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MGIC Investment (MTG) Gains as Q1 Earnings Beat Estimates

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MGIC Investment Corp. (MTG - Free Report) reported first-quarter 2017 operating net income per share of 31 cents, which outpaced the Zacks Consensus Estimate of 24 cents by 29%. The bottom line also surged 63% year over year.


The stock gained about 0.91% in the trading session on Apr 21, after the company reported its quarterly results. We wait to see if the momentum continues.

Including income tax provision related to IRS litigation, net income increased 41% year over year to 24 cents per share.

Operational Update

MGIC Investment recorded total operating revenue of $261 million, up nearly 2% year over year. The upside was driven by higher premiums earned and investment income.

New insurance written was $9.3 billion in the reported quarter, up 12% from $8.3 billion in the year-ago quarter.

As of Mar 31, 2017, the company’s primary insurance in force was $183.5 billion, up 4.8% year over year.

Persistency, or the percentage of insurance remaining in force from the year before, was 76.9% as of Mar 31, 2017. The company had recorded persistency of 79.9% as of Mar 31, 2016.

Percentage of delinquent loans, including bulk loans, was 3.62% as of Mar 31, 2017 compared with 5.62% as of Mar 31, 2016.

Primary delinquent inventory plunged 18.4% year over year to $45.3 billion.

Net underwriting and other expenses totaled $43 million, up 3.1% year over year.

Losses incurred in the quarter narrowed to $27.6 million from $85 million. The $49 million reduction in losses was due to the positive development on the company’s primary loss reserve. This apart, the company witnessed a lesser new delinquent notices received and a lower claim rate.

Total loss and expense decreased 44% year over year to $86.9 million on due to lesser loss incurred.

Financial Update

Book value per share, a measure of net worth, jumped nearly 13.7% year over year to $7.75 as of Mar 31, 2017, 12.5% higher than $6.89 as of Mar 31, 2016.

As of Mar 31, 2017, MGIC Investment had $5 billion in cash and investments, up 4.2% year over year.

Risk-to-capital ratio was 9.9:1 as of Mar 31, 2017 compared with 12:1 as of Dec 31, 2016.

MGIC Investment Corporation Price, Consensus and EPS Surprise


MGIC Investment Corporation Price, Consensus and EPS Surprise | MGIC Investment Corporation Quote

Zacks Rank

MGIC Investment carries Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Performance of Other Insurers

Among the other players from the insurance industry that have reported their first-quarter earnings so far, the bottom line at Brown & Brown, Inc. (BRO - Free Report) beat Zacks Consensus Estimate but RLI Corp. (RLI - Free Report) and The Progressive Corporation (PGR - Free Report) missed expectations.

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