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MGIC (MTG) Gains From Insurance Written as Expense Woes Stay
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MGIC Investment Corporation (MTG - Free Report) is poised to grow on the strength of solid insurance in force, a decline in loss and claims payments, lower delinquency, better housing market fundamentals and a solid capital position. Earnings of MTG have risen 16% over the last five years, better than the industry average of 5.9%.
MTG has a solid surprise history. It surpassed estimates in the last four quarters, with the average surprise being 23.59%.
This largest private mortgage insurer in the United States has been witnessing an increase in new business written. The insurer expects new business, combined with increasing annual persistency, to result in continued growth of the insurance-in-force portfolio.
MTG has been witnessing a declining pattern of claim filings. Thus, we expect paid claims to decrease further. A decline in loss and claims will strengthen the balance sheet and hence improve its financial profile.
Banking on capital contribution, reinsurance transaction and cash position, MTG has been improving its capital position. Both leverage and times interest earned ratio have been improving.
Riding on a solid capital position, the mortgage insurer returned approximately $209.5 million of capital to shareholders through a combination of shares repurchases and dividends in the first half of 2023. The board of directors approved an additional share repurchase program, authorizing the repurchase of an additional $500 million worth of shares through Jul 1, 2025.
However, the insurer has been witnessing an increase in underwriting and other expenses weighing on margins. The loss ratio was negative 2.5% in the first half of 2023. MTG expects operating expenses in 2023 in the range of $235 million to $245 million.
Nonetheless, MTG’s trailing 12-month return on equity was 17.3%, ahead of the industry average of 12.4%. Return on equity, a profitability measure, reflects how effectively a company is utilizing its shareholders.
Some Key Industry Players
Other players in the multi-line insurance industry include Radian Group Inc. (RDN - Free Report) , American International Group, Inc. (AIG - Free Report) and Assurant Inc. (AIZ - Free Report) .
Radian’s earnings surpassed estimates in each of the last four quarters, the average being 30.88%.
Radian remains focused on improving its mortgage insurance portfolio, growing the Homegenius business and managing capital resources. Continued high levels of the new mortgage insurance business, as well as an increase in persistency, are likely to drive primary insurance in force, the main driver of Radian Group’s future earnings.
American International’s earnings surpassed estimates in the last four quarters, the average earnings surprise being 13.45%.
American International is well-poised to grow on the back of acquisitions and prudent capital allocation. Improving travel and warranty operations are likely to drive AIG’s personal lines insurance business. Strategic business de-risking and acquisitions, cost-control efforts and accelerated capital deployment will drive American International’s growth.
Assurant’s earnings surpassed estimates in each of the last four quarters, the average being 24.39%.
Increased mobile subscribers in North America, inorganic and organic growth strategies, higher average insured values and effective capital deployment bode well for the growth. For 2023, AIZ expects to grow adjusted EBITDA, excluding reportable catastrophes, to increase by high single-digits and adjusted EPS growth to approximate adjusted EBITDA growth. Strong franchise, consistent cash flow generation and robust solutions segment are tailwinds. It plans to deploy capital, mainly to fund business growth and return capital to shareholders via share buybacks and dividends.
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MGIC (MTG) Gains From Insurance Written as Expense Woes Stay
MGIC Investment Corporation (MTG - Free Report) is poised to grow on the strength of solid insurance in force, a decline in loss and claims payments, lower delinquency, better housing market fundamentals and a solid capital position. Earnings of MTG have risen 16% over the last five years, better than the industry average of 5.9%.
MTG has a solid surprise history. It surpassed estimates in the last four quarters, with the average surprise being 23.59%.
This largest private mortgage insurer in the United States has been witnessing an increase in new business written. The insurer expects new business, combined with increasing annual persistency, to result in continued growth of the insurance-in-force portfolio.
MTG has been witnessing a declining pattern of claim filings. Thus, we expect paid claims to decrease further. A decline in loss and claims will strengthen the balance sheet and hence improve its financial profile.
Banking on capital contribution, reinsurance transaction and cash position, MTG has been improving its capital position. Both leverage and times interest earned ratio have been improving.
Riding on a solid capital position, the mortgage insurer returned approximately $209.5 million of capital to shareholders through a combination of shares repurchases and dividends in the first half of 2023. The board of directors approved an additional share repurchase program, authorizing the repurchase of an additional $500 million worth of shares through Jul 1, 2025.
However, the insurer has been witnessing an increase in underwriting and other expenses weighing on margins. The loss ratio was negative 2.5% in the first half of 2023. MTG expects operating expenses in 2023 in the range of $235 million to $245 million.
Nonetheless, MTG’s trailing 12-month return on equity was 17.3%, ahead of the industry average of 12.4%. Return on equity, a profitability measure, reflects how effectively a company is utilizing its shareholders.
Some Key Industry Players
Other players in the multi-line insurance industry include Radian Group Inc. (RDN - Free Report) , American International Group, Inc. (AIG - Free Report) and Assurant Inc. (AIZ - Free Report) .
Radian’s earnings surpassed estimates in each of the last four quarters, the average being 30.88%.
Radian remains focused on improving its mortgage insurance portfolio, growing the Homegenius business and managing capital resources. Continued high levels of the new mortgage insurance business, as well as an increase in persistency, are likely to drive primary insurance in force, the main driver of Radian Group’s future earnings.
American International’s earnings surpassed estimates in the last four quarters, the average earnings surprise being 13.45%.
American International is well-poised to grow on the back of acquisitions and prudent capital allocation. Improving travel and warranty operations are likely to drive AIG’s personal lines insurance business. Strategic business de-risking and acquisitions, cost-control efforts and accelerated capital deployment will drive American International’s growth.
Assurant’s earnings surpassed estimates in each of the last four quarters, the average being 24.39%.
Increased mobile subscribers in North America, inorganic and organic growth strategies, higher average insured values and effective capital deployment bode well for the growth. For 2023, AIZ expects to grow adjusted EBITDA, excluding reportable catastrophes, to increase by high single-digits and adjusted EPS growth to approximate adjusted EBITDA growth. Strong franchise, consistent cash flow generation and robust solutions segment are tailwinds. It plans to deploy capital, mainly to fund business growth and return capital to shareholders via share buybacks and dividends.