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MGIC (MTG) Up 3.6% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for MGIC Investment (MTG - Free Report) . Shares have added about 3.6% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is MGIC due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

MGIC Investment Q1 Earnings Top, Revenues Fall Y/Y

MGIC Investment Corporation reported first-quarter 2022 operating net income per share of 60 cents, which beat the Zacks Consensus Estimate by 3.4%. The reported figure increased 42.8% year over year.

The insurer witnessed higher premiums and net investment income, offset by higher expenses.

Operational Update

Insurance in force increased 10.2% from the prior-year quarter to $277.3 billion.
The insurer witnessed a 42.3% decrease in primary delinquency to 30,462 loans.
 
MGIC Investment recorded total operating revenues of $294.6 million, which decreased 1.1% year over year due to a change in net realized investment gains and losses related to the investment portfolio. Net premiums written increased 0.5% year over year to $242.7 million. The increase in net premiums written was due to an increase in insurance in force and a decrease in ceded premiums from its quota share reinsurance transactions. It was partially offset by lower new insurance written and a decrease in premium yield.

Net investment income increased 0.9% year over year to $38.3 million. Persistency — the percentage of insurance remaining in force from one year prior — was 66.9% as of Mar 31, 2022, up 1070 basis points (bps) year over year.
New insurance written was $19.6 billion, down 36.4% year over year due to a decrease in the refinance market. Net underwriting and other expenses totaled $57.5 million, up 13.4% year over year, due to increases in expenses related to investments in technology and data and analytics infrastructure.

For the quarter under review, the loss ratio was (7.6%) compared with 15.5% for the first quarter of 2021.

Financial Update

Book value per share, a measure of net worth, declined 2.8% from 2021-end to $14.75 as of Mar 31, 2022. MGIC Investment had $409 million in cash, cash equivalents and investments, down 38.3% from the 2021-end level. Total assets were $6.8 billion, down 6.6% from the 2021-end level.

Capital Deployment

MGIC Investment paid out dividends of $400 million to its holding company and paid 8 cents in dividend per common share to shareholders during first-quarter 2022. As of Mar 31, 2022, MTG had shares worth $372 million remaining under the share buyback authorization.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.


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