Milwaukee-based MGIC Investment Corp. today reported a steep drop in profit in its first quarter, driven by debt extinguishment and deferred taxes.
The mortgage insurance company’s net income was $69.2 million, or 17 cents per diluted share, in the first quarter, down from $133.1 million, or 32 cents per share, in the first quarter of 2015.
Revenue was $258.6 million in the first quarter, down from $270.2 million in the same period a year ago.
MGIC wrote $8.3 million in new primary insurance during the first quarter, down from $9 million in the first quarter of 2015. It had $175 million of primary insurance in force in the quarter, up from $166.1 million in last year’s first quarter.
The company recorded a $13.4 million loss on debt extinguishment during the quarter, compared with zero in last year’s first quarter, after buying back about $270 million in convertible debt. MGIC set aside $34.5 million for income taxes, up from $3.4 million a year ago, due to last year’s deferred tax asset valuation allowance.
“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,” said Patrick Sinks, chief executive officer of MGIC Investment Corp. and subsidiary Mortgage Guaranty Insurance Corp. “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.”
