Milwaukee-based MGIC Investment Corp. today surprised analysts with better-than-expected earnings, leading to a surge in its stock price.
The mortgage insurer reported second quarter net income of $109.2 million, or 26 cents per diluted share, down from $113.7 million, or 28 cents per share, in the second quarter of 2015.
Total losses and expenses were $98.3 million, down from $128.2 million, which MGIC attributed to a $55 million reduction in losses incurred due to positive development on its primary loss reserves. But the company had a much higher provision for income taxes in the most recent quarter, at $56 million, up from $1.3 million in the second quarter of 2015.
MGIC reported total second quarter revenue of $263.5 million, up 8.4 percent from $243.1 million in the same period last year.
The company’s earnings per share beat analyst expectations by six cents, and its revenue beat their predictions by a whopping $8.49 million, which drove MGIC’s stock up 10.8 percent, to $7.07, in morning trading.
MGIC wrote $250 million in net premiums in the second quarter, up from $226.8 million in the second quarter of 2015. It wrote $12.6 billion in new insurance in the quarter, up from $11.8 billion in the year-ago quarter. Its primary insurance in force was $177.5 billion as of June 30, up from $168.8 billion at June 30, 2015.
“I am pleased to report that our insurance in force continued to grow as we added $12.6 billion of high quality new insurance, the delinquent inventory continued to decline while newer books of business continue to generate low level of new delinquent notices, and we maintained our traditionally low expense ratio,” said Patrick Sinks, chief executive officer of MGIC Investment Corp. and subsidiary Mortgage Guaranty Insurance Corp. “As expected during the quarter, MGIC received approval for, and paid, another $16 million dividend to the holding company and I am optimistic that we will continue to receive approval from our regulator to pay dividends of at least this amount in subsequent quarters. Additionally we repurchased $50.2 million of our 5 percent convertible senior notes due in 2017.”
