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AFTER RISING TO 46,556, MGIC DEFAULT INVENTORY DECLINES 5.2% or 2,419 IN MARCH
MGIC INVESTMENT DEFAULT INVENTORY falls from 46,556 to 44,137. MGIC seems to have started a process of lower DEFAULTS after being hit with higher notices of delinquency in November 2017.
Before hurricanes hit Texas and Florida in August and September 2017, MGIC and other PMI were riding a declining trend in NODs dating back over two years.
However, NODS declined 267 in February and 2152 in March 2018, reversing the trend of higher DEFAULTS. The first and second quarters are generally strong quartes for PMI COMPANIES.
3084 MGIC HURRICANE AND OTHER CLAIMS MOUNT IN NOVEMBER.
MGIC ISSUED A PUBLIC STATEMENT OUTLINED THEIR PROCESS OF CLAIMS. This morning......
"
November 2016
Change
Insurance in Force (billions)
$193.5
$181.3
6.7%
Flow Only
$185.3
$171.9
7.8%
Beginning Primary Delinquent Inventory (# of loans)
43,816
50,612
(13.4%)
Plus: New Delinquency Notices – Non-Hurricane Impacted Areas (1)
4,350
4,953
(12.2%)
Plus: New Delinquency Notices - Hurricane Impacted Areas (1)
4,525
633
614.8%
Less: Cures
5,149
5,063
1.7%
Less: Paids (including those charged to a deductible or captive reinsurer)
617
944
(34.6%)
Less: Rescissions and Denials
25
55
(54.5%)
Ending Primary Delinquent Inventory (# of loans)
46,900
50,136
(6.5%)
(1) Hurricane impacted areas are locations that the Federal Emergency Management Agency has declared Individual Assistance Disaster Areas as a result of hurricanes Harvey, Irma and Maria. There were 12,626 and 7,156 loans in our Ending Primary Delinquent Inventory as of November 30, 2017 and 2016, respectively, that were located in these areas. Based on our analysis and past experience, we do not expect the increased level of notices received in those areas to result in a material increase in our incurred losses or paid claims. The Private Mortgage Insurer Eligibility Requirements of Fannie Mae and Freddie Mac require us to maintain significantly more "Minimum Required Assets" for delinquent loans than for performing loans. We expect the increase in delinquency notices to result in a temporary increase in "Minimum Required Assets" and a decrease in the level of our excess "Available Assets" under the PMIERs. Due to the suspension of certain foreclosures by the GSEs, our receipt of claims associated with foreclosed mortgages in the hurricane-affected areas may be delayed. The following factors could cause our actual results to differ from our expectations in the forward looking statements in this press release:
Third party reports that indicate the extent of flooding in the hurricane-affected areas may be understated.
Home values in hurricane-affected areas may decrease at the time claims are filed from their current levels thereby adversely affecting our ability to mitigate loss.
Hurricane-affected areas may experience deteriorating economic conditions resulting in more borrowers defaulting on their loans in the future (or failing to cure existing defaults) than we currently expect.
If an insured contests our claim denial or curtailment, there can be no assurance we will prevail. We describe how claims under our policy are affected by damage to the borrower's home in our Current Report on Form 8-K filed with the SEC on September 14, 2017.
Warning! GuruFocus has detected 3 Warning Signs with NYSE:MTG. Click here to check it out.
NYSE:MTG 30-Year Financial Data
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About MGIC
MGIC (www.mgic.com), the principal subsidiary of MGIC Investment Corporation, serves lenders throughout the United States, Puerto Rico, and other locations helping families achieve homeownership sooner by making affordable low-down-payment mortgages a reality. At November 30, 2017, MGIC had $193.5 billion of primary insurance in force covering approximately one million mortgages.
From time to time MGIC Investment Corporation releases important information via postings on its corporate website, including corrections of previous disclosures, without making any other disclosure and intends to continue to do so in the future. Investors and other interested parties are encouraged to enroll to receive automatic email alerts and Really Simple Syndication (RSS) feeds regarding new postings. Enrollment information can be found at http://mtg.mgic.com under Investor Information.
View original content:http://www.prnewswire.com/news-releases/mgic-investment-corporation-releases-monthly-operating-statistics-300568773.html
SOURCE MGIC Investment Corporation
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ARCH CAPITAL HAD $347 MIL. HURRICANE RELATED LOSSES IN Q3 2017
ARCH posted a net loss of $347 MILLION FOR Q3 2017.
Preferred shares in the amount of $100 MILLION was issued on December 1, 2017 to increase capital.
ARCH issued this statement in their SEC 10Q FOR SEPTEMBER 30, 2017:
"The Company’s 2017 third quarter results reflect estimated after-tax net losses from current accident year catastrophic events of $319.8 million (pre-tax net losses of $347.8 million), net of reinsurance and reinstatement premiums and excluding the ‘other’ segment.
Such amounts were primarily related to Hurricanes Harvey, Irma and Maria, along with the Mexican earthquakes and other more minor global events.
The Company’s estimates for these events are based on currently available information derived from modeling techniques, industry assessments of exposure, preliminary claims information obtained from the Company’s financial data."
NMIH AND RADIAN FAIL TO DISCLOSE HURRICANES DEFAULTS
I'm trying to get information now!
ESSENT GUARANTY LOAN DEFAULTS INCREASED 41.7% IN OCTOBER 2017
According to Essent Guaranty's SEC 10-Q SEPTEMBER 30, 2017, page 10, their loan DEFAULTS were up 898 in October.
Excerpt from ESSENT'S SEC 10-Q:
"These events(HURRICANES) have not materially affected our reserves as of September 30, 2017.
Loans in default increased from 2,153 as of September 30, 2017 to 3,051 as of October 31, 2017. Defaulted loans in the hurricane impacted areas represented 733 of the 898 increase in October.
As of October 31, 2017, 1,055 loans are in default in the affected counties representing 0.22% of our insured portfolio.
The impact on our reserves in future periods will be dependent upon the amount of delinquent notices received from loan servicers and our expectations for the amount of ultimate losses on these delinquencies."
DEFAULTS INCREASE 2,581 IN OCTOBER FOR MGIC INVESTMENT
MGIC expects capital required for PMIERS to result in more required assets, which could affect "LOSSES incurred".
MGIC OCTOBER OPERATING SUMMARY and related comments. Notice that the full affects of the hurricanes has not been registered at this time and, claims have not been received by PMI COMPANIES.
"PRESS RELEASE
MGIC Investment Corporation Releases Monthly Operating Statistics
By
Published: Nov 8, 2017 6:45 a.m. ET
SHARE
MILWAUKEE, Nov. 8, 2017
October 2017
October 2016
Change
Insurance in Force (billions)
$192.2
$180.7
6.4%
Flow Only
$184.0
$171.2
7.5%
Beginning Primary Delinquent Inventory (# of loans)
41,235
51,433
(19.8%)
Plus: New Delinquency Notices – Non-Hurricane Impacted Areas (1)
4,549
4,882
(6.8%)
Plus: New Delinquency Notices - Hurricane Impacted Areas (1)
3,394
637
432.8%
Less: Cures
4,680
5,335
(12.3%)
Less: Paids (including those charged to a deductible or captive reinsurer)
660
966
(31.7%)
Less: Rescissions and Denials
22
39
(43.6%)
Ending Primary Delinquent Inventory (# of loans)
43,816
50,612
(13.4%)
(1)
Hurricane impacted areas are locations that the Federal Emergency Management Agency has declared Individual Assistance Disaster Areas as a result of hurricanes Harvey, Irma and Maria. There were 8,987 and 7,289 loans in our Ending Primary Delinquent Inventory as of October 31, 2017 and 2016, respectively, that were located in these areas. Based on our analysis and past experience, we do not expect the increased level of notices received in those areas to result in a material increase in our incurred losses or paid claims. The Private Mortgage Insurer Eligibility Requirements of Fannie Mae and Freddie Mac require us to maintain significantly more "Minimum Required Assets" for delinquent loans than for performing loans. We expect the increase in delinquency notices to result in a temporary increase in "Minimum Required Assets" and a decrease in the level of our excess "Available Assets" under the PMIERs. Due to the suspension of certain foreclosures by the GSEs, our receipt of claims associated with foreclosed mortgages in the hurricane-affected areas may be delayed. The following factors could cause our actual results to differ from our expectations in the forward looking statements in this press release:
•
Third party reports that indicate the extent of flooding in the hurricane-affected areas may be understated.
•
Home values in hurricane-affected areas may decrease at the time claims are filed from their current levels thereby adversely affecting our ability to mitigate loss.
•
Hurricane-affected areas may experience deteriorating economic conditions resulting in more borrowers defaulting on their loans in the future (or failing to cure existing defaults) than we currently expect.
•
If an insured contests our claim denial or curtailment, there can be no assurance we will prevail. We describe how claims under our policy are affected by damage to the borrower's home in our Current Report on Form 8-K filed with the SEC on September 14, 2017."
LOSSES INCURRED HEADED HIGHER, NO RESERVES RELEASED
When delinquent loans increase,even in the short-term it will affect earnings.....
MGIC MONTHLY OP. SUMMARY DEFAULTS INCREASED
Beginning Primary Delinquent Inventory (# of loans)
40,904
51,642
(20.8%)
Plus: New Delinquency Notices
5,518
6,019
(8.3%)
Less: Cures
4,483
5,173
(13.3%)
Less: Paids (including those charged to a deductible or captive reinsurer)
662
1,010
(34.5%)
Less: Rescissions and Denials
32
45
(28.9%)
Less: Items removed from inventory (1)
10
0
Ending Primary Delinquent Inventory (# of loans)
41,235
51,433
(19.8%)
54,700 NEW FORECLOSURES
DSW
October 4, 2017
There was a total of 54,700 new foreclosure starts in the month of August, which is an increase month-over-month of 2.63 percent, but a year-over-year decrease of 20.49 percent. The number of total national properties 30 or more days delinquent, but not yet in foreclosure, amounted to 2.003 million, and increase of 17,000 from the month prior but a decrease of 148,000 year-over-year.
The number of properties 90 days past due, yet still not in foreclosure also declined year-over-year by 112,000, but rose month-over-month by 2,000 to a figure of 557,000.
300,000 IRMA DELINQUENCIES IN SEPTEMBER REPORT
AN ESTIMATED 300,000 DELINQUENCIES WILL SHOW UP IN SEPTEMBER REPORT FROM HURRICANE IRMA, ACCORDING TO "BLACK KNIGHT FINANCIAL".
"HOUSING WIRE" wrote:
In addition, Black Knight estimates that as many as 3.1 million mortgaged properties in Florida could be impacted by Irma – nearly three times as many impacted by Harvey and nearly seven times as many impacted by Katrina.
As a result of Irma, up to 300,000 borrowers in Florida could miss at least one mortgage payment and up to 160,000 could end up becoming 90 days or more past due – about the same levels of delinquency caused by Harvey, but spread across more properties and a much larger geographic area.
First numbers: Mortgage delinquencies climb 16% in Hurricane Harvey-impacted areas.
LENDINGSERVICINGHOMEOWNERS
First numbers: Mortgage delinquencies climb 16% in Hurricane Harvey-impacted areas
Heaviest impact on mortgage delinquency rates still to come
September 21, 2017 Brena Swanson 0 Comments
KEYWORDS BLACK KNIGHT FINANCIAL SERVICES HURRICANE HARVEY MORTGAGE DELINQUENCIES
Hurricane Harvey house tops
The aftermath of Hurricane Harvey in South Texas is still very much being felt, and as the first numbers start to roll in on its impact on mortgages in the area, the result is not looking good.
In the beginning stages of the
15%HOUSTON)42%FLORIDIANS HAVE FLOOD INSURANCE
The rest pay cash for repairs or lose their homes. According to NFIP (NATIONAL FLOOD INSURANCE PROGRAM).
Irma Triples Harvey's Threat to Mortgage Lenders
Jann Swanson
Mortgage News Daily
Sep 18 2017, 6:48AM
In the literal wake of a second major hurricane in as many weeks, Black Knight Financial Services is again warning of some potentially disastrous outcomes for mortgage guarantors. The company issued a report on September 11 estimating there was the potential of losses to mortgaged properties in Texas and Louisiana at $179 billion from Hurricane Harvey. Now they are back again with bad news about Hurricane Irma.
Irma hit the U.S. Virgin Islands, rather than hitting Miami as expected, and slammed into Florida's Cudjoe Key, making yet another landfall at Marco Island at category 3 windspeeds. Because of its late westerly shift and the hours it spent churning offshore of Florida's west coast the hurricane caused major storm surges on both coasts, affecting coastlines as far north as South Carolina and causing significant wind damage over the interior of both Florida and Georgia.
Black Knight's preliminary report on damages from Irma estimates the storm may have affected more than 3.1 million mortgaged properties, a number that represents $517 billion in unpaid principal balances. This is three times the number of properties as were involved with Hurricane Harvey and seven times those connected to Hurricane Katrina which clobbered Louisiana and Mississippi in 2005. In terms of dollars, Irma involved three times the projected unpaid balances of mortgages potentially impacted by Harvey
RADIAN ISSUES $450 MILLION IN JUNK BONDS
Potentially it will add liquidity to Radian Mortgage in the event of HURRICANE claims...
INCREASED INCURRED LOSSES COULD IMPACT Q3 2017 PROFIT FOR PMI INDUSTRY
YESTERDAY TIM MAKKE, EVP FINANCE, GUESS THAT MGIC INVESTMENT will most likely see a spike in delinquencies from insured loans due to HURRICANES. If so, "INCURRED LOSSES" increases will eat into profits for both the third and fourth quarters.
The insurers are already bracing for LOSSES and will most likely increase LOANS LOSSES RESERVES AND LAE, meanwhile analysts will sit on the sidelines waiting for the curtain fall, then adjust earnings estimates.
THE PMI MARKET IS already feeling impact of premium margins easing due to increased competition from the growth COMPANIES, ESSENT AND NMI HOLDINGS, which by the way are seeing less growth. NMI HOLDING'S net income has not grown in over four quarters, if you deduct extraordinary items from deferred tax assets.
Reuters wrote this: "HURRICANE Costs Become Talk of Monte Carlo’s Reinsurance Rendez-Vous
September 10, 2017 by Tom Sims
As Hurricane Irma battered Florida on Sunday, the cream of the insurance world — gathered under the Mediterranean sun in Monte Carlo — was assessing the costs of the storm for the global industry.
The takeaway so far: Irma and its predecessor Hurricane Harvey, which caused massive flooding in Texas two weeks ago, are likely to take a toll on profits in a sector struggling with thin margins, stiff competition and falling prices."
SPIKE IN DELINQUENCY RATES FROM HURRICANE
SOURCE: Barclays FINANCIAL Conference today at 2:30pm Tim Makke, ESP FINANCE MGIC INVESTMENT
NICE MOVE FROM $10.61
Snap back!!
Good monthly numbers....
***ALL ABOARD***
Positive outlook for MGIC MONTHLY OPERATING REPORT FOR AUGUST 2017.
CLAIMS AND NOTICES OF DEFAULT to continue positive trend of last two years.
$.62 ADJ.NET OP.INC. PER/SHARE H1/17 VS. $.44 vs. 2016
MGIC INVESTMENT
Present projection is $1.24 Adjusted Income per diluted share for 2017 and FORWARD PE of 9.46.
$202 MILLION WAS ADDED TO MGIC EQUITY IN Q2 17'FROM STOCK ISSUANCE
$202 MILLION WAS ADDED TO shareholders equity, $202 stock and 29 million shares issued were already accounted for in stock dilution share count. $5 MILLION in cash was used to retire 2% note balance.
$502 MILLION in debt was removed from HOLDING company debt subsequent to March 31, 2017 QUARTER. $150 revolving credit line pay down and 5% note balance of $145 MILLION payoff were included.
(See page 48 of SEC 10Q March 31, 2017 for details)
~$11.6B NIW FOR Q2, EXCEEDS $9.3B Q1 2017 MGIC
Premiums Earned should also see sequential improvements. Notices of default continuing reductions seen over last ten quarters.
We are expecting a net profit of $.27, exceeding analyst's estimates.
Settlement of non-performing loans are not expected to have a material impact on operating earnings.
4DUXS, THE PREMIUM YIELD REDUCTION WILL IMPACT ENTIRE PMI MARKET
However, the startups will feel a bigger premium yield reduction!
MTG PRICE/BOOK 1.42 HIGHEST
Next to ESNT
MGIC stock price to BOOK is HIGHEST next to ESSENT. If, stock market TIGHTENS MGIC could drop precipitously.
PREDATORY PRICING WILL HURT PMI MARGINS WORST
PRICE REDUCTIONS is a normal reaction to sales declines, as competition tries to hold onto marketshare.
PMI MARKET IS MATURE OPERATING MARGINS WILL TIGHTEN
EXCERPT FROM MGIC Q1 2017 EARNINGS CONFERENCE:
"Mihir Bhatia
First, I just wanted to clarify your comments on the premium rate being 2 to 3 basis points lower. Is that year-over-year from 2016 full year or from the Q1 50 basis points level?
Tim Mattke
I would say that we look at it, we think it could be up to 2 to 3 basis points lower from where we’re currently. I don’t think we’d expect to see actually down about 3 points. But I think it depends upon something private commissions can change, so we want to make sure that we at least take that in consideration of how it could fall of. But, the trend has definitely been there over the last year for the decline to be occurring.
Mihir Bhatia
Got it. That makes sense. And then just a question on your single premium share declining. Was that due to actions on your part or was that just more a function of the market as a whole?
Mike Zimmerman
Yes. Mihir, this is Mike. This really is more a function of the market as a whole; we don’t know if there are any changes really to our approach [indiscernible]. We obviously -- we have always preferred and continue prefer the monthly but really sort of a function of the market and the rate environment right that [indiscernible] higher rate for the borrower."
THE GROWTH COMPANIES WILL BE UNDER PRESSURE TO SEEK OUT ECOMIES OF SCALE. BUT, ALL PMICOMPANIES will see margin PRESSURE.
Nn,COMPETITION COULD REDUCE PREMIUM YIELDS FOR MGIC
Quote from MGIC FINANCIAL RESULTS UNDER RISK FACTORS:
"Competition or changes in our relationships with our customers could reduce our revenues, reduce our premium yields and / or increase our losses"
PREMIUM YIELDS DECLINE IN 1ST QUARTER 2017
MGIC 50.1 vs. 50.7 for Q4 2016
"ear. The effective average premium yield for the first quarter of 2017 was 50.1 basis points, which compares to 50.7 basis points for the first quarter of 2016"
"NMIH HOLDINGS 44 vs 48 for Q4 2016
Before the effect of reinsurance, premium yield in the first quarter was 44 basis points, down from 48 basis points in the prior quarter. The decline is attributable to the reduced cancellations in the quarter. After reinsurance, reported net premium yield was 40 basis points down from 44 basis points in the prior quarter"
Radian premium yield was down 3 basis points:
"Our gross portfolio yield this quarter of 51 basis points decreased by approximately 3 basis points compared to last quarter as relates to lower single premium policy acceleration. Our expectation for gross portfolio yields is a gradual decrease with the resulting gross portfolio yield of 48 to 50 basis points which includes the expected impact of our price changes implemented in early 2016"
ESSENT premium yield was 50, down by 8 basis points due mix of NIW.
"Doug Harter
Thanks. Can you talk about the decline in the premium yield you experienced during the quarter and during that context what you're seeing on premium yield on new insurance written?
Mark Casale
Doug, this is Mark. Yes, I think as Larry said in the script, the premium yield decline for the first quarter was really just a decline of single cancellation income. So to put it in context, so kind of in a bigger picture. I would say earned premium yield on the portfolio without single's cancellation and even net premium written on kind of new business is right around that 50 basis point mark, maybe a basis point above. Single's cancellation normalized is 1 or 2 basis points above that, and then when we hit certain quarters and certainly the third and fourth quarter last year kind of during the Brexit refi wave, that could add anywhere, believe it or not, 3 to 6 basis points to that number. So it's - I wouldn't read too much into it, I think longer term kind of that guidance in terms of that low 50s market is a good way to look at it and more importantly, we grew insurance in $20 billion year-over-year; so I mean picking few basis points - again, I wouldn't get too concerned about that, it's really around the volatility. But bigger picture kind of 50 - low 50s kind of normalized earned premium yield, it's something for you guys to use as you model out the growth"
In Summary:
These four PIM COMPANIES SUFFERED MARGIN COMPRESSION but, they didn't want to talk about competition competition causing ecline that cause
REFINANCE APPLICATIONS DECLINE TO SEPT 2008 LEVEL
The refinance portion of mortgage applications is hurting revenue for the PMI COMPANIES. THE REFINANCE INDEX FELL TO 41.1% OF total applications.
May 17, 2017
WASHINGTON, D.C. (May 17, 2017) - Mortgage applications decreased 4.1 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending May 12, 2017.
The Market Composite Index, a measure of mortgage loan application volume, decreased 4.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 4 percent compared with the previous week. The Refinance Index decreased 6 percent from the previous week. The seasonally adjusted Purchase Index decreased 3 percent from one week earlier. The unadjusted Purchase Index decreased 3 percent compared with the previous week and was 9 percent higher than the same week one year ago.
The refinance share of mortgage activity decreased to 41.1 percent of total applications, the lowest level since September 2008, from 41.9 percent the previous week
MONEY FLOW INDEX DIVERGING FROM MTG RUN-UP
The run-up in MTG that began at around $10.36 on May 2, was accompanied by a DIVERGING MONEY FLOW INDEX(MFI) that declined.
Sometimes, some of charts that I use, will have different reads but, generally the divergence will be small.
During the run-up that started last summer at $5.35, there a few days when the price gapped up. I believe gap ups or down distort the MFI indicator as well.
However, the run-up in MTG, that ended yesterday at $10.90, it was never supported by an increase in the MFI.
I researched everything I could to figure out why the divergence occured.
In Summary:
1. Expect a correction in MTG.
2. It may have topped out for a while.
E. Investors have been taking MONEY out of stock, while the price has been rising.
I really would like to hear from some experts out tbere, who can quantify how it works, the divergence I mean.
A BEARISH CONVERGENCE IN THE MONEY FLOW MEANS THAT MONEY IS COMING OUT OF MTG.
IT COULD ALSO MEAN A MARKET TOP OR, A CORRECTION WILL SOON OCCUR.
BEARISHNESS seen in other MARKET indices too.
GLTA
BEARISH CONVERGENCE SPOTTED IN MTG MONEYFLOW INDEX
PRICE GOING UP WHILE MFI GOING DOWN. WATCHING IT.
ESSENT GUARANTY TRADING AT 2.14 TIMES PRICE/BOOK VALUE FYE 2017
ALTHOUGH all PMI COMPANIES are TRADING at a high price/book, ESSENT GUARANTY is trading at estimated 2023 BOOK VALUE equivalence.
This is the current PRICE/BOOK value for some other PMI COMPANIES:
MTG 1.28
RDN 1.14
NMIH 1.37
PMI COS. REVENUES DECLINE IN Q1 2017
ARCH CAPITAL TO NMI HOLDINGS saw revenue decline. Based on results, competition for a smaller pie of NEW INSURANCE WRITTEN(NIW) resulting in margin contraction.
Although revenue declined sequencially, year over year results saw increasing NIW and revenue.
MGIC revenue essentially matched analyst's estimates. Net Income exceeded analysts estimates. Revenue declined $6 million sequentially.
RADIAN revenue declined sequentially for the third quarter straight. Net Income missed analyst's estimates.
ARCH CAPITAL revenue declined sequentially if, you strip out the acquisition of AMERICAN INSURANCE GROUP. Quoting financial release: "Mortgage Segment: Gross premiums written in the quarter skyrocketed 213.3% year over year to $348.6 million, largely driven by growth in U.S. primary business."
PMI GROWTH COMPANIES ESSENT GUARANTY AND NMI HOLDINGS BOTH saw revenue decline sequentially but, Net Income matched analyst's estimates.