MGIC Investment (MTG) Q3 Earnings Top Estimates, Increase Y/Y

MGIC Investment Corporation MTG reported third-quarter 2022 operating net income per share of 86 cents, which beat the Zacks Consensus Estimate by 56.4% and our estimate of 54 cents. The reported figure increased 86.9% year over year.

The insurer witnessed higher insurance in force and net investment income, offset by higher expenses and lower premiums.

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 9.4% from the prior-year quarter to $293.6 billion. The figure was lower than our estimate of $313.4 billion.

The insurer witnessed a 30.8% decrease in primary delinquency to 25,878 loans.
MGIC Investment recorded total operating revenues of $296 million, which increased 0.3% year over year on higher net investment income. The top line missed the consensus mark by 8%.

Net premiums written decreased 2.1% year over year to $242.3 million. The decrease was due to an increase in ceded premiums and a decrease in premium yield. The figure was lower than our estimate of $262 million.

Net investment income increased 11.1% year over year to $42.5 million. The figure was higher than our estimate of $42.1 million.

Persistency — the percentage of insurance remaining in force from one year prior — was 75.7% as of Sep 30, 2022, up from 59.5% in the year-ago quarter. It compares favorably with our estimate of 67.5%.

New insurance written was $19.6 billion, down 31.7% year over year due to a decrease in the origination markets. The figure was lower than our estimate of $37.4 billion.

Net underwriting and other expenses totaled $61.7 million, up 7.9% year over year. The increase was primarily due to higher expenses related to investments in technology and data and analytics infrastructure.

For the quarter under review, the loss ratio was (41.7%) compared with 8.1% for the third quarter of 2021.

Financial Update

Book value per share, a measure of net worth, declined 0.1% from 2021-end to $15.16 as of Sep 30, 2022.

Shareholder equity was $4.5 billion as of Sep 30, 2022, down 8.2% from 2021 end.
MGIC's PMIERs Available Assets totaled $5.9 billion, or $2.6 billion above its Minimum Required Assets as of Sep 30, 2022.

Assets were $6.1 billion as of Sep 30, 2022, down 15.9% from 2021 end. Debt was $663 million as of Sep 30, 2022, down 36.4% from 2021 end.

Capital Deployment

MGIC Investment paid 10 cents in dividend per common share to shareholders during third-quarter 2022.

It bought back shares worth $84.7 million in the third quarter and another $33.7 million worth in October.

Zacks Rank

MGIC Investment currently carries a Zacks Rank #2 (Buy). 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 third-quarter results so far, The Hartford Financial Services Group, Inc. HIG and Assurant, Inc. AIZ beat the respective Zacks Consensus Estimate for earnings, while Prudential Financial, Inc. PRU missed the mark.

The Hartford Financial Services reported third-quarter 2022 adjusted operating earnings of $1.44 per share, which outpaced the Zacks Consensus Estimate by 11.6%. The bottom line climbed 14% year over year. Operating revenues of HIG amounted to $3,830 million, which rose 3.6% year over year in the quarter under review.

The top line also beat the consensus mark by 1.8%. Hartford Financial’s total earned premiums improved 7.6% year over year to $4,910 million, which surpassed the Zacks Consensus Estimate of $4,811 million and our estimate of $4,808.2 million. Net investment income of $487 million dropped 25.1% year over year in the third quarter due to a decline in income from limited partnerships and other alternative investments.

Assurant reported third-quarter 2022 net operating income of $1.01 per share, which beat the Zacks Consensus Estimate by 1% but missed our estimate of $2.36. The bottom line decreased 40.2% from the year-ago quarter.

Assurant’s total revenues increased 1.9% year over year to $2.6 billion due to higher net earned premiums and net investment income. The top line, however, missed the Zacks Consensus Estimate by 1.8%. The figure was lower than our estimate of $2.7 billion. Net investment income was up 9.9% year over year to $83.5 million. The figure was higher than our estimate of $81.8 million.

Prudential Financial’s third-quarter 2022 operating net income of $2.13 per share missed the Zacks Consensus Estimate by 3.6%. The bottom line decreased 43.6% year over year. Total revenues of $21.6 billion increased 10% year over year on higher premiums. The top line beat the Zacks Consensus Estimate by 69.4%. The figure was higher than our estimate of $12.8 billion.

Total benefits and expenses of $20.6 billion were up 15.5% year over year for the quarter. The increase in expenses was mainly attributable to higher insurance and annuity benefits and interest expense. The figure was higher than our estimate of $11.6 billion.

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