MGIC INVESTMENT CORPORATION

SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT

CONDENSED BALANCE SHEETS

PARENT COMPANY ONLY

December 31, 2014 and 2013

	2014			2013
	(In thousands)
ASSETS

Fixed maturities (amortized cost, 2014 – $482,629; 2013 – $548,528)	$	480,125		$	539,124
Cash and cash equivalents		10,507			20,725
Investment in subsidiaries, at equity in net assets		1,821,024			1,475,956
Accounts receivable - affiliates		312			380
Income taxes receivable		17,478			17,958
Accrued investment income		3,435			3,629
Other assets		15,156			18,943
Total assets	$	2,348,037		$	2,076,715

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Senior notes	$	61,918		$	82,773
Convertible senior notes		845,000			845,000
Convertible junior debentures		389,522			389,522
Accrued interest		14,694			14,882
Total liabilities		1,311,134			1,332,177

Shareholders’ equity
Common stock, (one dollar par value, shares authorized 1,000,000; shares issued 2014 and 2013 – 340,047; outstanding 2014 – 338,560; 2013 – 337,758)		340,047			340,047
Paid-in capital		1,663,592			1,661,269
Treasury stock (shares at cost, 2014 – 1,487; 2013 – 2,289)		(32,937	)		(64,435	)
Accumulated other comprehensive loss, net of tax		(81,341	)		(117,726	)
Retained deficit		(852,458	)		(1,074,617	)
Total shareholders’ equity		1,036,903			744,538
Total liabilities and shareholders’ equity	$	2,348,037		$	2,076,715

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, 2014, 2013 and 2012

	2014			2013			2012
	(In thousands)
Revenues:
Investment income, net of expenses	$	6,985		$	5,033		$	6,921
Net realized investment gains		395			830			9,895
Other revenue		-			-			17,775
Total revenues		7,380			5,863			34,591

Expenses:
Operating expenses and other		1,383			511			2,227
Interest expense		69,648			79,663			99,344
Total expenses		71,031			80,174			101,571
Loss before tax		(63,651	)		(74,311	)		(66,980	)
Provision for income taxes		-			-			-
Equity in undistributed net income (loss) of subsidiaries		315,600			24,463			(860,099	)
Net income (loss)		251,949			(49,848	)		(927,079	)
Other comprehensive income (loss), net of tax		36,385			(69,563	)		(78,287	)
Comprehensive income (loss)	$	288,334		$	(119,411	)	$	(1,005,366	)

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, 2014, 2013 and 2012

	2014			2013			2012
	(In thousands)
Cash flows from operating activities:
Net income (loss)	$	251,949		$	(49,848	)	$	(927,079	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Equity in undistributed net (income) loss of subsidiaries		(315,600	)		(24,463	)		860,099
Other		14,862			21,693			23,765
Change in certain assets and liabilities:
Accounts receivable - affiliates		68			289			(753	)
Income taxes receivable		480			(3	)		5,909
Accrued investment income		194			(2,611	)		2,702
Accrued interest		(188	)		(15,577	)		17,288
Net cash used in operating activities		(48,235	)		(70,520	)		(18,069	)

Cash flows from investing activities:
Transactions with subsidiaries		-			(800,000	)		(100,000	)
Purchase of fixed maturities		(553,538	)		(563,968	)		(120,181	)
Sale of fixed maturities		613,322			148,608			409,601
Net cash provided by (used in) investing activities		59,784			(1,215,360	)		189,420

Cash flows from financing activities:
Repayment of long-term debt		(21,767	)		(17,235	)		(53,107	)
Net proceeds from convertible senior notes		-			484,625			-
Common stock shares issued		-			663,335			-
Net cash (used in) provided by financing activities		(21,767	)		1,130,725			(53,107	)

Net (decrease) increase in cash and cash equivalents		(10,218	)		(155,155	)		118,244
Cash and cash equivalents at beginning of year		20,725			175,880			57,636
Cash and cash equivalents at end of year	$	10,507		$	20,725		$	175,880

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 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 other than raising capital in the public markets is the principal source of our holding company cash inflow, is restricted by insurance regulation. MGIC is the principal source of dividend-paying capacity. Since 2008, MGIC has not paid any dividends to our holding company. In 2015, MGIC 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.