The insurer had declined 1.3% this year before today amid signs that rising interest rates and climbing home prices were slowing mortgage lending. Wells Fargo Co. and JPMorgan Chase Co. reported this month that loan volumes plunged in the first quarter. MGIC’s profit of $60 million, or 15 cents a share, was driven by improvements in loans backed in prior periods, even as the Milwaukee-based firm sold 20% less mortgage coverage than a year earlier.
“The credit story continues to drive upside to earnings estimates,” Jack Micenko, an analyst at Susquehanna International Group, said in a research note. He estimated MGIC would post earnings of 8 cents a share.
Mortgage insurers cover losses when homeowners default and foreclosures fail to recoup costs. MGIC and rivals Radian Group Inc. and Genworth Financial Inc. are rebounding from financial crisis-era losses as home prices rise.
Losses incurred at MGIC narrowed to $122.6 million from $266.2 million in the first three months of 2013. That helped cushion the decline in premium revenue, which fell to $214.3 million from $247.1 million.
Existing-home sales slowed 0.2% to a 4.59 million pace in March, the lowest level since July 2012, the National Association of Realtors reported. The decline was smaller than estimated in a Bloomberg survey.
Radian, the top seller of mortgage insurance last year, climbed 3.7% and Genworth jumped 4.7%.
MGIC was unprofitable for 23 of the past 27 quarters. The profit reported today compares with a loss of $72.9 million in the first quarter of 2013.