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MGIC Investment's (MTG) Q2 Earnings Beat, Revenues Rise Y/Y

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MGIC Investment Corporation (MTG - Free Report) reported second-quarter 2021 adjusted net operating income per share of 44 cents, which beat the Zacks Consensus Estimate by 4.8%. Moreover, the bottom line surged more than 14-fold year over year.

The company witnessed higher premiums earned and net investment income as well as improved loss ratio, offset by higher expenses.

MGIC Investment Corporation Price, Consensus and EPS Surprise

Operational Update

Insurance in force improved 13.7% from the prior-year quarter to $262 billion. The company witnessed a decline of 37.9% in primary delinquency to 42,999 loans.

Notably, as of Jun 30, 2021, 55% of the loans in delinquency inventory stemmed from COVID-19 related forbearance plans.

MGIC Investment reported total operating revenues of $297.9 million, which increased 1.3% year over year on higher premiums earned and higher net investment income.

Net premiums earned grew 3.3% year over year to $251.5 million in the second quarter. The upside was due to increases in insurance in-force and profit commission. These were partially offset by decrease in premium yield.

Net investment income increased 3.6% year over year to $41.1 million due to increase in the consolidated investment portfolio. It was partially offset by lower investment yields.

Persistency, the percentage of insurance remaining in force from one year prior, was 57.1% as of Jun 30, 2021, down 1110 basis points (bps) year over year.

New insurance written was $33.6 billion, up 19.1% year over year. The increase highlights strength of the purchase mortgage market and its position in the market.

Net underwriting and other expenses totaled $56.8 million, up 20.3% year over year due to increases in professional and consulting services related to investments in infrastructure.  This was partially offset by decreases in employee compensation costs.

In the quarter under review, loss ratio was 11.6%, which improved 7760 bps year over year.

Financial Update

Book value per share, a measure of net worth, grew 4.3% to $14.48 as of Jun 30, 2021 from 2020 end.

MGIC Investment had $772 million in investments, cash and cash equivalents, down 8.8% from the figure at 2020 end.

Total assets were $7.6 billion, up 3% from 2020-end level.

PMIERs available assets were $5.7 billion, which were $2.3 billion above its minimum required assets as of Jun 30, 2021.

Capital Deployment

MGIC did not pay dividends to its holding company during second-quarter 2021. Nevertheless, on Jul 29, 2021, MGIC Investment Corporation authorized a 33% increase in the quarterly common stock dividend, which will be paid on Aug 26, 2021 to  shareholders of record as on Aug 12.

The company also did not buy back shares during the quarter under review.

Zacks Rank & Performance of Other Insurers

MGIC Investment carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Of the insurance industry players that have reported second-quarter results so far, earnings of Prudential Financial, Inc. (PRU - Free Report) , Cincinnati Financial (CINF - Free Report) and American Financial Group (AFG - Free Report) beat the respective Zacks Consensus Estimate.

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