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MGIC Investment (MTG) Q4 Earnings Beat, Revenues Fall Y/Y

MGIC Investment Corporation MTG reported fourth-quarter 2021 adjusted net operating income per share of 61 cents, which beat the Zacks Consensus Estimate by 35.6%. The bottom line increased 41.9% year over year.

The quarterly results reflect a high quality of increased insurance in force, which benefited from a strong housing market and improved economic conditions.

MGIC Investment Corporation Price, Consensus and EPS Surprise

Operational Update

Insurance in force improved 11.3% from the prior-year quarter to $274.4 billion. The company witnessed a decline of 42.3% in primary delinquency to 33,290 loans.

MGIC Investment reported total operating revenues of $292.9 million, down 2.1% year over year on lower premium earned.

Net premiums written were $238.2 million, up 2.1% year over year, driven by an increase in insurance in force and profit commission, and profit commissions from quota share reinsurance transactions, partially offset by the effects of a decrease in the direct premium yield and an increase in ceded premiums written before the impact of the profit commission.

Net investment income rose 8.3% year over year to $39.1 million due to an increase in the consolidated investment portfolio. It was partially offset by lower investment yields.

Persistency, the percentage of insurance remaining in force from one year prior, was 62.6% as of Dec 31, 2021, up 210 basis points (bps) year over year.

New insurance written was $27.1 billion, down 13.6% year over year, reflecting a decrease in the refinance market.

Net underwriting and other expenses totaled $75.6 million, down 32.6% year over year attributable to lower losses incurred, interest expense and underwriting and other expenses.

In the quarter under review, the loss ratio was (9.9%) compared with 17.5% in the year-ago quarter.

Full-Year Update

Adjusted net operating income per share of $1.91 beat the Zacks Consensus Estimate by 35.6%. The bottom line increased 44.7% year over year.

Operating revenues of $1.3 billion increased 12% year over year.

Financial Update

Book value per share, a measure of net worth, grew 9.4% to $15.18 as of Dec 31, 2021 from 2020 end.

MGIC Investment had $663 million in investments, cash and cash equivalents, down 21.7% from the figure at 2020 end.

Total assets were $7.3 billion, down 1.4% from the 2020-end level. Debt declined 8.3% from 2020 end to $1.1 billion as of Dec 31, 2021.

PMIERs available assets were $5.7 billion, which were $2.2 billion above its minimum required assets as of Dec 31, 2021.

MGIC Investment bought back 9 million shares and paid a $250 million dividend to MGIC Investment Corporation.

Capital Deployment

MGIC Investment bought back 9 million shares and paid a $250 million dividend to MGIC Investment Corporation in the reported quarter.

In January, the company bought back another $60 million worth of shares.

The board of directors authorized an additional $500 million share repurchase program through the end of 2023.

The board of directors declared a dividend of 8 cents per share to be paid out on Mar 2, 2022, to shareholders of record as of Feb 16.

Zacks Rank & Performance of Other Insurers

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 Other Insurers

Of the insurance industry players that have reported fourth-quarter results so far, The Travelers Companies TRV, RenaissanceRe Holdings Ltd. RNR and The Progressive Corporation PGR beat the Zacks Consensus Estimate for earnings.

Travelers’ core income of $5.20 per share surpassed the Zacks Consensus Estimate of $3.86 and increased 6% year over year. Total revenues rose 7% to about $9 billion and beat the Zacks Consensus Estimate of $8.7 billion.

Travelers’ net written premiums increased 10% year over year to a record $8 billion. The combined ratio deteriorated 130 bps year over year to 88.

RenaissanceRe’s operating earnings per share of $4.71 surpassed the Zacks Consensus Estimate by 27% and rebounded from the year-ago loss of $1.59 per share. Total revenues of $1.39 billion dipped 0.1% year over year.

RenaissanceRe’s gross premiums written surged 40.4% year over year to $1.3 billion. The combined ratio improved 3530 bps year over year to 79.4.

Progressive’s earnings per share of $1.05 beat the Zacks Consensus Estimate of 99 cents but declined 43.2% from the year-ago quarter.

Progressive’s net premiums written were $10.7 billion in the quarter, up 13% from $9.5 billion a year ago. The combined ratio deteriorated 630 bps from the prior-year quarter to 94.7.


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MGIC Investment Corporation (MTG): Free Stock Analysis Report
 
The Travelers Companies, Inc. (TRV): Free Stock Analysis Report
 
RenaissanceRe Holdings Ltd. (RNR): Free Stock Analysis Report
 
The Progressive Corporation (PGR): Free Stock Analysis Report
 
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