MGIC Investment Corporation (MTG) Stock Analysis & Winston Score

MGIC Investment Corporation sells private mortgage insurance, or PMI. When someone buys a home but puts down less than 20%, their lender usually requires mortgage insurance to protect against the risk of the borrower not paying back the loan. MGIC's customers are mainly banks, credit unions, and mortgage lenders across the United States, and the company is one of the largest private mortgage insurers in the country. MGIC makes money by collecting insurance premiums from lenders and borrowers over the life of a mortgage policy. It operates almost entirely in the United States, and its competitive position benefits from strict government regulations that limit new competitors from easily entering the industry. The biggest risk the company faces is a rise in mortgage defaults — if home prices fall sharply or unemployment climbs, more borrowers stop making payments, which forces MGIC to pay out more claims and hurts its profits.