MGIC Investment Corp. (NYSE: MTG) managed the ultimate surprise… it made money after almost 3 straight years of quarterly losses.  The private mortgage insurance company reported a second quarter profit of $24.6 million, and this may be strong enough to spill over to peers.  The result from operations was a loss of -$0.04 EPS, but Thomson Reuters had estimates of -$0.63 EPS.  We’ll be watching shares of PMI Group Inc. (NYSE: PMI) and Radian Group Inc. (NYSE: RDN) on the news as well.

The company had recently raised $1 billion in a securities sale and sees the rate of home loan delinquencies easing.  The company’s portfolio had total delinquent loans down over 5% from last quarter to 228,455 mortgages.

The company also noted that its new notices fell to 48,181 loans from 53,393 just one quarter ago.  That compares to a peak of 68,912 more than a year ago.

The company is not exactly back on a growth path if you look at revenues.  Total revenues for the quarter were $406.4 million versus $454.5 million a year ago; and net premiums written for the quarter were $295.3 million versus $330.4 million for the same period a year ago.  New insurance written in the quarter was $2.7 billion versus $5.9 billion in the second quarter of 2009.  The company noted that the Home Affordable Refinance Program accounted for $639 million of insurance that is not included in the new insurance written total for the quarter due to these transactions being treated as a modification of the coverage on existing insurance in force.  MGIC’s primary insurance in force as of June 30 was $202.4 billion, down from $212.2 billion at the end of 2009 and down from $220.1 billion a year ago.

This is a story of managing losses rather than revenue growth.  Losses incurred in the quarter were $320.1 million, which is down from $769.6 million reported for the same second quarter of 2009.  MGIC attributed this primarily due to a decrease in the default inventory.

MGIC Investment shares are trading up 2.8% at $8.04 on almost 850,000 shares in the pre-market activity.  Shares have already come off their highs so far as the stock was trading up almost 5% at $8.20 on over 300,000 shares as of about 8:40 AM EST.

PMI Group Inc. (NYSE: PMI) is trading up 1.25% at $3.24 on close to 900,000 shares before the opening bell.  Radian Group Inc. (NYSE: RDN) is up 1% at $7.68 on over 100,000 shares before the opening bell.

JON C. OGG

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