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MGIC Investment Q2 net income drops YOY due to higher provision for taxes

MGIC InvestmentCorp. reported second-quarter net income of $109.2 million, or 26cents per share, down from $113.7 million, or 28 cents per share, in the prioryear-quarter.

The S&P Capital IQ consensus GAAP EPS estimate for thequarter was 20 cents.

Second-quarter pretax income was $165.2 million, up from$115.0 million in the prior-year quarter.

Total revenues climbed to $263.5 million in the secondquarter from $243.1 million in the year-ago quarter.

Second-quarter net premiums written rose to $250.0 millionfrom $226.8 million in the prior-year quarter. Net premiums earned alsoincreased to $231.5 million from $213.5 million. Net investment income was$27.2 million, up from $25.8 million.

New insurance written in the second quarter was $12.6billion, up 6.7% from $11.8 billion in the year-ago period. Persistency, or thepercentage of insurance remaining in force from one year prior, was 79.6% as ofJune 30, compared with 80.4% as of June 30, 2015.

Losses incurred in the second quarter were $46.6 million,compared with $90.2 million in the prior-year quarter. During the secondquarter, the company had positive development on its primary loss reserves,resulting in a $55 million reduction in losses incurred. The positivedevelopment in the second quarter of 2015 was approximately $22 million.

Book value per share was $7.37 as of June 30, compared with$6.58 as of Dec. 31, 2015, and $3.65 as of June 30, 2015.

The company's GAAP loss ratio for insurance operations inthe second quarter was 20.1%, compared with 38.4% in the linked quarter and42.3% in the year-ago quarter. Its GAAP underwriting expense ratio forinsurance operations was 13.9% in the second quarter, compared with 16.9% in theprior quarter and 15.0% in the year-ago period.

MGIC Investment recorded a tax provision of $56.0 million inthe second quarter, compared with $1.3 million in the year-ago period. Theincrease in the tax provision was attributed to the reversal of the company'sdeferred tax asset valuation allowance in 2015.