MGIC Investment Corp. finished 2Q13 with a net profit of $12.4 million, its first since 2Q10, noted CEO and chairman Curt Culver. And the company is getting ready to challenge its competition to regain market share, he said during a conference call.
The 2Q13 profit is compared with a loss of $273.9 million one year prior. In the notes in its earnings press release, MGIC said it expects to continue to report annual losses. For 1H13, the mortgage insurer lost $60.6 million.
New insurance written in the second quarter was $8 billion, its highest in the past four-and-one-half years, Culver said. In 2Q12 it did $5.9 billion. This does not include Home Affordable Refinance Program loans, which was an additional $3.3 billion of coverage in the quarter, up from $2.7 billion one year prior.
During the conference call, Culver pointed out that as an industry, private mortgage insurers have been regaining market share from the Federal Housing Administration.
MGIC’s own market share has “stabilized” at 17%, he said. During the bust era, the company
There is also increased competition in the private MI space as Essent and National MI have begun writing business and CMG, the PMI/CUNA Mutual joint venture
Another reason Culver feels that MGIC should be getting back market share is that some of its competition which has aggressively priced single-premium policies will be pulling back. He explained during the question and answer session that rising interest rates typically result in increased persistency and that lowers the return on single-premium policies if the loan stays on the books longer than expected.
Speaking of increased rates, while those have affected the number of traditional refinance loans, the increase in purchase applications has driven up MGIC’s average daily app volume by 10% in July. He said he expects purchase demand to remain healthy.
Another benefit of higher rates is increased persistency he said, although as of June 30 it was 78%, down from 81.4% one year prior.
As of June 30, the percentage of delinquent loans, including bulk loans, was 12%, down from 14.75% one year prior.
Losses incurred in 2Q13 were $196.3 million, reflecting fewer new delinquencies received during the quarter and an estimated lower claim rate on recently reported delinquencies.
Culver said that on a historical basis the second half of the year shows weaker credit trends than the first half.
Still, the company has revised its assumptions so now it believes one in five new notices received will end up in a claim, up from one in four.
MGIC’s risk-to-capital ratio was 20.2-to-1, compared with
