<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 1-11356
CMAC INVESTMENT CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 23-2691170
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
1601 MARKET STREET, PHILADELPHIA, PA 19103
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
(215) 564-6600
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
<TABLE>
<CAPTION>
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
------------------- -----------------------------------------
<S> <C>
COMMON STOCK, $.001 PAR VALUE NEW YORK STOCK EXCHANGE
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days: YES [X] NO [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date: 22,727,536 shares of Common
Stock, $.001 par value, outstanding on March 25, 1999, and the aggregate market
value of the voting stock held by non-affiliates of the registrant is
$799,725,173.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on April 15, 1999.
CMAC Investment Corporation
By: /s/ FRANK P. FILIPPS
------------------------------------
Frank P. Filipps
(principal executive officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below on April 15, 1999 by the following persons on
behalf of the registrant and in the capacities indicated.
<TABLE>
<CAPTION>
NAME TITLE
---- -----
<S> <C>
/s/ HERBERT WENDER Chairman of the Board and Director
- -----------------------------------------------------
Herbert Wender
/s/ FRANK P. FILIPPS President, Chief Executive Officer and
- ----------------------------------------------------- Director
Frank P. Filipps
/s/ C. ROBERT QUINT Senior Vice President, Chief Financial
- ----------------------------------------------------- Officer (principal accounting officer)
C. Robert Quint
/s/ DAVID C. CARNEY Director
- -----------------------------------------------------
David C. Carney
/s/ CLAIRE M. FAGIN, PH.D., R.N. Director
- -----------------------------------------------------
Claire M. Fagin, Ph.D., R.N.
/s/ JAMES W. JENNINGS Director
- -----------------------------------------------------
James W. Jennings
/s/ JAMES C. MILLER Director
- -----------------------------------------------------
James C. Miller
/s/ RONALD W. MOORE Director
- -----------------------------------------------------
Ronald W. Moore
/s/ ROBERT W. RICHARDS Director
- -----------------------------------------------------
Robert W. Richards
/s/ ANTHONY W. SCHWEIGER Director
- -----------------------------------------------------
Anthony W. Schweiger
</TABLE>
42
<PAGE> 3
CMAC INVESTMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Reserve for Losses
The reserve for losses consists of the estimated cost of settling claims on
defaults reported and defaults that have occurred but have not been reported.
Consistent with generally accepted accounting principles and industry accounting
practices, the Company does not establish loss reserves for future claims on
insured loans that are not currently in default. In determining the liability
for unpaid losses related to reported outstanding defaults, the Company
establishes loss reserves on a case-by-case basis. The amount reserved for any
particular loan is dependent upon the status of the loan as reported by the
servicer of the insured loan as well as the economic condition and estimated
foreclosure period in the area in which the default exists. As the default
progresses closer to foreclosure, the amount of loss reserve for that particular
loan is increased, in stages, to approximately 100 percent of the Company's
exposure and that adjustment is included in current operations. The Company also
reserves for defaults that have occurred but have not been reported using
historical information on defaults not reported on a timely basis by lending
institutions. The estimates are continually reviewed and, as adjustments to
these liabilities become necessary, such adjustments are reflected in current
operations.
Deferred Policy Acquisition Costs
Costs associated with the acquisition of mortgage insurance business,
consisting of compensation and other policy issuance and underwriting expenses,
are initially deferred. Amortization of these costs for each underwriting year
book of business are charged against revenue in proportion to estimated gross
profits using the guidance provided by FASB Statement No. 97, "Accounting and
Reporting by Insurance Enterprises For Certain Long Duration Contracts and for
Realized Gains and Losses From the Sale of Investments."
Income Taxes
Deferred income taxes are provided for the temporary difference between the
financial reporting basis and the tax basis of the Company's assets and
liabilities using enacted tax rates applicable to future years.
Investments
The Company is required to group its investment portfolio in three
categories: held to maturity, available for sale, and trading securities. Debt
securities for which the Company has the positive intent and ability to hold to
maturity are classified as held to maturity and reported at amortized cost. Debt
and equity securities purchased and held principally for the purpose of selling
them in the near term are classified as trading securities and reported at fair
value, with unrealized gains and losses included in earnings. The Company had no
trading securities in its portfolio at December 31, 1998 or 1997. All other
investments are classified as available for sale and are reported at fair value,
with unrealized gains and losses (net of tax) reported in a separate component
of stockholders' equity. Realized gains and losses are determined on a specific
identification method and are included in income.
Fair Values of Financial Instruments
The following methodology was used by the Company in estimating the fair
value disclosures for its financial instruments: fair values for fixed maturity
securities (including redeemable preferred stock) and equity securities are
based on quoted market prices, dealer quotes, and prices obtained from
independent pricing services. The carrying amounts reported on the balance sheet
for cash and short-term investments approximate their fair values.
Accounting for Stock-Based Compensation
The Company accounts for stock-based compensation in accordance with
Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting for
Stock-Based Compensation". SFAS 123 requires
F-6
