Back to top

Analyst Blog

Mortgage insurer MGIC Investment Corporation (MTG - Analyst Report) reported third quarter 2013 operating profit of 4 cents per share, in contrast to the Zacks Consensus Estimate of a loss of 12 cents per share. MGIC had reported an operating loss of $1.25 per share in the year-ago quarter.
Results benefited from fewer new delinquency notices received, a lower claim rate and favorable development in severity.  The home price appreciation as well as modest improvements in the employment scenario continued to positively impact the company’s financial results during the third quarter.
Quarterly Operational Update
Total revenue for the quarter came in at $254.4 million, down 17% year over year. 
Net premiums written were $234.3 million, down 11% year over year. The company’s new insurance written soared 23% year over year to $8.6 billion in the quarter. 
MGIC wrote $8.6 billion of new business, up 7% from last quarter and 23% from the same period last year. 
Losses incurred in the third quarter were $180.2 million, down 63% year over year. Paid claims in the third quarter were $414 million, down 29% from last year and down 4% from last quarter.
Net underwriting and other expenses were $48.0 million down 5.3% year over year. 
As of Sep 30, 2013 persistency (the percentage of insurance remaining in force from the previous year) was 78.3%, down 190 basis points year over year.
Total assets of MGIC were $5.9 billion, down 2.5% year over year. At quarter end, cash and investments totaled $5.5 billion, including $594 million of cash and investments at the holding company.
At Sep 30, 2013 MGIC’s risk-to-capital ratio was 20.0 to 1, lower than the maximum allowed by the jurisdictions with capital requirements, and its policyholder position was $190 million above the required minimum of $1.2 billion.
Book value per share as of Sep 30, 2013 declined 37% year over year to $2.08.
Our Take
MGIC’s third quarter results marked second quarterly profit, continuing with favorable performance during the previous quarter. MGIC also reported operating profit during the last quarter, its first quarterly profit since the second quarter of 2010. Going forward, we expect the company to benefit from an improving housing market, outstanding credit quality of the company’s new business and its growing share of business.  
MGIC carries a Zacks Rank #4 (Sell). Other players Radian Group Inc. (RDN - Snapshot Report), CIGNA Corp. (CI - Analyst Report), Assurant Inc. (AIZ - Analyst Report) all with Zacks Rank #2 (Buy) are scheduled to report third quarter earnings shortly. 

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
RPC INC RES 24.91 +8.35%
LITHIA MOTO… LAD 94.59 +4.60%
DELTA AIR L… DAL 39.15 +3.90%
FLAMEL TECH… FLML 14.51 +3.50%
SOUTHWEST A… LUV 28.87 +2.92%