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MGIC Investment (MTG) Reports Robust November Business Data

Zacks Equity Research
Updated

MGIC Investment Corporation MTG recently announced its November operating business statistics. Insurance in force for the month was $193.5 billion, up 6.7% year over year. Delinquency loans (loans that failed to pay back) at the company declined on a year-over-year basis. Delinquent inventory for the month under review decreased 6.5% year over year to 46,900 loans.

MGIC Investment was severely affected by the 2008 financial crisis. However, the company is steadily recovering on the back of declining delinquencies and improving cure rates on claims from its legacy business. The prospects of the company also look bright in terms of growing book of high-credit-quality business written since 2009.

Given the continued improvement in new business written, fueled by larger origination volume as well as a rise in the private mortgage insurance industry’s market share, the company anticipates to write approximately the same amount of new insurance as 2016. New business written and an expected increase in persistency are anticipated to grow MGIC Investment’s insurance in force for the remainder of 2017.

The company has been witnessing a decline in paid claims over a considerable period of time and the first nine months of 2017 were no exception. Hence, we expect paid claims to decrease further. Also, a decline in loss and claims will strengthen the company’s balance sheet and improve its financial profile.

MGIC Investment estimates the number of loans in delinquent inventory as well as claim rate applied to new delinquent notices to decline in 2017. Moreover, based on premium rate changes, the company anticipates the claim rate for new notices to be lower in the future quarters.

Zacks Rank and Share Price Movement

MGIC Investment sports a Zacks Rank #1 (Strong Buy). Shares of the company have soared 50.9% year to date, significantly outperforming the industry’s rally of 11.0%. We expect decreasing claim payments, declining delinquencies owing to an improving housing market, new business as well as a robust capital position to continue driving shares higher in the near term.



Other Stocks to Consider

Investors interested in other stocks worth considering from the insurance industry can check out Radian Group Inc. RDN, MetLife, Inc. MET and Prudential Financial, Inc. PRU, each holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.  

Radian Group offers mortgage and real estate products and services in the United States. The company delivered positive surprises in three of the last four quarters with an average beat of 4.52%.

MetLife offers life insurance, annuities, employee benefits and asset management products in the United States, Japan, Latin America, Asia, Europe and the Middle East. The company pulled off positive surprises in all the last four quarters with an average beat of 9.60%.  

Prudential Financial provides insurance, investment management and other financial products and services in the United States and internationally. The company came up with positive surprises in three of the last four quarters with an average beat of 0.16%.

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