FORM 10-K

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE 
     SECURITIES EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 2000

                                       OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE 
     SECURITIES EXCHANGE ACT OF 1934

         For the transition period from ____________ to ________________

                         Commission file number 1-10816
                                                -------

                           MGIC Investment Corporation
              ----------------------------------------------------
             (Exact name of registrant as specified in its charter)

            Wisconsin                                39-1486475             
 -------------------------------          -----------------------------------
 (State or other jurisdiction of          (I.R.S. Employer Identification No.)
  incorporation or organization)

MGIC Plaza, 250 East Kilbourn Avenue, Milwaukee, Wisconsin          53202
----------------------------------------------------------        ---------
      (Address of principal executive offices)                    (Zip Code)


Registrant's telephone number, including area code   (414) 347-6480
                                                   -----------------

           Securities Registered Pursuant to Section 12(b) of the Act:

          Title of Each Class:          Common Stock, Par Value $1 Per Share
                                        Common Share Purchase Rights

          Name of Each Exchange
          on Which Registered:          New York Stock Exchange

           Securities Registered Pursuant to Section 12(g) of the Act:

          Title of Class:               None

<PAGE>
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No

State the aggregate market value of the voting stock held by non-affiliates of
the Registrant as of February 1, 2001: $5.6 billion* 

----------------
* Solely for purposes of computing such value and without thereby admitting that
such persons are affiliates of the Registrant, shares held by The Northwestern
Mutual Life Insurance Company and by directors and executive officers of the
Registrant are deemed to be held by affiliates of the Registrant. Shares held
are those shares beneficially owned for purposes of Rule 13d-3 under the
Securities Exchange Act of 1934 but excluding shares subject to stock options.

Indicate the number of shares outstanding of each of the Registrant's classes of
common stock as of February 1, 2001: 106,858,747.

The following documents have been incorporated by reference in this Form 10-K,
as indicated:

                                                Part and Item Number of
                                                Form 10-K Into Which
Document                                        Incorporated
--------                                        ------------

1. Information from 2000 Annual Report to       Item 1 of Part I
   Shareholders (for Fiscal Year                Items 5 through 8 of Part II
   Ended December 31, 2000) 

2. Proxy Statement for the 2001 Annual          Items 10 through 13 of Part III
   Meeting of Shareholders

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. __

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                                     Part I
                                     ------


Item 1.  Business.
-----------------

A.  General

     MGIC Investment Corporation (the "Company") is a holding company which,
through its wholly owned subsidiary, Mortgage Guaranty Insurance Corporation
("MGIC"), is the leading provider of private mortgage insurance coverage in the
United States to the home mortgage lending industry. Private mortgage insurance
covers residential first mortgage loans and expands home ownership opportunities
by enabling people to purchase homes with less than 20% down payments. If the
home owner defaults, private mortgage insurance reduces and, in some instances,
eliminates the loss to the insured institution. Private mortgage insurance also
facilitates the sale of low down payment mortgage loans in the secondary
mortgage market, principally to the Federal National Mortgage Association
("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac")
(Fannie Mae and Freddie Mac are collectively referred to as the "GSEs"). In
addition to mortgage insurance on first liens, the Company, through other
subsidiaries, insures residential second mortgages and provides lenders with
various underwriting and other services and products related to home mortgage
lending.

     MGIC is licensed in all 50 states of the United States, the District of
Columbia and Puerto Rico. The Company is a Wisconsin corporation. Its principal
office is located at MGIC Plaza, 250 East Kilbourn Avenue, Milwaukee, Wisconsin
53202 (telephone number (414) 347-6480).

         The Company and its business may be materially affected by the factors
discussed in "Management's Discussion and Analysis -- Risk Factors" in
Exhibit 13 to this Annual Report on Form 10-K. These factors may also cause
actual results to differ materially from the results contemplated by forward
looking statements that the Company may make.

B.  The MGIC Book

     Types of Product

     In general, there are two principal types of private mortgage insurance:
"primary" and "pool."

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     Primary Insurance. Primary insurance provides mortgage default protection
on individual loans and covers unpaid loan principal, delinquent interest and
certain expenses associated with the default and subsequent foreclosure
(collectively, the "claim amount"). The insurer generally pays the coverage
percentage of the claim amount specified in the primary policy, but has the
option to pay 100% of the claim amount and acquire title to the property. The
claim amount averages about 115% of the unpaid principal balance of the loan.
Primary insurance generally applies to owner occupied, first mortgage loans on
one-to-four family homes, including condominiums. Primary coverage can be used
on any type of residential mortgage loan instrument approved by the mortgage
insurer. References in this document to amounts of insurance written or in
force, risk written or in force and other historical data related to MGIC's
insurance refer only to direct (before giving effect to reinsurance) primary
insurance, unless otherwise indicated.

     The following table shows, on a direct basis, primary insurance in force
(the unpaid principal balance of insured loans as reflected in MGIC's records)
and primary risk in force (the coverage percentage applied to the unpaid
principal balance), for insurance that has been written by MGIC (the "MGIC
Book") as of the dates indicated:

                       Primary Insurance and Risk In Force

                                              December 31,
                          ------------------------------------------------------
                            2000      1999       1998         1997       1996
                            ----      ----       ----         ----       ----
                                              (In millions of dollars)
Direct Primary
Insurance In Force.....   $160,192  $147,607    $137,990    $138,497   $131,397

Direct Primary
Risk In Force..........    $39,090   $35,623     $32,891     $32,175    $29,308

     The coverage percentage provided by MGIC is determined by the lender. For
loans sold by lenders to Fannie Mae or Freddie Mac, the coverage percentage must
comply with the requirements established by the particular GSE to which the loan
is delivered. Effective in the first quarter of 1995, Freddie Mac and Fannie Mae
increased their coverage requirements for, among other loan types, 30-year fixed
rate mortgages with loan-to-value ratios, determined at loan origination
("LTVs"), of 90.01-95.00% ("95s") from 25% coverage to 30% coverage and for such
mortgages with LTVs of 85.01-90.00% ("90s") from 17% to 25%. During the first
quarter of 1999, the GSEs changed their mortgage insurance requirements for
fixed rate and certain other mortgages on owner occupied properties having terms
greater than 20 years when the loan is approved by their automated underwriting
services. Lenders may deliver these loans to the GSEs with the prior coverage
requirements (30% for a 95 and 25% for a 90), or in the case of 95s, with either
(i) 25% coverage or (ii) 18% coverage and the payment of a delivery fee to the


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GSE, and in the case of 90s, with either (i) 17% coverage or (ii) 12% coverage
and the payment of a delivery fee to the GSE.

     The following table shows new insurance written during the last four years
for 95s with 30% coverage and for 90s with 25% coverage:

          Coverage Categories as a Percentage of New Insurance Written

                                            Year Ended December 31
                   -------------------------------------------------------------
LTV/
Coverage                2000          1999           1998             1997
----------------        ----          ----           ----             ----

95 / 30%                32.2%         32.0%          33.9%            38.7%

90 / 25%                29.6%         34.7%          38.6             39.1%
                        -----         -----          ----             -----
          Total          61.8%         66.7%         72.5%            77.8%

The Company expects the aggregate percentage of its new insurance written with
95/30% and 90/25% coverage will continue to decline in response to the GSEs
changed mortgage insurance requirements.

     MGIC charges higher premium rates for higher coverages, and the deeper
coverage requirements imposed by the GSEs beginning in 1995 have resulted in
higher earned premiums for loans with the same characteristics (such as LTV and
loan type). MGIC believes depth of coverage requirements have no significant
impact on frequency of default. Higher coverage percentages generally result in
increased severity (which is the amount paid on a claim), and lower coverage
percentages generally result in decreased severity. In accordance with industry
accounting practice, reserves for losses are only established for loans in
default. Because relatively few defaults occur in the early years of a book of
business (see "Past Industry Losses; Defaults; and Claims--Claims" below), the
higher premium revenue from deeper coverage is recognized before any higher
losses resulting from that deeper coverage may be incurred. On the other hand,
while a decline in coverage percentage will result in lower premium revenue, it
should also result in lower incurred (and paid) losses at the same level of
claim incidence. However, given the historical pattern of claims, the decline in
revenue will precede the benefits of reduced severity. MGIC's premium pricing
methodology generally targets substantially similar returns on capital
regardless of the depth of coverage. However, there can be no assurance that
changes in the level of premium rates adequately reflect the risks associated
with changes in the depth of coverage.


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     In partnership with mortgage insurers, the GSEs are also offering programs
under which, on delivery of an insured loan to a GSE, the primary coverage is
restructured to an initial shallow tier of coverage followed by a second tier
that is subject to an overall loss limit and, depending on the program,
compensation may be paid to the GSE reflecting services or other benefits
realized by the mortgage insurer from the coverage conversion. Lenders receive
guaranty fee relief from the GSEs on mortgages delivered with these restructured
coverages.

     Mortgage insurance coverage cannot be terminated by the insurer, except for
non-payment of premium, and remains renewable at the option of the insured
lender, generally at the renewal rate fixed when the loan was initially insured.
Lenders may cancel insurance at any time at their option or because of mortgage
repayment, which may be accelerated because of the refinancing of mortgages. In
the case of a loan purchased by Freddie Mac or Fannie Mae, a borrower meeting
certain conditions may require the mortgage servicer to cancel insurance upon
the borrower's request when the principal balance of the loan is 80% or less of
the home's current value.

     Under the federal Homeowners Protection Act (the "HPA") a borrower has the
right to stop paying premiums for private mortgage insurance on loans closed
after July 28, 1999 secured by a property comprised of one dwelling unit that is
the borrower's primary residence when certain LTV ratio thresholds determined by
the value of the home at loan origination and other requirements are met. In
general, a borrower may stop making mortgage insurance payments when the LTV
ratio is scheduled to reach 80% (based on the loan's amortization schedule
established at loan origination) if the borrower so requests and if certain
requirements relating to the borrower's payment history and the absence of
junior liens and a decline in the property's value since origination are
satisfied. In addition, a borrower's obligation to make payments for private
mortgage insurance generally terminates regardless of whether a borrower so
requests when the LTV ratio reaches 78% of the unpaid principal balance of the
mortgage and the borrower is (or thereafter becomes) current in his mortgage
payments. A borrower's right to stop paying for private mortgage insurance
applies only to borrower paid mortgage insurance. The HPA requires that lenders
give borrowers certain notices with regard to the cancellation of private
mortgage insurance.

     In addition, some states require that mortgage servicers periodically
notify borrowers of the circumstances in which they may request a mortgage
servicer to cancel private mortgage insurance and some states allow the borrower
to require the mortgage servicer to cancel private mortgage insurance under
certain circumstances or require the mortgage servicer to cancel such insurance
automatically in certain circumstances.

     Coverage tends to continue in areas experiencing economic contraction and
housing price depreciation. The persistency of coverage in such areas coupled
with cancellation of coverage in areas experiencing economic expansion and
housing price appreciation can increase the percentage of the insurer's
portfolio comprised of loans in economically weak areas. This development can
also occur during periods of heavy mortgage refinancing because refinanced loans
in areas of economic expansion experiencing property value appreciation are less
likely to require mortgage insurance at the time of refinancing, while
refinanced loans in economically weak areas not


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experiencing property value appreciation are more likely to require mortgage
insurance at the time of refinancing or not qualify for refinancing at all and,
thus, remain subject to the mortgage insurance coverage.

     When a borrower refinances an MGIC-insured mortgage loan by paying it off
in full with the proceeds of a new mortgage, the insurance on that existing
mortgage is cancelled, and insurance on the new mortgage is considered to be new
primary insurance written. Therefore, continuation of MGIC's coverage from a
refinanced loan to a new loan results in both a cancellation of insurance and
new insurance written. The percentage of primary risk written with respect to
loans representing refinances was 18.0% in 2000 compared to 22.3% in 1999 and
25.6% in 1998.

     In addition to varying with the coverage percentage, MGIC's premium rates
vary depending upon the perceived risk of a claim on the insured loan and, thus,
take into account the LTV, the loan type (fixed payment versus non-fixed
payment) and mortgage term and, for subprime loans, where the borrower's credit
score falls within a range of credit scores. In general, subprime loans are
mortgages that would not meet the standard underwriting guidelines of Fannie Mae
and Freddie Mac for prime mortgages due to credit quality, documentation, or
other factors, such as in a refinance transaction exceeding a specified increase
in the amount of mortgage debt due to cash being paid to the borrower.

     Premium rates cannot be changed after the issuance of coverage. Because the
Company believes that over the long term each region of the United States is
subject to similar factors affecting risk of loss on insurance written, MGIC
generally utilizes a nationally based, rather than a regional or local, premium
rate policy.

     The borrower's mortgage loan instrument may require the borrower to pay the
mortgage insurance premium ("borrower paid mortgage insurance") or there may be
no such requirement imposed on the borrower, in which case the premium is paid
by the lender, who may recover the premium through an increase in the note rate
on the mortgage ("lender paid mortgage insurance"). Almost all of MGIC's primary
insurance in force and new insurance written, other than through bulk
transactions, is borrower paid mortgage insurance.

     Under the monthly premium plan, a monthly premium payment is made to MGIC
to provide only one month of coverage, rather than one year of coverage provided
by the annual premium plan. Under the annual premium plan, the initial premium
is paid to MGIC in advance, and earned over the next twelve months of coverage,
with annual renewal premiums paid in advance thereafter and earned over the
subsequent twelve months of coverage. The annual premiums can be paid with
either a higher premium rate for the initial year of coverage and lower premium
rates for the renewal years, or with premium rates which are equal (level) for
the initial year and subsequent renewal years. Under the single premium plan, a
single payment is made to MGIC, covering a specified term exceeding 12 months.


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     During each of the last three years, the monthly premium plan represented
more than 90% of MGIC's new insurance written. The annual premium plan
represented substantially all of the remaining new insurance written.

     Pool Insurance. Pool insurance is generally used as an additional "credit
enhancement" for certain secondary market mortgage transactions. Pool insurance
generally covers the loss on a defaulted mortgage loan which exceeds the claim
payment under the primary coverage, if primary insurance is required on that
mortgage loan, as well as the total loss on a defaulted mortgage loan which did
not require primary insurance, in each case up to a stated aggregate loss limit.

     During the first quarter of 1997, the Company began writing pool insurance
generally covering fixed-rate, 30-year mortgage loans delivered to Freddie Mac
and Fannie Mae ("agency pool insurance"). The aggregate loss limit on agency
pool insurance generally does not exceed 1% of the aggregate original principal
balance of the mortgage loans in the pool. New pool risk written during 2000 was
$345 million and was $564 million in 1999. New pool risk written during these
years was virtually all agency pool insurance, with the remaining risk written
associated with loans insured under state housing finance programs. Net (giving
effect to external reinsurance) MGIC Book pool risk in force at December 31,
2000 was $1.5 billion compared to $1.4 billion and $0.9 billion at December 31,
1999 and 1998, respectively.

     For a discussion of litigation brought as a nationwide class action
alleging that MGIC violated the Real Estate Settlement Procedures Act ("RESPA")
by providing agency pool insurance and entering into other transactions with
lenders that were not properly priced (the "RESPA Litigation"), see Item 3
"Legal Proceedings." The proposed settlement of the RESPA Litigation, which has
been preliminarily approved by the Court, includes an injunction that specifies
the basis on which agency pool insurance may be provided in compliance with
RESPA.

     In a February 1, 1999 circular addressed to all mortgage guaranty insurers
licensed in New York, the New York Department of Insurance ("NYID") advised that
"significantly underpriced" agency pool insurance would violate the provisions
of New York insurance law that prohibit mortgage guaranty insurers from
providing lenders with inducements to obtain mortgage guaranty business. The
NYID circular does not provide standards under which the NYID will evaluate
whether agency pool insurance is "significantly underpriced." In response to
subsequent inquiries from the NYID, MGIC provided various information about
agency pool insurance to the NYID. In a January 31, 2000 letter addressed to all
mortgage guaranty insurers licensed in Illinois, the Illinois Department of
Insurance advised that providing pool insurance at a "discounted or below market
premium" in return for the referral of primary mortgage insurance would violate
Illinois law.

     Captive Mortgage Reinsurance. MGIC's products include captive mortgage
reinsurance in which an affiliate of a lender reinsures a portion of the risk on
loans originated or purchased by the lender which have MGIC primary insurance.
Approximately 21% of MGIC's primary risk in force at December 31, 2000 was
subject to captive mortgage reinsurance and other similar arrangements compared
to approximately 15% at year-end 1999. The complaint in the RESPA Litigation
alleges 


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that MGIC pays "inflated" captive mortgage reinsurance premiums in violation of
RESPA. The proposed settlement includes an injunction that specifies the basis
on which captive mortgage reinsurance may be provided in compliance with RESPA.

     Other Reinsurance. At December 31, 2000, disregarding reinsurance under
captive structures, less than 5% of MGIC's insurance in force was reinsured.
Reinsuring against possible loan losses does not discharge MGIC from liability
to a policyholder; however, the reinsurer agrees to indemnify MGIC for the
reinsurer's share of losses incurred.

     Bulk Transactions

     Primary insurance may be written on a flow basis, in which loans are
insured in individual, loan-by-loan transactions, or may be written on a bulk
basis, in which loans in an existing portfolio are insured in a single, bulk
transaction. Generally, in bulk transactions, the individual loans in the
insured portfolio are insured to specified levels of coverage and there is an
aggregate loss limit applicable to all of the insured loans. Bulk transaction
are frequently effected in connection with the securitization of mortgage loans
by securitizers other than the GSEs. The premium in a bulk transaction is based
on the mortgage insurer's evaluation of the overall risk of the insured loans
included in the transaction and is negotiated with the securitizer or other
owner of the loans. Most of the subprime loans insured by MGIC in 2000 were
insured in bulk transactions.

     Customers

     Originators of residential mortgage loans such as mortgage bankers, savings
institutions, commercial banks, mortgage brokers, credit unions and other
lenders have historically determined the placement of mortgage insurance written
on flow basis and as a result are the customers of MGIC. To obtain primary
insurance from MGIC written on flow basis, a mortgage lender must first apply
for and receive a mortgage guaranty master policy ("Master Policy") from MGIC.
MGIC had approximately 12,000 master policyholders at December 31, 2000 (not
including policies issued to branches and affiliates of large lenders). In 2000,
MGIC issued coverage on mortgage loans for approximately 4,200 of its master
policyholders. MGIC's top 10 customers generated 36.2% of its new insurance
written in 2000, compared to 32.5% in 1999 and 33.7% in 1998. These percentages
do not include new insurance written in subprime bulk transactions.

     Sales and Marketing and Competition

     Sales and Marketing. MGIC sells its insurance products through its own
employees, located throughout the United States. At December 31, 2000, MGIC had
27 underwriting centers located in 19 states and in Puerto Rico.

     Competition. MGIC and other private mortgage insurers compete directly with
federal and state governmental and quasi-governmental agencies, principally the
FHA and, to a lesser degree, the Veterans Administration ("VA"). These agencies
sponsor government-backed


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mortgage insurance programs, which during 2000 accounted for approximately 41%
(compared to approximately 48% during 1999) of the total low down payment
residential mortgages which were subject to governmental or private mortgage
insurance. See "Regulation, Indirect Regulation" below. Loans insured by the FHA
and the VA cannot exceed maximum principal amounts which are determined by a
percentage of the conforming loan limit (which is the annually adjusted maximum
unpaid principal amount of loans that can be purchased by Fannie Mae and Freddie
Mac). For 2000, the maximum FHA and VA loan amount for homes with one dwelling
unit in "high cost" areas may be as high as $239,250 compared to $219,849 in
1999.

     In addition to competition from the FHA and the VA, MGIC and other private
mortgage insurers face competition from state-supported mortgage insurance funds
in several states, including California, Illinois and New York. From time to
time, other state legislatures and agencies consider expansions of the authority
of their state governments to insure residential mortgages.

     Private mortgage insurers may also be subject to competition from Fannie
Mae and Freddie Mac to the extent the GSEs are compensated for assuming default
risk that would otherwise be insured by the private mortgage insurance industry.
Fannie Mae and Freddie Mac each have programs under which an up-front delivery
fee can be paid to the GSE and primary mortgage insurance coverage is
substantially reduced compared to the coverage requirements that would apply in
the absence of the program. See "Types of Product--Primary Insurance" above. In
October 1998, Freddie Mac's charter was amended (and the amendment immediately
repealed) to give Freddie Mac flexibility to use protection against default in
addition to private mortgage insurance and the two other types of credit
enhancement required by the charter for low down payment mortgages purchased by
Freddie Mac. In addition, to the extent up-front delivery fees are not retained
by the GSEs to compensate for their assumption of default risk, and are used
instead to purchase supplemental coverage from mortgage insurers, the resulting
concentration of purchasing power in the hands of the GSEs could increase
competition among insurers to provide such coverage.

     The capital markets may also develop as competitors to private mortgage
insurers. During 1998, a newly-organized off-shore company funded by the sale of
notes to institutional investors provided "reinsurance" to Freddie Mac against
default on a specified pool of mortgages owned by Freddie Mac.

     MGIC and other mortgage insurers also compete with transactions structured
to avoid mortgage insurance on low down payment mortgage loans. Such
transactions include self-insuring and originating loans comprised of both a
first and a second mortgage, with the LTV ratio of the first mortgage below what
investors require for mortgage insurance, instead of originating a loan in which
the first mortgage covers the entire borrowed amount. Captive mortgage
reinsurance and similar transactions also result in mortgage originators
receiving a portion of the premium and the risk.

     The private mortgage insurance industry currently consists of eight active
mortgage insurers and their affiliates; one of the eight is a joint venture in
which a mortgage insurer is one of the joint


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venturers. The names of these mortgage insurers are listed in "Management's
Discussion and Analysis--Risk Factors" in Exhibit 13 to this Annual Report on
Form 10-K. For 1995 and subsequent years, MGIC has been the largest private
mortgage insurer based on new primary insurance written (with a market share of
24.5% in 2000, 24.3% in 1999 and 23.1% in 1998) and at December 31, 2000, MGIC
also had the largest book of direct primary insurance in force. As a result of
bulk transactions, quarterly market share in 2000 reflected greater volatility
than in the past, a circumstance that may continue in 2001.

     The private mortgage insurance industry is highly competitive and, in
recent years, the dynamics of industry competition have undergone significant
change. The Company believes it competes with other private mortgage insurers
for flow business principally on the basis of programs involving agency pool
insurance, captive mortgage reinsurance and other similar structures involving
lenders; the provision of contract underwriting and related fee-based services
to lenders; the provision of other products and services that meet lender needs
for underwriting risk management, affordable housing, loss mitigation, capital
markets and training support; the strength of MGIC's management team and field
organization; and the effective use of technology and innovation in the delivery
and servicing of MGIC's insurance products. The Company believes MGIC's
additional competitive strengths, compared to other private insurers, are its
customer relationships, name recognition, reputation and the depth of its
database covering loans it has insured.

     The complaint in the RESPA Litigation alleges, among other things, that
agency pool insurance, captive mortgage reinsurance and contract underwriting as
provided by the Company violate RESPA. The proposed settlement includes an
injunction that specifies the basis on which these products and services may be
provided in compliance with RESPA.

     Certain private mortgage insurers compete by offering lower premium rates
than other companies, including MGIC, either in general or with respect to
particular classes of business. MGIC on a case-by-case basis will adjust premium
rates, generally depending on the risk characteristics, loss performance or
class of business of the loans to be insured, or the costs associated with doing
such business.

     If the risk-based capital stress test for the GSEs proposed in March 1999
by the Office of Federal Housing Enterprise Oversight ("OFHEO") as finally
adopted gives more capital credit to mortgage insurance provided by a
"AAA"-rated insurer (as discussed under "Regulation--Direct Regulation" below,
MGIC's claims-paying ability is rated "AA+"), the availability of "AAA" capacity
or the provision of equivalent coverage would likely become a competitive factor
among mortgage insurers. See "Management's Discussion and Analysis--Results of
Consolidated Operations--2000 Compared with 1999--Other Matters" in Exhibit 13
hereof for additional information about the proposed OFHEO stress test.


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     Contract Underwriting and Related Services

     The Company performs contract underwriting services for lenders in which
the Company judges whether the data relating to the borrower and the loan
contained in the lender's mortgage loan application file comply with the
lender's loan underwriting guidelines. The Company also provides an interface to
submit such data to the automated underwriting systems of the GSEs, which
independently judge the data. These services are provided for loans that require
private mortgage insurance as well as for loans that do not require private
mortgage insurance. A material portion of the Company's new insurance written in
recent years involved loans for which the Company provided contract underwriting
services. The complaint in the RESPA Litigation alleges, among other things,
that the pricing of contract underwriting provided by the Company violates
RESPA. The proposed settlement specifies the basis on which contract
underwriting may be provided in compliance with RESPA.

     Risk Management

     Risk Management Approach. MGIC evaluates four major elements of risk:

     o    Individual Loan and Borrower. Except to the extent its delegated
          underwriting program is being utilized or for loans approved by the
          automated underwriting services of the GSEs (see "Delegated
          Underwriting and GSE Automated Underwriting Approvals" below), MGIC
          evaluates insurance applications based on its analysis of the
          borrower's ability to repay the mortgage loan and the characteristics
          and value of the property. The analysis of the borrower includes
          reviewing the borrower's FICO credit score, as reported by credit
          reporting agencies, as well as the borrower's housing and total debt
          ratios. In the case of delegated underwriting, compliance with program
          parameters is monitored by periodic audits of delegated business.

     o    Geographic Market. MGIC places significant emphasis on the condition
          of the housing markets around the nation in determining its
          underwriting policies.

     o    Product. The type of mortgage instrument that the borrower selects and
          the purpose of the loan are important factors in MGIC's analysis of
          mortgage default risk. MGIC analyzes four general characteristics of
          the product to quantify this risk evaluation: (i) LTV ratio; (ii) type
          of loan instrument; (iii) type of property; and (iv) purpose of the
          loan. In addition to its underwriting guidelines (as referred to
          below), pricing is MGIC's principal method used to manage these risks.
          Loans with higher LTV ratios generally have a higher premium, as do
          instruments such as ARMs with an initial interest period of less than
          five years and loans with a maturity longer than fifteen years.

     o    Mortgage Lender. MGIC evaluates from time to time its major customers
          and the performance of their business which MGIC has insured.


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     The Company believes that, excluding other factors, the claim incidence for
95s is substantially higher than for 90s or loans with lower LTV ratios; for
loans with LTVs greater than 95 (which include loans with LTVs of up to 103) is
substantially higher than for 95s; for ARMs during a prolonged period of rising
interest rates would be substantially higher than for fixed rate loans; for
loans in which the original loan amount exceeds the conforming loan limit is
higher than for loans where such amount is below the conforming loan limit; and
for loans with lower FICO credit scores (which include subprime loans) is higher
than for loans with higher FICO credit scores. MGIC charges higher premium rates
to reflect the increased risk of claim incidence that it perceives is associated
with a loan. However, there can be no assurance that MGIC's premium rates
adequately reflect the increased risk, particularly in a period of economic
recession.

     There are also other types of loan characteristics relating to the
individual loan or borrower which affect the risk potential for a loan. The
presence of a number of higher-risk characteristics in a loan materially
increases the likelihood of a claim on such a loan unless there are other
characteristics to lower the risk.

     Underwriting Process. To obtain primary insurance on a specific mortgage
loan for which delegated underwriting is not being used, a master policyholder
typically submits an application to MGIC, supported by various documents, if
required by MGIC. MGIC utilizes national underwriting guidelines to evaluate the
potential risk of default on mortgage loans submitted for insurance coverage.
These guidelines generally are consistent with Fannie Mae and Freddie Mac
underwriting guidelines and take into account the applicable premium rates
charged by MGIC and the loss experience of the private mortgage insurance
industry, as well as the initiatives to expand home ownership opportunities
undertaken by Fannie Mae and Freddie Mac. MGIC's underwriters have discretionary
authority to insure loans which deviate in one or more respects from MGIC's
underwriting guidelines. In most such cases, offsetting underwriting strengths
must be identified.

     In order to react to local or regional economic conditions, MGIC has also
developed for use by its underwriting staff certain modified guidelines which
attempt to address particular regional or local market developments. These
"special market underwriting guidelines" are updated from time to time and
deviate in varying degrees from MGIC's national guidelines based on MGIC's
analysis of area housing markets and related economic indicators and conditions.
The special market underwriting guidelines are more liberal than the published
national guidelines in some markets, but in other markets are more restrictive.

     To assist its staff of underwriters, MGIC utilizes a computer-assisted
underwriting system which analyzes and approves certain mortgage insurance
applications based on MGIC's underwriting standards, but without personal
underwriter intervention, thereby allowing MGIC's underwriting staff to devote
additional attention to evaluating more difficult underwriting decisions. MGIC
audits a representative sample of applications approved by the system.

     Delegated Underwriting and GSE Automated Underwriting Approvals. Delegated
underwriting is a program whereby approved lenders are allowed to commit MGIC to
insure loans utilizing their MGIC-approved underwriting guidelines and
underwriting evaluation. For delegated


                                      -13-

<PAGE>

loans insured on a flow basis, while MGIC does not underwrite on a loan-by-loan
basis the credit of the borrower, the value of the property, or other factors
which it normally considers in its underwriting decision, it does audit on a
regular basis a sample of the loans insured. Loans insured in bulk transactions
are categorized as delegated underwritten loans. For these loans, the audit is
conducted prior to the commitment for the insurance and includes other
procedures for certain loans that are not audited.

     At December 31, 2000, MGIC's delegated underwriting program involved
approximately 580 lenders, including all of MGIC's top twenty customers. Loans
insured under MGIC's delegated underwriting program accounted for approximately
37.4% of MGIC's total risk in force at December 31, 2000. The percentage of new
risk written by delegated underwriters increased to 46.8% in 2000 from 38.4% in
1999 (this increase is principally due to loans insured in bulk transactions)
and was 36.2% in 1998.

     Loans covered under agency pool insurance are not underwritten by MGIC on a
loan-by-loan basis. If the loan has primary insurance provided by MGIC,
delegated underwriting is used, and if the loan has primary insurance provided
by another mortgage insurer or has no primary insurance, the lender underwrites
the loan to standards set forth in the agency pool insurance agreement with the
lender.

     MGIC also has a reduced document submission program under which it approves
a loan for insurance if the borrower satisfies certain minimum criteria for
credit scores and debt ratios.

     Loans approved by the automated underwriting services of the GSEs are
deemed acceptable for MGIC mortgage insurance without MGIC itself underwriting
the loan.

     Past Industry Losses; Defaults; and Claims

     Past Industry Losses. The private mortgage insurance industry experienced
substantial unanticipated incurred losses in the mid-to-late 1980s. From the
1970s until 1981, rising home prices in the United States generally led to
profitable insurance underwriting results for the industry and caused private
mortgage insurers to emphasize market share. To maximize market share, until the
mid-1980s, private mortgage insurers employed liberal underwriting practices,
and charged premium rates which, in retrospect, generally did not adequately
reflect the risk assumed (particularly on pool insurance). These industry
practices compounded the losses which resulted from changing economic and market
conditions which occurred during the early and mid-1980s, including (i) severe
regional recessions and attendant declines in property values in the nation's
energy producing states; (ii) the development by lenders of new mortgage
products to defer the impact on home buyers of double digit mortgage interest
rates; and (iii) changes in federal income tax incentives which initially
encouraged the growth of investment in non-owner occupied properties.


                                      -14-

<PAGE>

     Defaults. The claim cycle on private mortgage insurance begins with the
insurer's receipt of notification of a default on an insured loan from the
lender. Lenders are required to notify MGIC of defaults within 130 days after
the initial default, although most lenders do so earlier. The incidence of
default is affected by a variety of factors, including the level of borrower
income growth, unemployment, divorce and illness, the level of interest rates
and general borrower creditworthiness. Defaults that are not cured result in a
claim to MGIC. Defaults may be cured by the borrower bringing current the
delinquent loan payments or by a sale of the property and the satisfaction of
all amounts due under the mortgage.

     The following table shows the number of primary and pool loans insured in
the MGIC Book, including for new insurance written in 2000 and 1999 on loans
classified by MGIC as subprime loans, the related number of loans in default and
the percentage of loans in default (default rate) as of the dates indicated:

<TABLE>
                      Default Statistics for the MGIC Book
<CAPTION>
                                                                             December 31,
                                         --------------------------------------------------------------------------------------
                                             2000               1999            19981)            1997(1)            1996(1)
                                             ----               ----            ------            -------            -------
PRIMARY INSURANCE
<S>                                        <C>                <C>             <C>               <C>                <C>      
     Insured loans in force ...            1,448,348          1,370,020       1,320,994         1,342,976          1,299,038

     Loans in default .........               37,422             29,761          29,253            28,493             25,034

     Percentage of loans in default
     (default rate) ...........                2.58%              2.17%           2.21%             2.12%              1.93%

     Loans in default excluding
     subprime loans............               29,226             27,055           -                 -                  -

     Percentage of loans in default
     excluding subprime loans. .               2.16%              2.03%           -                 -                  -

     Subprime loans in force...               94,682             36,599           -                 -                  -

     Subprime loans in default.                8,196              2,706           -                 -                  -

     Subprime percentage of loans in
     default (default rate)....                8.66%              7.39%           -                 -                  -

POOL INSURANCE
     Insured loans in force ...            1,360,059          1,181,512         899,063           374,378             19,123

     Loans in default .........               18,209             11,638           6,524             2,174                855

     Percentage of loans in default
     (default rate) ...........                1.34%              0.99%           0.73%             0.58%              4.47%

(1)Information relating to defaults excluding subprime loans and to subprime defaults in 1996--1998 is not presented and
 is not material.
</TABLE>


     The default rate for primary loans excluding subprime loans has generally
increased due to an increase in the risk profile of loans insured in late 1994
and the first half of 1995 and the continued maturation of MGIC's insurance in
force. The default rate for subprime loans reflects the


                                      -15-

<PAGE>

higher default rate associated with such loans. The number of pool insurance
loans in force increased at December 31, 1997-2000 as a result of agency pool
insurance writings, and the number of pool insurance loans in default at those
dates increased due to the increase in pool insurance in force and the aging of
the loans in the pools. The percentage of pool insurance loans in default
decreased from 1996 to 1997 as a result of the increase in pool insurance in
force and increased from 1997 to 2000 due to the aging of the loans in the
pools.

     Regions of the United States may experience different default rates due to
varying localized economic conditions from year to year. The following table
shows the percentage of the MGIC Book's primary loans in default by MGIC region
at the dates indicated:

                 Default Rates for Primary Insurance By Region*

                                Dec. 31           Dec. 31            Dec. 31
                                  2000              1999               1998
                                  ----              -----              ----

MGIC REGION:
New England.............         1.84%             1.60%              1.78%
Northeast...............         3.15              3.02               3.05
Mid-Atlantic............         2.69              2.19               2.28
Southeast...............         2.72              2.24               2.23
Great Lakes.............         2.68              2.09               1.89
North Central...........         2.22              1.85               1.91
South Central...........         2.56              2.00               2.00
Plains..................         1.98              1.40               1.40
Pacific.................         2.63              2.42               2.73

   National.............         2.58%             2.17               2.21%
--------------------
*   The default rate is affected by both the number of loans in default at any
    given date as well as the number of insured loans in force at such date.


     Claims. Claims result from defaults which are not cured. Whether a claim
results from an uncured default principally depends on the borrower's equity in
the home at the time of default and the borrower's (or the lender's) ability to
sell the home for an amount sufficient to satisfy all amounts due under the
mortgage. Claims are affected by various factors, including local housing prices
and employment levels, and interest rates.

     Under the terms of the Master Policy, the lender is required to file a
claim for primary insurance with MGIC within 60 days after it has acquired good
and marketable title to the underlying property through foreclosure. Depending
on the applicable state foreclosure law, an average of about 12 months
transpires from the date of default to payment of a claim on an uncured 


                                      -16-

<PAGE>

default. The claim amount generally averages about 115% of the unpaid principal
amount of the loan.

     Within 60 days after the claim has been filed, MGIC has the option of
either (i) paying the coverage percentage specified for that loan, with the
insured retaining title to the underlying property and receiving all proceeds
from the eventual sale of the property or (ii) paying 100% of the claim amount
in exchange for the lender's conveyance of good and marketable title to the
property to MGIC, with MGIC then selling the property for its own account.

     Claim activity is not evenly spread throughout the coverage period of a
book of primary business. For prime loans, relatively few claims are received
during the first two years following issuance of coverage on a loan. This is
followed by a period of rising claims which, based on industry experience, has
historically reached its highest level in the third through fifth years after
the year of loan origination. Thereafter, the number of claims received has
historically declined at a gradual rate, although the rate of decline can be
affected by conditions in the economy, including lower housing price
appreciation. There can be no assurance that this historical pattern of claims
will continue in the future and MGIC expects that the peak claim period for
subprime loans will occur earlier than for prime loans. Moreover, when a loan is
refinanced, because the new loan replaces, and is a continuation of, an earlier
loan, the pattern of claims frequency for that new loan may be different from
the historical pattern of other loans. As of December 31, 2000, 66.8% of the
MGIC Book primary insurance in force had been written during 1998, 1999 and
2000, although a portion of such insurance arose from the refinancing of earlier
originations.

     In addition to the increasing level of claim activity arising from the
maturing of the MGIC Book, another important factor affecting MGIC Book losses
is the amount of the average claim paid, which is generally referred to as claim
severity. The main determinants of claim severity are the amount of the mortgage
loan and coverage percentage on the loan. The average claim severity on the MGIC
Book primary insurance was $18,977 for 2000 as compared to $19,444 in 1999,
reflecting the decline in the number of claims paid from certain high cost
regions of the country.

     Loss Reserves

     A significant period of time may elapse between the occurrence of the
borrower's default on a mortgage payment (the event triggering a potential
future claim payment by MGIC), the reporting of such default to MGIC and the
eventual payment of the claim related to such uncured default. To recognize the
liability for unpaid losses related to outstanding reported defaults (known as
the default inventory), the Company (similar to other private mortgage insurers)
establishes loss reserves, representing the estimated percentage of defaults
which will ultimately result in a claim (known as the claim rate), and estimates
of the severity of each claim which will arise from the defaults included in the
default inventory. In accordance with industry accounting practices, the Company
does not establish loss reserves for future claims on insured loans which are
not currently in default.


                                      -17-

<PAGE>

     The Company also establishes reserves to provide for the estimated costs of
settling claims, including legal and other fees, and general expenses of
administering the claims settlement process ("loss adjustment expenses"), and
for losses and loss adjustment expenses from defaults which have occurred, but
which have not yet been reported to the insurer.

     The Company's reserving process is based upon the assumption that past
experience, adjusted for the anticipated effect of current economic conditions
and projected future economic trends, provides a reasonable basis for estimating
future events. However, estimation of loss reserves is a difficult process.
Economic conditions that have affected the development of the loss reserves in
the past may not necessarily affect development patterns in the future, in
either a similar manner or degree.

     For a further information about loss reserves, see Note 6 to the
consolidated financial statements of the Company, included in Exhibit 13 to this
Annual Report on Form 10-K.

     Geographic Dispersion

     The following table reflects the percentage of primary risk in force in the
top 10 states and top 10 metropolitan statistical areas ("MSAs") for the MGIC
Book at December 31, 2000:

                       Dispersion of Primary Risk in Force

          Top 10 States                         Top 10 MSAs
          -------------                         -----------

      1.  California         11.2%         1.   Chicago               4.2%
      2.  Texas               6.3          2.   Los Angeles           3.0
      3.  Florida             5.7          3.   Washington, DC        2.7
      4.  Michigan            5.6          4.   Boston                2.6
      5.  Illinois            5.5          5.   Atlanta               2.6
      6.  Ohio                4.5          6.   Detroit               2.3
      7.  New York            4.4          7.   Philadelphia          2.0
      8.  Pennsylvania        4.1          8.   Phoenix               1.8
      9.  Georgia             3.3          9.   Houston               1.7
     10.  Wisconsin           3.1         10.   New York              1.6
                            -----                                 -------

               Total         53.7%                 Total            24.5%
                            =====                                  =====


     The percentages shown above for various MSAs can be affected by changes,
from time to time, in the federal government's definition of an MSA.


                                      -18-

<PAGE>

     Insurance in Force by Policy Year

     The following table sets forth the dispersion of MGIC's primary insurance
in force as of December 31, 2000, by year(s) of policy origination since MGIC
began operations in 1985:

                    Primary Insurance In Force by Policy Year

                                  Primary
                                Insurance in             Percent of
     Policy Year                   Force                   Total
     -----------                   -----                 ----------
                          (In millions of dollars)

     1985-1994                   $ 22,316                   13.9%
     1995                           7,319                    4.6
     1996                           9,636                    6.0
     1997                          13,864                    8.7
     1998                          32,411                   20.2
     1999                          37,254                   23.3
     2000                          37,392                   23.3
                                   ------                   ----

       Total                     $160,192                  100.0%
                                 ========                  ======

     Product Characteristics of Risk in Force

     At December 31, 2000 and 1999, 95.9% and 95.8%, respectively, of MGIC's
risk in force was primary insurance and the remaining risk in force was pool
insurance. The following table reflects at the dates indicated the (i) total
dollar amount of primary risk in force for the MGIC Book and (ii) percentage of
such primary risk in force (as determined on the basis of information available
on the date of mortgage origination) by the categories indicated.


                                      -19-

<PAGE>

<TABLE>
                    Characteristics of Primary Risk in Force
<CAPTION>
                                                           December 31,  December 31,
                                                                 2000           1999
                                                          ----------------------------
<S>                                                           <C>           <C>    
Direct Risk in  Force (Dollars in Millions):.............     $39,090       $35,623

Lender Concentration:
     Top 10 lenders......................................       28.8%         28.4%
     Top 20 lenders......................................       40.6%         39.7%

LTV: (1)
     100s(2).............................................        5.6%          4.5%
     95s.................................................       44.7          45.3
     90s(3)..............................................       47.0          49.8
     80s.................................................        2.7           0.4
                                                               -----         -----
         Total...........................................      100.0%        100.0%
                                                               =====         =====

Loan Type:
     Fixed(4)............................................       87.7%         89.8%
     ARM(5)..............................................       11.1           8.6
     Balloon(6)..........................................        1.2           1.5
     Other...............................................        0.0           0.1
                                                               -----         -----
         Total...........................................      100.0%        100.0%
                                                               =====         =====

Original Insured Loan Amount(7):
     Conforming loan limit and below.....................       90.8%         91.4%
     Non-conforming......................................        9.2           8.6
                                                               -----         -----
         Total...........................................      100.0%        100.0%
                                                               =====         =====

Mortgage Term:
     15-years and under..................................        3.6%          4.6%
     Over 15 years.......................................       96.4          95.4
                                                               -----         -----
         Total...........................................      100.0%        100.0%
                                                               =====         =====

Property Type:
     Single-family(8)....................................       93.9%         94.0%
     Condominium.........................................        5.8           5.7
     Other(9)............................................        0.3           0.3
                                                               -----         -----
         Total...........................................      100.0%        100.0%
                                                               =====         =====

Occupancy Status:
     Primary residence...................................       97.1%         97.7%
     Second home.........................................        1.5           1.4
     Non-owner occupied..................................        1.4           0.9
                                                               -----         -----
         Total...........................................      100.0%        100.0%
                                                               =====         =====
--------------------
</TABLE>


                                      -20-

<PAGE>

(1)  Loan-to-value represents the ratio (expressed as a percentage) of the
     dollar amount of the mortgage loan to the value of the property at the time
     the loan became insured. For purposes of the table, LTV ratios are
     classified as in excess of 95% ("100s"); in excess of 90% LTV and up to 95%
     LTV ("95s"); in excess of 80% LTV and up to 90% LTV ("90s"); and equal to
     or less than 80% LTV ("80s").

(2)  Includes 97% to 100% LTV loans for year 2000. In 1999, the maximum LTV
     insured by MGIC was 97%.

(3)  MGIC includes in its classification of 90s, loans where the borrower makes
     a down payment of 10% and finances the associated mortgage insurance
     premium payment as part of the mortgage loan. At December 31, 2000 and
     1999, 2.7% and 2.9%, respectively, of the primary risk in force consisted
     of these types of loans.

(4)  Includes fixed rate mortgages with temporary buydowns (where in effect, the
     applicable interest rate is typically reduced by one or two percentage
     points during the first two years of the loan) and adjustable rate
     mortgages in which the initial interest rate is fixed for at least five
     years.

(5)  Includes ARMs where payments adjust fully with interest rate adjustments.
     Also includes ARMs with negative amortization, which at December 31, 2000
     and 1999, represented 1.2% and 1.1%, respectively, of primary risk in
     force. Does not include ARMs in which the initial interest rate is fixed
     for at least five years. As of December 31, 2000 and 1999, ARMs with LTVs
     in excess of 90% represented 3.2% and 7.0%, respectively, of primary risk
     in force.

(6)  Balloon payment mortgages are loans with a maturity, typically five to
     seven years, that is shorter than the loans' amortization period.

(7)  Loans within the conforming loan limit have an original principal balance
     that does not exceed the maximum original principal balance of loans that
     the GSEs are eligible to purchase. The conforming loan limit is subject to
     annual upward adjustment and was $252,700 for 2000 and $240,000 for 1999.
     Non-conforming loans are loans with an original principal balance above the
     conforming loan limit.

(8)  Includes townhouse-style attached housing with fee simple ownership.

(9)  Includes cooperatives and manufactured homes deemed to be real estate.


C.  Other Business

     The Company, through subsidiaries, provides various mortgage services for
the mortgage finance industry, such as contract underwriting, portfolio
retention and secondary marketing of mortgage-related assets. At December 31,
2000, the Company also owned approximately 46% of Credit-Based Asset Servicing
and Securitization LLC ("C-BASS") and approximately 46% of Sherman Financial
Group LLC, joint ventures with senior management of the joint ventures and
Enhance Financial Services Group Inc. (which was acquired in February 2001 by
Radian Guaranty Inc., the parent of a competitor of MGIC), and approximately 46%
of Customers Forever LLC, a joint venture with senior management of the joint
venture and Marshall & Ilsley Corporation. For further information about these
joint ventures, see "Management's Discussion and Analysis--Results of
Consolidated Operations--2000 Compared to 1999" and Note 8 to the consolidated
financial statements of the Company, both of which are included in Exhibit 13 to
this Annual Report on Form 10-K. The revenues recognized from these mortgage
services operations,

                                      -21-

<PAGE>

other non-insurance services and the joint ventures represented 3.6% and 4.8% of
the Company's consolidated revenues in both 2000 and 1999, respectively.

     The Company's eMagic.com, LLC subsidiary, launched in January 2000,
provides an Internet portal through which mortgage originators can access
products and services of wholesalers, investors, and vendors necessary to make a
home mortgage loan.

     In 1997, the Company, through subsidiaries, began insuring second
mortgages, including home equity loans. New insurance written on second
mortgages in both 1999 and 2000 was approximately $1.1 billion and was
immaterial in 1998.


D.  Investment Portfolio

     Policy and Strategy

     Cash flow from the Company's investment portfolio represented approximately
36% of its total cash flow from operations during 2000. Approximately 79% of the
Company's long-term investment portfolio is managed by a subsidiary of The
Northwestern Mutual Life Insurance Company, although the Company maintains
overall control of investment policy and strategy. The Company maintains direct
management of the remainder of its investment portfolio.

     The Company's current policies emphasize preservation of capital, as well
as total return. Therefore, the Company's investment portfolio consists almost
entirely of high-quality, fixed-income investments. Liquidity is sought through
diversification and investment in publicly traded securities. The Company
attempts to maintain a level of liquidity commensurate with its perceived
business outlook and the expected timing, direction and degree of changes in
interest rates. The Company's investment policies in effect at December 31, 2000
limited investments in the securities of a single issuer (other than the U.S.
government and its agencies) and generally did not permit purchasing fixed
income securities rated below "A."

     At December 31, 2000, based on amortized cost, approximately 98.4% of the
Company's total fixed income investment portfolio was invested in securities
rated "A" or better, with 66.5% which were rated "AAA" and 23.0% which were
rated "AA," in each case by at least one nationally recognized securities rating
organization.

     The Company's investment policies and strategies are subject to change
depending upon regulatory, economic and market conditions and the existing or
anticipated financial condition and operating requirements, including the tax
position, of the Company.


                                      -22-

<PAGE>

     Investment Operations

     At December 31, 2000, the consolidated book value (which is equal to market
value) of the Company's investment portfolio was approximately $3.5 billion. At
December 31, 2000, municipal securities represented 71.7% of the market value of
the total investment portfolio. Securities due within one year, within one to
five years, within five to ten years, and after ten years, represented 5.2%,
19.1%, 26.7% and 49.0%, respectively, of the total book value of the Company's
investment in debt securities. The Company's net pre-tax investment income was
$178.5 million for the year ended December 31, 2000. At December 31, 2000, the
Company's after-tax yield of 4.9% for the year which was comparable to 1999.

     For further information concerning investment operations, see Note 4 to the
consolidated financial statements of the Company, included in Exhibit 13 to this
Annual Report on Form 10-K.

E.  Regulation

     Direct Regulation

     The Company and its insurance subsidiaries, including MGIC, are subject to
regulation, principally for the protection of policyholders, by the insurance
departments of the various states in which each is licensed to do business. The
nature and extent of such regulation varies, but generally depends on statutes
which delegate regulatory, supervisory and administrative powers to state
insurance commissioners.

     In general, such regulation relates, among other things, to licenses to
transact business; policy forms; premium rates; annual and other reports on
financial condition; the basis upon which assets and liabilities must be stated;
requirements regarding contingency reserves equal to 50% of premiums earned;
minimum capital levels and adequacy ratios; reinsurance requirements;
limitations on the types of investment instruments which may be held in an
investment portfolio; the size of risks and limits on coverage of individual
risks which may be insured; deposits of securities; limits on dividends payable;
and claims handling. Most states also regulate transactions between insurance
companies and their parents or affiliates and have restrictions on transactions
that have the effect of inducing lenders to place business with the insurer. For
a discussion of a February 1, 1999 circular letter from the NYID and a January
31, 2000 letter from the Illinois Department of Insurance, see "The MGIC
Book--Types of Product--Pool Insurance" and "--Captive Mortgage Reinsurance."
For a description of limits on dividends payable, see Note 11 to the
consolidated financial statements of the Company included in Exhibit 13 to this
Annual Report on Form 10-K.

     Mortgage insurance premium rates are also subject to state regulation to
protect policyholders against the adverse effects of excessive, inadequate or
unfairly discriminatory rates and to encourage competition in the insurance
marketplace. Any increase in premium rates must be justified, generally on the
basis of the insurer's loss experience, expenses and future trend analysis. The
general mortgage default experience may also be considered. Premium rates are
subject to review and challenge by state regulators.


                                      -23-

<PAGE>

     A number of states generally limit the amount of insurance risk which may
be written by a private mortgage insurer to 25 times the insurer's total
policyholders' reserves, commonly known as the "risk-to-capital" requirement.

     MGIC is required to contribute to a contingency loss reserve an amount
equal to 50% of earned premiums. Such amounts cannot be withdrawn for a period
of 10 years, except under certain circumstances.

     Mortgage insurers are generally single-line companies, restricted to
writing residential mortgage insurance business only. Although the Company, as
an insurance holding company, is prohibited from engaging in certain
transactions with MGIC without submission to and, in some instances, prior
approval of applicable insurance departments, the Company is not subject to
insurance company regulation on its non-insurance businesses.

     As the most significant purchasers and sellers of conventional mortgage
loans and beneficiaries of private mortgage insurance, Freddie Mac and Fannie
Mae impose requirements on private mortgage insurers in order for such insurers
to be eligible to insure loans sold to such agencies. These requirements of
Freddie Mac and Fannie Mae are subject to change from time to time. Currently,
MGIC is an approved mortgage insurer for both Freddie Mac and Fannie Mae. In
addition, to the extent Fannie Mae or Freddie Mac assumes default risk for
itself that would otherwise be insured, changes current guarantee fee
arrangements (including as a result of primary mortgage insurance coverage being
restructured as described under "The MGIC Book--Types of Product--Primary
Insurance"), allows alternative credit enhancement, alters or liberalizes
underwriting guidelines on low down payment mortgages they purchase, or
otherwise changes its business practices or processes with respect to such
mortgages, private mortgage insurers may be affected.

     Fannie Mae has issued primary mortgage insurance master policy guidelines
applicable to MGIC and all other Fannie Mae-approved private mortgage insurers,
establishing certain minimum terms of coverage necessary in order for an insurer
to be eligible to insure loans purchased by Fannie Mae. The terms of MGIC's
Master Policy comply with these guidelines.

     MGIC's claims-paying ability is rated "AA+" by Standard & Poor's
Corporation and "Aa2" by Moody's Investors Service, Inc. Maintenance of a
claims-paying ability rating of at least AA-/Aa3 is critical to a mortgage
insurer's ability to continue to write new business. In assigning claims-paying
ability ratings, rating agencies review a mortgage insurer's competitive
position and business, management, corporate strategy, historical and projected
operating and underwriting performance, adequacy of capital to withstand extreme
loss scenarios under assumptions determined by the rating agency, as well as
other factors. The rating agency issuing the claims-paying ability rating can
withdraw or change its rating at any time.


                                      -24-

<PAGE>

     Indirect Regulation

     The Company and MGIC are also indirectly, but significantly, impacted by
regulations affecting purchasers of mortgage loans, such as Freddie Mac and
Fannie Mae, and regulations affecting governmental insurers, such as the FHA and
VA, and lenders. Private mortgage insurers, including MGIC, are highly dependent
upon federal housing legislation and other laws and regulations to the extent
they affect the demand for private mortgage insurance and the housing market
generally. From time to time, those laws and regulations have been amended to
affect competition from government agencies. See "The MGIC Book - Sales and
Marketing and Competition - Competition." Proposals are discussed from time to
time by Congress and certain federal agencies to reform or modify the FHA and
the Government National Mortgage Association, which securitizes mortgages
insured by the FHA.

     Subject to certain exceptions, in general, RESPA prohibits any person from
giving or receiving any "thing of value" pursuant to an agreement or
understanding to refer settlement services. See "Item 3--Legal Proceedings."

     The OTS, the OCC, the Federal Reserve Board, and the Federal Deposit
Insurance Corporation have uniform guidelines on real estate lending by insured
lending institutions under their supervision. The guidelines specify that a
residential mortgage loan originated with an LTV of 90% or greater should have
appropriate credit enhancement in the form of mortgage insurance or readily
marketable collateral, although no depth of coverage percentage is specified in
the guidelines.

     Lenders are subject to various laws, including the Home Mortgage Disclosure
Act, the Community Reinvestment Act and the Fair Housing Act, and Fannie Mae and
Freddie Mac are subject to various laws, including laws relating to government
sponsored enterprises, which may impose obligations or create incentives for
increased lending to low and moderate income persons, or in targeted areas.

     There can be no assurance that other federal laws and regulations affecting
such institutions and entities will not change, or that new legislation or
regulations will not be adopted which will adversely affect the private mortgage
insurance industry.


F.  Employees

     At December 31, 2000, the Company had 1,093 full- and part-time employees,
of whom approximately 58% were assigned to its Milwaukee headquarters and 42% to
its field offices. The number of employees given above does not include
"on-call" employees. The number of "on-call" employees can vary substantially,
primarily as a result of changes in demand for contract underwriting services.


                                      -25-

<PAGE>


I
tem 2.  Properties.
-------------------

     At December 31, 2000, the Company leased office space in various cities
throughout the United States under leases expiring between 2001 and 2006 and
which required annual rentals of $2.7 million in 2000.

     The Company owns its headquarters facility and an additional
office/warehouse facility, both located in Milwaukee, Wisconsin, which contain
an aggregate of approximately 310,000 square feet of space.


Item 3.  Legal Proceedings.
--------------------------

     The Company is involved in litigation in the ordinary course of business.
No pending litigation is expected to have a material adverse affect on the
financial position of the Company.

     In addition, on December 15, 2000, MGIC entered into an agreement to settle
Downey et. al. v. MGIC, filed in May 2000 following the dismissal of a similar
case filed in December, 1999, which is pending in Federal District Court for the
Southern District of Georgia. The Court has preliminarily approved the
settlement agreement, certified a nationwide class of borrowers and scheduled a
hearing for June 15, 2001 to consider whether it should enter a final order
approving the settlement. The Company has recorded a $23.2 million charge to
cover the estimated costs of the settlement, including payments to borrowers.
The settlement includes an injunction that prohibits certain practices and
specifies the basis on which agency pool insurance, captive mortgage
reinsurance, contract underwriting and other products may be provided in
compliance with RESPA.

     The complaint in the case alleges that MGIC violated RESPA by providing
agency pool insurance, captive mortgage reinsurance, contract underwriting and
other products that were not properly priced, in return for the referral of
mortgage insurance. The complaint seeks damages of three times the amount of the
mortgage insurance premiums that have been paid and that will be paid at the
time of judgment for the mortgage insurance found to be involved in a violation
of RESPA. The complaint also seeks injunctive relief, including prohibiting MGIC
from receiving future premium payments. If the Court does not enter a final
order approving the settlement, the litigation will continue. In these
circumstances, there can be no assurance that the ultimate outcome of the
litigation will not materially affect the Company's financial position or
results of operations.

     In February, 2001, a complaint entitled Moore v. Radian Group, Inc. et al.
which seeks class action certification on behalf of a nationwide class of home
mortgage borrowers, was filed in Federal District Court for the Eastern District
of Texas against Radian Guaranty, Inc., Norwest Financial Services, Inc., their
respective corporate parents, John Doe Lenders I-X and John Doe PMI Carriers
I-X. The complaint alleges that the named and unnamed defendants violated RESPA
by providing agency pool insurance that was not properly priced in return for
the referral of mortgage insurance. The complaint seeks damages of three times
the amount of the charge paid by the class members for their mortgage insurance
settlement services and also seeks injunctive relief,


                                      -26-

<PAGE>

including prohibiting the defendants from receiving further premium payments.
The Company has not been served with the complaint in this action nor has it
been named as a defendant.


Item 4.  Submission of Matters to a Vote of Security Holders.
-------------------------------------------------------------

     None.

                               Executive Officers

     Certain information with respect to the Company's executive officers as of
March 1, 2001 is set forth below:

Name and Age                                   Title
------------                                   -----

Curt S. Culver, 48.............. President and Chief Executive Officer of the
                                 Company and MGIC; Director of the Company and 
                                 MGIC

J. Michael Lauer, 56............ Executive Vice President and Chief Financial 
                                 Officer of the Company and MGIC

James S. MacLeod, 53............ Executive Vice President--Field Operations of 
                                 MGIC

Lawrence J. Pierzchalski, 48.... Executive Vice President--Risk Management of 
                                 MGIC

Lou T. Zellner, 50.............. Executive Vice President--Corporate Development
                                 of MGIC

Jeffrey H. Lane, 51............. Senior Vice President, General Counsel and 
                                 Secretary of the Company and MGIC


     Mr. Culver has served as President of the Company since January 1999 and as
Chief Executive Officer since January 2000. He has been President of MGIC since
May 1996 and was Chief Operating Officer of MGIC from May 1996 until he became
Chief Executive Officer in January 1999. Mr. Culver has been a senior officer of
MGIC since 1988 having responsibility at various times during his career with
MGIC for field operations, marketing and corporate development. From March 1985
to 1988, he held various management positions with MGIC in the areas of
marketing and sales.

     Mr. Lauer has served as Executive Vice President and Chief Financial
Officer of the Company and MGIC since March 1989.

     Mr. MacLeod has served as Executive Vice President-Field Operations of MGIC
since January 1998 and was Senior Vice President-Field Operations of MGIC from
May 1996 to January


                                      -27-

<PAGE>

1998. Mr. MacLeod has been a senior officer of MGIC since 1987 having
responsibility at various times during his career with MGIC for sales, business
development and marketing. From March 1985 to 1987, he held various management
positions with MGIC in the areas of underwriting and risk management .

     Mr. Pierzchalski has served as Executive Vice President-Risk Management of
MGIC since May 1996 and prior thereto as Senior Vice President-Risk Management
or Vice President-Risk Management of MGIC from April 1990. From March 1985 to
April 1990, he held various management positions with MGIC in the areas of
market research, corporate planning and risk management.

     Mrs. Zellner has served as Executive Vice President-Corporate Development
of MGIC since January 1999. Prior thereto, she was a senior officer of MGIC
since 1986 having responsibility at various times during her career with MGIC
for corporate development, non-insurance operations, claims and reinsurance.
From 1983--1986, Mrs. Zellner was Wisconsin Deputy Commissioner of Insurance.

         Mr. Lane has served as Senior Vice President, General Counsel and
Secretary of the Company and MGIC since August 1996. For more than five years
prior to his joining the Company, Mr. Lane was a partner of Foley & Lardner, a
law firm headquartered in Milwaukee, Wisconsin.




                                      -28-

<PAGE>


                                     PART II
                                     -------


Item 5.   Market for Registrant's Common Equity and Related Stockholder Matters.
-------   --------------------------------------------------------------------- 

          The information set forth under the caption "MGIC Stock" in Exhibit 13
          to this Annual Report on Form 10-K is incorporated herein by
          reference.


Item 6.   Selected Financial Data.
------    -----------------------

          The information set forth in the tables under the caption "Five-Year
          Summary of Financial Information" in Exhibit 13 to this Annual Report
          on Form 10-K is hereby incorporated by reference in answer to this
          Item.


Item 7.   Management's Discussion and Analysis of Financial Condition and 
------    ---------------------------------------------------------------
          Results of Operations.
          --------------------- 

          The information set forth under the caption "Management's Discussion
          and Analysis" in Exhibit 13 to this Annual Report on Form 10-K is
          hereby incorporated by reference in answer to this Item.


Item 7A.  Quantitative and Qualitative Disclosures About Market Risk.
-------   ----------------------------------------------------------

          The information set forth in the second paragraph under the caption
          "Management's Discussion and Analysis - Financial Condition," in the
          fourth to last paragraph under the caption "Management's Discussion
          and Analysis - Liquidity and Capital Resources," and in Note 5 of the
          Notes to the consolidated financial statements, all in Exhibit 13 to
          this Annual Report on Form 10-K, is hereby incorporated by reference
          in answer to this Item.


Item 8.   Financial Statements and Supplementary Data.
------    -------------------------------------------

          The consolidated statements of operations, of shareholders' equity and
          of cash flows for each of the years in the three-year period ended
          December 31, 2000, and the related consolidated balance sheet of the
          Company as of December 31, 2000 and 1999, together with the related
          notes thereto and the report of independent accountants, as well as

          the unaudited quarterly financial data, all set forth in Exhibit 13 to
          this Annual Report on Form 10-K, are hereby incorporated by reference
          in answer to this Item.


                                      -29-

<PAGE>


Item 9.   Changes in and Disagreements with Accountants on Accounting and 
------    ---------------------------------------------------------------
          Financial Disclosure.
          ---------------------

                   None.




                                      -30-

<PAGE>


                                    PART III
                                    --------


Item 10.  Directors and Executive Officers of the Registrant.
-------   --------------------------------------------------

          This information (other than for executive officers) is included in
          the Company's Proxy Statement for the 2001 Annual Meeting of
          Shareholders, and is hereby incorporated by reference. The information
          on the executive officers appears at the end of Part I of this Form
          10-K.


Item 11.  Executive Compensation.
-------   ----------------------

          This information is included in the Company's Proxy Statement for the
          2001 Annual Meeting of Shareholders and, other than information
          covered by Instruction (9) to Item 402 (a) of Regulation S-K of the
          Securities and Exchange Commission, is hereby incorporated by
          reference.


Item 12.  Security Ownership of Certain Beneficial Owners and Management.
--------  -------------------------------------------------------------- 

          This information is included in the Company's Proxy Statement for the
          2001 Annual Meeting of Shareholders, and is hereby incorporated by
          reference.


Item 13.  Certain Relationships and Related Transactions.
-------   ----------------------------------------------

          This information is included in the Company's Proxy Statement for the
          2001 Annual Meeting of Shareholders, and is hereby incorporated by
          reference.


                                      -31-

<PAGE>

                                     PART IV
                                     -------


Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
--------  ---------------------------------------------------------------- 

          (a)  1.   Financial statements. The financial statements listed in the
                    accompanying Index to Consolidated Financial Statements and
                    Financial Statement Schedules are filed as part of this Form
                    10-K.

               2.   Financial statement schedules. The financial statement
                    schedules listed in the accompanying Index to Consolidated
                    Financial Statements and Financial Statement Schedules are
                    filed as part of this Form 10-K.

               3.   Exhibits. The accompanying Index to Exhibits is incorporated
                    by reference in answer to this portion of this Item and the
                    Exhibits listed in such Index are filed as part of this Form
                    10-K.

          (b)  Reports on Form 8-K

               Reports on Form 8-K - During the quarter ended December 31, 2000,
               Current Reports on Form 8-K were filed to report information
               under Item 5, Other Information, on October 10, 2000, October 18,
               2000 and November 20, 2000.



                                      -32-

<PAGE>

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
                        AND FINANCIAL STATEMENT SCHEDULES
                        ---------------------------------

                              [Item 14(a) 1 and 2]


Consolidated Financial Statements (all contained in Exhibit 13 to this Annual
Report on Form 10-K)

Consolidated statement of operations for each of the three years in the period
ended December 31, 2000

Consolidated balance sheet at December 31, 2000 and 1999

Consolidated statement of shareholders' equity for each of the three years in
the period ended December 31, 2000

Consolidated statement of cash flows for each of the three years in the period
ended December 31, 2000

Notes to consolidated financial statements

R
eport of independent accountants



Financial Statement Schedules (all contained immediately following the signature
page to this Annual Report on Form 10-K)

Report of independent accountants on financial statement schedules

Schedules at and for the specified years in the three-year period ended
December 31, 2000:

Schedule I  -- Summary of investments, other than investments in related 
               parties

Schedule II -- Condensed financial information of Registrant

Schedule IV -- Reinsurance

All other schedules are omitted since the required information is not present or
is not present in amounts sufficient to require submission of the schedules, or
because the information required is included in the consolidated financial
statements and notes thereto.


                                      -33-

<PAGE>


                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, on March 29, 2001.

MGIC INVESTMENT CORPORATION


By   /s/ Curt S. Culver                    
     -----------------------------------------
     Curt S. Culver
     President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below as of the date set forth above by the following persons on
behalf of the registrant and in the capacities indicated.

Name and Title
--------------


/s/ Curt S. Culver                            /s/ David S. Engelman
--------------------------------------        ---------------------------------
Curt S. Culver                                David S. Engelman, Director
President, Chief Executive Officer
 and Director
                                              /s/ James D. Ericson
                                              ---------------------------------
                                              James D. Ericson, Director


/s/ J. Michael Lauer                          /s/ Kenneth M. Jastrow, II
--------------------------------------        ---------------------------------
J. Michael Lauer                              Kenneth M. Jastrow, II, Director
Executive Vice President and
  Chief Financial Officer                     /s/ Daniel P. Kearney
(Principal Financial Officer)                 ---------------------------------
                                              Daniel P. Kearney, Director


/s/ Patrick Sinks                             /s/ Sheldon B. Lubar
--------------------------------------        ---------------------------------
Patrick Sinks                                 Sheldon B. Lubar, Director
Senior Vice President, Controller and
 Chief Accounting Officer                     /s/ William A. McIntosh
 (Principal Accounting Officer)               ----------------------------------
                                              William A. McIntosh, Director


/s/ James A. Abbott                           /s/ Leslie M. Muma
--------------------------------------        ---------------------------------
James A. Abbott, Director                     Leslie M. Muma, Director


/s/ Mary K. Bush                              /s/ Edward J. Zore
--------------------------------------        ---------------------------------
Mary K. Bush, Director                        Edward J. Zore, Director


/s/ Karl E. Case
--------------------------------------        
Karl E. Case, Director


                                      -34-

<PAGE>


                      Report of Independent Accountants on
                          Financial Statement Schedules

  To the Board of Directors
  of MGIC Investment Corporation:

  Our audits of the consolidated financial statements referred to in our report
  dated January 9, 2001 appearing in the 2000 Annual Report to Shareholders of
  MGIC Investment Corporation (which report and consolidated financial
  statements are incorporated by reference in this Annual Report on Form 10-K)
  also included an audit of the financial statement schedules listed in Item
  14(a)(2) of this Form 10-K. In our opinion, these financial statement
  schedules present fairly, in all material respects, the information set forth
  therein when read in conjunction with the related consolidated financial
  statements.



  PRICEWATERHOUSECOOPERS LLP

  Milwaukee, Wisconsin
  January 9, 2001




                                      -35-

<PAGE>

<TABLE>
                                                 MGIC INVESTMENT CORPORATION

                                            SCHEDULE I - SUMMARY OF INVESTMENTS -
                                          OTHER THAN INVESTMENTS IN RELATED PARTIES

                                                      December 31, 2000
<CAPTION>
                                                                                                                 Amount at
                                                                  Amortized              Market               which shown in
             Type of Investment                                      Cost                 Value              the balance sheet
             ------------------                                -----------------    -----------------        ------------------
                                                                                  (In thousands of dollars)
Fixed maturities:
   Bonds:
       United States Government and government
<S>                                                            <C>                  <C>                       <C>             
           agencies and authorities                            $        220,168     $        225,609          $        225,609
       States, municipalities and political subdivisions              2,382,766            2,488,316                 2,488,316
       Foreign governments                                               13,958               14,586                    14,586
       Public utilities                                                  51,885               49,893                    49,893
       All other corporate bonds                                        513,286              520,157                   520,157
                                                               -----------------    -----------------         -----------------
           Total fixed maturities                                     3,182,063            3,298,561                 3,298,561

Equity securities:
   Common stocks:
       Banks, trust and insurance companies                               1,333                2,090                     2,090
       Industrial, miscellaneous and all other                           20,570               19,952                    19,952
                                                               -----------------    -----------------         -----------------
           Total equity securities                                       21,903               22,042                    22,042
                                                               -----------------    -----------------         -----------------

Short-term investments                                                  151,592              151,592                   151,592
                                                               -----------------    -----------------         -----------------
           Total investments                                   $      3,355,558     $      3,472,195          $      3,472,195
                                                               =================    =================         =================

</TABLE>



                                       -36-

<PAGE>

<TABLE>
                                                 MGIC INVESTMENT CORPORATION

                                 SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT

                                                   CONDENSED BALANCE SHEET
                                                     PARENT COMPANY ONLY
                                                  December 31, 2000 and 1999
<CAPTION>
                                                                                 2000                1999
                                                                                 ----                ----
                                                                                (In thousands of dollars)
ASSETS
Investment portfolio, at market value:
<S>                                                                         <C>                 <C>           
   Fixed maturities                                                         $        1,373      $       12,729
   Short-term investments                                                            8,172               1,663
                                                                            ---------------     ---------------
       Total investment portfolio                                                    9,545              14,392

Investment in subsidiaries, at equity in net assets                              2,854,667           2,183,599
Income taxes receivable - affiliates                                                 1,167               4,518
Accrued investment income                                                               19                 209
Other assets                                                                        10,094                 958
                                                                            ---------------     ---------------
        Total assets                                                        $    2,875,492      $    2,203,676
                                                                            ===============     ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
   Long-term debt                                                           $      397,364      $      425,000
   Other liabilities                                                                13,246               2,687
                                                                            ---------------     ---------------
        Total liabilities                                                          410,610             427,687
                                                                            ---------------     ---------------
Shareholders' equity (note B):
   Common stock, $1 par value, shares authorized
       300,000,000; shares issued 121,110,800;
       outstanding 2000 - 106,825,758; 1999 - 105,798,034                          121,111             121,111
   Paid-in surplus                                                                 207,882             211,593
   Treasury stock (shares at cost, 2000 - 14,285,042;
       1999 - 15,312,766)                                                         (621,033)           (665,707)
   Accumulated other comprehensive income - unrealized appreciation
       (depreciation) in investment portfolio of subsidiaries, net of tax           75,814             (40,735)
   Retained earnings                                                             2,681,108           2,149,727
                                                                            ---------------     ---------------
       Total shareholders' equity                                                2,464,882           1,775,989
                                                                            ---------------     ---------------
       Total liabilities and shareholders' equity                           $    2,875,492      $    2,203,676
                                                                            ===============     ===============

See accompanying supplementary notes to Parent Company condensed financial statements.
</TABLE>


                                        -37-

<PAGE>

<TABLE>
                                                 MGIC INVESTMENT CORPORATION

                                 SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT

                                              CONDENSED STATEMENT OF OPERATIONS
                                                     PARENT COMPANY ONLY
                                         Years Ended December 31, 2000, 1999 and 1998
<CAPTION>
                                                                   2000             1999            1998
                                                                   ----             ----            ----
                                                                         (In thousands of dollars)

Revenue:
<S>                                                            <C>              <C>             <C>         
   Equity in undistributed net income of subsidiaries          $      550,014   $    313,292    $    368,242
   Dividends received from subsidiaries                                11,091        169,650          28,394
   Investment income, net                                                 800          1,362           1,117
   Realized investment (losses) gains, net                               (659)          (216)            334
   Other income                                                             -              -               9
                                                               ---------------  -------------   -------------
       Total revenue                                                  561,246        484,088         398,096
                                                               ---------------  -------------   -------------

Expenses:
   Operating expenses                                                     735            312             180
   Interest expense                                                    28,759         20,402          18,624
                                                               ---------------  -------------   -------------
       Total expenses                                                  29,494         20,714          18,804
                                                               ---------------  -------------   -------------
Income before tax                                                     531,752        463,374         379,292
Credit for income tax                                                 (10,247)        (6,827)         (6,173)
                                                               ---------------  -------------   -------------
Net income                                                            541,999        470,201         385,465
                                                               ---------------  -------------   -------------
Other comprehensive income - unrealized
   investment gains (losses), net                                     116,549       (135,307)         10,587
                                                               ---------------  -------------   -------------
Comprehensive income                                           $      658,548   $    334,894    $    396,052
                                                               ===============  =============   =============
</TABLE>



                                        -38-

<PAGE>

<TABLE>
                                                 MGIC INVESTMENT CORPORATION

                                 SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT

                                              CONDENSED STATEMENT OF CASH FLOWS
                                                     PARENT COMPANY ONLY
                                         Years Ended December 31, 2000, 1999 and 1998
<CAPTION>
                                                                       2000              1999             1998
                                                                       ----              ----             ----
                                                                             (In thousands of dollars)
Cash flows from operating activities:
<S>                                                               <C>               <C>              <C>          
   Net income                                                     $       541,999   $     470,201    $     385,465
   Adjustments to reconcile net income to net cash
       provided by operating activities:
           Equity in undistributed net income of subsidiaries            (550,014)       (313,292)        (368,242)
           Decrease (increase)  in income taxes receivable                  3,351          (4,259)          18,653
           Decrease (increase) in accrued investment income                   190            (182)             197
           Increase (decrease) in other liabilities                        10,559          (1,517)             939
           (Increase) decrease in other assets                             (9,136)           (110)            (839)
           Other                                                           29,005          (1,916)          16,633
                                                                  ----------------  --------------   --------------
Net cash provided by operating activities                                  25,954         148,925           52,806
                                                                  ----------------  --------------   --------------

Cash flows from investing activities:
   Transactions with subsidiaries                                          (5,050)         67,801                -
   Purchase of fixed maturities                                           (10,500)        (14,448)            (500)
   Sale of fixed maturities                                                21,920           1,843           10,901
                                                                     -------------    ------------     ------------
Net cash provided by investing activities                                   6,370          55,196           10,401
                                                                  ----------------  --------------   --------------

Cash flows from financing activities:
   Dividends paid to shareholders                                         (10,618)        (10,825)         (11,243)
   Proceeds from issuance of long-term debt                               309,079          43,000          262,000
   Repayment of long-term debt                                           (336,751)        (60,000)         (57,500)
   Reissuance of treasury stock                                            18,699           3,912            6,953
   Repurchase of common stock                                              (6,224)       (200,533)        (246,840)
                                                                  ----------------  --------------   --------------
Net cash used in financing activities                                     (25,815)       (224,446)         (46,630)
                                                                  ----------------  --------------   --------------
Net increase (decrease) in cash and short-term investments                  6,509         (20,325)          16,577
Cash and short-term investments at beginning of year                        1,663          21,988            5,411
                                                                  ----------------  --------------   --------------
Cash and short-term investments at end of year                    $         8,172   $       1,663    $      21,988
                                                                  ================  ==============   ==============


See accompanying notes to Parent Company condensed financial statements.
</TABLE>


                                        -39-

<PAGE>

                           MGIC INVESTMENT CORPORATION

           SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT

                               PARENT COMPANY ONLY

                               SUPPLEMENTARY NOTES


Note A

     The accompanying Parent Company financial statements should be read in
conjunction with the Consolidated Financial Statements and Notes to Consolidated
Financial Statements appearing on pages 14 through 29 of the MGIC Investment
Corporation 2000 Annual Report to Shareholders.

Note B

     The Company's insurance subsidiaries are subject to statutory regulations
as to maintenance of policyholders' surplus and payment of dividends. The
maximum amount of dividends that the insurance subsidiaries may pay in any
twelve-month period without regulatory approval by the Office of the
Commissioner of Insurance of the State of Wisconsin is the lesser of adjusted
statutory net income or 10% of statutory policyholders' surplus as of the
preceding calendar year end. Adjusted statutory net income is defined for this
purpose to be the greater of statutory net income, net of realized investment
gains, for the calendar year preceding the date of the dividend or statutory net
income, net of realized investment gains, for the three calendar years preceding
the date of the dividend less dividends paid within the first two of the
preceding three calendar years. In 2001, MGIC can pay $92.0 million of dividends
and the other insurance subsidiaries of the Company can pay $7.1 million of
dividends without such regulatory approval.

     Certain of the Company's non-insurance subsidiaries also have requirements
as to maintenance of net worth. These restrictions could also affect the
Company's ability to pay dividends.

     In 2000, 1999 and 1998, the Company paid dividends of $10.6 million, $10.8
million and $11.2 million, respectively, or $0.10 per share.


                                      -40-

<PAGE>

<TABLE>
                                            MGIC INVESTMENT CORPORATION

                                             SCHEDULE IV - REINSURANCE

                                         MORTGAGE INSURANCE PREMIUMS EARNED
                                    Years Ended December 31, 2000, 1999 and 1998
<CAPTION>

                                                                           Assumed                          Percentage
                                                         Ceded to           From                            of Amount
                                         Gross            Other             Other             Net           Assumed to
                                        Amount          Companies         Companies         Amount             Net
                                     --------------    -------------    --------------   --------------    -------------
                                                                 (In thousands of dollars)

Year ended December 31,
<S>        <C>                       <C>               <C>              <C>              <C>                       <C> 
           2000                      $     939,981     $     50,889     $         999    $     890,091             0.1%
                                     ==============    =============    ==============   ==============

           1999                      $     819,485     $     28,346     $       1,442    $     792,581             0.2%
                                     ==============    =============    ==============   ==============

           1998                      $     770,775     $     17,161     $       9,670    $     763,284             1.3%
                                     ==============    =============    ==============   ==============

</TABLE>




                                      -41-

<PAGE>

                                INDEX TO EXHIBITS
                                -----------------

                                  [Item 14(a)3]

Exhibit
Numbers   Description of Exhibits    
-------   -----------------------  

3.1       Articles of Incorporation, as amended.(1)

3.2       Amended and Restated Bylaws. (2)

4.1       Article 6 of the Articles of Incorporation (included within Exhibit
          3.1)

4.2       Amended and Restated Bylaws (included as Exhibit 3.2)

4.3       Rights Agreement, dated as of July 22, 1999, between MGIC Investment
          Corporation and Firstar Bank Milwaukee, N.A., which includes as
          Exhibit A thereto the Form of Right Certificate and as Exhibit B
          thereto the Summary of Rights to Purchase Common shares(3)

4.4       Indenture, dated as of October 15, 2000, between MGIC Investment
          Corporation and Bank One Trust Company, National Association, as
          Trustee(4)

4.5       Officer's Certificate, dated as of October 17, 2000, executed and
          delivered in connection with the issuance and sale of MGIC Investment
          Corporation's 7-1/2% Senior Notes due 2005(5) [The Company is a party
          to separate Credit Agreements with different groups of financial
          institutions. These Credit Agreements are not being filed pursuant to
          Reg. S-K Item 602(b) (4) (iii) (A). The Company hereby agrees to
          furnish a copy of such Credit Agreements to the Commission upon its
          request.]

10.1      Common Stock Purchase Agreement between the Company and The
          Northwestern Mutual Life Insurance Company ("NML"), dated November 30,
          1984(6)


                                      -42-

<PAGE>
Exhibit
Numbers   Description of Exhibits    
-------   -----------------------  

10.2      Amended and Restated Investment Advisory and Servicing Agreement
          between the Company and Northwestern Mutual Investment Services, Inc.
          ("NMIS"), dated December 5, 1997.(7) [Northwestern Mutual Investment
          Services, LLC has succeeded NMIS as a party to such Agreement.]

10.3      MGIC Investment Corporation 1991 Stock Incentive Plan.(8)

10.4      Two Forms of Stock Option Agreement under 1991 Stock Incentive
          Plan.(9)

10.5      Two Forms of Restricted Stock Award Agreement under 1991 Stock
          Incentive Plan.(10)

10.6      Executive Bonus Plan

10.7      Supplemental Executive Retirement Plan (11)

10.8      MGIC Investment Corporation Deferred Compensation Plan for
          Non-Employee Directors.(12)

10.9      MGIC Investment Corporation 1993 Restricted Stock Plan for
          Non-Employee Directors.(13)

10.10     Two Forms of Award Agreement under MGIC Investment Corporation 1993
          Restricted Stock Plan for Non-Employee Directors.(14)

10.11     Form of MGIC Mortgage Guaranty Master Policy, in effect generally for
          insurance commitments issued beginning March 1, 1995, including the
          Master Policy Program Endorsement relating to delegated
          underwriting.(15)

10.12     Form of Key Executive Employment and Severance Agreement.(16)

11        Statement re: computation of per share earnings

13        Information from the 2000 Annual Report of the Company to Shareholders
          which is incorporated by reference in this Annual Report on Form 10-K.

21        List of Subsidiaries

23        Consent of PricewaterhouseCoopers LLP


                                      -43-

<PAGE>
Exhibit
Numbers   Description of Exhibits    
-------   -----------------------  

          Supplementary List of the above Exhibits which relate to management
contracts or compensatory plans or arrangements.

10.3      MGIC Investment Corporation 1991 Stock Incentive Plan.

10.4      Two Forms of Stock Option Agreement under 1991 Stock Incentive Plan.

10.5      Two Forms of Restricted Stock Award Agreement under 1991 Stock
          Incentive Plan.

10.6      Executive Bonus Plan

10.7      Supplemental Executive Retirement Plan.

10.8      MGIC Investment Corporation Deferred Compensation Plan for
          Non-Employee Directors.

10.9      MGIC Investment Corporation 1993 Restricted Stock Plan for
          Non-Employee Directors.

10.10     Two Forms of Award Agreement under MGIC Investment Corporation 1993
          Restricted Stock Plan for Non-Employee Directors.

10.12     Form of Key Executive Employment and Severance Agreement



                                      -44-

<PAGE>


          The following documents, identified in the footnote references above,
are incorporated by reference, as indicated, to: the Company's Annual Reports on
Form 10-K for the years ended December 31, 1993, 1994, 1997 or 1999 (the "1993
10-K," "1994 10-K," "1997 10-K," and "1999 10-K," respectively); to the
Company's Quarterly Reports on Form 10-Q for the Quarters ended June 30, 1994,
1998 or 2000 (the "June 30, 1994 10-Q," "June 30, 1998 10-Q" and "June 30, 2000
10-Q," respectively); to the Company's registration Statement Form 8-A filed
July 27, 1999 (the "8-A"); to the Company's Current Report on form 8-K dated
October 17, 2000 (the "8-K"); or to the Company's Form S-1 Registration
Statement (No. 33-41289) (the "S-1"). The documents are further identified by
cross-reference to the Exhibits in the respective documents where they were
originally filed:
                                                                 
  (1)  Exhibit 3 to the June 30, 1998 10-Q.                      

  (2)  Exhibit 3.2 to the 1999 10-K.                             

  (3)  Exhibit 4.1 to the 8-A.                                   

  (4)  Exhibit 4.1 to the 8-K.                                   

  (5)  Exhibit 4.2 to the 8-K.                                   

  (6)  Exhibit 10.1 to the S-1.                                  

  (7)  Exhibit 10.5 to the 1997 10-K.                            

  (8)  Exhibit 10.7 to the 1999 10-K.                            

  (9)  Exhibit 10.9 to the 19999 10-K.                           

 (10)  Exhibit 10.10 to the 1999 10-K.                           

 (11)  Exhibit 10 to the June 30, 2000 10-Q.                     

 (12)  Exhibit 10.23 to the 1993 10-K.                           

 (13)  Exhibit 10.24 to the 1993 10-K.                           

 (14)  Exhibits 10.27 and 10.28 to the June 30, 1994 10-Q.       

 (15)  Exhibit 10.26 to the 1994 10-K.                           

 (16)  Exhibit 10.17 to the 1999 10-K.                           
                                                                 


                                      -45-






                             EXECUTIVE BONUS PLAN OF

                           MGIC INVESTMENT CORPORATION
                                 (the "Company")


The Executive Bonus Plan of the Company in effect for 2001 (which is not
contained in a formal plan document), applies to certain officers of the
Company, including the executive officers of the Company identified in the Form
10-K for the year ended December 31, 2000. Under the Executive Bonus Plan, if
the Company achieves a minimum level of net income for 2001, an executive
officer will be eligible for a bonus, depending upon the executive officer's
individual performance, of up to 120-200% of such executive officer's base
salary, depending on the maximum applicable to the executive officer.








<TABLE>
                                                                                                                      
                                    MGIC INVESTMENT CORPORATION AND SUBSIDIARIES
                                 STATEMENT RE COMPUTATION OF PER SHARE EARNINGS (1)
                                For The Years Ended December 31, 2000, 1999 and 1998
<CAPTION>
                                                                                                                      
                                                                     2000              1999              1998         
                                                                     ----              ----              ----         
                                                                       (In thousands, except per share data)          
BASIC EARNINGS PER SHARE                                                                                              
                                                                                                                      
<S>                                                                    <C>               <C>               <C>        
Average common shares outstanding                                      106,202           108,061           112,135    
                                                                 ==============    ==============    ==============   
                                                                                                                      
Net income                                                       $     541,999     $     470,201     $     385,465    
                                                                 ==============    ==============    ==============   
                                                                                                                      
Net income per share                                             $        5.10     $        4.35     $        3.44    
                                                                 ==============    ==============    ==============   
                                                                                                                      
DILUTED EARNINGS PER SHARE                                                                                            
                                                                                                                      
Adjusted shares outstanding:                                                                                          
   Average common shares outstanding                                   106,202           108,061           112,135    
   Net shares to be issued upon exercise of                                                                           
       common stock equivalents                                          1,058             1,197             1,447    
                                                                 --------------    --------------    --------------   
   Adjusted shares outstanding                                         107,260           109,258           113,582    
                                                                 ==============    ==============    ==============   
                                                                                                                      
Net income                                                       $     541,999     $     470,201     $     385,465    
                                                                 ==============    ==============    ==============   
                                                                                                                      
Net income per share                                             $        5.05     $        4.30     $        3.39    
                                                                 ==============    ==============    ==============   
                                                                                                                      
                                                                                                                      
                                                                                                                      
(1)   Per Statement of Financial Accounting Standards No. 128, "Earnings Per Share".                                  

</TABLE>







<TABLE>
              MGIC INVESTMENT CORPORATION & SUBSIDIARIES -- YEARS ENDED DECEMBER 31, 2000, 1999, 1998, 1997 AND 1996

             ----------------------------------------------------------------------------------------------------------
                                            Five-Year Summary of Financial Information
             ----------------------------------------------------------------------------------------------------------
<CAPTION>

                                                    2000             1999            1998             1997            1996
                                                --------------   --------------  --------------   --------------  --------------

                                                                (In thousands of dollars, except per share data)
Summary of Operations
Revenues:
<S>                                             <C>              <C>             <C>              <C>             <C>         
   Net premiums written.......................  $     887,388    $     792,345   $     749,161    $    690,248    $    588,927
                                                ==============   ==============  ==============   ==============  ==============

   Net premiums earned........................  $     890,091    $     792,581   $     763,284    $    708,744    $    617,043
   Investment income, net.....................        178,535          153,071         143,019         123,602         105,355
   Realized investment gains, net.............          1,432            3,406          18,288           3,261           1,220
   Other revenue..............................         40,283           47,697          47,075          32,665          22,013
                                                --------------   --------------  --------------   --------------  --------------
     Total revenues...........................      1,110,341          996,755         971,666         868,272         745,631
                                                --------------   --------------  --------------   --------------  --------------

Losses and expenses:
   Losses incurred, net.......................         91,723           97,196         211,354         242,362         234,350
   Underwriting and other expenses............        177,837          198,147         187,103         154,138         142,460
   Interest expense...........................         28,759           20,402          18,624           6,399           3,793
   Litigation settlement......................         23,221                -               -               -               -
                                                --------------   --------------  --------------   --------------  --------------
     Total losses and expenses................        321,540          315,745         417,081         402,899         380,603
                                                --------------   --------------  --------------   --------------  --------------

Income before tax.............................        788,801          681,010         554,585         465,373         365,028
Provision for income tax......................        246,802          210,809         169,120         141,623         107,037
                                                --------------   --------------  --------------   --------------  --------------
Net income....................................  $     541,999    $     470,201   $     385,465    $    323,750    $    257,991
                                                ==============   ==============  ==============   ==============  ==============

Weighted average common shares outstanding (in
   thousands) (1).............................        107,260          109,258         113,582         117,924         119,046
                                                ==============   ==============  ==============   ==============  ==============

Diluted earnings per share (1)................  $        5.05    $        4.30   $        3.39    $       2.75    $       2.17
                                                ==============   ==============  ==============   ==============  ==============

Dividends per share (1).......................  $         .10
    $         .10   $         .10    $       .095    $        .08
                                                ==============   ==============  ==============   ==============  ==============

Balance sheet data
   Total investments..........................  $   3,472,195    $   2,789,734   $   2,779,706    $  2,416,740    $  2,036,234
   Total assets...............................      3,857,781        3,104,393       3,050,541       2,617,687       2,222,315
   Loss reserves..............................        609,546          641,978         681,274         598,683         514,042
   Long-term debt.............................        397,364          425,000         442,000         237,500               -
   Shareholders' equity.......................      2,464,882        1,775,989       1,640,591       1,486,782       1,366,115
   Book value per share.......................          23.07            16.79           15.05           13.07           11.59


     (1)  In May 1997, the Company declared a two-for-one stock split of the common stock in the form of a 100% stock dividend.
          The additional shares were issued on June 2, 1997. Prior year shares, dividends per share and earnings per share have
          been restated to reflect the split.

----------------------------------------------------------------------------------------------------------------------------------

     A brief description of the Company's business is contained in Note 1 to the Consolidated Financial Statements of the Company,
     page eighteen.

                                                             -------
                                                               one
                                                             -------
</TABLE>


<PAGE>

<TABLE>
              MGIC INVESTMENT CORPORATION & SUBSIDIARIES -- YEARS ENDED DECEMBER 31, 2000, 1999, 1998, 1997 AND 1996

             ----------------------------------------------------------------------------------------------------------
                                            Five-Year Summary of Financial Information
             ----------------------------------------------------------------------------------------------------------
<CAPTION>

                                                    2000             1999            1998             1997            1996
                                                --------------   --------------  --------------   --------------  --------------

<S>                                             <C>              <C>             <C>              <C>             <C>         
New primary insurance written ($ millions)....  $      41,546    $      46,953   $      43,697    $     32,250    $     32,756
New primary risk written ($ millions).........         10,353           11,422          10,850           8,305           8,305
New pool risk written ($ millions)............            345              564             618             394               2

Insurance in force (at year-end) ($ millions)
   Direct primary insurance...................        160,192          147,607         137,990         138,497         131,397
   Direct primary risk........................         39,090           35,623          32,891          32,175          29,308
   Direct pool risk...........................          1,676            1,557           1,133             590             232

Primary loans in default ratios
   Policies in force..........................      1,448,348        1,370,020       1,320,994       1,342,976       1,299,038
   Loans in default...........................         37,422           29,761          29,253          28,493          25,034
   Percentage of loans in default.............         2.58%            2.17%           2.21%            2.12%           1.93%

Insurance operating ratios (GAAP)
   Loss ratio.................................         10.3%            12.3%           27.7%            34.2%           38.0%
   Expense ratio..............................         16.4%            19.7%           19.6%            18.4%           21.6%
                                                --------------   --------------  --------------   --------------  --------------
   Combined ratio.............................         26.7%            32.0%           47.3%            52.6%           59.6%
                                                ==============   ==============  ==============   ==============  ==============

Risk-to-capital ratio (statutory)
   MGIC.......................................         10.6:1           11.9:1          12.9:1           15.7:1          18.1:1



                                                             --------
                                                               two
                                                             --------
</TABLE>


<PAGE>
        -----------------------------------------------------------------

                      Management's Discussion and Analysis
        -----------------------------------------------------------------

Results of Consolidated Operations
2000 Compared with 1999

Net income for 2000 was $542.0 million, compared with $470.2 million in 1999, an
increase of 15%. Diluted earnings per share was $5.05 for 2000 compared with
$4.30 in 1999. Included in diluted earnings per share for 2000 were a $0.14
charge for the litigation settlement agreement referred to below and $0.01 for
realized gains. The 1999 earnings per share included $0.02 for realized gains
and $0.10 for loss reserve reductions made in the fourth quarter of 1999.
Excluding the aforementioned amounts, earnings per share was $5.18 for 2000,
compared to $4.18 for 1999, an increase of 24%.

Total revenues for 2000 were $1,110.3 million, an increase of 11% from the
$996.8 million for 1999. This increase was primarily attributed to an
improvement in persistency, which generated an increase in renewal premiums.
Also contributing to the increase in revenues was an increase in investment
income resulting from strong cash flows. See below for a further discussion of
premiums and investment income.

Losses and expenses for 2000 were $321.5 million, an increase of 2% from $315.7
million for the same period of 1999. The increase was primarily attributed to
the litigation settlement, offset by a decline in underwriting expenses
resulting from a decline in contract underwriting activity and an increase in
deferred insurance policy acquisition costs. See below for a further discussion
of losses incurred and underwriting expenses and the litigation settlement.

The amount of new primary insurance written by Mortgage Guaranty Insurance
Corporation ("MGIC") during 2000 was $41.5 billion, compared with $47.0 billion
in 1999. Refinancing activity decreased to 13% of new primary insurance written
in 2000, compared to 25% in 1999 as a result of the increasing mortgage interest
rate environment of the second half of 1999 and in 2000.

The $41.5 billion of new primary insurance written during 2000 was offset by the
cancellation of $28.9 billion of insurance in force, and resulted in a net
increase of $12.6 billion in primary insurance in force, compared to new primary
insurance written of $47.0 billion, cancellation of $37.4 billion, and a net
increase of $9.6 billion in insurance in force during 1999. Direct primary
insurance in force was $160.2 billion at December 31, 2000, compared to $147.6
billion at December 31, 1999.

In addition to providing direct primary insurance coverage, the Company also
insures pools of mortgage loans. New pool risk written during 2000 and 1999,
which was virtually all agency pool insurance, was $345.5 million and $563.8
million, respectively. The Company's direct pool risk in force at December 31,
2000 was $1.7 billion compared to $1.6 billion at December 31, 1999.

Cancellation activity has historically been affected by the level of mortgage
interest rates, with cancellations generally moving inversely to the change in
the direction of interest rates. Cancellations decreased during 2000 due to
increasing mortgage interest rates which resulted in an increase in the MGIC
persistency rate (percentage of insurance remaining in force from one year
prior) to 80.4% at December 31, 2000, from 72.9% at December 31, 1999. Future
cancellation activity could also be somewhat higher than it otherwise would have
been as a result of legislation that went into effect in July 1999 regarding
cancellation of mortgage insurance. Cancellation activity could also increase as
more of the Company's insurance in force is represented by subprime loans, which
the Company anticipates will have materially lower persistency than the
Company's prime business. In general, subprime loans are mortgages that would
not meet the standard underwriting guidelines of Fannie Mae and Freddie Mac for
prime mortgages due to credit quality, documentation, or other factors, such as
in a refinance transaction exceeding a specified increase in the amount of
mortgage debt due to cash being paid to the borrower.

Principally as a result of changes in coverage requirements by Fannie Mae and
Freddie Mac (described under "Other Matters" below), new insurance written for
mortgages with reduced coverage (coverage of 17% for 90s and coverage of 25% for
95s) increased to 14% of new insurance written in 2000 compared to 8% a year
ago. New insurance written for mortgages with deep coverage (coverage of 25% for
90s and coverage of 30% for 95s) declined to 62% of new insurance written in
2000 compared to 67% a year ago. 90s are mortgages with LTV ratios above 85% but
not above 90%, and 95s are mortgages with LTV ratios above 90% but not above
95%.

                                   ----------
                                     three
                                   ----------

<PAGE>

New insurance written for subprime mortgages was 19% of new insurance written
during 2000 compared to 7% for 1999. The Company expects that subprime loans
will have delinquency and default rates in excess of those on the Company's
prime business. While the Company believes it has priced its subprime business
to generate acceptable returns, there can be no assurance that the assumptions
underlying the premium rates adequately address the risk of this business.

Net premiums written increased 12% to $887.4 million in 2000, from $792.3
million in 1999. Net premiums earned increased 12% to $890.1 million in 2000,
from $792.6 million in 1999. The increases were primarily a result of a higher
percentage of renewal premiums on products with higher premium rates and the
growth in insurance in force offset by an increase in ceded premiums to $52.9
million in 2000, compared to $26.2 million in 1999, primarily due to an increase
in captive mortgage reinsurance and similar arrangements.

Mortgages (newly insured during 2000 or 1999) equal to approximately 33% of
MGIC's new insurance written during 2000 were subject to captive mortgage
reinsurance and similar arrangements compared to 32% during 1999. Such
arrangements entered into during a reporting period customarily include loans
newly insured in a prior reporting period. As a result, the percentages cited
above would be lower if only the current reporting period's newly insured
mortgages subject to such arrangements were included. At December 31, 2000
approximately 21% of MGIC's risk in force was subject to captive reinsurance and
similar arrangements compared to 15% at December 31, 1999. The amount of
premiums ceded under captive mortgage reinsurance arrangements and the
percentage of new insurance written and risk in force subject to such
arrangements are expected to continue to increase.

Investment income for 2000 was $178.5 million, an increase of 17% over the
$153.1 million in 1999. This increase was primarily the result of an increase in
the amortized cost of average investment assets to $3.1 billion for 2000, from
$2.7 billion for 1999, an increase of 13%. The portfolio's average pretax
investment yield was 6.0% and 5.6% at December 31, 2000 and 1999, respectively.
The portfolio's average after-tax investment yield was 4.9% in 2000 and 1999.
The Company realized gains of $1.4 million during 2000 compared to $3.4 million
in 1999.

Other revenue, which is composed of various components, was $40.3 million in
2000, compared with $47.7 million in 1999. The change is primarily the result of
decreases in contract underwriting and FHA fee revenue (a contract with the FHA
was completed in 1999) and an increase in equity losses for Customers Forever
LLC, a joint venture with Marshall & Ilsley Corporation, which were offset by
increases in equity earnings from Credit-Based Asset Servicing and
Securitization LLC ("C-BASS"), a joint venture with Enhance Financial Services
Group Inc. ("Enhance"), and Sherman Financial Group LLC, ("Sherman," another
joint venture with Enhance). In the first quarter of 2001, Enhance was acquired
by Radian Group Inc.

C-BASS engages in the acquisition and resolution of delinquent single-family
residential mortgage loans ("mortgage loans"). C-BASS also purchases and sells
mortgage-backed securities ("mortgage securities"), interests in real estate
mortgage investment conduit residuals and performs mortgage loan servicing. In
addition, C-BASS issues mortgage-backed debt securities collateralized by
mortgage loans and mortgage securities. C-BASS's results of operations are
affected by the timing of these securitization transactions. Substantially all
of C-BASS's mortgage-related assets do not have readily ascertainable market
values and as a result their value for financial statement purposes is estimated
by the management of C-BASS. Market value adjustments could impact C-BASS's
results of operations and the Company's share of those results.

Total combined assets of C-BASS at December 31, 2000 and 1999 were approximately
$1.0 billion and $934 million, respectively, of which approximately $867 million
and $773 million, respectively, were mortgage-related assets, including open
trades. Total liabilities at December 31, 2000 and 1999 were approximately $765
million and $744 million, respectively, of which approximately $694 million and
$617 million, respectively, were funding arrangements, including accrued
interest, virtually all of which were short-term. For the years ended December
31, 2000 and 1999, revenues of approximately $153 million and $112 million,
respectively, and expenses of approximately $97 million and $72 million,
respectively, resulted in income before tax of approximately $56 million and $40
million, respectively.

                                   ----------
                                     four
                                   ----------

<PAGE>
Sherman is engaged in the business of purchasing, servicing and securitizing
delinquent unsecured consumer assets such as credit card loans and Chapter 13
bankruptcy debt. A substantial portion of Sherman's consolidated assets are
investments in receivable portfolios that do not have readily ascertainable
market values and as a result their value for financial statement purposes is
estimated by the management of Sherman. Market value adjustments could impact
Sherman's results of operations and the Company's share of those results.

Net losses incurred decreased 6% to $91.7 million in 2000, from $97.2 million in
1999. Such decrease was primarily due to generally strong economic conditions,
including in California, and a related decline in losses paid which led the
Company to reduce its estimate of the claim rate and the severity (the "reserve
factors") for loans in the primary and pool notices inventory. Partially
offsetting the reduction in reserve factors was an increase in the primary
insurance notice inventory from 29,761 at December 31, 1999 to 37,422 at
December 31, 2000, primarily reflecting an increase in subprime notices, and an
increase in pool insurance notice inventory from 11,638 at December 31, 1999 to
18,209 at December 31, 2000. The redundancy in loss reserves for 2000 was
relatively consistent with that experienced in 1999. The default rate at
December 31, 2000 was 2.58% compared to 2.17% at December 31, 1999 and the
average claim paid for 2000 was $18,977 compared to $19,444 in 1999. The default
rates for the subprime business were 8.66% and 7.39% for 2000 and 1999,
respectively.

At December 31, 2000, 67% of the primary insurance in force was written during
the last three years, compared to 65% at December 31, 1999. Based on all of the
loans in the Company's insurance in force, the highest claim frequency years
have typically been the third through fifth years after the year of loan
origination. However, the pattern of claims frequency for refinance loans may be
different from this historical pattern and the Company expects the period of
highest claims frequency on subprime loans will occur earlier than in this
historical pattern.

Underwriting and other expenses decreased to $177.8 million in 2000 from $198.1
million in 1999, a decrease of 10%. This decrease was primarily due to decreases
in contract underwriting and an increase in deferred insurance policy
acquisition costs.

Interest expense in 2000 increased to $28.8 million from $20.4 million in 1999
due to higher weighted average interest rates in 2000 compared to 1999.

The consolidated insurance operations loss ratio was 10.3% for 2000 compared to
12.3% for 1999. The consolidated insurance operations expense and combined
ratios were 16.4% and 26.7%, respectively, for 2000 compared to 19.7% and 32.0%,
respectively, for 1999.

The effective tax rate was 31.3% in 2000, compared with 31.0% in 1999. During
both years, the effective tax rate was below the statutory rate of 35%,
reflecting the benefits of tax-preferenced investment income. The higher
effective tax rate in 2000 resulted from a lower percentage of total income
before tax being generated from tax-preferenced investments in 2000.

Other Matters

In December 2000, MGIC entered into an agreement to settle Downey et. al. v.
MGIC, which is pending in Federal District Court for the Southern District of
Georgia. The Court has preliminarily approved the settlement agreement,
certified a nationwide class of borrowers and scheduled a hearing for June 15,
2001 to consider whether it should enter a final order approving the settlement.
The Company has recorded a $23.2 million charge to cover the estimated costs of
the settlement, including payments to borrowers. The settlement includes an
injunction that prohibits certain practices and specifies the basis on which
agency pool insurance, captive mortgage reinsurance, contract underwriting and
other products may be provided in compliance with the Real Estate Settlement
Procedures Act.

The complaint in the case alleges that MGIC violated the Real Estate Settlement
Procedures Act by providing agency pool insurance, captive mortgage reinsurance,
contract underwriting and other products that were not properly priced, in
return for the referral of mortgage insurance. The complaint seeks damages of
three times the amount of the mortgage insurance premiums that have been paid
and that will be paid at the time of judgment for the mortgage insurance found
to be involved in a violation of the Real Estate Settlement Procedures Act. The
complaint also seeks injunctive relief, including prohibiting MGIC from
receiving future

                                   ----------
                                     five
                                   ----------

<PAGE>

premium payments. If the Court does not enter a final order approving the
settlement, the litigation will continue. In these circumstances, there can be
no assurance that the ultimate outcome of the litigation will not materially
affect the Company's financial position or results of operations.

During the first quarter of 1999, Fannie Mae and Freddie Mac ("GSEs") changed
their mortgage insurance requirements for certain mortgages approved by their
automated underwriting services. The changes permit lower coverage percentages
on these loans than the deeper coverage percentages that went into effect in
1995. MGIC's premium rates vary with the depth of coverage. While lower coverage
percentages result in lower premium revenue, lower coverage percentages should
also result in lower incurred losses at the same level of claim incidence.
MGIC's results could also be affected to the extent the GSEs are compensated for
assuming default risk that would otherwise be insured by the private mortgage
insurance industry. The GSEs have programs under which a delivery fee is paid to
them, with mortgage insurance coverage reduced below the coverage that would be
required in the absence of the delivery fee.

In partnership with mortgage insurers, the GSEs are offering programs under
which, on delivery of an insured loan to a GSE, the primary coverage is
converted to an initial shallow tier of coverage followed by a second tier that
is subject to an overall loss limit and, depending on the program, compensation
may be paid to the GSE for services or other benefits realized by the mortgage
insurer from the coverage conversion. Because lenders receive guaranty fee
relief from the GSEs on mortgages delivered with these restructured coverages,
participation in these programs is competitively significant to mortgage
insurers.

In March 1999, the Office of Federal Housing Enterprise Oversight ("OFHEO")
released a proposed risk-based capital stress test for the GSEs. One of the
elements of the proposed stress test is that future claim payments made by a
private mortgage insurer on GSE loans are reduced below the amount provided by
the mortgage insurance policy to reflect the risk that the insurer will fail to
pay. Claim payments from an insurer whose claims-paying ability rating is 'AAA'
are subject to a 10% reduction over the 10-year period of the stress test, while
claim payments from a 'AA' rated insurer, such as MGIC, are subject to a 20%
reduction. The effect of the differentiation among insurers is to require the
GSEs to have additional capital for coverage on loans provided by a private
mortgage insurer whose claims-paying rating is less than 'AAA.' As a result, if
adopted as proposed, there is an incentive for the GSEs to use private mortgage
insurance provided by a 'AAA' rated insurer. The Company does not believe there
should be a reduction in claim payments from private mortgage insurance nor
should there be a distinction between 'AAA' and 'AA' rated private mortgage
insurers. The proposed stress test covers many topics in addition to capital
credit for private mortgage insurance and is not expected to become final for
some time. If the stress test ultimately gives the GSEs an incentive to use
'AAA' mortgage insurance, MGIC may need 'AAA' capacity, which in turn would
entail using capital to support such a facility as well as additional expenses
or MGIC may need to make other changes to provide the GSEs with the equivalent
of 'AAA' coverage. The Company cannot predict whether the portion of the stress
test discussed above will be adopted in its present form.

1999 Compared with 1998

Net income for 1999 was $470.2 million, compared with $385.5 million in 1998, an
increase of 22%. Diluted earnings per share for 1999 was $4.30, compared with
$3.39 in 1998, an increase of 27%. Included in the 1999 diluted earnings per
share was $0.02 for realized gains compared with $0.10 for realized gains in
1998. The percentage increase in diluted earnings per share was favorably
affected by the lower adjusted shares outstanding in 1999 as a result of common
stock repurchased by the Company in the second half of 1998 and during the third
quarter of 1999.

Total revenues for 1999 were $996.8 million, an increase of 3% from the $971.7
million for 1999. This increase was primarily attributed to an improvement in
persistency, which generated an increase in renewal premiums. Also contributing
to the increase in revenues was an increase in investment income resulting from
strong cash flows. See below for a further discussion of premiums and investment
income.

Losses and expenses for 1999 were $315.7 million, a decrease of 24% from the
$417.1 million for 1999. The decrease was primarily attributed to a decline in
losses incurred resulting from generally strong economic conditions, improvement
in the California real estate market, and MGIC's claims mitigation efforts which

                                   ----------
                                     six
                                   ----------

<PAGE>
resulted in a decline in losses paid and a reduction in both primary and pool
reserve factors. See below for a further discussion of losses incurred and
underwriting expenses.

The amount of new primary insurance written by MGIC during 1999 was $47.0
billion, compared with $43.7 billion in 1998. Refinancing activity decreased to
25% of new primary insurance written in 1999, compared to 31% in 1998 as a
result of the increasing mortgage interest rate environment of the second half
of 1999.

The $47.0 billion of new primary insurance written during 1999 was offset by the
cancellation of $37.4 billion of insurance in force, and resulted in a net
increase of $9.6 billion in primary insurance in force, compared to new primary
insurance written of $43.7 billion, cancellation of $44.2 billion, and a net
decrease of $0.5 billion in insurance in force during 1998. Direct primary
insurance in force was $147.6 billion at December 31, 1999, compared to $138.0
billion at December 31, 1998.

In addition to providing direct primary insurance coverage, the Company also
insures pools of mortgage loans. New pool risk written during 1999 and 1998,
which was virtually all agency pool insurance, was $563.8 million and $618.1
million, respectively. The Company's direct pool risk in force at December 31,
1999 was $1.6 billion compared to $1.1 billion at December 31, 1998.

Cancellation activity has historically been affected by the level of mortgage
interest rates, with cancellations generally moving inversely to the change in
the direction of interest rates. Cancellations decreased during 1999 due to
increasing mortgage interest rates which resulted in an increase in the MGIC
persistency rate to 72.9% at December 31, 1999, from 68.1% at December 31, 1998.

Net premiums written increased 6% to $792.3 million in 1999, from $749.2 million
in 1998. Net premiums earned increased 4% to $792.6 million in 1999, from $763.3
million in 1998. The increases were primarily a result of a higher percentage of
renewal premiums on mortgage loans with deeper coverages and the growth in
insurance in force offset by an increase in ceded premiums to $26.2 million in
1999, compared to $14.8 million in 1998, primarily due to an increase in captive
mortgage reinsurance.

For a discussion of captive mortgage reinsurance and similar arrangements,
certain programs with the GSEs regarding mortgage insurance and proposed capital
regulations for the GSEs, see the 2000 compared with 1999 discussion and "Other
Matters" above.

Investment income for 1999 was $153.1 million, an increase of 7% over the $143.0
million in 1998. This increase was primarily the result of an increase in the
amortized cost of average investment assets to $2.7 billion for 1999, from $2.5
billion for 1998, an increase of 11%. The portfolio's average pretax investment
yield was 5.6% in 1999 and 1998. The portfolio's average after-tax investment
yield was 4.9% in 1999 and 1998. The Company realized gains of $3.4 million
during 1999 compared to $18.3 million in 1998. The decrease is primarily the
result of gains on the sale of equity securities in 1998 compared to no such
gains in 1999.

Other revenue, which is composed of various components, was $47.7 million in
1999, compared with $47.1 million in 1998. The change is primarily the result of
an increase in equity earnings from C-BASS, a joint venture with Enhance, offset
by equity losses from two joint ventures formed in 1999, Sherman, another joint
venture with Enhance, and Customers Forever, a joint venture with Marshall and
Ilsley Corporation, and a decrease in contract underwriting revenue. In
accordance with generally accepted accounting principles, C-BASS is required to
estimate the value of its mortgage related assets and recognize in earnings the
resulting net unrealized gains and losses. Including open trades, C-BASS's
mortgage related assets were $773 million at December 31, 1999. Substantially
all of C-BASS's mortgage-related assets do not have readily ascertainable market
values and, as a result, their value for financial statement purposes is
estimated by the management of C-BASS. Market valuation adjustments could impact
C-BASS's results of operations and the Company's share of those results.

A substantial portion of Sherman's consolidated assets are investments in
receivable portfolios that do not have readily ascertainable market values and,
as a result, their value for financial statements purposes is estimated by the
management of Sherman. Market value adjustments could impact Sherman's results
of operations and the Company's share of those results.

                                   ----------
                                     seven
                                   ----------

<PAGE>
Net losses incurred decreased 54% to $97.2 million in 1999, from $211.4 million
in 1998. Such decrease was primarily due to generally strong economic
conditions, improvement in the California real estate market, and MGIC's claims
mitigation efforts, which in the aggregate resulted in a decline in losses paid
and led the Company to reduce reserve factors for loans in the primary and pool
notices inventory. Partially offsetting the reduction in reserve factors was an
increase in the primary insurance notice inventory from 29,253 at December 31,
1998 to 29,761 at December 31, 1999 and an increase in pool insurance notice
inventory from 6,524 at December 31, 1998 to 11,638 at December 31, 1999. The
reasons for the decrease in net losses incurred discussed above contributed to
an increase in redundancy in prior year loss reserves. The redundancy results
from actual claim rates and actual claim amounts being lower than those
estimated by the Company when originally establishing the reserve at December
31, 1998.

At December 31, 1999, 65% of the primary insurance in force was written during
the last three years, compared to 60% at December 31, 1998. The highest claim
frequency years have typically been the third through fifth years after the year
of loan origination. However, the pattern of claims frequency for refinance
loans may be different from the historical pattern of other loans.

Underwriting and other expenses increased 6% in 1999 to $200.8 million from
$190.0 million in 1998. This increase was primarily due to the increase in new
primary insurance written and the related underwriting expenses.

Interest expense in 1999 increased to $20.4 million from $18.6 million in 1998
due to a higher weighted average outstanding notes payable balance in 1999
compared to 1998.

The Company utilized financial derivative transactions during 1999 consisting of
interest rate swaps to reduce and manage interest rate risk on its notes
payable. Earnings on such transactions aggregated approximately $3.8 million and
were netted against interest expense. In 1998, earnings on an interest rate swap
and premium income on three put-swaptions aggregating approximately $0.5 million
for all such transactions were netted against interest expense.

The consolidated insurance operations loss ratio was 12.3% for 1999 compared to
27.7% for 1998. The consolidated insurance operations expense and combined
ratios were 19.7% and 32.0%, respectively, for 1999 compared to 19.6% and 47.3%,
respectively, for 1998.

The effective tax rate was 31.0% in 1999, compared with 30.5% in 1998. During
both years, the effective tax rate was below the statutory rate of 35%,
reflecting the benefits of tax-preferenced investment income. The higher
effective tax rate in 1999 resulted from a lower percentage of total income
before tax being generated from tax-preferenced investments in 1999.

Financial Condition

Consolidated total investments increased approximately $682 million to $3.5
billion at December 31, 2000 from $2.8 billion at December 31, 1999, primarily
due to positive net cash flow, as well as unrealized gains on securities marked
to market of $179 million. The Company generated consolidated cash flows from
operating activities of $551.0 million during 2000, compared to $455.0 million
generated during 1999. The increase in operating cash flows during 2000 compared
to 1999 is due primarily to an increase in renewal premiums and investment
income and a decrease in losses paid. As of December 31, 2000, the Company had
$151.6 million of short-term investments with maturities of 90 days or less, and
63% of the portfolio was invested in tax-preferenced securities. In addition, at
December 31, 2000, based on book value, the Company's fixed income securities
were approximately 98% invested in 'A' rated and above, readily marketable
securities, concentrated in maturities of less than 15 years. At December 31,
2000 the Company had $22.0 million of investments in equity securities compared
to $15.4 million at December 31, 1999.

At December 31, 2000, the Company had no derivative financial instruments in its
investment portfolio. The Company places its investments in instruments that
meet high credit quality standards, as specified in the Company's investment
policy guidelines; the policy also limits the amount of credit exposure to any
one issue, issuer and type of instrument. At December 31, 2000, the average
duration of the Company's investment portfolio was 6.1 years. The effect of a 1%
increase/ decrease in market interest rates would result in a 6.1%
decrease/increase in the value of the Company's fixed income portfolio.

                                   ----------
                                     eight
                                   ----------

<PAGE>
The Company's investments in joint ventures increased $37.3 million from $101.5
million at December 31, 1999 to $138.8 million at December 31, 2000 as a result
of additional investments of $19.2 million and equity earnings of $18.1 million.

Consolidated loss reserves decreased 5% to $609.5 million at December 31, 2000
from $642.0 million at December 31, 1999, reflecting a reduction in the primary
and pool reserve factors partially offset by increases in the primary and pool
insurance notice inventories, all of which were discussed earlier. Consistent
with industry practices, the Company does not establish loss reserves for future
claims on insured loans which are not currently in default.

Consolidated unearned premiums decreased $0.7 million from $181.4 million at
December 31, 1999, to $180.7 million at December 31, 2000, primarily reflecting
the continued high level of monthly premium policies written for which there is
no unearned premium offset by an increase in unearned premiums for agency pool
insurance written.

Consolidated shareholders' equity increased to $2.5 billion at December 31,
2000, from $1.8 billion at December 31, 1999, an increase of 39%. This increase
consisted of $542.0 million of net income during 2000, $47.2 million from the
reissuance of treasury stock and unrealized gains on investments, net of tax, of
$116.5 million offset by the repurchase of $6.2 million of outstanding common
shares and dividends declared of $10.6 million.

Liquidity and Capital Resources

The Company's consolidated sources of funds consist primarily of premiums
written and investment income. Funds are applied primarily to the payment of
claims and expenses. Approximately 68% of underwriting expenses are
personnel-related costs, most of which are considered by the Company to be fixed
costs over the short term. Approximately 6% of operating expenses relate to
occupancy costs, which are fixed costs. Substantially all of the remaining
operating expenses are considered by the Company to be variable in nature, with
data processing costs and taxes, licenses and fees representing approximately 4%
and 10%, respectively, of total operating expenses. The Company generated
positive cash flows of approximately $551.0 million, $455.0 million and $411.8
million in 2000, 1999 and 1998, respectively, as shown on the Consolidated
Statement of Cash Flows. Positive cash flows are invested pending future
payments of claims and other expenses. Cash-flow shortfalls, if any, could be
funded through sales of short-term investments and other investment portfolio
securities.

During 1999 and 1998, the Company repurchased approximately 3.6 million and 5.3
million shares, respectively, of its outstanding common stock at a cost of $201
and $247 million, respectively. Funds to repurchase the shares in 1998 were
primarily provided by borrowings under credit facilities evidenced by notes
payable. The shares repurchased in 1999 were funded with a $150 million special
dividend from MGIC and cash flow. At December 31, 1999, the Company's
outstanding balance on the credit facilities was $425 million, which
approximated market value.

In June of 2000, the Company filed a $500 million public debt shelf registration
statement. During the fourth quarter of 2000, the Company issued in public
offerings $300 million, 7-1/2% Senior Notes due 2005. The notes are unsecured
and were rated 'A1' by Moody's and 'A+' by Standard & Poors ("S&P"). The net
proceeds were used to repay a portion of the borrowings under the bank credit
facilities.

At December 31, 2000, the Company's aggregate outstanding balance under the 1998
and 1999 credit facilities, each of which provides $100 million of availability,
was approximately $98 million and the remaining credit available was $102
million. Amounts drawn under the 1998 and 1999 credit facilities are due in 2003
and 2004, respectively. The interest rates on these credit facilities vary based
on LIBOR and the 1999 and 2000 weighted average interest rates were 6.71% and
5.57%, respectively. Under the terms of the credit facilities, the Company must
maintain shareholders' equity of at least $1 billion and MGIC must maintain a
claims paying ability rating of 'AA-' or better with S&P. At December 31, 2000,
the Company had shareholders' equity of $2.46 billion and MGIC had a claims
paying ability rating of 'AA+' from S&P. The Company plans to sell commercial
paper and use the proceeds to repay borrowings under the credit facilities and
to use the credit facilities to back the commercial paper.

During 1999, the Company utilized three interest rate swaps, each with a
notional amount of $100 million, to reduce and manage interest rate risk on a
portion of the

                                   ----------
                                     nine
                                   ----------

<PAGE>
variable rate debt under the credit facilities. The notional amount of $100
million represents the stated principal balance used for calculating payments.
The Company received and paid amounts based on rates that were both fixed and
variable. Earnings on the swaps during 1999, of approximately $3.8 million, were
netted against interest expense.

Early in 2000, two of the swaps were amended and designated as hedges. Later in
2000, the two hedges were amended. The Company pays an interest rate based on
LIBOR and receives a fixed rate of 7.5%. The swaps have an expiration date
coinciding with the maturity of the public debt and are designated as hedges.
The remaining swap was also amended. On this swap, the Company pays a fixed rate
of 6.79% and receives an interest rate based on LIBOR. The swap has an
expiration date coinciding with the maturity of the credit facilities and is
designated as a hedge. Gains or losses arising from the amendment or termination
of interest rate swaps are deferred and amortized to interest expense over the
life of the hedged items. Earnings on the swaps during 2000, of approximately
$0.3 million, were netted against interest expense. The swaps are subject to
credit risk to the extent the counterparty would be unable to discharge its
obligations under the swap agreements.

MGIC is the principal insurance subsidiary of the Company. MGIC's
risk-to-capital ratio was 10.6:1 at December 31, 2000 compared to 11.9:1 at
December 31, 1999. The decrease was due to MGIC's increased policyholders'
reserves, partially offset by the net additional risk in force of $3.1 billion,
net of reinsurance, during 2000.

The risk-to-capital ratios set forth above have been computed on a statutory
basis. However, the methodology used by the rating agencies to assign
claims-paying ability ratings permits less leverage than under statutory
requirements. As a result, the amount of capital required under statutory
regulations may be lower than the capital required for rating agency purposes.
In addition to capital adequacy, the rating agencies consider other factors in
determining a mortgage insurer's claims-paying rating, including its competitive
position, business outlook, management, corporate strategy, and historical and
projected operating performance.

For certain material risks of the Company's business, see "Risk Factors" below.

Risk Factors

Our revenues and losses could be affected by the risk factors discussed below.
These factors may also cause actual results to differ materially from the
results contemplated by forward looking statements that the Company may make.
Forward looking statements consist of statements which relate to matters other
than historical fact. Among others, statements that include words such as the
Company "believes," "anticipates" or "expects," or words of similar import, are
forward looking statements.

If the volume of low down payment home mortgage originations declines, the
amount of insurance that we write could also decline which could result in
declines in our future revenues.

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

o    the level of home mortgage interest rates,

o    the health of the domestic economy as well as conditions in regional and
     local economies,

o    housing affordability,

o    population trends, including the rate of household formation,

o    the rate of home price appreciation, which in times of heavy refinancing
     affects whether refinance loans have loan-to-value ratios that require
     private mortgage insurance, and

o    government housing policy encouraging loans to first-time homebuyers.

Our volume declined 12% in 2000 compared to the same period in 1999 because many
borrowers refinanced their mortgages during 1999 due to a lower interest rate
environment. While our volume was higher in 1999, lenders cancelled insurance on
loans due to borrowers refinancing. There has been substantially less
refinancing activity in 2000. As a result, lenders have cancelled our insurance
at a lower rate than in 1999. Also, due to generally favorable home mortgage
interest rates in 2000, home purchase activity by first-time homebuyers, who are
more likely to need private mortgage insurance, continued to be strong. As a
result
                                   ----------
                                     ten
                                   ----------

<PAGE>
of these factors, our premium revenues increased in 2000 compared to 1999. While
we have not experienced lower volume in recent years other than as a result of
refinancing activity, one of the risks we face is that substantially higher
interests rates will substantially reduce purchase activity by first-time
homebuyers and that the decline in cancellations of insurance that in the past
have accompanied higher interest rates will not be sufficient to offset the
decline in premiums from loans that are not made.

If lenders and investors select alternatives to private mortgage insurance, the
amount of insurance that we write could decline, which could result in declines
in our future revenues.

These alternatives to private mortgage insurance include:

o    lenders using government mortgage insurance programs, including those of
     the Federal Housing Administration and the Veterans Administration,

o    investors holding mortgages in portfolio and self-insuring,

o    investors using credit enhancements other than private mortgage insurance
     or using other credit enhancements in conjunction with reduced levels of
     private mortgage insurance coverage, and

o    lenders structuring mortgage originations to avoid private mortgage
     insurance, such as a first mortgage with an 80% loan-to-value ratio and a
     second mortgage with a 10% loan-to-value ratio (referred to as an 80-10-10
     loan) rather than a first mortgage with a 90% loan- to-value ratio.

We believe that during 2000 lenders and investors were self-insuring and making
80-10-10 loans at about the same percentage as they did over the last several
years. Although during 2000, the share of the low down payment market held by
loans with Federal Housing Administration and Veterans Administration mortgage
insurance was lower than in 1999, during three of the prior four years, the
Federal Housing Administration and Veterans Administration's collective share of
this market increased. In the last quarter of 2000, the Federal Housing
Administration reduced its mortgage insurance premiums. Investors are using
reduced mortgage insurance coverage on a higher percentage of loans that we
insure than they had over the last several years.

Because most of the loans MGIC insures are sold to Fannie Mae and Freddie Mac,
changes in their business practices could reduce our revenues or increase our
losses.

The business practices of Fannie Mae and Freddie Mac affect the entire
relationship between them and mortgage insurers and include:

o    the level of private mortgage insurance coverage, subject to the
     limitations of Fannie Mae and Freddie Mac's charters, when private mortgage
     insurance is used as the required credit enhancement on low down payment
     mortgages,

o    whether Fannie Mae or Freddie Mac influence the mortgage lender's selection
     of the mortgage insurer providing coverage and, if so, any transactions
     that are related to that selection,

o    whether Fannie Mae or Freddie Mac will give mortgage lenders an incentive,
     such as a reduced guaranty fee, to select a mortgage insurer that has a
     'AAA' claims-paying ability rating to benefit from the proposed lower
     capital requirements for Fannie Mae and Freddie Mac when a mortgage is
     insured by a company with that rating,

o    the underwriting standards that determine what loans are eligible for
     purchase by Fannie Mae or Freddie Mac, which thereby affect the quality of
     the risk insured by the mortgage insurer and the availability of mortgage
     loans,

o    the terms on which mortgage insurance coverage can be canceled before
     reaching the cancellation thresholds established by law, and

o    the circumstances in which mortgage servicers must perform activities
     intended to avoid or mitigate loss on insured mortgages that are
     delinquent.

We do not have a 'AAA' rating. If the proposed capital rules of the Office of
Federal Housing Enterprise Oversight are adopted in a form that gives greater
capital credit to private mortgage insurers with 'AAA' ratings, we may need to
obtain a 'AAA' rating or may need to make other changes to provide Fannie Mae
and Freddie Mac with the equivalent of 'AAA' coverage. While we believe we can
obtain this rating, we would need to

                                   ----------
                                     eleven
                                   ----------

<PAGE>
dedicate capital to the mortgage insurance business that we might use in other
ways and we would also have additional costs that we would not otherwise incur.

Because we participate in an industry that is intensely competitive, changes in
our competitors' business practices could reduce our revenues or increase our
losses.

Competition for private mortgage insurance premiums occurs not only among
private mortgage insurers but increasingly with mortgage lenders through captive
mortgage reinsurance transactions. In these transactions, a lender's affiliate
reinsures a portion of the insurance written by a private mortgage insurer on
mortgages originated by the lender. The low level of losses that has recently
prevailed in the private mortgage insurance industry has encouraged competition
to assume default risk through captive reinsurance arrangements, self-insurance,
80-10-10 loans and other means. In 1996, we reinsured under captive reinsurance
arrangements virtually none of our primary insurance. At the end of 2000, about
21% of our risk in force was subject to captive reinsurance arrangements. The
level of competition within the private mortgage insurance industry has also
increased as many large mortgage lenders have 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. Our top ten customers generated 27.0% of the new primary
insurance that we wrote in 1997 compared to 36.2% in 2000.

Our private mortgage insurance competitors include:

o    PMI Mortgage Insurance Company
o    GE Capital Mortgage Insurance Corporation
o    United Guaranty Residential Insurance Company
o    Radian Guaranty Inc.
o    Republic Mortgage Insurance Company
o    Triad Guaranty Insurance Corporation
o    CMG Mortgage Insurance Company

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 MGIC's premiums are from insurance that has been written
in prior years. As a result, the length of time insurance remains in force is an
important determinant of revenues. The factors affecting the length of time our
insurance remains in force include:

o    the 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

o    mortgage insurance cancellation policies of mortgage investors along with
     the rate of home price appreciation experienced by the homes underlying the
     mortgages in the insurance in force.

While it is difficult to measure the extent of the decline, in recent years, the
length of time that our policies remain in force has declined somewhat. Due to
this decline, our premium revenues were lower than they would have been if the
length had not declined.

If the domestic economy deteriorates, more homeowners may default and our losses
may increase.

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. Favorable economic
conditions generally 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. In recent years, due in part to the strength of the economy, we have
had low losses by historical standards. A significant deterioration in economic
conditions would probably increase our losses.

Our industry is subject to litigation risk.

In recent years, consumers have brought a growing number of lawsuits against
home mortgage lenders and settlement service providers. As of the middle of
February, 2001, seven mortgage insurers, including our MGIC subsidiary, were
involved in litigation alleging violations of the Real Estate Settlement
Procedures Act. Our MGIC subsidiary and two other mortgage insurers have entered
into an agreement to settle the cases against them. The Court will consider
whether to enter a final order approving this settlement in June 2001. We took a

                                   ----------
                                     twelve
                                   ----------

<PAGE>
$23.2 million pretax charge in 2000 to cover our share of the estimated costs of
the settlement. While the settlement includes an injunction that prohibits
certain practices and specifies the basis on which other practices may be done
in compliance with the Real Estate Settlement Procedures Act, we may still be
subject to future litigation.

Because we expect the pace of change in our industry and in home mortgage
lending to remain high, we will be disadvantaged unless we are able to respond
to new ways of doing business.

We expect the processes involved in home mortgage lending will continue to
evolve through greater use of technology. This evolution could effect
fundamental changes in the way home mortgages are distributed. Affiliates of
lenders who are regulated depositary institutions gained expanded insurance
powers under financial modernization legislation and the capital markets may
emerge as providers of insurance in competition with traditional insurance
companies. These trends and others increase the level of uncertainty in our
business, demand rapid response to change and place a premium on innovation.



                                   ----------
                                    thirteen
                                   ----------

<PAGE>

<TABLE>
                                       MGIC INVESTMENT CORPORATION & SUBSIDIARIES
                                      YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
                         ------------------------------------------------------------------------------------
                                          Consolidated Statement of Operations
                         ------------------------------------------------------------------------------------
<CAPTION>

                                                                     2000                1999               1998
                                                                 --------------     ---------------    ---------------
REVENUES:                                                          (In thousands of dollars, except per share data)
   Premiums written:
<S>                                                              <C>                <C>                <C>          
     Direct....................................................  $     939,482      $     816,351      $     755,620
     Assumed...................................................            847              2,215              8,352
     Ceded (note 7)............................................        (52,941)           (26,221)           (14,811)
                                                                 --------------     ---------------    ---------------

   Net premiums written........................................        887,388            792,345            749,161
   Decrease in unearned premiums...............................          2,703                236             14,123
                                                                 --------------     ---------------    ---------------

   Net premiums earned (note 7)................................        890,091            792,581            763,284

   Investment income, net of expenses (note 4).................        178,535            153,071            143,019
   Realized investment gains, net (note 4).....................          1,432              3,406             18,288
   Other revenue...............................................         40,283             47,697             47,075
                                                                 --------------     ---------------    ---------------

     Total revenues............................................      1,110,341            996,755            971,666
                                                                 --------------     ---------------    ---------------

LOSSES AND EXPENSES:
   Losses incurred, net (notes 6 and 7)........................         91,723             97,196            211,354
   Underwriting and other expenses.............................        177,837            198,147            187,103
   Interest expense............................................         28,759             20,402             18,624
   Litigation settlement (note 13).............................         23,221                  -                  -
                                                                 --------------     ---------------    ---------------

     Total losses and expenses.................................        321,540            315,745            417,081
                                                                 --------------     ---------------    ---------------

Income before tax..............................................        788,801            681,010            554,585
Provision for income tax (note 10).............................        246,802            210,809            169,120
                                                                 --------------     ---------------    ---------------

Net income.....................................................  $     541,999      $     470,201      $     385,465
                                                                 ==============     ===============    ===============

Earnings per share (note 11):
   Basic.......................................................  $        5.10      $        4.35      $        3.44
                                                                 ===============    ===============    ===============

   Diluted.....................................................  $        5.05      $        4.30      $        3.39
                                                                 ===============    ===============    ===============

     See accompanying notes to consolidated financial statements.


                                   ----------
                                    fourteen
                                   ----------
</TABLE>


<PAGE>

<TABLE>
                                             MGIC INVESTMENT CORPORATION & SUBSIDIARIES
                                                     December 31, 2000 and 1999
                         ------------------------------------------------------------------------------------
                                                     Consolidated Balance Sheet
                         ------------------------------------------------------------------------------------
<CAPTION>


                                                                                    2000                  1999
                                                                               ----------------     -----------------
ASSETS (In thousands of dollars) Investment portfolio (note 4):
   Securities, available-for-sale, at market value:
<S>                                                                            <C>                  <C>             
     Fixed maturities........................................................  $     3,298,561      $      2,666,562
     Equity securities.......................................................           22,042                15,426
     Short-term investments..................................................          151,592               107,746
                                                                               ----------------     -----------------

       Total investment portfolio............................................        3,472,195             2,789,734

Cash ........................................................................            5,598                 2,322
Accrued investment income....................................................           51,419                46,713
Reinsurance recoverable on loss reserves (note 7)............................           33,226                35,821
Reinsurance recoverable on unearned premiums (note 7)........................            8,680                 6,630
Home office and equipment, net...............................................           31,308                32,880
Deferred insurance policy acquisition costs..................................           25,839                22,350
Investments in joint ventures (note 8).......................................          138,838               101,545
Other assets.................................................................           90,678                66,398
                                                                               ----------------     -----------------

       Total assets..........................................................  $     3,857,781      $      3,104,393
                                                                               ================     =================

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
   Loss reserves (notes 6 and 7).............................................  $       609,546      $        641,978
   Unearned premiums (note 7)................................................          180,724               181,378
   Notes payable (note 5)....................................................          397,364               425,000

   Other liabilities.........................................................          205,265                80,048
                                                                               ----------------     -----------------

       Total liabilities.....................................................        1,392,899             1,328,404
                                                                               ----------------     -----------------

Contingencies (note 13)

Shareholders' equity (note 11):
   Common stock, $1 par value, shares authorized 300,000,000; shares issued
     121,110,800; outstanding 2000 - 106,825,758; 1999 - 105,798,034.........          121,111               121,111
   Paid-in surplus...........................................................          207,882               211,593
   Treasury stock (shares at cost 2000 - 14,285,042; 1999 -
     15,312,766).............................................................         (621,033)             (665,707)
   Accumulated other comprehensive income - unrealized appreciation
     (depreciation) in investments, net of tax (note 2)......................           75,814               (40,735)
   Retained earnings (note 11)...............................................        2,681,108             2,149,727
                                                                               ----------------     -----------------

     Total shareholders' equity..............................................        2,464,882             1,775,989
                                                                               ----------------     -----------------

     Total liabilities and shareholders' equity..............................  $     3,857,781      $      3,104,393
                                                                               ================     =================

     See accompanying notes to consolidated financial statements.

                                   ----------
                                    fifteen
                                   ----------
</TABLE>



<PAGE>

<TABLE>
                                             MGIC INVESTMENT CORPORATION & SUBSIDIARIES
                                            Years Ended December 31, 2000, 1999 and 1998
                   ------------------------------------------------------------------------------------------------
                                           Consolidated Statement of Shareholders' Equity
                   ------------------------------------------------------------------------------------------------
<CAPTION>
                                                                                Accumulated
                                                                                   other
                                                                               comprehensive
                                      Common        Paid-in       Treasury        income        Retained     Comprehensive
                                       stock        surplus         stock        (note 2)       earnings        income
                                    ------------  ------------   ------------  --------------  ------------  -------------
                                                               (In thousands of dollars)

<S>                                 <C>           <C>            <C>           <C>             <C>           <C>
Balance, December 31, 1997......... $   121,111   $   218,499    $ (252,942)   $      83,985   $ 1,316,129

Net income.........................           -             -             -                -       385,465   $    385,465
Unrealized investment gains, net...           -             -             -           10,587             -         10,587
                                                                                                             -------------
Comprehensive income...............           -             -             -                -             -   $    396,052
                                                                                                             =============
Dividends declared.................           -             -             -                -       (11,243)
Repurchase of outstanding
  common shares....................           -             -      (246,840)               -             -
Reissuance of treasury stock.......           -        (1,477)       17,317                -             -
                                    ------------  ------------   ------------  --------------  ------------

Balance, December 31, 1998.........     121,111       217,022      (482,465)          94,572     1,690,351

Net income.........................           -             -             -                -       470,201   $    470,201
Unrealized investment losses, net..           -             -             -         (135,307)            -       (135,307)
                                                                                                             -------------
Comprehensive income...............           -             -             -                -             -   $    334,894
                                                                                                             =============
Dividends declared.................           -             -             -                -       (10,825)
Repurchase of outstanding
  common shares....................           -             -      (200,533)               -             -
Reissuance of treasury stock.......           -        (5,429)       17,291                -             -
                                    ------------  ------------   ------------  --------------  ------------

Balance, December 31, 1999.........     121,111       211,593      (665,707)         (40,735)    2,149,727

Net income.........................           -             -             -                -       541,999   $    541,999
Unrealized investment gains, net...           -             -             -          116,549             -        116,549
                                                                                                             -------------
Comprehensive income...............           -             -             -                -             -   $    658,548
                                                                                                             =============
Dividends declared.................           -             -             -                -       (10,618)
Repurchase of outstanding
  common shares....................           -             -        (6,224)               -             -
Reissuance of treasury stock.......           -        (3,711)       50,898                -             -
                                    ------------  ------------   ------------  --------------  ------------

Balance, December 31, 2000......... $   121,111   $   207,882    $ (621,033)   $      75,814   $ 2,681,108
                                    ============  ============   ============  ==============  ============

   See accompanying notes to consolidated financial statements.

                                   ----------
                                    sixteen
                                   ----------
</TABLE>



<PAGE>

<TABLE>
                                             MGIC INVESTMENT CORPORATION & SUBSIDIARIES
                                            Years Ended December 31, 2000, 1999 and 1998
                   ------------------------------------------------------------------------------------------------
                                                Consolidated Statement of Cash Flows
                   ------------------------------------------------------------------------------------------------
<CAPTION>

                                                                           2000                1999               1998
                                                                      ----------------    ---------------    ----------------
                                                                                    (In thousands of dollars)
Cash flows from operating activities:
<S>                                                                   <C>                 <C>                <C>           
   Net income.......................................................  $      541,999      $      470,201     $      385,465
   Adjustments to reconcile net income to net cash provided by
     operating activities:
       Amortization of deferred insurance policy
         acquisition costs..........................................          20,597              16,822             20,717
       Increase in deferred insurance policy acquisition costs......         (24,086)            (15,107)           (17,626)
       Depreciation and other amortization..........................           6,860              11,746              7,742
       Increase in accrued investment income........................          (4,706)             (5,236)            (5,992)
       Decrease (increase) in reinsurance recoverable on                       2,595               9,706            (19,112)
         loss reserves..............................................
       (Increase) decrease in reinsurance recoverable on unearned
         premiums...................................................          (2,050)              2,126                483
       (Decrease) increase in loss reserves.........................         (32,432)            (39,296)            82,591
       Decrease in unearned premiums................................            (654)             (2,361)           (14,566)
       Equity earnings in joint ventures............................         (18,113)            (12,700)           (12,420)
       Other........................................................          61,027              19,114            (15,500)
                                                                      ----------------    ---------------    ----------------

Net cash provided by operating activities...........................         551,037             455,015            411,782
                                                                      ----------------    ---------------    ----------------

Cash flows from investing activities:
   Purchase of equity securities....................................         (14,629)            (14,035)            (3,886)
   Purchase of fixed maturities.....................................      (1,807,718)         (1,223,599)          (916,129)
   Investments in joint ventures....................................         (19,180)            (13,599)           (33,426)
   Proceeds from sale of equity securities..........................          14,029               4,150            116,164
   Proceeds from sale or maturity of fixed maturities...............       1,349,398             949,723            529,358
                                                                      ----------------    ---------------    ----------------

Net cash used in investing activities...............................        (478,100)           (297,360)          (307,919)
                                                                      ----------------    ---------------    ----------------

Cash flows from financing activities:
   Dividends paid to shareholders...................................         (10,618)            (10,825)           (11,243)
   Proceeds from issuance of long-term debt.........................         309,079              43,000            262,000
   Repayment of long-term debt......................................        (336,751)            (60,000)           (57,500)
   Reissuance of treasury stock.....................................          18,699               3,912              6,953
   Repurchase of common stock.......................................          (6,224)           (200,533)          (246,840)
                                                                      ----------------    ---------------    ----------------

Net cash used in financing activities...............................         (25,815)           (224,446)           (46,630)
                                                                      ----------------    ---------------    ----------------

Net increase (decrease) in cash and cash equivalents................          47,122             (66,791)            57,233
Cash and cash equivalents at beginning of year......................         110,068             176,859            119,626
                                                                      ----------------    ---------------    ----------------

Cash and cash equivalents at end of year............................  $      157,190      $      110,068     $      176,859
                                                                      ================    ===============    ================

              See accompanying notes to consolidated financial statements.


                                   ----------
                                   seventeen
                                   ----------
</TABLE>



<PAGE>
 MGIC Investment Corporation & Subsidiaries-- December 31, 2000, 1999 and 1998
  -----------------------------------------------------------------------------

                   Notes to Consolidated Financial Statements
                   ------------------------------------------

1.   Nature of business

     MGIC Investment Corporation ("Company") is a holding company which, through
Mortgage Guaranty Insurance Corporation ("MGIC") and several other subsidiaries,
is principally engaged in the mortgage insurance business. The Company provides
mortgage insurance to lenders throughout the United States to protect against
loss from defaults on low down payment residential mortgage loans. Through
certain other non-insurance subsidiaries, the Company also provides various
services for the mortgage finance industry, such as contract underwriting and
portfolio analysis.

     At December 31, 2000, the Company's direct primary insurance in force
(representing the current principal balance of all mortgage loans that are
currently insured) and direct primary risk in force, excluding MGIC Indemnity
Corporation ("MIC"), formerly known as Wisconsin Mortgage Assurance Corporation,
was approximately $160.2 billion and $39.1 billion, respectively. In addition to
providing direct primary insurance coverage, the Company also insures pools of
mortgage loans. The Company's direct pool risk in force at December 31, 2000 was
approximately $1.7 billion. MIC's direct primary insurance in force, direct
primary risk in force and direct pool risk in force was approximately $1.2
billion, $0.3 billion and $0.3 billion, respectively, at December 31, 2000. (See
note 7.)

2.   Basis of presentation and summary of significant accounting policies

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Principles of consolidation
     The consolidated financial statements include the accounts of MGIC
Investment Corporation and its wholly-owned subsidiaries. All intercompany
transactions have been eliminated. The Company's 45.9% investment in
Credit-Based Asset Servicing and Securitization LLC ("C-BASS") and 45.5%
investment in Sherman Financial Group LLC, ("Sherman"), joint ventures with
Enhance Financial Services Group Inc. and 46.4% investment in Customers Forever
LLC, ("Customers Forever"), a joint venture with Marshall & Ilsley Corporation
are accounted for on the equity method and recorded on the balance sheet as
investments in joint ventures. The Company's equity earnings from these joint
ventures are included in other revenue. (See note 8.)

     The Company also holds a 12% voting preferred stock investment in GHR
Systems, Inc. ("GHR"). GHR provides infrastructure for Internet-based lending,
including loan decisioning technology. The investment in GHR is recorded on the
Company's balance sheet as an equity security.

Investments
     The Company categorizes its investment portfolio according to its ability
and intent to hold the investments to maturity. Investments which the Company
does not have the ability and intent to hold to maturity are considered to be
available-for-sale and must be recorded at market and the unrealized gains or
losses recognized as an increase or decrease to shareholders' equity. The
Company's entire investment portfolio is classified as available-for-sale.
Realized investment gains and losses are reported in income based upon specific
identification of securities sold. (See note 4.)

Home office and equipment
     Home office and equipment is carried at cost net of depreciation. For
financial statement reporting purposes, depreciation is determined on a
straight-line basis for the home office, equipment and data processing hardware
over estimated lives of 45, 5 and 3 years, respectively. For income tax
purposes, the Company uses accelerated depreciation methods.

    Home office and equipment is shown net of accumulated depreciation of $31.3
million and $31.5 million at December 31, 2000 and 1999, respectively.

Deferred insurance policy acquisition costs
     Costs associated with the acquisition of mortgage insurance business,
consisting of employee compensation and other policy issuance and underwriting
expenses, are initially deferred and reported as deferred acquisition costs
(DAC). Because SFAS 60 specifically excludes mortgage guaranty insurance from
its guidance relating to the amortization of DAC, amortization of these costs
for each underwriting year book of business are charged against

                                 -------------
                                    eighteen
                                 -------------

<PAGE>
revenue in proportion to estimated gross profits over the life of the policies
using the guidance of SFAS 97, Accounting and Reporting by Insurance Enterprises
For Certain Long Duration Contracts and Realized Gains and Losses From the Sale
of Investments. This includes accruing interest on the unamortized balance of
DAC. The estimates for each underwriting year are updated annually to reflect
actual experience and any changes to key assumptions such as persistency or loss
development.

     During 2000, 1999 and 1998, the Company amortized $20.6 million, $16.8
million and $20.7 million, respectively, of deferred insurance policy
acquisition costs.

Loss reserves
     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 not yet reported by the lender. Consistent with industry practices,
the Company does not establish loss reserves for future claims on insured loans
which are not currently in default. Reserves are established by management using
estimated claims rates and claims amounts in estimating the ultimate loss.
Amounts for salvage recoverable are considered in the determination of the
reserve estimates. Adjustments to reserve estimates are reflected in the
financial statements in the years in which the adjustments are made. The
liability for reinsurance assumed is based on information provided by the ceding
companies.

     The incurred but not reported ("IBNR") reserves result from defaults
occurring prior to the close of an accounting period, but which have not been
reported to the Company. Consistent with reserves for reported defaults, IBNR
reserves are established using estimated claims rates and claims amounts for the
estimated number of defaults not reported.

     Reserves also provide for the estimated costs of settling claims, including
legal and other expenses and general expenses of administering the claims
settlement process. (See note 6.)

Income recognition
     The insurance subsidiaries write policies which are guaranteed renewable
contracts at the insured's option on a single, annual or monthly premium basis.
The insurance subsidiaries have no ability to reunderwrite or reprice these
contracts. Premiums written on a single premium basis and an annual premium
basis are initially deferred as unearned premium reserve and earned over the
policy term. Premiums written on policies covering more than one year are
amortized over the policy life in accordance with the expiration of risk which
is the anticipated claim payment pattern based on historical experience.
Premiums written on annual policies are earned on a monthly pro rata basis.
Premiums written on monthly policies are earned as coverage is provided.

     Fee income of the non-insurance subsidiaries is earned and recognized as
the services are provided and the customer is obligated to pay.

Income taxes
     The Company and its subsidiaries file a consolidated federal income tax
return. A formal tax sharing agreement exists between the Company and its
subsidiaries. Each subsidiary determines income taxes based upon the utilization
of all tax deferral elections available. This assumes tax and loss bonds are
purchased and held to the extent they would have been purchased and held on a
separate company basis since the tax sharing agreement provides that the
redemption or non-purchase of such bonds shall not increase such member's
separate taxable income and tax liability on a separate company basis.

     Federal tax law permits mortgage guaranty insurance companies to deduct
from taxable income, subject to certain limitations, the amounts added to
contingency loss reserves. Generally, the amounts so deducted must be included
in taxable income in the tenth subsequent year. The deduction is allowed only to
the extent that U.S. government non-interest bearing tax and loss bonds are
purchased and held in an amount equal to the tax benefit attributable to such
deduction. The Company accounts for these purchases as a payment of current
federal income taxes.

     Deferred income taxes are provided under the liability method which
recognizes the future tax effects of temporary differences between amounts
reported in the financial statements and the tax bases of these items. The
expected tax effects are computed at the current federal tax rate. (See note
10.)

Benefit plans
     The Company has a non-contributory defined benefit pension plan covering
substantially all employees. Retirement benefits are based on compensation and
years of service. The Company's policy is to fund pension cost as required under
the Employee Retirement Income Security Act of 1974. (See note 9.)

                                 -------------
                                    nineteen
                                 -------------

<PAGE>
     The Company accrues the estimated costs of retiree medical and life
benefits over the period during which employees render the service that
qualifies them for benefits. The Company offers both medical and dental benefits
for retired employees and their spouses. Benefits are generally funded on a
pay-as-you-go basis. (See note 9.)

Reinsurance
     Loss reserves and unearned premiums are reported before taking credit for
amounts ceded under reinsurance treaties. Ceded loss reserves are reflected as
"Reinsurance recoverable on loss reserves." Ceded unearned premiums are
reflected as "Reinsurance recoverable on unearned premiums." The Company remains
contingently liable for all reinsurance ceded. (See note 7.)

Earnings per share
     The Company's basic and diluted earnings per share ("EPS") have been
calculated in accordance with Statement of Financial Accounting Standards No.
128, Earnings Per Share ("SFAS 128"). The Company's net income is the same for
both basic and diluted EPS. Basic EPS is based on the weighted-average number of
common shares outstanding. Diluted EPS is based on the weighted-average number
of common shares outstanding and common stock equivalents which would arise from
the exercise of stock options. The following is a reconciliation of the
weighted-average number of shares used for basic EPS and diluted EPS. (See note
11.)
                                   Years Ended December 31,
                               ---------------------------------
                                 2000        1999       1998
                                 ----        ----       ----
                                    (shares in thousands)
Weighted-average shares -
   Basic EPS                    106,202     108,061    112,135
Common stock equivalents          1,058       1,197      1,447
                               ----------  ---------  ----------
Weighted-average shares -
   Diluted EPS                  107,260     109,258    113,582
                               ==========  =========  ==========

Statement of cash flows
     For purposes of the consolidated statement of cash flows, the Company
considers short-term investments to be cash equivalents, as short-term
investments have original maturities of three months or less.

Comprehensive income
     The Company's other comprehensive income consists of the change in
unrealized appreciation (depreciation) on investments, net of tax. Realized
investment gains of $1.4 million and $3.4 million in 2000 and 1999,
respectively, include sales of securities which had unrealized (depreciation)
appreciation of ($18.6) million and $27.9 million at December 31, 1999 and 1998,
respectively.

Recent accounting pronouncements
     The Company adopted Statement of Financial Accounting Standards No. 133,
Accounting for Derivative Instruments and Hedging Activities ("SFAS 133"),
effective January 1, 2001. The statement establishes accounting and reporting
standards for derivative instruments and for hedging activities. The adoption of
SFAS 133 will not have a significant effect on the Company's results of
operations or its financial position due to its limited use of derivative
instruments. (See note 5.)

Reclassifications
     Certain reclassifications have been made in the accompanying financial
statements to 1999 and 1998 amounts to allow for consistent financial reporting.

3.   Related party transactions

     The Northwestern Mutual Life Insurance Company ("NML") held approximately
8% of the common stock of the Company at December 31, 2000. The Company
contracts with Northwestern Mutual Investment Services, LLC, a subsidiary of
NML, for investment portfolio management. The Company incurred expense of $1.1
million, $1.0 million and $1.0 million for these services in 2000, 1999 and
1998, respectively.

     The Company provided certain services to C-BASS during 2000, 1999 and 1998,
and Customers Forever in 2000 and 1999 in exchange for an immaterial amount of
fees. In addition, C-BASS provided certain services to the Company during 2000
and 1999 in exchange for an immaterial amount of fees.

                                 -------------
                                    twenty
                                 -------------

<PAGE>
4.   Investments

<TABLE>
     The following table summarizes the Company's investments at December 31, 2000 and 1999:
<CAPTION>
                                                                                                                Financial
                                                                            Amortized           Market          Statement
                                                                               Cost             Value             Value
                                                                          ---------------   ---------------    --------------
                                                                                       (In thousands of dollars)
At December 31, 2000:
--------------------
   Securities, available-for-sale:
<S>                                                                       <C>               <C>                <C>          
     Fixed maturities.................................................... $   3,182,063     $    3,298,561     $   3,298,561
     Equity securities...................................................        21,903             22,042            22,042
     Short-term investments..............................................       151,592            151,592           151,592
                                                                          ---------------   ---------------    --------------
   Total investment portfolio............................................ $   3,355,558     $    3,472,195     $   3,472,195
                                                                          ===============   ===============    ==============
At December 31, 1999:
--------------------
   Securities, available-for-sale:
     Fixed maturities.................................................... $   2,732,451     $    2,666,562     $   2,666,562
     Equity securities...................................................        12,203             15,426            15,426
     Short-term investments..............................................       107,746            107,746           107,746
                                                                          ---------------   ---------------    --------------
   Total investment portfolio............................................ $   2,852,400     $    2,789,734     $   2,789,734
                                                                          ===============   ===============    ==============

     The amortized cost and market value of investments at December 31, 2000 are as follows:
<CAPTION>
                                                                                    Gross             Gross
                                                                Amortized         Unrealized        Unrealized          Market
December 31, 2000:                                                 Cost             Gains             Losses            Value
-----------------
                                                              ---------------   ---------------   ---------------   ---------------
                                                                                   (In thousands of dollars)
U.S. Treasury securities and obligations of U.S. government
<S>                                                           <C>               <C>               <C>               <C>           
   corporations and agencies..................................$     220,168     $       6,033     $        (592)    $      225,609
Obligations of states and political subdivisions..............    2,382,766           106,776            (1,226)         2,488,316
Corporate securities..........................................      715,115            12,152            (7,282)           719,985
Mortgage-backed securities....................................        1,648                 9                 -              1,657
Debt securities issued by foreign sovereign governments.......       13,958               628                 -             14,586
                                                              ---------------   ---------------   ---------------   ---------------

   Total debt securities......................................    3,333,655           125,598            (9,100)         3,450,153

Equity securities.............................................       21,903               757              (618)            22,042
                                                              ---------------   ---------------   ---------------   ---------------

   Total investment portfolio.................................$   3,355,558     $     126,355     $      (9,718)    $    3,472,195
                                                              ===============   ===============   ===============   ===============

    The amortized cost and market value of investments at December 31, 1999 are as follows:
<CAPTION>
                                                                                    Gross             Gross
                                                                Amortized         Unrealized        Unrealized          Market
December 31, 1999:                                                 Cost             Gains             Losses            Value
-----------------
                                                              ---------------   ---------------   ---------------   ---------------
                                                                                   (In thousands of dollars)
U.S. Treasury securities and obligations of U.S. government
<S>                                                           <C>               <C>               <C>               <C>           
   corporations and agencies..................................$     163,663     $         305     $      (9,162)    $      154,806
Obligations of states and political subdivisions..............    2,195,031            25,196           (71,323)         2,148,904
Corporate securities..........................................      466,204               469           (11,406)           455,267
Mortgage-backed securities....................................        1,366                 -                (8)             1,358
Debt securities issued by foreign sovereign governments.......       13,933                55               (15)            13,973
                                                              ---------------   ---------------   ---------------   ---------------

   Total debt securities......................................    2,840,197            26,025           (91,914)         2,774,308

Equity securities.............................................       12,203             3,223                 -             15,426
                                                              ---------------   ---------------   ---------------   ---------------

   Total investment portfolio.................................$   2,852,400     $      29,248     $     (91,914)    $    2,789,734
                                                              ===============   ===============   ===============   ===============
</TABLE>

                                  ------------
                                   twenty-one
                                  ------------

<PAGE>
                          ----------------------------
                               Notes (continued)
                          ----------------------------

     The amortized cost and market values of debt securities at December 31,
2000, by contractual maturity, are shown below. Debt securities consist of fixed
maturities and short-term investments. Expected maturities will differ from
contractual maturities because borrowers may have the right to call or prepay
obligations with or without call or prepayment penalties.

                                 Amortized         Market
                                    Cost            Value
                                -------------    ------------
                                 (In thousands of dollars)
Due in one year or less........ $   180,967      $   181,015
Due after one year through
  five years...................     645,228          657,114
Due after five years through
  ten years....................     893,942          920,049
Due after ten years............   1,611,870        1,690,318
                                -------------    ------------

                                  3,332,007        3,448,496

Mortgage-backed securities.....       1,648            1,657
                                -------------    ------------

Total at December 31, 2000..... $ 3,333,655      $ 3,450,153
                                =============    ============

    Net investment income is comprised of the following:

                           2000         1999         1998
                        -----------  -----------   ----------
                             (In thousands of dollars)
Fixed maturities....... $  167,810   $  144,614    $ 133,307
Equity securities......      1,279          975        1,133
Short-term investments.     10,673        8,865        9,603
Other .................        341           46           79
                        -----------  -----------   ----------

Investment income......    180,103      154,500      144,122
Investment expenses....     (1,568)      (1,429)      (1,103)
                        -----------  -----------   ----------

Net investment income.. $  178,535   $  153,071    $ 143,019
                        ===========  ===========   ==========

     The net realized investment gains (losses) and change in net unrealized
appreciation (depreciation) of investments are as follows:

                                2000         1999         1998
                              ---------    ----------   ----------
                                   (In thousands of dollars)
Net realized investment gains
 (losses), on sale of investments:

    Fixed maturities........  $   1,440    $    3,409   $    8,349
    Equity securities.......          -             -        9,941
    Short-term investments..         (8)           (3)          (2)
                              ----------   ----------   ----------
                                  1,432         3,406       18,288
                              ----------   ----------   ----------
Change in net unrealized
 appreciation (depreciation):

    Fixed maturities........    182,387      (208,338)      25,631
    Equity securities.......     (3,084)          179       (9,339)
    Short-term investments..          -             -            -
                              ----------   ----------   ----------
                                179,303      (208,159)      16,292
                              ----------   ----------   ----------

Net realized investment
  gains (losses) and change
  in net unrealized           $ 180,735    $ (204,753)  $   34,580
  appreciation (depreciation) ==========   ==========   ==========

    The gross realized gains and the gross realized losses on sales of
available-for-sale securities were $18.2 million and $16.8 million,
respectively, in 2000, $14.5 million and $11.1 million, respectively, in 1999
and $22.7 million and $4.4 million, respectively, in 1998.

    The tax expense (benefit) of the changes in net unrealized appreciation
(depreciation) was $62.8 million, ($72.9) million and $5.7 million for 2000,
1999 and 1998, respectively.

5.   Long-term debt

     During 1999 and 1998, the Company repurchased approximately 3.6 million and
5.3 million shares, respectively, of its outstanding common stock at a cost of
$201 million and $247 million, respectively. Funds to repurchase the shares in
1998 were primarily provided by borrowings under credit facilities evidenced by
notes payable. The shares repurchased in 1999 were funded with a $150 million
special dividend from MGIC and cash flow. At December 31, 1999, the Company's
outstanding balances on the 1997, 1998 and 1999 credit facilities were $200
million, $225 million and $0, respectively, which approximated market value.

     In June of 2000, the Company filed a $500 million public debt shelf
registration statement. During the fourth quarter of 2000, the Company issued in
a public offering $300 million, 7-1/2% Senior Notes due 2005. The notes are
unsecured and were rated 'A1' by Moody's and 'A+' by Standard & Poors ("S&P").
The net proceeds were used to repay a portion of the previously existing credit
facilities.

     During the fourth quarter, the Company repaid and terminated the 1997
credit facility. At December 31, 2000, the Company's outstanding balances under
the 1998 and 1999 credit facilities were approximately $98 million and $0,
respectively. The remaining credit available under these facilities at December
31, 2000 was $2 million and $100 million, expiring in 2003 and 2004,
respectively. The interest rates on these credit facilities vary based on LIBOR
and the 1999 and 2000 weighted average interest rates were 6.71% and 5.57%,
respectively. Under the terms of the credit facilities, the Company must
maintain shareholders' equity of at least $1 billion and MGIC must maintain a
claims paying ability rating of 'AA-' or better with S&P. At December 31, 2000,
the Company had shareholders' equity of $2.46 billion and MGIC had a claims
paying ability rating of 'AA+' from S&P.

                                  ------------
                                   twenty-two
                                  ------------

<PAGE>
     During 1999, the Company utilized three interest rate swaps, each with a
notional amount of $100 million, to reduce and manage interest rate risk on a
portion of the variable rate debt under the credit facilities. The notional
amount of $100 million represents the stated principal balance used for
calculating payments. The Company received and paid amounts based on rates that
were both fixed and variable. Earnings on the swaps during 1999, of
approximately $3.8 million, were netted against interest expense.

Early in 2000, two of the swaps were amended and designated as hedges. Later in
2000, the two hedges were amended. The Company pays an interest rate based on
LIBOR and receives a fixed rate of 7.5%. The swaps have an expiration date
coinciding with the maturity of the public debt and are designated as hedges.
The remaining swap was also amended. On this swap, the Company pays a fixed rate
of 6.79% and receives an interest rate based on LIBOR. The swap has an
expiration date coinciding with the maturity of the credit facilities and is
designated as a hedge. Gains or losses arising from the amendment or termination
of interest rate swaps are deferred and amortized to interest expense over the
life of the hedged items. Earnings on the swaps during 2000, of approximately
$0.3 million, were netted against interest expense. The swaps are subject to
credit risk to the extent the counterparty would be unable to discharge its
obligations under the swap agreements.

Interest payments on all long-term debt were $25.5 million and $22.0 million for
the years ended December 31, 2000 and 1999, respectively. At December 31, 2000,
the carrying value of the long-term debt approximates market value.

6.   Loss reserves

    Loss reserve activity was as follows:

                                    2000          1999          1998
                                 ------------  ------------  ------------
                                        (In thousands of dollars)

Reserve at beginning of year     $ 641,978     $ 681,274     $ 598,683
Less reinsurance recoverable..      35,821        45,527        26,415
                                 -----------   -----------   -----------
Net reserve at beginning 
 of year......................     606,157       635,747       572,268
Reserve transfer (1)..........          85           833           538
                                 -----------   -----------   -----------
Adjusted reserve at beginning
 of year......................     606,242       636,580       572,806

Losses incurred:
  Losses and LAE incurred
  in respect of default
  notices received in:
      Current year............     320,769       333,193       377,786
      Prior years (2).........    (229,046)     (235,997)     (166,432)
                                 -----------   -----------   -----------
        Subtotal..............      91,723        97,196       211,354
                                 -----------   -----------   -----------
Losses paid:
  Losses and LAE paid in
   respect of default notices
    received in:
      Current year............       9,044         7,601         8,752
      Prior years.............     112,601       120,018       139,661
                                 -----------   -----------   -----------
        Subtotal..............     121,645       127,619       148,413
                                 -----------   -----------   -----------

Net reserve at end of year....     576,320       606,157       635,747

Plus reinsurance recoverages..      33,226        35,821        45,527
                                 -----------   -----------   -----------
Reserve at end of year........   $  609,546    $  641,978    $  681,274
                                 ===========   ===========   ===========

(1) Received in conjunction with the cancellation of certain reinsurance
treaties. (See note 7.)
(2) A negative number for a prior year indicates a redundancy of loss reserves,
and a positive number for a prior year indicates a deficiency of loss reserves.

     The top portion of the table above shows losses incurred on default notices
received in the current year and in prior years, respectively. The amount of
losses incurred relating to default notices received in the current year
represents the estimated amount to be ultimately paid on such default notices.
The amount of losses incurred relating to default notices received in prior
years represents an adjustment made in the current year for defaults which were
included in the loss reserve at the end of the prior year.

     Current year losses incurred decreased from 1999 to 2000 primarily due to
generally strong economic conditions, including California and a related decline
in losses paid which resulted in a decline in both primary and pool reserve
factors. Partially offsetting the reduction in factors was an increase in the
primary insurance notice inventory from 29,761 at December 31, 1999 to 37,422 at
December 31, 2000 and an increase in pool insurance notice inventory from 11,638
at
                                  ------------
                                  twenty-three
                                  ------------

<PAGE>
December 31, 1999 to 18,209 at December 31, 2000. The default rate at December
31, 2000 was 2.58% compared to 2.17% at December 31, 1999 and the average claim
paid for 2000 was $18,977 compared to $19,444 in 1999.

     The favorable development of the reserves in 2000, 1999 and 1998 is
reflected in the prior year line, and results from the actual claim rates and
actual claim amounts being lower than those estimated by the Company when
originally establishing the reserve at December 31, 1999, 1998 and 1997,
respectively.

     The lower portion of the table above shows the breakdown between claims
paid on default notices received in the current year and default notices
received in prior years. Since it takes, on average, about twelve months for a
default which is not cured to develop into a paid claim, most losses paid relate
to default notices received in prior years.

7.   Reinsurance

     The Company cedes a portion of its business to reinsurers and records
assets for reinsurance recoverable on estimated reserves for unpaid losses and
unearned premiums. Business written between 1985 and 1993 is ceded under various
quota share reinsurance agreements with several reinsurers. The Company receives
a ceding commission in connection with this reinsurance. Beginning in 1997, the
Company has ceded business to captive reinsurance subsidiaries of certain
mortgage lenders primarily under excess of loss reinsurance agreements.

     The reinsurance recoverable on loss reserves and the reinsurance
recoverable on unearned premiums primarily represent amounts recoverable from
large international reinsurers. The Company monitors the financial strength of
its reinsurers including their claims paying ability rating and does not
currently anticipate any collection problems. Generally, reinsurance
recoverables on loss reserves and unearned premiums are backed by trust funds or
letters of credit. No reinsurer represents more than $10 million of the
aggregate amount recoverable. As a result of the purchase of MIC on December 31,
1998, reinsurance recoverable on loss reserves as shown in the Consolidated
Balance Sheet includes approximately $15 million and $19 million of reinsured
loss reserves at December 31, 2000 and December 31, 1999, respectively.

     The effect of reinsurance on premiums earned and losses incurred is as
follows:

                           2000           1999           1998
                        ------------   ------------   ------------
                                (In thousands of dollars)
Premiums earned:
  Direct..............  $  939,981     $  819,485     $  770,775
  Assumed.............         999          1,442          9,670
  Ceded ..............     (50,889)       (28,346)       (17,161)
                        ------------   ------------   ------------

  Net premiums earned.  $  890,091     $  792,581     $  763,284
                        ============   ============   ============

Losses incurred:
  Direct..............  $   93,218     $   94,920     $  216,340
  Assumed.............          35         (1,332)        (3,234)
  Ceded ..............      (1,530)         3,608         (1,752)
                        ------------   ------------   ------------

  Net losses incurred.  $   91,723     $   97,196     $  211,354
                        ============   ============   ============

8.   Investments in joint ventures

     C-BASS engages in the acquisition and resolution of delinquent
single-family residential mortgage loans ("mortgage loans"). C-BASS also
purchases and sells mortgage-backed securities ("mortgage securities"),
interests in real estate mortgage investment conduit residuals and performs
mortgage loan servicing. In addition, C-BASS issues mortgage-backed debt
securities collateralized by mortgage loans and mortgage securities.
Substantially all of C-BASS's mortgage-related assets do not have readily
ascertainable market values and as a result their value for financial statement
purposes is estimated by the management of C-BASS. Market value adjustments
could impact the Company's share of C-BASS's results of operations.

     Total combined assets of C-BASS at December 31, 2000 and 1999 were
approximately $1,006 million and $934 million, respectively, of which
approximately $867 million and $773 million, respectively, were mortgage-related
assets, including open trades. Total liabilities at December 31, 2000 and 1999
were approximately $765 million and $744 million, respectively, of which
approximately $694 million and $617 million, respectively, were funding
arrangements, including accrued interest. For the years ended December 31, 2000
and 1999, revenues of approximately $153 million and $112 million, respectively,
and expenses of approximately $97 million and $72 million, respectively,
resulted in income before tax of approximately $56 million and $40 million,
respectively. The Company's investment in C-BASS on an equity basis at December
31, 2000 was $108.7 million.

     Sherman is engaged in the business of purchasing, servicing and
securitizing delinquent unsecured consumer assets such as credit card loans and
Chapter 13
                                  ------------
                                  twenty-four
                                  ------------

<PAGE>
bankruptcy debt. A substantial portion of Sherman's consolidated assets are
investments in receivable portfolios that do not have readily ascertainable
market values and as a result their value for financial statement purposes is
estimated by the management of Sherman. Market value adjustments could impact
the Company's share of Sherman's results of operations. The Company's investment
in Sherman on an equity basis at December 31, 2000 was $17.0 million. MGIC is
guaranteeing one half of a $25 million Sherman credit facility that is scheduled
to expire in December 2001.

     Customers Forever is an Internet-focused transaction service company
dedicated to helping large residential mortgage servicers retain and enhance
relationships with their customers nationwide. The Company's investment in
Customers Forever on an equity basis at December 31, 2000 is $8.3 million.

     The Company expects that it will provide additional funding to the joint
ventures.

9.   Benefit plans

     The following tables provide reconciliations of the changes in the benefit
obligation, fair value of plan assets and funded status of the pension and other
postretirement benefit plans:

<TABLE>
<CAPTION>
                                                                                                       Other Postretirement
                                                                            Pension Benefits                 Benefits
                                                                        --------------------------   --------------------------
                                                                           2000           1999          2000          1999
                                                                        ------------   -----------   ------------  ------------
                                                                                      (In thousands of dollars)
Reconciliation of benefit obligation:
------------------------------------
<S>                                                                     <C>            <C>           <C>           <C>        
Benefit obligation at beginning of year...............................  $   69,971     $   66,280    $   24,512    $    23,010
   Service cost.......................................................       4,734          5,869         1,943          2,041
   Interest cost......................................................       4,885          4,677         1,831          1,644
   Actuarial (gain) loss..............................................      (4,341)        (5,917)          (18)        (2,044)
   Benefits paid......................................................      (1,067)          (938)         (344)          (139)
                                                                        ------------   -----------   ------------  ------------

Benefit obligation at end of year.....................................  $   74,182     $   69,971    $   27,924    $    24,512
                                                                        ============   ===========   ============  ============
Reconciliation of fair value of plan assets:
Fair value of plan assets at beginning of year........................  $   86,848     $   73,822    $   13,330    $    11,045
   Actual return on plan assets.......................................      (1,627)         6,390          (524)           422
   Employer contributions.............................................       2,131          7,574           750          1,863
   Benefits paid......................................................      (1,067)          (938)            -              -
                                                                        ------------   -----------   ------------  ------------

Fair value of plan assets at end of year..............................  $   86,285     $   86,848    $   13,556    $    13,330
                                                                        ============   ===========   ============  ============
Reconciliation of funded status:
-------------------------------
Benefit obligation at end of year.....................................  $  (74,182)    $  (69,971)   $  (27,924)   $   (24,512)
Fair value of plan assets at end of year..............................      86,285         86,848        13,556         13,330
                                                                        ------------   -----------   ------------  ------------
Funded status at end of year..........................................      12,103         16,877       (14,368)       (11,182)
   Unrecognized net actuarial gain....................................      (7,977)       (12,011)       (3,426)        (4,959)
   Unrecognized net transition obligation.............................           -             31         6,359          6,889
   Unrecognized prior service cost....................................       2,176          2,359             -              -
                                                                        ------------   -----------   ------------  ------------

Prepaid (accrued) benefit cost........................................  $    6,302     $    7,256    $  (11,435)   $    (9,252)
                                                                        ============   ===========   ============  ============
</TABLE>

                                  ------------
                                  twenty-five
                                  ------------

<PAGE>
                           --------------------------
                               Notes (continued)
                           --------------------------

     The following table provides the components of net periodic benefit cost
for the pension and other postretirement benefit plans:

<TABLE>
<CAPTION>
                                                                                                 Other Postretirement
                                                        Pension Benefits                               Benefits
                                            -----------------------------------------  -----------------------------------------
                                               2000          1999           1998          2000           1999          1998
                                            ------------  ------------   ------------  ------------   ------------  ------------
                                                                         (In thousands of dollars)
<S>                                         <C>           <C>            <C>           <C>            <C>           <C>        
Service cost..............................  $    4,734    $     5,869    $    4,064    $     1,943    $    2,041    $     1,612
Interest cost.............................       4,885          4,677         3,959          1,831         1,644          1,357
Expected return on plan assets............      (6,496)        (5,543)       (4,674)        (1,009)         (844)          (696)
Recognized net actuarial gain.............        (520)             -             -           (146)          (17)          (170)
Amortization of transition obligation.....          32             32            32            530           530            530
Amortization of prior service cost........         183            183           183              -             -              -
                                            ------------  ------------   ------------  ------------   ------------  ------------

Net periodic benefit cost.................  $    2,818    $     5,218    $    3,564    $     3,149    $    3,354    $     2,633
                                            ============  ============   ============  ============   ============  ============
</TABLE>


     The assumptions used in the measurement of the Company's pension and other
postretirement benefit obligations are shown in the following table:

<TABLE>
<CAPTION>
                                                                                                     Other Postretirement
                                                            Pension Benefits                               Benefits
                                                -----------------------------------------  -----------------------------------------
                                                   2000          1999           1998          2000           1999          1998
                                                ------------  ------------                 ------------   ------------  ------------
Weighted-average interest rate assumptions 
 as of December 31:
<S>                                                   <C>            <C>           <C>            <C>           <C>            <C> 
     Discount rate............................        7.5%           7.5%          7.0%           7.5%          7.5%           7.0%
     Expected return on plan assets...........        7.5%           7.5%          7.5%           7.5%          7.5%           7.5%
     Rate of compensation increase............        6.0%           6.0%          6.0%            N/A           N/A            N/A

</TABLE>

     Plan assets consist of fixed maturities and equity securities. The Company
is amortizing the unrecognized transition obligation for other postretirement
benefits over 20 years.

     The assumed health care cost trend rate used in measuring the accumulated
postretirement benefit obligation is:

Medical Pre 65...  8.0% for 2000 graded down by 0.5% to 6.0% in 2004 and 
                   remaining level thereafter.
Medical Post 65..  7.5% for 2000 graded down by 0.5% to 6.0% in 2003 and 
                   remaining at 6.0% thereafter.
Dental...........  6.0% per year.

    A 1% change in the health care trend rate assumption would have the
following effects on other postretirement benefits:

                               1-Percentage     1-Percentage
                                   Point           Point
                                 Increase         Decrease
                               --------------   --------------
                                 (In thousands of dollars)
Effect on total service and
  interest cost components.... $         801    $      (678)
Effect on postretirement
  benefit obligation..........         5,400         (4,562)

     The Company has a profit sharing and 401(k) savings plan for employees. At
the discretion of the Board of Directors, the Company may make a profit sharing
contribution of up to 5% of each participant's compensation. The Company
provides a matching 401(k) savings contribution on employees' before-tax
contributions at a rate of 80% of the first $1,000 contributed and 40% of the
next $2,000 contributed. Profit sharing costs and the Company's matching
contributions to the 401(k) savings plan were $4.7 million, $5.3 million and
$5.0 million in 2000, 1999 and 1998, respectively.

10.  Income taxes

     The components of the net deferred tax liability (asset) as of December 31,
2000 and 1999 are recorded on the Consolidated Balance Sheet as part of other
liabilities or other assets and are as follows:

                                         2000           1999
                                      -----------    -----------
                                      (In thousands of dollars)
Unearned premium reserves............ $   (12,054)   $  (17,726)
Deferred policy acquisition costs....       9,044         7,822
Loss reserves........................      (6,368)       (8,119)
Unrealized appreciation/depreciation
  in investments.....................      40,822       (21,933)
Contingency reserve..................      51,330        29,029
Other ...............................        (993)       (4,521)
                                      -----------    -----------

Net deferred tax (asset) liability... $    81,781    $  (15,448)
                                      ===========    ===========

                                  ------------
                                   twenty-six
                                  ------------

<PAGE>
     At December 31, 2000, gross deferred tax assets and liabilities amounted to
$75.3 million and $157.1 million, respectively. Management believes that all
gross deferred tax assets at December 31, 2000 are fully realizable and no
valuation reserve has been established.

    The following summarizes the components of the provision for income tax:

                                  2000          1999          1998
                              -----------   ----------    ----------
                                     (In thousands of dollars)
Federal:
  Current.................    $   208,949   $  179,423    $  171,244
  Deferred................         34,476       28,874        (4,198)
State.....................          3,377        2,512         2,074
                              -----------   ----------    ----------

Provision for income tax..    $   246,802   $  210,809    $  169,120
                              ===========   ==========    ==========

     The Company paid $199.9 million, $173.1 million and $160.6 million in
federal income tax in 2000, 1999 and 1998, respectively. At December 31, 2000
and 1999, the Company owned $838.0 million and $704.1 million, respectively, of
tax and loss bonds.

     The reconciliation of the tax provision computed at the federal tax rate of
35% to the reported provision for income tax is as follows:

                                  2000          1999          1998
                              -----------   ----------    ----------
                                   (In thousands of dollars)
Tax provision computed at
  federal tax rate..........  $   276,080   $  238,354    $  194,105
(Decrease) increase in tax
  provision resulting from:
    Tax exempt municipal 
      bond interest.........      (32,350)     (31,851)      (28,973)
    Other, net..............        3,072        4,306         3,988
                              -----------   ----------    ----------
Provision for income tax....  $   246,802   $  210,809    $  169,120
                              ===========   ==========    ==========

11.  Shareholders' equity and dividend restrictions

     The Company's insurance subsidiaries are subject to statutory regulations
as to maintenance of policyholders' surplus and payment of dividends. The
maximum amount of dividends that the insurance subsidiaries may pay in any
twelve-month period without regulatory approval by the Office of the
Commissioner of Insurance of the State of Wisconsin ("OCI") is the lesser of
adjusted statutory net income or 10% of statutory policyholders' surplus as of
the preceding calendar year end. Adjusted statutory net income is defined for
this purpose to be the greater of statutory net income, net of realized
investment gains, for the calendar year preceding the date of the dividend or
statutory net income, net of realized investment gains, for the three calendar
years preceding the date of the dividend less dividends paid within the first
two of the preceding three calendar years. In 2001, MGIC can pay $92.0 million
of dividends and the other insurance subsidiaries of the Company can pay $7.1
million of dividends without such regulatory approval.

     Certain of the Company's non-insurance subsidiaries also have requirements
as to maintenance of net worth. These restrictions could also affect the
Company's ability to pay dividends.

     In 2000, 1999 and 1998, the Company paid dividends of $10.6 million, $10.8
million and $11.2 million, respectively or $0.10 per share in 2000, 1999 and
1998.

     The principles used in determining statutory financial amounts differ from
generally accepted accounting principles ("GAAP"), primarily for the following
reasons:

     Under statutory accounting practices, mortgage guaranty insurance companies
     are required to maintain contingency loss reserves equal to 50% of premiums
     earned. Such amounts cannot be withdrawn for a period of ten years except
     as permitted by insurance regulations. Contingency loss reserves are not
     reflected as liabilities under GAAP.

     Under statutory accounting practices, insurance policy acquisition costs
     are charged against operations in the year incurred. Under GAAP, these
     costs are deferred and amortized as the related premiums are earned
     commensurate with the expiration of risk.

     Statutory financial statements only include a provision for current income
     taxes due, and purchases of tax and loss bonds are accounted for as
     investments. GAAP financial statements provide for deferred income taxes,
     and purchases of tax and loss bonds are recorded as payments of current
     income taxes.

     Under statutory accounting practices, fixed maturity investments are valued
     at amortized cost. Under GAAP, those investments which the Company does not
     have the ability and intent to hold to maturity are considered to be
     available for sale and are recorded at market, with the unrealized gain or
     loss recognized, net of tax, as an increase or decrease to shareholders'
     equity.
                                  ------------
                                   twenty-seven
                                  ------------

<PAGE>
     The statutory net income, equity and the contingency reserve liability of
the insurance subsidiaries (excluding the non-insurance companies) are as
follows:

 Year Ended           Net                    Contingency
December 31,         Income       Equity       Reserve
--------------     -----------  ------------ ------------
                         (In thousands of dollars)
    2000           $ 348,137    $ 991,343    $  2,616,653
    1999             296,287      637,234       2,253,418
    1998             187,535      585,280       1,939,626

     The differences between the statutory net income and equity presented above
for the insurance subsidiaries and the consolidated net income and equity
presented on a GAAP basis primarily represent the differences between GAAP and
statutory accounting practices, and the effect of the treasury shares on
consolidated equity.

     In 1998, the NAIC adopted the Codification of Statutory Accounting
Principles guidance, which replaces the current Accounting Practices and
Procedures manual as the NAIC's primary guidance on statutory accounting as of
January 1, 2001. The Codification provides guidance for areas where statutory
accounting has been silent and also changes current statutory accounting in
other areas. The OCI has adopted the Codification guidance, effective January 1,
2001. The effect of the adoption is not expected to have a material impact on
the Company's insurance subsidiaries' statutory surplus. The most significant
change affecting surplus is the requirement to record deferred income taxes.

     The Company has two stock option plans which permit certain officers and
employees to purchase common stock at specified prices. A summary of activity in
the stock option plans during 1998, 1999 and 2000 is as follows:

                                     Average         Shares
                                     Exercise      Subject to
                                      Price          Option
                                   -----------   -------------
Outstanding, December 31, 1997...  $    22.09       3,634,874

   Granted.......................       62.28         109,500
   Exercised.....................       10.99        (478,848)
   Canceled......................       33.99         (70,002)
                                   -----------     -----------
Outstanding, December 31, 1998...       24.87       3,195,524
                                   -----------     -----------
   Granted.......................       42.29         791,750
   Exercised.....................        8.74        (413,930)
   Canceled......................       45.94         (17,200)
                                   -----------     -----------
Outstanding, December 31, 1999...       30.52       3,556,144
                                   -----------     -----------
   Granted.......................       45.40         954,000
   Exercised.....................       16.91      (1,080,208)
   Canceled......................       37.96         (44,940)
                                   -----------     -----------
Outstanding, December 31, 2000...  $    38.96       3,384,996
                                   ===========     ===========

     The exercise price of the options granted in 1998, 1999 and 2000 was equal
to the market value of the stock on the date of grant. The options are
exercisable between one and ten years after the date of grant. At December 31,
2000, 1,846,627 shares were available for future grant under the stock option
plans.

     The Company adopted the disclosure-only provisions of Statement of
Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation
("SFAS 123"). Had compensation cost for the Company's stock option plans been
determined based on the fair value method described by SFAS 123, the Company's
net income and earnings per share would have been reduced to the pro forma
amounts indicated below (in thousands, except per share data):

                               Year Ended December 31,
                        --------------------------------------
                           2000         1999          1998
                        -----------   ----------   -----------
Net income              $  530,625    $ 464,793    $  381,689

Earnings per share:
   Basic                $     5.00    $    4.30    $     3.40
   Diluted              $     4.95    $    4.25    $     3.36

     The fair value of these options was estimated at grant date using the
Black-Scholes option pricing model with the following weighted average
assumptions for each year:

                                  Grants Issued in Year Ended
                                          December 31,
                              -------------------------------------
                                 2000         1999         1998
                              -----------  -----------  -----------
Risk free interest rate....     6.75%        5.18%        5.33%
Expected life..............   6.8 years    5.4 years    5.9 years
Expected volatility........     33.62%       33.55%       26.69%
Expected dividend yield....     0.15%        0.16%        0.25%
Fair value of each option..    $21.96       $16.70       $22.64

     The following is a summary of stock options outstanding at December 31,
2000:

                    Options Outstanding       Options Exercisable
                ----------------------------- -------------------
                          Remaining   Average            Average
Exercise                  Average     Exercise           Exercise
Price Range      Shares   Life (yrs.)  Price    Shares    Price
--------------- --------- ----------  -------- --------- ---------
$9.63-$20.88     380,830   3.0       $15.65    380,830  $ 15.65

$26.69-$46.06   2,886,166  7.6        40.97    791,418    37.41

$60.25-$68.63    118,000   7.0        65.15     56,790    64.75
                --------- ---------  -------- --------- ---------
Total           3,384,996  7.1       $38.96   1,229,038 $ 31.93
                ========= =========  ======== ========= =========

    At December 31, 1999 and 1998, option shares of 1,721,204 and 1,751,725 were
exercisable at an average exercise price of $20.03 and $14.01, respectively. The
Company also granted an immaterial amount of equity instruments other than
options during 1999 and 2000.

                                 -------------
                                  twenty-eight
                                 -------------

<PAGE>
     The Company adopted a Shareholder Rights Plan on July 22, 1999. Under terms
of the plan, on August 9, 1999, Common Share Purchase Rights were distributed as
a dividend at the rate of one Common Share Purchase Right for each outstanding
share of the Company's Common Stock. The "Distribution Date" occurs ten days
after an announcement that a person has acquired 15 percent or more of the
Company's Common Stock (the date on which such an acquisition occurs is the
"Shares Acquisition Date" and a person who makes such an acquisition is an
"Acquiring Person"), or ten business days after a person announces or begins a
tender offer in which consummation of such offer would result in ownership by a
person of 15 percent or more of the Common Stock. The Rights are not exercisable
until the Distribution Date. Each Right will initially entitle shareholders to
buy one-half of one share of the Company's Common Stock at a Purchase Price of
$225 per full share (equivalent to $112.50 for each one-half share), subject to
adjustment. If there is an Acquiring Person, then each Right (subject to certain
limitations) will entitle its holder to purchase, at the Rights' then-current
Purchase Price, a number of shares of Common Stock of the Company (or if after
the Shares Acquisition Date, the Company is acquired in a business combination,
common shares of the acquiror) having a market value at the time equal to twice
the Purchase Price. The Rights will expire on July 22, 2009, subject to
extension. The Rights are redeemable at a price of $.001 per Right at any time
prior to the time a person becomes an Acquiring Person. Other than certain
amendments, the Board of Directors may amend the Rights in any respect without
the consent of the holders of the Rights.

12.  Leases

     The Company leases certain office space as well as data processing
equipment and autos under operating leases that expire during the next seven
years. Generally, all rental payments are fixed.

     Total rental expense under operating leases was $5.3 million, $5.5 million
and $5.4 million in 2000, 1999 and 1998, respectively.

     At December 31, 2000, minimum future operating lease payments are as
follows (in thousands of dollars):

          2001                             $     4,886
          2002                                   3,408
          2003                                   1,568
          2004                                     820
          2005                                     586
          2006 and thereafter............          143
                                            ----------
                Total....................  $    11,411
                                            ==========

13.  Contingencies and litigation settlement

     The Company is involved in litigation in the ordinary course of business.
In the opinion of management, the ultimate resolution of this pending litigation
will not have a material adverse effect on the financial position or results of
operations of the Company.

     In addition, MGIC has entered into an agreement to settle Downey et. al. v.
MGIC, which is pending in Federal District Court for the Southern District of
Georgia. The Court has preliminarily approved the settlement agreement,
certified a nationwide class of borrowers and scheduled a hearing for June 15,
2001 to consider whether it should enter a final order approving the settlement.
The Company has recorded a $23.2 million charge to cover the estimated costs of
the settlement, including payments to borrowers. The settlement includes an
injunction that prohibits certain practices and specifies the basis on which
agency pool insurance, captive mortgage reinsurance, contract underwriting and
other products may be provided in compliance with the Real Estate Settlement
Procedures Act.

     The complaint in the case alleges that MGIC violated the Real Estate
Settlement Procedures Act by providing agency pool insurance, captive mortgage
reinsurance, contract underwriting and other products that were not properly
priced, in return for the referral of mortgage insurance. The complaint seeks
damages of three times the amount of the mortgage insurance premiums that have
been paid and that will be paid at the time of judgment for the mortgage
insurance found to be involved in a violation of the Real Estate Settlement
Procedures Act. The complaint also seeks injunctive relief, including
prohibiting MGIC from receiving future premium payments. If the Court does not
enter a final order approving the settlement, the litigation will continue. In
these circumstances, there can be no assurance that the ultimate outcome of the
litigation will not materially affect the Company's financial position or
results of operations.

                                 -------------
                                  twenty-nine
                                 -------------

<PAGE>

-------------------------------------------------------------------------------
 
                       Report of Independent Accountants
--------------------------------------------------------------------------------

To the Board of Directors & Shareholders of MGIC Investment Corporation

     In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of operations, of shareholders' equity and of cash flows
present fairly, in all material respects, the financial position of MGIC
Investment Corporation and Subsidiaries (the "Company") at December 31, 2000 and
1999, and the results of their operations and their cash flows for each of the
three years in the period ended December 31, 2000, in conformity with accounting
principles generally accepted in the United States of America. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States of America, which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

PricewaterhouseCoopers LLP
Milwaukee, Wisconsin
January 9, 2001



                                   -----------
                                     thirty
                                   -----------

<PAGE>

<TABLE>
                     -----------------------------------------------------------------------------------------
                                                Unaudited quarterly financial data
                     -----------------------------------------------------------------------------------------
<CAPTION>
                                                                            Quarter                                    
                                                 ---------------------------------------------------------------        2000
                       2000                         First            Second           Third           Fourth            Year
----------------------------------------------   -------------    -------------    -------------   -------------    -------------
                                                                (In thousands of dollars, except per share data)
<S>                                              <C>              <C>              <C>             <C>              <C>         
Net premiums written...........................  $    199,320     $    220,814     $    236,208    $    231,046     $    887,388
Net premiums earned............................       210,104          218,434          229,208         232,345          890,091
Investment income, net of expenses.............        40,609           42,731           46,125          49,070          178,535
Losses incurred, net...........................        22,615           22,540           21,442          25,126           91,723
Underwriting and other expenses, net...........        47,008           46,198           40,055          44,576          177,837
Litigation settlement..........................             -                -                -          23,221           23,221
Net income.....................................       127,220          136,103          146,355         132,321          541,999
Earnings per share (a):
   Basic.......................................          1.20             1.28             1.38            1.24             5.10
   Diluted.....................................          1.19             1.27             1.36            1.23             5.05
<CAPTION>
                                                                            Quarter                                    
                                                 ---------------------------------------------------------------        1999
                       1999                         First            Second           Third           Fourth            Year
----------------------------------------------   -------------    -------------    -------------   -------------    -------------
                                                                (In thousands of dollars, except per share data)
<S>                                              <C>              <C>              <C>             <C>              <C>         
Net premiums written...........................  $    184,011     $    196,374     $    207,582    $    204,378     $    792,345
Net premiums earned............................       193,981          194,766          200,042         203,792          792,581
Investment income, net of expenses.............        36,915           38,627           39,303          38,226          153,071
Losses incurred, net...........................        44,232           30,941           19,533           2,490           97,196
Underwriting and other expenses, net...........        52,872           51,384           47,476          46,415          198,147
Net income.....................................       100,418          112,934          122,909         133,940          470,201
Earnings per share (a):
   Basic.......................................           .92             1.04             1.13            1.27             4.35
   Diluted.....................................           .91             1.02             1.11            1.25             4.30

(a)  Due to the use of weighted average shares outstanding when calculating earnings per share, the sum of the quarterly per share
     data may not equal the per share data for the year.

</TABLE>

                                  ------------
                                   thirty-one
                                  ------------

<PAGE>

     -----------------------------------------------------------------------
                             Shareholder Information
     -----------------------------------------------------------------------
MGIC Stock
----------
MGIC Investment Corporation Common Stock is listed on the New York Stock
Exchange under the symbol MTG. At December 31, 2000, 106,825,758 shares were
outstanding. The following table sets forth for 1999 and 2000 by quarter the
high and low sales prices of the Common Stock on the New York Stock Exchange
Composite Tape.

                      1999                      2000
            -------------------------  ------------------------
Quarters       High         Low           High         Low

1st         $  45.625   $  30.125      $ 59.2500   $  31.9375
2nd            51.625      34.750        54.8750      42.0000
3rd            56.750      40.250        64.3125      44.7500
4th            62.750      46.500        71.5000      58.5000

In 1999 and 2000 the Company declared and paid the following cash dividends:

                  1999                2000
            -----------------   ------------------
Quarters
1st           $   .025             $   .025
2nd               .025                 .025
3rd               .025                 .025
4th               .025                 .025
              -------------        ------------
              $   .100             $   .100
              =============        ============

The Company is a holding company and the payment of dividends from its insurance
subsidiaries is restricted by insurance regulation. For a discussion of these
restrictions, see Note 11 of the Notes to the Consolidated Financial Statements.

As of March 12, 2001, the number of shareholders of record was 238. In addition,
there were approximately 33,500 beneficial owners of shares held by brokers and
fiduciaries


                                 -------------
                                  thirty-two
                                 -------------



                           MGIC INVESTMENT CORPORATION

               DIRECT AND INDIRECT SUBSIDIARIES AND JOINT VENTURES
                        OF MGIC INVESTMENT CORPORATION1


          1.        MGIC Assurance Corporation
          2.        MGIC Credit Assurance Corporation
          3.        MGIC Indemnity Corporation
          4.        MGIC Insurance Services Corporation
          5.        MGIC Investor Services Corporation
          6.        MGIC Mortgage Insurance Corporation
          7.        MGIC Mortgage Marketing Corporation
          8.        MGIC Mortgage and Consumer Asset I LLC
          9.        MGIC Mortgage and Consumer Asset II LLC
          10.       MGIC Mortgage Reinsurance Corporation
          11.       MGIC Mortgage Securities Corporation
          12.       MGIC Reinsurance Corporation
          13.       MGIC Reinsurance Corporation of Vermont
          14.       MGIC Reinsurance Corporation of Wisconsin
          15.       MGIC Residential Reinsurance Corporation
          16.       MGIC Surety Corporation
          17.       Mortgage Guaranty Insurance Corporation
          18.       eMagic.com LLC
          19.       Credit-Based Asset Servicing and Securitization LLC2
          20.       Litton Loan Servicing LP3
          21.       Sherman Financial Group LLC2
          22.       Customers Forever LLC4

The names of certain less than 50% owned persons that would not in the aggregate
be a significant subsidiary are omitted.

--------------------
1    Except as otherwise noted in Footnotes 2-4, all companies listed are 100%
     directly or indirectly owned by the registrant and all are incorporated
 in
     Wisconsin.
2    Less than 50% owned and organized under Delaware law.
3    100% owned by Credit-Based Asset Servicing and Securitization LLC
4    Less than 50% owned and organized under Wisconsin law.




                                                                      EXHIBIT 23



                       CONSENT OF INDEPENDENT ACCOUNTANTS


We hereby consent to the incorporation by reference in the Registration
Statements listed below of MGIC Investment Corporation of our report dated
January 9, 2001 relating to the consolidated financial statements, which appears
in the 2000 Annual Report to Shareholders, which is incorporated by reference in
this Annual Report on Form 10-K. We also consent to the incorporation by
reference of our report dated January 9, 2001 relating to the financial
statement schedules, which appears in this Form 10-K.

         1.     Registration Statement on Form S-8 (Registration No. 33-42120)

         2.     Registration Statement on Form S-8 (Registration No. 33-43543)

         3.     Registration Statement on Form S-8 (Registration No. 333-56350)

         4.     Registration Statement on Form S-8 (Registration No. 333-56346)





PRICEWATERHOUSECOOPERS LLP


Milwaukee, Wisconsin
March 28, 2001