MGIC is the oldest and one of the largest US private mortgage insurers. It never lends — it insures the low-down-payment mortgages that lenders and the GSEs (Fannie Mae, Freddie Mac) can only accept if a third party covers the default risk. The borrower pays the monthly premium; MGIC pools and prices the risk, cedes the biggest tail losses to reinsurers, and invests the float. At the end of 2024 it carried $295B of primary insurance in force across 1.1M mortgages and earned $763M.
Who pays, who's protected
The twist in mortgage insurance: the borrower PAYS the premium, but the lender and the GSEs are the ones PROTECTED. MGIC sits in the middle — it lets a buyer with less than 20% down get a loan, and lets the lender sell that loan to Fannie Mae or Freddie Mac, by promising to cover the loss if the borrower defaults.