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MGIC Investment's (MTG) Q3 Earnings Beat, Revenues Fall Y/Y
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MGIC Investment Corporation (MTG - Free Report) reported third-quarter 2020 adjusted net operating income per share of 43 cents, which beat the Zacks Consensus Estimate by 30.3%. The bottom line declined 10.4% year over year.
The third-quarter performance was aided by strength of the purchase mortgage market and the refinance market as well as the company’s solid market presence. However, annual persistency remained low while primary delinquency inventory increased.
Operational Update
Insurance in force improved 9.5% to $238.9 billion, primarily attributable to new business writings, partly offset by lower persistency.
The company witnessed a surge of 114.5% in primary delinquency to 64,418 loans due to the adverse economic impact of COVID-19.
MGIC Investment reported total operating revenues of $296 million, which declined 7% year over year on lower net investment income and net premiums earned.
Net premiums earned fell 4.4% year over year to $256.1 million in the third quarter. The downside was mainly due to lower premium rates on insurance in force and a decrease in profit commission resulting from higher ceded incurred losses, partially offset by higher average insurance in force.
Net investment income decreased 12.8% year over year to $37.3 million, attributable to lower investment yields, partially offset by an increase in the consolidated investment portfolio.
Persistency, the percentage of insurance remaining in force from one year prior, was 64.5% as of Sep 30, 2020, down 1410 basis points (bps) year over year.
New insurance written was $32.8 billion, up 71.7% year over year. The surge clearly highlights strength of the purchase mortgage market and the refinance market as well as the company’s solid market presence.
Net underwriting and other expenses totaled $48.5 million, which increased 0.4% year over year.
In the quarter under review, loss ratio was 8915.9%, which deteriorated 320 bps year over year.
MGIC Investment Corporation Price, Consensus and EPS Surprise
Book value per share, a measure of net worth, grew 7.4% to $13.33 as of Sep 30, 2020 from 2019 end.
MGIC Investment had $380.1 million in investments, cash and cash equivalents, up from $165.4 million as on 2019 end. Debt was $1.2 billion as on Sep 30, 2020, up from $0.8 billion as on Dec 31, 2019.
Total assets were $7.1 billion, up 14.5% from 2019-end level.
PMIERs available assets were $5 billion, which is $1.4 billion above its minimum required assets as of Sep 30, 2020.
Capital Deployment
MGIC Investment paid out quarterly cash dividend of 6 cents per share in the reported quarter.
The company also did not buy back shares during the quarter under review.
Among other insurance industry players, which have reported third-quarter earnings so far, the bottom lines of Prudential Financial (PRU - Free Report) and Assurant (AIZ - Free Report) beat the Zacks Consensus Estimate while that of Radian Group (RDN - Free Report) missed estimates.
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MGIC Investment's (MTG) Q3 Earnings Beat, Revenues Fall Y/Y
MGIC Investment Corporation (MTG - Free Report) reported third-quarter 2020 adjusted net operating income per share of 43 cents, which beat the Zacks Consensus Estimate by 30.3%. The bottom line declined 10.4% year over year.
The third-quarter performance was aided by strength of the purchase mortgage market and the refinance market as well as the company’s solid market presence. However, annual persistency remained low while primary delinquency inventory increased.
Operational Update
Insurance in force improved 9.5% to $238.9 billion, primarily attributable to new business writings, partly offset by lower persistency.
The company witnessed a surge of 114.5% in primary delinquency to 64,418 loans due to the adverse economic impact of COVID-19.
MGIC Investment reported total operating revenues of $296 million, which declined 7% year over year on lower net investment income and net premiums earned.
Net premiums earned fell 4.4% year over year to $256.1 million in the third quarter. The downside was mainly due to lower premium rates on insurance in force and a decrease in profit commission resulting from higher ceded incurred losses, partially offset by higher average insurance in force.
Net investment income decreased 12.8% year over year to $37.3 million, attributable to lower investment yields, partially offset by an increase in the consolidated investment portfolio.
Persistency, the percentage of insurance remaining in force from one year prior, was 64.5% as of Sep 30, 2020, down 1410 basis points (bps) year over year.
New insurance written was $32.8 billion, up 71.7% year over year. The surge clearly highlights strength of the purchase mortgage market and the refinance market as well as the company’s solid market presence.
Net underwriting and other expenses totaled $48.5 million, which increased 0.4% year over year.
In the quarter under review, loss ratio was 8915.9%, which deteriorated 320 bps year over year.
MGIC Investment Corporation Price, Consensus and EPS Surprise
MGIC Investment Corporation price-consensus-eps-surprise-chart | MGIC Investment Corporation Quote
Financial Update
Book value per share, a measure of net worth, grew 7.4% to $13.33 as of Sep 30, 2020 from 2019 end.
MGIC Investment had $380.1 million in investments, cash and cash equivalents, up from $165.4 million as on 2019 end. Debt was $1.2 billion as on Sep 30, 2020, up from $0.8 billion as on Dec 31, 2019.
Total assets were $7.1 billion, up 14.5% from 2019-end level.
PMIERs available assets were $5 billion, which is $1.4 billion above its minimum required assets as of Sep 30, 2020.
Capital Deployment
MGIC Investment paid out quarterly cash dividend of 6 cents per share in the reported quarter.
The company also did not buy back shares during the quarter under review.
Zacks Rank & Performance of Other Insurers
MGIC Investment currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Among other insurance industry players, which have reported third-quarter earnings so far, the bottom lines of Prudential Financial (PRU - Free Report) and Assurant (AIZ - Free Report) beat the Zacks Consensus Estimate while that of Radian Group (RDN - Free Report) missed estimates.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>