MGIC Investment Corporation


Click the image to learn more. Photograph of the uniquely designed MGIC building taken in 2006. The building forms an upside-down pyramid, with each floor constructed to be bigger than the one below it.

MGIC Investment Corporation is the publicly traded parent company of the Mortgage Guaranty Insurance Corporation (MGIC).[1] With roughly 550 Milwaukee-based employees and offices throughout the country, MGIC is the one of the nation’s largest private mortgage insurers.[2] Despite losses due to the subprime mortgage crisis of the early twenty-first century, MGIC has reemerged profitable. The corporation’s 2015 income totaled $1.2 billion.[3]

MGIC was founded by real estate attorney Max H. Karl in 1957.[4] Believing that federal mortgage guarantees were too burdensome to attain, Karl began MGIC as the first private mortgage insurer.[5] Private mortgage insurance protected loan originators and allowed them to offer loans to borrowers unable to make a full twenty percent down payment.[6] By 1967, MGIC controlled around seventy percent of the American private mortgage insurance market.[7]

In 1982, MGIC merged with Baldwin-United Corporation.[8] The merger was short-lived, as Baldwin-United’s debt caused it to seek out buyers for the profitable MGIC.[9] In 1985, with the financial backing of Northwestern Mutual Life Insurance Company, Max Karl led a group of MGIC executives to repurchase MGIC from Baldwin-United.[10] The newly independent MGIC returned to large profits by 1989.[11]

Hard hit by the subprime mortgage crisis, MGIC failed to post a profit between 2007 and 2014.[12] The company reduced its workforce, though many of these reductions came through attrition.[13] Throughout these difficulties, MGIC remained one of Southeastern Wisconsin’s most employee-friendly firms. The Journal Sentinel ranked MGIC among Greater Milwaukee’s top ten large workplaces each year from 2010 to 2016.[14]

Footnotes [+]

  1. ^ Anne Curley, “MGIC Plans Merger with Ohio Company,” Milwaukee Journal, December 14, 1981; “Stock Listing Aim of MGIC Operation,” Milwaukee Journal, September 17, 1968.
  2. ^ “MGIC Investment Corporation,” Milwaukee Journal Sentinel: Top Workplaces, accessed May 23, 2016; “Careers,” MGIC website, accessed May 23, 2016.
  3. ^ Paul Gores, “MGIC Caps Strong Fiscal Year as Housing Market Heals,” Milwaukee Journal Sentinel, January 21, 2016.
  4. ^ “History,” MGIC website, accessed May 18, 2016.
  5. ^ “History,” MGIC website, accessed May 18, 2016; James Graaskamp, “Development and Structure of Mortgage Loan Guaranty Insurance in the United States,” Journal of Risk and Insurance 34, no. 1 (March 1967): 54.
  6. ^ Michael Quint, “Max H. Karl, 85, Pioneer in Mortgage Insurance,” New York Times, April 20, 1995.
  7. ^ “Figures Depict MGIC Growth, Computer Defines Its Strength,” Milwaukee Journal, January 25, 1968.
  8. ^ Anne Curley, “MGIC Plans Merger with Ohio Company,” Milwaukee Journal, December 14, 1981; Quint, “Max H. Karl.”
  9. ^ Judy Wenzel, “Troubled Parent Firm Plans to Sell MGIC,” Milwaukee Journal, September 14, 1983; “Buyers Sought for MGIC,” Milwaukee Journal, February 3, 1984.
  10. ^ Judy Wenzel, “Free at Last: MGIC No Longer Trapped in Baldwin-United,” Milwaukee Journal, March 1, 1985.
  11. ^ Cary Spivak, “MGIC Should Post ‘Meaningful Profit’ for Year, Chief Says,” Milwaukee Sentinel, December 12, 1989.
  12. ^ Gores, “MGIC Caps Strong Fiscal Year.”
  13. ^ Paul Gores, “MGIC Keeps Benefits in Hard Times,” Milwaukee Journal Sentinel, May 20, 2011.
  14. ^ Thomas Content, “Consistently Strong Workplaces Respond to Employees’ Changing Needs,” Milwaukee Journal Sentinel, June 12, 2015; “Top Workplaces 2016,” Milwaukee Journal Sentinel, April 22, 2016, accessed June 2, 2016.

For Further Reading

Graaskamp, James. “Development and Structure of Mortgage Loan Guaranty Insurance in the United States.” Journal of Risk and Insurance 34, no. 1 (March 1967): 47-67.

Rapkin, Chester, J., Robert Ferrari, Roger Blood, and Grace Milgram. The Private Insurance of Home Mortgages: A Study of Mortgage Guaranty Insurance Corporation. Philadelphia: University of Pennsylvania Institute for Environmental Studies, 1967.

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Understory

The Man Who Built MGIC: An Oral History with Max Karl

Conducting historical research is a lot like a treasure hunt. Both historians and treasure hunters spend hours following leads, deciphering clues, and digging. There is a lot of digging. Sometimes, that digging turns up marvelous things that are not quite what you were looking for, but that are wonderful all the same. When I was researching the MGIC Investment Corporation, I found one of these unexpected gems.

In 1990, Max Karl, the founder of MGIC, was one of seven Milwaukeeans interviewed for the Polish-Jewish Relations in Milwaukee Oral History Project. Robert Mink, a history graduate student at UWM, completed this project as a student in Professor Michael Gordon’s class in 1990. Mink’s original audiotapes and their transcripts are housed at the UWM Libraries’ Archives. (Full disclosure: I was a student worker at the Archives.) And, even better for a history treasure hunter, all of the tapes have been digitized.

The interview with Max Karl is wonderfully detailed. For over forty-five minutes, Karl reminisces about his family history, his childhood on Milwaukee’s south side, and his experience as a Jewish man living in a predominantly Polish neighborhood. Max Karl’s sister, Minnie Friedman, was also interviewed for the project. The interviews cover everything from their father’s dry goods business to their family religious practices.

As the interview deals primarily with Karl’s personal history, very little of this rich information made its way into the Encyclopedia of Milwaukee entry on MGIC. With only a limited number of words to talk about MGIC, there was no room to talk about Karl’s background. Knowing this history, however, added new dimensions to my understanding of MGIC and Karl’s fights to maintain his company.

Listening to Karl’s story, I felt that I was getting to know this man in a much more personal way than I would ever be able to do through corporate histories. By understanding more of Max Karl’s personal life, I was able to better understand his company and his desire to see MGIC succeed.

For further reading:

Polish-Jewish Relations in Milwaukee Oral History Project Records Finding Aid, Archival Resources in Wisconsin: Descriptive Finding Aids website, last accessed March 9, 2018.

Digitized Oral History Interview with Max Karl, June 29, 1990, University of Wisconsin-Milwaukee Libraries website, last accessed March 9, 2018.

Jenna Himsl