Back to top

Image: Bigstock

MGIC Investment (MTG) Q1 Earnings Top on Lower Expenses &Tax

Read MoreHide Full Article

MGIC Investment Corp (MTG - Free Report) reported first-quarter 2018 operating net income per share of 38 cents, surpassing the Zacks Consensus Estimate by 8.57%. The bottom line improved 22.6% year over year on higher revenues and lower loss.

MGIC Investment Corporation Price, Consensus and EPS Surprise

 

Insurance in force as well as investment income rose while claims and primary delinquent inventory declined year over year. Also, persistency increased and a lower tax rate added to the upside.

Operational Update    

MGIC Investment recorded total operating revenues of $266 million, inching up about 1.9% year over year on higher net investment income (up 8.7%) and higher premiums (up nearly 1.3%). The top line missed the Zacks Consensus Estimate of $274 million.

Increase in net premiums earned was driven by an increase in insurance in force offset by a lower effective premium yield.
 
New insurance written was $10.6 billion in the reported quarter, having increased nearly 14% year over year.
 
As of Mar 31, 2018, the company’s primary insurance in force was $197.5 billion, up 7.6% year over year.
 
Persistency or the percentage of insurance remaining in force from the preceding year was 80.2% as of Mar 31, 2018, expanding 330 basis points year over year.

Primary delinquent inventory declined 9.1% year over year to 41,243 loans on Mar 31, 2018.
 
Net underwriting and other expenses totaled $48.7 million, up 13.3% year over year. Total loss and expenses declined 13.6% year over year to $85.7 million due to 13.6% reduced loss and 180.9% lower interest expenses.

Loss ratio was 10.3% in the quarter under review, contracting 180 basis points. Underwriting expense ratio of 19.5% deteriorated 250 basis points year over year.

MGIC Investment expects new business worth $50 billion in 2018, banking on a strong purchase mortgage market and potential share gain from the Federal Housing Administration.

Financial Update

Book value per share, a measure of net worth, grew nearly 2.2% year over year to $8.70 as of Mar 31, 2018.
 
As of Mar 31, 2018, MGIC Investment had $257 million in cash and investments, down 43% year over year.
 
Risk-to-capital ratio was 10.3:1 as of Mar 31, 2018 compared with 11.6:1 as of Mar 31, 2017.
 
Zacks Rank and Performance of Other Insurers

MGIC Investment has a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
 
The bottom line of Torchmark Corporation , The Progressive Corporation (PGR - Free Report) and RLI Corp. (RLI - Free Report) outpaced the respective Zacks Consensus Estimate in the first quarter of 2018.

The Hottest Tech Mega-Trend of All

Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


RLI Corp. (RLI) - free report >>

MGIC Investment Corporation (MTG) - free report >>

The Progressive Corporation (PGR) - free report >>

Published in