MGIC Has a Record Quarter as Mortgage Originations Swell
MGIC Investment Corp. (NYSE: MTG) reported fourth-quarter earnings of $0.49 a share, easily surpassing Wall Street expectations of $0.43 a share. A combination of increasing insurance policies and a drop in mortgage delinquencies drove the increase. The company also announced a $300 million stock buyback through 2021.
MGIC is a mortgage insurer (you might have noticed on your mortgage statement something called PMI, or private mortgage insurance) that covers losses for the lender in the event you default on your mortgage. The biggest drivers of delinquencies and defaults are falling home prices, natural disasters, and recessions. Last year was exceptionally favorable for mortgage insurers in that the economy was strong, the hurricane season was not as intense as in 2017, and home prices continued to appreciate. About the only negative was the drop in interest rates, which caused many of MGIC's insurance policies to be canceled early due to refinances.
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Source Fool.com
