MGIC Investment Lags Estimate - Analyst Blog
21 Avril 2011 - 5:15PM
Zacks
MGIC Investment Corp. (MTG) reported a first-quarter 2011
operating loss of 20 cents per share; wider than the Zacks
Consensus Estimate of a loss of 10 cents. However, the loss
narrowed from the year-ago quarter's loss of $1.42 per share.
Operating loss totaled $38.8 million compared with a loss of $177
million in the prior-year quarter.
Including a
realized gain of $5.8 million or 3 cents a share, MGIC reported a
loss of $33 million, compared with a loss of $150.1 million or
$1.20 per share. The year-ago quarter included a realized
gain of $26.9 million or 22 cents a share.
Operational
Update
Total
revenue for the quarter came in at $353.1 million, up 5% year over
year. Results modestly exceeded the Zacks Consensus Estimate of
$352 million in revenue.
Net premiums
written increased 7.2% to $274.5 million. New insurance written at
$3.4 billion grew for the fourth straight quarter. On a
year-year-year basis, new insurance written grew a whopping
67%.
Investment
income was $56.5 million, down 18% year over year.
Net
underwriting and other expenses were $57.6 million, down 3.8% year
over year. The decrease reflected lower contract underwriting
volume as well as a focus on expense control in difficult market
conditions.
Persistency
(the percentage of insurance remaining in force from the
year-earlier period) was 88.3% as of March 31, 2011, compared with
85.6% in the prior-year period. MGIC’s primary insurance in force
fell 9.8% year over year to $186.9 billion.
In the first
quarter, net claims paid totaled $687 million, sharply up 32% year
over year.
As of March
31, 2011, MGIC’s risk-to-capital ratio was 19.7:1 compared with
20.1:1 as of March 31, 2010. MGIC ended the quarter with cash and
cash equivalents of $1.1 billion, up 36% from $818 million at the
first quarter 2010 end.
Book value
per share declined 13% year over year to $8.00 as on March 31,
2011.
Going
forward, we expect the company to benefit from improving credit
trends. Also, a normal operating environment, expected in 2011,
will fuel an increase in new insurance written. We also expect
lower levels of loan modifications under the Home Affordable
Mortgage Program as the company has realized significant benefits
from it.
The
quantitative Zacks #5 Rank (short term Strong Sell rating) on
the stock indicates downward pressure on the shares over the
near term.
Based in Milwaukee, Wisconsin, MGIC Investment Corp. is the
parent company of Mortgage Guaranty Insurance Corporation, the
largest private mortgage insurer in the U.S., offering its products
across the country, the District of Columbia, and in Puerto Rico.
It competes with Genworth Financial Inc. (GNW),
PMI Group Inc. (PMI) and Radian Group
Inc. (RDN).
GENWORTH FINL (GNW): Free Stock Analysis Report
MGIC INVSTMT CP (MTG): Free Stock Analysis Report
PMI GROUP (PMI): Free Stock Analysis Report
RADIAN GRP INC (RDN): Free Stock Analysis Report
Zacks Investment Research
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