MGIC Investment (MTG) Q1 Earnings Top, Revenues Fall Y/Y

MGIC Investment Corporation MTG reported first-quarter 2022 operating net income per share of 60 cents, which beat the Zacks Consensus Estimate by 3.4%. The reported figure increased 42.8% year over year.

The insurer witnessed higher premiums and net investment income, offset by higher expenses.

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 10.2% from the prior-year quarter to $277.3 billion.

The insurer witnessed a 42.3% decrease in primary delinquency to 30,462 loans.

MGIC Investment recorded total operating revenues of $294.6 million, which decreased 1.1% year over year due to a change in net realized investment gains and losses related to the investment portfolio.

Net premiums written increased 0.5% year over year to $242.7 million. The increase in net premiums written was due to an increase in insurance in force and a decrease in ceded premiums from its quota share reinsurance transactions. It was partially offset by lower new insurance written and a decrease in premium yield.

Net investment income increased 0.9% year over year to $38.3 million.
Persistency — the percentage of insurance remaining in force from one year prior — was 66.9% as of Mar 31, 2022, up 1070 basis points (bps) year over year.

New insurance written was $19.6 billion, down 36.4% year over year due to a decrease in the refinance market.

Net underwriting and other expenses totaled $57.5 million, up 13.4% year over year, due to increases in expenses related to investments in technology and data and analytics infrastructure.

For the quarter under review, the loss ratio was (7.6%) compared with 15.5% for the first quarter of 2021.

Financial Update

Book value per share, a measure of net worth, declined 2.8% from 2021-end to $14.75 as of Mar 31, 2022.

MGIC Investment had $409 million in cash, cash equivalents and investments, down 38.3% from the 2021-end level.

Total assets were $6.8 billion, down 6.6% from the 2021-end level.

Capital Deployment

MGIC Investment paid out dividends of $400 million to its holding company and paid 8 cents in dividend per common share to shareholders during first-quarter 2022.

As of Mar 31, 2022, MTG had shares worth $372 million remaining under the share buyback authorization.

Zacks Rank

MGIC Investment currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Some Other Multi-line Insurers

Of the insurance industry players that have reported first-quarter results so far, Prudential Financial, Inc. PRU, Assurant, Inc. AIZ and American International Group, Inc. AIG beat the respective Zacks Consensus Estimate.

Prudential Financial’s first-quarter 2022 operating net income of $3.17 per share beat the Zacks Consensus Estimate by 18.7%. The bottom line decreased 20.6% year over year.

Total revenues of $13.6 billion were down 0.7% year over year due to lower policy charges and fee income, asset management fees, commissions and other income. The top line missed the Zacks Consensus Estimate by about 3.7%. Total benefits and expenses of $12.1 billion were up 3.2% year over year for the quarter.

Assurant reported first-quarter 2022 net operating income of $3.75 per share, which beat the Zacks Consensus Estimate by 31%. The bottom line increased 51.8% from the year-ago quarter.

Total revenues increased 4.6% year over year to $2.5 billion due to higher net earned premiums, fees and other income and net investment income. The top line however missed the Zacks Consensus Estimate by 2.3%. Net investment income was up 13.1% year over year to $86.3 million.

American International posted first-quarter 2022 adjusted operating earnings of $1.30 per share, which beat the Zacks Consensus Estimate by 4.8%. AIG’s bottom line climbed 23.8% year over year.

Total operating revenues of AIG amounted to $11 billion, which improved 3.5% year over year in the first quarter on the back of higher premiums. However, the top line missed the consensus mark by 1.6%. Total net investment income of $3.2 billion tumbled 11% year over year in the quarter under review.

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