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MGIC Investment Corp. Message Board

  • pepsiberger pepsiberger Jan 31, 2013 9:47 AM Flag

    question for Mortgageguy44 and TommieGUN

    Is it possible the 1st qtr is going very strong, so strong and the company is holding off the 4th qtr release to report such, and is likely to report an operating profit for the 1st qtr. despite a loss for the 4th. The delay is to make sure once the company gets to a certain date in the first qtr. profitability is in the bag????Thoughts.

    Sentiment: Strong Buy

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    • MorgageGUY you are wrong....

      Cure ratio was 98.5% in Q4.

      Cure ratio is about 115% in Q1 and, Radian and MGIC will be profitable.

      Mortgageguy is good with philosophical opinions about the mortgage insurance business but, generally fails to have an understanding of the nuts and bolts of operations.

      Look at "MGIC cure ratio 98.5% in Q4" to get started.

      Sentiment: Strong Buy

    • The Freddie Mac issue will be charged to fourth quarter. I believe the loss from the Freddie issue is about $250 million.

      The cures improved and this should help. but the new delinquincies are still 10,000 per quarter higher than break even. At $12,000 per new delinquincy, the cures would need to ofset a $120,000,000 loss on new delinquincies plus $250,000,000 in losses due to the Freddie issue. My guess is that the loss is $300 million to $400 million for the fourth quarter.

      My forecast for 2013 is a loss of about $50 million per quarter based on new delinquincies generally trending down by about 22% from the fourth quarter to the 1st quarter. $200 million for the year.

      I believe 2014 is the year we will see a small profit or break even. Once we break even, the big ship MTG should sail smoothly for a few decades and we should be able to realize a gain on our investment for those who bought at low prices and a return on investment for those who have held stock from the highs to the lows.

    • I believe that as part of the settlement, they are taking more time to audit loan files and #$%$ the aging of the delinquency inventory for reserve allocations.

      Therein, lies the opportunity to reduce reserves, if it turns out that of the claims paid were from the late stage buckets.

      The "provision for losses" is a very subjective process. My guest is many of loans paid as part of settlement with Freddie Mac were of late stage delinquency inventory. If that turns to be the case, then the prior "prior years" portion of "losses incurred" would be negative thereby, lowering the overall "losses incurred" for Q4 2012

      Sentiment: Strong Buy

    • A slight loss will be reported for the 4th quarter but a positive guidance will be issued ; henceforth a slight gain will be reported in the 1st quarter ; hope this helps

      Sentiment: Strong Buy

 
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