MGIC Investment (MTG) Q2 Earnings, Revenues Top, Fall Y/Y
MGIC Investment Corporation MTG reported second-quarter 2023 operating net income per share of 68 cents, which beat the Zacks Consensus Estimate by 23.6%. However, the bottom line declined 16% year over year.
MGIC Investment recorded total operating revenues of $295.7 million, which decreased 0.7% year over year on lower premiums earned. The top line beat the consensus mark by 0.5%.
The better-than-expected results of the insurer witnessed higher insurance in force and net investment income, partially offset by higher expenses and lower premiums.
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 2% from the prior-year quarter to $292.5 billion. The figure was in line with the Zacks Consensus Estimate and our estimate.
The insurer witnessed an 11.3% decrease in primary delinquency to 23,823 loans.
Net premiums written decreased 5.4% year over year to $231.2 million. The figure was lower than our estimate of $236.2 million.
Net investment income increased 29.9% year over year to $52.3 million. Our estimate was $42.9 million.
Persistency — the percentage of insurance remaining in force from one year prior — was 83.5% as of Jun 30, 2023, up from 71.5% in the year-ago quarter.
New insurance written was $12.4 billion, down 49% year over year due to a decline in origination markets. The figure was lower than our estimate of $30 billion.
Net underwriting and other expenses totaled $56.6 million, up 0.3% year over year.
For the quarter under review, the loss ratio was negative 7.3% compared with 38.7% for the second quarter of 2022.
Financial Update
Book value per share, a measure of net worth, increased 8% from 2022-end to $17.09 as of Jun 30, 2023.
Shareholder equity was $4.8 billion as of Jun 30, 2023, up from $4.6 billion at 2022-end.
MGIC's PMIERs Available Assets totaled $5.8 billion, or $2.3 billion above its Minimum Required Assets as of Jun 30, 2023.
Assets were $6.4 billion as of Jun 30, 2023, up from $6.2 billion at 2022-end. Debt was $664 million as of Jun 30, 2023, up 0.2% from the 2022-end level.
Capital Deployment
MGIC Investment paid 10 cents in dividends per common share to shareholders during second-quarter 2023.
The company bought back 5 million shares in the second quarter and another 1.1 million shares in the third quarter to date. The board of directors approved an additional share repurchase program, authorizing the repurchase of an additional $500 million worth of shares through Jul 1, 2025.
The board also declared a dividend of 11.50 cents per common share to be paid on Aug 24, 2023 to shareholders of record as of Aug 10, 2023.
Zacks Rank
MGIC Investment currently has a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Insurers
The Travelers Companies TRV reported second-quarter 2023 core income of 6 cents per share, which missed the Zacks Consensus Estimate of $2.27. The bottom line decreased 97.7% year over year, primarily attributable to higher-than-expected catastrophe loss.
Travelers’ total revenues increased 9.8% from the year-ago quarter to $10.1 billion, primarily driven by higher premiums. The top-line figure was almost in line with the Zacks Consensus Estimate.
Net written premiums increased 14% year over year to a record $10.3 billion, driven by strong growth across all three segments. The figure was higher than our estimate of $9.1 billion.
Travelers witnessed an underwriting gain of $781 million, up 38% year over year, driven by record net earned premiums of $9.2 billion and a consolidated underlying combined ratio, which improved 170 basis points. The combined ratio deteriorated 820 basis points year over year to 106.5 due to higher catastrophe losses and lower net favorable prior-year reserve development, partially offset by a lower underlying combined ratio.
The Progressive Corporation’s PGR second-quarter 2023 earnings per share of 50 cents missed the Zacks Consensus Estimate of 88 cents. The bottom line declined 47.4% year over year.
Net premiums earned grew 19% to $14.5 billion and beat our estimate of $12.9 billion as well as the Zacks Consensus Estimate of $14.3 billion. The combined ratio deteriorated 480 bps from the prior-year quarter’s level to 104.
Policies in force were solid in the Personal Auto segment, increasing 17% from the year-ago month’s figure to 19.7 million. Special Lines improved 7% to 5.8 million.
W.R. Berkley Corporation’s WRB second-quarter 2023 operating income of $1.14 per share beat the Zacks Consensus Estimate by 6.5%. The bottom line increased 1.8% year over year.
Operating revenues came in at $2.9 billion, down 57.4% year over year, on the back of higher net premiums earned as well as higher net investment income. The top line missed the consensus estimate by 1.2%.
W.R. Berkley’s net premiums written were a record $2.8 billion, up 8.7% year over year, as market conditions remained favorable for most lines of business. Our estimate for the same was $2.7 billion.
Catastrophe losses totaled $53.5 million in the quarter. The consolidated combined ratio (a measure of underwriting profitability) deteriorated 100 basis points to 89.6, in line with the Zacks Consensus Estimate. Our estimate for combined ratio was 91.3.
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