- Radian, Essent, Genworth also advance in New York trading
- Sales rise 10% in second quarter as claims costs decline
MGIC Investment Corp. led a rally of mortgage insurers after the company posted a sales gain, and U.S. housing starts rose more than forecast.
MGIC jumped 6.7 percent to $6.81 at 4:15 p.m. in New York, the biggest one-day gain since March, while Radian Group Inc. climbed 1.2 percent. Essent Group Ltd. increased 0.3 percent and Genworth Financial Inc. rose 0.7 percent.
Second-quarter policy sales advanced 10 percent to $250 million, and claims costs fell by about half, Milwaukee-based MGIC said Tuesday. Mortgage insurers cover losses for lenders when homeowners default and foreclosure fails to recoup costs. Results show that the company is on stronger footing after surviving the housing crisis that felled some weaker rivals and then facing competition from newcomers like Essent.
“MGIC’s unlikely restoration continues apace, nearly a decade on from the maw of the housing crisis,” David Havens, an analyst at Imperial Capital, said in a note to clients. “MGIC’s numbers should read through in a somewhat positive manner for Genworth’s U.S. mortgage insurance business.”
New-home construction in the U.S. climbed more than expected last month, increasing 4.8 percent to a 1.19 million annualized rate, the most since February, Commerce Department data showed Tuesday.
“Our insurance in force continued to grow as we added $12.6 billion of high-quality new insurance,” Patrick Sinks, MGIC’s chief executive officer, said in the statement. “The delinquent inventory continued to decline while newer books of business continue to generate low level of new delinquent notices, and we maintained our traditionally low expense ratio.”
Radian is scheduled to post quarterly results July 28. Essent and Genworth have scheduled announcements for the first week of August.