Fewer mortgage defaults drive MGIC profit
Expenses are also down at mortgage insurer
Private mortgage insurer Mortgage Guaranty Insurance Corporation (MTG) posted a profit for the first quarter on the back of better loan performance. Expenses were also down.
Losses incurred in the first quarter were $122.6 million, down from $266.2 million reported for the same period last year, primarily due to fewer new notices of default being received and a lower claim rate on new and previously received delinquencies.
Net underwriting and other expenses were $39.4 million in the first quarter as compared to $50 million reported for the same period last year due primarily to ceding commissions related to reinsurance.
Reported income for the quarter is $60 million, compared with a net loss of $72.9 million for the same quarter a year ago.
Diluted income per share was $0.15 for the quarter ending March 31, 2014, compared to diluted loss per share of $0.31 for the same quarter a year ago.
New insurance written in the first quarter was $5.2 billion, compared to $6.5 billion in the first quarter of 2013.
In addition, the Home Affordable Refinance Program accounted for $1 billion of insurance that is not included in the new insurance written total compared to $3 billion in the first quarter of 2013.
Total revenues for the first quarter were $235.1 million, compared with $269.2 million in the first quarter last year.
Net premiums written for the quarter were $218 million, compared with $248.5 million for the same period last year.
The fair value of MGIC Investment Corporation's investment portfolio, cash and cash equivalents was $5.1 billion at March 31, 2014, compared with $5.2 billion at December 31, 2013, and $6.2 billion at March 31, 2013.
"I feel the company is in an excellent position to take advantage of the housing recovery," said Curt Culver, CEO of MGIC.
Last year, MGIC raised $1.15 billion in net proceeds after selling 135 shares of common stock and $500 million in senior notes due in 2020.
The company also completed its previously announced transfer of $800 million to principal mortgage insurance subsidiary, Mortgage Guaranty Insurance Corp.
The transfer of funds to the mortgage guaranty business buffered the MI insurer’s capital levels, improving its risk-to-capital ratio to approximately 20-to-1. With the transfer of funds, MGIC finally met all of the capital requirements stated by jurisdictions that force MI insurers to meet certain standards before writing insurance in particular states.