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MGIC Investment's New Business Growth Continues to Impress

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MGIC Investment CorporationMTG has successfully lived up to ever-changing demands and expectations of its clients, building a solid service and product portfolio over the years. The company remains focused on maintaining this winning streak to further upgrade the overall results.

MGIC Investment has kept its target intact on growing insurance in force. However, given the current market environment, the company anticipates to write approximately the same amount of new insurance this year as was in 2016. Nonetheless, the company estimates writing new business of about $48 billion in 2017. Therefore, such level of new business along with expected increase in persistency is anticipated to drive growth for insurance in force during the remainder of 2017 and the years ahead.

Also, MGIC Investment witnessed a substantial decline in paid claims over a considerable period of time and the first nine months of 2017 were no exception. Banking on lesser claim filings, this Multi line insurer estimates a further fall in the metric in the near term. A decrease in loss and claims will in turn brace the company's balance sheet, improving its financial profile.

This apart, the Zacks Rank #2 (Buy) Multi line insurer's growing private mortgage market share continues to boost insurance in force, driving future revenues. The company with a current 18% market share expects to gain 19-20% of the same in the industry it operates.

Additionally, a strong capital position will allow the company to repurchase some of the convertible debt in order to lower its interest burden as well as facilitate margin expansion.

Northbound Estimates : Even though the stock has not witnessed any estimate revision for its current-year earnings in the last 60 days, the Zacks Consensus Estimate for 2018 has been revised 1.7% upward during the same period.

Growth Projections : The Zacks Consensus Estimate for earnings per share is $1.21 on revenues of $1.07 billion for 2017. While the top line reflects a year-over-year rise of 1.6%, the bottom line improves 22.5%. For 2018, the Zacks Consensus Estimate for earnings per share is pegged at $1.21 on $1.13 billion revenues. Although revenues reflect a 5.9% rise, earnings represent a slip of 0.2%.

An Outperformer : Shares of MGIC Investment have soared 42.7% year to date, significantly outperforming the industry 's increase of 9.7%. We expect bottom-line growth, improving new insurance written, higher net investment income as well as a robust capital position to drive the stock higher in the near term.

Strong Surprise History : MGIC Investment delivered positive surprises in all the last four quarters with an average beat of 27.1%.

Value Score : MGIC Investment has a Value Score of B. The value score helps investors identify the undervalued stocks, which in turn will generate superior returns. Hence, MGIC Investment's value score raises optimism amongst investors. Moreover, back tested results have shown Zacks Rank #1 (Strong Buy) or 2 with Value Score A or B are best investment bets.

Other Stocks to Consider

Investors interested in other top-ranked stocks from the insurance industry can also consider CNA Financial Corporation CNA , Infinity Property and Casualty Corporation IPCC and NMI Holdings, Inc. NMIH .

CNA Financial provides commercial property and casualty insurance products primarily in the United States. The company came up with positive surprises in three of the last four quarters with an average beat of 39.87%. Shares of the company have gained 26.5% year to date. The company sports a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here .

Infinity Property and Casualty Corporation provides personal automobile insurance products in the United States. The company pulled off positive surprises in three of the last four quarters with an average beat of 300.65%. Shares of the company have rallied 20.9% year to date. Notably, the company sports a Zacks Rank of 1.

NMI Holdings provides private mortgage guaranty insurance services in the United States. The company delivered a four-quarter average positive surprise of 11.75%. Shares of the company have surged 63.9% year to date. The company holds a Zacks Rank #2.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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