MGIC Investment (MTG) Beats On Q2 Earnings & Revenues

MGIC Investment’s total operating revenue of $262.7 million was up 8.2% year over year on higher premiums earned, investment income and other income. Also, the top line surpassed the Zacks Consensus Estimate by 3.2%.

New insurance written was $12.6 billion in the reported quarter, up 6.8% from $11.8 billion in second-quarter 2015.

As of Jun 30, 2016, the company’s primary insurance in force was $177.5 billion, up 5.2% year on year. It covered approximately one million mortgages.

Persistency, or the percentage of insurance remaining in force from the year before, was 79.6% as of Jun 30, 2016 compared with 80.4% as of Jun 30, 2015.

Percentage of delinquent loans including bulk loans was 5.3% as of Jun 30, 2016 compared with 6.8% as of Jun 30, 2015.

Primary delinquent inventory plunged 20.8% year over year to $52.6 billion.

Net underwriting and other expenses totaled $37.6 million, down 0.8% year over year.

Losses incurred in the quarter narrowed 48.3% to $46.6 million. A $55 million reduction in losses in the second quarter was due to positive development on the company’s primary loss reserve. The company had recorded positive development of around $22 million in the second quarter of 2015.

Total losses and expenses decreased 23.3% year over year to $98.3 million. Also, underwriting and other expenses, net was down 0.7% year over year, while interest expenses decreased 29.5% year over year. All these factors contributed to the fall in total losses and expenses.

Financial Update

Book value per share, a measure of net worth, soared about 102% year over year to $7.37 as of Jun 30, 2016 from $3.65 as of Jun 30, 2015.

As of Jun 30, 2016, MGIC Investment had approximately $4.9 billion in cash and investments, up 0.5% year over year.

In the second quarter, the company repurchased $50.2 million 5% convertible senior notes, due 2017, for $52.1 million plus accrued interest.

Dividend Update

During the second quarter, in April and June, MGIC Investment paid $16 million in dividends to the holding company.

We wait to see how the stock fares following the second-quarter outperformance.

Zacks Rank and Performance of Other Stocks

Currently MGIC Investment carries a Zacks Rank #4 (Sell). Among the other players from the insurance industry that have reported their second-quarter earnings so far, the bottom line at RLI Corp. (NYSE:RLI) and Progressive Corp. (NYSE:PGR) missed their respective Zacks Consensus Estimates, while Brown & Brown Inc.’s (NYSE:BRO) earnings beat the same.