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MGIC Investment's (MTG) Q1 Earnings Beat, Revenues Miss
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MGIC Investment Corporation (MTG - Free Report) reported first-quarter 2020 operating net income per share of 42 cents, which beat the Zacks Consensus Estimate by 10.5% but were flat year over year.
The quarter witnessed favorable economic and housing environment. Credit losses remained low.
MGIC Investment Corporation Price, Consensus and EPS Surprise
Insurance in force increased 7% to $225.5 billion, despite lower persistency, leading to a strong capital position.
The company witnessed 11% decline in primary delinquency to 27,384 loans.
MGIC Investment recorded total operating revenues of $305 million, which increased 4.4% year over year on higher net investment income (up 1.7%) and net premiums earned (up 4.4%). Revenues missed the Zacks Consensus Estimate by 1.9%
The increase in net premiums earned was due to higher average insurance in force and a rise in premiums from single premium policy cancellations, partially offset by the effect of lower premium rates.
Net investment income improved from an increase in the consolidated investment portfolio.
Persistency, the percentage of insurance remaining in force from one year prior, was 73% as of Mar 31, 2020, down 870 basis points (bps) year over year.
New insurance written was $17.1 billion, up 77.2% year over year.
Net underwriting and other expenses totaled $44.8 million, down 7.4% year over year.
In the quarter under review, loss ratio was 23.4%, which deteriorated 780 basis points year over year.
Financial Update
Book value per share, a measure of net worth, grew about 1% to $12.53 as of Mar 31, 2020 from 2019 end.
MGIC Investment had $563 million in cash, cash equivalents and investments, up 73.2% year over year.
Total assets were $6.2 billion, flat with 2019-end level.
Capital Deployment
MGIC paid out dividends of $390 million to its holding company during the first quarter of 2020 while MGIC Investment Corporation paid $0.06 dividend per common share to shareholders during the first quarter of 2020
The company bought back 9.6 million shares for about $120 million in the first quarter. However, the company has temporarily suspended buybacks.
Zacks Rank
MGIC Investment currently carries a Zacks Rank #4 (Sell).
Among other players from the insurance industry that have reported first-quarter earnings so far, the bottom line of Brown & Brown, Inc. (BRO - Free Report) beat the Zacks Consensus Estimate while that of RLI Corp. (RLI - Free Report) and Travelers Companies (TRV - Free Report) missed the same.
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MGIC Investment's (MTG) Q1 Earnings Beat, Revenues Miss
MGIC Investment Corporation (MTG - Free Report) reported first-quarter 2020 operating net income per share of 42 cents, which beat the Zacks Consensus Estimate by 10.5% but were flat year over year.
The quarter witnessed favorable economic and housing environment. Credit losses remained low.
MGIC Investment Corporation Price, Consensus and EPS Surprise
MGIC Investment Corporation price-consensus-eps-surprise-chart | MGIC Investment Corporation Quote
Operational Update
Insurance in force increased 7% to $225.5 billion, despite lower persistency, leading to a strong capital position.
The company witnessed 11% decline in primary delinquency to 27,384 loans.
MGIC Investment recorded total operating revenues of $305 million, which increased 4.4% year over year on higher net investment income (up 1.7%) and net premiums earned (up 4.4%). Revenues missed the Zacks Consensus Estimate by 1.9%
The increase in net premiums earned was due to higher average insurance in force and a rise in premiums from single premium policy cancellations, partially offset by the effect of lower premium rates.
Net investment income improved from an increase in the consolidated investment portfolio.
Persistency, the percentage of insurance remaining in force from one year prior, was 73% as of Mar 31, 2020, down 870 basis points (bps) year over year.
New insurance written was $17.1 billion, up 77.2% year over year.
Net underwriting and other expenses totaled $44.8 million, down 7.4% year over year.
In the quarter under review, loss ratio was 23.4%, which deteriorated 780 basis points year over year.
Financial Update
Book value per share, a measure of net worth, grew about 1% to $12.53 as of Mar 31, 2020 from 2019 end.
MGIC Investment had $563 million in cash, cash equivalents and investments, up 73.2% year over year.
Total assets were $6.2 billion, flat with 2019-end level.
Capital Deployment
MGIC paid out dividends of $390 million to its holding company during the first quarter of 2020 while MGIC Investment Corporation paid $0.06 dividend per common share to shareholders during the first quarter of 2020
The company bought back 9.6 million shares for about $120 million in the first quarter. However, the company has temporarily suspended buybacks.
Zacks Rank
MGIC Investment currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Insurance Releases
Among other players from the insurance industry that have reported first-quarter earnings so far, the bottom line of Brown & Brown, Inc. (BRO - Free Report) beat the Zacks Consensus Estimate while that of RLI Corp. (RLI - Free Report) and Travelers Companies (TRV - Free Report) missed the same.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
See 8 breakthrough stocks now>>