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MGIC Investment (MTG) Q4 Earnings Top, Revenues Lag Estimates

MGIC Investment Corporation MTG reported fourth-quarter 2022 operating net income per share of 64 cents, which beat the Zacks Consensus Estimate by 8.5% and our estimate of 59 cents. The reported figure increased 4.9% year over year.

The insurer witnessed higher insurance in force and net investment income, offset by higher expenses and lower premiums.

MGIC Investment Corporation Price, Consensus and EPS Surprise

 

 

MGIC Investment Corporation price-consensus-eps-surprise-chart | MGIC Investment Corporation Quote

Operational Update

Insurance in force increased 7.6% from the prior-year quarter to $295.3 billion. The figure was higher than our estimate of $294.9 billion.

The insurer witnessed a 20.7% decrease in primary delinquency to 26,387 loans.

MGIC Investment recorded total operating revenues of $291 million, which decreased 0.6% year over year on lower premiums earned. The top line missed the consensus mark by 12.9% and our estimate of $334.1 million.

Net premiums written decreased 2.8% year over year to $231.4 million. The figure was lower than our estimate of $260.1 million.

Net investment income increased 18.5% year over year to $46.4 million. The figure was higher than our estimate of $44.3 million.

Persistency — the percentage of insurance remaining in force from one year prior — was 79.8% as of Dec 31, 2022, up from 62.6% in the year-ago quarter. It compares favorably with our estimate of 66.3%.

New insurance written was $12.9 billion, down 52.4% year over year due to a decline in origination markets. The figure was lower than our estimate of $37.2 billion.

Net underwriting and other expenses totaled $73.5 million, up 58.9% year over year. The increase was primarily due to higher expenses related to investments in technology and data and analytics infrastructure.

For the quarter under review, the loss ratio was (12.8%) compared with (9.9%) for the fourth quarter of 2021.

Full-Year Highlights

Operating net income per share of $2.79 missed the Zacks Consensus Estimate as well as our estimate of $2.86. The reported figure increased 50.9% year over year.

Total operating revenues of $1.2 billion increased 0.3% year over year. The top line missed the consensus mark by 12.9% and was almost in line with our estimate.

Financial Update

Book value per share, a measure of net worth, increased 4% from 2021-end to $15.82 as of Dec 31, 2022.

Shareholder equity was $4.6 billion as of Sep 30, 2022, down 6.1% from 2021 end.

MGIC's PMIERs Available Assets totaled $5.7 billion, or $2.3 billion above its Minimum Required Assets as of Dec 31, 2022.

Assets were $6.2 billion as of Dec 31, 2022, down 15.1% from 2021 end. Debt was $663 million as of Sep 30, 2022, down 39.7% from 2021 end.

Capital Deployment

MGIC Investment paid 10 cents in dividend per common share to shareholders during fourth-quarter 2022.

It bought back shares worth $80 million in the fourth quarter and another $28.2 million worth in January 2023.

Zacks Rank

MGIC Investment currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Insurers

The Travelers Companies, Inc. TRV reported fourth-quarter 2022 core income of $3.40 per share, which matched the Zacks Consensus Estimate. The bottom line decreased 35% year over year. Total revenues increased 7.5% from the year-ago quarter to about $9.6 billion, primarily, driven by higher premiums and fee income. The top-line figure beat the Zacks Consensus Estimate by 0.2%.

Net written premiums increased 10% year over year to $8.8 billion. The figure was higher than our estimate of $8.6 billion. Catastrophe losses totaled $459 million pre-tax, wider than $36 million pre-tax in the prior-year quarter. Travelers witnessed an underwriting gain of $449 million, down 51.5% year over year.  The combined ratio deteriorated 650 bps year over year to 94.5.

The Progressive Corporation’s PGR fourth-quarter 2022 earnings per share of $1.50 beat the Zacks Consensus Estimate of $1.49 as well as our estimate of $1.34. The bottom line improved 42.9% year over year.

Net premiums earned grew 11% to $12.9 billion and beat our estimate of $12.3 billion. The combined ratio — the percentage of premiums paid out as claims and expenses — improved 80 bps from the prior-year quarter’s level to 93.9.

RLI Corp. RLI reported fourth-quarter 2022 operating earnings of $1.53 per share, beating the Zacks Consensus Estimate by 41.7%. The bottom line improved 26.4% from the prior-year quarter. Operating revenues for the reported quarter were $329.5 million, up 19.4% year over year. The top line beat the Zacks Consensus Estimate by 0.4%.

Gross premiums written increased 14% year over year to $383.8 million. Underwriting income of $54 million increased 8.7%, primarily due to higher profitability at its Property segment. The combined ratio deteriorated 140 bps year over year to 82.1.

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