently in discussions with mortgage insurers regarding their standard
mortgage insurer eligibility requirements. The FHFA and the GSEs are
separately developing mortgage insurer capital standards that would replace
the use of external credit ratings. Revised capital standards are expected to
be released in 2013, however the timing of their implementation is unknown.
The GSEs may include any new eligibility requirements as part of our current
remediation plan. MIC's financial strength rating from Moody's is Ba3 and from
Standard & Poor's is B (with a stable outlook). Therefore, MIC also does not
meet the current financial strength rating requirements of the GSEs and has
been operating with each GSE as an eligible insurer under the approvals
discussed above. See "— Capital requirements may prevent us from continuing to
write new insurance on an uninterrupted basis." If MGIC or MIC cease to be
eligible to insure loans purchased by one or both of the GSEs, it would
significantly reduce the volume of our new business writings.

We have reported net losses for the last six years, expect to continue to
report annual net losses, and cannot assure you when we will return to
profitability.

We have reported a net loss in each of the last six fiscal years, with an
aggregate net loss for 2007-2012 of $5.3 billion. For the first quarter of
2013, we reported a net loss of $73 million. We currently expect to continue
to report annual net losses, the size of which will depend primarily on the
amount of our incurred and paid losses from our business written prior to
2009. Our incurred and paid losses are dependent on factors that make
prediction of their amounts difficult and any forecasts are subject to
significant volatility. Although we currently expect to return to
profitability on an annual basis, we cannot assure you when, or if, this will
occur. Conditions that could delay our return to profitability include high
unemployment rates, low cure rates, low housing values and unfavorable
resolution of legal disputes. You should read the rest of these risk factors
for additional information about factors that could increase our net losses in
the future. The net losses we have experienced have eroded, and any future net
losses will erode, our shareholders' equity and could result in equity being
negative.

Our losses could increase if we do not prevail in proceedings challenging
whether our rescissions were proper or we enter into material resolution
arrangements.

Prior to 2008, rescissions of coverage on loans were not a material portion of
our claims resolved during a year. However, beginning in 2008, our rescissions
of coverage on loans have materially mitigated our paid losses. In 2009
through 2011, rescissions mitigated our paid losses in the aggregate by
approximately $3.0 billion; and in 2012 and the first quarter of 2013,
rescissions mitigated our paid losses by approximately $0.3 billion and $35
million, respectively (in each case, the figure includes amounts that would
have either resulted in a claim payment or been charged to a deductible under
a bulk or pool policy, and may have been charged to a captive reinsurer). In
recent quarters, less than 8% of claims received in a quarter have been
resolved by rescissions, down from the peak of approximately 28% in the first
half of 2009.

Our loss reserving methodology incorporates our estimates of future
rescissions and reversals of rescissions. Historically, the number of
rescissions that we have reversed has been immaterial. A variance between
ultimate actual rescission and reversal rates and our estimates, as a result
of the outcome of claims investigations, litigation, settlements or other
factors, could materially affect our losses. See "— Because loss reserve
estimates are subject to uncertainties and are based on assumptions that are
currently very volatile, paid claims may be substantially different than our
loss reserves." We estimate rescissions mitigated our incurred losses by
approximately $2.5 billion in 2009 and $0.2 billion in 2010. In 2011, we
estimate that rescissions had no significant impact on our losses incurred.
All of these figures include the benefit of claims not paid in the period as
well as the impact of changes in our estimated expected rescission activity on
our loss reserves in the period. In 2012, we estimate that our rescission
benefit in loss reserves was reduced by $0.2 billion due to probable
rescission settlement agreements. We estimate that other rescissions had no
significant impact on our losses incurred in 2012 or in the first quarter of
2013.

If the insured disputes our right to rescind coverage, the outcome of the
dispute ultimately would be determined by legal proceedings. Under our
policies, legal proceedings disputing our right to rescind coverage may be
brought up to three years after the lender has obtained title to the property
(typically through a foreclosure) or the property was sold in a sale that we
approved, whichever is applicable, although in a few jurisdictions there is a
longer time to bring such an action. For approximately 40% of our rescissions
since the beginning of 2009 that are not subject to a settlement agreement,
this period in which a dispute may be brought has not ended. Until a liability
associated with a settlement agreement or litigation becomes probable and can
be reasonably estimated, we consider a rescission resolved for financial
reporting purposes even though legal proceedings have been initiated and are
ongoing. Although it is reasonably possible that, when the proceedings are
completed, there will be a determination that we were not entitled to rescind
in all cases, we are sometimes unable to make a reasonable estimate or range
of estimates of the potential liability. Under ASC 450-20, an estimated loss
from such proceedings is accrued for only if we determine that the loss is
probable and can be reasonably estimated. Therefore, when establishing our
loss reserves, we do notgenerally include additional loss reserves that would
reflect an adverse outcome from ongoing legal proceedings.

In April 2011, Freddie Mac advised its servicers that they must obtain its
prior approval for rescission settlements and Fannie Mae advised its servicers
that they are prohibited from entering into such settlements. In addition, in
April 2011, Fannie Mae notified us that we must obtain its prior approval to
enter into certain settlements. Since those announcements, the GSEs have
approved our settlement agreement with one customer and have rejected
settlement agreements that were structured differently. We have reached and
implemented settlement agreements that do not require GSE approval, but they
have not been material in the aggregate.

As noted in "— We are involved in legal proceedings and are subject to the
risk of additional legal proceedings in the future," in April 2013, we entered
into two agreements to resolve our dispute with Countrywide Home Loans ("CHL")
and its affiliate, Bank of America, N.A., as successor to Countrywide Home
Loans Servicing LP ("BANA" and collectively with CHL, "Countrywide")
regardingrescissions. Implementation of the agreements is subject to various
conditions. The resolutions of that and other disputes, assuming they
occur,may encourage other customers to seek remedies against us. We continue
to be involved in legal proceedings with other customers with respect to
rescissions that we do not consider to be collectively material in amount. We
also continue to discuss with customers their objections to rescissions and
have reached settlement terms with several of our significant customers. In
connection with some of these settlement discussions, we have suspended
rescissions related to loans that we believe could be included in potential
settlements. As of March 31, 2013, approximately 265 rescissions, representing
total potential claim payments of approximately $19 million, were affected by
our decision to suspend such rescissions. These amounts do not include loans
covered by the two Countrywide agreements referred to above nor do they
include loans of a customer for which we consider a settlement agreement
probable, as defined in ASC 450-20. Although it is reasonably possible that,
when the discussions or legal proceedings with customers regarding rescissions
are completed, there will be a conclusion or determination that we were not
entitled to rescind in all cases, we are unable to make a reasonable estimate
or range of estimates of the potential liability.

The benefit of our net operating loss carryforwards may become substantially
limited.

As of March 31, 2013, we had approximately $2.6 billion of net operating
losses for tax purposes that we can use in certain circumstances to offset
future taxable income and thus reduce our federal income tax liability. Our
ability to utilize these net operating losses to offset future taxable income
may be significantly limited if we experience an "ownership change" as defined
in Section382 of the Internal Revenue Code of 1986, as amended (the "Code").
In general, an ownership change will occur if there is a cumulative change in
our ownership by "5-percent shareholders" (as defined in the Code) that
exceeds 50percentage points over a rolling three-year period. A corporation
that experiences an ownership change will generally be subject to an annual
limitation on the corporation's subsequent use of net operating loss
carryovers that arose from pre-ownership change periods and use of losses that
are subsequently recognized with respect to assets that had a built-in-loss on
the date of the ownership change. The amount of the annual limitation
generally equals the value of the corporation immediately before the ownership
change multiplied by the long-term tax-exempt interest rate (subject to
certain adjustments). To the extent that the limitation in a
post-ownership-change year is not fully utilized, the amount of the limitation
for the succeeding year will be increased.

While we have adopted a shareholder rights agreement to minimize the
likelihood of transactions in our stock resulting in an ownership change,
future issuances of equity-linked securities or transactions in our stock and
equity-linked securities that may not be within our control may cause us to
experience an ownership change. If we experience an ownership change, we may
not be able to fully utilize our net operating losses, resulting in additional
income taxes and a reduction in our shareholders' equity.

We are involved in legal proceedings and are subject to the risk of additional
legal proceedings in the future.

Consumers continue to bring lawsuits against home mortgage lenders and
settlement service providers. Mortgage insurers, including MGIC, have been
involved in litigation alleging violations of the anti-referral fee provisions
of the Real Estate Settlement Procedures Act, which is commonly known as
RESPA, and the notice provisions of the Fair Credit Reporting Act, which is
commonly known as FCRA. MGIC's settlement of class action litigation against
it under RESPA became final in October 2003. MGIC settled the named
plaintiffs' claims in litigation against it under FCRA in December 2004,
following denial of class certification in June 2004. Since December 2006,
class action litigation has been brought against a number of large lenders
alleging that their captive mortgage reinsurance arrangements violated
RESPA.Beginning inDecember2011, MGIC, together with various mortgage
lenders and other mortgage insurers, have been named as defendants in twelve
lawsuits, alleged to be class actions, filed in various U.S. District Courts.
Four of those cases have previously been dismissed. The complaints in all
eight of the remaining cases allege various causes of action related to the
captive mortgage reinsurance arrangements of the mortgage lenders, including
that the defendants violated RESPA by paying excessive premiums to the
lenders' captive reinsurer in relation to the risk assumed by that captive.
MGIC denies any wrongdoing and intends to vigorously defend itself against the
allegations in the lawsuits. There can be no assurance that we will not be
subject to further litigation under RESPA (or FCRA) or that the outcome of any
such litigation, including the lawsuits mentioned above, would not have a
material adverse effect on us.

On April 5, 2013, the U.S. District Court approved a settlement with the CFPB
that resolves a previously-disclosed, nearly five-year-old federal
investigation of MGIC's participation in captive reinsurance arrangements in
the mortgage insurance industry. The settlement concludes the investigation
with respect to MGIC without the CFPB making any findings of wrongdoing. As
part of the settlement, MGIC agreed that it would not enter into any new
captive reinsurance agreement or reinsure any new loans under any existing
captive reinsurance agreement for a period of ten years. MGIC had voluntarily
suspended most of its captive arrangements in 2008 in response to market
conditions and GSE requests. In connection with the settlement, MGIC paid a
civil penalty of $2.65 million.

We remain subject to various state investigations or information requests
regarding captive mortgage reinsurance arrangements, including (1) a request
received by MGIC in June 2005 from the New York Department of Financial
Services for information regarding captive mortgage reinsurance arrangements
and other types of arrangements in which lenders receive compensation; and
(2)requests received from the Minnesota Department of Commerce beginning in
February 2006 regarding captive mortgage reinsurance and certain other matters
in response to which MGIC has provided information on several occasions,
including as recently as May 2011. Other insurance departments or other
officials, including attorneys general, may also seek information about or
investigate captive mortgage reinsurance.

Various regulators, including the CFPB, state insurance commissioners and
state attorneys general may bring actions seeking various forms of relief,
including civil penalties and injunctions against violations of RESPA. The
insurance law provisions of many states prohibit paying for the referral of
insurance business and provide various mechanisms to enforce this prohibition.
While we believe our practices are in conformity with applicable laws and
regulations, it is not possible to predict the eventual scope, duration or
outcome of any such reviews or investigations nor is it possible to predict
their effect on us or the mortgage insurance industry.

We are subject to comprehensive, detailed regulation by state insurance
departments. These regulations are principally designed for the protection of
our insured policyholders, rather than for the benefit of investors. Although
their scope varies, state insurance laws generally grant broad supervisory
powers to agencies or officials to examine insurance companies and enforce
rules or exercise discretion affecting almost every significant aspect of the
insurance business. Given the recent significant losses incurred by many
insurers in the mortgage and financial guaranty industries, our insurance
subsidiaries have been subject to heightened scrutiny by insurance regulators.
State insurance regulatory authorities could take actions, including changes
in capital requirements or termination of waivers of capital requirements,
that could have a material adverse effect on us. As noted above, in January
2013, the CFPB issued rules to implement laws requiring mortgage lenders to
make ability-to-pay determinations prior to extending credit. We are uncertain
whether the CFPB will issue any other rules or regulations that affect our
business apart from any action it may take as a result of its investigation of
captive mortgage reinsurance. Such rules and regulations could have a material
adverse effect on us.

We understand several law firms have, among other things, issued press
releases to the effect that they are investigating us, including whether the
fiduciaries of our 401(k) plan breached their fiduciary duties regarding the
plan's investment in or holding of our common stock or whether we breached
other legal or fiduciary obligations to our shareholders. We intend to defend
vigorously any proceedings that may result from these investigations. With
limited exceptions, our bylaws provide that our officers and 401(k) plan
fiduciaries are entitled to indemnification from us for claims against them.

Since December 2009, we havebeen involved in legal proceedings with
Countrywide in which Countrywide alleged that MGIC denied valid mortgage
insurance claims. (In our SEC reports, we refer to rescissions of insurance
and denials of claims collectively as "rescissions" and variations of that
term.) In addition to the claim amounts it alleged MGIC had improperly denied,
Countrywidecontended it was entitled to other damages of almost $700 million
as well as exemplary damages. Wesought a determination in those proceedings
that we were entitled to rescind coverage on the applicable loans. From
January 1, 2008 through March 31, 2013, rescissions of coverage on
Countrywide-related loans mitigated our paid losses on the order of $445
million. This amount is the amount we estimate we would have paid had the
coverage not been rescinded. In addition, in connection with mediationwe were
holding with Countrywide, we voluntarily suspended rescissions related to
loans that we believed could be covered by a settlement. As of March 31, 2013,
coverage on approximately 2,300 loans, representing total potential claim
payments of approximately $170 million, that we had determined was
rescindable, was affected by our decision to suspend such rescissions.

On April 19, 2013, MGIC entered into separate settlement agreements with CHL
and BANA, pursuant to which the parties will settle the Countrywide litigation
as it relates to MGIC's rescission practices. These settlement agreements (the
"Agreements"), including consents and approvals that must be obtained before
they are implemented, are described in our Form 8-K filed with the SEC on
April 25, 2013. The Agreements are also filed as exhibits to that Form 8-K,
although certain portions of the Agreements are redacted and covered by a
confidential treatment request. While there can be no assurance that the
Agreements will be implemented, we have determined that their implementation
is probable.

We are also discussing a settlement of a dispute with another customer and
have alsodetermined that it is probable we will reach a settlement with this
customer. As of March 31, 2013, coverage on approximately 300 loans,
representing total potential claim payments of approximately $20 million, was
affected by our decision to suspend rescissions for that customer.

We recorded the estimated impact of the two probablesettlements referred to
above in our financial statements for the quarter ending December 31, 2012.
The aggregate impact to loss reserves for the probable settlement agreements
was an increase of approximately $100 million. This impact was somewhat offset
by impacts to our return premium accrual and premium deficiency reserve. If we
are not able to implement the Agreements, we intend to defend MGIC against any
related legal proceedings, vigorously.

The flow policies at issue with Countrywide are in the same form as the flow
policies that we use with all of our customers, and the bulk policies at issue
vary from one another, but are generally similar to those used in the majority
of our Wall Street bulk transactions. The settlement with Countrywide may
encourage other customers to pursue remedies against us. From January 1, 2008
through March 31, 2013, we estimate that total rescissions mitigated our
incurred losses by approximately $2.9 billion, which included approximately
$2.9 billion of mitigation on paid losses, excluding $0.6 billion that would
have been applied to a deductible. At March 31, 2013, we estimate that our
total loss reserves were benefited from anticipated rescissions by
approximately $0.2 billion.

Before paying a claim, we review the loan and servicing files to determine the
appropriateness of the claim amount. All of our insurance policies provide
that we can reduce or deny a claim if the servicer did not comply with its
obligations under our insurance policy, including the requirement to mitigate
our loss by performing reasonable loss mitigation efforts or, for example,
diligently pursuing a foreclosure or bankruptcy relief in a timely manner. We
call such reduction of claims submitted to us "curtailments." In 2012 and the
first quarter of 2013, curtailments reduced our average claim paid by
approximately 4.1% and 4.7%, respectively. In addition, the claims submitted
to us sometimes include costs and expenses not covered by our insurance
policies, such as mortgage insurance premiums, hazard insurance premiums for
periods after the claim date and losses resulting from property damage that
has not been repaired. These other adjustments reduced claim amounts by less
than the amount of curtailments.

After we pay a claim, servicers and insureds sometimes object to our
curtailments and other adjustments. We review these objections if they are
sent to us within 90 days after the claim was paid. Historically, we have not
had material disputes regarding our curtailments or other adjustments.

The Agreements referred to above do not resolve assertions by Countrywide that
MGIC has improperly curtailed numerous insurance coverage claims. Countrywide
has asserted that the amount of disputed curtailments approximates $40
million. MGIC and Countrywide have agreed to mediate this matter and to enter
into arbitration if the mediation does not resolve the matter. We do not
believe a loss is probable regarding this curtailment dispute and have not
accrued any reserves that would reflect an adverse outcome to this dispute. We
intend to defend vigorously our position regarding the correctness of these
curtailments under our insurance policy. Although we have not had other
material objections to our curtailment and adjustment practices, there can be
no assurances that we will not face additional challenges to such practices.

A non-insurance subsidiary of our holding company is a shareholder of the
corporation that operates the Mortgage Electronic Registration System
("MERS").Our subsidiary, as a shareholder of MERS, has been named as a
defendant (along with MERS and its other shareholders) in eight lawsuits
asserting various causes of action arising from allegedly improper recording
and foreclosure activities by MERS. Two of those lawsuits remain pending and
the other six lawsuits have been dismissed without any further opportunity to
appeal.The damages sought in the remaining cases are substantial. We deny
any wrongdoing and intend to defend ourselves against the allegations in the
lawsuits, vigorously.

In addition to the matters described above, we are involved in other legal
proceedings in the ordinary course of business. In our opinion, based on the
facts known at this time, the ultimate resolution of these ordinary course
legal proceedings will not have a material adverse effect on our financial
position or results of operations.

Resolution of our dispute with the Internal Revenue Service could adversely
affect us.

The Internal Revenue Service ("IRS") completed examinations of our federal
income tax returns for the years 2000 through 2007 and issued assessments for
unpaid taxes, interest and penalties related to our treatment of the
flow-through income and loss from an investment in a portfolio of residual
interests of Real Estate Mortgage Investment Conduits ("REMICs"). This
portfolio has been managed and maintained during years prior to, during and
subsequent to the examination period. The IRS indicated that it did not
believe that, for various reasons, we had established sufficient tax basis in
the REMIC residual interests to deduct the losses from taxable income. The IRS
assessment related to the REMIC issue is $190.7 million in taxes and
penalties. There would also be applicable interest which, when computed on the
amount of the assessment, is substantial. Depending on the outcome of this
matter, additional state income taxes along with any applicable interest may
become due when a final resolution is reached and could also be substantial.

We appealed these assessments within the IRS and, in 2007, we made a payment
of $65.2 million to the United States Department of the Treasury related to
this assessment. In August 2010, we reached a tentative settlement agreement
with the IRS which was not finalized. We currently expect to receive a
statutory notice of deficiency (commonly referred to as a "90-day letter") for
the disputed amounts in the second quarter of 2013. We would then be required
to litigate the validity of the assessments in order to avoid payment to the
IRS of the entire amount assessed. Any such litigation could be lengthy and
costly in terms of legal fees and related expenses. We continue to believe
that our previously recorded tax provisions and liabilities are appropriate.
However, we would need to make appropriate adjustments, which could be
material, to our tax provision and liabilities if our view of the probability
of success in this matter changes, and the ultimate resolution of this matter
could have a material negative impact on our effective tax rate, results of
operations, cash flows and statutory capital. In this regard, see "— Capital
requirements may prevent us from continuing to write new insurance on an
uninterrupted basis."

Because we establish loss reserves only upon a loan default 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.

In accordance with accounting principles generally accepted in the United
States, commonly referred to as GAAP, we establish loss reserves only for
loans in default. Reserves are established for reported insurance losses and
loss adjustment expenses based on when notices of default on insured mortgage
loans are received. Reserves are also established for estimated losses
incurred on notices of default that have not yet been reported to us by the
servicers (this is often referred to as "IBNR"). We establish reserves using
estimated claim rates and claim amounts in estimating the ultimate loss.
Because our reserving method does not take account of the impact of future
losses that could occur from loans that are not delinquent, our obligation for
ultimate losses that we expect to occur under our policies in force at any
period end is not reflected in our financial statements, except in the case
where a premium deficiency exists. As a result, future losses may have a
material impact on future results as such losses emerge.

Because loss reserve estimates are subject to uncertainties and are based on
assumptions that are currently very volatile, paid claims may be substantially
different than our loss reserves.

We establish reserves using estimated claim rates and claim amounts in
estimating the ultimate loss on delinquent loans. The estimated claim rates
and claim amounts represent our best estimates of what we will actually pay on
the loans in default as of the reserve date and incorporate anticipated
mitigation from rescissions. We rescind coverage on loans and deny claims in
cases where we believe our policy allows us to do so. Therefore, when
establishing our loss reserves, unless we have determined that a loss is
probable and can be reasonably estimated, we do not include additional loss
reserves that would reflect an adverse development from ongoing dispute
resolution proceedings. For more information regarding our legal proceedings,
see "— We are involved in legal proceedings and are subject to the risk of
additional legal proceedings in the future."

The establishment of loss reserves is subject to inherent uncertainty and
requires judgment by management. Current conditions in the housing and
mortgage industries make the assumptions that we use to establish loss
reserves more volatile than they would otherwise be. 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, leading to a reduction in borrowers' income and thus their
ability to make mortgage payments, a drop in housing values that could result
in, among other things, greater losses on loans that have pool insurance, and
may affect borrower willingness to continue to make mortgage payments when the
value of the home is below the mortgage balance, and mitigation from
rescissions being materially less than assumed. Changes to our estimates could
result in material impact to our results of operations, even in a stable
economic environment, and there can be no assurance that actual claims paid by
us will not be substantially different than our loss reserves.

We rely on our management team and our business could be harmed if we are
unable to retain qualified personnel.

Our industry is undergoing a fundamental shift following the mortgage crisis:
long-standing competitors have gone out of business and two newly capitalized,
privately-held start-ups that are not encumbered with a portfolio of
pre-crisis mortgages, have been formed. Former executives from other mortgage
insurers have joined these two new competitors. In addition, in February 2013,
a worldwide insurer and reinsurer with mortgage insurance operations in Europe
announced that it was purchasing CMG Mortgage Insurance Company. Our success
depends, in part, on the skills, working relationships and continued services
of our management team and other key personnel. The departure of key personnel
could adversely affect the conduct of our business. In such event, we would be
required to obtain other personnel to manage and operate our business, and
there can be no assurance that we would be able to employ a suitable
replacement for the departing individuals, or that a replacement could be
hired on terms that are favorable to us. We currently have not entered into
any employment agreements with our officers or key personnel. Volatility or
lack of performance in our stock price may affect our ability to retain our
key personnel or attract replacements should key personnel depart.

Loan modification and other similar programs may not continue to provide
material benefits to us and our losses on loans that re-default can be higher
than what we would have paid had the loan not been modified.

Beginning in the fourth quarter of 2008, the federal government, including
through the Federal Deposit Insurance Corporation and the GSEs, and several
lenders have adopted programs to modify loans to make them more affordable to
borrowers with the goal of reducing the number of foreclosures. During 2010,
2011, 2012, and the first quarter of 2013, we were notified of modifications
that cured delinquencies that had they become paid claims would have resulted
in approximately $3.2 billion, $1.8 billion, $1.2 billion and $247 million,
respectively, of estimated claim payments. As noted below, we cannot predict
with a high degree of confidence what the ultimate re-default rate on these
modifications will be. Although the recent re-default rate has been lower, for
internal reporting and planning purposes, we assume approximately 50% of these
modifications will ultimately re-default, and those re-defaults may result in
future claim payments. Because modifications cure the defaults with respect to
the previously defaulted loans, our loss reserves do not account for potential
re-defaults unless at the time the reserve is established, the re-default has
already occurred. Based on information that is provided to us, most of the
modifications resulted in reduced payments from interest rate and/or
amortization period adjustments; less than 5% resulted in principal
forgiveness.

One loan modification program is the Home Affordable Modification Program
("HAMP"). Some of HAMP's eligibility criteria relate to the borrower's current
income and non-mortgage debt payments. Because the GSEs and servicers do not
share such information with us, we cannot determine with certainty the number
of loans in our delinquent inventory that are eligible to participate in HAMP.
We believe that it could take several months from the time a borrower has made
all of the payments during HAMP's three month "trial modification" period for
the loan to be reported to us as a cured delinquency.

We rely on information provided to us by the GSEs and servicers. We do not
receive all of the information from such sources that is required to determine
with certainty the number of loans that are participating in, or have
successfully completed, HAMP. We are aware of approximately 8,650 loans in our
primary delinquent inventory at March 31, 2013 for which the HAMP trial period
has begun and which trial periods have not been reported to us as completed or
cancelled. Through March 31, 2013 approximately 47,200 delinquent primary
loans have cured their delinquency after entering HAMP and are not in default.
In 2012 and the first quarter of 2013, approximately 17% and 14%,
respectively, of our primary cures were the result of a modification, with
HAMP accounting for approximately 70% and 75%, respectively,of those
modifications in each of those periods. By comparison, in 2010, approximately
27% of our primary cures were the result of a modification, with HAMP
accounting for approximately 60% of those modifications. We believe that we
have realized the majority of the benefits from HAMP because the number of
loans insured by us that we are aware are entering HAMP trial modification
periods has decreased significantly since 2010. Announcements made by the U.S.
Treasury in 2012 extended the end date of the HAMP program through 2013,
expanded the eligibility criteria of HAMP and increased lenders' incentives to
modify loans through principal forgiveness. Approximately 65% of the loans in
our primary delinquent inventory are guaranteed by the GSEs. The GSEs have
informed us that they already use expanded criteria (beyond the HAMP
guidelines) for determining eligibility for loan modification and currently do
not offer principal forgiveness. Therefore, we currently expect new loan
modifications will continue to only modestly mitigate our losses in 2013.

In 2009, the GSEs began offering the Home Affordable Refinance Program
("HARP"). HARP allows borrowers who are not delinquent but who may not
otherwise be able to refinance their loans under the current GSE underwriting
standards, to refinance their loans. We allow the HARP refinances on loans
that we insure, regardless of whether the loan meets our current underwriting
standards, and we account for the refinance as a loan modification (even where
there is a new lender) rather than new insurance written. To incent lenders to
allow more current borrowers to refinance their loans, in October 2011, the
GSEs and their regulator, FHFA, announced an expansion of HARP. The expansion
includes, among other changes, releasing certain representations in certain
circumstances benefitting the GSEs. We have agreed to allow these additional
HARP refinances, including releasing the insured in certain circumstances from
certain rescission rights we would have under our policy. While an expansion
of HARP may result in fewer delinquent loans and claims in the future, our
ability to rescind coverage will be limited in certain circumstances. We are
unable to predict what net impact these changes may have on our incurred or
paid losses. In April 2013, the FHFA announced that HARP had been extended
through 2015. Approximately 12% of our primary insurance in force has
benefitted from HARP and is still in force.

The effect on us of loan modifications depends on how many modified loans
subsequently re-default, which in turn can be affected by changes in housing
values. Re-defaults can result in losses for us that could be greater than we
would have paid had the loan not been modified. At this point, we cannot
predict with a high degree of confidence what the ultimate re-default rate
will be. In addition, because we do not have information in our database for
all of the parameters used to determine which loans are eligible for
modification programs, our estimates of the number of loans qualifying for
modification programs are inherently uncertain. If legislation is enacted to
permit a portion of a borrower's mortgage loan balance to be reduced in
bankruptcy and if the borrower re-defaults after such reduction, then the
amount we would be responsible to cover would be calculated after adding back
the reduction. Unless a lender has obtained our prior approval, if a
borrower's mortgage loan balance is reduced outside the bankruptcy context,
including in association with a loan modification, and if the borrower
re-defaults after such reduction, then under the terms of our policy the
amount we would be responsible to cover would be calculated net of the
reduction.

Eligibility under certain loan modification programs can also adversely affect
us by creating an incentive for borrowers who are able to make their mortgage
payments to become delinquent in an attempt to obtain the benefits of a
modification. New notices of delinquency increase our incurred losses.

If the volume of low down payment home mortgage originations declines, the
amount of insurance that we write could decline, which would reduce our
revenues.

The factors that affect the volume of low down payment mortgage originations
include:

  orestrictions on mortgage credit due to more stringent underwriting
    standards, liquidity issues and risk-retention requirements associated
    with non-QRM loans affecting lenders,
  othe level of home mortgage interest rates and the deductibility of
    mortgage interest for income tax purposes,
  othe health of the domestic economy as well as conditions in regional and
    local economies,
  ohousing affordability,
  opopulation trends, including the rate of household formation,
  othe rate of home price appreciation, which in times of heavy refinancing
    can affect whether refinance loans have loan-to-value ratios that require
    private mortgage insurance, and
  ogovernment housing policy encouraging loans to first-time homebuyers.

As noted above, in January 2013, the CFPB issued rules to implement laws
requiring mortgage lenders to make ability-to-pay determinations prior to
extending credit. We are uncertain whether this Bureau will issue any other
rules or regulations that affect our business or the volume of low down
payment home mortgage originations. Such rules and regulations could have a
material adverse effect on our financial position or results of operations.

A decline in the volume of low down payment home mortgage originations could
decrease demand for mortgage insurance, decrease our new insurance written and
reduce our revenues. For other factors that could decrease the demand for
mortgage insurance, see "— The amount of insurance we write could be adversely
affected if the definition of Qualified Residential Mortgage results in a
reduction of the number of low down payment loans available to be insured or
if lenders and investors select alternatives to private mortgage insurance"
and "— The implementation of the Basel III capital accord, or other changes to
our customers' capital requirements, may discourage the use of mortgage
insurance."

Competition or changes in our relationships with our customers could reduce
our revenues or increase our losses.

As noted above, the FHA substantially increased its market share beginning in
2008 and beginning in 2011, that market share began to gradually decline. It
is difficult to predict the FHA's future market share due to, among other
factors, different loan eligibility terms between the FHA and the GSEs, future
increases in guarantee fees charged by the GSEs, changes to the FHA's annual
premiums, and the total profitability that may be realized by mortgage lenders
from securitizing loans through Ginnie Mae when compared to securitizing loans
through Fannie Mae or Freddie Mac.

In recent years, the level of competition within the private mortgage
insurance industry has been intense as many large mortgage lenders reduced the
number of private mortgage insurers with whom they do business. At the same
time, consolidation among mortgage lenders has increased the share of the
mortgage lending market held by large lenders. During 2012 and the first
quarter of 2013, approximately 10% and 8%, respectively, of our new insurance
written was for loans for which one lender was the original insured, although
revenue from such loans was significantly less than 10% of our revenues during
each of those periods. Our private mortgage insurance competitors include:

  oGenworth Mortgage Insurance Corporation,
  oUnited Guaranty Residential Insurance Company,
  oRadian Guaranty Inc.,
  oCMG Mortgage Insurance Company (whose owners have agreed to sell it to a
    worldwide insurer and reinsurer),
  oEssent Guaranty, Inc., and
  oNMI Holdings, Inc.

Until 2010 the mortgage insurance industry had not had new entrants in many
years. In 2010, Essent Guaranty, Inc. began writing new mortgage insurance.
Essent has publicly reported that one of our customers, JPMorgan Chase, is one
of its investors. During 2012, another new company, NMI Holdings Inc., raised
$550 million in order to enter the mortgage insurance business. NMI Holdings
has been approved as an eligible mortgage insurer by the GSEs and it announced
in April 2013 that it began writing new business. In addition, in February
2013, a worldwide insurer and reinsurer with mortgage insurance operations in
Europe announced that it was purchasing CMG Mortgage Insurance Company. The
perceived increase in credit quality of loans that are being insured today,
the deterioration of the financial strength ratings of the existing mortgage
insurance companies and the possibility of a decrease in the FHA's share of
the mortgage insurance market may encourage additional new entrants.

Our relationships with our customers could be adversely affected by a variety
of factors, including tightening of and adherence to our underwriting
guidelines, which have resulted in our declining to insure some of the loans
originated by our customers and rescission of coverage on loans that affect
the customer. We have ongoing discussions with lenders who are significant
customers regarding their objections to our rescissions.

We believe many lenders assess a mortgage insurer's financial strength rating
and risk-to-capital ratio as important elements of the process through which
they select mortgage insurers. As a result of MGIC's less than investment
grade financial strength ratings and its risk-to-capital ratio level
beinghigher than that of other mortgage insurers, MGIC may be competitively
disadvantaged with these lenders. MGIC's financial strength rating from
Moody's is B2 (on review for upgrade) and from Standard & Poor's is B (with a
stable outlook). It is possible that MGIC's financial strength ratings could
decline from these levels. While we expect MGIC's risk-to-capital ratio to
continue to comply with the current Capital Requirements, its level will
depend primarily on the level of incurred losses, any settlement with the IRS,
and the volume of new risk written. Our incurred losses are dependent upon
factors that make prediction of their amounts difficult and any forecasts are
subject to significant volatility. Conditions that could negatively affect the
risk-to-capital ratio include high unemployment rates, low cure rates, low
housing values, changes to our current rescission practices and unfavorable
resolution of ongoing legal proceedings.

Downturns in the domestic economy or declines in the value of borrowers' homes
from their value at the time their loans closed may result in more homeowners
defaulting and our losses increasing.

Losses result from events that reduce a borrower's ability to continue to make
mortgage payments, such as unemployment, and whether the home of a borrower
who defaults on his mortgage can be sold for an amount that will cover unpaid
principal and interest and the expenses of the sale. In general, favorable
economic conditions reduce the likelihood that borrowers will lack sufficient
income to pay their mortgages and also favorably affect the value of homes,
thereby reducing and in some cases even eliminating a loss from a mortgage
default. A deterioration in economic conditions, including an increase in
unemployment, generally increases the likelihood that borrowers will not have
sufficient income to pay their mortgages and can also adversely affect housing
values, which in turn can influence the willingness of borrowers with
sufficient resources to make mortgage payments to do so when the mortgage
balance exceeds the value of the home. Housing values may decline even absent
a deterioration in economic conditions due to declines in demand for homes,
which in turn may result from changes in buyers' perceptions of the potential
for future appreciation, restrictions on and the cost of mortgage credit due
to more stringent underwriting standards, liquidity issues and risk-retention
requirements associated with non-QRM loans affecting lenders, higher interest
rates generally or changes to the deductibility of mortgage interest for
income tax purposes, or other factors. The residential mortgage market in the
United States has for some time experienced a variety of poor or worsening
economic conditions, including a material nationwide decline in housing
values, with declines continuing into early 2012 in a number of geographic
areas. Although housing values have recently been increasing in certain
markets, they generally remain significantly below their early 2007 levels.
Changes in housing values and unemployment levels are inherently difficult to
forecast given the uncertainty in the current market environment, including
uncertainty about the effect of actions the federal government has taken and
may take with respect to tax policies, mortgage finance programs and policies,
and housing finance reform.

The mix of business we write also affects the likelihood of losses occurring.

Even when housing values are stable or rising, mortgages with certain
characteristics have higher probabilities of claims. These characteristics
include loans with loan-to-value ratios over 95% (or in certain markets that
have experienced declining housing values, over 90%), FICO credit scores below
620, limited underwriting, including limited borrower documentation, or higher
total debt-to-income ratios, as well as loans having combinations of higher
risk factors. As of March 31, 2013, approximately 23.9% of our primary risk in
force consisted of loans with loan-to-value ratios greater than 95%, 7.6% had
FICO credit scores below 620, and 7.9% had limited underwriting, including
limited borrower documentation, each attribute as determined at the time of
loan origination. A material portion of these loans were written in 2005 —
2007 or the first quarter of 2008. In accordance with industry practice, loans
approved by GSEs and other automated underwriting systems under "doc waiver"
programs that do not require verification of borrower income are classified by
us as "full documentation." For additional information about such loans, see
footnote (1) to the Additional Information at the end of this press release.

From time to time, in response to market conditions, we change the types of
loans that we insure and the guidelines under which we insure them. Our
underwriting guidelines are available on our website at
http://www.mgic.com/underwriting/index.html. In addition, we make exceptions
to our underwriting guidelines on a loan-by-loan basis and for certain
customer programs. Together, the number of loans for which exceptions were
made accounted for fewer than 2% of the loans we insured in 2012 and the first
quarter of 2013.

During the second quarter of 2012, we began writing a portion of our new
insurance under an endorsement to our master policy that limits our ability to
rescind coverage on loans that meet the conditions in that endorsement, which
is filed as Exhibit 99.7 to our quarterly report on Form 10-Q for the quarter
ended March 31, 2012 (filed with the SEC on May 10, 2012). We estimate that
approximately 52% of our new insurance written in the first quarter of 2013,
was written under this endorsement. We expect that eventually a significant
portion of our new insurance written will have rescission terms equivalent to
those in this endorsement.

As of March 31, 2013, approximately 23.4% of our primary risk in force written
through the flow channel, and 2.1% of our primary risk in force written
through the bulk channel, consisted of adjustable rate mortgages in which the
initial interest rate may be adjusted during the five years after the mortgage
closing ("ARMs"). In the current interest rate environment, interest rates
resetting in the near future are unlikely to exceed the interest rates at
origination. We classify as fixed rate loans adjustable rate mortgages in
which the initial interest rate is fixed during the five years after the
mortgage closing. If interest rates should rise between the time of
origination of such loans and when their interest rates may be reset, claims
on ARMs and adjustable rate mortgages whose interest rates may only be
adjusted after five years would be substantially higher than for fixed rate
loans. In addition, we have insured "interest-only" loans, which may also be
ARMs, and loans with negative amortization features, such as pay option ARMs.
We believe claim rates on these loans will be substantially higher than on
loans without scheduled payment increases that are made to borrowers of
comparable credit quality.

Although we attempt to incorporate these higher expected claim rates into our
underwriting and pricing models, there can be no assurance that the premiums
earned and the associated investment income will be adequate to compensate for
actual losses even under our current underwriting guidelines. We do, however,
believe that given the various changes in our underwriting guidelines that
were effective beginning in the first quarter of 2008, our insurance written
beginning in the second quarter of 2008 will generate underwriting profits.

The premiums we charge may not be adequate to compensate us for our
liabilities for losses and as a result any inadequacy could materially affect
our financial condition and results of operations.

We set premiums at the time a policy is issued based on our expectations
regarding likely performance over the long-term. Our premiums are subject to
approval by state regulatory agencies, which can delay or limit our ability to
increase our premiums. Generally, we cannot cancel the mortgage insurance
coverage or adjust renewal premiums during the life of a mortgage insurance
policy. As a result, higher than anticipated claims generally cannot be offset
by premium increases on policies in force or mitigated by our non-renewal or
cancellation of insurance coverage. The premiums we charge, and the associated
investment income, may not be adequate to compensate us for the risks and
costs associated with the insurance coverage provided to customers. An
increase in the number or size of claims, compared to what we anticipate,
could adversely affect our results of operations or financial condition.

In January 2008, we announced that we had decided to stop writing the portion
of our bulk business that insures loans included in Wall Street
securitizations because the performance of such loans deteriorated materially
in the fourth quarter of 2007 and this deterioration was materially worse than
we experienced for loans insured through the flow channel or loans insured
through the remainder of our bulk channel. As of December 31, 2007 we
established a premium deficiency reserve of approximately $1.2 billion. As of
March 31, 2013, the premium deficiency reserve was $72 million, which reflects
the present value of expected future losses and expenses that exceeds the
present value of expected future premium and already established loss reserves
on these bulk transactions.

We continue to experience material losses, especially on the 2006 and 2007
books. The ultimate amount of these losses will depend in part on general
economic conditions, including unemployment, and the direction of home prices,
which in turn will be influenced by general economic conditions and other
factors. Because we cannot predict future home prices or general economic
conditions with confidence, there is significant uncertainty surrounding what
our ultimate losses will be on our 2006 and 2007 books. Our current
expectation, however, is that these books will continue to generate material
incurred and paid losses for a number of years. There can be no assurance that
an additional premium deficiency reserve on Wall Street Bulk or on other
portions of our insurance portfolio will not be required.

It is uncertain what effect the extended timeframes in the foreclosure
process, due to moratoriums, suspensions or issues arising from the
investigation of servicers' foreclosure procedures, will have on us.

In response to the significant increase in the number of foreclosures that
began in 2009, various government entities and private parties have from time
to time enacted foreclosure (or equivalent) moratoriums and suspensions (which
we collectively refer to as moratoriums). In October 2010, a number of
mortgage servicers temporarily halted some or all of the foreclosures they
were processing after discovering deficiencies in their foreclosure processes
and those of their service providers.In response to the deficiencies, some
states changed their foreclosure laws to require additional review and
verification of the accuracy of foreclosure filings. Some states also added
requirements to the foreclosure process, including mediation processes and
requirements to file new affidavits.Certain state courts have issued rulings
calling into question the validity of some existing foreclosure practices.
These actions halted or significantly delayed foreclosures. Furthermore five
of the nation's largest mortgage servicers agreed to implement new servicing
and foreclosure practices as part of a settlement announced in February 2012,
with the federal government and the attorneys general of 49 states.

Past moratoriums or delays were designed to afford time to determine whether
loans could be modified and did not stop the accrual of interest or affect
other expenses on a loan, and we cannot predict whether any future moratorium
or lengthened timeframes would do so. Therefore, unless a loan is cured during
a moratorium or delay, at the completion of a foreclosure, additional interest
and expenses may be due to the lender from the borrower. In some
circumstances, our paid claim amount may include some additional interest and
expenses. For moratoriums or delays resulting from investigations into
servicers and other parties' actions in foreclosure proceedings, our
willingness to pay additional interest and expenses may be different, subject
to the terms of our mortgage insurance policies. The various moratoriums and
extended timeframes may temporarily delay our receipt of claims and may
increase the length of time a loan remains in our delinquent loan inventory.

We do not know what effect improprieties that may have occurred in a
particular foreclosure have on the validity of that foreclosure, once it was
completed and the property transferred to the lender. Under our policy, in
general, completion of a foreclosure is a condition precedent to the filing of
a claim. Beginning in 2011 and from time to time, various courts have ruled
that servicers did not provide sufficient evidence that they were the holders
of the mortgages and therefore they lacked authority to foreclose. Some courts
in other jurisdictions have considered similar issues and reached similar
conclusions, but other courts have reached different conclusions. These
decisions have not had a direct impact on our claims processes or rescissions.

We are susceptible to disruptions in the servicing of mortgage loans that we
insure.

We depend on reliable, consistent third-party servicing of the loans that we
insure. Over the last several years, the mortgage loan servicing industry has
experienced consolidation. The resulting reduction in the number of servicers
could lead to disruptions in the servicing of mortgage loans covered by our
insurance policies. In addition, current housing market trends have led to
significant increases in the number of delinquent mortgage loans requiring
servicing. These increases have strained the resources of servicers, reducing
their ability to undertake mitigation efforts that could help limit our
losses, and have resulted in an increasing amount of delinquent loan servicing
being transferred to specialty servicers. The transfer of servicing can cause
a disruption in the servicing of delinquent loans. Future housing market
conditions could lead to additional increases in delinquencies. Managing a
substantially higher volume of non-performing loans could lead to increased
disruptions in the servicing of mortgages. Investigations into whether
servicers have acted improperly in foreclosure proceedings may further strain
the resources of servicers.

If interest rates decline, house prices appreciate or mortgage insurance
cancellation requirements change, the length of time that our policies remain
in force could decline and result in declines in our revenue.

In each year, most of our premiums are from insurance that has been written in
prior years. As a result, the length of time insurance remains in force, which
is also generally referred to as persistency, is a significant determinant of
our revenues. The factors affecting the length of time our insurance remains
in force include:

  othe level of current mortgage interest rates compared to the mortgage
    coupon rates on the insurance in force, which affects the vulnerability of
    the insurance in force to refinancings, and
  omortgage insurance cancellation policies of mortgage investors along with
    the current value of the homes underlying the mortgages in the insurance
    in force.

Our persistency rate was 78.7% at March 31, 2013, compared to 79.8% at
December 31, 2012 and 82.9% at December 31, 2011. During the 1990s, our
year-end persistency ranged from a high of 87.4% at December 31, 1990 to a low
of 68.1% at December 31, 1998. 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.

Current mortgage interest rates are at or near historic lows. The high-quality
mortgages insured by us in recent years that have not experienced significant
declines in underlying home prices are especially vulnerable to refinancing.
Future premiums on our insurance in force represent a material portion of our
claims paying resources. We are unsure what the impact on our revenues will be
as mortgages are refinanced, because the number of policies we write for
replacement mortgages may be more or less than the terminated policies
associated with the refinanced mortgages.

Your ownership in our company may be diluted by additional capital that we
raise or if the holders of our outstanding convertible debt convert that debt
into shares of our common stock.

Any future issuance of equity securities may dilute your ownership interest in
our company. In addition, the market price of our common stock could decline
as a result of sales of a large number of shares or similar securities in the
market or the perception that such sales could occur.

We have $389.5 million principal amount of 9% Convertible Junior Subordinated
Debentures outstanding. The principal amount of the debentures is currently
convertible, at the holder's option, at an initial conversion rate, which is
subject to adjustment, of 74.0741 common shares per $1,000 principal amount of
debentures. This represents an initial conversion price of approximately
$13.50 per share. On April 1, 2013, we paid all interest that we had
previously elected to defer on these debentures.We continue to have the
right, and may elect, to defer interest payable under the debentures in the
future. If a holder elects to convert its debentures, the interest that has
been deferred on the debentures being converted is also converted into shares
of our common stock. The conversion rate for such deferred interest is based
on the average price that our shares traded at during a 5-day period
immediately prior to the election to convert the associated debentures. We may
elect to pay cash for some or all of the shares issuable upon a conversion of
the debentures. We also have $345 million principal amount of 5% Convertible
Senior Notes and $500 million principal amount of 2% Convertible Senior Notes
outstanding. The 5% Convertible Senior Notes are convertible, at the holder's
option, at an initial conversion rate, which is subject to adjustment, of
74.4186 shares per $1,000 principal amount at any time prior to the maturity
date. This represents an initial conversion price of approximately $13.44 per
share. The 2% Convertible Senior Notes are convertible, at the holder's
option, at an initial conversion rate, which is subject to adjustment, of
143.8332 shares per $1,000 principal amount at any time prior to the maturity
date. This represents an initial conversion price of approximately $6.95 per
share. We do not have the right to defer interest on our Convertible Senior
Notes.

Our debt obligations materially exceed our holding company cash and
investments

At March 31, 2013, we had approximately $671 million in cash and investments
at our holding company and our holding company's debt obligations were $1,335
million in aggregate principal amount, consisting of $100 million of Senior
Notes due in November 2015, $345 million of Convertible Senior Notes due in
2017, $500 million of Convertible Senior Notes due in 2020 and $390 million of
Convertible Junior Debentures due in 2063. Annual debt service on the debt
outstanding as of March 31, 2013, is approximately $68 million.

The Senior Notes, Convertible Senior Notes and Convertible Junior Debentures
are obligations of our holding company, MGIC Investment Corporation, and not
of its subsidiaries. Our holding company has no material sources of cash
inflows other than investment income. The payment of dividends from our
insurance subsidiaries, which prior to raising capital in the public markets
in 2008, 2010 and 2013, had been the principal source of our holding company
cash inflow, is restricted by insurance regulation. MGIC is the principal
source of dividend-paying capacity.Since 2008, MGIC has not paid any
dividends to our holding company. Through 2013, MGIC cannot pay any dividends
to our holding company without approval from the OCI. In connection with the
approval of MIC as an eligible mortgage insurer, Freddie Mac and Fannie Mae
have imposed dividend restrictions on MGIC and MIC through December 31, 2013.
Any additional capital contributions to our subsidiaries would decrease our
holding company cash and investments.

We could be adversely affected if personal information on consumers that we
maintain is improperly disclosed.

As part of our business, we maintain large amounts of personal information on
consumers. While we believe we have appropriate information security policies
and systems to prevent unauthorized disclosure, there can be no assurance that
unauthorized disclosure, either through the actions of third parties or
employees, will not occur. Unauthorized disclosure could adversely affect our
reputation and expose us to material claims for damages.

The implementation of the Basel III capital accord, or other changes to our
customers' capital requirements, may discourage the use of mortgage insurance.

In 1988, the Basel Committee on Banking Supervision (the "Basel Committee")
developed the Basel Capital Accord (Basel I), which set out international
benchmarks for assessing banks' capital adequacy requirements. In June 2005,
the Basel Committee issued an update to Basel I (as revised in November 2005,
Basel II). Basel II was implemented by many banks in the United States and
many other countries in 2009 and 2010.

In December 2010, the Basel Committee released the nearly final version of
Basel III. In June 2012, federal regulators requested public comments on
proposed rules to implement Basel III. The proposed Basel III rules would
increase the capital requirements of many banking organizations. Among other
provisions, the proposed rules contain a range of risk weightings for
residential mortgages held for investment by certain banking organizations,
with the specific weighting dependent upon, among other things, a loan's LTV.
Unlike previous Basel rules, the proposed Basel III rules do not consider
mortgage insurance when calculating a loan's risk weighting. The rules, if
implemented as proposed, may reduce the incentive of banking organizations to
purchase mortgage insurance for loans held for investment. The proposed Basel
III rules continue to afford FHA-insured loans and Ginnie Mae mortgage-backed
securities ("MBS") a lower risk weighting than loans held for investment by
the banking organization and for Fannie Mae and Freddie Mac MBS. Therefore,
with respect to capital requirements, FHA-insured loans will continue to have
a competitive advantage over loans insured by private mortgage insurance and
held for investment or sold to and securitized by the GSEs. Public comments to
the proposed rules were due by October 22, 2012. It is uncertain what form the
final rules will take. We are continuing to evaluate the potential effects of
the proposed Basel III rules on our business.

Our Australian operations may suffer significant losses.

We began international operations in Australia, where we started to write
business in June 2007. Since 2008, we are no longer writing new business in
Australia. Our existing risk in force in Australia is subject to the risks
described in the general economic and insurance business-related factors
discussed above. In addition to these risks, we are subject to a number of
other risks from having deployed capital in Australia, including foreign
currency exchange rate fluctuations and interest-rate volatility particular to
Australia.





MGIC INVESTMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
                                           Three Months Ended March 31,
                                           2013               2012
                                           (Unaudited)
                                           (In thousands, except per share
                                           data)
Net premiums written                       $  248,500       $    254,986
Net premiums earned                        $  247,059       $    262,405
Investment income                          18,328             37,408
Realized gains, net                        1,259              77,561
Total other-than-temporary impairment      -                  -
losses
Portion of loss recognized in other
comprehensive
                                           -                  -
income (loss), before taxes
Net impairment losses recognized in        -                  -
earnings
Other revenue                              2,539              2,309
Total revenues                            269,185            379,683
Losses and expenses:
Losses incurred                            266,208            337,088
Change in premium deficiency reserve       (1,650)            (14,183)
Underwriting and other expenses, net       50,012             50,343
Interest expense                           26,406             24,627
Total losses and expenses                  340,976            397,875
Loss before tax                           (71,791)           (18,192)
Provision for income taxes                 1,139              1,363
Net Loss                                   $  (72,930)      $    (19,555)
Diluted weighted average common shares
                                           232,348            201,528
outstanding
Diluted loss per share                     $    (0.31)    $     
                                                              (0.10)
NOTE: See "Certain Non-GAAP Financial Measures" for diluted earnings per share
contribution from realized gains and losses.



MGIC INVESTMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET AS OF
                                      March 31,    December 31,    March 31,
                                      2013         2012            2012
                                      (Unaudited)
                                      (In thousands, except per share data)
ASSETS
Investments (1)                       $ 4,540,690  $  4,230,275  $ 5,536,249
Cash and cash equivalents             1,635,810    1,027,625       902,606
Reinsurance recoverable on loss       96,179       104,848         142,289
reserves (2)
Prepaid reinsurance premiums          762          841             1,462
Home office and equipment, net        26,863       27,190          27,590
Deferred insurance policy acquisition 12,208       11,245          8,701
costs
Other assets                          195,986      172,300         193,217
                                      $ 6,508,498  $  5,574,324  $ 6,812,114
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Loss reserves (2)                     $ 3,848,348  $  4,056,843  $ 4,209,170
Unearned premiums                     140,213      138,840         147,375
Premium deficiency reserve            72,131       73,781          120,634
Senior notes                          99,929       99,910          170,548
Convertible senior notes              845,000      345,000         345,000
Convertible junior debentures         389,522      379,609         352,591
Other liabilities                     335,673      283,401         335,244
Total liabilities                     5,730,816    5,377,384       5,680,562
Shareholders' equity                  777,682      196,940         1,131,552
                                      $ 6,508,498  $  5,574,324  $ 6,812,114
Book value per share (3)              $        $         $    
                                      2.30        0.97            5.60
(1) Investments include net           30,999       41,541          73,161
unrealized gains on securities
(2) Loss reserves, net of reinsurance 3,752,169    3,951,995       4,066,881
recoverable on loss reserves
(3) Shares outstanding                337,758      202,032         202,030



CERTAIN NON-GAAP FINANCIAL MEASURES
                                               Three Months Ended March 31,
                                               2013              2012
                                               (Unaudited)
                                               (In thousands, except per share
                                               data)
Diluted earnings per share contribution from
realized gains (losses):
Realized gains and impairment losses           $     1,259   $    
                                                                 77,561
Income taxes at 35% (1)                        -                 -
After tax realized gains                      1,259             77,561
Weighted average shares                        232,348           201,528
Diluted EPS contribution from realized gains
and                                                              $      
                                               $      0.01  0.38
impairment losses

(1) Due to the establishment of a valuation allowance, income taxes provided
    are not currently affected by realized gains or losses.
    Management believes the diluted earnings per share contribution from
    realized gains or losses provides useful information to investors because
    it shows the after-tax effect of these items, which can be discretionary.



             Additional Information
             Q4 2011     Q1 2012     Q2 2012     Q3 2012     Q4 2012     Q1
                                                                                   2013
New primary
insurance    $         $         $         $         $         $   
written      4.2          4.2          5.9          7.0          7.0          6.5
(NIW)
(billions)
New primary  $         $         $         $         $         $   
risk written 1.0          1.0          1.5          1.8          1.7          1.6
(billions)
Product mix
as a % of
primary flow
NIW
 >95%     2%            2%            3%            3%            3%            4%
LTVs
 ARMs     1%            1%            1%            1%            1%            1%
          39%           42%           32%           32%           41%           46%
Refinances
Primary
Insurance In $           $           $           $           $           $ 
Force (IIF)  172.9        169.0        166.7        164.9        162.1        159.5
(billions)
(1)
 Flow   $           $           $           $           $           $ 
             153.5        150.3        148.6        147.5        146.2        144.7
 Bulk   $          $          $          $          $          $  
             19.4         18.7         18.1         17.4         15.9         14.8
 Prime   $           $           $           $           $           $ 
(620 & >)    146.3        143.5        142.3        141.7        140.4        139.3
 A minus $         $         $         $         $         $   
(575 - 619)  9.7          9.3          8.9          8.5          8.2          7.8
         $         $         $         $         $         $   
Sub-Prime (< 2.6          2.5          2.4          2.3          2.3          2.2
575)
 Reduced $          $          $          $          $          $  
Doc (All     14.3         13.7         13.1         12.4         11.2         10.2
FICOs)
Annual       82.9%         82.2%         81.4%         80.2%         79.8%         78.7%
Persistency
Primary Risk
In Force     $          $          $          $          $          $  
(RIF)        44.5         43.5         42.9         42.5         41.7         41.1
(billions)
(1)
 Prime   $          $          $          $          $          $  
(620 & >)    37.2         36.5         36.2         36.1         35.8         35.5
 A minus $         $         $         $         $         $   
(575 - 619)  2.6          2.6          2.4          2.3          2.2          2.2
         $         $         $         $         $         $   
Sub-Prime (< 0.8          0.7          0.7          0.7          0.7          0.6
575)
 Reduced $         $         $         $         $         $   
Doc (All     3.9          3.7          3.6          3.4          3.0          2.8
FICOs)
RIF by FICO
 FICO 620 91.5%         91.7%         91.9%         92.1%         92.2%         92.4%
& >
 FICO 575 6.6%          6.4%          6.3%          6.1%          6.0%          5.8%
- 619
 FICO <   1.9%          1.9%          1.8%          1.8%          1.8%          1.8%
575
Average
Coverage
Ratio
(RIF/IIF)
(1)
 Total   25.7%         25.7%         25.8%         25.8%         25.7%         25.7%
 Prime   25.4%         25.4%         25.5%         25.5%         25.5%         25.5%
(620 & >)
 A minus 27.3%         27.3%         27.4%         27.4%         27.4%         27.5%
(575 - 619)

Sub-Prime (< 28.9%         28.9%         28.9%         29.0%         29.0%         28.9%
575)
 Reduced
Doc (All     27.2%         27.3%         27.2%         27.2%         27.0%         26.9%
FICOs)
Average Loan
Size
(thousands)
(1)
 Total   $            $            $            $            $            $ 161.59
IIF          158.59       158.89       159.59       160.70       161.06
 Flow    $            $            $            $            $            $ 162.27
             157.87       158.28       159.20       160.62       161.42
 Bulk    $            $            $            $            $            $ 155.25
             164.55       163.99       162.80       161.38       157.85
 Prime   $            $            $            $            $            $ 163.34
(620 & >)    158.87       159.29       160.26       161.69       162.45
 A minus $            $            $            $            $            $ 128.39
(575 - 619)  130.70       130.37       129.86       129.43       128.85
         $            $            $            $            $ 
Sub-Prime (< 121.13       120.98       120.65       120.01       119.63       $ 119.54
575)
 Reduced $            $            $            $            $ 
Doc (All     194.06       193.54       192.23       191.18       188.21       $ 185.21
FICOs)
Primary IIF
- # of loans 1,090,086     1,063,797     1,044,342     1,026,200     1,006,346     987,123
(1)
 Prime   921,112       901,300       887,967       875,953       864,432       852,527
(620 & >)
 A minus 74,036        71,250        68,538        65,878        63,438        61,098
(575 - 619)

Sub-Prime (< 21,391        20,633        20,003        19,371        18,805        18,183
575)
 Reduced
Doc (All     73,547        70,614        67,834        64,998        59,671        55,315
FICOs)
Primary IIF
- Delinquent
Roll Forward
- # of Loans

Beginning    180,894       175,639       160,473       153,990       148,885       139,845
Delinquent
Inventory
 New     41,796        34,781        32,241        34,432        31,778        27,864
Notices
 Cures  (33,837)      (37,144)      (26,368)      (27,384)      (29,352)      (31,122)
 Paids
(including
those        (12,086)      (11,909)      (11,738)      (11,344)      (10,750)      (9,445)
charged to a
deductible
or captive)

Rescissions  (1,128)       (894)         (618)         (809)         (716)         (532)
and denials
(5)
 Ending
Delinquent   175,639       160,473       153,990       148,885       139,845       126,610
Inventory
Primary
claim
received
inventory
included in  12,610        12,758        13,421        12,508        11,731        10,924
ending
delinquent
inventory
(5)
Composition
of Cures
 Reported
delinquent   9,333         11,353        7,104         8,097         7,819         9,324
and cured
intraquarter
 Number of
payments
delinquent
prior to
cure
 3
payments or  13,883        16,523        11,875        10,593        11,651        12,811
less
 4-11   6,298         6,277         5,349         5,433         5,476         5,430
payments
 12
payments or  4,323         2,991         2,040         3,261         4,406         3,557
more
 Total
Cures in     33,837        37,144        26,368        27,384        29,352        31,122
Quarter
Composition
of Paids
 Number of
payments
delinquent
at time of
claim
payment
 3
payments or  38            44            50            71            55            38
less
 4-11   1,600         1,776         1,840         1,771         1,584         1,576
payments
 12
payments or  10,448        10,089        9,848         9,502         9,111         7,831
more
 Total
Paids in     12,086        11,909        11,738        11,344        10,750        9,445
Quarter
Aging of
Primary
Delinquent
Inventory

Consecutive
months in
default
 3
months or    31,456    18% 22,516    14% 24,488    16% 25,593    17% 23,282    17% 17,973   14%
less
 4-11   46,352    26% 45,552    28% 38,400    25% 35,029    24% 34,688    25% 32,662   26%
months
 12
months or    97,831    56% 92,405    58% 91,102    59% 88,263    59% 81,875    58% 75,975   60%
more
 Number of
payments
delinquent
 3
payments or  42,804    24% 33,579    21% 33,677    22% 35,130    24% 34,245    24% 28,376   23%
less
 4-11   47,864    27% 45,539    28% 39,744    26% 36,359    24% 34,458    25% 32,253   25%
payments
 12
payments or  84,971    49% 81,355    51% 80,569    52% 77,396    52% 71,142    51% 65,981   52%
more
Primary IIF
- # of       175,639       160,473       153,990       148,885       139,845       126,610
Delinquent
Loans (1)
 Flow    134,101       121,959       116,798       113,339       107,497       97,317
 Bulk    41,538        38,514        37,192        35,546        32,348        29,293
 Prime   112,403       102,884       98,447        95,517        90,270        81,783
(620 & >)
 A minus 25,989        23,002        22,428        21,865        20,884        18,946
(575 - 619)

Sub-Prime (< 9,326         8,434         8,175         7,999         7,668         6,993
575)
 Reduced
Doc (All     27,921        26,153        24,940        23,504        21,023        18,888
FICOs)
             Q4 2011     Q1 2012     Q2 2012     Q3 2012     Q4 2012     Q1
                                                                                   2013
Primary IIF
Delinquency  16.11%        15.09%        14.75%        14.51%        13.90%        12.83%
Rates (1)
 Flow    13.79%        12.84%        12.51%        12.34%        11.87%        10.91%
 Bulk    35.33%        33.82%        33.50%        32.97%        32.10%        30.78%
 Prime   12.20%        11.42%        11.09%        10.90%        10.44%        9.59%
(620 & >)
 A minus 35.10%        32.28%        32.72%        33.19%        32.92%        31.01%
(575 - 619)

Sub-Prime (< 43.60%        40.88%        40.87%        41.29%        40.78%        38.46%
575)
 Reduced
Doc (All     37.96%        37.04%        36.77%        36.16%        35.23%        34.15%
FICOs)
Reserves
 Primary
 Direct
Loss         $           $           $           $           $           $ 
Reserves     4,249        3,985        3,934        3,855        3,744        3,558
(millions)

Average      $            $            $            $            $ 
Direct       24,193       24,835       25,547       25,890       26,771       $ 28,100
Reserve Per
Default
 Pool
 Direct
Loss         $         $         $         $         $         $   
Reserves     299           216           168           144           140           127
(millions)
 Ending
Delinquent   32,971        26,601        25,178        9,337     (6) 8,594         7,890
Inventory
 Pool
claim
received
inventory    1,398         893           1,154         255           304           325
included in
ending
delinquent
inventory

Reserves
related to   -             -             -             -             167           157
Freddie Mac
settlement
(6)
 Other
Gross        $         $         $         $         $         $   
Reserves      10            8          7          5          6          6
(millions)
(4)
Net Paid
Claims       $         $         $         $         $         $   
(millions)   704           673           636           587           628           469
(1) (2)
 Flow    $         $         $         $         $         $   
             484           459           466           430           425           370
 Bulk    $         $         $         $         $         $   
             135           124           113           115            98           78
 Pool -
with         $         $         $         $         $         $   
aggregate     90           95           64           42            9         11
loss limits
 Pool -
without      $         $         $         $         $         $   
aggregate      4          4          6          7          7          6
loss limits
 Pool -
Freddie Mac  $         $         $         $         $         $   
settlement      -          -          -          -       100            10
(6)
         $         $         $         $         $         $   
Reinsurance  (28)         (24)         (25)         (21)         (20)         (15)
 Other   $         $         $         $         $         $   
(4)           19           15           12           14            9          9

Reinsurance  $         $         $         $         $         $   
terminations    -          -          -          -        (6)         (3)
(2)
 Prime   $         $         $         $         $         $   
(620 & >)    430           408           402           378           370           329
 A minus $         $         $         $         $         $   
(575 - 619)   62           64           63           57           51           49
         $         $         $         $         $         $   
Sub-Prime (<  14           18           18           16           13           14
575)
 Reduced $         $         $         $         $         $   
Doc (All     113            93           96           94           89           56
FICOs)
Primary
Average
Claim        $          $          $          $          $          $  
Payment      51.1         48.9         49.3         48.0         48.6         47.4
(thousands)
(1)
 Flow    $          $          $          $          $          $  
             48.3         46.2         46.8         44.8         45.8         45.0
 Bulk    $          $          $          $          $          $  
             64.5         62.6         63.2         65.4         66.4         64.1
 Prime   $          $          $          $          $          $  
(620 & >)    49.6         47.4         47.6         45.9         46.7         46.2
 A minus $          $          $          $          $          $  
(575 - 619)  44.3         44.5         44.6         42.5         43.1         44.6
         $          $          $          $          $          $  
Sub-Prime (< 40.7         44.9         44.4         46.2         44.6         45.6
575)
 Reduced $          $          $          $          $          $  
Doc (All     66.8         62.6         64.3         65.6         65.9         60.3
FICOs)
Risk sharing
Arrangements
- Flow Only
 %
insurance
inforce      13.8%         13.1%         12.7%         12.2%         11.3%         10.5%
subject to
risk
sharing
 %
Quarterly
NIW subject  5.3%          5.4%          5.6%          5.6%          4.6%          3.1%
to risk
sharing
 Premium  $         $         $         $         $         $   
ceded        9.9          9.2          8.7          8.2          7.3          7.1
(millions)
 Captive
trust fund   $         $         $         $         $         $   
assets       386           371           360           350           328           314
(millions)
(2)
Direct Pool
RIF
(millions)
 With     $         $         $         $         $         $   
aggregate    674           569           508           469           439           425
loss limits
 Without  $           $           $           $         $         $   
aggregate    1,177        1,092        1,024        945           879           812
loss limits
Mortgage
Guaranty
Insurance    20.3:1        20.3:1        27.8:1        31.5:1        44.7:1        20.4:1   (7)
Corporation
- Risk to
Capital
MGIC
Indemnity
Corporation                                            0.3:1         1.2:1         1.8:1    (7)
- Risk to
Capital
Combined
Insurance
Companies -  22.2:1        22.2:1        30.0:1        34.1:1        47.8:1        23.1:1   (7)
Risk to
Capital
GAAP loss
ratio
(insurance   174.8%        128.5%        227.3%        184.0%        263.1%        107.8%
operations
only) (3)
GAAP
underwriting
expense
ratio        14.9%         16.7%         16.6%         13.6%         14.2%         18.0%
(insurance
operations
only)



Note: The FICO credit score for a loan with multiple borrowers is the lowest
of the borrowers' "decision FICO scores." A borrower's "decision FICO score"
is determined as follows: if there are three FICO scores available, the middle
FICO score is used; if two FICO scores are available, the lower of the two is
used; if only one FICO score is available, it is used.
Note: The results of our operations in Australia are included in the
financial statements in this document but the additional information in this
document does not include our Australian operations, unless otherwise noted,
which are immaterial.
Note: During the fourth quarter of 2012 and the first quarter of 2013, 941
and 933 loans, respectively, were cured as a result of the aggregate loss
limits on certain policies being reached. These policies are not related to
the recently disclosed Freddie Mac settlement.
(1) In accordance with industry practice, loans approved by GSE and other
automated underwriting (AU) systems under "doc waiver" programs that do not
require verification of borrower income are classified by MGIC as "full doc."
Based in part on information provided by the GSEs, MGIC estimates full doc
loans of this type were approximately 4% of 2007 NIW. Information for other
periods is not available. MGIC understands these AU systems grant such doc
waivers for loans they judge to have higher credit quality. MGIC also
understands that the GSEs terminated their "doc waiver" programs in the second
half of 2008. Reduced documentation loans only appear in the reduced
documentation category and do not appear in any of the other categories.
(2) Net paid claims, as presented, does not include amounts received in
conjunction with termination of reinsurance agreements. In a termination, the
agreement is cancelled, with no future premium ceded and funds for any
incurred but unpaid losses transferred to us. The transferred funds result in
an increase in the investment portfolio (including cash and cash equivalents)
and there is a corresponding decrease in reinsurance recoverable on loss
reserves. This results in an increase in net loss reserves, which is offset
by a decrease in net losses paid.
(3) As calculated, does not reflect any effects due to premium deficiency.
(4) Includes
Australian operations
(5) Refer to our risk factors titled "Our losses could increase if we do not
prevail in proceedings challenging whether our rescissions were proper or we
enter into material resolution arrangements" and "We are involved in
legal proceedings and are subject to the risk of additional legal proceedings
in the future" above for information about our suspension of certain
rescissions and the number of rescissions suspended as of March 31, 2013.
(6) During the third quarter of 2012, approximately 15,600 pool notices were
removed from the pool notice inventory due to the exhaustion of the aggregate
loss on a pool policy we have with Freddie Mac. See our Form 8-K filed with
the Securities and Exchange Commission on November 30, 2012 for a discussion
of our settlement with Freddie Mac regarding this pool policy.
(7) Preliminary



SOURCE MGIC Investment Corporation

Website: http://mtg.mgic.com
Contact: Investors, Michael J. Zimmerman, Investor Relations, (414) 347-6596,
mike_zimmerman@mgic.com, or Media, Katie Monfre, Corporate Communications,
(414) 347-2650, katie_monfre@mgic.com