MGIC Investment Corporation MTG reported first-quarter 2024 operating net income per share of 65 cents, which beat the Zacks Consensus Estimate by 8.3%. The better-than-expected earnings were driven by higher net investment income and lower underwriting and other expenses. The insurer continues to benefit from favorable credit trends and the resiliency of the housing market. The bottom line improved 20.3% year over year.
MGIC Investment recorded total operating revenues of $303 million, which increased 3.8% year over year on higher net investment income. The top line, however, missed the consensus mark by 0.4%.
Operational Update
Insurance in force declined 0.5% from the prior-year quarter to $290.9 billion. The company missed our estimate of $292.6 billion.
The insurer witnessed a 2.5% decrease in primary delinquency to 24,142 loans.
Net premiums earned declined 2.5% year over year to $242.6 million. The figure was lower than our estimate of $252 million.
MGIC Investment Corporation Price, Consensus and EPS Surprise
MGIC Investment Corporation price-consensus-eps-surprise-chart | MGIC Investment Corporation Quote
Net investment income increased 21.4% year over year to $61 million. The company beat our estimate of $52.7 million.
Persistency, the percentage of insurance remaining in force from one year prior, was 85.7% as of Mar 31, 2024, up from 84.5% in the year-ago quarter.
New insurance written was $9.1 billion, up 11% year over year, benefiting from favorable credit trends and the resiliency of the housing market.
Net underwriting and other expenses totaled $561 million, down 15.9% year over year.
For the quarter under review, the loss ratio was 1.9% compared with 2.7% for the first quarter of 2023.
Financial Update
Book value per share, a measure of net worth, increased 1.9% from 2023-end to $18.97 as of Mar 31, 2023. Shareholder equity was $5.1 billion as of Mar 31, 2024, up 0.5% from 2023-end.
MGIC’s PMIERs Available Assets totaled $5.9 billion or $2.5 billion above its Minimum Required Assets as of Mar 31, 2024.
Assets were $6.5 billion as of Mar 31, 2024, flat compared with 2023-end. Debt was $650 million as of Mar 31, up from $643.2 million at 2023-end.
Capital Deployment
MGIC Investment paid 11.50 cents in dividends per common share to shareholders during the first quarter of 2024. The board also approved a dividend of 11.50 cents, to be paid out on May 21, 2024, to shareholders of record as of May 9.
The company bought back 4.7 million shares in the first quarter and another 2.7 million shares in the second quarter to date. In April, the board of directors approved an additional share repurchase program worth $750 million through Dec 31, 2026.
Zacks Rank
MTG 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 Property & Casualty Insurers
The Travelers Companies TRV reported first-quarter 2024 core income of $4.69 per share, which missed the Zacks Consensus Estimate of $4.75 on higher-than-expected catastrophe loss. The bottom line increased 14.1% year over year, driven by higher underlying underwriting gain and higher net investment income, partially offset by higher catastrophe losses. Travelers’ total revenues increased 15.3% from the year-ago quarter to $11.2 billion, primarily driven by higher premiums. The top-line figure beat the Zacks Consensus Estimate by 0.1%.
Net written premiums increased 8% year over year to about $10.2 billion, driven by strong growth across all three segments. The figure was higher than our estimate of $9.9 billion. Travelers witnessed an underwriting gain of $1.4 billion, up 57.3% year over year, driven by higher business volumes.
Consolidated underlying combined ratio of 87.7 improved 290 bps year over year. The combined ratio improved 150 bps year over year to 93.9 due to an improvement in the underlying combined ratio, partially offset by higher catastrophe losses and lower net favorable prior-year reserve development. The Zacks Consensus Estimate was pegged at 94.
Progressive Corporation’s PGR first-quarter 2024 earnings per share of $3.83 beat the Zacks Consensus Estimate of $3.20. The bottom line improved nearly eight times year over year. Operating revenues of $17.1 billion beat the Zacks Consensus Estimate by 2.4% and increased 20.1% year over year.
Net premiums earned grew 19% to $16 billion and beat our estimate of $14.4 billion. Combined ratio — the percentage of premiums paid out as claims and expenses — improved 1,290 bps from the prior-year quarter’s level to 86.1.
RLI Corp. RLI reported first-quarter 2024 operating earnings of $1.89 per share, beating the Zacks Consensus Estimate as well as the year-ago number by 16%. The quarterly results reflected continued premium growth across all product segments. Operating revenues for the reported quarter were $394 million, up 17.6% year over year, driven by 17% higher net premiums earned and 21.3% higher net investment income. The top line, however, missed the Zacks Consensus Estimate by 0.1%.
Gross premiums written increased 13% year over year to $468 million. This uptick can be attributed to the solid performance of the Casualty (up 12.6%), Property (up 13.5%) and Surety (up 12.1%) segments. Our estimate was $511 million. Underwriting income of $77.7 million increased 16%. Combined ratio deteriorated 60 bps year over year to 78.5. The Zacks Consensus Estimate for the metric was pegged at 85, while our estimate was 77.7.
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RLI Corp. (RLI) : Free Stock Analysis Report
MGIC Investment Corporation (MTG) : Free Stock Analysis Report
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