MGIC Income Grows 36% in the Fourth Quarter
MGIC Investment Corp. posted net income of $102.4 million in the fourth quarter, a gain of 36% from the $75.1 million it earned in the same period in 2014.
The latest results include a $11.5 million downward accounting adjustment related to a deferred tax asset. For the full year 2015, the Milwaukee-based mortgage insurance firm earned $1.2 billion, up from $252 million one year prior.
New insurance written during the quarter totaled $9.8 billion, up from $9.5 billion one year prior. For the full year, it had $43 billion of NIW, compared with $33.4 billion in 2014.
However, CEO Patrick Sinks said in a press release that price competition is causing its Mortgage Guaranty Insurance Corp. subsidiary to revise its rate cards to charge lower premiums to some borrowers with high credit scores and higher premiums to some borrowers with lower credit scores.
This change should generate comparable financial returns for MGIC but also reduce its NIW this year.
"The revisions will also reflect the associated capital charges of [the Private Mortgage Insurer Eligibility Requirements] and the current marketplace dynamics. As a result of these changes we expect to write modestly less business than we did in 2015, however, we expect modest growth in the insurance in force portfolio," Sinks said in the release.
In a note included in the earnings release, MGIC elaborated that if it did not revise its rate cards, lenders were likely to choose competitors that were charging a lower premium to insure high credit score mortgages. In turn lenders would steer the lower credit score business to MGIC because its premiums were lower than its competition for these loans.
Insurance in force grew by nearly 6% during 2015 to $174.5 billion.