MGIC Leads Mortgage Insurer Rally After Profit
MGIC Investment Corp. (MTG), the home-loan guarantor that posted losses for six straight years tied to the housing crash, led a rally of mortgage insurers after reporting a second straight quarterly profit.
MGIC surged 15 percent to $8.33 at 4:01 p.m. in New York. The Milwaukee-based firm has tripled this year. Rival Radian Group Inc. (RDN) advanced 7.7 percent, and has more than doubled since Dec. 31. Genworth Financial Inc. (GNW), which also sells life insurance, climbed 3.6 percent.
Net income was $12.1 million in the third quarter, compared with a loss of $246.9 million a year earlier, as fewer homeowners fell behind on mortgage payments, and rising home prices cushioned losses, MGIC said in a statement today. Mortgage insurers cover losses when homeowners default and foreclosures fail to recoup costs.
“The favorable economic trends we have been benefiting from relative to home-price appreciation and employment over the last several quarters have continued,” MGIC Chief Executive Officer Curt Culver said in the statement.
Home prices in 20 U.S. cities rose by the most in more than seven years in the 12 months through July, increasing 12.4 percent from a year earlier, according to the S&P/Case-Shiller index. (SPCS20) The unemployment rate fell to 7.3 percent in August, the lowest level since 2008.
MGIC sold coverage on $8.6 billion of home loans, compared with $7 billion in the same period a year earlier. The insurance is typically required when borrowers pay less than 20 percent of the cost of a home up front.
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