MGIC beats estimates with $231.2M revenue in 2Q2014

Net income triples year over year

MGIC Investment Corporation (MTG) today reported revenue of $231.20 million for the quarter, compared to the consensus estimate of $237.13 million. During the same quarter in the prior year, the company posted $0.03 earnings per share.

Analysts downgraded shares of MGIC Investment Corp. from a “conviction-buy” rating to a “buy” rating in a research note from Goldman Sachs on Friday, July 11. Net income for the quarter ended June 30, 2014 was $45.5 million, compared with a net income of $12.4 million for the same quarter a year ago.

Diluted income per share was $0.12 for the quarter ending June 30, 2014, compared to diluted income per share of $0.04 for the same quarter a year ago. Analysts expected $0.10.

Total revenues for the second quarter were $231.2 million, compared with $263.9 million in the second quarter last year. Net premiums written for the quarter were $213.4 million, compared with $236.6 million for the same period last year.

Curt S. Culver, CEO and chairman of the board of MGIC, said, "I am pleased that the positive operating trends affecting new insurance writings and credit performance continued and resulted in another profitable quarter." 

Relative to the recently proposed GSE mortgage insurance eligibility requirements, he further added that "throughout the financial crisis MGIC has demonstrated its commitment to remaining an approved mortgage insurer with the GSEs and I expect we will meet the requirements of the proposed mortgage insurer eligibility requirements even if they become effective in their current form.  We will be providing comments to the FHFA and the GSEs to reflect the appropriate changes required to the proposed standards such that they promote a liquid, affordable and stable housing market that reduces taxpayer risk, incent private capital to participate, and keep the cost of homeownership financing affordable."

New insurance written in the second quarter was $8.3 billion, compared to $8.0 billion in the second quarter of 2013.  

As of June 30, 2014, MGIC's primary insurance in force was $159.3 billion, compared with $158.7 billion at December 31, 2013, and $158.6 billion at June 30, 2013. Persistency, or the percentage of insurance remaining in force from one year prior, was 82.4% at June 30, 2014, compared with 79.5% at December 31, 2013, and 78.0% at June 30, 2013. 

At June 30, 2014, the percentage of loans that were delinquent, excluding bulk loans, was 7.30%, compared with 8.92% at December 31, 2013, and 10.16% at June 30, 2013. Including bulk loans, the percentage of loans that were delinquent at June 30, 2014 was 8.98%, compared to 10.76% at December 31, 2013, and 12.00% at June 30, 2013.

The fair value of MGIC’s investment portfolio, cash and cash equivalents was $5.0 billion at June 30, 2014, compared with $5.2 billion at December 31, 2013, and $5.6 billion at June 30, 2013.

Shares of MGIC opened at $8.35 on Wednesday. The company has a one-year low of $6.10 and a one-year high of $9.50.

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