Slide 1: Genworth Mortgage Insurance Australia 1Q 2017 Financial Results Presentation
Genworth Mortgage Insurance Australia 1Q 2017 Financial Results Presentation 3 May 2017 ©2017 Genworth Mortgage Insurance Australia Limited. All rights reserved.
Slide 2: Disclaimer
Disclaimer This presentation contains general information in summary form w hich is current as at 31 March 2017. It may present financial information on both a statutory basis (prepared in accordance w ith Australian accounting standards w hich comply w ith International Financial Reporting Standard
Slide 3: Introduction
Introduction Georgette Nicholas, CEO
Slide 4: 1Q 2017 financial results summary
1Q 2017 financial results summary (A$ millions) 1Q16 1Q17 Change % 1Q result in line with expectations • GWP reflects impact of $1.3 billion bulk portfolio Gross written premium 85.0 88.2 3.8% transactions and premium rate actions taken in 2016. • Reported NPAT includes after-tax mark-to-market Net
Slide 5: Residential mortgage lending market
Residential mortgage lending market Originations and HLVR penetration1 $ bn 37% 34% 33% 31% 31% 27% 27% 24% 22% 371 376 335 37 31 300 52 40 51 262 256 40 240 242 49 219 46 36 41 26 31 41 43 47 50 43 199 200 40 166 139 102 99 98 111 74 71 80 80 83 93 65 68 63 66 2008 2009 2010 2011 2012 2013 2014 201
Slide 6: Macroeconomic conditions
Macroeconomic conditions Delinquency rates by geography Unemployment rates (seasonally adjusted) Change Change State Mar 16 Mar 17 State Mar 16 Mar 17 (basis points) (basis points) New South Wales 0.29% 0.31% 2 bps New South Wales 5.2% 5.1% (10 bps) Victoria 0.35% 0.38% 3 bps Victoria 5.6% 6.1% 50 b
Slide 7: Detailed financial performance
Detailed financial performance Luke Oxenham, CFO
Slide 8: 1Q 2017 income statement
1Q 2017 income statement (A$ millions) 1Q16 1Q17 Change Gross written premium 85.0 88.2 3.8% Movement in unearned premium 47.0 36.7 (21.9%) Gross earned premium 132.0 124.9 (5.4%) Outwards reinsurance expense (18.5) (17.0) (8.1%) Net earned premium 113.5 107.9 (4.9%) Net claims incurred (30.7) (37.6
Slide 9: New insurance written
New insurance written NIW1 by original LVR2 band NIW1 by product type $ bn, % $ bn, % 87% 85% 84% 85% 84% 84% 10.5 83% 83% 81% 10.5 23% 8.5 7.8 8.5 7.2 20% 7.8 16% 6.6 6.8 7.2 6.4 6.2 6.1 6.8 6.4 6.2 6.6 29% 18% 16% 6.1 44% 22% 17% 18% 49% 46% 99.4% 42% 99.2% 50% 56% 54% 99.1% 99.1% 57% 56% 99.0% 99
Slide 10: Gross written premium
Gross written premium GWP and average price of flow business GWP walk $ m, % $m Body Copy 2.0% • Bullet 1 8.5 (9.9) 4.6 1.77% 1.78% ‒ 85.0 Bullet 2 88.2 1.57% 1.57% 1.56% 1.60% 157.6 1.53% 1.42% 1.48% Bullet 3 1.5% 127.7 124.7 Subtitle 1 104.8 99.7 97.5 1.0% 85.0 92.5 88.2 Subtitle 2 0.5% 0.0% 1Q1
Slide 11: Net incurred claims
Net incurred claims (A$ m illions unless otherwise stated) 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 Number of paid claims (#) 280 288 325 291 280 286 321 312 356 Average paid claim1 ($’000) 62.5 66.9 65.9 71.0 65.8 79.2 73.3 65.0 92.5 Claim s paid1 17.5 19.3 21.4 20.6 18.4 22.7 23.5 21.3 32.9 Mo
Slide 12: 1Q 2017 regulatory capital position
1Q 2017 regulatory capital position (A$ in millions) 31 Dec 16 31 Mar 17 NIW by original LVR band and Probable Maximum Loss $ bn Capital Base Common Equity Tier 1 Capital 2,012.8 1,976.7 2.60 2.59 2.51 Tier 2 Capital 200.0 200.0 Regulatory Capital Base 2,212.8 2,176.7 2.36 2.36 Capital Requirement 3
Slide 13: Summary and conclusion
Summary and conclusion Georgette Nicholas, CEO
Slide 14: 2017 outlook
2017 outlook • Australian economic conditions have moderated recently as the economy continues to transition away from the mining investment boom. • The unemployment rate has moved up slightly to 5.9 per cent and key labour market indicators remain mixed. Under-employment remains near-record highs,
Slide 15: Questions
Questions Georgette Nicholas, CEO Luke Oxenham, CFO
Slide 16: Supplementary slides
Supplementary slides M4 Genworth =, <.
Slide 17: Residential mortgage lending market
Residential mortgage lending market Investment vs. owner-occupied (APRA statistics)1 Investment vs. owner-occupied2 (Genworth) $ bn, % $ bn, % 40% 30% 36% 37% 27% 34% 34% 25% 32% 33% 24% 24% 31% 29% 23% 23% 21% 20% 20% 136 128 136 109 76 12.5 8.7 78 84 81 68 6.7 8.0 8.6 8.4 6.2 5.2 6.4 235 248 187 1
Slide 18: 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 March 2017 IIF1 by product type, as at 31 March 2017 Total IIF $322bn 95.01%+ 60.01-70% Low HomeBuyer Plus 2% 6% Doc 3% Other <60% 5% 1% 8% 90.01-95% 28% 70.01-80% 17% 85.01-90% Standard 80.01-85%
Slide 19: Insurance ratio analysis
Insurance ratio analysis Expenses Combined ratio $ m, % $ m, % 28.5% 71.1% 27.3% 64.0% 26.0% 25.7% 25.7% 25.2% 25.8% 25.2% 59.2% 60.1% 53.4% 57.1% 23.4% 50.5% 43.9% 43.5% 82.4 30.3 31.9 30.9 30.8 73.4 73.8 29.9 29.1 29.9 26.6 27.2 61.4 61.7 64.8 57.3 29.9 52.2 29.1 17.1 48.7 31.9 17.5 16.9 17.0 15.9
Slide 20: Delinquency development
Delinquency development Quarterly delinquency roll and delinquency composition Delinquency roll 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 Opening balance 4,953 5,378 5,900 5,804 5,552 5,889 6,413 6,844 6,731 New delinquencies 2,679 3,103 2,782 2,401 2,697 3,215 3,214 2,786 2,852 Cures (1,974) (2,
Slide 21: Delinquency rate (%)
Delinquency development Favourable performance post 2009 1.40% 2005 2006 1.20% 2007 2008 2009 1.00% 2010 2011 2012 Delinquency rate (%) 0.80% 2013 2014 2015 0.60% 0.57% 2016 0.49% 0.49% 0.45% 0.45% 0.46% 0.40% 0.32% 0.32% 0.24% 0.19% 0.20% 0.12% 0.04% 0.00% 103 109 115 121 127 133 139 145 151 157 13
Slide 22: Balance sheet and unearned premium reserve
Balance sheet and unearned premium reserve Strong balance sheet with $3.5bn in cash and investments and $1.1bn in UPR Balance sheet as at 31 March 2017 Unearned premium by year as at 31 March 2017 (A$ in millions) 31 Dec 16 31 Mar 17 Assets Total UPR $1.1bn Cash and cash equivalents 57.6 29.0 28.8 2
Slide 23: Income statement reconciliation
Income statement reconciliation Reconciling to the US GAAP figures reported by Genworth Financial, Inc . Walk from US GAAP AUS segment results to Quarterly Less Quarterly AUD Adjustments Total Genworth AIFRS Genworth Consolidated Income supplement non - supplement equivalent adjustments group Statem