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MGIC Investment (MTG) Q1 Earnings Top Estimates, Shares Up

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MGIC Investment Corporation (MTG - Free Report) reported first-quarter 2019 operating net income per share of 42 cents, which beat the Zacks Consensus Estimate and were 10.5% higher than the year-ago earnings.

Shares of the company gained 1.7% in the last trading session in response to the outperformance.

Insurance in force increased largely driven by strong persistency and the addition of $10.1 billion of high-quality new insurance writings.

The company witnessed lower delinquency attributable to a favorable operating environment driven by better employment, wage growth, and higher housing demand. The quarter also witnessed low credit losses.

MGIC Investment Corporation Price, Consensus and EPS Surprise

Operational Update   

MGIC Investment recorded total operating revenues of $291.7 million, which increased 9.7% year over year on higher net investment income (up 26.5%) and higher premiums earned (up 7.6%).

Net premiums earned increased on higher average insurance in force and a decrease in ceded premiums during the quarter, partially offset by the effect of lower premium rates.

Insurance in force was $211.4 billion as of Mar 31, 2019, up 7.1% year over year.

Persistency, the percentage of insurance remaining in force from one year prior, was 81.7% as of Mar 31, 2019, up 150 basis points (bps) year over year.

Net investment income increased on higher yields.

New insurance written was $10.1 billion, down 4.7% year over year.

Net paid claims were $57 million. The number of claims received declined 30%, reflecting continued declines in delinquency inventory.

Net underwriting and other expenses totaled $48.4 million, down 0.5% year over year. Total loss and expenses increased 17.5% on higher losses incurred.

In the quarter under review, loss ratio was 15.6%, down 530 bps year over year.  Underwriting expense ratio of 18.9% improved 60 bps year over year.

Financial Update

Book value per share, a measure of net worth, grew nearly 23.2% year over year to $10.72 as of Mar 31, 2019.

MGIC Investment had $299 million in cash and investments, up 16.3% year over year.

Risk-to-capital ratio was 9.6:1 as of Mar 31, 2019 compared with 10.3:1 as of Mar 31, 2018.

Debt-to-total capital ratio was 18% at the end of the quarter, down 100 bps from 2018 end.

The company paid $70 million in dividend to the holding company. Also, the board of directors approved additional $200 million worth share buyback authorization.

Zacks Rank

MGIC Investment currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks.

Other Insurance Releases

Of the insurance industry players that have reported first-quarter results so far, The Travelers Companies, Inc. (TRV - Free Report) , The Progressive Corporation (PGR - Free Report) and RLI Corp. (RLI - Free Report) beat the respective Zacks Consensus Estimate for earnings.

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