Helia Group Limited · ASX:HLI
Helia — Investor Presentation (February 2021)
32 slides from Helia's investor presentation, Feb 12, 2021
Slide 1: FY20 Financial Results Presentation
12 FEBRUARY 2021 FY20 FINANCIAL RESULTS PRESENTATION
Slide 2: Disclaimer
Disclaimer This presentation contains general information in summary form w hich is current as at 31 December 2020. It may present financ ial information on both a statutory basis (prepared in accordance w ith Australian accounting standards w hich comply w ith International Financial Reporting Stan
Slide 3: Agenda
Agenda 01 Overview 02 FY20 Financial 03 Summary result Pauline Blight- Pauline Blight- Michael Bencsik Johnston Johnston CFO CEO & MD CEO & MD Pages 12 - 20 Pages 4 - 11 Pages 21 - 22 04 Supplementary slides Pages 23 - 29 3 FY20 financial results – produced by Genworth.
Slide 4: Overview
Overview Pauline Blight-Johnston, CEO and Managing Director
Slide 5: Responding to the challenge of COVID-19
Responding to the challenge of COVID-19 COVID-19 impacts have continued 2020 impacted by • FY20 Underwriting result of $234m loss. COVID-19 related • FY20 Statutory NPAT loss of $108m. reserving • FY20 Underlying NPAT loss of $104m. Economic • Headline unemployment and house prices have improved. en
Slide 6: 2020 impacted by COVID-19 related reserving
2020 impacted by COVID-19 related reserving Claims delayed due to government stimulus measures and deferrals Financial results overview FY19 FY20 Change • GWP growth reflecting higher LMI flow volumes across lender customers with Gross written premium (GWP) $433.2m $561.7m 29.7% underwriting quality
Slide 7: Economic environment improving
Economic environment improving Recovery supported by easing COVID-19 restrictions and stimulus measures Unemployment Unemployment peaked in July 2020 at 7.5% and has fallen to 6.6% at December 2020. This is tracking better than our 2021 economic assumptions. Data sourced from ABS at Dec’20 HPA Natio
Slide 8: Strong volume growth
Strong volume growth Housing market activity resilient and key lender customers taking market share New insurance written Gross written premium Net earned premium $b $m $m • Key lender customers growing • Higher business volumes are the • Strong GWP growth will drive home lending above system. main
Slide 9: Support measures delaying claims
Support measures delaying claims 4Q20 refined delinquency reserving methodology Deferral time series 4Q20 refined delinquency reserving 1 methodology breakdown 2 $m Deferrals 22.9 Non deferrals 73.3 Claims handling expenses, 13.0 recoveries and risk margin Total additional reserve 109.1 Note: Totals
Slide 10: Capital strength and flexibility
Capital strength and flexibility Strong capital and reinsurance program successfully renewed PCA ratio walk Note: Totals may not sum due to rounding . 1. NPAT excluding 1Q20 DAC write-down (net of associated amortisation) and 4Q20 reserving review 2. Af ter tax impact of $181.8m DAC write down in 1Q
Slide 11: Strategic customer focus
Strategic customer focus Repositioning the customer value proposition for sustainable growth Improve the efficiency and Reimagine LMI for a new Leverage our core capabilities competitiveness of LMI generation of homebuyers into complementary offerings • Over 50 active lender • Monthly Premium produc
Slide 12: FY20 Financial result
FY20 Financial result Michael Bencsik, Chief Financial Officer
Slide 13: FY20 income statement
FY20 income statement Business performance impacted by COVID-19 ($ m illions) 4Q19 4Q20 4Q19 v 2H19 2H20 2H19 v FY19 FY20 FY19 v 4Q20 (%) 2H20 (%) FY20 (%) Gross w ritten premium 134.6 178.7 32.8% 249.1 322.4 29.4% 433.2 561.7 29.7% Movement in unearned premium (42.7) (79.7) (86.7%) (63.6) (126.4) (
Slide 14: Australia wide snapshot
Australia wide snapshot House prices and employment stabilise and delinquencies continue to be delayed Change in dwelling Sep 20 – Jun 20 – Delinquencies by geography Dec 19 % Jun 20 % Dec 20 % 12 m onths values Dec 20 Dec 20 New South Wales 1,320 0.42% 1,495 0.51% 1,350 0.47% Sydney 1.3% -0.4% 2.7%
Slide 15: Net claims incurred
Net claims incurred Repayment deferrals interrupting claim occurrence, notification and cure ($ m illions unless otherwise stated) 1Q19 2Q19 3Q19 4Q19 FY19 1Q20 2Q20 3Q20 4Q20 FY20 Number of paid claims (#) 319 296 361 376 1,352 333 358 332 231 1,254 Average paid claim1 ($’000) 94.2 94.1 97.9 99.4 9
Slide 16: Investment performance
Investment performance Lower investment portfolio yields reflecting the current interest rate environment ($ millions) 1Q19 2Q19 3Q19 4Q19 FY19 1Q20 2Q20 3Q20 4Q20 FY20 Net interest income and dividend income 21.8 20.5 18.9 16.2 77.4 14.9 12.3 10.2 9.8 47.2 Realised gains on investments 5.0 3.2 12.7
Slide 17: Balance sheet
Balance sheet Balance sheet strength with $3.4b in cash and investments Balance sheet as at 31 December 2020 ($ millions) 31 Dec 19 30 Jun 20 31 Dec 20 2H20 commentary: Assets • Deferred reinsurance expense reduced as Cash 87.3 80.9 104.6 the deferred reinsurance premium was Accrued investment incom
Slide 18: Cash and investments portfolio
Cash and investments portfolio Well-diversified portfolio with average maturity of 4.2 years 1 Portfolio by rating2 Investment portfolio ($m) 31 Dec 19 30 Jun 20 31 Dec 20 Commonwealth3 944.2 67.4% 1,192.1 70.6% 784.2 45.9% State Gov't 374.7 26.7% 226.2 13.4% 573.3 33.5% Corporate / Other 80.1 5.7%
Slide 19: Liability adequacy test (LAT)
Liability adequacy test (LAT) Economic assumptions updated, improved LAT surplus Key assumptions / outcome 1Q20 3Q20 4Q20 Economic indicators adopted Central Central Central • Central estimate adopted for the LAT assessment is based on estimate estimate estimate mean view of external economic foreca
Slide 20: Regulatory capital
Regulatory capital Strong regulatory capital position maintained ($ millions) 31 Dec 19 30 Jun 20 31 Dec 20 NIW1 by original LVR band and probable Capital base maximum loss Common equity Tier 1 capital 1,459.6 1,298.1 1,426.3 Tier 2 capital 200.0 200.0 190.0 Regulatory capital base 1,659.6 1,498.1 1
Slide 21: Summary
Summary Pauline Blight-Johnston, CEO and Managing Director
Slide 22: Delivering customer outcomes in a challenging environment
Delivering customer outcomes in a challenging environment Repositioning the customer value proposition for sustainable growth Sound business fundamentals and strong customer focus • GWP growth supporting future NEP growth. • Improved lender customer net promoter score. • Monthly premium product laun
Slide 23: Supplementary slides
Supplementary slides 44 Genworth =, <.
Slide 24: Residential mortgage lending market
Residential mortgage lending market Originations and HLVR penetration1 Industry loan approvals: Investment vs. owner-occupied Industry loan approvals by LVR band $b, % $b, % Source: APRA Quarterly ADI property exposures statistics (ADI’s new housing loan funded), September 2020. APRA has discontinue
Slide 25: Insurance in-force
Insurance in-force As at 31 December 2019 As at 31 December 2020 $ Original Change in $ Effective Change in house Book year % Effective LVR Book year % Original LVR billions LVR house price % billions LVR price % 2009 & Prior 79.9 29% 78.0 36.2 77% 2009 & Prior 76.2 26% 77.9 33.1 81% 2010 10.6 4% 80
Slide 26: Insurance ratio analysis
Insurance ratio analysis Expense ratio1 Loss ratio2 % % Combined ratio3 Insurance margin4 % % 1.Adjusted ratio excludes $181.8m DAC write-down in 1Q20, less associated DAC amortisationbenefit of $12.3m in 2Q20, $12.7m in 3Q20 and $12.4m in 4Q20. 2.Adjusted ratio excludes $109.1m increase in IBNR as
Slide 27: Delinquency trends
Delinquency trends Delinquency roll 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 Opening balance 7,145 7,490 7,891 7,713 7,221 7,274 7,614 7,422 New delinquencies 2,662 2,853 2,622 2,277 2,326 2,662 2,552 1,828 Cures (1,998) (2,156) (2,439) (2,393) (1,940) (1,964) (2,412) (2,055) Paid claims (319) (296)
Slide 28: Reinsurance
Reinsurance 2021 Reinsurance program • The reinsurance program is designed to drive efficient economic capital credit, whilst also allowing for risk management in severe stress scenarios only. • The 2021 program is structured on a paid claims basis for policies in-force plus two additional years of
Slide 29: Reconciliations
Reconciliations Statutory NPAT to Underlying NPAT ($ m illions) 1Q19 2Q19 3Q19 4Q19 FY19 1Q20 2Q20 3Q20 4Q20 FY20 Statutory net profit / (loss) after tax 47.8 40.3 25.1 6.9 120.1 (125.6) 35.6 24.6 (42.2) (107.6) Unrealised (gains) / losses and FX (36.4) (28.0) 2.1 29.2 (33.0) 32.0 (25.6) 4.0 (5.7) 4
Slide 30: Glossary
Glossary As at 31 December 2020 Term Definition Term Definition Ageing Movement in reserves on any insurance policy that remains in a Expense ratio The expense ratio is calculated by dividing the sum of the delinquent state (3+ months of missed payments or Mortgage In acquisition costs and the other
Slide 31: Glossary
Glossary As at 31 December 2020 Term Definition Term Definition Loss ratio The loss ratio is calculated by dividing the net claims incurred by the Single policy v iew Excludes additional policies issued for top ups and refinancing net earned premium Statutory NPAT Net profit after tax LVR Loan to va
Slide 32: Contact
For more information, analysts, investors and other interested parties should contact: Paul O’Sullivan Iwona Falkiner Head of Investor Relations Head of Corporate Affairs D: +61 499 088 640 D: +61 428 059 965 The release of this announcement was authorised by the Board.