MGIC Investment (MTG) Q4 Earnings Top Estimates, Revenues Lag
MGIC Investment Corporation MTG reported fourth-quarter 2023 operating net income per share of 67 cents, which beat the Zacks Consensus Estimate by 17.5%. The better-than-expected earnings were driven by higher net investment income and lower underwriting and other expenses. The bottom line improved 4.7% year over year.
MGIC Investment recorded total operating revenues of $285 million, which declined 2.1% year over year on lower net premiums written, partially offset by higher net investment income. The top line missed the consensus mark by 6%.
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 declined 0.6% from the prior-year quarter to $293.5 billion. The company missed our estimate of $300.7 billion.
The insurer witnessed a 2.8% decrease in primary delinquency to 25,650 loans.
Net premiums written declined 5.3% year over year to $219.1 million. The figure was lower than our estimate of $235 million.
Net investment income increased 24.7% year over year to $57.8 million. The company beat our estimate of $56.1 million.
Persistency, the percentage of insurance remaining in force from one year prior, was 86.1% as of Dec 31, 2023, up from 82.2% in the year-ago quarter.
New insurance written was $10.9 billion, down 15.5% year over year due to a decline in origination markets.
Net underwriting and other expenses totaled $54.7 million, down 25.5% year over year.
For the quarter under review, the loss ratio was negative 4.2% compared with negative 12.8% for the fourth quarter of 2023.
Full-Year Highlights
Operating net income per share of $2.49 decreased 10.8% from the 2022 figure of $2.79.
Total operating revenues of $1.2 billion decreased 1.5% year over year.
Financial Update
Book value per share, a measure of net worth, increased 17.6% from 2022-end to $18.61 as of Dec 31, 2023.
Shareholder equity was $5.1 billion as of Dec 31, 2023, up from $4.6 billion at 2022-end.
MGIC's PMIERs Available Assets totaled $5.8 billion, or $2.4 billion above its Minimum Required Assets as of Dec 31, 2023.
Assets were $6.5 billion as of Dec 31, 2023, up from $6.2 billion at 2022-end. Debt was $643.2 million as of Dec 31, up from $641.7 million at 2022-end.
Capital Deployment
MGIC Investment paid 11.50 cents in dividends per common share to shareholders during the fourth quarter of 2023.
The company bought back 7 million shares in the fourth quarter and another 1.8 million shares in the first quarter to date.
The board also declared a dividend of 11.50 cents per common share to be paid on Mar 5, 2024, to shareholders of record as of Feb 15, 2024.
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 fourth-quarter 2023 core income of $7.01 per share, which beat the Zacks Consensus Estimate of $5.04. The bottom line more than doubled year over year, driven by higher underlying underwriting gain, lower catastrophe losses and higher net investment income.
Travelers’ total revenues increased 13.5% from the year-ago quarter to $10.9 billion, primarily driven by higher premiums. The top-line figure beat the Zacks Consensus Estimate by 0.2%. Net written premiums increased 13% year over year to about $10 billion, driven by strong growth across all three segments. The figure was higher than our estimate of $9.7 billion. Travelers witnessed an underwriting gain of $1.4 billion, up more than three-fold year over year, driven by higher business volumes.
The Progressive Corporation’s PGR fourth-quarter 2023 earnings per share of $2.96 beat the Zacks Consensus Estimate of $2.38. The bottom line improved 97.3% year over year. Net premiums written were $15.1 billion in the quarter, up 21% from $12.5 billion a year ago. Premiums beat our estimate of $14 billion.
Net premiums earned grew 22% to $15.8 billion and beat our estimate of $14.8 billion. Operating revenues of $16.6 billion beat the Zacks Consensus Estimate by 3% and increased 23.2% year over year. Net realized gain on securities was $303.4 billion against a loss of $72.8 million in the year-ago quarter. The combined ratio — the percentage of premiums paid out as claims and expenses — improved 520 basis points (bps) from the prior-year quarter’s level to 88.7.
RLI Corp. RLI reported fourth-quarter 2023 operating earnings of $1.54 per share, which beat the Zacks Consensus Estimate by 6.9%. The bottom line improved 0.6% from the prior-year quarter.
Operating revenues for the reported quarter were $378.4 million, up 15% year over year, driven by 14.9% higher net premiums earned and 14.4% higher net investment income. The top line, however, missed the Zacks Consensus Estimate by 2%. Gross premiums written increased 13% year over year to $434.4 million. Underwriting income of $59.8 million increased 10.9%. Combined ratio deteriorated 60 bps year over year to 82.7.
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