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MGIC Investment (MTG) Q3 Earnings Top & Rise Y/Y, Shares Up

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MGIC Investment Corp (MTG - Free Report) reported third-quarter 2017 operating net income per share of 32 cents, having surpassed the Zacks Consensus Estimate as well as the year-ago earnings by 28% on lower losses.
 
Insurance in force improved while claims declined year over year. Also, expense ratio remained low.

MGIC Investment Corporation Price, Consensus and EPS Surprise

Shares of MGIC Investment gained 3.3% in yesterday’s trading session to reflect the outperformance.

Operational Update
 
MGIC Investment recorded total operating revenue of $270 million, nudging up about 0.4% year over year on higher net investment income.
 
New insurance written was $14.1 billion in the reported quarter, marginally down 0.7% from $14.2 billion in the year-ago quarter on higher insurance written in the quarter.
 
As of Sep 30, 2017, the company’s primary insurance in force was $191 billion, up 6.1% year over year.
 
Persistency or the percentage of insurance remaining in force from the preceding year was 78.8% as of Sep 30, 2017. The company had recorded persistency of 78.3% as of Sep 30, 2016.
 
Percentage of delinquent loans, including bulk loans, was 3.19% as of Sep 30, 2017 compared with 4.14% as of Sep 30, 2016.
 
Primary delinquent inventory declined nearly 19.8% year over year to $41.2 billion worth of loans.
 
Net underwriting and other expenses totaled $42.9 million, up 6.2% year over year.
 
Losses incurred in the quarter significantly narrowed to $29.7 million from $60.9 million in the year-ago quarter. This enormous $38-million reduction in losses was driven by a positive development on the company’s primary loss reserve. This apart, the company witnessed a lesser number of new delinquent notices and a lower claim rate.
 
Total loss and expenses contracted 55% year over year to $85.9 million due to lower losses.
 
MGIC Investment expects new business combined with an expected increase in persistency. This in turn should help the company continue to improve its insurance in force.

Financial Update
 
Book value per share, a measure of net worth, jumped nearly 13% year over year to $8.45 as of Sep 30 30, 2017.
 
As of Sep 30, 2017, MGIC Investment had $250.7 million in cash and investments, down 8.7% year over year.
 
Risk-to-capital ratio was 11:1:1 as of Sep 30, 2017 compared with 12.6.1:1 as of Sep 30, 2016.
 
 Zacks Rank
 
Currently, MGIC Investment carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
 
Performance of Other Insurers
 
Among other players from the insurance industry that have reported third-quarter earnings so far, the bottom line at Brown & Brown, Inc. (BRO - Free Report) , RLI Corp. (RLI - Free Report) and The Progressive Corporation (PGR - Free Report) beat the respective Zacks Consensus Estimate.

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