MGIC Investment Corp. (MTG) on April 19, 2016 reported net income for the quarter ended March 31, 2016 of $69.2 million, compared with a net income of $133.1 million for the same quarter a year ago. Diluted net income per share was $0.17 for the quarter ending March 31, 2016, compared to diluted net income per share of $0.32 for the same quarter a year ago. As explained below there was activity in both periods that impacted the comparability of results on a year over year basis.
Patrick Sinks, CEO of MTG and Mortgage Guaranty Insurance Corporation (“MGIC”), said, “I am pleased to report that in the first quarter of 2016 we prudently grew our insurance in force by adding high quality new insurance, continued to experience positive credit trends and maintained our traditionally low expense ratio.” Sinks added, “I am also pleased that during the quarter we were able to use our improved financial position to reduce potential dilution to shareholders and lower our long term interest expense by repurchasing a portion of our convertible debt. Additionally, MGIC, after receiving appropriate approval, paid a $16 million dividend to our holding company in April.”
Total revenues for the first quarter were $258.6 million, compared to $270.2 million in the first quarter last year. Total revenues in the first quarter of 2015 included $26.3 million of net realized investment gains compared to $3.1 million in the first quarter of 2016. Net premiums written for the quarter were $231.3 million, compared to $234.5 million for the same period last year. Other revenue in the first quarter of 2016 includes a $4.0 million benefit related to the realization of foreign currency gains from our Australian operations; as previously disclosed the risk in force from our Australian operations was terminated in the fourth quarter of 2015.
New insurance written in the first quarter was $8.3 billion, compared to $9.0 billion in the first quarter of 2015. Persistency, or the percentage of insurance remaining in force from one year prior, was 79.9 percent at March 31, 2016, compared to 79.7 percent at December 31, 2015, and 81.6 percent at March 31, 2015.
Losses incurred in the first quarter were $85.0 million, compared to $81.8 million in the first quarter of 2015. During the first quarter of 2015 there was a $22 million reduction in losses incurred due to positive development on our primary loss reserves; compared to positive development of approximately $5 million in the first quarter of 2016. Absent the positive development, the decrease in losses incurred, on a year over year basis, is primarily a result of fewer new delinquency notices received. Net underwriting and other expenses were $41.7 million in the first quarter, compared to $41.0 million reported for the same period last year.
MGIC Investment Corp. earnings per share showed an increasing trend of 292% for the current fiscal year. The company’s expected EPS growth rate for next fiscal year is 99%.Analysts project EPS growth over the next 5 years at 5.14%. It has EPS annual growth over the past 5 fiscal years of 26.3% when sales declined -7.4. It reported -4.3% sales drop, and -43.6% EPS decline in the last quarter.
The stock is trading at $7.05, up 25.22% from 52-week low of $5.63. The stock trades down -39.85% from its peak of $11.72 and 33.62% above the consensus price target of $9.42. Its volume clocked up at 4.05 million shares which is lower than the average volume of 5.04 million shares. Its market capitalization currently stands at $2.40B.
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