U.S. Markets closed

MGIC Investment Breaks Even, Beats Ests

Zacks Equity Research

MGIC Investment Corp. (MTG) reported breakeven bottom-line results in the fourth quarter of 2013, beating the Zacks Consensus Estimate of a loss of 2 cents per share. The results compared favorably with the operating loss of $1.91 per share reported in the year-ago quarter.  

Total revenue for the fourth quarter came in at $251.9 million, down 32.2% year over year and also missing the Zacks Consensus Estimate of $255 million. The year-over-year decline was primarily due to lower realized gain in the company’s investment portfolio.

Net premiums written for the quarter were $204.1 million down 21.7% year over year.

New insurance written in the fourth quarter was $6.7 billion, down 4.3% year over year, due primarily to a decrease in refinance transactions.

Persistency, or the percentage of insurance remaining in force since a year, was 79.5% percent as on Dec 31, 2013, down 30 basis points year over year.

MGIC Investment incurred losses of $196.1 million in the quarter, down 72% year over year driven by fewer new delinquency notices received, with a lower claim rate and favorable development in severity.

Total loss and expense declined 67% year over year to $252.1 million led primarily by lower incurred losses.

Full-Year Highlights

For the full year MGIC Investment reported a loss of 16 cents per share, substantially down from a loss of $4.59 per share incurred a year ago.

Total revenue came in at $1.04 billion down 25% year over year primarily due to lower realized gains. Reported revenue lagged the Zacks Consensus Estimate of $1.07 billion.

MGIC Investment's fourth-quarter market share increased to a range of 17% to 18% from the 16.5% to 17% range reported in the third quarter.

In 2013, MGIC Investment made substantial progress on numerous issues that have been challenging the company for the last few years, such as improving capital position, increasing the volume and quality of new business writings and decreasing the level of delinquencies and claim payments.

Given improving operating conditions for mortgage insurers, we expect to see favorable results from other players in the industry like Radian Inc. (RDN) and Genworth Financial Inc. (GNW), both of which are scheduled to release fourth-quarter and full year 2013 earnings in the first week of Feb 2014.   

While MGIC Investment carries a Zacks Rank #2 (Buy), another top-ranked player CNO Financial Group, Inc. (CNO) with a Zacks Rank #1 (Strong Buy) is also worth considering.

Read the Full Research Report on GNW
Read the Full Research Report on MTG
Read the Full Research Report on CNO
Read the Full Research Report on RDN

Zacks Investment Research