MGIC INVESTMENT CORPORATION

SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT

CONDENSED BALANCE SHEETS

PARENT COMPANY ONLY

December 31, 2012 and 2011

	2012			2011
	(In thousands)
ASSETS

Fixed maturities (amortized cost, 2012-$137,330; 2011-$421,250)	$	139,019		$	428,985
Cash and cash equivalents		175,880			57,636
Investment in subsidiaries, at equity in net assets		709,946			1,544,017
Accounts receivable - affiliates		669			-
Income taxes receivable		17,955			23,864
Accrued investment income		1,018			3,720
Other assets		7,431			11,785
Total assets	$	1,051,918		$	2,070,007

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Senior notes	$	99,910		$	170,515
Convertible senior notes		345,000			345,000
Convertible junior debentures		379,609			344,422
Accounts payable - affiliates		-			84
Accrued interest		30,459			13,171
Total liabilities		854,978			873,192

Shareholders' equity
Common stock, (one dollar par value, shares authorized 680,000; shares issued 2012 and 2011 - 205,047; shares outstanding 2012 – 202,032; 2011 - 201,172)		205,047			205,047
Paid-in capital		1,135,296			1,135,821
Treasury stock (shares at cost, 2012 – 3,015; 2011 - 3,875)		(104,959	)		(162,542	)
Accumulated other comprehensive (loss) income, net of tax		(48,163	)		30,124
Retained deficit		(990,281	)		(11,635	)
Total shareholders' equity		196,940			1,196,815
Total liabilities and shareholders' equity	$	1,051,918		$	2,070,007

See accompanying supplementary notes to Parent Company condensed financial statements.

CONDENSED STATEMENTS OF OPERATIONS

PARENT COMPANY ONLY

Years Ended December 31, 2012, 2011 and 2010

	2012			2011			2010
	(In thousands)
Revenues:
Investment income, net of expenses	$	6,921		$	15,693		$	5,573
Realized investment gains, net		9,895			4,724			163
Other income		17,775			27,688			-
Total revenues		34,591			48,105			5,736

Expenses:
Operating expenses		2,227			(133	)		2,116
Interest expense		99,344			103,271			98,589
Total expenses		101,571			103,138			100,705
Loss before income taxes		(66,980	)		(55,033	)		(94,969	)
Benefit from income taxes		-			(6,872	)		(2,078	)
Equity in undistributed net loss of subsidiaries		(860,099	)		(437,731	)		(270,844	)
Net loss		(927,079	)		(485,892	)		(363,735	)
Other comprehensive (loss) income, net		(78,287	)		7,988			(52,019	)
Comprehensive loss	$	(1,005,366	)	$	(477,904	)	$	(415,754	)

See accompanying supplementary notes to Parent Company condensed financial statements.

CONDENSED STATEMENTS OF CASH FLOWS

PARENT COMPANY ONLY

Years Ended December 31, 2012, 2011 and 2010

	2012			2011			2010
	(In thousands)
Cash flows from operating activities:
Net loss	$	(927,079	)	$	(485,892	)	$	(363,735	)
Adjustments to reconcile net loss to net cash used in operating activities:
Equity in undistributed net loss of subsidiaries		860,099			437,731			270,844
Other		23,765			7,378			40,638
Change in certain assets and liabilities:
Accounts receivable - affiliates		(753	)		770			658
Income taxes receivable		5,909			(2,452	)		6,330
Accrued investment income		2,702			1,890			(5,474	)
Accrued interest		17,288			(2,438	)		(33,795	)
Net cash used in operating activities		(18,069	)		(43,013	)		(84,534	)

Cash flows from investing activities:
Transactions with subsidiaries		(100,000	)		(200,000	)		(200,000	)
Purchase of fixed maturities		(120,181	)		(130,503	)		(977,408	)
Sale of fixed maturities		409,601			551,493			135,413
Net cash provided by (used in) investing activities		189,420			220,990			(1,041,995	)

Cash flows from financing activities:
Repayment of long-term debt		(53,107	)		(178,721	)		(1,000	)
Net proceeds from convertible senior notes		-			-			334,373
Common stock shares issued		-			-			772,376
Net cash (used in) provided by financing activities		(53,107	)		(178,721	)		1,105,749

Net increase (decrease) in cash and cash equivalents		118,244			(744	)		(20,780	)
Cash and cash equivalents at beginning of year		57,636			58,380			79,160
Cash and cash equivalents at end of period	$	175,880		$	57,636		$	58,380

See accompanying supplementary notes to Parent Company condensed financial statements.

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 in Item 8 of 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 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.

The senior notes, convertible senior notes and convertible debentures, discussed in Note 8 – "Debt" to our consolidated financial statements in Item 8, are obligations of MGIC Investment Corporation, our holding company, and not of its subsidiaries. The payment of dividends from our insurance subsidiaries, which prior to raising capital in the public markets in 2008 and 2010 had been the principal source of our holding company cash inflow, is restricted by insurance regulation. MGIC is the principal source of dividend-paying capacity. In 2009 through 2012, MGIC has not paid any dividends to our holding company. In 2013, MGIC and our other insurance subsidiaries cannot pay any dividends to our holding company without approval from the OCI.

In the fourth quarter of 2008, we suspended the payment of dividends to shareholders.