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MGIC Investment's (MTG) Q1 Earnings Beat, Revenues Miss

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MGIC Investment Corporation MTG reported first-quarter 2020 operating net income per share of 42 cents, which beat the Zacks Consensus Estimate by 10.5% but were flat year over year.

The quarter witnessed favorable economic and housing environment. Credit losses remained low.

MGIC Investment Corporation Price, Consensus and EPS Surprise

MGIC Investment Corporation Price, Consensus and EPS Surprise
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 7% to $225.5 billion, despite lower persistency, leading to a strong capital position.

The company witnessed 11% decline in primary delinquency to 27,384 loans.

MGIC Investment recorded total operating revenues of $305 million, which increased 4.4% year over year on higher net investment income (up 1.7%) and net premiums earned (up 4.4%). Revenues missed the Zacks Consensus Estimate by 1.9%

The increase in net premiums earned was due to higher average insurance in force and a rise in premiums from single premium policy cancellations, partially offset by the effect of lower premium rates.

Net investment income improved from an increase in the consolidated investment portfolio.

Persistency, the percentage of insurance remaining in force from one year prior, was 73% as of Mar 31, 2020, down 870 basis points (bps) year over year.

New insurance written was $17.1 billion, up 77.2% year over year.

Net underwriting and other expenses totaled $44.8 million, down 7.4% year over year.

In the quarter under review, loss ratio was 23.4%, which deteriorated 780 basis points year over year.

Financial Update

Book value per share, a measure of net worth, grew about 1% to $12.53 as of Mar 31, 2020 from 2019 end.

MGIC Investment had $563 million in cash, cash equivalents and investments, up 73.2% year over year.

Total assets were $6.2 billion, flat with 2019-end level.

Capital Deployment

MGIC paid out dividends of $390 million to its holding company during the first quarter of 2020 while MGIC Investment Corporation paid $0.06 dividend per common share to shareholders during the first quarter of 2020

The company bought back 9.6 million shares for about $120 million in the first quarter. However, the company has temporarily suspended buybacks.

Zacks Rank

MGIC Investment currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Insurance Releases

Among other players from the insurance industry that have reported first-quarter earnings so far, the bottom line of Brown & Brown, Inc. BRO beat the Zacks Consensus Estimate while that of RLI Corp. RLI and Travelers Companies TRV missed the same.

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