MGIC Falls as Profit Misses Analysts’ Estimates on Sales Decline

Jul 16, 2014 9:50 am ET

July 16 (Bloomberg) -- MGIC Investment Corp., the No. 3 U.S. mortgage guarantor, declined in New York trading after posting profit that missed some analysts’ estimates as sales of home-loan guarantees slowed.

Net income was $45.5 million, or 12 cents a share, trailing by 2 cents the average estimate of analysts surveyed by Bloomberg. Policy sales fell 9.8 percent to $213.4 million, Milwaukee-based MGIC said today in a statement, MGIC fell 5.9 percent to $7.86 at 9:46 a.m. in New York.

MGIC, which had benefited as rising home prices reduced losses tied to policies issued before the real estate crisis, is vulnerable to slowing property sales. The shares have fallen since federal regulators proposed tighter liquidity standards last week for mortgage insurers that do business with Fannie Mae and Freddie Mac.

“If we increase the amount of capital we hold with respect to insured loans, our returns may decrease unless we increase premiums,” MGIC said in today’s statement. “An increase in premium rates may not be feasible.”

American International Group Inc.’s United Guaranty Corp. was the top seller of mortgage guarantees in the first three months of the year, followed by Radian Group Inc. and MGIC.

Radian dropped 2.9 percent. AIG advanced 0.3 percent after saying it would received $650 million as part of a settlement with Bank of America Corp. to resolve a dispute over mortgages.