UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

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

Date of report (Date of earliest event reported)		October 12, 2005

MGIC Investment Corporation

(Exact Name of Registrant as Specified in Its Charter)

Wisconsin

(State or Other Jurisdiction of Incorporation)

1-10816		39-1486475
(Commission File Number)		(IRS Employer Identification No.)

MGIC Plaza, 250 East Kilbourn Avenue, Milwaukee, WI		53202
(Address of Principal Executive Offices)		(Zip Code)

(414) 347-6480

(Registrant’s Telephone Number, Including Area Code)

(Former Name or Former Address, if Changed Since Last Report)

     Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o		Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o		Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o		Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o		Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

Item 2.02.		Results of Operations and Financial Condition
		The Company issued a press release on October 12, 2005 announcing its results of operations for the quarter ended September 30, 2005 and certain other information. The press release is furnished as Exhibit 99.
Item 9.01.		Financial Statements and Exhibits
(c)		Exhibits
		Pursuant to General Instruction B.2 to Form 8-K, the Company’s October 12, 2005 press release is furnished as Exhibit 99 and is not filed.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

INDEX TO EXHIBITS

Exhibit
Number		Description of Exhibit
99		Press Release dated October 12, 2005. (Pursuant to General Instruction B.2 to Form 8-K, this press release is furnished and is not filed.)

Exhibit 99

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

MILWAUKEE (October 12, 2005) — MGIC Investment Corporation (NYSE:MTG) today reported net income for the quarter ended September 30, 2005 of $142.4 million, compared with the $134.1 million for the same quarter a year ago, an increase of 6.2%. Diluted earnings per share was $1.55 for the quarter ending September 30, 2005, compared to $1.36 for the same quarter a year ago, an increase of 13.8%.

Net income for the first nine months of 2005 was $498.8 million, compared with $418.7 million for the same period last year, an increase of 19.1%. For the first nine months of 2005, diluted earnings per share was $5.33 compared with $4.25 for the same period last year, an increase of 25.4%.

Curt S. Culver, president and chief executive officer of MGIC Investment Corporation and Mortgage Guaranty Insurance Corporation (MGIC), said that he was pleased with the improvement in credit losses and the contribution from joint ventures but that insurance in force and associated revenues continue to be challenged by low interest rates and strong home price appreciation.

Total revenues for the third quarter were $375.7 million, down 3.9 percent from $391.0 million in the third quarter of 2004. The decline in revenues resulted from a 5.7 percent decrease in net premiums earned to $305.8 million. Net premiums written for the quarter were $314.2 million, compared with $320.8 million in the third quarter last year, a decrease of 2.1 percent.

New insurance written in the third quarter was $18.1 billion, compared to $18.0 billion in the third quarter of 2004. New insurance written for the quarter included $6.8 billion of bulk business compared with $6.0 billion in the same period last year. New insurance written for the first nine months of 2005 was $46.2 billion compared to $47.1 billion for the same period in 2004 and includes $15.5 billion of bulk business compared to $11.0 billion in the first nine months of 2004.

Persistency, or the percentage of insurance remaining in force from one year prior, was 60.2 percent at September 30, 2005, compared with 60.2 percent at December 31, 2004, and 59.4 percent at September 30, 2004.

As of September 30, 2005, MGIC’s primary insurance in force was $170.2 billion, compared with $177.1 billion at December 31, 2004, and $179.8 billion at September 30, 2004. The book value of MGIC Investment Corporation’s investment portfolio was $5.5 billion at September 30, 2005, compared with $5.6 billion at December 31, 2004, and $5.6 billion at September 30, 2004.

At September 30, 2005, the percentage of loans that were delinquent, excluding bulk loans, was 3.95 percent, compared with 3.99 percent at December 31, 2004, and 3.80 percent at September 30, 2004. Including bulk loans, the percentage of loans that were delinquent at September 30, 2005 was 5.95 percent, compared to 6.05 percent at December 31, 2004, and 5.80 percent at September 30, 2004.

Losses incurred in the third quarter were $146.2 million, down from $169.8 million reported for the same period last year due primarily to a decrease in the delinquency inventory. Underwriting expenses were $70.6 million in the third quarter up from $69.7 million reported for the same period last year.

Income from joint ventures, net of tax, for the quarter was $31.7 million, up from $29.6 million for the same period last year. For the nine months ending September 30, 2005 joint venture contributions, net of tax, were $110.5 million versus $87.4 million for the same period one year ago.

About MGIC

MGIC (www.mgic.com), the principal subsidiary of MGIC Investment Corporation, is the nation’s leading provider of private mortgage insurance coverage with $170.2 billion primary insurance in force covering 1.3 million mortgages as of September 30, 2005. MGIC serves 5,000 lenders with locations across the country and in Puerto Rico, helping families achieve homeownership sooner by making affordable low-down-payment mortgages a reality.

Webcast Details

As previously announced, MGIC Investment Corporation will hold a webcast today at 10 a.m. ET to allow securities analysts and shareholders the opportunity to hear management discuss the company’s quarterly results. The call is being webcast and can be accessed at the company’s website at www.mgic.com. The webcast is also being distributed over CCBN’s Investor Distribution Network to both institutional and individual investors. Investors can listen to the call through CCBN’s individual investor center at www.companyboardroom.com or by visiting any of the investor sites in CCBN’s Individual Investor Network. The webcast will be available for replay through November 14, 2005.

This press release, which includes certain additional statistical and other information, including non-GAAP financial information, is available on the Company’s website at www.mgic.com under “Investor — News and Financials — News Releases.”

Safe Harbor Statement

Forward-Looking Statements and Risk Factors:

The Company’s revenues and losses could be affected by the risk factors discussed below, which should be reviewed in conjunction with the Company’s periodic reports to the SEC. 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. The Company is not undertaking any obligation to update any forward looking

statements it may make even though these statements may be affected by events or circumstances occurring after the forward looking statements were made.

The amount of insurance the Company writes could be adversely affected if lenders and investors select alternatives to private mortgage insurance.

These alternatives to private mortgage insurance include:

	•		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%, 15% or 20% loan-to-value ratio (referred to as 80-10-10, 80-15-5 or 80-20 loans, respectively) rather than a first mortgage with a 90%, 95% or 100% loan-to-value ratio,
	•		investors holding mortgages in portfolio and self-insuring,
	•		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
	•		lenders using government mortgage insurance programs, including those of the Federal Housing Administration and the Veterans Administration.

While no data is publicly available, the Company believes that 80-10-10 loans and related products are a significant percentage of mortgage originations in which borrowers make down payments of less than 20% and that their use, which the Company believes is primarily by borrowers with higher credit scores, continues to increase. During the fourth quarter of 2004, the Company introduced on a national basis a program designed to recapture business lost to these mortgage insurance avoidance products but there can be no assurance that it will be successful.

Deterioration in the domestic economy or changes in the mix of business may result in more homeowners defaulting and the Company’s losses increasing.

Losses result from events that reduce a borrower’s ability to continue to make mortgage payments, such as unemployment, and whether the home of a borrower who defaults on his mortgage can be sold for an amount that will cover unpaid principal and interest and the expenses of the sale. 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. A deterioration in economic conditions generally increases the likelihood that borrowers will not have sufficient income to pay their mortgages and can also adversely affect housing values.

Less than 3% of the Company’s risk in force is located in areas within Alabama, Louisiana, Mississippi and Texas that have been declared eligible for individual and public assistance by the Federal Emergency Management Agency (“FEMA”) as a result of Hurricanes Katrina and Rita. The effect on the Company from these hurricanes, however, will likely not be limited to these areas to the extent that the borrowers in areas that have not experienced wind or water damage are adversely affected due to deteriorating economic conditions attributable to the hurricanes.

The mix of business the Company writes also affects the likelihood of losses occurring. In recent years, the percentage of the Company’s volume written on a flow basis that includes segments the Company views as having a higher probability of claim has continued to increase. These segments include loans with loan-to-value (“LTV”) ratios over 95% (including loans with 100% LTV ratios), “FICO” credit scores below 620, limited underwriting, including limited borrower documentation, or total debt-to-income ratios of 38% or higher, as well as loans having combinations of higher risk factors.

Approximately 9% of the Company’s risk in force written through the flow channel, and more than half of the Company’s risk in force written through the bulk channel, consists of adjustable rate mortgages (“ARMs”). The Company believes that during a prolonged period of rising interest rates, claims on ARMs would be substantially

higher than for fixed rate loans, although the performance of ARMs has not been tested in such an environment. In addition, the Company believes the volume of “interest-only” loans has recently increased. Because interest-only loans are a relatively recent development, the Company has no data on their historical performance. The Company believes claim rates on certain interest-only loans will be substantially higher than on comparable loans requiring amortization. Interest-only loans may also be ARMs.

Competition or changes in the Company’s relationships with its customers could reduce the Company’s revenues or increase its losses.

Competition for private mortgage insurance premiums occurs not only among private mortgage insurers but also 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 or serviced by the lender. As discussed under “The mortgage insurance industry is subject to risk from private litigation and regulatory proceedings” below, the Company provided information to the New York Insurance Department about captive mortgage reinsurance arrangements and it has been publicly reported that certain other insurance departments may review or investigate such 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.

The Company’s private mortgage insurance competitors include:

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

Assured Guaranty Limited, a financial guaranty company whose mortgage insurance business is primarily reinsurance, also writes investment grade mortgage guaranty insurance on a direct basis.

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

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

	•		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
	•		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.

During the 1990s, the Company’s year-end persistency ranged from a high of 87.4% at December 31, 1990 to a low of 68.1% at December 31, 1998. At September 30, 2005 persistency was at 60.2%, compared to the record low of 44.9% at September 30, 2003. Over the past several years, refinancing has become easier to accomplish and less

costly for many consumers. Hence, even in an interest rate environment favorable to persistency improvement, the Company does not expect persistency will approach its December 31, 1990 level.

If the volume of low down payment home mortgage originations declines, the amount of insurance that the Company writes could decline which would reduce the Company’s revenues.

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

	•		The level of home mortgage interest rates,
	•		the health of the domestic economy as well as conditions in regional and local economies,
	•		housing affordability,
	•		population trends, including the rate of household formation,
	•		the rate of home price appreciation, which in times of heavy refinancing can affect whether refinance loans have loan-to-value ratios that require private mortgage insurance, and
	•		government housing policy encouraging loans to first-time homebuyers.

In general, the majority of the underwriting profit (premium revenue minus losses) that a book of mortgage insurance generates occurs in the early years of the book, with the largest portion of the underwriting profit realized in the first year. Subsequent years of a book generally result in modest underwriting profit or underwriting losses. This pattern of results occurs because relatively few of the claims that a book will ultimately experience occur in the first few years of the book, when premium revenue is highest, while subsequent years are affected by declining premium revenues, as persistency decreases due to loan prepayments, and higher losses.

If all other things were equal, a decline in new insurance written in a year that followed a number of years of higher volume could result in a lower contribution to the mortgage insurer’s overall results. This effect may occur because the older books will be experiencing declines in revenue and increases in losses with a lower amount of underwriting profit on the new book available to offset these results.

Whether such a lower contribution would in fact occur depends in part on the extent of the volume decline. Even with a substantial decline in volume, there may be offsetting factors that could increase the contribution in the current year. These offsetting factors include higher persistency and a mix of business with higher average premiums, which could have the effect of increasing revenues, and improvements in the economy, which could have the effect of reducing losses. In addition, the effect on the insurer’s overall results from such a lower contribution may be offset by decreases in the mortgage insurer’s expenses that are unrelated to claim or default activity, including those related to lower volume.

Changes in the business practices of Fannie Mae and Freddie Mac could reduce the Company’s revenues or increase its losses.

The business practices of the Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“Freddie Mac”), each of which is a government sponsored entity (“GSE”) affect the entire relationship between them and mortgage insurers and include:

	•		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,
	•		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,

	•		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 lower capital requirements for Fannie Mae and Freddie Mac when a mortgage is insured by a company with that rating,
	•		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,
	•		the terms on which mortgage insurance coverage can be canceled before reaching the cancellation thresholds established by law, and
	•		the circumstances in which mortgage servicers must perform activities intended to avoid or mitigate loss on insured mortgages that are delinquent.

The mortgage insurance industry is subject to the risk of private litigation and regulatory proceedings.

Consumers are bringing a growing number of lawsuits against home mortgage lenders and settlement service providers. In recent years, seven mortgage insurers, including MGIC, have been involved in litigation alleging violations of the anti-referral fee provisions of the Real Estate Settlement Procedures Act, which is commonly known as RESPA, and the notice provisions of the Fair Credit Reporting Act, which is commonly known as FCRA. MGIC’s settlement of class action litigation against it under RESPA became final in October 2003. MGIC settled the named plaintiffs’ claims in litigation against it under FCRA in late December 2004 following denial of class certification in June 2004. There can be no assurance that MGIC will not be subject to future litigation under RESPA or FCRA or that the outcome of any such litigation would not have a material adverse effect on the Company. In August 2005, the United States Court of Appeals for the Ninth Circuit decided a case under FCRA to which the Company was not a party that may make it more likely that the Company will be subject to future litigation regarding when notices to borrowers are required by FCRA.

In June 2005, in response to a letter from the New York Insurance Department, the Company provided information regarding captive mortgage reinsurance arrangements and other types of arrangements in which lenders receive compensation. Spokesmen for insurance commissioners in Colorado and North Carolina have been publicly reported as saying that those commissioners are considering investigating or reviewing captive mortgage reinsurance arrangements. Insurance departments or other officials in other states may also conduct such investigations or reviews. The anti-referral fee provisions of RESPA provide that the Department of Housing and Urban Development (“HUD”) as well as the insurance commissioner or attorney general of any state may bring an action to enjoin violations of these provisions of RESPA. The insurance law provisions of many states prohibit paying for the referral of insurance business and provide various mechanisms to enforce this prohibition. While the Company believes its captive reinsurance arrangements are in conformity with applicable laws and regulations, it is not possible to predict the outcome of any such reviews or investigations nor is it possible to predict their effect on the Company or the mortgage insurance industry.

Net premiums written could be adversely affected if the Department of Housing and Urban Development reproposes and adopts a regulation under the Real Estate Settlement Procedures Act that is equivalent to a proposed regulation that was withdrawn in 2004.

HUD regulations under RESPA prohibit paying lenders for the referral of settlement services, including mortgage insurance, and prohibit lenders from receiving such payments. In July 2002, HUD proposed a regulation that would exclude from these anti-referral fee provisions settlement services included in a package of settlement services offered to a borrower at a guaranteed price. HUD withdrew this proposed regulation in March 2004. Under the proposed regulation, if mortgage insurance were required on a loan, the package must include any mortgage insurance premium paid at settlement. Although certain state insurance regulations prohibit an insurer’s payment of referral fees, had this regulation been adopted in this form, the Company’s revenues could have been adversely affected to the extent that lenders offered such packages and received value from the Company in excess of what they could have received were the anti-referral fee provisions of RESPA to apply and if such state regulations were not applied to prohibit such payments.

The Company’s income from joint ventures could be adversely affected by credit losses, insufficient liquidity or competition affecting those businesses.

C-BASS: Credit-Based Asset Servicing and Securitization LLC (“C-BASS”) is particularly exposed to credit risk and funding risk. In addition, C-BASS’s results are sensitive to its ability to purchase mortgage loans and securities on terms that it projects will meet its return targets. With respect to credit risk, an increasing proportion of non-conforming mortgage originations (the types of mortgages C-BASS principally purchases), are products, such as interest only loans to subprime borrowers, that are viewed by C-BASS as having greater credit risk. In addition, credit losses are a function of housing prices, which in certain regions have experienced rates of increase greater than historical norms and greater than growth in median incomes.

With respect to liquidity, the substantial majority of C-BASS’s on-balance sheet financing for its mortgage and securities portfolio is short-term and dependent on the value of the collateral that secures this debt. While C-BASS’s policies governing the management of capital at risk are intended to provide sufficient liquidity to cover an instantaneous and substantial decline in value, such policies cannot guaranty that all liquidity required will in fact be available.

Although there has been growth in the volume of non-conforming mortgage originations in recent years, such growth may not continue if interest rates increase or the economy weakens. There is an increasing amount of competition to purchase non-conforming mortgages, including from newly established real estate investment trusts and from firms that in the past acted as mortgage securities intermediaries but which are now establishing their own captive origination capacity. Decreasing credit spreads also heighten competition in the purchase of non-conforming mortgages and other securities.

Sherman: The results of Sherman Financial Group LLC (“Sherman”) are sensitive to its ability to purchase receivable portfolios on terms that it projects will meet its return targets. While the volume of charged-off consumer receivables and the portion of these receivables that have been sold to third parties such as Sherman has grown in recent years, there is an increasing amount of competition to purchase such portfolios, including from new entrants to the industry, which has resulted in increases in the prices at which portfolios can be purchased.

The March 2005 acquisition of Bank of Marin is intended to provide Sherman with the capability to originate subprime credit card receivables. This acquisition has materially increased Sherman’s assets as well as its debt and its financial leverage. There can be no assurance that the benefits projected from the acquisition by Sherman will be achieved.

MGIC INVESTMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS

		Three Months Ended September 30,								Nine Months Ended September 30,
		2005				2004				2005				2004
		(in thousands of dollars, except per share data)
Net premiums written		$	314,178			$	320,803			$	935,637			$	968,991
Net premiums earned		$	305,841			$	324,224			$	933,553			$	996,868
Investment income			57,338				54,187				171,519				159,642
Realized gains (losses)			61				(228	)			16,813				15,025
Other revenue			12,503				12,851				33,719				38,087
Total revenues			375,743				391,034				1,155,604				1,209,622
Losses and expenses:
Losses incurred			146,197				169,802				381,978				514,552
Underwriting, other expenses			70,558				69,738				208,290				211,560
Interest expense			10,084				10,310				31,318				30,760
Ceding commission			(863	)			(956	)			(2,641	)			(2,741	)
Total losses and expenses			225,976				248,894				618,945				754,131
Income before tax and joint ventures			149,767				142,140				536,659				455,491
Provision for income tax			39,126				37,649				148,391				124,210
Income from joint ventures, net of tax (1)			31,741				29,578				110,484				87,385
Net income		$	142,382			$	134,069			$	498,752			$	418,666
Diluted weighted average common shares outstanding (Shares in thousands)			91,796				98,386				93,630				98,578
Diluted earnings per share		$	1.55			$	1.36			$	5.33			$	4.25
(1)     Diluted EPS contribution from C-BASS		$	0.15			$	0.12			$	0.58			$	0.49
Diluted EPS contribution from Sherman		$	0.19			$	0.17			$	0.57			$	0.37

NOTE: See “Certain Non-GAAP Financial Measures” for diluted earnings per share contribution from realized gains (losses).

MGIC INVESTMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET AS OF

		September 30,				December 31,				September 30,
		2005				2004				2004
		(in thousands of dollars, except per share data)
ASSETS
Investments (1)		$	5,536,119			$	5,582,627			$	5,575,367
Cash			1,814				2,829				2,820
Reinsurance recoverable on loss reserves (2)			14,620				17,302				17,379
Prepaid reinsurance premiums			7,780				6,836				7,173
Home office and equipment, net			32,717				36,382				35,742
Deferred insurance policy acquisition costs			20,723				27,714				29,298
Other assets			736,195				707,001				631,565
		$	6,349,968			$	6,380,691			$	6,299,344
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Loss reserves (2)			1,101,042				1,185,594				1,150,610
Unearned premiums			146,462				143,433				139,903
Short- and long-term debt			599,806				639,303				599,726
Other liabilities			255,764				268,722				283,218
Total liabilities			2,103,074				2,237,052				2,173,457
Shareholders’ equity			4,246,894				4,143,639				4,125,887
		$	6,349,968			$	6,380,691			$	6,299,344
Book value per share		$	46.56			$	43.05			$	42.12
(1) Investments include unrealized gains on securities marked to market pursuant to FAS 115			135,636				193,864				199,712
(2) Loss reserves, net of reinsurance recoverable on loss reserves			1,086,422				1,168,292				1,133,231

CERTAIN NON-GAAP FINANCIAL MEASURES

		Three Months Ended September 30,								Nine Months Ended September 30,
		2005				2004				2005				2004
		(in thousands of dollars, except per share data)
Diluted earnings per share contribution from realized gains (losses):
Realized gains (losses)		$	61			$	(228	)		$	16,813			$	15,025
Income taxes at 35%			21				(80	)			5,885				5,259
After tax realized gains (losses)			40				(148	)			10,928				9,766
Weighted average shares			91,796				98,386				93,630				98,578
Diluted EPS contribution from realized gains (losses)		$	0.00			$	0.00			$	0.12			$	0.10

Management believes the diluted earnings per share contribution from realized gains (losses) provides useful information to investors because it shows the after-tax effect that sales of securities from the Company’s investment portfolio, which are discretionary transactions, had on earnings.

OTHER INFORMATION

New primary insurance written (“NIW”) ($ millions)		$	18,126			$	18,047			$	46,161			$	47,101
New risk written ($ millions):
Primary		$	5,087			$	4,946			$	12,586			$	12,533
Pool (1)		$	97			$	55			$	203			$	153
Product mix as a % of primary NIW
95% LTVs			27	%			31	%			27	%			32	%
ARMs			12	%			16	%			13	%			14	%
Refinances			27	%			23	%			28	%			30	%
Net paid claims ($ millions)
Flow		$	72			$	70			$	217			$	204
Bulk (2)			65				56				187				164
Other			20				18				60				58
		$	157			$	144			$	464			$	426

(1)		Represents contractual aggregate loss limits and, for the three and nine months ended September 30, 2005 and 2004, for $98 million, $900 million, $252 million and $820 million, respectively, of risk without such limits, risk is calculated at $5 million, $49 million, $16 million and $42 million, respectively, the estimated amount that would credit enhance these loans to a ‘AA’ level based on a rating agency model.
(2)		Bulk loans are those that are part of a negotiated transaction between the lender and the mortgage insurer.

OTHER INFORMATION

		As of
		September 30,				December 31,				September 30,
		2005				2004				2004
Direct Primary Insurance In Force ($ millions)			170,207				177,091				179,827
Direct Primary Risk In Force ($ millions)			44,666				45,981				46,535
Direct Pool Risk In Force ($ millions) (1)			2,876				3,022				2,998
Mortgage Guaranty Insurance Corporation — Risk-to-capital ratio			6.5:1				6.8:1				7.1:1
Primary Insurance:
Insured Loans			1,323,197				1,413,678				1,447,051
Persistency			60.2	%			60.2	%			59.4	%
Total loans delinquent			78,754				85,487				83,940
Percentage of loans delinquent (delinquency rate)			5.95	%			6.05	%			5.80	%
Loans delinquent excluding bulk loans			41,742				44,925				43,496
Percentage of loans delinquent excluding bulk loans (delinquency rate)			3.95	%			3.99	%			3.80	%
Bulk loans delinquent			37,012				40,562				40,444
Percentage of bulk loans delinquent (delinquency rate)			13.92	%			14.06	%			13.40	%
A-minus and subprime credit loans delinquent (2)			34,265				35,824				35,135
Percentage of A-minus and subprime credit loans delinquent (delinquency rate)			16.66	%			16.49	%			15.75	%

(1)		Represents contractual aggregate loss limits and, at September 30, 2005, December 31, 2004 and September 30, 2004, respectively, for $5.1 billion, $4.9 billion and $4.8 billion of risk without such limits, risk is calculated at $468 million, $418 million and $395 million, the estimated amounts that would credit enhance these loans to a ‘AA’ level based on a rating agency model.
(2)		A-minus and subprime credit is included in flow, bulk and total.

ADDITIONAL INFORMATION

		Q3 2003				Q4 2003				Q1 2004				Q2 2004				Q3 2004				Q4 2004				Q1 2005				Q2 2005				Q3 2005
Insurance inforce
Flow ($ bil)		$	145.7			$	144.8			$	143.0			$	140.6			$	140.0			$	138.0			$	135.1			$	132.8			$	130.9
Bulk ($ bil)		$	45.3			$	44.8			$	42.3			$	39.8			$	39.8			$	39.1			$	37.0			$	39.0			$	39.3
Risk inforce
% Prime (FICO 620 & >)			82.2	%			82.4	%			83.0	%			83.7	%			83.9	%			84.2	%			84.6	%			84.2	%			84.0	%
% A minus (FICO 575 - 619)			12.6	%			12.6	%			12.3	%			11.8	%			11.6	%			11.3	%			11.0	%			11.1	%			11.1	%
% Subprime (FICO < 575)			5.2	%			5.0	%			4.7	%			4.5	%			4.5	%			4.5	%			4.4	%			4.7	%			4.9	%
Bulk % of risk inforce by credit grade
Prime (FICO 620 & >)			54.4	%			55.0	%			55.6	%			56.3	%			57.4	%			58.1	%			58.4	%			58.0	%			57.5	%
A minus (FICO 575 - 619)			30.1	%			30.1	%			29.9	%			29.4	%			28.3	%			27.5	%			27.1	%			26.7	%			26.8	%
Subprime (FICO < 575)			15.5	%			14.9	%			14.5	%			14.3	%			14.3	%			14.4	%			14.5	%			15.3	%			15.7	%
Flow % of risk inforce by credit grade
% Prime (FICO 700 and >)			49.7	%			49.8	%			49.9	%			49.9	%			50.3	%			51.2	%			51.4	%			51.9	%			52.3	%
% Prime (FICO 620 - 699)			43.0	%			43.0	%			43.0	%			43.0	%			42.8	%			42.0	%			41.8	%			41.5	%			41.2	%
% A minus (FICO 575 - 619)			6.1	%			6.0	%			5.9	%			5.9	%			5.8	%			5.7	%			5.7	%			5.6	%			5.5	%
% Subprime (FICO < 575)			1.2	%			1.2	%			1.2	%			1.2	%			1.1	%			1.1	%			1.1	%			1.0	%			1.0	%
New insurance written
Flow ($ bil)		$	20.7			$	14.2			$	10.8			$	13.2			$	12.1			$	11.0			$	8.9			$	10.4			$	11.4
Bulk ($ bil)		$	7.3			$	5.1			$	2.1			$	2.9			$	6.0			$	4.8			$	2.5			$	6.2			$	6.8
Average loan size of Insurance in force (000’s)
Flow		$	119.4			$	120.4			$	120.9			$	121.4			$	122.2			$	122.6			$	122.7			$	123.2			$	123.8
Bulk		$	128.1			$	128.4			$	127.8			$	128.3			$	132.0			$	135.5			$	136.7			$	141.7			$	147.8
Average Coverage Rate of Insurance in force
Flow			24.6	%			24.8	%			24.4	%			24.5	%			24.6	%			24.8	%			24.8	%			25.0	%			25.1	%
Bulk			28.2	%			29.0	%			30.2	%			30.1	%			30.2	%			30.2	%			30.3	%			30.0	%			30.1	%
Paid Losses (000’s)
Average severity flow		$	22.9			$	23.8			$	25.0			$	25.0			$	25.2			$	25.6			$	26.5			$	25.8			$	26.4
Average severity bulk		$	22.0			$	23.4			$	22.8			$	22.7			$	23.9			$	25.0			$	25.6			$	25.6			$	27.1
Average severity total		$	22.5			$	23.6			$	24.0			$	23.9			$	24.6			$	25.3			$	26.1			$	25.7			$	26.7
Risk sharing Arrangements — Flow Only
% insurance inforce subject to risk sharing (1)			45.3	%			46.1	%			46.7	%			47.1	%			47.7	%			48.1	%			48.0	%			48.0	%
% Quarterly NIW (flow only) subject to risk sharing (1)			53.4	%			50.8	%			51.2	%			53.2	%			49.8	%			48.5	%			47.0	%			46.7	%
Premium ceded (millions)		$	28.8			$	28.4			$	29.0			$	29.0			$	30.5			$	26.3			$	30.2			$	30.3			$	30.5
Documentation Type — % of Risk in Force that is Alt A
Bulk (2)			n/a				24.8	%			24.7	%			24.6	%			24.6	%			25.8	%			26.7	%			27.8	%			29.5	%
Flow (2)			n/a				6.7	%			6.9	%			7.2	%			6.9	%			6.9	%			6.7	%			6.6	%			6.7	%
Total (2)			n/a				11.7	%			11.7	%			11.6	%			11.5	%			11.7	%			11.7	%			12.1	%			12.7	%
Other:
Shares repurchased
# of shares (000)			0.0				94.5				395.0				319.5				682.1				1,692.4				1,100.1				3,350.0				1,109.3
Average price		$	—			$	52.29			$	67.48			$	71.88			$	67.62			$	64.57			$	62.33			$	60.73			$	62.84
C-BASS Investment		$	204.6			$	219.8			$	228.7			$	243.0			$	261.5			$	285.2			$	304.8			$	330.6			$	341.8
Sherman Investment		$	52.3			$	63.7			$	45.8			$	46.3			$	71.2			$	97.0			$	69.4			$	101.4			$	50.9
GAAP loss ratio (insurance operations only)			63.7	%			65.7	%			55.8	%			46.5	%			52.4	%			56.1	%			31.3	%			43.9	%			47.8	%
GAAP expense ratio (insurance operations only)			14.0	%			13.1	%			13.7	%			15.1	%			14.7	%			15.0	%			15.9	%			15.1	%			15.7	%

Footnotes:

	(1)		Latest Quarter data not available due to lag in reporting
	(2)		Data not tracked prior to Q4 2003