Helia Group Limited · ASX:HLI
Helia — Investor Presentation (February 2018)
39 slides from Helia's investor presentation, Feb 7, 2018
Slide 1: Full Year 2017 Results Presentation
© 2018 Genworth Mortgage Insurance Australia Limited. All rights reserved.
Slide 2: Disclaimer
Disclaimer This presentation contains general information in summary form which is current as at 31 December 2017. It may present financial information on both a statutory basis (prepared in accordance with Australian accounting standards which comply with International Financial Reporting Standards
Slide 3: Introduction
Introduction Georgette Nicholas, CEO 3 Full Year 2017 Results Presentation – produced by Genworth
Slide 4: FY17 Results overview
FY17 Results overview Summary (A$ millions) FY16 FY17 Change % FY17 result in line with expectations • GWP lower due to changes in the customer portfolio Gross written premium 381.9 369.0 (3.4%) during the year, changes in business mix and premium rate actions taken in 2016 and not repeated Net earn
Slide 5: Macroeconomic conditions
Macroeconomic conditions Delinquency rates by geography Unemployment rates (seasonally adjusted) Change Change State Dec 16 Dec 17 State Dec 16 Dec 17 (basis points) (basis points) New South Wales 0.30% 0.31% 1 bps New South Wales 5.2 4.8 (40 bps) Victoria 0.38% 0.37% (1 bps) Victoria 6.1 6.1 0 bps
Slide 6: Residential mortgage lending market
Residential mortgage lending market Originations and HLVR penetration1 $ bn 37% 34% 33% 31% 31% 27% 27% 24% 22% 21% 371 376 335 37 31 300 52 40 51 286 262 256 40 240 242 49 20 219 46 36 41 40 26 31 41 43 47 50 43 200 200 40 166 150 139 102 99 98 111 74 71 68 80 80 83 93 75 65 63 66 2008 2009 2010 20
Slide 7: Genworth's strategic objectives
Genworth’s strategic objectives A refined strategic plan to re-ignite profitable growth over the medium term Value proposition: Innovation and technology will underpin Genworth’s value proposition. Focus: To be the leading provider of customer-focused capital and risk management solutions in residen
Slide 8: Strategic update
Strategic update Good progress in redefining core business model and implementing strategic initiatives Identified and commenced implementation of strategic initiatives designed to deliver sustainable shareholder returns Leveraging core competencies to offer customers greater depth and breadth of ta
Slide 9: Detailed financial performance
Detailed financial performance Luke Oxenham, CFO 9 Full Year 2017 Results Presentation – produced by Genworth
Slide 10: FY 2017 income statement
FY 2017 income statement (A$ millions) 1H16 2H16 FY16 1H17 2H17 FY17 Change FY16 v FY17 Gross written premium 189.8 192.1 381.9 182.3 186.7 369.0 (3.4%) Movement in unearned premium 76.0 66.8 142.8 63.1 6.1 69.2 (51.5%) Gross earned premium 265.8 258.9 524.7 245.4 192.8 438.2 (16.5%) Outwards reinsu
Slide 11: New insurance written
New insurance written NIW1 by original LVR2 band NIW1 by product type $ bn, % $ bn, % 87% 87% 86% 84% 84% 18.9 84% 17.7 82% 82% 17.3 18.9 17.3 17.7 28% 14.9 25% 14.0 33% 13.1 14.9 21% 12.6 14.0 16% 12.6 13.1 18% 17% 10.9 10.9 21% 51% 49% 52% 48% 99.1% 99.3% 50% 49% 98.6% 55% 99.1% 99.2% 99.3% 68% 99
Slide 12: Gross written premium
Gross written premium GWP and average price1 of flow business GWP walk $ m, % $m 2.0% 4.7 (63.6) 1.82% 1.79% 1.82% 381.9 46.0 1.78% 369.0 1.65% 313.6 320.6 1.55% 1.56% 1.45% 1.5% 285.4 222.2 1.0% 189.8 192.1 182.3 186.7 0.5% 0.0% 1H14 2H14 1H15 2H15 1H16 2H16 1H17 2H17 FY16 Total Product Flow Flow F
Slide 13: Net incurred claims
Net incurred claims (A$ in millions unless otherwise stated) 1H16 2H16 FY16 1H17 2H17 FY17 Number of paid claims (#) 566 633 1,199 711 761 1,472 Average paid claim1 ($’000) 72.6 70.8 71.6 102.3 122.1 112.6 Claims paid1 41.1 44.8 85.9 72.7 93.0 165.7 Movement in non-reinsurance recoveries on paid cla
Slide 14: Loss development
Loss development Delinquency roll and incurred loss drivers Delinquency roll 1H16 2H16 FY16 1H17 2H17 FY17 Opening balance 5,552 6,413 5,552 6,731 7,285 6,731 New delinquencies 5,912 6,000 11,912 5,997 5,350 11,347 Cures (4,485) (5,049) (9,534) (4,732) (5,178) (9,910) Paid claims (566) (633) (1,199)
Slide 15: Earnings curves
Earnings curves Comprehensive review of Premium Earning pattern completed in 2H17 Comparative in-force earning pattern Observations • Detailed review and evaluation completed in 2H17 • 2018 and 2019 are the years most impacted by the changes made to the premium earning pattern • Underlying economic
Slide 16: Balance sheet and unearned premium reserve
Balance sheet and unearned premium reserve Strong balance sheet with $3.4bn in cash and investments and $1.1bn in UPR Balance sheet as at 31 December 2017 Unearned premium by year as at (A$ in millions) 31 Dec 16 31 Dec 17 31 December 2017 Assets Cash and cash equivalents 57.6 43.0 Accrued investmen
Slide 17: FY 2017 regulatory capital position
FY 2017 regulatory capital position (A$ in millions) 31 Dec 16 31 Dec 17 NIW1 by original LVR band and Probable Capital Base Maximum Loss1 $ bn Common Equity Tier 1 Capital 2,012.8 1,892.4 2.60 2.59 Tier 2 Capital 200.0 200.0 2.51 Regulatory Capital Base 2,212.8 2,092.4 2.36 2.36 Capital requirement
Slide 18: Reinsurance
Reinsurance 2018 Renewal has improved capital efficiency Reinsurance program as at 01 Jan 2018 Observations • $50m reduction in the total level of reinsurance purchase • $900m of Excess of Loss Cover with varying durations depending on the layer • Well diversified panel with over 20 different reinsu
Slide 19: Ongoing program of capital management
Ongoing program of capital management Recent actions Genworth dividends • Since listing, Genworth has paid out all after-tax profits by way of ordinary and special dividends to shareholders • In 2017 Board declared 2 cps fully franked special 32 dividend and 24 cps total fully franked ordinary divid
Slide 20: Summary and conclusion
Summary and conclusion Georgette Nicholas, CEO 20 Full Year 2017 Results Presentation – produced by Genworth
Slide 21: Genworth economic outlook and FY18 guidance
2018 Genworth economic outlook and FY18 guidance The economic outlook for 2018 is expected Housing market conditions likely to ease to be relatively similar to 2017, with growth further in 2018 as macro-prudential measures remaining below the long-term trend of continue to take effect and record lev
Slide 22: Conclusion
Conclusion Track record of Strategic work Commenced Business is well delivering strong being undertaken implementation of capitalised profits and to redefine core strategic initiatives shareholder returns business model Unique set of Excess capital and competencies that Dividend payout potential use
Slide 23: Questions
Questions Georgette Nicholas, CEO Luke Oxenham, CFO 23 Full Year 2017 Results Presentation – produced by Genworth
Slide 24: Supplementary slides
Supplementary slides 24 Full Year 2017 Results Presentation – produced by Genworth
Slide 25: Residential mortgage lending market
Residential mortgage lending market Investment vs. owner-occupied (APRA statistics)1 Investment vs. owner-occupied3 (Genworth) $ bn, $ bn, % % 40% 30% 36% 37% 34% 27% 34% 34% 32% 33% 25% 31% 24% 29% 23% 23% 21% 20% 20% 19% 136 128 136 109 96 76 12.5 8.7 78 84 81 8.6 68 6.7 8.0 8.4 6.2 5.2 6.4 235 24
Slide 26: Insurance in force and new insurance written
Insurance in force and new insurance written Insurance in force (IIF)1 by original LVR2 band, as at 31 December 2017 IIF1 by product type, as at 31 December 2017 Total IIF $322 bn Low HomeBuyer Plus Doc 2% Other 95.01%+ 60.01-70% 1% 5% 2% 6% <60% 8% 90.01-95% 28.0% 70.01-80% 16% 85.01-90% Standard 8
Slide 27: Insurance ratio analysis
Insurance ratio analysis Expenses Combined ratio 76.7% $ m, % 33.7% $ m, % 64.3% 60.6% 57.3% 26.6% 26.3% 26.7% 27.1% 48.8% 51.4% 144.2 25.7% 25.9% 46.2% 44.7% 24.4% 131.2 128.3 62.8 125.6 121.8 58.1 59.8 60.2 60.8 110.1 55.8 54.7 53.6 101.0 101.5 60.8 55.8 54.7 34.1 62.8 53.6 34.0 34.9 34.4 30.5 33.
Slide 28: 2017 full year performance metrics
2017 full year performance metrics Change Key financial measures FY16 FY17 FY17 vs FY16 NIW ($ billions) $26.6bn $23.9bn (10.2%) Average price - Flow NIW 1.51% 1.73% 0.22% Gross written premium ($ millions) $381.9m $369.0m (3.4%) Net earned premium ($ millions) $452.9m $370.5m (18.2%) Loss ratio 35.
Slide 29: Quarterly financial information
Quarterly financial information Financial ratios Key financial 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 measures Loss ratio 27.0% 38.8% 45.3% 28.6% 34.8% 34.7% 37.0% 53.1% Expense ratio 23.4% 25.2% 25.8% 28.5% 25.2% 26.6% 29.7% 40.6% Combined ratio 50.5% 64.0% 71.1% 57.1% 60.1% 61.3% 66.6% 93.7% Insu
Slide 30: Delinquency development
Delinquency development Delinquency composition Delinquencies by book Delinquencies by Dec 16 Dec 17 Dec 16 Dec 17 year geography 2008 and prior 2,928 2,660 0.37% New South Wales 1,106 1,088 0.31% 2009 882 892 1.00% Victoria 1,378 1,304 0.37% 2010 430 357 0.53% Queensland 2,102 2,083 0.67% 2011 470
Slide 31: Active delinquencies / policies written (%)
Delinquency development1 Favourable performance post 2009 1.40% 2005 2006 1.20% 2007 2008 Active delinquencies / policies written (%) 2009 1.00% 2010 2011 2012 0.80% 2013 2014 2015 0.60% 0.54% 2016 0.48% 0.49% 2017 0.45% 0.41% 0.44% 0.40% 0.35% 0.27% 0.28% 0.20% 0.18% 0.17% 0.12% 0.02% • 2008 book y
Slide 32: Delinquency population
Delinquency population By month in arrears 2Q14 3Q14 4Q14 8,000 40% 1Q15 7,285 7,146 2Q15 6,926 7,000 6,844 6,731 6,696 35% 3Q15 12% 6,413 13% 12% 4Q15 14% 5,900 5,804 5,889 14% 13% 1Q16 6,000 13% 30% 5,378 5,552 19% 19% 2Q16 14% 14% 14% 17% 20% 20% 3Q16 15% 19% 5,000 15% 18% 25% 4Q16 No. of arrears
Slide 33: Portfolio evolution
Portfolio evolution Annual NIW1 by LVR Annual NIW1 by product type 73.8 73.8 $bn $bn 26% 28% 17% 44.7 44.7 41.6 41.6 35.4 36.2 35.4 36.2 36% 31.8 33.8 32.6 15% 33.8 30.8 35% 31.8 2% 1% 32.6 46% 30.8 3% 36% 36% 26.6 5% 1% 26.6 24% 39% 23% 23.9 3% 29% 17% 72% 1% 23.9 1% 20% 1% 57% 19% 41% 45% 51% 85%
Slide 34: Insurance in force
Insurance in force Insurance portfolio as at 31 December 2017 – total $322bn IIF1 by original LVR2 band IIF1 by product type Total IIF $322bn Low HomeBuyer Plus 95.01%+ 60.01-70% Doc 2% Other 2% 6% 5% 1% <60% 8% 90.01-95% 28.0% 70.01-80% 16% 85.01-90% 80.01-85% Standard 32.0% 8% 92% IIF1 by book yea
Slide 35: Investment portfolio
Investment portfolio Conservative, well-diversified portfolio with duration to maturity of 1.5 years1 Investment portfolio by maturity Investment portfolio by rating Investment portfolio by issuer type 7% 7% ~0% 1% 7% 7% 12% 29% 34% 42% 22% 11% 16% 28% 9% 28% 40% 0 - 1 yr 1 - 3 yr 3 - 5 yr Corporate
Slide 36: Claims severity
Claims severity1 40% 36% 35% 30% 27% 28% 26% 24% 25% 25% 23% 23% 20% 21% 15% 15% 15% 10% 5% 0% 0% Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 1. Claim severity refers to the size of net claims paid
Slide 37: Claims frequency
Claims frequency By book year (%) as at 31 December 2017 2.0% 1.72% 1.8% 1.6% 1.4% 1.27% 1.23% 1.2% 1.01% 1.0% 0.8% 0.6% 0.45% 0.46% 0.48% 0.4% 0.28% 0.2% 0.06% 0.01% 0.15% 0.0% Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 2006 2007 2008 2009 2010 2011 2012
Slide 38: Net claims incurred development
Ever to date loss ratio By book year (%) as at 31 December 2017 80% 70% 70% Net claims incurred development 60% 50% 50% 40% 39% 30% 23% 23% 20% 14% 20% 10% 2% 5% 9% 0% 0 0% 1 2 3 4 5 6 7 8 9 10 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 38 Full Year 2017 Results Presentation – produced b
Slide 39: Effective LVR
Effective LVR As at 31 Dec 16 As at 31 Dec 17 Insurance in force LVR Change in Insurance in force LVR Change in house price house price Book year $ billion % Original Effective % Book year $ billion % Original Effective % 2007& prior 70.7 24% 76.6% 33.4% 96% 2008 & prior 81.8 28% 77.7% 35.3% 87% 200