MGIC Investment (MTG) Q3 Earnings Top, Insurance in Force Rises
MGIC Investment Corporation MTG reported third-quarter 2023 operating net income per share of 6 cents, which beat the Zacks Consensus Estimate by 12.3%. The better-than-expected earnings were driven by higher insurance in force, premiums and net investment income, partially offset by an increase in expenses.
However, the bottom line declined 25.6% year over year.
MGIC Investment recorded total operating revenues of $297 million, which increased 0.3% year over year on higher net investment income, partially offset by a decrease in net premiums earned. The top line missed the consensus mark by 0.5%.
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 0.2% from the prior-year quarter to $294.3 billion. The Zacks Consensus Estimate was $301 billion. Our estimate was $300.7 billion.
The insurer witnessed a 4.5% decrease in primary delinquency to 24,720 loans.
Net premiums written increased 3.2% year over year to $234.5 million. The figure was lower than our estimate of $249.32 million.
Net investment income increased 30.4% year over year to $55.4 million. Our estimate was $43.1 million. The Zacks Consensus Estimate was pegged at $48.8 million.
Persistency — the percentage of insurance remaining in force from one year prior — was 86.3% as of Sep 30, 2023, up from 78.3% in the year-ago quarter.
New insurance written was $14.6 billion, down 25.5% year over year due to a decline in origination markets.
Net underwriting and other expenses totaled $52.9 million, down 14.3% year over year.
For the quarter under review, the loss ratio was 0% compared with 41.7% for the third quarter of 2022.
Financial Update
Book value per share, a measure of net worth, increased 10% from 2022-end to $17.37 as of Sep 30, 2023.
Shareholder equity was $4.9 billion as of Sep 30, 2023, up from $4.5 billion at 2022-end.
MGIC's PMIERs Available Assets totaled $5.9 billion, or $2.6 billion above its Minimum Required Assets as of Sep 30, 2023.
Assets were $6.3 billion as of Sep 30, 2023, up from $6.2 billion at 2022-end. Debt was $643 million as of Sep 30, 2023, down 3% from the 2022-end level.
Capital Deployment
MGIC Investment paid 11.50 cents in dividends per common share to shareholders during third-quarter 2023.
The company bought back 3.9 million shares in the third quarter and another 2.2 million shares in the fourth quarter to date.
The board also declared a dividend of 11.50 cents per common share to be paid on Nov 28, 2023 to shareholders of record as of Nov 9, 2023.
Zacks Rank
MGIC Investment currently has a Zacks Rank #2 (Buy). 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 third-quarter 2023 core income of $1.95 per share, which missed the Zacks Consensus Estimate by 33.4%. The bottom line decreased 11.4% year over year, primarily attributable to higher catastrophe losses and net unfavorable prior-year reserve development. Travelers’ total revenues increased 14% from the year-ago quarter to $10.6 billion, primarily driven by higher premiums. The top-line figure beat the Zacks Consensus Estimate by 1.3%.
Net written premiums increased 14% year over year to a record $10.4 billion, driven by strong growth across all three segments. The figure was higher than our estimate of $9.4 billion. Travelers witnessed an underwriting gain of $868 million, up 43% year over year, driven by record net earned premiums of $9.7 billion and a consolidated underlying combined ratio, which improved 90.6%.
The Progressive Corporation’s PGR third-quarter 2023 earnings per share of $2.09 beat the Zacks Consensus Estimate of $1.71. The bottom line improved more than fourfold year over year. Net premiums written were $15.6 billion in the quarter, which grew 20% from $13 billion a year ago and beat our estimate of $14.2 billion.
Net premiums earned grew 20% to $14.9 billion, beating our estimate of $13.6 billion and the Zacks Consensus Estimate of $14.8 billion. Net realized losses on securities were $149 million, narrower than a loss of $216.4 million in the year-ago quarter. The combined ratio — the percentage of premiums paid out as claims and expenses — improved 680 bps from the prior-year quarter’s level to 92.4.
RLI Corp. RLI reported third-quarter 2023 operating earnings of 61 cents per share, beating the Zacks Consensus Estimate by 510%. The bottom line improved 22% from the prior-year quarter. Operating revenues for the reported quarter were $350.4 million, up 12.1% year over year, driven by 9.2% higher net premiums earned and 50.3% higher net investment income. The top line, however, missed the Zacks Consensus Estimate by 7.2%.
Gross premiums written increased 11.3% year over year to $449.3 million. Underwriting income of $4.2 million decreased 52.3%, primarily due to Hawaiian wildfire losses. The combined ratio deteriorated 170 basis points year over year to 98.7. Our estimate was 90.8.
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