As the Q1 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the property & casualty insurance industry, including MGIC Investment (NYSE:MTG) and its peers.
Property & Casualty (P&C) insurers protect individuals and businesses against financial loss from damage to property or from legal liability. This is a cyclical industry, and the sector benefits when there is ‘hard market’, characterized by strong premium rate increases that outpace loss and cost inflation, resulting in robust underwriting margins. The opposite is true in a ‘soft market’. Interest rates also matter, as they determine the yields earned on fixed-income portfolios. On the other hand, P&C insurers face a major secular headwind from the increasing frequency and severity of catastrophe losses due to climate change. Furthermore, the liability side of the business is pressured by ‘social inflation’—the trend of rising litigation costs and larger jury awards.
The 32 property & casualty insurance stocks we track reported a mixed Q1. As a group, revenues beat analysts’ consensus estimates by 1.9%.
In light of this news, share prices of the companies have held steady as they are up 4.6% on average since the latest earnings results.
MGIC Investment (NYSE:MTG)
Founded in 1957 when the modern mortgage insurance industry was in its infancy, MGIC Investment (NYSE:MTG) provides private mortgage insurance that protects lenders when homebuyers default on their loans, enabling borrowers to purchase homes with smaller down payments.
MGIC Investment reported revenues of $297.1 million, down 3% year on year. This print fell short of analysts’ expectations by 1%. Overall, it was a slower quarter for the company with a narrow beat of analysts’ EPS estimates.
Tim Mattke, CEO of MTG and Mortgage Guaranty Insurance Corporation (“MGIC”) said, “We had a strong start to the year, successfully executing on our business strategies and generating solid first quarter results.”
The market seems disappointed with the results as the stock is down 7.1% since reporting and currently trades at $27.06.
Read our full report on MGIC Investment here, it’s free.
Best Q1: Stewart Information Services (NYSE:STC)
Founded in 1893 during America’s westward expansion when property records were often disputed, Stewart Information Services (NYSE:STC) provides title insurance and real estate services, helping homebuyers, sellers, and lenders verify property ownership and protect against title defects.
