Helia Group Limited · ASX:HLI
Helia — Investor Presentation (February 2022)
36 slides from Helia's investor presentation, Feb 25, 2022
Slide 1: FY21 Financial Results Presentation
25 FEBRUARY 2022 FY21 Financial Results Presentation
Slide 2: Disclaimer
Disclaimer This presentation contains general information in summary form which is current as at 31 December 2021. 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: Agenda
Agenda 01 Overview 02 FY21 Financial result 03 Summary Pauline Blight- Pauline Blight- Michael Cant Johnston Johnston CFO CEO & MD CEO & MD Pages 11 - 23 Pages 4 - 10 Pages 24 - 25 04 Supplementary slides 05 Glossary Pages 26 - 32 Pages 33 - 35 3 FY21 financial results – produced by Genworth.
Slide 4: Overview
Overview Pauline Blight-Johnston
Slide 5: FY21 result overview
FY21 result overview Strong business performance underpinned by a supportive economic environment Underwriting result • FY21 Underlying NPAT of $238m driving NPAT • FY21 Statutory NPAT of $193m • FY21 Net claims incurred ($8.3m), underwriting result of $296m. Economic • Strong HPA has reduced portfo
Slide 6: Australia’s leading LMI business
Australia’s leading LMI business Delivery of strategy fueling growing business momentum Improve the efficiency and Reimagine LMI for a new Leverage our core capabilities competitiveness of LMI generation of home buyers into complementary offerings FY21 achievements: • Retained all lender customer co
Slide 7: Business recovery demonstrated in financial outcomes
Business recovery demonstrated in financial outcomes Key performance measures Net earned premium PCA coverage ratio Loss ratio Underlying ROE Underwriting result Underlying diluted EPS Underlying NPAT Capital management Note: dividends declared, and buy- backs announced Source: Genworth 7 FY21 finan
Slide 8: Strategy implementation driving customer results
Strategy implementation driving customer results Creating a differentiated customer and borrower experience Genworth’s value proposition CBA contract details1 • Australia's leading LMI business • Exclusive LMI provider to CBA, excluding Bankwest • Service delivery, operating flexibility and collabor
Slide 9: GFI separation programme
GFI separation programme Delivering on time and within budget Delivered Outstanding & costs • Finance systems • Expected range remains $15m to $19m • Human resources systems • $8.4m of costs incurred in FY21 • Investments services • Target separation date at 1Q22, with rebranding to follow in 2022.
Slide 10: Resumption of capital management
Resumption of capital management Buy-back in progress and special dividend announced PCA ratio walk Capital management 1 2 1. Excludes $63.9m on-market share buy-back. Note: Totals may not sum due to rounding. 2. Excludes $2.4m on-market share buy-back. • In-force runoff continues to support new bus
Slide 11: FY21 Financial result
FY21 Financial result Michael Cant
Slide 12: Economic environment supportive
Economic environment supportive Most COVID-19 restrictions relaxed Dwelling values • National dwelling values 25.8% above December 2019 levels • Regional dwelling value growth remains strong, including areas with higher historical negative equity. Data sourced from CoreLogic's Hedonic Home Value Ind
Slide 13: FY21 income statement
FY21 income statement Strong business performance ($ millions) 1H20 2H20 FY20 1H21 2H21 FY21 FY21 v FY21 commentary: FY20 (%) • GWP reflects 2020 loss of Gross written premium 239.3 322.4 561.7 289.7 259.9 549.6 (2.2%) NAB contract largely offset Movement in unearned premium (54.0) (126.4) (180.4) (
Slide 14: Strong underlying growth
Strong underlying growth Market conditions returning to more sustainable levels New insurance written Gross written premium Net earned premium $b $m $m • 2H21 owner occupier and first • Mix driven by higher 80-90% • Recent book year GWP driving home buyer new loan LVR and lower >90% LVR growth in NE
Slide 15: Net claims incurred
Net claims incurred Unusually low due to strong HPA and low delinquencies FY21 commentary: • Net claims incurred were ($8.3m), within guidance range of $5m to ($15m) • Reduction in reserves reflects low delinquencies and strong number HPA • Number of paid claims and MIPs well down due to lender mora
Slide 16: Net claims incurred
Net claims incurred Unusually low due to strong HPA and low delinquencies FY21 commentary: • Delinquency rate fell to 0.52% and generally improved across book years, geographies and lender customers • Healthy borrower finances contributed to new delinquencies falling 29.7% from 1H21, to 3,082 in 2H2
Slide 17: Investment performance
Investment performance Rising bond rates increase running yield, but cause unrealised losses ($ millions) 1H20 2H20 FY20 1H21 2H21 FY21 Net interest income and dividend income 27.2 20.0 47.2 22.6 16.9 39.6 Realised gains on investments 29.0 18.5 47.5 2.0 3.7 5.7 Unrealised gains / (losses) and net F
Slide 18: Balance sheet
Balance sheet Strong claims paying ability with $3.7b of cash and investments Balance sheet as at 31 December 2021 ($ millions) 31 Dec 20 30 Jun 21 31 Dec 21 2H21 commentary: Assets • Deferred reinsurance expense reduced Cash 104.6 89.6 76.7 following amortisation of reinsurance contract Accrued inv
Slide 19: Cash and investment portfolio
Cash and investment portfolio Portfolio positioned for a rising yield environment Cash and investment portfolio1 ($m) 31 Dec 20 30 Jun 21 31 Dec 21 Commonwealth2 784.2 45.9% 584.9 35.3% 532.8 34.5% State Gov't 573.3 33.5% 589.9 35.6% 514.6 33.4% Corporate / Other 350.2 20.5% 459.4 27.7% 430.2 27.9%
Slide 20: Outstanding claims and premium liabilities
Outstanding claims and premium liabilities Total insurance liability returned to pre-COVID-19 levels Total insurance liability • Insurance liability (IL) is comprised of the outstanding claims liability (OCL) and premium liability (PL) • The OCL is a reserve for loans 30 or more days in delinquency
Slide 21: Regulatory capital
Regulatory capital Strong regulatory capital position maintained ($ millions) 31 Dec 20 30 Jun 21 31 Dec 21 2H21 commentary: Capital base • Common equity Tier 1 increase reflects retained profits and reduced premium liability Common equity Tier 1 capital 1,426.3 1,652.0 1,864.4 • Probable maximum lo
Slide 22: Reinsurance
Reinsurance 2022 Reinsurance programme • Designed to drive efficient economic capital credit, whilst also allowing for risk management in severe stress scenarios only • Structured on a paid claims basis for in-force policies at 1 January 2022, plus two additional years of new insurance written • Gen
Slide 23: Net loss ratio and unearned premium
Net loss ratio and unearned premium Underwriting year groupings highlight embedded profits in recent cohorts Loss ratio to date by underwriting year Unearned premium reserve by underwriting year Note: Books years 2020 and 2021 are still relatively undeveloped and are not shown. Note: Excludes excess
Slide 24: Summary
Summary Pauline Blight-Johnston
Slide 25: Summary
Summary Momentum is building Strategy is delivering • Lender customer contract renewals and improved NPS reinforce value proposition • Product innovation and borrower focus creating differentiation • First move into alternative deposit gap solutions • Key financial indicators and performance measure
Slide 26: Supplementary slides
Supplementary slides Genworth> <.
Slide 27: Australian key economic indicators
Australian key economic indicators Change in dwelling values 3 months 6 months 12 months Rental vacancies Dec 20 Jun 21 Dec 21 Sydney 2.7% 8.6% 25.3% Sydney 3.6% 2.8% 2.6% Melbourne 1.5% 4.9% 15.1% Melbourne 4.7% 3.5% 3.2% Brisbane 8.5% 15.0% 27.4% Brisbane 1.8% 1.3% 1.3% Perth 0.4% 1.7% 13.1% Perth
Slide 28: Residential mortgage lending market
Residential mortgage lending market Originations and HLVR penetration1 Industry loan approvals: Investment vs. owner occupied Genworth NIW: Investment vs. owner occupied2 $b, % $b, % Source: APRA Quarterly ADI property exposures statistics (ADI’s new housing loan funded), September 2021. APRA has di
Slide 29: Insurance in-force
Insurance in-force As at 31 December 2020 As at 31 December 2021 $ Original Effective Change in $ Original Effective Change in Book year % Book year % billions LVR LVR house price % billions LVR LVR house price % 2010 & Prior 86.0 30% 80.0 32.0 96% 2010 & Prior 80.1 28% 80.1 28.9 113% 2011 10.3 4% 8
Slide 30: Delinquency trends
Delinquency trends Delinquency roll 1H19 2H19 FY19 1H20 2H20 FY20 1H21 2H21 FY21 Opening balance 7,145 7,891 7,145 7,221 7,614 7,221 6,964 6,853 6,964 New delinquencies 5,515 4,899 10,414 4,988 4,380 9,368 4,384 3,082 7,466 Cures (4,154) (4,832) (8,986) (3,904) (4,467) (8,371) (4,170) (3,910) (8,080
Slide 31: Insurance ratio analysis
Insurance ratio analysis Expense ratio1 Loss ratio2 117.1% % % 67.0% 147.9% Combined ratio3 Insurance margin4 100.1% 95.3% % % 215.0% 137.7% -28.5% -84.9% -4.1% 1. Adjusted ratio excludes $181.8m DAC write-down in 1H20, less associated DAC amortisation benefit of $12.3m in 1H20, $25.1m in 2H20, $23.
Slide 32: Reconciliations
Reconciliations Statutory NPAT to Underlying NPAT ($ millions) 1H20 2H20 FY20 1H21 2H21 FY21 Statutory net profit / (loss) after tax (90.0) (17.6) (107.6) 59.4 133.5 192.8 Unrealised (gains) / losses and FX 6.4 (1.7) 4.7 23.5 32.3 55.8 Separation costs - - - 0.8 7.6 8.4 Adjustment for tax (expense)
Slide 33: Glossary
Glossary As at 31 December 2021 Term Definition Term Definition Ageing Movement in reserves on any insurance policy that remains in a Earnings curve Is based on an analysis of claims incidence. This curve determines delinquent state (3+ months of missed payments or Mortgage In the proportion of the
Slide 34: Glossary
Glossary As at 31 December 2021 Term Definition Term Definition Level 2 A term defined by APRA under GPS 001 referring to a consolidated NPS Net Promoter Score insurance group OO Owner Occupied loans LMI Lenders mortgage insurance RBA Reserve Bank of Australia Loss ratio The loss ratio is calculated
Slide 35: Glossary
Glossary As at 31 December 2021 Term Definition Statutory NPAT Net profit after tax Technical funds The investments held to support premium liabilities and outstanding claims reserves Tier 1 capital As defined by APRA GPS 112, Tier 1 Capital comprises the highest quality components of capital that f
Slide 36: For more information, analysts, investors and other interested parties should contact
For more information, analysts, investors and other interested parties should contact: Paul O’Sullivan Head of Investor Relations D: +61 499 088 640 The release of this announcement was authorised by the Board.