Private mortgage insurer, MGIC Investment Corp. (MTG) reported fourth-quarter 2014 earnings per share of 19 cents, beating the Zacks Consensus Estimate by 5 cents. In the year-ago quarter, the company had reported loss of 1 cent per share.
The earnings beat was driven by higher new insurance written coupled with a decline in delinquent inventory.
Following strong earnings, shares of the company gained 0.5% during the course of the day to close at $8.62.
MGIC Investment’s total revenue of $240.4 million declined 4.6% year over year but surpassed the Zacks Consensus Estimate of $236 million.
For the full year 2014, revenues came in at $941.8 million, down 9.4% year over year. Operating earnings of 64 cents per share were higher than the Zacks Consensus Estimate of 59 cents per share.
Premium written increased 11.6% year over year to $227.7 million. New insurance written in the fourth quarter increased 41.8% year over year to $9.5 billion.
As of Dec 31, 2014, MGIC Investment’s primary insurance in force was $164.9 billion, up 3.9% year over year.
Persistency, or the percentage of insurance remaining in force from the year before, was 82.8% at Dec 31, 2014 compared with 79.8% as of Dec 31, 2013.
Claim loss declined a significant 40.3% year over year to $117.1 million.
Book value per share, a measure of net worth, increased 39.1% year over year to $3.06.
As of Dec 31, 2014, MGIC Investment had approximately $491 million in cash and investments. The company expects to keep a part of this cash as future capital contribution required by Federal Housing Finance Agency (FHFA). The FHFA released new capital maintenance guidelines for mortgage insurers last year that are likely to be finalized by the end of first-quarter 2015.
The year 2014, was a good one for MGIC Investment as reflected by an increase in premium and decline in new delinquent notices, paid claims and a delinquent inventory. But 2015 might bring stiff competition for the company and other private mortgage insurers such as Genworth Financial, Inc. (GNW), Radian Group Inc. (RDN) and Essent Group Ltd. (ESNT) from the expected decline in annual mortgage insurance premiums of their competitor Federal Housing Administration, announced in earlier during the month.
MGIC Investment carries a Zacks Rank #1 (Strong Buy).
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