MGIC posts profit as defaults decline in recovering U.S. housing market

Reuters

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April 22 (Reuters) - Mortgage insurer MGIC Investment Corp posted a better-than-expected quarterly profit as fewer homeowners defaulted on their payments in an improving U.S. housing market.

The company reported a net income of $60 million, or 15 cents per share, for the first quarter ended March 31, compared with a loss of $72.9 million, or 31 cents per share, a year earlier.

Analysts on average had expected a profit of 10 cents per share, according to Thomson Reuters I/B/E/S.

Rising house prices mean fewer homeowners have loans that exceed the value of their property, reducing delinquencies.

"I am pleased with the credit performance during the quarter and am encouraged by the level of the new business being written ...," said Chief Executive Curt Culver in a statement.

Rising housing prices in states such as California have indicated toward a strong spring selling season while the housing market benefits from a recovering U.S. economy as buyers become more confident and adjust to the higher interest rates.

The percentage of MGIC's loans that were delinquent, excluding bulk loans, fell to 7.9 percent as of March 31 from 10.9 percent a year earlier.

Mortgage insurers such as MGIC, Radian Group Inc and life insurer Genworth Financial Inc's mortgage unit protect lenders in cases where homebuyers make down payments below a certain threshold.

More timely repayments are helping mortgage insurers recover some of the losses incurred after the housing bubble burst and foreclosures soared.

The preliminary risk-to-capital ratio at MGIC's combined insurance operations was 17.6-to-1 as of March 31. Mortgage insurance regulators commonly allow for a maximum risk-to-capital ratio of 25-to-1.

MGIC shares, which once sold for as much as $70 before the housing bubble burst in 2007, closed at $9.46 on the New York Stock Exchange on Monday.

(Reporting by Tanya Agrawal in Bangalore; Editing by Sriraj Kalluvila)

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