Consumer credit outlook in focus for mortgage insurers' Q3 - CS
10/10/2022 11:32
** Credit Suisse says in the mortgage insurance sector in Q3
the focus will be on the outlook for credit quality, amid rising
concerns about the health of the economy and slowing housing
market
** Lowers PTs on multiple cos citing the macro environment
with increased risk of an economic/housing downturn in the
coming 12+ months
** Also cuts 2023 estimates to reflect higher credit costs
due to increased defaults and lower reserve releases
** "While we view the sector as modestly undervalued vs.
history given current expected returns, this is unlikely to
change until there is increased clarity around the
economy/housing market" - CS
** Still, the brokerage says while the potential for
softening in the economy remains a concern, the near-term
environment remains favorable
** Adds its estimates for earnings in Q3 are generally above
the Wall Street consensus
** As of last close, S&P 500 Insurance Index .SPXIN has
lost ~3.9% YTD vs a ~23.6% decline in the benchmark S&P 500
Index .SPX
Company New PT Old PT
Enact Holdings Inc ACT.O $24 $26.50
Essent Group Ltd ESNT.N $46 $52
MGIC Investment Corp MTG.N $15 $17
NMI Holdings Inc NMIH.O $28 $30
Radian Group Inc RDN.N $23.50 $27
(Reporting by Manya Saini in Bengaluru)
((Manya.Saini@thomsonreuters.com;))