MGIC posts 3Q net income of $72M on $235M revenue

Not concerned about GSE insurance changes in works

MGIC Investment Corporation (MTG) posted net income of $72 million for the quarter ended Sept. 30, compared with net income of $12.1 million for the same quarter a year ago.

Diluted earnings per share were $0.18 for the quarter ending Sept. 30, 2014, compared to diluted earnings per share of $0.04 for the same quarter a year ago.  Net income for the first nine months of 2014 was $177.5 million, compared with a net loss of $48.4 million for the same period last year.

"I am pleased to report we had another profitable quarter and that the amount of new insurance written increased 21% while the delinquency inventory declined more than 25% from the same period last year," said Curt Culver, CEO and Chairman. 

Relative to the recently proposed GSE mortgage insurance eligibility requirements he further added that "I fully expect that we will comply with the requirements, whether they are modified or not, and that MGIC will remain a vital part of the evolving U.S. housing finance system."

Total revenues for the third quarter were $235.1 million, compared with $254.4 million in the third quarter last year. Net premiums written for the quarter were $222.9 million, compared with $234.3 million for the same period last year. Other revenue was $3.1 million compared to$2.5 million in the same quarter last year.     

New insurance written in the third quarter was $10.4 billion, compared to $8.6 billion in the third quarter of 2013.  New insurance written for the first nine months of 2014 was $23.9 billion, compared to $23.1 billion for the same period last year. 

Persistency, or the percentage of insurance remaining in force from one year prior, was 82.8% at Sept. 30, 2014, compared with 79.5% at December 31, 2013, and 78.3% at September 30, 2013.

As of September 30, 2014, MGIC's primary insurance in force was $162.4 billion, compared with $158.7 billion at December 31, 2013, and $159.2 billion at September 30, 2013. The fair value of MGIC Investment Corporation's investment portfolio, cash and cash equivalents was$4.9 billion at September 30, 2014, compared with $5.2 billion at December 31, 2013, and $5.5 billion at September 30, 2013.

At September 30, 2014, the percentage of loans that were delinquent, excluding bulk loans, was 6.97%, compared with 8.92% at December 31, 2013, and 9.69% at Sept. 30, 2013. Including bulk loans, the percentage of loans that were delinquent at Sept. 30, 2014 was 8.65%, compared to 10.76% at December 31, 2013, and 11.51% at September 30, 2013.

Losses incurred in the third quarter were $115.3 million, compared to $180.2 million in the third quarter of 2013, reflecting fewer new delinquency notices received and lower claim rates on new and previously reported delinquencies.  Net underwriting and other expenses were $37.0 million in the third quarter, compared to $48.0 million reported for the same period last year reflecting ceding commissions related to reinsurance. 

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