MGIC Investment Corporation
) reported first quarter 2013 operating loss of 31 cents per
share, substantially worse than the Zacks Consensus Estimate of a
loss of 20 cents per share. MGIC had reported an operating loss
of 10 cents per share in the year-ago quarter.
Quarterly Operational Update
Total revenue for the quarter came in at $269.2 million, down
29.1% year over year. Results were also below the Zacks Consensus
Estimate of $285 million.
Net premiums written were $248.5 million, down 2.5% year over
year. The company's new insurance written soared 54.8% year over
year to $6.5 billion in the quarter.
MGIC's primary insurance in force stood at $159.5 billion, down
1.6% from $162.1 billion at year end 2012.
Losses incurred were $266.2 million, narrower than the loss of
$337.1 million incurred in the year-ago quarter reflecting fewer
new notices of default being received.
Total expenses in the quarter declined 14.3% year over year to
Net underwriting and other expenses in the first quarter were $50
million, down 0.6% year over year.
Investment income in the quarter declined 51% year over year to
As of Mar 31, 2013 persistency (the percentage of insurance
remaining in force from the previous year) was 78.7%, down 110
basis points from 79.8% at Dec 31, 2012.
In Mar 2013, MGIC raised capital worth $1145.35 million. The
capital was raised in two parts with $695.25 million from the
issue of shares and $450 million from the issue of 2.00%
convertible senior notes due 2020.
CIGNA CORP (CI): Free Stock Analysis Report
GENWORTH FINL (GNW): Free Stock Analysis
HARTFORD FIN SV (HIG): Free Stock Analysis
MGIC INVSTMT CP (MTG): Free Stock Analysis
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Interest on the notes will be paid at a rate of 2.00% per year,
semi-annually on Apr 1 and Oct 1 of each year, effective Oct 1,
The total numbers of shares issued were 135 million. The
underwriters were given a 30-day option to purchase up to an
additional 20-25 million shares and $50 million of notes.
As of Mar 31, 2013, MGIC's investment portfolio, cash and cash
equivalents was $6.2 billion, down 3.1% year over year.
Total assets of MGIC were $6.5 billion, down 4.5% year over year.
The debt-to-capital ratio of MGIC at mar 31, 2013 was 63.2%
compared to 43.4% in the year-ago period.
At Mar 31, 2013 MGIC's risk-to-capital ratio was 20.4 to 1, lower
than the maximum allowed by the jurisdictions with capital
requirements, and its policyholder position was $168 million
above the required minimum of $1.2 billion.
Book value per share as of Mar 31, 2013 declined 58.9% year over
year to $2.30 from $5.60.
In Apr 2013, MGIC partnered with INTEGRA Software Systems to
automate the access to its mortgage insurance programs and
The company has been reporting annual net loss for the past
consecutive 6 years with aggregate net loss of $5.3 billion from
2007-2012. We do not expect the company to return to
profitability in 2013 given high unemployment rates, low cure
rates, low housing values, changes to the company's rescission
practices and unfavorable resolution of ongoing legal
Performance of Other Stocks
Genworth Financial Inc.
) reported first-quarter 2013 net operating income of 30 cents
per share. The result surpassed the Zacks Consensus Estimate of
27 cents and was much above year-ago level of 3 cents.
) first-quarter 2013 net operating earnings of $1.72 per share
outpaced the Zacks Consensus Estimate of $1.43 per share.
Moreover, the results surged nearly 39% year over year.
Hartford Financial Services Group Inc.
) reported first-quarter 2013 operating earnings of $456 million
or 92 cents per share, surpassing the Zacks Consensus Estimate of
83 cents. Operating earnings also outperformed the year-ago
earnings of $426 million or 87 cents per share.
MGIC currently carries a Zacks Rank #2 (Buy).