MGIC Investment Corporation
) reported primary new insurance for Nov 2013 of $2.2 billion,
unchanged year-over-year but down 8.3% sequentially.
For the first nine months of 2013 primary new insurance written
at MGIC Investment was $23.1 billion, up 35% year over year. The
increase was due to larger origination volume as well as an
increase in the private mortgage insurance industry's market
Though MGIC Investment did not register any increase in new
business written because of seasonality, improvement in
delinquency levels was seen. Delinquent inventory for Nov 2013
was 104,637, down 27% year over year.
The private mortgage industry continues to regain market share
from the Federal Housing Authority but the pace of that recovery
Management at MGIC Investment remains encouraged about the
recovering demand for home purchases. It anticipates that since
the majority of purchases that need a mortgage do not have a 20%
down payment, the company is poised to benefit from this market
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After suffering from losses for the past six years from the
subprime crisis, MGIC Investment is recovering gradually along
with the industry. The current market structure thus presents a
good opportunity for stronger players, who have sturdy capital
position and can tolerate regulation. Moreover, due to the exit
of some firms during the housing market crisis, supply is
limited. Mortgage insurers with a differentiated financial
profile can therefore benefit from current market conditions.
Some of the companies under the Zacks coverage are well poised to
gain from the changing trends in the mortgage industry and
Old Republic International Corporation
) with Zacks Rank # 1(Strong Buy) is one of them. This company is
planning to raise fresh funds from capital markets to restart its
mortgage insurance unit early next year, after mounting losses
from the collapse of the housing market pushed the firm out from
the mortgage insurance business.
Another new entrant,
Arch Capital Group Ltd.
), also with a Zacks Rank # 2, announced plans to enter the U.S.
mortgage insurance market earlier this year by acquiring the
assets of previously bankrupt insurer PMI Group Inc. in a $300
MGIC Investment Corporation carries a Zacks Rank # 2 (Buy).
) with a similar Zacks Rank is worth considering.