SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT

12 Months Ended

Dec. 31, 2016

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT

CONDENSED BALANCE SHEETS

PARENT COMPANY ONLY



	December 31,
(In thousands)	2016			2015
ASSETS
Fixed income (amortized cost, 2016 – $247,396; 2015 – $385,281)	$	245,435		$	382,565
Cash and cash equivalents	37,666			19,417
Investment in subsidiaries, at equity in net assets	3,150,671			2,903,944
Accounts receivable - affiliates	780			938
Income taxes - current and deferred	289,703			151,318
Accrued investment income	1,749			3,700
Other assets	80			123
Total assets	$	3,726,084		$	3,462,005

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Senior notes	$	417,406		$	—
Convertible senior notes	349,461			822,301
Convertible junior subordinated debentures	389,522			389,522
Accrued interest	20,853			14,042
Total liabilities	1,177,242			1,225,865

Shareholders’ equity:
Common stock, (one dollar par value, shares authorized 1,000,000; shares issued 2016 – 359,400; 2015 – 340,097; outstanding 2016 – 340,663; 2015 – 339,657)	359,400			340,097
Paid-in capital	1,782,337			1,670,238
Treasury stock (shares at cost 2016 – 18,737; 2015 – 440)	(150,359		)	(3,362		)
Accumulated other comprehensive loss, net of tax	(75,100		)	(60,880		)
Retained earnings	632,564			290,047
Total shareholders’ equity	2,548,842			2,236,140
Total liabilities and shareholders’ equity	$	3,726,084		$	3,462,005

See accompanying supplementary notes to Parent Company condensed financial statements.

MGIC INVESTMENT CORPORATION

SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT

CONDENSED STATEMENTS OF OPERATIONS

PARENT COMPANY ONLY



	Years Ended December 31,
(In thousands)	2016			2015			2014
Revenues:
Investment income, net of expenses	$	3,807		$	7,586		$	6,985
Net realized investment gains	646			357			395
Total revenues	4,453			7,943			7,380

Expenses:
Operating expenses	1,409			582			546
Interest expense	64,598			68,932			69,648
Loss on debt extinguishment	82,234			507			837
Total expenses	148,241			70,021			71,031
Loss before tax	(143,788		)	(62,078		)	(63,651		)
Benefit from income taxes	(52,575		)	(125,487		)	—
Equity in net income of subsidiaries	433,730			1,108,591			315,600
Net income	342,517			1,172,000			251,949
Other comprehensive (loss) income, net of tax	(14,220		)	20,461			36,385
Comprehensive income	$	328,297		$	1,192,461		$	288,334

See accompanying supplementary notes to Parent Company condensed financial statements.

MGIC INVESTMENT CORPORATION

SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT

CONDENSED STATEMENTS OF CASH FLOWS

PARENT COMPANY ONLY



	Years Ended December 31,
(In thousands)	2016			2015			2014
Cash flows from operating activities:
Net income	$	342,517		$	1,172,000		$	251,949
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Equity in net income of subsidiaries	(433,730		)	(1,108,591		)	(315,600		)
Dividends received from subsidiaries	64,000			6,500			—
Deferred tax benefit	(55,988		)	(125,532		)	—
Loss on debt extinguishment	82,234			507			837
Other	11,625			22,342			14,025
Change in certain assets and liabilities:
Accounts receivable - affiliates	158			(626		)	68
Income taxes receivable	3,602			(8,308		)	480
Accrued investment income	1,951			(265		)	194
Accrued interest	6,811			(652		)	(188		)
Net cash provided by (used in) operating activities	23,180			(42,625		)	(48,235		)

Cash flows from investing activities:
Capital distributions from subsidiaries	51,987			32,000			—
Capital contributions to subsidiaries	(36,025		)	—			—
Purchase of fixed income	(194,751		)	(295,010		)	(553,538		)
Sale of fixed income	330,142			386,385			613,322
Net cash provided by investing activities	151,353			123,375			59,784

Cash flows from financing activities:
Net proceeds from issuance of long-term debt	416,967			—			—
Repayment of long-term debt	—			(61,953		)	(21,767		)
Repurchase of convertible senior notes	(426,191		)	(12,004		)	—
Repurchase of common stock	(147,127		)	—			—
Excess tax benefits related to share-based compensation	67			2,117			—
Net cash used in financing activities	(156,284		)	(71,840		)	(21,767		)

Net increase (decrease) in cash and cash equivalents	18,249			8,910			(10,218		)
Cash and cash equivalents at beginning of year	19,417			10,507			20,725
Cash and cash equivalents at end of year	$	37,666		$	19,417		$	10,507

See accompanying supplementary notes to Parent Company condensed financial statements.

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 this annual report.

Note B

Our 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 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.

The payment of dividends from our insurance subsidiaries is the principal source of cash inflow for MGIC Investment Corporation, our holding company, other than investment income and raising capital in the public markets. The payment of dividends by our insurance subsidiaries is restricted by insurance regulation as discussed above. MGIC is the principal source of dividend-paying capacity and, in 2016, it paid a total of $64 million in dividends to our holding company, its first dividends since 2008, and we expect MGIC to continue to pay quarterly dividends. During 2016, distributions of $52 million were paid to our holding company from other insurance subsidiaries. These distributions were completed in conjunction with the transfer of risk and the final dissolution of those insurance entities during 2016. Our holding company subsequently contributed the majority of the funds, approximately $36 million, to MGIC in relation to the transfer of risk. During 2015, distributions of $38.5 million, which includes dividends of $6.5 million, were paid to the holding company from other insurance subsidiaries. No dividends were paid to the holding company by our insurance subsidiaries in 2014 and no contributions were made to our insurance subsidiaries in 2015 or 2014.

Note C

The senior notes, convertible senior notes and convertible junior subordinated debentures ("9% Debentures"), discussed in Note 7 – “Debt” to our consolidated financial statements, are obligations of MGIC Investment Corporation, our holding company, and not of its subsidiaries. In February 2016, MGIC purchased $132.7 million in aggregate principal of the 9% Debentures. The details of this transaction are discussed in Note 7 – “Debt” to our consolidated financial statements. The 9% Debentures owned by MGIC remain obligations of our holding company. The carrying amount outstanding of the 9% Debentures of $389.5 million is reported on the Parent Company only condensed balance sheet. For GAAP accounting purposes, the 9% Debentures owned by MGIC are eliminated in our consolidated financial statements.