MGIC Sees Revenue Rise Despite Mortgage Market Slowdown

Despite the fact that mortgage origination volume is way down compared to a year ago, things are on the up and up for mortgage insurer MGIC Investment Corp., which this week reported net income of $60 million for the first quarter, compared to a net loss of $72.9 million for first quarter of 2013.

Diluted income per share was $0.15 for the quarter, compared to $0.31 for the same quarter a year ago.

MGIC was unprofitable for 23 of the past 27 quarters.

Driving the improvement in the company's revenue is the fact that mortgage defaults keep decreasing as the housing market continues to heal from the financial crisis. With the rate of foreclosure falling, losses incurred in the first quarter were $122.6 million, compared to $266.2 million in the first quarter of 2013. In addition, the company is seeing a lower claim rate on new and previously received delinquencies.

Due primarily to ceding commissions related to reinsurance, net underwriting and other expenses dropped to $39.4 million in the first quarter compared to $50 million reported for the same period last year.

In a release, Curt S. Culver, CEO and chairman of MGIC, says he is ‘encouraged by the level of the new business being written given the significant decline in refinance transactions compared to last year and the slow start in home sales given this winter's harsh conditions.’

‘I feel the company is in an excellent position to take advantage of the housing recovery,’ Culver adds.

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