QUOTE AND NEWS
TheStreet.com  Apr 8  Comment 
NEW YORK (TheStreet) -- MGIC Investment Corp.  rose Tuesday after the private mortgage insurance provider reported an increase in its primary new insurance written for March. The company announced primary new insurance written totaled $2...
DailyFinance  Mar 19  Comment 
HOUSTON, TX -- (Marketwired) -- 03/19/14 -- This year's installment of the GTL North America conference will examine the advancement of leading gas-conversion projects, including Sasol's Southwest La. GTL, ZEEP South Louisiana Methanol, Novello...
StreetInsider.com  Jan 27  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Upgrades/JMP+Securities+Upgrades+MGIC+Investment+%28MTG%29+to+Market+Outperform/9088419.html for the full story.
SeekingAlpha  Jan 23  Comment 
MGIC Investment Corp Q4 2013 Earnings Conference Call Jan 23, 2014 / 10:00 a.m. E.T. Executives Michael Zimmerman – IR Curt Culver – Chairman, CEO Mike Lauer – EVP, CFO Pat Sinks – President, COO Larry Pierzchalski –...
StreetInsider.com  Jan 23  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Earnings/MGIC+Investment+%28MTG%29+Tops+Q4+EPS+by+3c/9080304.html for the full story.
DailyFinance  Jan 16  Comment 
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StreetInsider.com  Dec 20  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Upgrades/Compass+Point+Upgrades+MGIC+Investment+%28MTG%29+to+Buy%2C+%2410+PT/8999451.html for the full story.
SeekingAlpha  Dec 11  Comment 
MGIC Investment Corporation (MTG) 2013 Goldman Sachs US Financial Services Conference Call December 11, 2013 01:10 PM ET Executives Curt Culver - Chairman and CEO Analysts Presentation Curt Culver Okay. There...
Benzinga  Dec 5  Comment 
In a report published Thursday, Goldman Sachs analyst Eric Beardsley initiated coverage on MGIC Investment (NYSE: MTG) with a Conviction List-Buy rating and $10.00 price target. In the report, Goldman Sachs noted, “We initiate coverage on the...
Forbes  Nov 8  Comment 
Option bears and shorts have targeted outperforming MTG lately, setting up the shares for a potential contrarian rally.




 
TOP CONTRIBUTORS

Based in Milwaukee, Wisconsin, MGIC Investment Corporation (MTG) is the largest private mortgage insurer in the U.S., offering private mortgage insurance across the country, the District of Columbia, and in Puerto Rico through its subsidiary, Mortgage Guaranty Insurance Corporation. MGIC Investment Corporation primarily covers single-family, first-time mortgage loans by providing primary insurance to cushion lenders against non-payment on individual loans and expand home ownership opportunities by enabling people to purchase homes with smaller down payments. MGIC Investment also offers pool insurance (coverage over and above primary coverage) in the secondary mortgage market on low down payment loans, mainly to Fannie Mae and Freddie Mac (Government Sponsored Enterprises). Through its other operating subsidiaries, the company provides ancillary financial services such as contract underwriting, portfolio retention, mortgage loan origination, and fulfillment services. In 2006, premiums earned accounted for 80.8% of the company's $1.47 billion revenue. Investment income and other sources and gains accounted for the remaining 16.4% and 3.1% of revenue, respectively, with realized investment curtailing total revenues by 0.3% for the year.

Our main concern going forward for MGIC is the impact that mortgage insurance (MI) avoidance products, known as piggyback loans, will have on insurance in force growth. Lenders have been offering a second mortgage as an alternative to mortgage insurance for purchasers with a down-payment of less than 20% of the value of the property. The first mortgage is the 80% LTV required to avoid mortgage insurance. The second mortgage is a 10% LTV and is used by the borrower to pay the balance of the 20% down payment on the first mortgage, which the borrower did not initially have. Because these products are attractive to banks and lenders (they receive two loan origination fees), and borrowers (interest on the second mortgage is tax deductible mortgage insurance premiums are not) we believe piggyback loans and other mortgage insurance avoidance products will continue to gain popularity and erode the market share of traditional mortgage insurance. While MTG management has stated that about 30-40% of the industry's business has been lost to these alternatives, this company as well as other mortgage insurers has retaliated by releasing new products and coaxing the congress for the tax deductibility of mortgage insurance premiums. Though positive, we still think it may take some time to stem the outflow of business to MI avoidance products.

We also have concerns regarding the seasoning of insurance in force at MGIC. The majority of MGIC's insurance in force was written after 2000. Since mortgage insurance losses typically peak on an average of about 3 years after the origination of business, MGIC could see increasing delinquency rates going forward.

During the third quarter, the company experienced a substantial increase in the incurred losses expense. We are concerned about the general negative and building trends within the economy with respect to the housing markets. With the slowdown in home sales, economic down-turn pressures in select markets, as well as the rise in mortgage delinquencies and default rates we would not anticipate improvement in the level of losses incurred or the total loans delinquent over the near term on the contrary we expect losses to increase, going further.

On November 21, 2007, Standard & Poor's Rating Services lowered its counterparty credit rating on MGIC Investment Corp. to "A-" from "A", citing the potential for outsized losses. The rating downgrade could have an adverse material effect on the company's operations. The company also decreased its dividend by 90% in the current quarter.

To ramp up revenues and control payouts, the company has made plans to raise prices and limit its coverage of loans (made without proof of income or to people with low credit scores). We are of the opinion that the changes could cost the company some of its market shares before it could reap the benefits.




References

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