I just recently started playing this about a week ago, and just now saw your question. My understanding is, that magic attacks are mitigated by morale of the unit being attacked. Even undead units still have morale (at least the ones I have checked), and while undead units according to the game can't be broken, their morale stats will still reduce magic attacks accordingly. Once their morale stat is reduced to zero, your units should be able to inflict 100% magic damage. This applies to all units, not just undead ones.